New Zealand’s Financial Resets - Part 3 Supplement
Full press stories to accompany New Zealand's Financial Resets - Part 3
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DOMINION, 3 JANUARY 1918, PAGE 8
SILVER COINAGE
According to official figures the year 1916-17 'was a record period for the coinage of silver by the Indian Mints. The value in rupees of the coins struck at the Calcutta and Bombay establishments for the Government of India was 307,707,326 [rupees], compared with 16,202,199 rupees in 1915-16. Only a small fraction of the total represents recoinage of withdrawn coins, the value of which was 138,545,587 rupees only. The bulk of the coinage was from bar and syce silver, and from silver coins of various foreign countries. In addition, the Bombay Mint coined 20,215,358 pieces of the value of 151,336,887 rupees for the Straits and Egyptian Governments. No fewer than 39,087,087 anna pieces of nickel and 11,702,143 milliemes pieces were struck by the Bombay Mint for the British India and Egyptian Governments. Amongst the bronze coinage, which is carried out entirely at the Calcutta Mint, were 8,364,000 pieces of bronze pennies and half-pennies for the Commonwealth Government. War expenditure in Mesopotamia and Egypt accounted in part for this enormous expansion in the silver and subsidiary coinage, but the- enhanced prosperity of the cultivators of the soil, due to the good crops, called for a greatly increased metallic currency.
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POVERTY BAY HERALD, 22 OCTOBER 1918, PAGE 5
U.S. RENDERED SERVICE TO INDIA.
That the United States helped India this year over one of the most serious financial crises in the history of the British Empire, is the statement made by Sir James Meston, financial member of the Viceroy's Council. "Probably few people in America," be said, "realise how vital to India and India's share of the war, was the legislation passed in Washington releasing large quantities of silver for use in alleviating the currency situation there. For this action, India as well as the British Empire and the Allies, owe a debt of gratitude to the United States, which it “is hard to over-estimate).”
Sir James explained that the American legislation to which he referred was the Pittman Act, which provides for the withdrawal of dollars in silver held in reserve by the United States as security for certain note issues.
From https://en.wikipedia.org/wiki/Pittman_Act
The Pittman Act was a United States federal law sponsored by Senator Key Pittman of Nevada and enacted on April 23, 1918. The Act authorized the conversion of up to 350,000,000 standard silver dollars into bullion and its sale or use for subsidiary silver coinage, and directed purchase of domestic silver for recoinage of a like number of dollars. For each silver dollar converted into bullion, the Act also called for the temporary removal from circulation of an equivalent value of Silver Certificates. These certificates were to be temporarily replaced with a new issuance of Federal Reserve Bank Notes, including $1 and $2 denominations for the first time.Under the Act, 270,232,722 standard silver dollars were converted into bullion (259,121,554 for sale to Great Britain at $1.00 per fine ounce, plus mint charges, and 11,111,168 for subsidiary silver coinage), the equivalent of about 209,000,000 fine ounces of silver. Between 1920 and 1933, under the Pittman Act, the same quantity of silver was purchased from the output of American mines, at a fixed price of $1 per ounce, from which 270,232,722 standard silver dollars were recoined. The fixed price of $1 per ounce was above the market rate and acted as a federal subsidy to the silver mining industry.
The passage of the Pittman Act led to most coins of lesser value having much lower mintages in 1921, and no mintages at all, in 1922 — echoing what happened after the Bland-Allison Act of 1878 was passed, which also resumed the coinage of silver dollars. Further provisions relating to silver coinage were contained in the Thomas Amendment to the Agricultural Adjustment Act of 1933.
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TARANAKI HERALD, 18 NOVEMBER 1919, PAGE 2
Like nearly all metals, and indeed most commodities of any kind, silver has gone up in price until now the quotation is the highest ever recorded. The reasons for the abnormal jump are ascribed by competent authorities to the enormous demands of India and China, and to shortage in production. During the last four years the average annual production of tho world has been 156,750,000 ounces. The demand is said to bo for 250,000,000 ounces per annum. Apart from any causes connected with the war, the amount of silver required yearly has grown through the spread of manufactures. In addition to this, the prosperity caused by the war in India- has increased the demand from that country, where the hoarding of currency is a practice dating from immemorial time's, and whore practically all trade is carried on in coin. Tho exchange on India, is now in a. sadly disturbed state, tho attempt to keep tho rupee at a fixed rate of 15 to tho pound sterling having failed in face of tho tremendous increase in the quotations for silver—or, in other words, of its appreciation. Tire effect of high exchange on the purchase of commodities in China and India may he ganged from the transactions that have taken place in tea. Thirty years ago a certain brand of tea cost Is 3d per lb.; just before tho war tho cost was Is 6d. In August the same article cost 3s to land in Sydney. Purchasers now would have to find the grower 4s 9d. Opinions regarding tho immediate future are confessedly speculative. There is a fooling in London that the silver market will be in an abnormal condition for some months. But while conditions may or may not then bo stabilised, the likelihood of silver retreating rapidly in price is considered to be very remote. Everything turns on output. In America the output is not yet hack to normal* and Mexico, where silver can bo produced in enormous quantities at low cost, is in a terribly disturbed condition. High prices are, of course, a great stimulus to production. But it may take a year or two to make up shortages.
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STAR (CHRISTCHURCH), 27 NOVEMBER 1918, PAGE 4
VALUE OF SILVER.
BECOMING RARE AS GOLD. WHERE THE MONEY GOES.
Ask your bank for gold these, war days (says the New York "Sun") and you’ll find it about as easy to obtain as platinum, palladium, iridium—which aren't obtainable at all, and for which the Government is paying prices running from 105 dollars an ounce to 175 dollars. And though you can still obtain silver, the fact remains that in proportion to the demand—especially for foreign trade—silver is becoming, if not absolutely scarce relatively, rare as the rarest metal. Is the day coming when silver, too, will become shy and disappear in the invisible " sink " that absorbs precious metals in times of war? The demand for silver is exactly like a great reservoir of water with half a dozen inflowing pipes and an unknown number of leaks in the bottom. All we see is that the surface level of the water keeps sinking faster than the flow comes in. We find one hole and stop the leak. Up comes the water level; but before the world financiers have had a chance to soap their hands with satisfaction down the water level goes again. Not all the man-made regulations can stop the tide, any more than Canute could command the sea. India's demands alone could drain the world of silver.
SOME OF THE IMPORTANT FACTS.
Take a few disconnected facts. Within a. few mouths the American Government melted down 100,000,000 silver dollars for export to India, China and Japan. Immediately afterwards, about a month ago, the Treasury fixed the maximum price for silver at 1 dollar 01.5 cents. It then announced that export licenses for silver would be granted only on condition that the maximum price was not exceeded. This was to stop the speculators, who had been buying silver at one dollar and reselling it at one dollar 8 cents and one dollar 7 cents. As the Government pays only one dollar an ounce its profit is 1.1 cent, which covers the expense of melting and recoining.
France tried to stop the leak by demonetising silver. When 15,000,000 small nickel and silver coins were struck off by Franco with only 67 per cent value in real silver they vanished within a week of issue as if by magic. Who or what sucked them up so furtively that the French Government did not know the new coins had disappeared until there literally was not one in circulation? The story is told of thirty-seven United States coinage presses this summer being unable to turn off silver dimes as last as the commercial demand for those dimes! You may use the silver to buy bullets, but you can't use silver in bullets. Why did trade suddenly need so many more dimes?
So fast was silver leaking away from Mexico to Japan and China and India that Mexico, too, clapped, on an embargo. It was a typical Carranza embargo—those who exported silver must reimport 25 per cent of the value of the silver in gold within ten days.
RISE IN PRICE.
