The Ohinemuri Gazette. AND UPPER THAMES WARDEN WEDNESDAY, NOV. 21, 1900 THE MONETARY PROBLEM.

Ohinemuri Gazette, Volume IX, Issue 750, 21 November 1900, Page 2

The Ohinemuri Gazette. AND UPPER THAMES WARDEN WEDNESDAY, NOV. 21, 1900 THE MONETARY PROBLEM.

Although by the general adoption of the gold standard the currency question has been greatly simplified, it must not be assumed that all the puzzles which perplexed the disputants pro and con in the bi-metal lie controversy have disappeared. On the contrary, many of them remain quite as urgent and almost as puzzling as before ; for, as before, to attain to a reasonable understanding of the position at any particular moment a number of considerations have to be borne in mind which inevitably affect the principal issue. The war in South Africa is a case in point. The first principle in the monetary problem is this ; Since gold is the measure of the value of all commodities, any change in the value of gold must affect the value of all other articles of commerce. Hence if the supply of gold tends to outstrip the demand for its services, its value must decrease, and the value of all other commodities, measured in gold, must increase. On the other hand, if the supply of gold falls below the demand, prices in general tend to fall. This first

principle of the science of money is, however, though complete in itself, liable to be affected by other consideredona to such an extent that in appearance its application may be wholly reversed ; and herein lies the explanation of an apparent anomaly arising out of .I he war in South Africa,. For now nearly a year the supply of gold from the Transvaal, the country which was the largest gold' producer m the world, has practically ceased. Hence on first principles the value of gold .should during the past twelve months have perceptibly risen, and the prices of commodities -in general should have fallen. Although, however, complaints are rife all round of the tightness of money and the limitation of enterprise, no general fall in prices has yet taken place. On the contrary, trade in certain directions has been brisker than ever and the prices in certain classes of commodities have perceptibly risen. The explanation of this apparent contradiction of the tirst principle of monetary science is simple. Although the supply of gold has suddenly decreased, the price of other commodities have not correspondingly fallen, because the demand for them has also been suddenly increased by the enormous expenditure on war materials. Further, the great rise in freights in the case of an importing country like England his raised or maintained the prices of those goods which have not been directly affected by the war expenditure. War is good for trade so long as it lasts, and so long" as the resources of the country waging it are unimpaired. Its effect is precisely that of alcohol upon the human frame, it is when the war is oyer that its effects are felt ; and then, asm the case of a strong-constituted drinker the collapse is the more sudden and the more complete. And when this war is over the same effect will doubtless result. The expenditure upon it suddenly ceasing, the trades which fattened upon it will find their occupations gone. The expenditure upon it is unproductive. Cordite and human flesh are alike in this that when the one is exploded and the other dead, both are useless, and have left no prodnct behind that is of any value to mankind. As after the Napoleonic wars, as after the war in the Crimea, the nation will feel the effects where the glory of war is departed and the bluster of the guns has ceased. With the New Year will probably come a brighter time, for then the gold mines of the Transvaal will be again sending forth their stores of the yellow life blood of commerce, ond England will resume those peaceable avocations whereby alone real wealth can be attained.