Silvery Hopes

With the President and Congress plumping for inflation (see p. 10), silver prices last week jumped more than 25%. from 28-c- per oz. to the neighborhood of 36. Practically every inflationary scheme discussed had its silvery promise: to remonetize silver at 16 to 1; to have the U. S. take $100,000,000 worth of silver from any government in payment on War debts; to have the U. S. buy 5,000,000 oz. of silver per month; to have the U. S. buy $250,000,000 worth of silver to remove the world surplus. Three classes of arguments were advanced for these silver proposals:

1) To decrease the value of the dollar by re-establishing bimetallism--Bryan's old inflationary scheme. This is politics (see p. 10).

2) To make silver producers rich by raising silver prices. No different from any other raid on the Treasury, this attack is led by Congressmen from Nevada, Colorado. Arizona and Utah.

3) To increase the buying power of China and India thereby promoting trade revival.

No ordinary commodity is silver. To half the world's population (chiefly the Orient) it represents money and wealth. To the other half of the world it is merely a useful metal like copper or nickel. The reason that the price of silver fell from over 50-c- in 1929 to around 25-c- at the first of this year is partly that some countries such as Russia and French Indo-China have melted up part of their silver money and sold it; partly it is that less silverware is being made.

But the big reason for the fall in prices is that China and India have ceased hoarding silver. For years all the hard-working millions of India and China, when they wanted to lay something by, tucked a piece of silver into the thatched roofs or the mud walls of their houses. In India the people are said to have five billion ounces of silver quietly tucked away and in China another three billion ounces. When the price of silver goes down they normally buy and hoard more, but today they are too poor to buy at any price. The big reason that the price of silver went down to 25-c- an ounce was that China and India who tucked away 218,000,000 oz. of silver in 1929. last year tucked away only 52,000,000 oz.

Sir Henri Deterding of Royal Dutch-Shell and some economists argue that if the value of silver increases. India and China with their silver wealth will have greatly increased purchasing power. All of which is true, but others ask, "What will happen to the price of silver if India and China dump in the market some of their hoarded billions?" Hard times in the hinterlands have already brought silver back to the bazaars. The stock of silver at Shanghai reached the unheard of total of 322,000,000 oz. What will happen if the biggest buyers become the biggest sellers?

All of which contributed last week to make the Shanghai Gold Exchange (so called because Chinese currency being based on silver, the only way for Chinese to speculate in silver pieces is by trading in fictitious gold, though seldom does gold ever change hands) the most exciting market in the world. The silk clad brokers sat with their telephone clerks behind them, watching a steady stream of prices rushing across the board, seeing the boys who execute their buying and selling orders charging each other, shrieking and making finger-signals in the great gambling battle of silver. Meanwhile China's ablest financier, T. V. Soong, perpetual finance minister of the Republic, was cradled on the long swells of the Pacific, swoshing on toward the U. S. where he has an appointment to discuss silver at the White House.

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