The greatest store of unused silver in the world was 350,000,000 ounces bought in the nineties by the United States Treasury at a price described as "a song"—the song being 58 to 68 cents. It was to permit the melting and exporting of this silver that the Pitman Act was possible in April 1918. Since the outbreak of the great war silver has gone up in price from 60 cents to one dollar plus. Why? Several reasons are given. Here they are:
Owing to the war, silver mining, like all other mining of precious metals is declining. When you examine it there is very little fact beneath this explanation. The silver production of the world for 1916 was 175,933,024 ounces. In 1915 and in 1914 it was more than 182,000,000 ounces—which seems to show there has been a decline. But wait! From 1908 to 1913 silver production went as low as 78,000,000 ounces and never once exceeded 162,000,000 ounces, but the dimes didn't disappear nor did the price jump to 1.08 dollars.
Another explanation is that owing to the disappearance of gold as coin there has been an increased demand for the use of silver, but in the old pre-war days how often was gold really used as coin? About as often as 500 dollar bills. We knew it was there if we wanted it, but we didn't bother using it.
EXPLANATION DOESN'T EXPLAIN.
Then an explanation is given of the explanation. The nations having embargoed gold for foreign trade, the increased demand comes for silver, but this explanation likewise is so much bunk. True, gold is chiefly used for foreign trade, and the various Governments have forbidden the export of gold, except with special license, but the very same Governments have also forbidden the exportation of silver except under special license, so the real explanation of silver almost doubling in price narrows down to two questions which no man can answer, bluff he never so wisely:
Are people privately hoarding silver coin? Or has the price doubled because of open and secret buying of silver for the countries of the Orient, chiefly India?
No one can answer the first question, for hoarding is too furtive to be traced, but the action of the Governments in Mexico and in France would seem to indicate that both authorities are apprehensive of secret hoarding also of secret agents for foreign Powers buying up the hoards at a price above the minted face value. But that does not explain the absorption of American dimes, and it would take a powerful lot of proof to convince people that the American public has taken to salting away silver dimes in old stocking toes and unused teapots. Still the cardinal fact remains—dimes here and smaller coins in France were absorbed as if by magic.
Even before the Pitman Act permitted the melting and exportation of the silver dollars piled up dead and unused in the United States Treasury, private purchases had sent the price of silver up 50 per cent. For the ten years preceding 1908 India had absorbed and "sunk" or lost to circulation 135,000,000 [oz?] of gold—more, than a quarter of the world's yearly production of gold.
AVERTED TROUBLE IN THE EAST.
By the end of 1917 India was drawing three-fourths of all the silver produced in the world. Silver had to be supplied to India to avert a financial panic, and perhaps revolution. The world had produced about 175,000,000 ounces of silver and India- needed immediately 20,000,000 dollars worth and later 150,000,000 dollars more, so the United States Treasury dollars were melted and exported. But before that a curious situation had arisen as to the rupee. The premium was so great on metal that the silver in the rupee was worth more than the fact value of the minted rupee, so rupees were being melted up and going out of circulation. A law was passed in India making it a penal offence to melt or export coin. Silver cannot now be shipped to India except by purchase of the Government-
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AUCKLAND STAR, 1 JANUARY 1920, PAGE 6
THE PRICE OF SILVER AND ITS COINAGE
The increasing price of silver has brought very near a crisis iv the coinage of this country (states the Shipping World"). As long as silver was costing 2/6 to 3/ per ounce, it was a profitable transaction for the Treasury to take a piece of silver, put an image and superscription upon it, and call it a shilling or a crown or half-crown, and say that it represented a certain fraction of the value of a sovereign. The nominal value was then about double the intrinsic value. But silver has been steadily rising in price, and the amount of silver required for any coin is now nearly equivalent in price to the face value of the coin itself. Should silver advance further in value, our silver coins will be produced at a loss, which is, of course, an unthinkable proceeding. In such case, it would pay a person who manages to gain possession of a quantity of the legally stamped discs of metal called silver coins to melt them down and sell the silver to the Government to make further discs of the kind. It almost looks as if some speculatively-minded persons were already preparing for this course. In Paris it is said to be almost impossible to get change in silver, and reports are current that both in France and in this country an issue of paper money is impending for smaller amounts than at present. A nickel coinage is also said to be contemplated. Might we urge the Government that, if it should be necessary to institute a nickel coinage, it should be courageous enough to take advantage of such an opportunity to institute a decimal coinage. lt should be comparatively easy. Keeping the standard value of the sovereign as it is, there is the florin, which represents the tenth part of it, the tenth part of the florin represents a value of 2.5d, approximately, but hitherto a coin of that value has been awkward to mint. A bronze coin would be too clumsy, and a silver one too minute for convenience. A nickel coin would just fit this value, and 100 nickels would then constitute a sovereign. As for the 1000th part of a sovereign, all that is necessary to reduce the value of the farthing slightly, so that instead of there being 900 farthings to the sovereign, there may be 1000. The scheme is worth trying, and after generations may say of the present silver crisis—"lt's an ill wind that blows nobody good."
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WANGANUI HERALD, 1 JANUARY 1920, PAGE 6
HIGH VALUE OF SILVER. HOARDING BY CHINESE. FRENCH COINAGE PROBLEM. IMPORTANT ARRESTS MADE.
LONDON, November, 6.
Steadily, for several weeks, has the price of silver continued to go up, until at its present price the actual value of our silver coins is equal to, if not greater than, their face value. Apart from the illegality of melting silver coins, it would probably not pay those who contemplate such an offence to do so until the price rose still further; but the upward tendency is so pronounced that some measures will doubtless become necessary to prevent the same difficulties arising here as were experienced in France in regard to their silver circulation.
For the moment there is no shortage here of silver currency, but that hoarding is going on to a considerable degree is an inconvertible fact. Sufficient silver currency has been issued to average £1 per head for every man, woman, and child in the United Kingdom, but nothing like this amount is in actual circulation. The chief cause of the rise in the price of silver is declared to be a marked change in the habits of the Chinese. They have taken to hoarding silver coins. They have been extensive purchasers of the metal for some considerable time, yet the regular statements of their banks show no corresponding accumulations in their vaults. There is but one explanation—the individual Chinaman is hoarding his money, and until such time as he realises the waste and futility of such a course prices must continue to rise, for the demand now generally exceeds the supply.
WILLING SELLERS
One practical outcome of the present inflated price is that people are debating the wisdom of keeping useless articles of silver, or even of articles that can hardly be regarded as useless. The “New Poor’" has a chance to get good value for pretty but useless articles of silver. Silver vases, candlesticks, inkstands, photograph frames, and other odd bits are all worth selling, and are beginning to flow into the hands of the refiners. Old silver spoons and forks, entree dishes, and other table ware are also realisable immediately at the current prices. Already the Government has been advised by critics to take the bold step of calling in the present silver coins and issuing others containing a larger alloy of nickel, zinc, lead, and aluminium; but in well-informed circles such a course is strongly deprecated. Before the war hall-marked silver sold as low as Is 9d an ounce.
The rise in the price of silver brings the coinage problem nearer again. There is a strong public objection, largely on hygienic grounds, to the issue of paper money of small values. It is understood that the Finance Committee of the London Chamber of Commerce will submit a resolution in favour of nickel coinage. At its present price nickel is worth little more than 1.5d per ounce, and nickel shillings of the same weight as silver shillings would thus cost about a fortieth of the price. But in other countries nickel coins generally consist of only a quarter nickel and three-quarters copper. Copper being half the price of nickel, this alloy makes the cost cheaper still.
FRENCH TRAFFICKERS.
