The daily banner. (Cambridge, Md.) 1897-2008, 1920-08-05
SILVER UNFIT FOR
STANDARD MONEY
Too Unstable for Basis of Paper
Circulation, Says National
Bank of Commerce in New
York.

The recent unprecedented move,
ments in the price Of silver have again
demonstrated the unftness of that
metal as a monetary standard, accord
ing to the National Bank of Commerce
in New York In discussing the silver
situation. the bank points out that
within a year silver quotations have
fuctuated more than 100 per cent in
the London market and 20 per cent in
the New York market.
The high price of silver the bank
continues, led in some countries to the
melting and sale of silver boards ac-
cumulated during the war and even Of
coins still in circulation. In many in
stances countries were forced to de-
base their subsidiary coinage or to
| substitute for it coins of base metal
| in order to retain their small change.
! As a result of these developments, the
demand for the metal for coinage pur-
poses slackened, and today the de-
pendence of the world on silver for
coinage purposes is less widespread
| than it was.
Another important factor in the
high price of silver emphasized by the
bank is the decline in production, par
ticularly in Mexico. where, largely on
account of political disturbances, the
output fell from 100000 ounces in
| 1913 to 2S,000,000 ounces in 1914, only
to f1uctuate between the latter figure
| and 63.000,000 ounces In 1919.
In discussing the probable future
price of silver, the bank says:
"The result of the purchase provi-
sions of the Pittman act and Of the
| Mint regula tons is to establish two
separate and distinct markets and quo
tations for silver. In the United
States, domestic commercial silver .999
fine is virtually pegged at 991a cents.
If the price for foreign silver should
! rise above $1.00 per ounce, treasury
purchases would automatically cease.
But the price would probably not get
much above S1.OO. The annual out
put of the United States is about
one-third that Of the entire world, and
price materially above S1.00 would
add this amount to market supply, in
creasing it possibly by one-half. 1t
would, therefore, seem that the price
could at most rule only fractionally
higher than the Pittman law figure,
unless it is to be supposed that demand
and supply both be as abnormal as
| during the war period.
at has frequently been asserted that
| a greater use of silver as standard
or redemption money would be newt
able as a means of stabilizing inflated
paper currencies, particularly IL view
of the decline of gold production. But
| it is apparent that if new silver is to
| be relied on for this purpose it will
be many years before adequate re-
serves for existing issues can be ac-
cumulated. Unless the price of silver
goes above $1.O0 per fine ounce, or the
purchase clause of the Pittman Act is
repealed, the output of the United
| States will not for at least three years
| be available for these reserves. If
silver is so used, either it must be
adopted by some countries as the ex-
elusive monetary standard, or legal
ratio between the values of gold and
silver must be settled upon. Either
alternative involves the question of
! himetalism.
"a return to bimetalism would in
all probability mean return to an al
! ternating standard, now of gold, now
of silver, such as the world sought re-
lief from when it chose gold as the
! more stable monetary standard.
1.-THE adoption of a single silver
standard by some countries while
other important commercial nations
use gold would result in giving the
foreign exchanges with the silver
countries q fiuctuating par Of ex-
| change such as China now has. The
| conduct of international business
would thereby be interfered with
rather than facilitated, and the pro
| posal is therefore undesirable"