Evening star., 1934-08-10
RY PROF.. WALTER z. SPAHR.

NEW YORK. August ls.-The
President OF the United States made
history in issuing an executive order
providing for the naturalization of
silver. Never before. apparently, has
any nation ever nationalized its silver.
The experiment and the reasons for
It are unique But the consequences
which may flow from such action
will be of vital Importance to every
person in the United States.
Section of the silver purchase act.
approved June l9. 1884. authorizes
the President to nationalize silver
that is to require delivery to the
United States minis of any or all
silver by whomever owned or pos
sessed. The naturalization order
specified that all silver shall be turned
over to the Government within 90
days after August at a price of
5O.01 cents per fine troy ounce.
Price Is Significant.
The significance of this price will
be appreciated If it is understood
that. when the price Of fine or pure
silver in a dollar is worth its face
value, silver bullion will be worth
$l.29 per fine ounce in the market.
Thus the Government is taking over
silver at a price just slightly above
the market price of silver (49.25 cents
as of August 81, but at a price far
below the nominal monetary value of
$1.29 per ounce and below the pre-
vailing 641z cent price of newly mined
silver, which will be purchased at
the market price.
1t was reported that the Secretary
of the Treasury gave as the reason
for naturalization the rising cost of
new silver and because the Treasury
could not pay more than so cents per
ounce for the metal"
Section of the silver purchase act
is clear in stating that no purchase
of silver shall be made in excess of
the monetary value thereof (Which,
presumably, means at the market
value, but not in excess of 1929 per
fine ounce), and that no purchases of
silver situated in the Continental
United States on May l, 1884, shall
be made at a price in excess of so
cents a fine ounce. Although the law
authorizes a deduction from the So
cent price of silver of enough to cover
various mint charges, the Secretary
apparently has decided to add such
expenses to his 50-cent price despite
the fact that the act says he cannot
pay in excess of SO cents per fine
ounce.
Discrimination Possible.
It seems quite clear that silver Is
nationaliZed now so that the holders
Of silver as Of May /, 1884, will not be
compelled to sell at loss to the Gov
ernment. But the Governments ma
tionalization order applies not only to
the local supply as of May /, but to
any and all silver in the United
States except newly mined silver,
foreign-owned silver, and silver IN
fabricated articles. Apparently the
Government remains free to purchase
foreign and newly mined silver at the
market price as it chooses. AS a con-
sequence. domestic sellers at 50.0l
cents may feel that they have been
Disseminated against.
Section 3 of the silver purchase
act authorizes and directs" the Sec
retary of the Treasury to purchase
silver, at home or abroad, until our
silver stock equals one-fourth the gold
and silver stocks combined. II the
Secretary carries out the law, he must
purchase enough silver to give us
approximately 26 billion silver dol
lars The aggregate amount OF sill
yer delivered to the mint service Of
fees in 1888 was only about $500, 900
ounces, and the present supply OF sill
yer dollars in the Treasury-506
millions only about per cent OF
the gold supply. Therefore, the Sec
retary must purchase huge amount
of foreign silver If the terms of the
law are fulfilled. There seems to be
some question, however, as to whether
the law merely authorizes or directs
the Secretary to carry out fully the
terms of the act.
Some question also arises as to
whether silver certificates are to be
issued at the rate of one silver dol
lar certificate for each dollars worth
of silver bullion purchased at 50.0l
cents per ounce, or whether they will
be issued as though the silver bullion
actually were worth S12 per ounce.
Thus far our silver certificates have
been issued against silver as though
the silver were worth $129 per ounce,
even though it may have cost the
Government much less. The profit
to the Government has been carried
under the heading of seigniorage.
In other words, back of each silver
certificate issued in the past has been
standard silver dollar of bullion
weighing 412l2 grains Of standard
silver s-10 fine. regardles of what it
cost or actually was worth in the
market.
It IS understood that the Secretary
of the Treasury proposes to issue the
80 m