An interesting sidelight has been shown on the dearth of French silver coinage by five arrests which have been made by the Paris police. The recent rise in the price of silver has intrinsically ncreased the value of silver coinage as a metal, and the result is that the franc and two-franc pieces are worth much more than their nominal monetary value. According to a Paris correspondent, surreptitiously withdrawn from circulation they have found their way into the melting-pot, to issue therefrom in the shape of bar silver —the process of converting silver coinage into ingots leaving a handsome margin of profit . Search made at a small Paris bank led to the discovery of a single ingot of silver weighing over 501b, which had been obtained by the melting down cf two and one-franc pieces. The manager of a metal refinery on the outskirts of Paris, as well as the man who brought the ingot of silver to the bank and offered it for sale, have been arrested. Two other men were arrested at Montmarte for illegal trafficking in silver. The police laid their hands on a fifth man, named Frollo, a Swiss, as he was about to leave for the Swiss frontier. In a belt round his waist was about 700 francs in sliver pieces.
Under present French law offences of this kind are punishable by a fine and imprisonment. ‘The authorities are now satisfied that the melting down of this coinage has for some time been carried out on an extensive scale in Paris and the chief French cities by well-organised groups of silver speculators, who have found the operation a very lucrative one.
Early in the war silver coins began to disappear from circulation in France, causing immense difficulties to the public and to the shopkeepers. The process has continued till in most districts silver is rarely seen. If it can be got anywhere it is in Paris and the north, where the silver famine is less acute. In the south it is seldom now seen.
In the south copper is vanishing, too, after silver. There is a great scarcity of copper change. Thus, in Tonlousa 10-centime tickets for journeys on a tramway that was not running and 10-centime stamps are doing duty for the French Government copper 10 centime (0.75d) piece. Tramway tickets were commonly given by the waiters as change in the cafes, and were readily accepted there. They were naturally valueless outside Toulouse.
LOW VALUE PAPER MONEY
As a substitute for silver there are French bank-notes of as low a denomination as 10 francs (roughly 6s) and five francs (3s) in general circulation. But for still smaller change—and such is required at every turn—most towns and districts have printed small paper notes of one franc (worth a little less than 7d) and 50 centimes (3.5d). Each town or district has its own notes, and these are not readily taken at a distance when they are new—and most of them are old, greasy, and lamentably dilapidated.
The traveller’s life in these conditions is not an easy one, says another man writing from France. Before he leaves a place he has to get rid of his paper money, and by hook or crook to secure some silver for his journey, or else so to arrange his expenses and plans that he will need no small change en route. He is very apt to be given the unwelcome paper at the booking office or office for the registration of luggage, as the people there often have nothing else.
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KAWHIA SETTLER AND RAGLAN ADVERTISER, 2 JANUARY 1920, PAGE 4
THE VALUE OF SILVER
The cabled quotation for bar silver last week was 79.5d per ounce standard, while before the war the price ranged between 24d and 26d per ounce. The exchange value of rupee is now 2s 4.5d, as compared with 1s 4d prior to the war. This appreciation in the exchange is affecting Eastern trade and adding considerably to the cost of Eastern produce, apart from the actual rise in the price of commodities. The tea planter in Ceylon, the Indian peasant growing rice or jute, and those exporting such commodities want to be paid in the currency of the country. Thus a New Zealand merchant buying a thousand rupees’ worth of tea has to pay considerably more than prior to the war. When the rupee stood at 1s 4d the New Zealand merchant had to find £66 13s 4d plus the freight and insurance to obtain his one thousand rupee tea shipment. For a similar shipment now, he has to find £118 15s plus freight and insurance. The freight charges are higher, and the prime cost of tea is higher, but the direct effect of the adverse exchange is that £52 1s 8d more has to be paid for the same quantity of tea than in the prewar period, an increase of 78.? per cent. In view of this it is difficult to see how it will be possible to avoid a sharp increase in the prices of Eastern commodities. The very high price of silver is proving a strong temptation to melt silver coins, and there is danger of such coin disappearing in the melting-put. It was estimated some time ago that the price of bar silver would have to reach 5s 8d to give the melters of coins any profit, but that price was exceeded long since, and the price last week was 6s 7d per ounce. There is every prospect of silver coins disappearing from circulation, notwithstanding the fact that it is illegal to melt down coins. India is the great sink for the precious metals and precious stones. The use of precious metals in artistic industry is bound up with the religious and the marital customs of the people of India and these customs cannot be upset by Legislative Acts and decrees. The demand tor purposes of domestic and religious manufacture varies from year to year on account of the character of the seasons, the extent of the great pilgrim fairs, and the astrological propitiousness of the times for marriage. There is also a great absorption of rupees or bar silver beyond the frontiers of India. The rupee is accepted practically all over the East, because it is the only Eastern coin of silver using countries which has not undergone depreciation or debasement over a long series of years.
India on her trade balance is able to demand the high exchange; that is to say, her position in international trade is such that she has more to receive than to pay; she is in fact very much of a creditor like the United States and Japan. The dollar exchange and the rupee exchange are both adverse to Great Britain and to the dominions with sterling currency. The probability that silver coins will be in short supply has led the Federal Government [i.e. Australia] to provide for the issue of 5s notes, and it is not unlikely that some similar provision may be made in New Zealand. It is a wonder that some effort is not made to call in the damaged silver coins that cannot be circulated, but which could be accepted at their face value, and sent for recoinage or otherwise dealt with. It does not seem likely that the Imperial Government will take any steps to stabilise either the dollar or rupee exchanges, preferring that a solution to the problem should be brought about by natural law. The imports from the United States and India must be checked, and if tea becomes very dear the people may be forced to drink coffee and cocoa. However, international trade will follow the line of least resistance and trade is groping for this line. An illustration of the difficulties of the position is afforded by the sale of a ???? of copper by London merchants to Czechoslovakia, the payment for which was to be made in hops. The barter system appears to be the only means of restoring international trade in cases where low exchange countries have to deal with those whose exchange is high.
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PRESS, 18 MARCH 1920, PAGE 7
THE PRICE OF SILVER, TO THE EDITOR OF “THE PRESS
Sir—The price of silver has recently been quoted as high as 85d per ounce. Now, as one pound of standard silver (containing thirty-seven-fortieths of fine silver and three-fortieths of alloy), is made into 66 shillings, it is evident that British mints cannot coin silver at present prices. In 1914 and 1915 the London average price of silver was under 24d per ounce, therefore, the value of silver in a shilling was much less than 6d. The English Silver Currency Bill now proposes to reduce the amount of silver in the coins to 50 per cent, and replace the other half with alloy. As British silver money is only Royal token money for home use, and legal tender for sums of £2 and under. The shilling simply represents the twentieth part of a sovereign. If the British Government calls in the present silver coinage, melts it down, and reissues it with half the silver, the Mint would make a large profit, and the coins would be as good legal tender currency at twenty shillings for a sovereign, as the £1 legal tender notes costing about a penny each, or as the shillings were when the price of silver was less than 24d per ounce. The bimetallists want free coinage of silver at the ratio of fifteen ounces of silver to one of gold, to make silver legal tender to any amount, and for foreign payments. American silver kings, rings, and mining companies, would. of course, like to coin their silver free of charge at 6s an ounce, and, probably, there is a conspiracy among them, which has largely helped to raise the price of silver. J. S. Nicholson said "it was estimated that silver could be produced as low as 1s 6d per ounce." To reduce the weight of silver in the British coinage would probably checkmate the bimetallists, and bring down the price of silver.
Although the British Mints have been coining gold for anyone at the expense of the people, there have been very large profits to the Mint on the silver coinage account. In 1913 this amounted to over £730,000 on under £2,000,000 of silver coin. In 1914-15-16, with an average silver coinage of over £7,000,000 a year, and the prices of silver under 26d, 24d, and 32d, the profits must have been far greater. (See Whitaker's.) There is no doubt that if the British Government does not melt down the silver coinage for its own profit it will be done illegally to the loss of the people. If the silver is recoined then New Zealand ought to get its share of the profit.
Long ago I pointed out that the British Government, or Royal Mint, ought to get millions a year, royalty or seignorage for coining gold. The Mint has often coined thirty or forty millions of sovereigns or half-sovereigns for nothing! If a man or a company wants a ton of gold converted into legal tender sovereigns, with the Mint stamp on each, ought he not to willingly pay? Would not a ton of sovereigns be better value than a ton of fine gold dust?— Yours, etc, J. MILES VERRALL. Swannanoa, March 16th, 1920.
