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Lyttelton Times, Volume CXVIII, Issue 18352, 9 March 1920, Page 6

A correspondent whose letter we print this morning cannot understand our objection to the flour subsidy, since bo

thinks thiß is the only practical help the Government is giving to families to meet the increased cost of living, and he would have the subsidy polioy enlarged- Well, our objection to this *« policy .” ia that it is absolutely unsound. It only pretends to help families. Before the Government pays out a subsidy to reduce the cost of bread it has first to collect the money from the public by way of taxation. The subsidy mothod may look like a means of affording relief to families, hut actually it is nothing of the kind. It is really a means of relieving the minds of the politicians, and the more it is practised the less will the Government, and the Parliament which sanctions this camouflage, take the trouble to study the cost-of-living question in the light of basic principles. We can assure “ Father of Four ” that, although it may be indirectly contributed, his share of the subsidy will cost him more than the apparent saving in his bread hill.

The arrest of persons in London for converting gold and silver coinage into ingots is a reminder of the fact that while tho value of paper currency has been decreasing right through the war period, gold and silver have latterly appreciated considerably in value. lor many years prior to 1914 silver maintained a fairly steady price of about 2s an ounce. The lafjpst quotations are in the neighbourhood of 6s 6d an effince. so that silver has appreciated in value by 325 per cent. Gold, the price of which up till quite recently was controlled by law and maintained for many years at between £3 17s 6d and £3 17 s lOidfpor ounce, has also increased m price. Tho British Government decided to permit free trad© in gold in July last, and the latest quotation from London, in November last, was £5 3s an ounce, an increase in value of nearly 33 per cent.

In respect to gold, the increase is claimed to be almost solely due to the increased cost of production- The same factor applies to the cost of silver, hut in a lesser degree. Tho greater part of the enhanced price of silver must ho ascribed to the .extraordinarily heavy purchases by’ China, which nation lias continued for several months to acquire silver on a rising market, and is still a heavy purchaser. Owing to the increased Value of gold and silver, the coinage of Britain and most other countries is now slightly in excess of its face value, though at pre-war quotations the coinage was not intrinsically worth the value stamped upon it. A sovereign before the war contained ,18s 4d worth of gold It now contains about 24s 2d worth. The temptation to traffic in ingots obtained by melting dow’n coinago is therefore a strong one, but fortunately for the Governments concerned such frauds are easily found out. The penalty is a very heavy one, and detection is practically certain.