Before the war, German interests had extensive holdings in South Africa and Australia.
CHAPTER XXX
SILVER
By F. W. Paine
USES OF SILVER
The chief and essential use of silver is as money. This form of consumption takes place mainly in India and China, where silver serves as a basis for the settlement of foreign exchange balances. In China, silver is the money standard of the country. In India a gold standard is used, but from time immemorial the natives have hoarded silver and invested their savings in silver coins and ornaments rather than making use of banks, bonds or other securities. Silver is used for subsidiary coinage in all countries, but such coins in Europe and the United States can normally be replaced to a considerable extent by paper, as they circulate at more than their intrinsic value. In Mexico, Peru, and other silver-producing countries silver money is extensively used.
A large amount of silver is used in the arts. To a small degree such consumption is for photographic or chemical work but mainly for the production of jewelry and luxurious household wares. The use of silver jewelry in India is intimately related to silver hoards, the bank balance of the natives. Such hoards are now mainly coin, however, because coin has become of more stable value than ornaments since India adopted the gold standard. Before 1914 it was estimated by the Director of the United States Mint that two-thirds of the new silver annually produced went into the arts. In 1912, however, coinage absorbed over half of the 224,310,000 ounces produced by the world. During the war the payment by the Allies for goods purchased in the Orient diverted enormous stores of silver to India and China. In Europe greater amounts of silver coin were needed under war conditions. Moreover, the large issues of paper money make corresponding increases in the number of silver coins desirable. In 1915 only 20 per cent. of the world’s silver was used in the arts; in 1916, 15 per cent. was so used, the balance being coined.
The importance of silver for essential uses during the war is best indicated by the fact that old dead stocks of silver coin, United States dollars in the Treasury, Manila dollars, etc., had to be called into service. A stage not reached was the melting down of silver plate and ornaments. This stage was reached in Germany in the case of gold and probably of silver, just as the United States had begun to adopt such a program to obtain platinum. During 1916 our exports of silver exceeded $210,000,000, surpassing by $58,000,000 the total copper exports for the same period.
As long as the centuries-old customs of India and China fail to change, silver must be considered as ranking with gold as an essential money metal of intranational and international trade.
The large use of silver in the arts, in the period 1900 to 1914, a use naturally considered as entirely a luxury, leads to emphasis upon the non-essential character of silver consumption as a whole. When the European war broke out, prices for silver, in common with most metals and other commodities, declined. But silver did not increase in price a few months later, as did base metals. It was not until the end of 1915 that silver sold as high as before the war, and during the early part of the war it sold so low that producers felt discouraged and regarded silver as, in the main, an article of luxury.
On the other side is the fact that coinage of silver in Europe increased tremendously in 1914 and 1915, although it did not seem to offset fully the curtailment in manufacture of silverware and jewelry. This need for coinage continued during the war at an accelerated rate, just as did the demands for munitions and men. The “silver bullet” was important in Europe, but still more essential in bringing supplies from the Far East to the battle fronts. This fact is confirmed by the advance in the price of silver to substantially twice the pre-war quotation, and had a price not then been fixed the advance would probably have been greater. The normal annual silver production of the world is around 159,000,000 ounces, whereas the actual demand for silver during 1918 exceeded 500,000,000 ounces.
All silver used in the arts by no means represents consumption in luxuries. Silver enters the essential chemical and photographic industries to a considerable degree. At least one-third of the silver consumed in the arts before the war represented jewelry used in India, and this use is much more a form of investment by the natives than it is in Europe and the United States.