CURRENCY PROBLEMS.

Waikato Times, Volume 108, Issue 18167, 4 November 1930, Page 6

CURRENCY PROBLEMS.

Almost every country is experiencing times of stress, >of which difficulties and unemployment are salient features. It is difficult to ascribe one definite and sole reason for the state of affairs. So many reasons and so many remedies—many of them contradictory—are put forward that the public is hard put to distinguish the seer from the charlatan. One factor, however, w r hich (says an Australian paper) must be taken seriously to account for the derangement of world trade and finance is the price of silver. Standard silver is quoted to-day at about Is 5d per ounce, which means that the intrinsic value of one shilling is a fraction more than threepence, though it is stabilised in portions of the. British Empire on the fixed basis of twenty shillings being equal to £1 The monetary -standard of China, India and South American countries is silver, the purchasing power of these countries in the world’s markets is so impaired as to disturb seriously the balance of world trade and finance. Thus the variable price of -silver is a menace to trade stability, and this menace will remain until either every country adopts the gold standard or until the price of silver is fixed in relation to gold. The latter is difficult of achievement. A survey of the world production of silver from 1493 to 1927 by the United States Bureau of Mines has established that the output of -silver is increasing but -the relative increase in the output of gold has been greater. In spite of this the price of silver has declined over an extended period owing rather to a lessening demand than to an abnormal increase in supply. 1 The decreasing demand for silver has been due very largely to the demonetising of silver by the principal countries of the world during the latter part of the 19th. century. _ _ The demonetisation of silver was facilitated by the great increase in gold production following the invention of the cyanide process in 1887, and the development of the South African goldfields. The Eastern countries and -some of the South American Republics remain the exception. Silver may thus be regarded as a second line of defence of monetary systems, but its future will be largely influenced by the production of gold. In early times, the proportion of silver extracted from silver ore was much higher than it is now. _ Slowly the -silver and silver-gold deposits have become less important, and the silverlead, sliver-copper, silver zinc, silver-lead-zinc and other silver bearing deposits have risen in silver-producing importance. Silver production, in other words, is becoming more and more dependent on the production of base metals and of gold. Thi-s trend will, no doubt, continue, and the future of silver production should therefore expand and contract with the production of the base metals, with the qualification that as base-metal deposits increase in depth they often become poorer in silver, so that, apart from new deposits, silver production -should be at a lower rate proportionately than is indicated for copper, lead and zinc. •]*ie quotations’ of the latter are nowdepressed and many of the smaller producers have closed down, while there has been restriction in the output of larger concerns. Meanwhile, the price of silver is a serious matter for those countries who find their currencies thereby debased and whose purchasing power in -the world’s markets is therefore affected. It is ,thus contributing to the world-wide depression.