THE ups and downs of silver have been more marked than those of any other commodity. Silver led the way in the world decline of prices. Recently it has shot up faster than any other. In the current upturn, as in the previous downturn, economic influences are deferring to such mighty political forces that the metal has become more a football of international politics than an element in world commerce. Silver has turned completely irrational.
Today the chief movement in silver is the political drain on China's stock. The last time this writer commented on the subject in this journal he was describing a political influx of silver into China.[i] That was in early 1931. China had already displaced India as the world's greatest silver consumer. It was the recipient of two flows of silver. As the only great country left on the silver standard, it was taking silver in payment of its consistent balances against the world, just as gold-standard countries take gold. Moreover, it was absorbing surplus as well as trade silver. The surplus was derived both from the progressive debasement of silver coinage in European countries as a result of the high wartime price of the metal, and from the demonetization of silver in the Oriental world. India's decision to go on the gold bullion standard in 1927 made that country the chief market factor. Left-over silver was being dumped into silver-standard China in such quantities that in 1930 the Nanking Government had actually put an embargo on the import of foreign silver coin and was contemplating the imposition of an import duty. This was the situation when the silver party in the United States suddenly conceived the notion of lending silver to China!
So quickly did the world situation change, however, that within a year China's balance of payments turned unfavorable. Consequently it was called upon to pay out silver on trade account. There was no question now of a silver loan to China. Just as China's trade position had
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