Jan, President Roosevelt has shown the American public that he and the bankers are on better terms. He has even talked of ce-operation between his Government and that depressed class at which every finger of scorn has been pointed during the hectic ecstasy Jaunching the New Deal. Now ce-operation is not one-sided. At Toast it should not be. So, presumably, the President, whether the Silver Senators like it or not, will occasionally give heed to the silver wisdom of the bankers. The bankers have views on silver pur~ chases. Those views probably coincide with the conclusions form= ed by such unassailable documents as the annual silver report which Messrs. Handy and Harman have just published in accordance with their usual practice. Reuter's summary of Messrs. Handy and Harman's views is worthy of attention just as this moment when President Roosevelt. may be confronted by yet another move from the silver-producing interests. The President has rightly declared favour of "nelghbourliness" for the guidance of America's foreign policy. He has also modified his previous hostility to banking susceptibilities, Therefore, he may be inclined to take note of Messrs. Handy and Harman's frigid comment on China's export tax:
Although the view of the Mints ter of Finance is undoubledly true that controlled exchange will tend to stimulate the export of! Chinese commodities which curtailed by rising silver prices, nevertheless this tendency' can only become an actuality to the extent that the rest of the' world is ina position to buy China's products. "But since such. purchasing power 1s still largely lacking, it would appear that _the Chinese trade balance would adjust Hselt cly a decrease in imports. If this deduction, based on China's continuance of protective exchange control is correct the net result of raising and maintaining silver prices above the level of commodity prices generally will be the Ampairment of China's purchasing' power.
'This journal takes no particular' credit' for having consistently pointed cut this logical effect of artificial enhancement of the price of silver in the present state of China's trade balances. satisfied to observe that the American Government is not without authoritative information on the subject.
In November last the National City Bank of New York was most outspoken in advising American opinion of the effect of the United. 'States' purchasing operations on. China's "monetary system. After pointing out the significance of heavy exports of silver from China, following the appearance of the United States in the market as a heavy purchaser of silver, the Bank remarked:
Loss of silver from China hae the same effect upon the Chinese economy that loss of gold has upon countries on a gold. basis, foreing a contraction in the! volume of credit and means of! payment, with disastrous effects! upon business and prices......In China, as elsewhere, 1 rising currency' means increasing diftculty' In selling goods abroad and deflations of all internal costs and prices.... While a high price for silver might temporarily increase China's ability to buy foreign goods by enabling her to export her holdings at a profit, this could goon for only so long as the possessed stocks of the metal to spare.
This summary of the situation has been recently extended by the same Bank's return to the charge fu its January bulletin. There it ts bluntly stated—according to. Reuter summary—that it the price of silver continues to rise the outcome {s more likely to be a smaller rather than a larger United States [fade with the Orient. The! bulletin also roundly described the United States silver purchase pro-somme as Antagonistic to the interests of China, contrary to the object the London Sliver Agreement and Also contrary to. the purpose nounced by President Rowevel! ratifying that agreenient, to "augment the purchasing power of the peoples of the silver, using This view will, no doubt, nave been ruefully ' studied by the members of the Trade Commission which is shortly to arrive in this country from the United States of America. Tt carries all the more weight because current market reports have unfortunately endorsed the warnings sounded by the National City Bank two months The Handy and Harman Report Matters none of the theories so assiduously advanced Wy the silver-producing interests. It reveals the uncomfortable fact that India and China were on balance actually sellers of silver during 1994 to the extent of 15 million and 200 million ounces, respectively, 'The United States of America, while putting forward a plan for the stimulation of silver production within its own borders, actually bought over 317 million' ounces—and that at the higher prices induced by its own legislation—as against 25 million ounces produced in: the country. Such an outcome of the silver purchasing programme can hardly be regarded with enthusiasm. As, moreover, it seems definitely to have Imposed restrictions on the Eastern market for American goods cannot acquire merit as an instrument for the recovery of trade. Mr. Roosevelt's. new "alliance" may induce him to pay greater heed to the opinions of banking interests in framing his policy as it develops on the "trial jand error" method. It would be surprising if Professor J. H. Rogers, who visited China on' his behalf }last_ summer, did not give him. chapter and verse to substantiate the representations which, it is elleved, Chinese spokesmen have again made in this regard. Those views will probably tally closely with the deductions drawn by the Handy and Harman Report and by the National City Bank of New York. So far as China's position is jeoncerned it is clear that the balance of trade must be redressed the normal restriction of imports pending further facilities for deve-Hoping exports. While that process 's" permitted to come gradually into play it is entirely desirable that confidence should be generated rather than excitement induced by monetary disturbance. The system here is too primitive in its working to stand the application of artificial remedies whether of respiration or inspiration. It is to be hoped that that consideration will force itself on the attention of the authorities at Washington, more especially since it finds firm support from responsible banking opinion.
Text read from the printed page and cleaned; old type leaves the occasional error.