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DOMINION, 31 MARCH 1920, PAGE 7
THE POUND STERLING
What is the pound sterling—that majestic entity in praise of which Sir Robert Peel once kept the House of Commons spellbound for a full hour, though now sadly fallen from its high estate? Sterling, as some fervid patriots will grieve to know has been derived from Easterling, a name for the Hanseatic merchants, states a writer in the "Manchester Guardian". But the pound was originally an actual pound weight in silver—5760* grains of a standard of fineness fixed at 925 in 1000 was coined into 240 pence. Over a long period the standard was maintained, but it fell grievously under the early Tudors, and by 1551 it had fallen as low as 250. Nine years afterwards Elizabeth undertook its reinstatement "a indeed weighty and great" says Camden, "which neither Edward VI could nor Mary durst attempt." Elizabeth proceeded on generous lines. She called in the old money, and every person was given the nominal value of the base coin in the new good coinage the State bearing the loss. Thus the coinage of England was reinstated, and since English silver was better and purer than that of other nations it was necessary to issue enactments against trafficking in the coin or melting it down, just as similar enactments are enforced now in respect of the sovereign.
Another coinage crisis came in 1695 owing to the fact that all the new milled money went overseas where it had a. real value, and the clipped, bad old money stayed in England, where it had a fictitious value. This process went on until at last no one knew what was the purchasing power of any one of a dozen coins in his possession. Locke and Montague solved the problem anew, and in 1816 the gold standard with the gold sovereign was enthroned. The word "pound" was retained, but it no longer has any actual relation to facts.
[* The troy weight scale. 1 troy pound equals 5760 troy grains.]
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TAIHAPE DAILY TIMES AND WAIMARINO ADVOCATE. WEDNESDAY, 7 APRIL 1920, PAGE 4
INDIA SLIPPING AWAY
In these troublous times no part of the great British Empire has immunity from the insane operations of commercialism, and that greatest and grandest of all countries coming under British sway, India, is giving more cause for concern than any other. Little is heard of the current social history of India in our daily newspapers, and from the nature of the little information that does filter through it might be thought the millions of that great Asiatic peninsula were the most contented and happy people upon earth.
No country has enjoyed entire freedom from the curse of the unprecedented commercialist war, and India seems to have had to shoulder a burden too heavy for its heterogenous population to carry. The fact is that human turmoil, dissatisfaction, discontent, and disruption of social conditions in India is so general, and of so serious a character that it has been deemed advisable to institute a stringent censorship over all news submitted for publication in newspapers in other parts of the world. India is having to suffer through being British; and it has become questionable whether government under commercialist influence has pursued a policy that was best calculated to maintain loyality [sic] to the British Crown. So extreme has revulsion of feeling to Britain become, that British people in India are now openly subjected to Native insolence in public places.
Matters were not improved by the Government raising the value of the silver rupee from two shillings to about half-a-crown, for it made those who control the greatest volume of silver coinage immensely richer, while the condition of the very poor was rendered almost unbearable. This rise in the value of the rupee caused a rush into the gold market, and so keen was the demand from India that it was largely responsible for the hitherto unprecedented price of gold which now stands at just about five pounds twelve shillings an ounce and that price may be taken as the first indication of dear money that is to become general throughout the Empire and all over the world.
The trend of markets and of money values are all in the direction of making the rich richer, and the poor poorer. Commercialism has done its deadly work in gathering in money from the working populations of all British Dominions, now it is about to deliver the master-stroke in making that money so much more valuable that it will buy more labour, and more of every commodity labour produces. The silver rupee value has been arbitrarily increased until British sterling is only worth about seven rupees instead of ten. Even British sterling has been depreciated as against the silver rupee, and merchants in this Dominion have at similarly unfavourable exchange rate to contend with in India, as they have in purchasing from the United States.
Truly has it been said that “money is the root of all evil,” which paraphrased means that greed is the greatest and most destructive curse which civilisation has ever been subjected to. The position of a New Zealander in India, receiving remuneration for his labours from a British source is indeed parlous. In India as in New Zealand, prices of life necessaries have advanced until the pound sterling will only purchase a pre-war ten-shillings’ worth, adding the adverse rate of exchange which reduces the pound by a further four or five shillings. the pound sterling sent by bank draft from this Dominion is only worth something less than six shillings at this present moment.
Hence, India is seething with sedition and open rebellion; it is rich ground for seeds of Bolshevism and revolution, which are coming into that grand and glorious country from Russia and Germany, with ample gold behind it to make its influence the more deadly. In searching for cause of Indian unrest, the profiteering vulture of commercialism is discovered in its shameless practices. Commercialism and materialism are twin brothers, they commenced an invasion of world civilisation at the same time, and they have worked together side by side, in India, as elsewhere, right to this present moment.
These twins were rather more audacious with their operations in India than in most other places, for that body of conscienceless profiteering vultures known as the East India Company, to make their nafarious [sic] practices easier and free from criticism of the Christian cult, boldly adopted a policy of excluding Christian missionaries altogether from their territories, giving the whole country over to the vigorous proselytising of Mohammedism.
Britain is to-day in the hour of its greatest trial, reaping the whirlwind of the wind sown in India. by the twin brothers of commercialism and materialism. India was denied the Christianity of Britain and left to the followers of Mahomet, and to-day it is the Mohammedan element that is the rapier at the British heart, while friendly Indian Christians are too restricted in number, and in all other ways, to render much aid to the British cause. India is racked and torn, struggling to live against the bloodsucking of the profiteering, exploiting octopus of commercialism, against the twin demons that dare not now force all apostles of the Christian cult out of the land by legislation, but they are using their devilish power to starve them to death if they will remain. Laws suppressing Christianity in India were ultimately withdrawn, and it is to the uphill work of Christian people and teachers, who thereafter flocked in, Britain is indebted for the loyalty of yet a considerable proportion of Indian people.
Need anyone marvel that India is seething with sedition and social disruption? British traders insinuated their way with a religion of brotherly love, then finding the practice of that religion was a bar to trade robbery and the process of slow starvation and semi-slavery they inflicted on the people, they passed a law making the teaching of the brotherly love cult illegal, and its teachers were expelled altogether. In a last effort to placate India, the British Government has now had to give the country a ruler from amongst its own people; to permit the legislature to become largely composed of Indian people, and who will say that this is not a long, Indian stride out of British rule?
Commercialism and materialism came upon civilisation together, they have worked together, destroyed together, and we will venture to predict that they will, die together. Peoples of the world are struggling for freedom and the right to live, but have not yet a full understanding of what they are struggling against. Nevertheless they are gaining victory after victory over the twin arch-fields which are cunningly camouflaging themselves under the shadow of a cult, that is incompatible with their vile crime, and which they banished from India, leaving the Indian people to be stricken and divided by the cult of Mohammedism.
That twin octopus certainly increased British trade in India, but by what methods, and at what cost? What did it profit Britain to dishonestly acquire Indian trade, if in the end India is lost to Britain and becomes an intensely potent enemy. India was the richest gem in the British Crown, but it is fast passing away, lost by the depredations of worse than brutish greed. There is likely to be strict censorship of Indian news until social conditions in that rich, yet unhappy, country become either much better or worse.
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OTAGO DAILY TIMES, 28 AUGUST 1920, PAGE 6
THE RISE IN SILVER AND THE INDIAN EXCHANGE.
In The Weekly Times of Ceylon, of 19th May last, there appeared an interesting article written by Mr H. J. Temple, a well-known tea planter of Ambawela, Ceylon. The article is headed "Rupee Sterling Exchange," and is in great part devoted to an explanation of the highly artificial system adopted by the Indian Government to manage the exchanges between India and Great Britain since 1893, when the Indian mints were closed to the unrestricted coinage of rupees.
