Show 4 11 im II I I M i M ali M im l 1 I mal V H I I l J I 1 t LM I 1 12 I 1 B M 5 M a n t t C 0 aft S I 1 international ASPECT OF THE SILVER SITUATION now york city N T Y march 10 1930 to the directors of american silver producers association mr W mont perry ferry president gentlemen you may be interested in reading a letter which one of the directors of the american amel smelling smelting Sm ting elting and refining company mr charles D hines has addressed to president hoover a copy of which has bm been sent to a number of senators mr hules hines as you may recall was formerly assistant secretary of pra the treasury later secretary to t the he president under president tatt then ar aft chairman of the republican republic n national at lonal committee and Is now republican ican national committeeman from t the be state of new york I 1 am sure that any suggestion or recommendation that ho he might make will receive very careful conal consideration dera on the part of those to w whom horn it Is sent certainly on the par part t of all who personally know him and hence know his big great ability and remarkably mar kably sound judgment yours truly P V 11 BROWNELL BROWNE february 7 1630 1930 dear mr president As a consequence ot the recent recession A on in the demand for silver and the su sudden drop in price a worldwide world wide condition has developed which in the judgment ment of economists and sliver silver producers produce re will not be corre corrected c ted until the problem has been studied and solved by a deliberative international assembly the price of silver has declined to the lowest level on record this depression puts a handicap upon all metals associated with silver in the ores in which they are contained A few years ago an exhaustive hau stive examination was conducted on behalf of a committee of the united states senate which brought out the fact that it Is not profitable to operate the silver of the united states those that produce silver liver almost exclusively if tl f t metal Is selling at less than 60 cent per bouce when the royal commis sic i iride ir ide its report in 1925 the price of was 65 cents per ounce for the five years there has been a r lual reduction in the price in 1926 lh average had fallen three cents and was then a trifle over 62 cents in 1929 it was a trifle under 63 cents cent and on the ath of january 1930 the drastic drop carried it down to a traction fraction less than 44 cents there are of course many mines la in which silver Is a byproduct by product the amount of it that Is extracted from a body of ore grades downward from a percentage that Is controlling to one that is incidental or even negligible but a large number of our mines are so dependent upon the silver content that they must discontinue operations unless the price of silver advances mines in which silver Is dominating ina ting and whose other valuable metals are minute are located in III nevada in colorado gold Is intimately associated with silver ores so much so that it is lor for the most part only obtained there through the ultimate process of refining but gold is less frequently found in alx combination with silver than silver is with the metals that do not enrich it nature too often fc forms an alloy in which the worth of silver Is diminished by being mixed with less valuable metals nevada u hilll III suffer more severely from the silver depression than any other Amerl american can state and unless there Is a sharp recovery in the th price it Is said that mines in that section section must shut down clown with the result that fully men will be thrown out of employment major reasons for decline pointed out tho principal cause of the decline in the price of silver prior to last autumn was the new policy of the indian government under which it has been selling its excess silver in anticipation of th the e adoption of a gold standard A secondary cause acutely affecting the demand was the discontinuance of the use of silver as subsidiary coinage in european countries as their currency beame stabilized but the abrupt drop in recent months I 1 is described bed to the unconfirmed rumor that chinn china is about to adopt a policy ichen a al with indias andias the kemmerer commission has been studying stud ying the subject of in coin connection ec with the proposed new system seste m of chinese currency the price reflects reflect s the apprehension of silver merchants and while it was precipitated in janus january ry by the action of astute oriental speculators there are influences that may lead to in an even greater depression the statement that the kemmerer commission will advise china to adopt the gold standard is without established authority its authenticity Is indeed somewhat doubtful and the findings of the commission are a matter of conjecture the conclusions may differ widely from the presumed intention to advocate an ultimate gold basis and the consequent cessation of silver purchases but even it if it should turn out that there Is no justification tor for the prediction as to china the fact remains that I 1 the diminishing demand lor for silver in I 1 india and on the continent will continue ito to bear down the price of the metal I 1 the people of china and india seem to have little confidence in banks for centuries it has