Through the Pittman Act in the United States.

—The above silver trade flow-sheet has recently (1920) been materially changed by the program of the Government of the United States to purchase domestic silver at $1 an ounce. If the world price for silver remains below this figure, all American silver will be absorbed by the Government for about four years, or until the 207,000,000 ounces specified in the Pittman Act are bought. If silver, however, should rise above $1 the flow to market as sketched above would be resumed.

Position of China and Japan.

—Chinese foreign exchange rates depend to a large extent on the price of silver. All importers or exporters dealing with China must deal in the silver market. Although copper “cash” is the basis of Chinese currency, silver is the standard legal tender for transactions involving large amounts, and weights of silver are used as units. Fineness and weight of Chinese coins are manipulated so that coins issued by the silver-producing states, e.g., Mexican dollars (two varieties), British dollars, Spanish dollars, etc., are prized by the Chinese because they are uniform in value.

Japan produces considerable silver, a great deal coming from her electrolytic copper refineries. Gold is the money standard and silver is not used extensively in the arts. Consequently Japan produces more than enough silver to satisfy local consumption. The government is alive to the importance of silver in connection with all dealings with China. In 1918, Japanese banks bought up Chinese silver supplies, paying prices in excess of all other traders. It is believed that American silver has been flowing into Japan via China and that Japan seeks to control the Chinese silver market. A large silver reserve is being built up in Japan. On account of the international importance of the whole Chinese problem, Japanese activity in silver should be noted.

SUMMARY

Silver is used both for money and in the arts, the former use being the more important and more essential. In some countries, especially those producing silver in large amounts, it is the money standard, either alone or with gold. In other countries on a gold standard, silver is used for subsidiary coinage. In India and China it is used for the settlement of foreign trade exchange balances. Normally about two-thirds of the silver produced annually is used in the arts, mainly for the manufacture of jewelry and luxurious household wares, though some is consumed in the photographic, chemical, and other essential industries. During the war more silver went into coinage and less into the arts than formerly, as the large issues of paper money made corresponding increases in the number of silver coins desirable. Large amounts have been exported to the Far East. The war has shown that silver should still be considered an essential metal of the world’s finance and trade, despite the increasing amounts consumed in non-essential uses.

About one-half of the silver output of the world is obtained as a secondary product in the mining of other metals, notably lead and copper, from deposits of all geologic ages. The high-grade silver ores are derived chiefly from Tertiary deposits, and it is probable that in the future Mexico and the Rocky Mountain-Andes region will be the chief sources of ores of this type.

Of the total world silver production over 80 per cent. comes from the mines of the Western Hemisphere. For many years Mexico was the leading silver-producing country of the world, but the unsettled political conditions have so interfered with mining operations that the production for 1917 was less than a half of that for 1911 or 1912. The United States, a close second to Mexico in pre-revolutionary years, now occupies the leading position. Canada and Central and South American countries also produce important quantities of silver. In the Eastern Hemisphere, Australia is the leading silver producer. Smaller amounts are contributed by Spain, Austria, Turkey, India, and Japan.

Changes in practice of silver recovery and even silver prices have little influence on silver production. It will be stimulated rather by discoveries of new silver deposits or by enlarged and improved base-metal milling operations.

The principal silver deposits of the world are controlled politically by the United States, Mexico, and Great Britain, the three nations controlling about 85 per cent. of the total production in 1913. United States capital controls the entire silver output of the United States, and mines producing half of the Mexican output, one-fourth of the Canadian output, and much of that of the Central and South American countries, in all something over one-half of the world’s normal silver production. Great Britain controls probably one-third of the world production, chiefly in Canada, Australia, India, Africa, and Mexico. German capital owns probably one-tenth, located partly in Germany but mainly in Mexico. The remaining silver deposits of the world are owned by Japanese, Spanish, and French capital. Ownership of reduction plants is not a powerful form of control in the case of silver. The United States owns about four-sevenths of the total smelting and refining capacity of the world, the remaining three-sevenths being controlled largely by German, British, and Mexican capital.

Although the greater part of the silver produced each year comes from North and South America, the world’s silver market is located in London because of the close relations between English business interests and India and China, the chief consumers of the metal.

The United States Government, however, will (1920) purchase all American silver offered at $1 per ounce, up to 207,000,000 ounces.