Cheap Silver Lowers Wheat Price 1930
Why Cheap Silver Cheapens Wheat
TWO price phenomena that attract world-wide attention are the very low price of wheat and the world-wide decline in the value of silver.
This is a great deal more than a coincidence, one statistical observer is inclined to think.
The Cambridge Associates of Boston have prepared a chart, here reproduced, which shows that in recent years, “not only major but even minor movements have synchronized between these two commodities to an extraordinary degree.” And we are told that “the reason is not far to seek”:
The great centers of population in the world are located, as every one knows, in the Orient.
While these people do not depend on wheat for subsistence to quite the same extent that we of the Occident do, it is nevertheless a fact that this grain does play a large part in the lives of the people of India and other parts of the Orient.
Therefore, when silver, which is their standard, goes down, their buying power is seriously affected, since wheat is produced almost exclusively in countries on a gold standard. Therefore, a large part of the potential wheat-buying strength of the world is pitched at a considerably lower key, and the great wheat countries of the world—notably the United States, Canada and Russia—are faced with a surplus.
Source: The Literary Digest for August 23, 1930
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