been their habit to bury surplus earnings and visible wealth so that the vast treasure that india has accumulated in the form or of precious metals has disappeared as water does when it I 1 ti poured on sand it Is estimated that these two countries possess five thousand million ounces of silver the royal commission reported that india normally purchased annually about one third of the worlds production of silver since tile the adoption of that report it has purchased less than that percentage and the indian government has been selling some of the stock it had long been hoarding boarding china also normally purchases about one third of the worlds production of silver so that before this movement was accentuated the rest of th the e world combined consumed only about one third of the annual production stimulation of gold god usage will not at help i in what respect and to what extent win will the united states suffer it if both india ind china substitute a gold standard for a silver basis the answer Is that the united states Is restricted in production to about ten per cent of the worlds current output of gold and shiou therefore the stimulation of the use of the yellow metal will not A enhance nh ance our status s 1 in 1 1 1923 wo we produced fine 0 ounces u n c e s in a world total of fine ounces in that same year north end south america 1 combined furnished about one fourth of the world production on tho the other hand silver production by the united states before the agitation in india was begun was approximately 25 per cent of the worlds total and the sliver silver product ot of the western hemisphere which Is largely controlled by the united I 1 states was upwards of 85 per cent of the worlds production in 1929 tho the americas Amerl cas produced somewhat more than four fifths of the worlds total the americas Amerl cas therefore share in the output of g gold 0 1 d on only 1 y to t 0 the t he ex extent te n t 0 of f a about b 0 u t 25 2 5 per cent which would not atsa ris A with an lacre increased a s ed d demand e m a nd wh whereas r a s w we e a bhare h a r e in the output of suver silver to the extent of about 80 per cent hence the curtailment of silver mining will not have the compensating advantage of an increase in our gold production the difficulty la Is not alone the tact fact that there Is a diminishing demand of Amerl americas cas silver without an actual or prospective compensatory increase in gold production but it Is that no one knows where in the world the additional gold la Is to be found rn in a report released for publication on january 14 1930 mr albert H wiggin 0 f the chase national bank made the statement that there is enough gold in the world to do the legitimate business of the world at comfortable rat rates ot of interest there Is not enough gold to finance such a speculation as wo we have recently experienced and there Is not enough surplus gold to justify extremely cheap money at the present time in a circular ot of the national city bank of 0 new york issued at an earlier date it Is said A large share of 0 the worlds production of gold has been taken by india in recent years in the form ot of bullion although taken solely for ornaments and private holdings in the five fiscal years ended march 31 1914 the net imports of gold into india aggregated or an average of per year since 1913 the movement has been irregular owing to the war and the violent fluctuations of trade but in the calendar year 1925 it exceeded all records private imports of gold bullion into india rising to slightly above out of 0 a total worlds world a production of approximately the gravity of this movement is in the tact fact that gold taken by india does not remain a part of the worlds monetary stock as in the case of gold taken by any of the western nations the gold stock of europe and the americas Amerl cas may be shifted about from country to country and serve all countries continuously as a part of the worlds capital employed in production and trade these movements tend to maintain the industrial equilibrium and to stabilize prices in all countries in relation to each other the imported by india in 1925 did not enter the banking reserves ot of that country has not been devoted to investments or business purposes and lit in all probability has been lost to the monetary stock of the world at a time therefore when the annual supply of virgin gold barely meets the demand fits the requirements as a glove without w elasticity fits the hand band that demand in and Is to be still further stretched whereas the annual production beginning next year will be reduced let us examine the facts respecting the production of gold the stores ot of which are known and are by no means ble able the distribution of productive gold bearing deposits Is worldwide world wide alde russia held first place until california sprang into prominence by reason of the discovery of gold fields vastly richer than anything previously disclosed california was for many years chiefly known to the world as the region where gold was obtained in extraordinarily large quantities but soon australia became an equally important gold producing region at the time of their greatest productiveness the yield of california gold washl washings was said eald to have reached about sixty fe