Mr. Pratt to Mr. Bayard.
Teheran, October 22, 1888. (Received November 30.)
Sir: Believing it desirable that our Government should be enlightened in regard to the exact relation of silver to the economy of this Empire, I have been endeavoring for some time past to procure reliable data bearing upon that question for transmission to the Department.
The want of official statistics on the subject made this task seem in the beginning almost a hopeless one.
At last, however, I have succeeded in obtaining, through trustworthy private sources, the required information, and this I now have the honor to submit to you, embodied in the following report:
Though Persia nominally possesses a bimetallic currency and still continues to coin gold in small quantities, the universal medium of circulation throughout the land is silver.
This metal up to eight or nine years ago was supplied to the Persian mint in bars, imported by native and foreign merchants from England via Bushire.
The Persian mint then paid for the bullion an amount of new kran pieces equivalent in weight, and as the Persian krans are .90 fine, gained 11 per cent, or more on the transaction, the importers gaining, 5 1/5 per cent., less their expenses for freight and insurance.
In October, 1880, 1 ounce troy of standard silver cost 56.35d. and one pound troy of it £2.817. For 1 pound (5,760 grains) of pure silver the importers received in Persia 1 pound weight of krans; and 1 kran weighing 70.672 grains, 81.503 go to the pound. At the then rate of exchange (27.5 krans=£l) these 81.503 krans were equal to £2.96363, and the importer realized on each pound troy a profit of £0.1466, or about 5 1/5 per cent. But as the importer had to pay transport, insurance, etc., his direct profit was nil; in fact he would have lost on the transaction if he had not bought merchandise for exportation with the krans he received here and then gained on the exchange.
The value of the exports from Persia is not very considerable, and considering that the export trade is in the hands of many while the silver import was in the hands of a few the silver importers soon found that they had more krans than they could hope to purchase merchandise with.
To cover the losses of the importers the Persian mint had to raise its rate and pay more for the silver than its equivalent weight in krans.
The mint in September, 1888, was paying 107½ pounds of krans for 100 pounds of pure silver, most of which came from Russia.
A firm of Tabriz and Moscow is reported to have just made a contract with the mint-master for the supply of 1,000 puds (43,880 pounds Troy, nearly) at the rate of 107½ krans for a weight of pure silver equal to [Page 644]100 krans. The Persian mint gains about 23/5 per cent., less the expenses of the mint establishment on this transaction.
The profits of the importer are about 11¾ per cent., less expenses of transport, insurance, etc. He buys pure silver at the rate of 45d=.476 an ounce=£2.274 per pound Troy (London market September 1, 1888), and gets for the pound 1.075 pounds of krans=87.61 krans=£2.539 (at exchange 34.5 krans per £1 in Russia), hence his profit is £0.265 on a pound of silver, or about 11¾ per cent.
As he does not export much and has to buy bills for remitting his money to Russia, and has also to pay much for the transportation from Russia to Teheran, his clear profits are very much less, probably only 5 per cent.
Those who are supposed to be “au courant” estimate the quantity of silver annually made into coin at the Persian mint at about 220,000 pounds.
Exchange on London varies between 32, 32½, 33 and 34 krans silver to the pound sterling.
Bills of this legation on the bankers for the Department of State, London, are regularly purchased at 33. Bills of the British legation sell, I understand, at the same rate.
An English firm here are now arranging it appears to import silver in bars from India.
The question arises, could not this be done with greater advantage from the United States direct?
I have, etc.,