Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-06-10
GOLD MONEY BASIS
CUTS SILVER PRICE
Change in Standard of Cur
renCy Held Responsible
for Slump.
BY JOHN L. COOLEY,

Associated FreSS FINANCIAL writer.
NEW YORK, June 10.-Significant
economic changes, especially in the
Orient, are held responsible for the
drastic decline in bar silver to record
low levels. The immutable law of sup
ply and demand, in the last analysis,
must be regarded as the cause of the
slump, but the wide spread between
these two points is traceable to the
gradual decentralization of the white
metal.
The movement to the gold standard
in the years since the war has brought
most Of the world to the yellow metal
basis. This has meant that countries
formerly on the silver standard have
been sellers rather than buyers of Sill.
yer. Particularly has this been true in
India, where the rupee was put on the
gold basis in 1927 and where a duty
on silver imports has been established,
To the quantities of bullion dumped
on the market by the demonstration
process has been added the greatly in
creased production attendant upon the
enormous gains in the output of the
base metalS-copper, lead and zinc. In
other words, more silver is available
than can be used, consequently the
price dropped.
At present China seems to hold the
key to the situation. Large stores of
silver have piled up in that war-ridden
country which is so beset with political
troubles that consideration of economic
problems apparently must await the
appearance of more stable conditions.
Nevertheless, China has taken at least
one step toward solution of the silver
impasSe. Early this year she established
new gold unit for payment of GUS
toms. How soon she can 90 further
seems problematical in view of her
present strife.
Part of the silver surplus in China
came from India. After the establish
ment of the gold standard in the latter
country a large part of the treasury
silver reserves found its way to the
northern republic, which has recently
been selling the metal and also ex-
change as result of prospective drop
in the amount of rice available for ex-
port.
In the first three months of this year
the trend of the silver movement In
India was reversed and imports showed
gain over the first quarter of 1929.
This rather curious change was appar-
emily due to speculation and to accu-
mutations made prior to the levying Of
the import duty which has had the eff
feet of protecting the large silver hold
ings of the natives. The recent gain in
purchases by India, therefore, would
seem to be temporary, and so it is to
China, the other large user of silver, that
the world is looking with some dis
couragement, for a solution Of the diff
ficulties.
Since there is no prospect of a shift
toward resumption of subsidiary silver
coinage, the problem of extending the
uses of the white metal is receiving con-
siderable attention. Normally, the in
dustrieS and the arts absorb 20 per cent
IF the rtnrIdtc t,,k
developments-la the result of
scientific research-have indicated that
these markets are to become larger con-
sumers. The motion picture industry's
utilization of vast quantities of silver
salts and the introduction of silver SOL
ders, as well as the discovery of other
practical uses aside from the consump-
ton for tableware, are expected to be-
come increasingly important sources Of
demand incidentally. the slump in the
price of the metal should stimulate these
newer commercial inquiries.