"THE APPRECIATION OF GOLD."

New Zealand Mail, Issue 1193, 11 January 1895, Page 33

"THE APPRECIATION OF GOLD."

TO THE EDITOR. Sir, —Some little time back you were good enough to publish two letters of mine on the above subject. Those attracted more attention than I expected, and I was frequently asked for any further information I might be able to give on it. I think, therefore, the following extract will interest many of your readers. It is taken from the inaugural address by Lord Farrer to the Eoyal Statistical Society:—• " There is a notion still, I. am sorry to say, prevalent in many quarters, that since coined money is the nominal medium of exchange, and is actually in some cases given in exchange, therefore prices of all articles depend on the quantity of coined money available for the purpose. This theory may have had some foundation in fact at a time, if ever there was such a time, when coined money was actually used and given in exchange on every sale and purchase. It has long ceased to be generally true, and has become absolutely false and mischievous at the present time, when the great bulk of sales and purchases are carried on without any coin at all, and when the trade of a country may be doubled without the need of an additional sovereign. The real weapon with which to defeat this fallacy is to be found in the statistics of banking, of credit operations, of gold reserves, and of the rate of discount."

This really sums up the whole question completely, and disposes of it as one out of the many panaceas which tinthinking people are content to rely on in their despair as to finding any other solution for the pressing problems of the day. Probably even what Lord Farrer says wotild have little, weight with the bimetallists, but for the one fact which upsets all their theories as to the disastrotis effects on trade, of the scarcity of gold. This fact is the remarkable one, that, instead of a scarcity, there is now a most remarkable and tmprecedented glut of gold, and yet prices of most articles continues steadily to fall. One great feature in the English mind is its readiness to accept the " logic of facts " when once proved, and for this reason the bimetallist is obliged now to keep very quiet. He is in fact classed in the public mind with the few who still believe in Protection and similar fallacies. It is satisfactory to find even one mischievous error thus got out of the way of progress, but so many still prevail that much harm will be done before they are likewise discredited by facts. We may depend on it that there is no artificial way of stopping the present downward tendency of prices though much is being done by the errors of trades unionism to aggravate the evil, by checking the power of consumption, and generally restricting trade. Every article must ultimately settle down to a price at which it can be produced, in the places most suited to its production, so as to leave a profit which satisfies the producer. It is of course rank heresy just now to say that labour is subject to exactly the same law, and can only permanently command its market value, that value being mainly dependent on its being good and reliable. Of course trades unionists dispute this entirely, and I quite admit their right to do so, being content to leave it also to the " logic of facts." —I am, "&c,

Charles Pharazyn, St. Moritz, Engadine, Switzerland, November 28th, 1894.