August 1921

936 FEDERAL RESERVE BULLETIN. AUGUST, 1021.

decreased, so that silver can be marketed steady market at a dollar an ounce, is likely to profitably even at the existing price. Produc- remain constant at least for the next two or tion in the United States, which is assured a three years.

SILVER PRODUCTION OF THE WORLD BY PRINCIPAL COUNTRIES. [In fine ounces.]

Countries. 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 19201

United States 57,137. 900 60,399,4001 63. 766,800 66,801,500 72,455,100 74,961, 075 74, 71,740,400 67,810,100 56,682,445 56,564,504 Canada 32.869' 32,740,748 31, 625,451 31,524,708 27,300,667 26,625, 960 25, 22,221,300 21,284,600 15,675,134 13,000,000 Mexico 71,372; 79,032,440! 74.640,300 70,703,828 70,703,828 39,570, 151! 22, 35,000,000 62,517,000 62,681,987 63,656,100 South America 17,416' 314| 14,433,9151 13980,88, 8 13,126,490 12,938,439 13,687, 464| 11, 15,451,300 15,561,000 14, 713,165 15,000,000 Europe 14;i52', 061! 15; 693, 366; 15 992,082 15,248,216 15,317,155 10,107: 556 511,900 6,871,700 4,899,618 5,000,000 British India 44, 772| 104, 323! 93,649 236,440 284, 628, 2', 068,700 2 240,500 2 165; 606 2,000,000 Australia 21,545, 8281 16,578, 421 14 737,944 18,128,577 3,520,274 4,295, 1,863, 10,000,000 10,000,000 7;430,7701 8,000,000 Japan 4,646, 160! 4,459, 087 4 932,852 4,649,910 4,649,910 5,120, i, 120, 111,700 600,400 4;800,000 5,000,000 Allother 3,694, 869i 2,751, 223J 4 540,688 3,724,614 3,981,564 4,197, 1,870, 082,500 509,600! 5:468,689 5,000,000

Total 222,879,362 226,192,923i224,310,654J223,907,843 211,103,377 178,850,500|156,626,521J174,187,800 197,394,900:174,517,414 173,220,604

1 Preliminary. DEMAND IN EUROPE AND AMERICA. indicate the points at which the coins would be melted with exchange at the June, 1921, level. Silver consumption in the arts depends to a considerable extent on its price and on general MELTING POINTS OF SILVER CURRENCIES. prosperity. During the war period, and espe- cially during the postwar boom, which was Melting point (price of silver per oz.). world wide in its scope, an increasing demand In U. S. money. Fine for silver in the arts was an element in Coin. silver At June, its rising price. Among the principal indus- content In local currency. At par (grains). 1921, rate tries consuming silver is the moving-picture of ex- of ex- industry, which, because of its striking de- change. change. velopment, caused an increased demand in the Dollar 371.25 1.2929 dollars silver market. The demand for silver to be Subsidiary silver 34.722 1.3824 dollars (dime). used in the manufacture of ornaments and luxu- Shilling: Old 80.7263 5.946 shillings $1.447 $1.124 ries, however, experienced a sharp decline, when New 43.6364 11 shillings 2.677 2.08 in June, 1920, the world-wide depression began 5-franc piece 374.22 7.234 francs 1.396 .584 1-franc piece 64.4286 7.45 francs 1.438 .602 to be felt. Mark 11.16 6.221 marks 1.482 .09 More important in the recent history of silver Lira 64.4286 7.45 lire 1.438 .371 prices were the developments in connection with silver coinage. At the outbreak of the war It will be seen that with currencies at the there was a large increase in the demand for June, 1921, level, silver dollars and subsidiary silver coins, partly because the general disturbed silver are far removed from the danger of the condition encouraged people to hoard silver, melting pot. The price chart shows, however, partly because the higher price level necessi- that for four months, November, 1919, to Feb- tated the use of more silver coins as pocket ruary, 1921, the price of silver was above the money, but chiefly because the armies, espe- melting point of silver dollars, though below cially those operating in the Near East, were that of subsidiary silver. British silver is now drawing pay in silver and spending silver money also far below the melting point. At the Jan- of the smaller denominations. uary, 1920, price of silver, however, the old A very interesting development took place shilling was worth less than its silver content; when the price of silver began to rise at the same this caused a change in the British coinage act time that the currencies of the various coun- by which the silver content of the shilling was tries became increasingly depreciated. The reduced from 81 grains to 44 grains, or from a table below and the chart on page 937 show fineness of 925 per thousand to one of 500 per the silver contents of different silver currencies thousand. The new shilling is far removed and the melting points for these currencies, i.e., from any danger of melting either at par or at the price of silver per ounce at which the silver the present rate of sterling exchange. Other content of the coins is worth as much as their countries took similar measures to protect face value. The total bars in the chart indicate their silver coinage, notably Norway, Sweden, how high the price of silver must be before the and Holland. In France the melting point of currencies will reach the melting point, assum- the 1-franc piece at the present rate of exchange ing that the value of these currencies remains is very close to the current price of silver, at par. The black portions of these bars while that of the 5-franc piece is below, so that

