June 16. is a matter of regret that a portion of the debate on the British Budget proposals, including the formation of the Exchange Equalisation Account be-ise of its lenwth—occupying y pages of Hansard—cannot receive all the publicity to which its importance would appear to entitle it. There are, however, certain considerations—arising out of the amendment, proposed but not adopted, empowering the government to use some portion of the £160,000,000 of the Fund for the purpose of purchasing, silver as well as securities, notes and coins based on silver. The proposer, Mr. L. $, Amery, in ex-Plaining' the objects of the amendment, emphasised that it was not sought to pledge the government to any form of bimetallism, but to extend the object of the Fund, from the maintenance of the stability of currencies attached to. sterling rather than gold, to the maintenance of stability between sterling and silver currency, an infinitely smaller problem than in the case of gold using coring ties, The amendment in other words was designed to enable the Fund to do something to correct the very serious and undue fluctuations in the silver price of sterling, or the sterling price of silver, during the past two or three years. Mr. Amery contended that the' fall' in the price of silver had not been the mere casual result of economic circumstances, it had Rot resulted from a glut in the Production of the white metal from the mines; on the contrary during the last ten years there had been an actual shortage in the production of silver to the extent of 328,000,000 ozs. The depreciation, Lo argued, was the result" of artificial government action, commencing in 1921 with the decision of Great Britain to debase its silver currency with the result that 100,000,000 ozs. Were thrown on the' market. Britain was followed by France and Belgium, and other countries the Latin Union which got rid of their silver coinage to the extent of another 100,000,000 ozs. aluminium. Five years ago the Government of India decided to Jgo upon the gold bullion basis heading to the sale of 83,000, J000 ozs. and the possibility Jof a reserve of 400,000,000 jozs. being sold if the policy had been fully carried out. This position was further accentuated when the government of French Indo-China sold less than 100,000,000 ozs., that the sale of government silver counteracted and obscured the actual shortage and brought bout the very serious fall. Mr. [Amery's suggestion, though he {did not contend that it should be done, was that if ten per cent. lof the fund were used it would more than suffice to buy up the Iworld's silver production for the jeurrent year, probably double the price of silver, and perhaps restore it to the same level, if not higher than, it was in 1928-
On the face of it it is an attractive thought that by the expenditure of a mere £16,000,000 such complete change could be effected in the price of a Jeurreney commodity which has been causing so much heart-mourning of recent years, but the Proposer of the amendment of proposing mandatory resolution that such should be done, but that the government should be in a position to do if the deliberations at Ottaws indicated that such a step was desirable. But the purchase of a year's output of silver, while it might increase its price and leven, stabilize its relationship to gold—a axvelopment which it is permissible to doubt—may not the unmixed blessing for British trade in the Far East which Mr. Amery contended it would be. On this point the following extract from the speech lof the chairman of the Hongkong Shanghai Banking Corporation not inapropos "Many Chinese as well as foreigners hold the view. that the stabilisation of the rate of exchange between silver and gold would be a mixed blessing to China and that a sudden artificial would have extremely harmful Tt is, frequently argued in the purchasing value of silver would render China a better customer of the world's goods. This is true to the limited extent to which silver might be brought out of hoard for the purchase of foreign prod but... China, like all count Duys her imports by means of her exports, and it is upon the quantity of the latter, and not on the price of silver, that her capacity to buy from abroad really depends. Silver is merely the medium of exchange, the inginsic value of which is of parely temporary importance."
But there seems to be another Jaspect of the suggested purchase silver by the use of the Exchange Equalisation Fund which it would be unwise to disregard. If any such change took place as that hopefully suggested by Mr. Amery it might have two results, both of which might tend to restore the present status quo with regard to silver, jand might possibly render the situation worse. China is still jon a silver standard, much as some of its authorities would like to be on gold; India, though not lusing a silver standard, does use the metal asa store of value and the establishment of a year's output as a reserve by Great Britain might not be a bad movement, if it were not for the fact that the remedy might be only temporary on the one hand and might serve to entice the metal Jat present hoarded into the open market for the purpose of realise jing its artificially enhanced value. The danger would not, it Jseems, be obviated by Ottawa suggesting any bimetallic system for the Empire, thereby including China trade within its purview, for it is open to question whether the establishment of larly such system, owing to the premium on silver within the bimetallic area would not tend to drain all the gold out and all the silver in, which if it occurred would seriously upset the currency standard of the bimetallic countries. There is also danger be feared in the universal adoption of a bimetallic system,
Text read from the printed page and cleaned; old type leaves the occasional error.