GOLD SUPPLY.

Press, Volume LI, Issue 8731, 1 March 1894, Page 3

GOLD SUPPLY.

TO THE SD.TQR PRESS. Sib, —In an article headed " The World's Goldyield" you say, " We have always held that the fall in prices was duo rather to an excess of production than to the alleged increase in the value,of gold through diminished supplies." Now the facts are—(a) That the value of gold has not appreciated owing to diminished supplies, but owing to the increased demand for the metal from countries that have till lately used silver, or both silver and gold, as full legal tender money; and (b) that an appreciation of the value*of gold necessarily means a fall in all prices measured by a gold standard. A comparison of the index numbers of the last forty years, taking twenty years before 1873 and tweuty years since, will show that up till 1873 prices were rising during all the time; since that 'date they have steadily fallen, and the explanation is that up till 1873 there were mints in the world which would coin all the silver sent to them into, full legal tender money, but since 1873 these mints have been closed. The last act was in June and November of last year, when India and the United States successively, declared themselves' upon a gold standard. Not that these;countries wished: to discontinue silver and .use gold, but becauM there were di-BC-rlties in continuing to use silver as money when the world ac large did not recognise it as full legal tender. It is not production that 'has affected either silver or gold. It is legislation in various countries which has stopped the demand for silver and diverted it to gold, causing a fall in the value and price of silver and a rise in the value of .gold. The increased production from the Witwaterandt district will have no appreciable effect in preventing this for the following reasons: In the first place the total annual production only adds » small decimal of a fraction (I forget the exact amount) to the ocean of gold money now in existence. Out of this total annual addition more than oue-T_alf is used in arts and manufactures, so that the proportion of the annual increase is infinitesimal and cannot overtake the void caused by the displacement of silver, which is the poing that most writers miss to note the effect of. It may sately be said that the,total annual increase would not supply the world's demand for gold for tooth-stoppint purposes alone.—Yours, &c f Rudolph.