Hawke's Bay Herald. SATURDAY, JANUARY 14, 1899.

Hawke's Bay Herald, Volume XXXIV, Issue 11122, 14 January 1899, Page 2

Hawke's Bay Herald. SATURDAY, JANUARY 14, 1899.

THE MONETARY OUTLOOK. The prosperity or- otherwise of colonial industry and enterprise is dependent largely on prices. Prices in their turn are dependent, not only on the supply of the commodities to be exchanged, but on the supply of money available to purchase them. With a nurblindness which will be characterised in its proper terms by the better-informed generations who are to follow us, our financial and monetary guides overlook or ignore the latter condition of the problem, although it is as vital to the issue, and therefore as intimately connected with the prosperity of the producer as the former. Are we to be driven to conclude that the prosperity of the producer is of no importance in their eyes ? What is the present outlook, co far as the monetary or currency side of the problem is concerned ? As regards the productive side, producers on all hands, pastoralists, agriculturists, miners, and manufacturers, are working their very hardest. Tet their success is seldom equal to their deserts. If they have good crops the price generally falls in a greater ratio than the increase of production. If they have poor crops the price does not rise iv proportion to the shortage. Too often they find themselves steadily going behind, without perceptible fault of their own. This is just the effect which would be produced if the currency, that is to say the amount of money available to the world's population for actual purchases, or for the foundation of bank credits, were boing steadily and insidiously contracted. Is such contraction proceeding, and, if so, is there any probability that it will continue ? It must be borne in miud iv tkis connection that other considerations besides the actual quantity of the monetary metals in existence have to be taken into consideration in answering these questions. The quantity of one monetary metal may increase, but if the number of persons who are compelled to resort to the use of that metal for monetary purposes increases at the same time iv greater proportion than the increase iv tho available quantity of the monetary metal, the general effect will bo that of scarcity, as there will be a smaller quantity per head available. So also if the increase in tho quantity of oue monetary metal available is offset by a greater decrease iv tho quantity, or in the exchangeable value, of the other monetary metal, the general effoct is still that of docrcnao. In both these instances prices will fall, profits will diminish, the burden of

debt will become heavier, producers j will be straitened and impoverished, and there will be distrecs and pressure, as truly and as really caused by scarcity of money, as distress and pressure of another description are sometimes caused by drought or the failure of crops. Are these influences at Work ? We are compelled to a^mit that they nre, and that in a most unmistakeable manner, The production of gold is increasing, it is true. But it is not increasing so fast as the population and commerce of the countries which have adopted gold as their standard. It must be remembered that it is the mass of the money in existence that counts against commodities, not ths yearly output of a "single monetary metal. Only a portion of the yearly production of gold is coined into money, and much that is coined is promptly remelted for the requirements of tfo& -arts. At a very liberal calculation the quantity of gold money in the world is not being increased by more than 2 per cent per annum. This barely keeps pace with the increase in population of the gold-using countries-, And as, owing to the march of invention, productiveness 5p increasing at a much greatet ratio than population, it is skat that the world's supply of gold is no larger than will suffice to maintain the prices of commodities in gold standard countries at their I present level, all other things being equal. It ia very doubtful, indeed, whether ifc is adequate for this purpose. But all other things are not equal, A Very great deal more than this is expected o£ it. A movement is on foot, and is being Bteadily and energetically pressed forward) to place the 300,000,000 inhabitants of India, who have previously been relying on. silver, on the gold standard. Is it toot evid<ettl that \i. this is effected tbe demand for gold and the Btraln on that metal will be immensely increased and that the effect will be to cause a practical scarcity, and that it will therefore be very detrimental to the prices of staple articles of production, and therefore especially detrimental to the interests of colonial producers ? Already there are rejoicings in certain quarters that millions of gold are being diverted to India in consequence of the steps recently taken by the Government of that country to close the mints to the coinage of silver and thus make a rupee intrinsically worth only tenpence pass current as worth sixteenpence — one of the worst tricks of the currency debasing monarcha of the Dark Ages. Every million of gold Bent to India means so much less available for the other gold users of the world, and it means, moreover, an increasing difficulty in. maintaining prices at a profitable level. If wages, interest, and rent could be scaled down as prices fell the outlook would be less dismal, though even then a very rudimentary sense of the fitness of things will show that the supply of money ought to increase pa7-ipasstl with the increase in production and commerce. Wages cannot be reduced without great industrial convulsions and stirring up strife and ill-will, and the very fact that the fall in prices causes the employment of labor at current rates to be unremunerative, swells the number of unemployed. Bank interest, under the influence of competition, has, it is true, been materially reduced. B'lt there is no means of effecting a reduction in the interest payable under mortgages or for fixed terms, still less in that which is payable in respect of the public debt. The latter is very heavy and a very real burden on the people. It is really, as we know, paid in produce, and, owiDg to tbe fall in prices which has been caused of late years by the arbitrary contraction of the world's currency, it now takes twice as much labor (represented by produce) as it formerly did to pay the same amount of interest. The pressure of rent, for similar reasons, becomes heavier than formerly, and, on the other hand, when property owners, in deference to the prevailing tendency, reduce rents, the value of their property is proportionately diminished, though under normal conditions it ought rather to increase. The outlook as regards currency, therefore, owing mainly to the proposal to put India on tbe gold standard, but also to other causes into which we cannot now enter, iB not encouraging, Hope, it is true, remains at the bottom, even of Pandora's box of evils, and there seems little left bufc to hope that the project of the Indian Government may be frustrated before it has time to adversely affect Australasian interests.

