Evening star., 1938-09-12
TRADE WATCHES
j. s. SILVER PLAN

Nation Resumes Buying OF
Chinese Supplies in
/, Large Amounts.
BY the Associated Press.
NEW YORK, Sept. 12-With the
United States Government store Of
silver now amounting to 2,409, 1000, 900
ounces, or about one-half of the total
world supply of monetary silver, the
trade here watched with interest re-
sumption of buying of Chinese silver
in large amount during the past week.
While Government officials have
not given the trade any indication OF
its future plans, informed sources
anticipated no likelihood in the near
future Of curtailment of Government
purchasing policy.
Recent buying of silver by the
United States Government from for
eign governments was estimated as
follows for the four months past:
Spain, $2,230.5O0.
Mexico, $11 ,369,285.
China, s34, 4,301, 1903.
In addition, there is impounded in
the Federal Reserve Bank of New
York large amount of silver in the
form of 5-peseta pieces which was
to have been purchased from the
Spanish Loyalist government, but
which has been the subject Of litiga-
ton instituted by the Franco govern
ment. Termination of this litigation
presumably would be followed by fur
ther purchases of substantial amount.
One-Fourth in Silver.
In each Of the three countries men,
toned, United States Government pur-
chases of silver have made up a sub
stantial part of the credit established
here for national use-which in the
case Of China and Spain including the
requirements of nations at war.
The Gold Standard Act of June,
1894 establishes as the United States
Governments ultimate objective" to
have one-fourth of the value Of its
monetary stocks in silver.
On this basis trade sources recently
estimated that the Government must
still acquire about 30,000,00O ounces
to reach the level of more than
four and a quarter billions monetary
value Of silver to make up one-fourth
Of the gold store.
If the Government continues to tina.
point it would have between two
thirds and three-fourths Of the esti-
mated total world monetary supply of
silver. (However, it is believed pri-
vate boards about equal the world
monetary supply)
India in late months has been the
chief foreign buyer besides the United
States for subsidiary currency require
ments and CubA has also been q
recent buyer.
In general there is cleavage of
opinion between Wall Street bankers
and metal trade sources as to the net
effect Of the Governments program.
Course Is Unknown.
The program itself. as now being
pursued, has destination not known
either to trade or banking sources
here. Originally several factors were
involved Silver mining in the United
States. the international silver situa-
ton, the domestic currency situation
and foreign exchange, in which the
Government has been actively inter-
ested, presumably primarily as trade
factor
Newly . mined silver continues to
command premium prices in the
United States-64ls cents per fine
ounce. In the four years Of the silver
buying program, United States produc-
ton has more than doubled, world
production has increased about one
third. domestic use of silver for in
dustrial purposes has greatly increased.
Leading silver trade sources have
openly commended one phase OF the
Treasury's behavior as the worlds
largest purchaser Of silver-stability
OF price offerings. The world price of
silver now depends chiefly upon the
price paid by the United States Gov
ernment, and that price has been prac-
tically unchanged for some time at
around 43 cents, in New York.
The international silver situation
has ceased to be primary factor in
the Governments policy The eight
nations lead by the United States who
entered into an agreement for holding
or buying silver in 1888, allowed that
instrument to die quietly with the year
1887.
The remaining actor involved, heavy
buying and storing Of silver in one
fourth ratio to gold as provided in
the 1884 Gold Standard Act, is one
which has caused some criticism on
the part of Wall Street bankers.
The Governments venture into BIZ
metallism in the past few years, they
contend, has proven" its "unwork-
ability" Supporting this argument,
the bankers point out that China,
last major nation on the silver stand
ard. abandoned it in 1935-one year
after the United States silver-buying
program was begun-in favor of man.
aged currency; and that after more
than three years of experimentation in
the field, the othex seven nations who
had agreed to support silver, dumped
their purchases on the world market
now supported only by the United
States.
Some trade and banking sources
here speculate upon the possibility
that there may be further reason
for the Governments policy, not as
yet disclosed.
For example, it has been suggested
that possibly the United States, in
control for the first time in its his
tory lof all the main media for for
eign exchange other than that based
on the principle Of simple barter, may
be in position to offer especial in
ducements to countries entering into
trade agreements such as the admin
istration is at present negotiating.
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