THE DEPRECIATION OF BULLION.

Auckland Star, Volume XLI, Issue 69, 22 March 1910, Page 6

THE DEPRECIATION OF BULLION.

(To the Editor.) - —It has been truly stated that the greatest events that have occurred in the history of mankind have been directly brought about by a successive contraction and expansion of that concrete expression of exchange and circulating medium of society known as money. The fall of the Roman Empire, erroneously ascribed to slavery, heathenism, and moral corruption, was in reality brought about by a decline in the silver and gold production of the mines of Spain and Greece. Columbus led the way in the career-of renovation when he crossed the Atlantic. Before a century had passed the annual supply of the precious metals was tripledprices ot produce the world over were quadrupled, and the weight of debt and taxes insen-sibly-wore off. In this rejuvenation of industry the relations of society were changed and man's rights established, and this wondrous overthrow of feudalism was due, not to an improved moral tone or to the teachings of Christianity, but to the pick of the miner releasing, first, the silver stored in the mines of the great South American Continent, secondly, by the efforts of the old-timers of California and Australia, and lastly, by the scientific exploration of the bowels of the earth, the treatment of the ore by chemical processes, and the dredging of great ..drifts by mechanical appliances. At present the attention of the British people is taken up by Home politics, the making of Dreadnoughts, the creation.of; a territorial army; and yet the relation between money and prices transcends all these matters in importance. It is evident that as the out-turn of gold -more than doubles itself every ten years, so will, the price of all commodities in daily use, the cost of services, and tbe value of land, tend to increase in a like ratio or in proportion to the depreciation in value of the yellow metal, as estimated by its purchasing power. ' * The question, then, is: Can the great creditor countries look on calmly while every contract, including that of the English National debt, is being violated

5 'against the intention -of at least one i side of the contracting parties? In 3 the. case of. debtor .communities, such ,as the Australian Common-Wealth and the I Dominions of Canada, South Africa and New Zealand, the relief occasioned by 5 the advance of prices itated by ' the decvreased purchasing power of gold, > must be already something enormous. Naturally, the creditor countries are ; alarmed, for there may come a time when their loans will possess no greater ' value than French assignats of the first Revolution. England, outside of her own national deht, is a world's creditor to an amount of capital equal in round numbers to two thousand one hundred millions Stirling, for which her debtors send her, by way of interest, commodities and bullion to the value of something in the ■ vicinity of eighty millions per annum. Now, money is the creation of law. Deprive gold of its legal tender prerogative, gold would be comparatively ; worthless, and gold mines would shut | down, but, however much the gold bugs j of the world may desire to keep up the appreciation of the precious metal, it is I hardly likely that even those who have I mortgages over the earth's surface will have the temerity to order the shutting off of the world's supply. Another and more serious operation than that of an over supply from natural sources may effect the creditors. A I certain Polish Professor of Chemistry, one err Yon Guldenberger, has almost ) perfected a method by which certain metallic substances can, by the aid of powerful electric currents, be transmitted into the noblest of noble metals. ' In other words, gold may shortly be - manufactured as surely and as cheaply | as aluminium is by means of the elec , trie current now obtained from common l clay. When this eventuates, what price j gold? What the value of bonds and; ' I interest on bonds payable in gold ? For I i I gold is a legal tender, and payments of : j gold that is gold must be accepted by ; I creditors big or little, Whether great as . I the Bank of England or insignificant as ' j the three-ball -tfaison de Piete dealer ; round the corner. Sic transit gloria ruundi.— am, etc., ! H. JOHNSON.