ACTIVITY IN" THE EAST. If crass stupidity can secure the wiping out of China as a nation the Empresa-Dowager bids fair to accomplish that consummation. In yesterday morning's issue a cable announced that the Viceroy of Nanking had been censured for recommending that the Chinese soldiery should be instructed in modern arms and drill ! One would have thought that the disastrous result of the war with little Japan would have taught even a prejudiced old woman that the very existence of the dynasty is dependent npon the development of the natio.n on modern lines. Meanwhile the European Powers, notably Great Britain and Bussia, are preparing for the time when the partition of the Empire is inevitable. Britain's activity is chiefly manifested in the strengthening of her fleet in Chinese waters. Eussia has not only followed suit, but is making enormous preparations on land. The Samhurger Correspondent publishes the following interesting and instructive letter from St. Petersburg.— "Quietly, in all secrecy, but with all the greater exertion and expenditure, Eussia is endeavoring to make Port Arthur the strongest point d'appui in Chinese waters. The work of deepening and enlarging the harbor is being carried out with the greatest energy day and night, and before long it will be accessible to the largest ironclad. In the town masons, carpenters, and all sorts of artisans are seen. Storehouses, arsenals, Government buildings, crop up like mushrooms — so to say —in a night, and the place will soon have quite a civilised appearance. What is still more important, private enterprise keeps pace with official activity. The number of commercial houses which establish branch offices at Port Arthur is daily increasing. Contrary to its custom, the Uussiau Government is doing everything to promote the development of the piaco, which is to become the starting point of Bussia's great aims in the Par East. Postal affaire are being zealously regulated, private steamers and men-of-war keep up regular intercourse with Chofoo and Nagasaki, at which places there is connection with the traffic of the world. Prom the Eussian post-office at Chefoo, daily communication by land with Irkutsk, via l'ion-tsin, has boon organised, so that from Port Arthur the most distant spot in European Eussia can bo reached in about four weeks, while only a short time ago mouths were necessary. Telegraphic communication, which is still via Vladivostock, loaves much Vi be desired, but the Government has dovoted its serious attention to this evil, fn short, from all 0110 hooh, Eussia intends greet thiugs with Port Arthur, It is positively stated at St. Peters-

burg, and confirmed by letters from Port Arthur, that the Government intends shortly to begin building extensive docks, &c, or at least to give private enterprise the gteatesl support ill this field, ft Is proposed to offer the greatest facilities to Eussian emigrants to Eastern Asia, especially those intending to take out or send for their families. The Government knows it will be difficult to Create a civilised country without foreigners! and for the piieeteht all foreigners— German) Belgian, of French— who; besides a spirit of enterprise and ability, possess Capital-, can rector upon a welcome. Hdw good arc, salaries thfire 1b illustrated by the fact that a few weeks ago one of the largest commercial houses in Vladivostock, a German firm, engaged an une'drfcated, but reliable non-com-missioned officer of the volunteer fleet as clerk at a salary of 6000 roubles (£600), free dwelling, gas, and coal,