The Portland daily press., 1890-10-29
WHY THE PRICE OF SILVER DECLINED.
Western RefInerIes Held for a Rise
Which Has Not Cot Along.
The Situation As Explained by the
Director of the Mint
War On the Lotteries To Be Waged
With Activity.


statement in regard to Treasury purchases of
silver bulletin and the causes of the recent
decline in the market price of silver:
The Treasury method of purchasing silver
| has been criticized in these particulars.
that the large purchases by the department
| do not include all the silver bought that
London prices are used as the basis of
| government purchase and that bids to the
| government are on the decimal system tend
| ing to favoritism.
In regard to the first criticism, / may say
| that the government purchases silver as it
| does bonds or, indeed, any. ar6icle required
| in considerable quantities by public compe-
| cepted provided they do not exceed the
highest market price. For the benefit of
| small producers, however, who would other
| wise be obliged to trade through middle men
| the superintendents of the mints are author
| lied to purchase small lots at a price fixed
by the director of the mint, corresponding to
| the market price of silver. These purchases
| averaging possibly half million ounces
| month are reported to the Treasury weekly.
| 1t is not true that the London price has
been used as the basis Of silver purchases
under the new law. During the last admin
| istration not only was the London price the
| only price In making purchases but the de-
| partment did not pay an equivalent of the
London price, but made counter offers to
| bidders on the theory that silver was worth
| less in New York than in London by the
| cost of transportation and insurance across
the water. Thespresent administration has
been governed In its purchases by the New
York price and has paid at times in excess
| of the highest price at which certificates sold
| In that city the same day. The government
| accepts the lowest bids for the sale of silver
and does not reject bid for the reason that
| 1t exceeds the London price. Ii there are no
lower bids it will accept any bid within the
highest New York prices. AT no time since
| the passage of the new silver law, and, in
| deed, for some months before, has the Treas
| ury felt itself limited in its acceptance TO
the London price.
In regard to government quot atoms being
| on the decimal basis, one OF our critics is
| made to say: "a suspicious and significant
| fact in regard to the government purchases
| of late Is that houses offering large lots have
been underbid by a hundredth part of cent.
NAL basis, which is great advantage to
| those who may have advance information in
| regard to the price the government is willing
| to pay on given date"
1t may be said the government has no
scale of its own. Bidders use whatever
scale suits them best. Any person who has
silver may offer it at any price he sees fit. If
one house happens to bid decimal lower
the lower bid because of the decimal? The
idea that any seller has had advance infor-
nation" as to the price the government will
pay is ridiculous and impossible. Offers for
tuo odlO VI olitcI tLc dlt uduo ny boiCRIdpu
within few minutes of 1 o'clock. The
Treasury has no idea of what it will pay un-
til the offers are made. Its acceptances are
governed entirely by the offers. These Of
fers are entered in book and passed on by
the director of the mint, who recommends
what one shall be accepted or rejected. The
book is then taken to the Secretary of the
Treasury and each offer passed on separately
and personally by him. The bidders are
notified by telegraph of the acceptance or re-
ipotion nf thair hida The whola hus siracc
does not occupy 10 minutes. The uniform
practice is to accept the lowest bids, the only
question for the director and secretary to de-
termine being how much they VIII buy on
given day and how favorable the offers are
as compared with the market price. The
method of purchasing silver by public CON-
petition is the same as has been pursued by
the treasury under all the administrations
since 1873.
The causes for the recent decline in the
price of silver are obvious. The visible
stock of silver in New York has not been
sensibly decreased, notwithstanding the
purchase by the government OF $12,276.47S
ounces since August 18th. This large and
undiminished stock is a standing menace to
the price of silver. and has of itself been
sufficient to shake public confidence in sill
yer. If large western refneries had offered
their product for sale to the government at
current prices and sold the remainder abroad
this stock would not have accumulated. In
the hope of realizing larger profits they held
their silver for months prior to the passage
of the new law, or deposited it in New YORK
for certificates
1t is very unfortunate that this stock was
allowed to accumulate, and especially that
certificates were allowed to be issued on it,
guaranteed by national bank, and listed on
the stock exchange to be dealt in on margins
as other stocks In my Judgment there
should be a law enacted against dealing in
money metals on margins. The usual de-
mand for silver for export has almost entire
ly, ceased. and large quantities OF foreign
silver are shipped to the United States. The
imports of silver into the United States from
May to September 80 of the present year,
exceeded the exports by $4,923,175. In the
corresponding period last year the exports
exceeded the imp rts by $5,948,9 800. This ac-
counts for the fact that the stock has not di-
minished.
All sorts of roorbachs have been tele
graphed from London to this country. The
purpose and effect of this was to weaken the
price of silver. 1t is we'll known we are in
the midst of most active mining season.
Undoubtedly the production of silver has
been stimulated by the passage of the new
silver bill. But it must be remembered that
we are approaching winter, when mining
will not be so active, and moreover that the
present activity in working the silver mines
naturally results in more rapidly exhausting
their lodes. 1t is fair to assume that the
silver product for any considerable period,
unless there are new discoveries, will not be
materially increased by the present active
working of the mines. The new silver law
| has been executed by the Treasury Depart
ment in the utmost good faith, and in the
| same friendly spirit towards silver which
| characterized the passage of the act, and the
| manner OF Its execution has not had the
| most remote bearing upon the recent decline