London, Sept. 29.
The decline in the price of silver, which is apparently continuing, is beginning to preoccupy trade circles even more than financial interests, Within the last few days, according to a telegram from Hongkong, the Government of India is negotiating for a further sale there of an unknown quantity of silver. Inasmuch as the Chinese!
Government has asked for the ce-operation of the British "Government in reference to the sale of silver by the Indian Government, it is useful to point out the exact position. China's intervention is of course due to the serious effect_on British China trade of the fall in the price of silver, which also increases the, difficulty felt by the Chinese Government in meeting its foreign obligations which are payable in gold.
The control of the Indian currency is still in the hands of the Indian Government, and in accordance with the recommendation of the Royal Commission on the Indian Currency System which reported in 1926, steps have been taken recent years, as opportunity off ed, to dispose of moderate amounts.
ver ina manner which would Toast disturb the market, At that is the view of the Indic Government, which claims that the sales of Indian Government silver have been effected with discretion and regard for the other interests involved, although according to the telegram already published, Delhi is apparently ready to soll'at 1/8 below the market price, whereas a potential purchaser (unnamed) demands 1/4, Indeed, Sir George Schuster, in the Budget debate in the Lo tive the ago by suggesting that Great! Britain was primarily responsible, since some years ago the State decided to reduce the silver content of our subsidiary coinage to one half, and that every other Power has more or less followed suit since that. date—an assertion which is quite correct and does explain the pro-sent non-absorption of silver by Governments of the world. He ro-garded the Indian Government as being particularly responsible by solling at low quotations to the-loss of both the Indian Government and the Indian people, with the added result that "the buying power of such countries as India and China has been very greatly impaired, with the result that unemployment the manufacturing districts, particularly of Lancashire and the Midlands, of this country has been largely increased." Of course the Indian Government has defenders Samuel Montagu & Ca. ional position is well: known, remark "Countries finding it, necessary te ye ad established upon a sound Indian Government the" proceeds In. the. purchase 0 terest bearing securities than to bold relunaant liver coin to ug purpose.
ould be pointed out rom this the very fact of such a potential supply must be accounted factor. When. with their consequent Trade had decided be Trust be borne following transactions of his Government iver to date:
"The total amount of, silver sold inca' the." Currency ° Commission's Report to che end of February' 1330, panerg. milan The The average fhlver hae been sold. works out mee. That Hatement fil inthe Seat place, that 0 Governtient have. not been market during "the whole.
Feeent. period "of weakness: tino indfeote-that, our total Sunt under 68 milton ounces ov three" oF four years, ha the extent Iver, but according experts the percentage of fall so due cannot be assessed at higher than 80 per cent. The remaining percentage is of course attributable to the over-production of silver, which is now worldwide, and which is of course mainly due to the fact that silver today isa by-product and is therefore automatically placed on the market asa result the treatment of other metals hare needed more especially for commerce. " Ben at the present low price of silver it pays indus trial concerns treating thes bass metals to continue to produce silver, whose economic price of production is generally estimated at 10}d. Silver has still some way further to fall before it reaches this This statement, by the way, docs not deal either with the speculative fall of silver, which has occurred mainly since Sir George Schuster spoke, or with the price at which the Indian Government is now golling. China resents, too, that sales should be conducted, when the market is on a continuous decline.
Moreover, it is contended offic ly, on behalf of India, that in 3 of the sales that have been effected at various times, the silver holding of the Government of India has been increased by the reflux of currency from hoards or circulation, and the holding ut the end of 'August 1030 exceeded Rs. 120 crores (1,200,000,000) as compared with the' figure of Rs. 85 crores '(850,000,000) hold when the Eu: rency Commission prepared the report, As the silver holding thus continues greatly in excess of requirements, it is contended also by the Indian Government that there thas been no disposition on its part to dispose of surplus metal undue rapidity. no question as to the purchasing power caused by the fall in silver prices, but there is grent difference as to the apportionment of the re. sponsibility for the fall. Mr. David Landale, whose authority on China fade is unquestioned, really initiate ed a controversy some three weeks figure, although it is believed we are still very far from reaching the bottom price.
The position of the Chinese Gov: ernment is quite natural. It is perfectly true that the Nanking Government controls the importa: tion of silver, and presumably there: fore if this control is enforced the results should be more or less sati factory. It should not. however, be forgotten carried on a preciation of silver outside Chinese territory must produce firstly a disastrous effect on British export trade in the Far E ly undesirable re-a port trade with Eh vious that any continuous fall in silver, regular or irregular, mus! influence contracts for imported goods Which may be placed in coun-outside China. Unless there is scrupulous honesty on the part of the consignees of goods forwarded under a contract effected by the fall in the price of silver, there may be repudiation or attempts to alter terms and certainly delay of payment due to the desire of the Chinese buyer to await a more favourable time for unloading.
Probably it is the older-established firms in China who are rather fosiing the prejudicial effects of the 3 fall in the price of silver. They. have to carry out their contracts
Text read from the printed page and cleaned; old type leaves the occasional error.