People's Pilot, Volume 3, Number 17, Rensselaer, Jasper County, 13 October 1893 — THE RISE OF GOLD. [ARTICLE]

THE RISE OF GOLD.

The Arguments of • Gold Monometalllst Answered Gold Has Appreciated la value. The monometallists in this country and in England persist in denying that gold has appreciated in value. During the silver debate in the house several ■ of the single standard advocates, notably Bourke Cockran, loudly asserted I that there was no ground for claiming ; that gold had risen. And now we have ! the article of Sir John Lubbock in the ; North American Review for September on “The Silver Problem.” He adopts the views of the financial writers of that way of thinking, whom he quotes. With them he takes issue with the bimetallists, who assert that gold has actually appreciated in its purchasing power from 30 to 50 per cent, since silver was demonetized by the United States ansl the nations of Europe. I When pressed to the wall by the well-known and undeniable fact that a given amount of gold or its equivalent will now buy nearly, if not quite, 50 per cent more of the supplies for living, the gold standard advocates insist that that fact must not be ascribed to any rise in the purchasing power of gold, but it is to be explained by the decrease in the cost of production resulting from the improvements of machinery. the cheapening of transportation and the progress of industrial methods. Summing the matter up, Sir John Lubbock, whom yve qupte because his discussion of the subject is the most recent at hand, says that in his opinion the fall in the value of commodities is mainly due to economies in manufacture and carriage, to the discovery of new processes and new sources of supply, and but slightly to any appreciation in the value of gold. j That this theory is untenable has been shown time and again. It utterly ' fails to account for all the phenomena. ! While the prices of some articles of | production have fallen since 1878 from ' those causes the shrinkage of values or fall of prices has been universal, and ' cannot be explained by the improveI ments in methods of production of 1 particular things. And besides, as a i matter of fact, nearly all of the important inventions, such as the cotton I gin, the steam engine, the sewing machine and the like—inventions ■ which have revolutionized the world’s ■ industries—were invented and practically perfected before 1878, when the marked and persistent fall of prices be- ! gan. But before we proceed with this discussion let us see just what we mean when wc say that gold has risen or appreciated in value. Gold money, though universally used by the western nations as a measurer of the relative value of the product of labor and of all property, is still itself a commodity whose value, as compared with all other things, is determined by the law of supply and demand. When gold money is plentiful, it being, the standard, it will buy fewer things. This phenomenon we call a rise of prices. On the contrary, when gold is scarce, it will then buy more of everything, and we say that prices have fallen. Of course, the converse of this proposition would be true. If the products of labor were inordinately increased in relation to population and the stock of gold—the standard for the measurement of values—the same phenomenon would appear. There would be a corresponding fall of prices. But we know that this is not so. We know that production barely keeps pace with the increase of population. This fact, in its relation to food supplies, is stated in the economic law that consumption is ever pressing upon production. It is not necessary here to secure the statistics for the purpose of proving that there has been in all gold standard countries a universal fall of the prices of commodities. This shrinkage was not observable, did not in fact begin, as has often been pointed out, until 1873, the very year that silver was set aside and gold made the sole standard. From that time to this the fall of prices has been steady and uniform. If the phenomenon could be accounted for by improvements in industrial methods and facilities for transportation, then there would be marked variations in the shrinkage of various products. Those articles in the production of which the greatest advance has been made would show the greatest reduction. But this is not so. The downward tendency of prices has been, as we say, uniform. Butter and eggs, for instance, have fallen in price from thirty to thirty-five per cent and it cannot be claimed that this is the result of improved machinery. Curiously enough it can be shown that the fall of prices since 1878 has about kept pace with the fall of silver bullion measured by gold. At least this was so until the recent slump following the closing of the Indian mints. And this interesting fact amply supports the contention that silver is a less fluctuating metal than gold. In other words, that while the price of commodities estimated in gold have been constantly falling the price of the same things, estimated in silver, have not materially changed. We discussed this idea of the greater stability of silver, as compared to gold, several weeks ago. We then took occasion to call attention to the valuable lession to be found in the examination of the relation of prices to production in China, where gold is not known or recognized at all as a money metal. We adverted to the instructive and valuable discussion of the subject by W. 6. Wetmore in the Hong Kong papers. Mr. Wetmore pointed out and conclusively proved by elaborate tables that in that vast silver-using country, where methods of production have not changed in centuries, prices have not varied in twenty years. That is to say except as to one commodity, gold. That metal is bought and sold in China as copper or lead would be in this country. While the prices of the twenty leading articles selected by Mr. Wetmore for his table of index numbers have remained practically stationary since 1878, gold alone has risen in value nearly 50 per cent We have recently .received another | extended and valuable article from Mr.

Wetmore, printed in the North Chin* News, in which he treats the subject in its relation to Japan and China. He takes the matter of wages in those countries and shows that notwithstanding the enormous depreciation in the gold price of silver in Europe, America and India, there has been no fall or fluctuation of wages in either China or Japan. He takes as an example and by way of illustration an actual ease—a man who seventeen years ago went into employment as a horse boy, as he calls him, at a salary of twenty-one Mexican dollars a month. ♦At that time the silver was worth in gold £3 3.3. Now the silver is worth in gold less than £2. The man had to employ an assistant, to keep his master's horse and support a large family. Mr. Wetmore found that he was able to do so now, quite as well as in 1870. This illustrative and singular object lesson, taken at random in a country which contains one-third of the populatiov of the earth, goes far to show that ths so-called depreciation of silver, about which the gold monometalists of Europe and America are crying so loud, absolutely has not occurred. It is not silver that has depreciated, but it is gold that haa risen in value. In all the vast silverusing countries of the world an ounce of silver will buy just as much of the necessaries or luxuries of life to-day as twenty years ago. Nay, this is substantially true in America, also, as has been so often shown by statistical demonstration. Leaving out of consideration the recent unexampled fall of the gold price of silver, resulting from the India panic, and from which there has been a reaction, silver has kept pace with the prices of commodites in the United States and Europe. When the conspiracy of the world’s creditors in England is overthrown and silver is restored to its rightful position as a universal money metal, gold will depreciate as silver rises and their parity will be restored at the former ratio, which is based upon the relative volume of the two metals.—San Francisco Chronicle.