We cannot afford space to give this article in full, but wish to afford our readers the information given by it, so far as it explains the rise in silver since the war began, and the circumstances which led to this rise. After explaining the settlement of trade balances in favour of India by the use of India council drafts (generally known as “councils”), sold in London against a corresponding rupee balance in India to meet these drafts in India when presented, and the settlement of trade balances in favour of Great Britain by the sale of "reverse councils" by the Government of India at a " fixed rate against a gold reserve of £38,000,000 in gold accumulated by the Indian Government in London. Mr. Temple deals at some length with the value of the trade exports of India for the five years prior to the war and for the five years after the war began. In the former period the average annual exports were £149,000,000, and the imports £97,000,000, showing a favourable trade balance of about £52,000,000 annually. With this preliminary explanation (which is only given to economise space), we prefer to give the further explanation in his own words.
"In this period (pre-war period) council drafts totalling £140,000,000 were sold, which is tantamount to remittance to India, and gold and silver to the extent of £120,000,000 were also sent to India from Great Britain. Thus the balance of trade was liquidated. Now, in the five war years, the balance of a trade is curiously the same as in the five pre-war years . In the first year India suffered, as her balance shrank to £29,000,000, but it then steadily rose to £61,000,000 in 1917-1918. The average exports work out at £148,000,000 and imports at £98,000,000, giving an average annual balance of about £50,000 000, or a total of, say, £250,000,000 to be paid to India for the five war years. It will thus be seen that India had to receive in the quinquennium of war almost a exactly the same balance as in the previous quinquennium of peace, when she was paid easily and with no dislocation of exchange or currency. In this war period she received remittances by councils to the extent of about £100,000,000, and she received in gold and silver £36,000,000, or together £136,000,000 out of the £250,000,000 owing to her. It had proved difficult enough to pay her as much as £136,000,000—or, perhaps I should put it, for her to succeed in getting as much as £136,000,000 remitted to her, — and the balance due had to be deferred, as it was impossible to send gold out, or get enough silver, or to sell further councils in London owing to the scarcity of rupees to meet these council drafts when presented for payment in India. But it did not end at this. India had a small extra account of £240,000,000 against England for expenses incurred on the latter's behalf for the war. The expenditure was in rupees and England readily paid the sterling equivalent in London; but the money could not be transferred to India for the reasons already stated—viz., the impossibility of sending gold or silver and the impossibility of remitting to the full extent by council drafts. It was exactly the same with us, for we could not transfer the sterling balances accumulated in London on the sale of our tea and rubber.
THE CRISIS
"There have been two ways of settling India's balance of trade in the past—by shipping the precious metals or by council drafts. In the five pre-war years India took £96,000,000 of gold and £24,000,000 of silver, totalling £120,000,000 of treasure. In the five war years she would normally have taken at least as much gold and silver, but instead all she could get was £26,000,000 of gold and £10,000,000 of silver, totalling £36,000,000. It will therefore be seen that she would require a greater amount of councils to square her balance. But you cannot sell councils in London without rupees to meet them in India, and as India could not get the silver to coin rupees she could not sell councils to the desired extent, and so here was an impasse. One further remark to show how the difficulty grew. India had been accustomed before the war to consume £20 millions gold annually except for one year in the war she only got an average of £3 millions of gold, and in the last war year she got a beggarly £15,000 only. Gold and silver are essentials in the social and religious life of the 300,000,000 of people in India, and as gold could not be got, all the belligerent countries holding tightly to it, greater work fell on silver; but as silver, too, could not be imported, the rupee coin, itself was used, and the melting and withholding (hoarding) of it by people reduced the circulation.
SHRINKAGE OF CURRENCY
"Now in 1914-15 exports were £121 millions and imports £92 millions. Two hundred millions of people out of the 300 millions in India work on the cultivation of the soil. Rupees go up country from the cities to buy the crops. There are very few banking facilities out of the cities of India, and, taking the middle of the war, 1916, the note circulation was only 53 crores against 212 crores of silver rupees, the cultivator not yet being educated up to a note issue. He receives very largely rupees for his crop. He then pays his taxes, buys clothes, etc., and so much of the money he has received returns to the cities, and, therefore, circulates, but a certain amount remains with the cultivator and always silver, —and is lost or absorbed from circulation. In 1916-17 and 1917-18 exports were £161 millions and imports £100 millions, and, therefore, much more currency was wanted to move the crops and meet the expansion of trade. Taking the price of imports as 100 in 1914, it rose to 170 in 1917, 211 in 1918, and 268 in 1919, but the volume did not increase. For instance, the import of piece goods in 1919 was only 43' per cent, of prewar imports. The ryot could not get, as he could not afford to buy, imported things, and so he did not spend the money ho received for his crop, and the money (silver) remained with him, and, therefore, did not circulate, but was lost or absorbed from circulating currency. In pre-war years the rupees (silver) absorbed amounted to eight crores; in 1916-17 the figure grew to 33 crores, in 1918-19 to 45 crores. [We may here explain that a crore of rupees at 2s per rupee represents £1,000,000, or 10,000,000 rupees.] It will thus be seen how rupees were disappearing, and naturally the thing to do was to make good the shortage, which necessitated the buying of silver on a larger scale than hitherto. Unfortunately the world's production of silver fell from an average of 228 million ounces before the war to 178 million ounces during the war, while in addition to India other countries became strong buyers. The consequence was the price of silver rose from 27 pence in 1915 to 36 in 1916, 50 in 1917, 78 in 1919, and oven higher this year.
INDIAN GOVERNEMNT'S DIFFICULTIES
“Now arose the difficulties of Government in regard to exchange. The note issue of India is convertible, that is to say, at the principal treasuries any holder can demand silver rupees in exchange for a note. To maintain convertibility, on which the credit of Government and the structure of currency rested, the Government were compelled to buy silver to coin into rupees to replace absorbed rupees. The more Government bought, the more it put the price of silver up against itself. The price rose to 43 pence. Up to this point the value of the silver content of a rupee was less than the exchange or token value of the coin, and there was no danger. But with silver at 43 pence per ounce, the silver content of a rupee melted down was equal to the token value of the coin—viz.. 1s 4d—and any rise in the price of silver above 43d made it profitable to melt rupees. I have explained that silver is an essential for social and religious purposes. No one was allowed to import rupees, and it would have paid people to buy rupees at 1s 4d, melt them and dispose of the silver. It would have paid people to convert notes into rupees, the rupees would then have disappeared, and the reduced reserves of rupees would have jeopardised the convertibility of the note issue. There was, therefore, no alternative but to raise exchange which was then put up to 1s 5d, and the foregoing will explain also every subsequent rise in exchange. The Government of India was, however, only at the beginning of its troubles. The stoppage of the flow of gold and silver to India, owing to war restrictions, meant that the maintenance of the financing of trade was entirely thrown on the shoulders of Government, for there was no other way of settling the differences between exports and imports under the circumstances. We here remember the banks saying they could not get cover to give us rupees. Cover then consisted very largely of councils, but Government could not sell anything like sufficient councils because rupees were running out to a dangerous extent. Exchange was raised to 1s 5d on August 28, 1917, but silver steadily rose. Three-quarters of the world's production of silver comes from America, and the assistance of America was sought and in September the U.S.A. controlled her silver, prohibiting export except under license. This checked the rise in silver, and till April in the following year, 1918, silver fluctuated between 41 and 49 pence. But the position in India steadily got worse. On March 31, 1914, India had 79 per cent of her note circulation in metallic reserves (that is, gold and silver) to maintain the convertibility of notes. The ratio steadily fell to 70 per cent, in 1916, 44 per cent, in 1917, 38 per cent, in 1918. On March 31, 1918, the silver in the metallic reserve had fallen to 10.75 crores of rupees against a note issue of 99.75 crores, and the position was a very anxious one as the convertibility of the note was threatened. What was India doing to meet the position? In the three years ending March 31, 1918, she had bought no less than 2?0 million ounces of silver which had been coined, and yet, as I have shown, the silver in reserves was less than ever. In fact, the position grew desperate. The tremendous final effort of Germany early in 1918, when she drove back the British and French armies with huge captures of Allied men and material, and for some three or four months maintained a triumphant, though dying, effort, had its effect in India. The conversion of notes continued, and the silver stock, which was so low at the end of March, suffered a further heavy withdrawal in the first fortnight of April, so much so that the silver reserve sunk to only 6.25 crores or about 6 percent of the note issue. It seemed inevitable that Government would have to announce the inconvertibility of notes. Notes had in fact reached a discount of 19 per cent in the Indian bazaars, and the whole structure of currency seemed in peril.
