New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-05-23
India Asks for
"Hard Money" on
Trade Balance
New York Banks Arrange
Large Shipments OF
Silver to Calcutta

New York banks, acting IN behalf OF
certain American commercial houses'
have started 10 ship bar silver direct
to Calcutta. India, at the rate of ap-
proximately 100000 week. 1t was
stated in authoritative quarters yes
terday that such efforts have been made
necessary because of the inability oil
American importing firms TO arrange
in any other manner satisfactory TO
the Indian producer payment for the
large amounts of hides iute and tea
that are being shipped into the United
States from India.
A banker who has had hand in ar
ranging some of the first shipments OF
silver that have been made on the
movement so far said yesterday that
il had been found absolutely necessary
TO pay the Indian merchants in hard
money. For obvious reasons the Tor
eign exchange machinery that in ordi-
nary times makes it possible for debts
between the United States and India
to be settled by the remittance of pa
per has broken down. Normally, Amer
lean purchasers of raw materials from
India arrange through their local banks
to have romittances made to Calcutta
by means of rupee drafts on that city
or by means of sterling drafts on Lon
don. Now it is impossible to buy Ind
ian rupees in the New York market,
and sterling drafts, it is said. are not
wanted in either Calcutta or Bonn
bay. Similarly, dollar drafts. which
have in other times passed at their
face value in India, are also taboo,
and the result has been that American
traders who have debts to settle in
India have finally discovered that they
must pay in gold or silver.
Further Shipments Impending
As silver is the chief form of cur
rency in India. the bar metal is now
being shipped 1t is understood that
a large amount will be shipped on this
movement, as there are no signs of
immediate improvement in the eX-
change situation between India and the
United States.
The reason for the breakdown Of
the exchanges is found primarily in
the heavy balance of trade now run
ming in favor of India in the interna-
tional account between the two coun-
tries The United States is buying
far more from India than she is sell
ing to that country, and this condition
has existed since early in the war.
Large amounts of hides. jute and tea
are constantly being exported to the
United States from India, and as this
is only partially offset by our exports
10 that country, a large credit bal
ance remains in its favor.
Great Britain is in much the same
situation, her purchases from India
also largely exceeding the movement of
goods in the opposite direction. Brit
ain has sought to float loans in India
to ease the situation. but this has not
brought much relief so far 1t is I'M
derstood that the direct shipments of
silver now being made from the United
States bear the approval of the Brit
sh treasury authorities. who see in it
one means of helping to adjust diff
cult exchange problem.
An Unusual Movement
silver tndJ is now DelnS SHipPeu "
India is going via San Francisco. Lo-
cal bankers send it to their CORE
spondents in Calcutta. who in turn pay
it out in settlement of American obli-
cations in that market. A movement
of this kind is unusual in as much as
in the past Great Britain has frowned
upon all shipments that have not first
passed through London.
India is one of the worlds great
consumers of silver. The Indian ma
tive banks his savings in the earth or
else in the form of bangles and brace
lets, which are worn by female men,
bers Of his family. In either case his
savings deposits are mainly in the
form of silver and always available in
time of need. Silver is a commodity in
that country. and, like wheat. its price
is regulated BY supply and demand.
q