CHINA AND SILVER.

Waikato Times, Volume 112, Issue 18778, 28 October 1932, Page 6

CHINA AND SILVER.

It is no\y neither safe, fashionable nor wise to ascribe the world depression to any one factor. For some time, large Interests in the United States Insisted that the low price of silver, oaused by Britain’s marketing of surplus silver from India has been one of the causes of the trade dislocation, but recently this theory has been seriously shaken. There Is evidence that the theory is approaching the discard in the growing opinion In 'this Dominion concerning the advantages In trade with the East, where silver is the currency of something like 800,000,000 people. Whatever the cause of the trouble in China, it appears that low silver prices are not to blame at the present time .at least. China is the only great Independent nation left on the silver standard and Mr LI Ming, a leading Chinese banker, In a recent publication, oites a wealth of facts In support of his declaration, “Instead of proving harmful, low silver prioes have been largely beneficial to China.” Silver Is the standard in which all Chinese commodities are priced. In other words, it Is the absolute, like gold in the West, not the relative, like sliver in the West. The difference is so profound as to make China practically Immune from the price influences at work In the gold standard world. Whereas world prices have gone down. Chinese prices have gone up. China encounters the relation between gold and sliver in Its foreign commerce. But this is a mere bagatelle compared with 'the sum of China’s total economic trade, domestic and foreign. It does probably less business with outsiders than does any other country. Nobody knows the ratio, but it cannot be more than 1 per cent., which may be contrasted with 30 per cent, in that of Britain.

The contention of the silver advocates is that low silver has crippled China’s buying power. Low silver should Impede China’s purchases abroad because its means of payment for gold-priced goods is silver. But again, just the contrary has occurred. According to the National Foreign Trade Council, the trade of the United States with China for 1931 actually increased 9 per cent, while American trade with all countries showed a decrease of 35 per cent. As in other respects, China lias flown in the face of Western logic. New Zealand, too, is experiencing increasing trade with the East and looks for more. It is interesting that we should be looking to a silver standard country to expand our exports.