millions of dollars in value a year but russia california and austri australia all declined progressively find and I 1 in marked degree and africa tins has since supplied the world more abundantly than any other country except africa canada Is the only country whose production has increased the chief gold bearing locality is the west coast of africa gold Is both jn in debt derived from alluvial deposits and in veins of gold bearing quartz in the t h e mountains of the transvaal today that country furnishes 56 per cent of the worlds product president asked to help out oitt rad situation those who know almost all that Is known with accuracy in regard to the mineral resources say that no permanently valuable gold deposit has ever been discovered and that africa will pass the peak of productiveness in 1931 thereafter her yield will be sensibly lowered by degrees many mines of interest historically tori cally are economically of small importance at present gold deposits immortalized zed in traditions are not now worked because they became exhausted long ago mines of great antiquity have i been reopened and again abandoned there may be undiscovered deposits of the metal but if so the tact fact has eluded the industry and ingenuity of men for the whole world has been exhaustively ex explored I 1 have discussed the subject with many well informed men who are of opinion ithac that a further demoralization in the metals market could be prevented and pro bibly a very great improvement could be I 1 ejected it you mr president should see lit fit to take the tha initiative in arranging lor for I 1 an examination of the facts by fin an international I 1 ter conference or an interns international commission in the hope that the people may be apprised of the situation and that such conference or commis commission sion may propose a remedy t the immediate problem Is the serious I 1 I 1 a silver liver situation the lessened demand clemand for or which threatens loss of employment places a burden on other less valuable I 1 metals which must be enhanced lit in price tt if the workings of certain mines is to be justified and automatically increases the I 1 demand for gold which Is a restricted I 1 product atack A could stress the importance a e of retaining silver for money in status quo and at a somewhat higher price to do the essential mon money e Y work of the world it could state the essence esi sence of the problem and clarify current thought what are the estimated gold require ments tor for the next ten years what tire are the prospects for gold production in that period what Is the likelihood of gold appreciation in value there la Is another phase of the subject I 1 actively and widely under discussion that has large possibilities but with respect to which the assumptions have not been established that phase Is the economic disturbance that may result from the threatened deficiency in the amount of gold I 1 have secured the views of several sagacious men on this point and I 1 find they are somewhat divergent although it Is the consensus of opinion that the demand for gold will very shortly exceed the supply and that the world must undergo an important readjustment to avert appalling consequences mr george E roberts formerly director of the mint and now economist of the National City bank was the first to arv e any real attention to this menace he says that there can be no question but that so BO long as the worlds currencies and supply of bank credits aro are based upon gold reserves a restriction in the output of gol gold mus must t restrict the expansion of credit and that unless this tendency Is counteracted in some way will mate make itself felt in a declining trend of prices I 1 do not doubt that the banking organization of the world may be improved by cooperative policies so that smaller reserves will answer the purpose but it Is a serious question whether anything of importance will be done to that end until the real pinch of scarcity Is felt I 1 think that owen D young and other members of the young commission had this situation in mind in formulating the plan for the international bank I 1 know that J C stamp one of the british members of the commission la Is of the opinion that the gold situation Is so grave as to call cal tor for international ter national consideration and coop co op er aeration era tion atlon when wo we consider now how sharp has been the pinch of credit scarcity to in london in the past six months and how great was the anxiety that the bank of england should be able to assure a liberal portion of the weekly shipments of gold coming from south africa and how manifest was the disappointment week after week when these shipments were taken by foreign buyers how can we doubt that a steady decline in the south african production would have a depressing effect in financial and commodity markets the world over rn and other economists quoted mr stamps disquietude Is shared by continued on page two iiii I KIi 44 si ii I 1 i i i 4 mining matters batters j M M M M M 4 continued from page one J M english economist who holds that already the world Is feeling the effects of the loss of demand tor for silver and the corresponding internecine struggle tor for gold he says that the storm centers today neither in britain nor the united |