The Wanganui Chronicle. MONDAY, AUGUST 20, 1934. UNITER STATES SILVER PURCHASES

Wanganui Chronicle, Volume 77, Issue 196, 20 August 1934, Page 6

The Wanganui Chronicle. MONDAY, AUGUST 20, 1934. UNITER STATES SILVER PURCHASES

T HE ultimate purpose of the United States Administration in purchasing silver until it constitutes twenty-five per cent, of the metallic monetary base, is the raising of prices in America by broadening the basis of credit, but the actual effect on credit, and whether the additional currency will be slow to enter into circulation because of the present weakened state of business activity, will be developments worth noting. It is not credit so much as consumer purchasing power which America, in common with other countries, is in need. Plenty of credit is available — far more, it seems, than is required, or, rather, can be supplied. A point of great interest at the moment, however, is whether the United States, by fixing the relative values of gold and silver for legal tender purposes ■within that country, can determine their relative values throughout the world. China, India, South America and those countries that have only silver money and have small worl4 credit, have had the buying power of theinb silver cut to twenty-five per cent, of its old value. A reinstatement of silver values must have considerable effect in restoring purchasing power in those countries. In the discussions leading up to the passing of the Act, an intention of which was to promote intercourse with silver-using countries, it was obvious that Mr. Roosevelt did not want any further monetary legislation at the present time. A recent message to Congress shows that he recognises the importance of international accord on the subject of a monetary standard. In it he states that he is favourable to an attempt to establish an international bimetallie standard, and wishes to enlist the cooperation of other nations. On the other hand, the aggressive silver group in the United States has been impatient of further international consultation, and it is apparent that the placing of legislation into operation at the present stage is in no small measure due to its efforts. According to a Washington cablegram, dated August 9, silver is to be purchased by the United States Government under the Silver Purchase Act, 1934, at 50.01 cents per ounce. But certificates are to be issued bearing a. face yalue of lhe dollar 29 cents. They will be set against the metallic holding. In this way more money will be created. Banking opinion in the United States is far from favourable to this policy of the exhaltation of silver on the box seat with gold. History is quoted against such a policy. When in 1893 chaotic financial conditions prevailed in the United States as a result of weakening the currency by coining cheap silver’ dollars, gold took flight from the country and panic was general. In that emergency President Cleveland called a special session of Congress for the purpose of repealing the provisions of the Sherman Silver Purchase Act of 1890, an Act authorising the Government, to purchase silver bullion. Mr. Cleveland then laid it down that “the people of the United States are entitled to a sound and stable currency and to money recognised as such on every exchange and in every market of the world. Their Government has no right to injure them by financial experiments opposed to the policy and practice of other civilised States, nor is it justified in permitting an exaggerated and unreasonable reliance on our natural strength and ability to jeopardise the soundness of the people’s money. The very man of all others who has the deepest interest in a sound currency and who suffers most by mischievous legislation in money matters is the man who earns his daily bread by his daily toil.” How this new decision of the United States will operate under the changed circumstances of to-day, it will be interesting to see, but confident credit still demands’a fixed and stable currency as its agency, as it did in President Cleveland’s time.