Audubon County Republican. [volume] (Audubon, Audubon Co., Iowa) 1885-1894, 1890-10-16
POLITICAL POINTERS.
The Silver Bill and Wheat.

The Silver Bill and Wheat.
A correspondent asks the Cleveland
Leader to explain how the passage of
the silver bill, which every Democrat
in the house voted against, and the
recent advance in the price OF silver
due thereto, have increased the price
OF wheat in India, and therefore in the
United States, aud the Leader accom-
modates the inquirer in terms which
deserve reproduction.
The currency of the United States is
on a gold basis like that OF Great
Britain and her European coun-
tries. 1t is true we have Il large
amount of silver money that is legal
tender, and Of paper money based on
silver, and this money circulates at
par with gold, but the ultimate re-
demption and the settlement of for
eign exchanges is in gold, or in pro-
ducts figured on gold basis. To ex-
plain this fully would require more
space than can here be given, and it is
not part OF the matter directly at
issue.
The currency OF India aud China,
Japan, and Mexico, and some other
countries as well, is on silver basis.
Silver, and paper based on silver, is
practically the only money of these
countries, and exchange with them is
settled in silver or in products figured
on a silver basis.
Before the passage OF the silver bill,
silver bullion was worth only ninety
four cents an ounce, and the bullion
value Of an American dollar was only
seventy-two cents. At that time the
bullion value of the rupee, the legal
tender silver coin of India, was only
thirty-six cents, its nominal value be-
ing about fifty cents. The foreign ex-
change value OF the rupee was its bull
lion value, or thirty-siX cents.
Since the passage OF the silver bill
silver has advanced in price from
ninety-fOur cents to $l.17 an ounce.
The bullion value OF the silver dollar
Is now little over ninety cents and of
the rupee forty-five cents, measured in
gold, which is an advance OF twenty
five per cent. When silver reaches
$1.2O an ounce, the gold value of the
bullion in a silver dollar will be one
hundred cents and OF the rupee fifty
cents. Two-lhirds of the former diff
ference between gold and silver has
uiV 90
the silver bill.
To illustrate how the low price OF
silver depressed the price of American
wheat we will suppose a transaction
occurring, say ten years ago, or about
the time that India began to export
wheat heavily to Europe. A Liver
pool buyer had 100000 to invest in
the purchase Of wheat, the price then
being, for example, 81 u bushel in the
Liverpool market. 1t was worth that,
less the cost Of freight and exchange,
in the American and Indian markets.
That 100000 would buy draft for
as, 500 American dollars, gold, green
backs, or silver. The buyer could not
purchase silver and have it coined in
the United States mint, for our gov
| eminent buys its own silver and makes
the profit on the coinage. He would
have to take United States money, OF
whatever kind at one hundred cents On
the dollar.
/ The government OF India coins all
silver brought to it, on payment OF
two per cent, selgniorage, into rupees
OF the nominal value OF fifty cents
each. That 100000 would have pur-
chased enough silver to coin into 1872,
OO0 rupees, or .half dollars in India.
In other words, the. 100000 draft
would have purchased money of the
nominal value OF $4S, 800 in the United
States, and 100000 in India-lega
tender money good in the purchase Of
wheat in both cases. That induce
ment led Liverpool buyers into the
Indian market, and during the pas
ten years the exports of wheat from
India enormously increased, while
American exports decreased in pro
portion. 1t could not be otherwise
for seventy-two cents worth OF silveI
bullion would buy as much wheat il
India as one hundred cents worth o
gold in the United States. The differ
ence was not all clear gain to TIL
buyer, however, as the cost OF ex
change and transportation in TIL
Indian trade was very high. But 4
was enough to develop heavy pur
chases OF Indian wheat and breal
down the prices Of American wheat
1t brought No. 2 wheat in Americ,
down 10 seventy.four cents bushel il
the course of time, and may hav,
slightly increased prices in India.
The passage Of the silver bill
brought up the price OF silver bullion
all over the world from ninety-fou
cents to SLY an ounce and the cos
Of the rupee from thirty-six to abou
forty-six cents, including the seignior
age OF two per cent 1t added nothin,
TO the purchasing value of the silve
dollar, although it greatly increases
the bullion value, or what is Gale,
'intriusic" value. There is still al
apparent difference OF about nine pc
sent in favor OF the Indian market
but the cost of freight to Liverpool an
other European markets is higher. S
that the actual difference is small
whereas formerly it was twenty-fiv
per cent. The Liverpool buyer ca
! 10 almost as we'll now TO purchase
, the United Sta as in India. Whe
! silver comes to par with gold on tn
1 haa ~ n