The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-08-31
VARS EFFECT ON SILVER.
Probable influence OF Present Condii ions
on COINAGE OF the Cheaper Metal.

pose. one result that is of peculiar in
terest to the United States as the pro-
Queer OF from 25 to 80 per cent. of the
tota, annual silver supply of the world
may quite safely be counted upon.
namely, an increased consumption Of
the white metal in coinage. And with this
enlarged demand, coupled with the nat
ural growth OF the needs of the silver
smith, may come permanently higher
level Of prices for silver, which. in its
train. is suggestive OF even more inter-
esting possibilities
With the great dislocation of all
exchange and other monetary opera
lions that occurred the instant war be-
came inevitable between nearly half a
dozen Of the leading nations OF Eu-
rope, Great Britain became conscious
OF her deficiency in circulating media
other than gold. The Government at
once entered the market as purchaser
Of silver for coinage and more or less
arbitrarily fixed the price though. IT
must be confessed, with a decent regard
for conditions as they might have been
in normal times The French Govern
ment, which IN late years has added
hut modestly to its silver coins. pre-
pared 10 Increase its coinage within a
Few weeks more than 90 Per cent. OF the
normal our own Treasury made some
liberal purchases for the Mint, this.
however. rather with a view TO as.
sisting the mining industry. tempo
rarily deprived Of the export market,
than 10 add to our volume OF currency.
as for that purpose We Immediately re-
sorted to the Nreeland- A,drich emery
ency bank notes. But in the case OF
the United kingdom. its large pur-
Chases Of silver after the war began
obviously We're 10 swell the amount OF
moneys" available foe retail trade and
oolncidentally to lessen the demand for
gold for circulation.
In modern banking the great and
most efficient function of gold is to
furnish bank reserves against which
credits may be extended to business.
y gold dollar in a mans pocket merely
has the potency of buying a dollars
worth OF goods. \ paper or silver dollar
would do as well. But a gold dollar in
bank vaults Is the basis for three or
four dollars OF credit to the producer
or manufacturer or distributor In his
trade fructifying operations For
months prior TO the war Germany's
financicrs had recognized the advisable
ity of garnering as much of the yellow
metal In bank reserves as possible.
The Reichsbank had begun systematl-
Cally to use methods for dlsplacing
gold with silver ard paper notes in the
circulating media and drawing the
metal Of redemption TO its Golfers. A
year ago SIR Edward Holden, one Of
Brltains foremost fnanciers, was
preaching the doctrine Of strengthening
- "A
banks as second line of support to the
Bank OF England and committee of
British bankers for some time has been
seeking out plans by which this could
he accomplished with the minimum OF
disturbance TO the money market. These
two movements may have had some
reference TO the possibility OF such
war conflict as has now been precipi-
tated, but a strong economic necessity
inspired them. fer the trade expansion
OF the world had been Initiating note and
deposit obligations at a far faster ratio
than redemption money was accumulat-
ing In the sources OF credit.
The larger the proportion OF gold in
bank as compared with the amount In
the hands Of the public the better the
central institution of any banking sys-
Nfiii adll my lldilNldl 'illfl
ency. Under the new Federal Reserve
system the position of the United
States will he peculiarly strong in this
respect. The most complete statistics
~ the stocks OF money in the world
admittedly are those compiled by the
United States Mint authorities For
broad considerations the latest data Of
this character are OF December 81
ka -
country then held nearly 1900 millions
in gold. while ass millions were In cir
culation on the same date Russia had
646 millions banked. with 354 millions
circulating. But In Germany the
amount Of banked gold was only 2l3is
millions. against $50 millions in circua-
ton The banks Of the United King
dom held 395 MILLIONS. while nearly as
much 1896 millions) was in constant
Use by the people. In the last year
and a half the German Reichshank has
added about l45 millions to its gold
holdings otherwise there is no reason
to suppose that the proportions have
materially chanCei since the Mint fig
ures were extensively compiled There
fore large field exists for magnetic
ing reserve money In Germany and
Great Britain into bank vaults and
supplying a substitute for circulation
uses
In connection with this phase Of the
subject 1t H. suggestive to compare tho
silver circulation of tho principal Eu-
ropean countries. SUI following the
I Mint authorities, We find that the
amounts per capita for the nations
| whose total circulation tgold, silver and
paper l. above So a head vary as
follows: France, sl03s; Spain. IS 50,
Belgium. s5.73. Netherlands, 81 81;
Switzerland. s416. Germany Sl.03;
Denmark S2.92; the United Kingdom,
s267 These figures compare with
/ s56l az the per capita silver circula-
ton In tho United States. Great Brit
ain stands at the foot of the European
! column Of nations In the class defined,
/ Even Austria Hungary. whose total
supply of money falls below 81 "A head,
/ has larger silver volume 20 the ind1-
Nidual than Great Britain, namely,
$500 Difficult as 1t is Ia Ak the So
called "saturation point in silver cir
, cuation. except hv actual tcst, II is
not unsafe to assume that the figures
Just given leave q considerable margin
for the Injection ~ a larger amount NJ
silver in the currency ~ the principal