The Indianapolis times., 1932-05-19
BY JOSEPH II. BAIRD
United Press stan Correspondent

WASHINGTON. May 19.-wor-
ship Of the gold standard" is cited
by most economists as the cause
Of the rapid fan Of silver in the
worlds markets.
Not that the gold standard itself
debased silver. But its sweeping
conquest Of the western powers set
IN motion a train of events which
brought silver from its oost-war
throne Of $115 per ounce down to
% cents, and thus diminished the
buying power of more than half
the world, which depends almost
entirely on the white metal.
With the gold standard supreme
in most Of Europe, a widespread
movement was begun to debase sill
yer, the subsidiary coinage.
Thus, Great Britain in 1920 re-
melted its silver money, and reduced
the silver content from .925 to 500
per cent. AS a result, 1t has thrown
on the world market during the
last decade about 75,OO0, 900 ounces
OF silver, competing with the prod
uct of silver mines and forcing
down prices.
Flow Out OF East
Britain's action alone might have
been of little moment, but other
countries followed Immediately.
France, Belgium, Australia and va
rious nations of South America put
their faith in gold and sent a con-
slant stream Of discarded silver to
the Orient. China and India alone
usually consume two-thirds Of the
worlds silver production.
Even this trend might not have
been ruinous had it not been fol-
lowed by a later flow Of silver to
the world market from the rich
eastern reservoirs.
The first really drastic decline in
silver-after the postwar adjust
ment of 192l-came in 1926, when
the royal commission on coinage
and finance recommended that In
oia-the worlds silver vault-be put
on a gold bullion standard.
The situation was made worse by
Indo-China's adoption Of a gold
exchange standard, and the conse-
quent sale of bullion by the gov
eminent.
Sword Hangs Over Mountain
The Indian situation is regarded
by economists ms the real crux of
the problem. OF the 100000, 900
(B) ounces Of silver believed to
have been produced since the dis
covery Of America, India is sup
posed to have about 4,500, 1000 (B)
ounces. Part of it is in coinage, but
a much greater amount is in orna-
mentS.
Actually. between 1926 and 1880,
India sold only 100.000,000 ounces
Of silver on the world market.
But its vast reserves-and the
possibility that more of them may
be sold-have hung as a suspended
sword over the silver market.
Still another reason cited by
economists for the dwindling price
Of Silver is the chaotic situation in
China.
Helps Deepen Depression
HarasSed by war lords and
bandits, China's trade has suffered,
and 1t has not consumed as much
silver as it would have under more
stable conditions. AS a result i'm
ports of silver into China declined
by 1000, 900 ounces in 1890.
Finally. economists point out that
silver prices tend to flow with the
general trend of commodity prices.
The world depression in such prod
ucts as wheat, oil. coal and lumber
has contributed, it is believed, to
forcing silver down even further.
All these causes have combined |
to make the Chinese dollar worth
about 80 cents, to limit purchases
of American and European goods
by the Orient, to close down silver
mines here and in Mexico, and
thus to deepen the economic de-
preston.