HELP FROM AMERICA
In her extremity India turned to the U.S.A., which had a huge store of silver dollars from the old days of bimetallism. America readily appreciated India's danger, and rapid legislation was passed through Congress making 200 million ounces of silver available for India at a dollar an ounce. This was shipped as rapidly as possible, and at the same time another 120 million ounces were bought in the open market, though at tremendous prices. The Bombay Mint was kept working night and day, and the position was only just saved and India's credit maintained. Confidence gradually returned, and in 1919 the highest discount reported on the note was 3 per cent. In April, 1919, the silver reserve was only 6.25 crores, and by November 39 had risen to 77.5, which, with 32.75 crores of gold, gave a metallic reserve of 80 crores—or taking the rupee at its then exchange value, £83,000,000. The anxieties of Government to maintain convertibility are thus clear. It is wonderful how the position, was overcome and trouble averted. In spite of the demands of China for silver, and the increased demands of Europe, India secured altogether 538 million ounces of silver, or the equivalent of three years of the world's production.”
We regret that space will not permit us giving further explanation by such a competent observer. The article, however, shows how simply the whole artificial system, which had answered its purpose since 1893, failed under war conditions. A recent cablegram from Delhi showed the steps taken by the Indian Government to meet the difficulties caused by the rise in silver. On this subject we have already written in our issues of July 6 and 17 last. But it is quite evident that the remedy is only a temporary one pending a return to gold payments in England—that is, until the Bank of England commences to pay to the public sovereigns for one-pound notes.
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AUCKLAND STAR, 4 OCTOBER 1920, PAGE 4
SPECIE IMPORTS STOPPED. DUE TO HIGH PRICE OF METAL. COINS THAT DISAPPEAR.
Gold has vanished from the till, and we are now threatened with a shortage of silver. So far the inconvenience is confined to the commercial banks, but no doubt it is only a matter of time when the business people will find a difficulty in finding small change. Up to the present time the retail shops in Auckland have not had the same difficulty as their fellow traders in some of the big shops in Australia, who have been hard put to rake up enough small silver and copper to keep their customers going. There were rumours in Auckland about hoarding silver, particularly on the part of the exotics who cultivate the cabbage and the lettuce, and those who hail from, the densely populated bit of the Empire, which is washed by the waves of the Indian Ocean. These reports, however, can be dismissed at once. The propagator of vegetables has a higher aim than the white metal. If he has a long stocking stowed away somewhere it contains gold and nothing more plebeian. As for the dark man, who drifts as naturally to the hawking profession as an Irishman does to the "Force," there is not enough of him 'here to affect the market even if he had designs on our silver change.
LESS COMING IN
It is perfectly easy to explain the shortage. Before the war we were in receipt of regular shipments of silver from the mint in London, but since the price of that metal took to emulating the mercury on a February day these natural increments. have ceased, and as there is always a certain amount of wastage and leakage, it is only a matter of time when the shortage becomes so acute as to inconvenience trade. This unexplained evaporation of silver coinages is one of the curiosities -of numismatics. It is not so noticeable in white countries, but in places like Egypt and India the amount of silver coin which is issued and never accounted for runs into some hundreds of thousands of pounds. During the war there was an absolute dearth of silver towards the end of the campaign, and the Government had to issue paper for 25 piastres (5/), and even down to 5 piastres (1/), much to the perturbation of the natives, who in some eases could only be induced to accept the new currency with the aid of a boot or other display of physical force. And the silver that was circulating was of all nations. Port Said was notorious for the mixture of coinages that pass current — Italian, Greek, English,' Egyptian, jostling one another in the pocket with impunity.
PAPER SMALL CHANGE
If silver does not come down in price, and we cannot get our usual shipments of coin from the Old Country, it is quite possible that we shall have an issue of 5/ notes. As a matter of convenience the paper notes for the smaller denominations, such as were issued in Egypt, are much preferable to the coin. Instead of two unwieldy half crowns, for instance, one will carry a neat slip of paper about four or five inches long by half that width. They have of course the disadvantage of gathering the clinging microbe and the dirt, and if they were not renewed oftener that the filthy pound notes that we have to put up with the convenience would in no way compensate for the additional risk one would run in handling them. Talking about the Egyptian currency, we in New Zealand might well copy their £1 notes in the matter of size. Instead of the roll of “blankets” a man has to carry round in this country, the Egyptian with the same amount of money would have a handy bundle of notes not much bigger than the 10/ notes issued by the Bank of New Zealand—and the less paper the less dirt.
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SOUTH CHINA MORNING POST, 1 DECEMBER 1920, REPORTED IN
SOUTHLAND TIMES, ISSUE 19048, 5 FEBRUARY 1921, PAGE 2
THE DOLLAR AT CANTON
… The present drop [in the British pound against the U.S. dollar] is attributed almost entirely to a fall in the price of silver, in turn credited to the European Governments’ efforts to rehabilitate their currencies. We are told that speculators had the silver market pretty well cornered until the governments interfered quietly, with the result, we are assured, that there is sufficient silver available to meet all likely demands for another year. The demand from the Far East is at present small and no forward rates are quoted. Only a bold man will predict. Memories of the unprecedented rise to over 6s a year ago, then the swift fall to 3s 6d and again a rush to 4s 4d only a few weeks ago gave us a pause. …
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EVENING POST, 15 DECEMBER 1920, PAGE 9
NEW COINS. “NICKEL” SILVER CIRCULATION IN NEW ZEALAND. ANOTHER WAR INCREASE.
A brief cablegram published last week announced that the new "nickel" coinage would be put into circulation in Great Britain on Monday next, and the old silver coinage would at the same time be withdrawn from circulation. This little message has an interest for New Zealand, for the Dominion maintains the same currency as the United Kingdom, and will in due time, just so soon presumably as the new coins can be brought to the Dominion, make the same change in the coinage. The reason for the change lies in the fact that for sometime past the public has, to put it paradoxically, been receiving more than a shilling's worth of silver in a shilling. If a man had a little silver mine on his property and could refine the silver produced, and if he were then permitted to convert it into coins he would find it comparatively unprofitable to do so. It is a serious offence to coin money (not using the term in its colloquial sense), but lately there has been no temptation to break the law. The man who had silver to sell could with greater profit sell it to the banks or other dealers in precious metals.
THE MINTING PROFITS
It was not always thus. For very many years the Royal Mint made sufficient profit on its silver and bronze coinage to pay the whole expenses of the Mint, including the loss involved in gold coinage and in the redemption of defaced and worn coins. One ounce of coinage silver, containing 925 parts of silver and 75 parts of copper, was converted into 5s 6d worth of coins. As the silver for many years cost less than 2s 6d an ounce, it will be seen that a profit was made. Bronze coinage also yielded & handsome profit—necessarily so. One ton of standard coinage bronze containing 95 parts of copper, four parts of tin, and one part of zinc would be worth on current quotations anything from £80 to £100. The Royal Mint can make from one ton pennies to the value of £448, or halfpennies and farthings to the value of £373 6s 8d. If the system followed with gold of maintaining full value of metal in coinage were to be followed with the pence the penny would require to be roughly five times its present size. One immediate result would be that tram-conductors would want an increase of wages—or a small boy to carry their enlarged "small change." Bronze coinage still yields a profit to His Majesty; but the Master of the Royal Mint can say with truth that there is not the money in silver that there used to be. To remedy this less silver is to be put into the money. People are accustomed to hear of benevolent men engaged in business from philanthropic motives and carrying on at a loss; but this is quite true of the business of His Majesty of turning out the little silver discs bearing the image and superscription of King George V.
