Silver-Dollar Diplomacy

At the instance of a number of crackpots, speculators, inflationists, amateur economists and the Senators from six Western States, the U. S. embarked upon a silver-buying program. To date the most conspicuous result of the Administration's silver policy is that the Treasury in a little more than four years has purchased about 1400,000,000 oz. of a metal whose prime characteristic is its futility. And much of it was purchased at prices considerably above last week's quotation of 44 3/4 per oz., which is an entirely artificial figure since the U. S. has been buying most of the world's silver production. Last week, for the first time since it was inaugurated, the silver-buying program was turned to practical account Secretary of the Treasury Morgenthau announced that beginning All Fools' Day he would buy no more silver from Mexico.

Last winter Secretary Morgenthau was asked whether he would stop subsidizing the Mexican silver mines in retaliation for prohibitive boosts in Mexican tariffs on U. S. goods. The reply: "We don't mix our silver and other matters."

Mr. Morgenthau, knowing that silver and politics have been well-mixed for over half a century, was playing innocent--as he was last week when he refused to confirm the obvious fact that he was now mixing silver and oil. For the wording of his statement made it perfectly clear that he had withdrawn his subsidy in retaliation for President Cardenas' seizure of $400,000,000 worth of foreign oil investments (TIME, March 28). The action had been taken, said the Secretary, "in view of the decision of the Government of the United States to re-examine certain of its financial and commercial relationships with Mexico." The "good neighbor policy" had given way to silver-dollar diplomacy.

Curiously, the heavy pressure on the State Department, which gave Mr. Morgenthau his orders, did not come from U. S. oil men. Not until after the day after the announcement did a delegation of U. S. oil men headed by Standard Oil's Walter Clark Teagle formally protest to Secretary of State Hull. The effective pressure came from Britain, whose stake in Mexican oil is larger than that of the U. S. It is the theory of the British Foreign Office that if it is to be prevented, by the Monroe Doctrine, from following its normal policy in dealing with backward countries in such affairs, then the least the U. S. can do is to see to it that the natives maintain a decent regard for Anglo-Saxon property rights.

What regard the natives had for Anglo-Saxon property rights was last week fairly evident. Waving tiny Mexican flags, 200,000 of them paraded in Mexico City to celebrate their "Declaration of Economic Independence," hail the departure of los Gringos from the oil fields. But if President Lazaro Cardenas enjoyed the parade, he was not amused by the U. S. silver embargo. Seriously he proclaimed to his people: "We must draw together to meet an unexpected problem." Mexico is the world's biggest silver producer and its silver mines are even more important to its domestic economy than its oil fields. Thirteen percent of the Government's revenues have come from the silver industry. Silver is a major factor in its currency and in its foreign exchange. And if Mexico tries to dump its silver directly on the world market, Secretary Morgenthau can simply pull his plug.

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