THE CURRENCY QUESTION.

Otago Daily Times, Issue 10306, 13 March 1895, Page 3

THE CURRENCY QUESTION.

TO TEE EDITOR.

Sir, —In Monday's issue you have a leader on the great question of bimetallism in which you t»ke some very erroneous views, the result of overlooking a factor in the question which is really at the bottom of the whole matter. You quote John Stuart Mill, who cays: "An increase in tho volume of money raises prices, and a diminution lowers them." To this yon say : " Put into simple language, it means that if a certain number of articles are to be bought and sold, and there ara a largo number of sovereigns in the possession of customers, the number of sovereigns given for each article will be large—that is, price 3 will be high. If, on the other hand, the buying public has only a few sovereigns to expend, only a few can go to the purchasing of each article—that is, prices will be low." That is ao far true, but it does not in the least help to solve the problem of low prices, which is the real question at issue. Nor do yonr illustrations which follow help any either. You say: "If there are a largo number of sovereigns in the possession of customers the number of sovereiges given for each article will be large—that is, prices will be high." But supposing that the number of sovereigns in a country is large—as large as was ever known in that country—but tbew sovereigns wera mostly in banks or in other places, and not in the possession of customers, then your whole theory of shortness of money and that of the bimetallist falls to tho ground. It is not a question of j scarcity of moDey as compared with the numi ber of articles to be_ purchased—the money is I there as plentiful as it was when prices were at their best, but it is not in the hands of wouldbe customers, —it in a question of distribution of money. Now for my statement that money is plentiful, I refer you to the last weekly return of the Bank of England, which shows a total reserve to be £34-,392,000. Now you will not have to go back many years to find the reserve of that bank only about the half of that sum. And, further, money has not been at so low a rate of interest for 30 years as it is at the present time; and that is the surest test of its plentilulness. You will, perhaps, object that this money question is not conQned to one country, but is of world-wide application. But if the theory of short supply of money fails so completely &3 regards England and her colonies, it can hardly have any force when applied to other countries. An authority on this question, writing recently to the London Times, said that the difficulty which had arisen over this silver question in India was now past, and that is one of the countries to be chiefly affected by it. I have above assigned as a cause of low prices the want of proper distribution of the money there is. To illustrate this point, let us suppose that a mine of gold was discovered containing enough gold to double the amount of gold coin now in circulation when coined, and that this gold all belonged to one man, and that it could be got with very little cost of labour, and that the man had it all minted and stored away in vaults, tbe quantity of gold coin would be doubled, but for want of distribution it would be of no good to anybody except the one man who owned it. This illustration only shows, in an exaggerated form, the true position of this money question. Money has in all periods of the world's history become congested. This is an inevitable concomitant' of individualism. But the present condition of the civilised world is more favourable to the congestion of money than has been the case for many years past. There has been a long reign of peace. The war now going on between China and Japan ha 3 not caused any large expenditure of money iv Europe. If a European war was to break out it would smash your theory of shortness of money in no time. And there are no gigantic works goipg on of an extraordinary kind to circulate money. NothiDg of moment is being done for the future. The world is just working to supply its daily wants. Its great army of pioneer workers are, to a very great extent, suspended. There has been a diminution of expenditure in these colonies in this way of something like £10,000,000 a year, and, added to this, the relations between capital and labour are in a more unsatisfactory condition thau was ever known bsfore, considering the political power labour now possesses, and this has z, most depressing effect upon speculative enterprise. This is a pretty stiff array of reasons for the depression and low prices—quite I enough to sat aside the bimetaliisis' theory: | but there are a host of others yet, which, if I were to enumerate them all, would take up more spaoe in your broad sheets than you could allow. There is the matter of improved methods of production, which includes labour-saving machinery, triple expansion engines, &c. This all means dopriving the labourer of work and wages, and the tradesman of customers. And cheap land has played no insignificant part in lowering the prices. Cheap freights and railway extension have, of course, brought this about. And these colonies have, to some extent, been worsted in this race by countries nearer the markets of Europe where labour is chasper.

I will now notice one or two more points in your article where I think your reasoning is faulty. You say: " Either the amount of good 3 to be bought and sold has increased out of all proportion to the money used in commerce, or the amount of money used in commercial transactions has not increased sufficiently to keep pace with the increase in the supply of goods." The question that arises hera ia, Is not the money required to produce goods sufficient to purchase them for consumption ? It it is not it ought to be, and would do if the money was rightly distributed. Your figures regarding the world's wheat production show that the quantity produced was more one year than another, bub it doe 3 not follow that all the wheat produced in the plentiful years wao consumed in those years. You have read the story of Pharaoh's fat and lean kine, and the moral of it applies to your wheat calculations. You next show that "25 years ago about 40 millions of people were competing for gold ; now there are about 300 millions among whom a slightly increased amount of gold han to be divided." Here 5 again remark that geld and money of all kinds only play a pare in carrying on the world's business. Property in probably a greater factor in thia than even money. It is said that ships will force their way over stones to get freights, and tradesmen will certainly send their gooda to those who have property, cr s,nyfcbiug of value, even if they hove not a cent. The rest of your contention on behalf of the bimetallists' theory is answered by what I have already said, so I will cot take up more of your space.—l am, &c, T, Buxton.

Makarewa, Southland, March 5.