THE PRICE OF SILVER
Without going too deeply into market movements and the reasons therefor, it may be stated that the price of silver went bounding up during the war period! For years it had been below 30d per oz, varying a penny now and again. In January, 1916, the price was 26.75d. Then a gradual rise commenced. Towards the end of the year the price was 32d. This upward movement continued to the end of and after the war. At the end of last year 76d was being asked. Market reports show that this was a case of supply and demand. China and India have a solid effect on the silver market. The demand for the white metal is partly due to coinage requirements and partly to the favour in which silver ornaments are held. Not all races have the fondness we display for gold. The Maoris when they first came in contact with the whites held gold in low esteem; and instances are recorded of sovereigns being exchanged for half-crowns or shillings—and the Maori was quite satisfied with his bargain. Anyway, the silver market reports constantly contained the words "great demand from China." Also the German silver refiners were not selling—for obvious reasons. This year the market has steadied, and recent quotations are from 50d to 60d. It may yet return to approximately the pre-war level; but in the meantime the Royal Mint is losing money, or losing silver while making money. For that reason early in this year the British Parliament amended the Coinage Act. In place of requiring that silver coinage should contain 925 parts of silver and 75 parts of alloy, it was provided that it should be one-half silver and one-half alloy. The matter was debated at some length, as readers of the cables will recollect, but the measure was passed. It was further provided that the amendment should not apply to the self-governing Dominions unless and until it was brought into operation by Proclamation in the Dominions. The New Zealand Government gazetted a Proclamation on 16th September last applying the amendment to the Dominion.
NEW ZEALAND COIN
New Zealand obtains her silver coin through the banks from the United Kingdom. A little of the Australian silver comes to this country occasionally, but it is not strictly legal tender. Some people will remember that when the Commonwealth first commenced in 1910 to produce silver coins they were not readily accepted here. Now there is such a shortage of change that business people are not so particular. So far as is known, Australia has not yet resolved on an alteration in the composition of her coin.
This may be referred to as a "war increase," but its effect will not be felt by the man in the street. Economists, of course, debate the effect of such alterations in the currency, but the possessor of a new shilling will be able to exchange it for as much in goods as if it were one of the old coins.
For a hundred years silver has been a "token" coinage, not dependent on its intrinsic value. Were it a practice to sell the coins for the metal they contain, of course, there would be a difference; but such a dealing to be profitable to the buyer would mean that he must use the metal for other than currency purposes. That is illegal. Section 48 of the Finance Act of last session made it an offence punishable by a fine of £10 to melt down or breakup any gold or silver current in New Zealand. Nor may the coin exported without permission. If the value of the coin were dependent on its intrinsic worth, worn coins would be refused, for they are worth much less than new before they are recalled. Silver coinage has an average life of less than fifty years, by which time the loss in weight amounts to 8 to 10 per cent. Gold sovereigns, on the other hand, are reminted about every twenty-five years, when the loss is 0.6 per cent, and half-sovereigns every fifteen years, when the loss is 0.6 per cent.
Presumably, some portion of the alloy to be lined in the new coins will be nickel, but it will not be a nickel coinage such as that current in some other countries. The American "nickel" is a five-cent piece, worth less than our silver three-penny bit, but much larger. The coinage alteration will make no difference to the ordinary man, except that he will have the satisfaction when he places his three-penny bit where three-penny bits are mostly placed, of feeling that he is giving something which is really worth more than it appears to be—though he cannot obtain more for it.
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EVENING POST, 9 FEBRUARY 1921, PAGE 7
FIFTY-FIFTY COINS.
THE NEW MONEY ARRIVES. FINENESS OF SILVER REDUCED.
New threepenny bits, half pure silver half alloy, have arrived in New Zealand. They are the forerunners of other "silver" coins up to half-a-crown. Last February, when the price of silver rose to 7s 4d per ounce, the Chancellor of the Exchequer passed through the British Parliament a Bill to "permit a reduction of the fineness of the silver coins to be minted in future. The objects of that Bill were officially explained as follows: "It is proposed by the Bill to reduce the fineness of the silver in the coins hereafter minted from .925 fine to .500 fine; with silver at 88d, the intrinsic value of a one-shilling piece .500 fine will still be considerably more than the intrinsic value of a one shilling piece .925 fine in July 1914.The first installment of the new coinage was issued from the mint in the middle of December. The threepenny bits have just arrived in New Zealand. As the new coins pass into circulation the old ones will be withdrawn. Although the high price of silver was the cause of this new coinage being issued, it will continue; but silver is down to-day to 3s per ounce. It was within the region of 1s 10d to 2s in 1914.
The intrinsic value of the shilling, considered as a piece of silver in pre-war times, was under 6d. The mintage of silver by the British Government was then a profitable business, but its revenue was used in the purchase of worn gold and silver coins, new being given in exchange. Thus was the wear and tear made good. The Australian Federal Government, attracted by the profits in silver, minted its own. It will be recalled that when it came over to New Zealand there was some little hesitancy about taking it; this soon passed, and the Australian silver circulates freely enough.
Travellers in Eastern countries and the Islands know that twenty shillings is not taken as the equivalent of a sovereign. The Oriental knows to a nicety the value of silver coin, and he regards it as metal and nothing more. How will he regard this new coinage, which looks like silver but is half alloy?
It is not, however, quite correct to say that it looks like silver. Some of it seen by a representative of The Post to-day had a rather yellowish tinge when compared with bright, unworn, wholly-silver coins; it seemed a suspicion thicker; and it had a duller, less bell-like, ring than the all-silver coin it will replace.
Many years ago Australia was flooded with new shillings, and their date was 1882. There was a slight yellowish tinge about them too. Close observation showed a slight variation in the Queen's coiffure, in the knot at the back of her head. These shillings were of purest silver, but they had been made by Chinese in Hongkong, and smuggled into Australia. As a matter of fact, they were worth a shade more than the genuine article - as silver; but the wily Chinese who minted them greatly benefited by the exchange of 20 of them for a sovereign, by reason of the then low price of silver, and the sovereigns went to Hongkong in exchange for the shillings.
There will be no inducement to traffic in the new fifty-fifty coins, for the shillings are worth but 4d in silver, and a minute fraction would pay for the alloy in them. The threepenny bit as to its silver would be worth 1d.
Punch describes the new shilling as a ‘boblet,' representing Britannia as a lady shopping and "our Mr. Chamberlain” as shopwalker.
"What's this?" asks the lady, counting her change and holding up a "boblet."
Mr. Chamberlain: "That, madam, is the new shilling. It has more alloy than the old, but the same purchasing power.
Britannia: "Purchasing weakness, you mean."
The new coins are from the same dies and are dated 1920. They will presently be in circulation in New Zealand. Those who receive them will be able to compare them with the older silver, and possibly feel that the return of the sovereign or welcome "yellow-boy" seems farther off than it ever was before.
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MANAWATU TIMES, 30 APRIL 1921, PAGE 8
AMERICA’S AID TO BRITAIN.
