Evening star., 1933-12-23
A Silver Lining?

President Roosevelt's proclamation
ratifying the London Conference agree
ment on silver is widely hailed as a
move to raise the value of silver in
this country and in the world market
and to extend Americas trade with the
Orient and with other nations which
use silver as money. 1t is hailed, too,
as another move on the part of the
President to raise commodity prices.
So far as the silver mining companies
of the United States are concerned, 1t
Is indeed silver lining to the cloud.
For under the agreement the Govern
ment is to purchase 24,000,oOo ounces
Of newly mined silver annually for
the next four years This is about
what the production of American mines
was during the last year. Furthermore,
the President has decreed that the net
price Of silver paid by the Government
for this newly mined ore shall be GAS
cents, or about 2112 cents above the
present market price of the commodity.
What will happen is that the miners
will turn their ore over to the Govern
ment at the old statutory price for sill
ver-Sl29 an ounce-and that the
Government will pay the miners for
One-half of the silver and retain half
the silver as "seigniorage'' and cover all
usual charges and expenses. Seignior-
age is the charge or toll deducted from
the bullion brought to a mint to be
coined. Broadly speaking, seigniorage
represents the Governments share of
the difference between the market value
Of the bullion and the value of the same
bullion when coined into dollars.
In dealings or proposed dealings with
silver, the national policy actual or
suggested, has varied. Under the oper-
alton of the Sherman law, enacted in
July, 1890, and repealed in 1908, the
Secretary of the Treasury purchased at
the market price silver bullion to the
amount of 4.5Oo,oOo ounces a month,
issuing in payment Treasury notes to be
legal tender for debt. So much bullion
was coined as might redeem these
notes. The Nation profted by the
whole Of the difference between market
value of the bullion and the coined
value. Under the Bryan proposition OF
free coinage at the ratio of 16 to /,
the Nation would not have profted by
the difference between the market and
the coinage value of the metal. All
would have gone to silver owners. Under
the present proposition, as proclaimed
by the President, the seigniorage repre-
Senting the difference between the. cost
of the mass of metal and the value of
the coins struck from it will be divided
between the Nation and the silver
owner. The ratio between the new
price of gold (s34.O6j and the new
price Of silver GAS cents) amounts
to about SO to /.
The fact that the President has de-
1ayed until the eve of the opening of
Congress his proclamation regarding the
London Conference agreement on silver
is regarded in some quarters as a move
to head off the drive for more radical
legislation concerning silver or fiat
money when the National Legislature
assemblies January 3. There has been
a growing demand in Congress for in
flationary legislation, and the sup
porters of bi-metallism with silver COIN
age free and on ratio of sixteen Cor
- 1va vol 70 hoH
been clamoring for immediate action.
Indeed, the prospect has been that the
main fight for further imitation of the
currency would come over silver, with
fat money pushed into the background.
Supporters of bi-metalliSm and free sill
yer are inclined to believe that the Pres
ident's latest move may retard favorable
action on silver measures that are to
be presented to the Congress. They in
sist, however, that in the end the op-
Grafton of the London agreement will
not fill the bill, and that eventually the
country will come to bi-metallism. They
contend that what the President has
done SO far is merely to seek to stabilize
VIC PIANS VA oA'CA do o SSAAAAAA0NA"J ~
he would the price of wheat, for ex-
ample-and that what is needed is
affirmative action stabilizing the value
of silver as money"
Those who still retain the Sound
money beliefs which swept the business
world of America in the presidential
campaigns of 1896 and 1900 are placed
by existing conditions in a dilemma. AS
a rule, they desire earnestly that the
Presidents campaign for national re-
covery may succeed with use of what
ever remedies he may adopt. They
hope that the remedies chosen by him
for experiment will involve a minimum
of injury to be later suffered by the
Nation after the immediate cure Of de-
preston has been effected. In other
words, they yearn for national recovery
through the other potent remedies that
the President commands with minimum
imitation, depreciation or debaSement
of the currency. They are quieted
in expressions of protest by fear
that they may really retard ma
tional recovery by impairing general
confidence in the Presidents leadership
and by the threat that if they complain
too vigorously of moderately controlled
infation they will bring upons them