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis June 1922

JUNE, 1022. FEDERAL RESERVE BULLETIH. 663

DEMAND IX EUROPE AND AMERICA. cents in March, 1922, and a recent rise to about 74 cents at the end of May of the current year. Nineteen hundred and twenty-one and the This rise in the price of silver occurred at a time early part of 1922 was a period of relatively when the general price level remained fairly low business activity in the western world and stationary at around 150. The explanation of of only moderate demand for silver in the arts. the rise must be sought in the Far East. Even On the other hand, the low values of the cur- there, however, developments are not so clearly rencies of many countries in terms of gold has defined as in 1919 and 1920. In India, 1921 resulted in the withdrawal of silver from circu- was not a prosperous year; merchandise im- lation. The table below and the chart oppo- ports exceeded exports by 530,000,000 rupees site show the price of silver at which differ- for the calendar year, but during the early ent foreign currencies reach the melting point, months of 1922 imports showed a material de- i. e., the point at which the silver content of the coins becomes more valuable than their face value. PRICE OF SILVER AT WHICH DIFFERENT CURRENCIES MELTING POINTS OF SILVER CURRENCIES. REACH THE MELTING POINT Molting point (price of silver per ounce). 3 WITH EXCHANGE WITH EXCHANGE I AT PAR L AT APRIL, 1922, RATE Fine In U. S. money. PRICE OF PRICE OF silver SILVER SILVER Coin. content (grains). In local cur- At April, rency. At par 1922, of f exchange Change. 250

Dollar 371.25 1.2929 dollars. Subsidiary silver 34.722 1.3824 dollars. (dime). Shilling: Old , 80.7203 5.946 shillings SI.447 $1,312 200 New 43.6364 11 shillings.. 2.677 2.427 5-franc pie:c 347.22 6.9125 francs. 1.334 .638 1-franc piei'e 64.4286 7.45 francs... 1.438 .688 Mark , 77.16 6.221 marks. 1.482 .0215 Lira j 64.4286 7.45 lire 1.438 .398 150 150 At the average price of silver in April, 1922, PEAK I m JAN. the silver currencies of the United States and of England were far above the melting point, but 100 100 French, Italian, and German silver coins were melted and sold in large amounts as bullion. APR. 1922 The supply of silver from this source, which PRICE PRICE reached its peak in 1920, continued in 1921. In 50 50 England, at the time that silver was at its highest price and the shilling reached the melt- ing point, the legal content of the shilling was reduced from 916/1000 to 500/1000. This re- — 0 0 — duction in the silver content of the shilling, if COINS g< S| I llgluj L I COINS all the silver minted since the commencement 2 of the reign of Edward VII in 1901 were to be melted, would release in England alone 57,000,000 ounces of silver, but not all or even cline, and in February there is shown an export the greater part of it is likely to find its way to balance of about 23,000,000 rupees in favor of the melting pot. The effect on the price of India. Silver was imported into India partly silver of the constant offerings of coins as in exchange for gold, but partly also as a con- bullion has been lessened by an arrangement sequence of the prevailing unrest which in- by which silver derived from the recoinage of creased the desire of the Indian masses to bury shillings was dispatched to the Anglo-Eastern silver in the ground where it is safe from, banks to be absorbed in the Far East. seizure. Recent imports of silver into India were occasioned also by the fact that the Gov- DEMAND IN THE FAR EAST. ernment had under consideration a plan to European demand can not, therefore, account reimpose import duties on the metal. Exports for a rise in the price of silver. Nevertheless, of silver from the United States to India, which silver showed an advance from 60 cents in July, amounted to $109,000,000 in 1919, practically 1921, to 71 cents in October of that year, fol- ceased in 1920, and totaled only about $3,000,- lowed by a recession to something under 65 000 in 1921. From January to April, 1922, a

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