It was announced recently by the Treasury at Washington that Great Britain had paid 25,000,000 dollars on account of her silver debt. It is only very recently, it seems, that public light had been thrown upon the circumstances in which Great Britain came to need and to receive a large supply of silver from the United States. The Earl of Reading, the new Viceroy of India, told the story, into which India appropriately enters, at the farewell dinner accorded him by the English-speaking Union in London in February. He cited it as one of the instances of American goodwill to Great Britain which came closely under his notice while he was Ambassador at Washington. During the war every attempt was made to sow dissension in the Empire by insidious propaganda. This was a factor which contributed during the war to a great scarcity of silver. To quote Lord Reading: “There was a moment at which we were very hard-pressed to find the metallic reserve, particularly the silver which was necessary in India, it being incumbent that the paper note issue should be convertible immediately into the silver rupee. Our difficulty was to find the silver. There was no means but one; that seemed impossible. In the vaults of the American Treasury there were vast stores of silver, preserved there as the financial backing against the notes which were issued—silver which could not be disturbed, no matter how much it was wanted. It could not be taken out of the vaults of the United States save by Act of Congress.” Lord Reading went on to relate how the Administration at Washington and the members of Congress, to whatever party they belonged, solved the difficulty by passing an Act of Congress without discussion “because discussion would have been serious.” The measure was enacted practically without debate in almost record shortness of time, and became law within a few days. The vast millions of ounces of silver from the vaults were released, and by arrangement between the British and American Governments were shipped to India. Nothing, we are told, was said of this, which seems just a little the more astonishing in the light of a reminder that the American newspapers knew as well as possible what was happening, yet forbore to mention it lest they should detract largely from the generosity of the service that was being rendered by the United States to the British Empire.
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EVENING STAR, 24 MAY 1921, PAGE 10
SILVER PRODUCTION
With the price of silver fixed at a dollar an ounce, under the Pittman Act, the silver producer in the United States is favored compared with the less fortunate outside competitor, who has to accept current market prices. Towards the end of 1919, when the exchange position with the East was very bad, the Pittman Act permitted the melting down and exporting of 350,000,000oz of scrap silver and dollars, of which 207,000,000oz was sold at a dollar an ounce, mainly to India through Great Britain. This, it was stipulated, was to be replaced by purchases of silver produced in the United States at a dollar an ounce. Such purchasing began in May, and up to March of this year 39,200,391oz had been bought. The silver produced in the United States, as in Australia, is mostly by-product, and the fixed price of the silver has been of great importance in aiding the lead and copper producers to make “both ends meet.’’ The lead ores of the Rocky Mountain district are rich in silver content, and in taking advantage of the price of silver under the Pittman Act, which is practically double that ruling in the foreign market, lead is bring produced largely as a by-product of silver, instead of silver a by-product of lead, as in ordinary times. This explains to a large degree why domestic lead can be sold at present low prices by many producers in America, while other mines cannot afford to produce the metal.
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DOMINION, 14 MAY 1921, PAGE 8
NEW SILVER COINS NOW BEING CIRCULATED
REASONS FOR THE CHANGE
Some of the new silver currency recently minted in the United Kingdom is about to be put into circulation in this country. The Bank of New Zealand has just received as a first consignment of the new issue florins, shillings, sixpences, and threepenny bits to the aggregate value of £10,000, and these will soon be in common use. A few of the now coins, no doubt brought by immigrants and other persons arriving from Great Britain, are already in circulation. They seem to have been regarded in some cases with suspicion, no doubt because they differ to some extent in colour and still more markedly in “ring” from the silver coins hitherto in use. It seems likely that some recent reports of allegedly spurious silver coins in circulation actually refer to coins of the new issue. Until last year British silver coins were almost pure. They contained 925 parts in a thousand of fine silver. The new coins contain 500 parts silver, 400 parts copper, and 100 parts nickel. The reduction in the silver content is noteworthy, since it is the first that has been made since the days of Queen Elizabeth.
The Boom in Silver.
The change in the composition of British silver coins was prompted by the great increase in the price of silver during the war and post-war period. Immediately before the war silver was selling at approximately two shillings an ounce. Although the coins then issued were almost, pure, the amount of silver they contained was worth much less than their face value. An ounce of silver sufficed for coins to the value of 5s 6d. In these conditions the minting of silver coins was of course highly profitable to the British Treasury. The margin was sufficient to cover a great increase in the price of silver, but on February 11 last year the price of the metal touched the abnormal figure of 89.5d., nearly four times the pre-war price, and more than four times the record low price of 21 11-16d., which was touched in 1902. The February price was the highest since statistics have been systematically recorded. With silver at 89.5d. an oz, it became profitable, though it was of course illegal, to melt down British silver coins and sell them as bar metal. In February, 1920, the profit on this operation was over 33 per cent., and the profit remained considerable even when the price of silver had fallen to some extent. With matters in this state, the British Treasury announced that a Bill would be promoted to reduce the fineness of the silver in coins from .925 fine to .500 fine. Great deliberation was shown, however, in giving effect to this decision, and it was not until December last that the new coins were first put into circulation in the United Kingdom. Long before that time the price of silver had fallen far below the point at which the illegal melting down of silver coins was profitable. At the end of the year the price was about 40d. per ounce, at which figure the melting down of silver coin would involve a loss of about 40 per cent. To what extent British silver coins were melted down during the period of extremely high prices does not seem to have been stated with authority, but the fall in the price of silver was hastened by the marketing in Britain of a large amount of bulk silver obtained by melting down foreign coinage.
Complaints in Britain.
Silver was quoted by cablegram at the end of last week at 35.25d., so that British coinage is safer than ever. Apparently, however the Treasury intends to persevere in the policy of issuing the new coins, and gradually withdrawing the old silver coins from circulation. It was rumoured in London in March that owing to dissatisfaction with the new coinage because of its liability to discoloration (with use it shows a yellowish tinge), instructions had been given to the banks to cease calling in the old silver coins, and to the Mint to stop turning out more new silver coins. A note in the commercial columns of the London “Times” stated that both reports were without foundation. “That there is room for improvement in the now subsidiary coinage,” it added, “is undeniable. The fact is that the substitution of a coinage composed of 925 per 1000 parts pure silver for a coinage made up of 500 parts silver, 400 parts copper, and 100 parts nickel has meant that the new coins when brought into contact with certain liquids become discoloured with verdigris, as is the case with bronze coins. The trouble is, we understand, engaging the active attention of the Mint, the research department of which is striving to discover a remedy. Meantime, the public may perhaps find some consolation in the fact that the amended Act has meant the coinage of money in a double sense, for already the virtual halving of the silver content, together with the fall in the price of the metal, has meant a profit to the State of over £2,000,000 on silver coinage since the Act came into operation (a period of about three months). Some complaints have been made that the reduction of the amount of silver in coins debases the coinage, but this is an erroneous view. British silver coins are "token money,” and are legal tender only to an amount of £2. Even before the war, they were worth intrinsically much less than their face value, and the present reduction carries no such consequences as would the reduction of the amount of gold in a sovereign.
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DOMINION, 2 JULY 1931, PAGE 10
PARLIAMENT IN SESSION
SILVER & COPPER COINAGE. PROFIT IN MINTING
“New Zealand is the only country of importance that does not mint its own coinage,” said Mr. C. A. Wilkinson (Ind., Egmont), when explaining his Silver and Copper Coinage Bill, which was read a first time. “All other British Dominions have their own monetary system, but here we seem to have lagged behind.” Mr. Wilkinson said the object of the Bill was to produce a profit for the country. No doubt if the proposals were given effect to the Dominion’s funds would be augmented to a very considerable extent. The coin now in use could be sent back to where it belonged. That was done in Australia when that country undertook the minting of its own coinage. The silver in circulation could be got rid of quite easily by lifting the foolish embargo on its export, when it would flow out of the country of its own accord. Quite a lot of Australian coinage was circulating in New Zealand. If Zealanders attempted to circulate in Australia money minted here they would be fined anything up to £20. Had he his way he would bar Australian coins, for there was no reason why New Zealand should not have the profit on them. A two shilling piece was worth only fourpence. Mr. Wilkinson asked the Government to give careful consideration to the proposals in his Bill. If it became law it would be a profitable proposition for New Zealand.
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