Show A double siver silver ratio rat 10 0 BY MURRAY SCHICK I 1 have submitted to the treasury department at washington a plan whose adoption by the united states government would undoubtedly stabilize the market value of silver at somewhere near its present price and probably would zad advance vance the price gradually ra dually to a higher level I 1 realize at the outset that the plan will not appeal to the consumer who looks back to the long period during which silver was quoted at an average of 55 cents an ounce nor to the producer who looks back still farther to the years when it brought an ounce I 1 can only ask these people to divorce their thoughts from their wishes and look facts squarely in the face some of us have a feeling that the ratio of sixteen parts silver to one part gold in coinage was divinely established and that it is sacrilege to v alue the two metals on any other basis but an unregenerate world has not been converted to this doctrine and pending its conversion we shall have to fall back on commonplace mundane arguments such as utility value and supply and demand we may start with the premise that the buyer of silver is not lot going to pay a frac salt lake city paper read before of western i mining operators meeting salt lake december 4 and 5 1917 held at tion of a cent more than lie he must to fill his requirements and the seller is not going to take a fraction less than lie he can force the buyer to pay it may be said that the buyer would do better in the long run to pay a liberal price and by encouraging new production prevent higher prices in the hy future but he be will not heed this counsel couns 1 any more than the average producer will heed beed the suggestion that lie he go slow on production when prices are high in order to keep thern them high both parties will come ba back with the he argument that prices will aNe average rage about the same in either case and itlie ine surest way is to get them while the getting gettLY 19 is good we are forced to the fundament fundamental ai truth t that hat permanently higher prices for this commodity can be secured only by decreasing the supply or by increasing the demand the normal supply is not decreasing such a decrease as is seen in the worlds production during the lost last few years is due to the wars in mexico and europe the production in the united states has in creased considerably even though the american producers producer should curtail production by agreement which the law forbids or otherwise the benefit would go to foreign producers not no arties to the agreement any plan for irice ce maintenance to be workable must illow ow for a progressive increase in the out lut t of th the metal supply must be regarded s out of 0 control J the question narrows down to demand deman I 1 can be made to grow faster than aply up ply i a progressive increase in price is certain ertain ard rd continued long enough the ex ess ss of amand would bring us to the his aric ric prie hrire ratio of sixteen to one some producers have a good deal of faith ith in the industrial demand they are enthusiastic thusia over the new market created by ahe the moving picture business it is important ta nt for it not only consumes twelve to fifteen fifteen million ounces annually but destroys all it consumes the chemist is also a good customer of the silver miner and jewelers e use quantities of the metal for table iett ware watch cases and ornaments but gare yip sitter after fter 1 all is said the arts and industries do 61 not 0 t offer much of a field for expansion the war has reduced the worlds industrial iEn to consumption from 50 to 60 per cent according 9 to official estimates we cannot find fet touch uch encouragement in a market capable w cf such shrinkage as this at its best it is may amay take care of half the annual production iti on of silver at its worst it will absorb ill only about one third of the output 4 the determining factor in the price of silver is and will continue to be the quantity 0 used as a medium of exchange either directly from hand to hand or indirectly as a reserve for the redemption of paper currency y V at present silver does not become a me daum indium of exchange until it is coined into J money oney and in gold standard countries its value alue even after coinage depends not on th he e value of silver but on the quantity of gold id tile the government will give in exchange jor to r the silver coin i our government buys silver as it buys copper opper for pennies and paper for currency ls s any consumer buys any commodity as rt cheaply r cheaply as possible it puts its stamp on he I 1 e face and its credit at the back of the 13 arfi F ilver and grains of silver equal in purchasing 4 u hasing rc power twenty six grains of gold h he e difference in tile the value of the silver be pre re r and after this operation is known as a ie e when bar silver is 50 y ints an ounce the on a silver ia 01 ilar alar is 61 cents with silver at 1 the V igni orage is 23 cents when silver is low the nation gains and etie ea e producer loses when silver is high the gains and the nation loses for yle icae il nation to waive its profit on silver coin 0 elge e would be to subsidize the silver mining 01 riidu id stry and subsidies are frowned upon es y those who do not get them athe the problem before the silver man mail is to 1 hect an arrangement that will align the ir merest t or of the government with his interest jeto oil p must have a proposition that will make it pay the government to act with him instead of against him under the arrangement I 1 propose the government beside enjoying its would share with the producer in the profits accruing from higher prices for the metal would strengthen its financial position in the world and would stimulate the foreign commerce of its citizens As business is now conducted silver is not employable as a medium of exchange until it is coined and when it is coined it loses its value as a commodity because it cannot be shipped abroad without forfeiting the premium it commands as coin on leaving the refinery gold even as bullion enters at once the channels of trade and will make a purchase or cancel a debt in any part of the world silver bullion goes to a warehouse and has no utility until it is purchased for industrial or monetary purposes stop and analyze the reason for this discrimination between the two metals both are used as money in every country silver silve r more extensively than gold why then is it not possible to pay a foreign debt with a bar of silver as well as a bar of gold why cannot the united states support the value of its foreign exchange by exporting silver if convenient instead of gold there is just one reason the price of gold is always the same and the price of silver fluctuates from day to day give silver bullion a fixed price no matter what that price is and it will be accepted as readily as gold in payment of foreign accounts or if its price is not absolutely sol stationary the more stable it is tile the better will silver serve as a substitute for gold in making international trade settlement tl in that degree the use of silver will swill increase and the demand for go gold diminish there should be a good profit in silver bullion as an international exchange i medium n e but tile the miner cannot get that profit alone he can furnish the silver but he needs a strong partner to hold the price steady the best partner lie he could get would be tile the united states of america the trend of silver prices is determined by supply and demand but tile the daily jumps and drops are due to speculation by stopping slopping speculation a stable market would encourage use use would promote demand and demand would cause the general trend to be upward I 1 maintain that the government should buy with silver certificates all the silver tendered at its mints and assay offices and sell for silver certificates all the silver bullion desired for industrial export or other purposes the price to adjust itself automatically mati cally with the growth or shrinkage of the stock on hand thus if fifteen to twenty million oun ounces ces were the normal stock the price would rise when the stock fell below fifteen million ounces and fall when the stock rose above twenty million it would rise again if the stock dropped below fourteen million and fall again if the surplus rose above twenty one million and so on this arrangement need not disturb the present coinage ratio in the least coined silver would steil still be worth cents on the dollar but we might change the inscription on the silver certificate to read payable to bearer five dollars in silver coin or bullion the arrangement proposed would be as advantageous to our commercial as to our mining interests trade balances with sil ver standard countries could be settled directly with silver bullion instead of exchange on london which must be paid for in gold our gold stock would be available exclusively for settlements with gold standard countries with silver doing some of the work that has been done by gold there is no question that the demand for silver would increase and that its value measured in gold would likewise increase I 1 do not believe the demand for silver would be confined to the silver standard standard countries for some time after the war most of the european nations will be on a paper basis with gold and silver coin at a high premium their commercial interests will suffer severely until specie payments are resumed and the parity restored to accomplish this it will be necessary to coin vast quantities of silver as well as gold it will be this demand in my judgment which will advance the bullion ratio between silver and gold to t 0 the present coinage ratio in the united states and make every ounce of silver mined worth one dollar and twenty nine and oneA one third hird cents per ounce |