Evening star., 1934-07-08

until the stocks of silver reach this
one-quarter proportion. The silver
so bought is to be retained in the
Treasury and coined into dollars or
kept as bullion. The silver will be
paid for at the market price with
silver certificates. The Treasury Is
authorized to commander all silver
in the country.
There are two minor provisions
demanded by the administration. One
limits the price to be paid for stocks
of silver held in this country on
May l to so cents an ounce. The
other taxes future spectators profits
so per cent The time of purchase
and the amounts are left to the
Treasury.
This law Is a monetary paradox.
1t proposes to buy 35 cents worth Of
non-monetary bullion, no more a
money material than zinc, coin it,
call it a dollar, issue a dollar in paper
money against 1t and pretend that
the 35 cents worth of dead metal in
the vaults is a dollar reserve. 1t is
to continue this absurdity until the
quantity of these so-called dollars is
equal to one-third of the gold dollars
in this country. Each silver certih-
cate issued will buy at present prices
enough foreign bullion to make al
most 50 In silver dollars. One of
the dollars must be kept against the
outstanding certificate. The remain
ing bullion can be coined as profit
to the Government and certificates
issued against the coins.
The number of dollars necessary to
make the one-fourth proportion Is
unpredictable. Under present con-
ditions it would be more than 2,OOO,-
900 900. The dollars necessary above
the present holdings would be about
| 500 .0O0. 900. The dollar certificates
necessary to purchase this amount
would be more than soc, 100000. But
long before this vast accumulation
could be achieved, the price Of silver
would be mounting rapidly, and the
number of certificates issued would
increase correspondingly. The theo-
retical limits of new silver certificate
issue run far about 100000, 600.
Financia! opinion holds that even
issues Of this volume would not seri-
ously initiate the currency, since there
would be a corresponding withdrawal
of Federal Reserve notes. For the
moment this is true, as there is an
excess of credit That it will be true
in the future is extremely doubtful.
Opinion Divided.
Expert opinion on this queer meas
ure Is greatly divided. The admin
istration held out for weeks for a
"permlssive" law, but had to sur
render to a measure directing" silver
purchases. But the times of purchase
are left to the Treasury. Some COM
mentators believe that the admins
tration will let the measure go by
default. having accepted it only for
political purposes. Others believe that
the purchases will be just enough to
provide a steady market for silver.
This view is mistaken. Any one
who thinks that interests strong
enough to force this law on the
American people will permit it to
become a dead letter is mistaken.
Even if the law is ignored, its effect
is still serious, for 1T adds one more
currency law whose operation is
shrouded in the mists of uncertainty.
Recovery is already wandering about
in an impenetrable fog of currency
legislation whose meaning no man
knows. In actual operation this
new measure will weaken the already
mutilated and suspended gold stand
ard, postpone the return to a real
gold standard, increase the liability
of the Treasury, eventually initiate
the currency and incidentally raise
the price of silver bullion. That pallid
political courtesan, silver. Is still with
us. as for more than half century
past,