Most
of the world's production of silver is produced or refined in the
United States, but a large part of the consumption is that of Great
Britain, India, and China, and the price of silver has been dominated
by the London market. "Silver, its romance and history," by Benjamin
White, contains the following paragraphs relating to the buying and
selling of silver and the fixing of the market quotations:
For several generations four firms have formed the market, namely, Messrs. Mocatta & Goldsmid,
Samuel Montagu & Co., Pixley & Abell, and Sharps & Wilkins.
The first-mentioned firm dates back to 1684, 10 years before the Bank
of England was founded. In the case of the second firm, silver forms
but one branch of their business, for they are also foreign bankers.
The operation in London, commonly called "fixing" the price of silver,
controls the price of the metal in every important financial center
throughout the world. This official quotation is cabled abroad
instantly by the agency of the press, as well as by each of the four
firms, to such of their foreign clients as desire the information. The
great bulk of the business transacted is based upon this price, which
is determined at a certain hour each day, namely, 1.45 p. m. (Saturday,
11.45 a. m.), by the partners of the respective firms, who meet at the
office of one of their number.
Before
the demonitization of silver by Germany in 1873 and the great fall in
price which followed that event the fluctuations, as well as the volume
of business transacted each day, were so small that the operation of
"fixing" was carried out by an informal change of notes or by verbal
messages. Each broker, while ho may disclose the excess of his own
position as a buyer or a seller at a given price, is careful to
protect in every possible way the interests of his clients and to
preserve their anonymity. It should be remembered that it is quite
possible for the business done in the market upon a given day to be
extremely large, and yet the amount changing hands at "fixing" to be
trifling. Clients are therefore well advised to give a discretion to
brokers as to the quantity of silver which it is desirable to operate
for their account upon any one day. It may be taken for granted that,
as a general rule, no silver is parted with at any price before the
official quotation is made, but after "fixing" it may occasionally
change hands at a lower price if the market is weak, or at a higher if
buyers appear after supplies have been absorbed.
The
method of fixing the price is very simple. The first step is usually to
ascertain if there is occasion to alter the price of the day before. If
supplies prove insufficient
