Of the measures designed to improve and revive industrial life in the United States, most notable results up to the present time were brought about by the silver policy adopted by President Roosevelt. Let us recall successive stages of this policy.

According to the first declaration of the United States Government, made on Dec. 21, 1933, the American treasury obligated itself to purchase the entire annual output of silver in the United States at the fixed price of 64 1/2 cents an ounce. At that time this price was quite high for the American producers of silver, for on the world markets this metal was sold at 43 cents an ounce. Prior to the adoption by the United States Government of its new silver policy the conditions under which owners of silver mines all over the world found themselves were almost desperate. Due to the fact that the majority of 2European countries, after the change to the gold standard, stopped or reduced to a minimum the coinage of silver, the demand for the metal in these countries slackened to a great extent and silver was used only as bullion.

It is quite true that a number of Asiatic countries--such important ones as China and India--and also Mexico on the American continent, have preserved their silver circulation and the demand for the white metal remained at its old volume even after most of the civilized countries had gone over to the gold standard. However, the world-wide economic crisis of the last few years has affected the silver producing countries very seriously and has considerably reduced the demand for their metal.

The extremely grave situation in the silver market all over the world, as is known, was a subject for deliberation at the economic conference in London and a special conference called in the same city in 1933, in which there participated both the silver producing countries, and those countries which had accumulated stocks of this metal after discontinuing its coinage.

The latter conference decided that all participating countries should within four years reduce their total production of silver to forty million ounces. Despite this sharp reduction in output, the low price on silver continued to prevail--a price which failed to cover the production costs even in the richest mines in the United States. Most of the silver is obtained from polymetallic ores which contain, besides silver, copper, zinc, and other metals. A slump in prices on these incidental metals aggravated still more the situation of the silver producers. As a result, there appeared in Congress a very influential group of representatives from the silver states, which demanded that the Government take immediate steps toward the stabilization of prices on silver or its valorization.

But since the interests and desires of this group coincided with the aspirations of the so-called "inflationist group," inasmuch as such valorization of silver could be carried through only by inflationary methods, these groups by concerted effort persuaded President Roosevelt to embark on a policy of raising the price on silver.

The first step in this direction, as we have already noted, was made on December 21, 1933, but the Government did not stop at that. Even though the Government paid 64 1/2 cents an ounce for newly mined silver to the American producers, which amounts virtually to paying them a premium of 20 cents an ounce, the group interested in enhancing the price persisted in carrying this policy still further.

As a result, in conformity with the law passed on May 19, 1934 and known under the title, "Silver Purchase Act," Congress empowered the Government to purchase all silver produced not only in the United States, but in all foreign markets. In accordance with this law the Government requisitioned all silver in the country, paying for it 50 cents an ounce. Besides, the law authorized the government to purchase silver in the foreign market at a price not exceeding $1.29 an ounce, which price constituted the value of silver in American coins. The total acquisition of silver metal was limited to one third of the value of the gold stocks in the United States. Thus the silver policy authorized by the Silver Purchase Act proved to be a powerful stimulus for raising the 5price of silver.

In August of 1934 the price on silver in the New York market stood around 49 cents an ounce. However, under the influence of mass purchases of the metal by the U. S. Treasury, the price began to rise, and in October of last year the metal was sold at 60 cents and over. Even this moderate increase in the price of silver called forth protests from countries remaining with silver coinage, such as China, because for such countries, this valorization of silver meant deflation in domestic prices, difficulties in export trade, and forced exportation of silver abroad. In order to stop the flow of silver, the Chinese Government, for instance, was forced to impose a special export duty on silver, the rate of which was to vary with the fluctuations of price of the metal in the world markets. Imposition of this duty was in effect equivalent to imposition of an embargo on the export of silver bars and silver coin.

Despite Chinese protests, the U. S. Government continued its silver purchases and the prices for this white metal continued to rise, reaching the level of 664 1/2 cents toward April of this year, and this was the price which the U. S. Government paid for newly mined domestic silver. As soon as this occurred President Roosevelt made public his decision to hike the price still further and raised the price paid for domestic silver to 71 cents an ounce. This increase was followed by another jump in world prices which again soon approached the official American rate. On April 24 the President once more raised the price, this time to 77.57 cents an ounce. Speculators, foreseeing further increases in the price on silver, once more hiked up the price in the world markets and raised it to 81 cents.

This sharp increase in silver prices produced a genuine boom in the world markets and feverish speculation not only in silver, but in all silver articles, which inevitably could lead only to another crash with all the grave consequences, not only for the silver market, but for the entire world economy.

Besides the fear of a crash the speculative hiking up of prices produced new and serious complications in countries retaining silver as a circulating 7medium, such as India, China, and Mexico. Partly under pressure from these countries, and partly from the fear of another silver crisis, the U. S. Government temporarily, at least seemingly, abandoned its policy of price-fixing.