In dealing with the sliver situation report it was ssu ise in the "price of silver would seriously affect the foundations of China's national economy, and that, If foreign countries, should adopt artificial means to this end,' the result would be much larger exports of the metal from China. he hope was also expressed that for the sake of China every country would observe the agreement for the Mabilization of silver adopted at the Economic. Conference Yet, within a few months after that conference, the silver-purchase programme was adopted by the U.S. Congress, The purchases of silver which the U.S. Goverment has Been making in the market have resulted in a wide disparity between the world price and the price in China; and, because of the profit obtainable from sales abroad, silver exports from China have continued fon a large scale, The widest disparity between the sterling exchange Quotation in' Shanghai and the London price of silver occurred in November, and amounted to 3.9104 pence, as compared with a disparity In January of only.1789 pence. From July to October inclusive there was not export of silver from China amounting to over $200,000,000. The National Government, in order to prevent a crisis and further exports of silver, introduced a duty and a variable equalization charge on silver exports as from October 15. Th were considerable differences of opinion regarding this measure. Those who approved of the step maintain-that, if the US, silver-purchase policy temined unchanged, China's silver holdings would be completely drained away, and that a continuance fof the outflow of silver would result ina financial crisis. Those of a contrary opinion argued that, if China should attempt to devalue the dollar or place restrictions on silver movements, the hoarding of silver would be encouraged. T: was said that unless there was free movement of silver there would be no inducement for foreign capital to come to China for investment, and, because of fears of a devaluation' of. the currency, there might even be a fight of foreign capital already in China. Furthermore, the fear was expressed that the higher the equal ization charge was raised the greater would the outward smuggling of silver become.
However, since the imposition of the export duty on October 15 silver exports from China have been great reduced, the net export in November being $11,327,850 and in December $11,974,659. For the month of August the net export was no less than $79,000,000. It was, in addition, found unnecessary to raise the] equalization charge owing to the lightness in the money market and the higher' level of Shanghai exchange. The average equalization. charge was 7-1 per cent. in November fand 64 per cent. in December. The Smuggling out of silver was actually Rot as great as had been predicted. The greater demand for silver in the outports in November and December was due not so much to] hoarding as. to. requirements in connection with the marketing of agricultural produce. On the whole the Imposition of the export duty on silver has probably proved a stabiliz~ ing influence on the monetary ang} financial situation, If the ultimate object of the U.S. Purchase Act is to be accomplished—that is to say, if the gold and sliver veserves of that country are to be established on a three-to-one basis by the purchase of an amount of silver estimated to be at least 1,400,000,000 ounces—the export the total available silver stocks of doth China and India will be insufcient for this purpose. Tt has been argued by those in favour of a higher price of silver that this would increase China's purchasing power abroad; but that this is not so. is shown by the fact that, despite the higher price of silver last year, iment is so ignorant of China's position with regard to silver, and so. ill-Informed as to the economic situation in this country, that they do not, understand the" source of China's purchasing power, or is it their @eliberate intention to force up the value of China's currency in order to decrease our exports and facilitate American competition in this market? The National Government has more than once made representations to) the US. Administration explaining the harmful effects of the silver~ purchase policy on the financial situation in China, Fortunately there are indications that the U.S. Government's policy is gradually being modified. "It is earnestly to be [hoped that the U.S. Legislature will appreciate that a rise in the price of silver will be beneficial to China a silver standard country only to the extent that commodity prices also rise, that no stability in the price of silver can be possible without the ce-operation of silver-using countries, and that U.S, trade in the Far East will be benefitted to a much greater extent through a strengthening of financial conditions in this country, which has a population of over 400,000,000, than through the present silver-purchase policy.
Text read from the printed page and cleaned; old type leaves the occasional error.