MORE EVERY YEAR

Taranaki Daily News, 21 December 1932, Page 12

MORE EVERY YEAR

WORLD’S SUPPLY OF GOLD GROWTH IN PRODUCTION. % EFFECT ON MONEY SYSTEMS. During the post-war period the gold production of the world per annum was substantially below the record production achieved in 1915, when the world output reached £96.5 million, writes Professor D. B. Copland in the Svdney Daily Telegraph. From 1924 to 1929 production fluctuated between £BO million and £B3 million, distributed as follows (all £ million)':—

Contrary to expectations, the South African production increased. This is due to cheaper methods of mining ana the opening up of some new mines. Canada has shown a rapid expansion of production, while in the United States production has declined. The most remarkable feature of the table is the expansion of production between 1929-31. In Australia, for example, production has increased from £l.B million in 1923 to £3.5 million in 1931, and it will probably be higher for the current year. THE DEMAND FOR GOLD. In view of the expansion of production it will ba of interest to consider whether the fear of a gold shortage will arise again when the world i eturns to the gold standard. Gold is absorbed in the industrial arts, in hoards in the East, notably India, and in monetary uses.- The total nen-monetary demand' was for some time more than half the total production per annum. This is ’ explained largely by • the enormous appetite of India tor gold. For example, in 1925, when the output of gold was £Bl million, India absorbed £4G million. The following table shows thq, amount of gold absorbed for non-mo.netary puiposes, and the balance available for additions to gold stocks'. Non-

■’Owing to the export of gold from India this was a minus quantity in 1931. DECLINE IN DEMAND. The balance available for money has more than doubled since 1922 or 1924. The figures given for stocks of gold money include the gold reserves in central banks and treasuries, the gold in. circulation, and the gold hoarded in countries other than the East. The significant feature of this table is the high percentage addition per annum to the gold stocks in the last three years. In 1928 it was slightly over 2 per cent., in 1930 it had grown to nearly .3 per cent., while in 1931 it was over 4 per cent. The position in 1931 is unusual, because in that year India surrendered no less than 17 millions of its, hoards, while the amount used in the industrial arts was only 8 millions compared with 17 millions in 1928.

The increase In the additions to stocks was brought about, not by a rapid expansion of production, but by a rapid contraction of the non-monetary demand for gold. The annual rate of growth of the world’s monetary stocks should be at least 2 per cent to keep pace with the increase in. production and the expansion of population. With a reduction in the non-monetary demand the amount available for money automatically increases and enables the stocks to be expanded in conformity with the increased trade and commerce of the world. The decline in the nonmonetary demand is best shown in the following comparison of the non-mone-tary demand for different periods:—

SUPPLIES AND PRICES.

The most striking feature of this table is the enormous increase in the stock of gold money. There were actually at the end of 1931 three times as much gold available for money as there was in 1894. If the world stock of money must go oii increasing at the same rate in order to maintain anything like stability in the value of money and the price level, the ultimate outlook for the gold standard is not bright. There are three possible sources of relief without changing the working of the gold standard:— 1. The continued increase in production. 2. A continued decline in the nonmonetary demand for gold. 3. A better; distribution of the gold reserves. ' / Some relief may be expected from each of these, and the outlook for the gold standard in the near future is perhaps not as serious as appeared two years' ago. Nevertheless, taking the long view, we cannot expect world production to go on increasing at such a rate that the stock of gold money will be trebled in 40 years.- It follows, therefore, that fundamental changes must take place in the working and constitution of the gold standard if and When it is restored.

re tn d <s *C (8 .2 rs ■ s tn J" o O ■ S3 1922 29.8 5.4 9.7 3.9 65.7 1924 40.7 6.5 10.4 3.4 80.8 1926 42.3 7.5 9.5 23 82.3 1928 44.0 8.0 9.1 2.7 83.7 1930 45.5 8.9 8.9 2.6 85.7 1931 46.2 11.4 9.3 32 90.0

"S C-3 CO 5 CD CO t'O tO o w cn CO CO to co to ■ I M CJ W J-* CH 74 co co a* .....' 42.5 ..... 51.7 M . monetary 3 demand . co -CO gfilfc b© ro to co co H* M Additions 2 to Stocks to s bi So w GA CH *0 M KO •O..CO *3 tO h» Total Stocks p of gold moiic

x 4 1 3 S s g 0 li s •g-S i-S ji " < as o W & 5 years to 1894 60 91 802 5 years to 1904 132 174 1132 5 years to 1914 223 247 1647 5 years to 1926 247 338 2137 5 years to 1931 108 317 2454