People's Pilot, Volume 5, Number 42, Rensselaer, Jasper County, 23 April 1896 — Bit Off Too Much. [ARTICLE]

Bit Off Too Much.

In throwing silver overboard it is more than possible that the sh.ylocks have bitten off to much. It is not often that a shy lock will cut his own throat, but this may be the one exception. The temporary enhanced purchasing power of gold stimulated the production of that metal to such an extent that the day is not so very far distant when, at the present ratio of 16 to 1, silver will be worth the most. This may seem like a rash prophesy, but time will prove its correctness. In fact, it is not a prophesy at all. It is a calculation based upon certain unalterable laws and unquestioned facts. First: The.inevitable law is that the increase in the volume of money decreases its purchasing power. That the increase of gold product decreases the purchasing power of gold, and that the increase in the product of silver decreases the purchasing power of silver—and vicvi versa. Of course the decrease in the purchasing power of the one metal, even while its product is being increased, may for a time be checked by the disuse of the other metal. Till the vacuum thus caused is filled the above rule may seem inoperative. For instance, though there lias been already an enormous increase in the production of gold its purchasing power has steadily increased, but this is owing to the fact that silver coinage has been suspended. Till this shortage, caused by the suspension of silver coinage is made up by the gold product, the purchasing power of gold will contiuue to increase. But when this vacuum caused by the withdrawal of silver is filled the the rise in the purchasing power of gold will not only decrease, but will at once begin its inevitable decline. In the years to come, you who are students in financial lore, please remember what here is recorded: The decline in the purchasing power of gold will be as rapid as has been that of silver since 1875! And the decline will not stop till the difference between gold and silver is as great as it is now with the conditions reversed. When the day comes, as come it will, that gold begins to decline in purchasing power the value of silver will begin to increase—not only relatively with gold but actually with all other commodities. The above is as unalterable a law as that water runs down hill. And now as to the facts: Second: The indisputable fact is that the production of gold is increasing at an enormous rate, with a prospect of a long and continually increasing product. In 1887 the world turned out 1106,000,000 and in 1890 the output was only 1113,000,000. Last year the output of gold rose to the enormous aggregate of $203,000,000—a yield equal to the entire product of any two decades down to 1840. In the last five years the gold output has doubled, the rate of increase being about 12 per cent for e ach year. If the average for the next five years is no more than 10 per cent the production in 1900 will reach the vast sum of $320,000,000, and the world’s stock of gold will be increased, considering the product of the last five years, by more than $2,000,000,000. A well-known French economist estimates that within two or three years the world will yield about $244,000,000 annually, and that this will continue for at least twenty-five or thirty years. The productive power of gold mining machinery, as well as the greatly cheapened price of rock drills and explosives, has cut down the cost of gold production to about one-fourth what it was forty, or more than twenty years ago. It.is interesting to note the fact that already Shylock begins to shake in his cowardly shoes oyer the rapidly increasing supply of gold. We refer of course to those shy locks who are interested in long time investments. ' The note-shav-ing shylock who deals in commercial paper is not interested in the question. A Chicago goldbug organ of recent date expresses its uneasiness on the subject in the foliowing language: “When the gold basis was established the world’s production of gold averaged but ten millions a year. Within this century enormous piles of gold have beeil amassed and the stock, as we have seen, is certain to receive immense additions. In what way will the mechanism of finance have to be readjusted to meet the new conditions? The fear of limitless production of silver. which made international bimetallism entirely hopeless, even in the opinion of ardent advocates of that system, has been supplanted by the fear of a gold flood; and it is interesting to note what moral bimetallists draw from this change. “It is believed that the present commercial ratio between gold and silver will be materially modified. Some, indeed expect to see silver at a premium. A very able writer in the Bankers’ Magazine, of London, is inclined to believe that gold will depreciate in value and that effects on the industrial world will be extremely alarming. —Norton’s News.