Omaha daily bee., 1922-04-13
Fire Million q Month
Pi,tmsn Act Of 1918 Gives
Federal Aid 70 Silver Mines.
(By @. o. Virtue. in New s,ats)


II you should learn that the secretary OF COM
msres MAS buying four or hye m,ion pocket
knives each month Al . dollar apiece, and then
hiring . big force OF men and working them
overtime 10 polish the growing stock OF cutlery
aud to count. box and store il away In costly
vaults, you would wonder why perfectly good
| money which taxpayers have very reluctantly
parted with should be used for such . purpose.
Your wonder would increase II you were to
learn that the secretary could buy knives Just As
good as those he Is buying At dollar apiece from
lew favored producers on the open market At
90 or os cents apiece: and II you found that II
was not expected that the knives would ever be
OF any use 20 anybody. your wonder would be
increased still further And ye, this Is JUS, Mha,
| has been gong on al Washington since May,
| 1920: only instead OF the secretary oi commerce
buying useless knives 20 or IS per cent above
the market price. !, Is the secretary OF the treas
| ury who IS buying four or fve million ounces OF
silver at 80 or is per cent above the market price,
with the perfect knowledge that Il will not serve
| now or IN the future. any useful purpose.
These purchases OF silver are being made
under the terms OF the Pit,man act, passed in
April. 1918. II all came about in this ways As
everyone knows. We had for many years had
great stock Of silver dollars in the treasury which
could be circulated only through the use OF silver
certificates. or. TO be more accurate did not cir
culaie az all. the more convenient certificates
being in circulation in the place OF the dollars.
During the great war new situation de-
veloped. The price oi silver, which had long been
around so cents, rose rapidly. and in 1918 reached
u an ounce. The exchange with the far east
was in critical condition. and. in order TO cor
rect an awkward situation. large shipments OF
silver 10 India were desired. especially by Eng
land. We had the silver the price was more
favorable than il had been for about thirty years,
and the need for stabilizing the eastern ex-
changes was acute. Under these conditions con-
grcss authorized the sale OF not to exceed $751;
100000 Of the dollars All the conditions were
thus favorable Tor getting rid OF useless and cx-
pensiye part OF our currency without harm to
the silver industry.
The silver industry was, however. long
beaded, II took advantage OF the war psychology
which is very intolerant in some respects, but
amazingly tolerant in others. The farmers were
getting guaranteed price for their wheat;
why should not the silver producers enjoy a
guaranteed price for silver? To make long
story short the silver interests succeeded in get
ting into the bill provision for the repurchase
by the treasury OF an amount Of silver equal TO
the amount melted down for sale, at the rate of
81 per ounce. This price was to apply only to
currently produced silver from American mines.
The monthly purchases have ranged since |
June, 1920 from 5.5 to 6.8 million ounces, and |
have averaged ~ million. Down to November |
]. 1921, about 80000000 ounces had been bought, |
leaving l28,000,000 ounces still to be purchased |
unless an end is made OF the folly by the re- |
peal OF the law.
There seems to be no good reason for the |
purchase provisions Of the law. Domestic silver
is regularly quoted at 991k in the New York
market while 'other" silver is quoted at prices
during the last year from So to 60 cents. We
are buying something we do not need; we are
paying for it more than the market price; and
We have had to enlarge the mint service to con-
vert the silver into dollars that will never do a
lick Of money work except by proxy. If this re-
placement of the silver is defended simply be-
cause it adds to the currency and tends to raise
or maintain the general price level, it should be
remembered that we have what seems an un-
limited capacity for creating currency in the Fed
eral Reserve banks, and there is, therefore, no
reason why the most enthusiastic inflationist
should want to restore these costly dollars to
the currency.
1t is beside the mark to say as is sometimes
said, that the purchases under the Pittman act (;
are paid for by the sales under that act-that the
government loses nothing by the transaction.
As matter of fact England has not yet paid
tor the silver she bought but if she had, it would
still be about as wise to say that the government
would lose nothing, if it should use the proceeds
from the sale of surplus army supplies to pur-
chase more supplies for which it has no need
| he purchases now going on look like case of :
clear and avoidable waste