THE PURPOSE OF GOLD

Timaru Herald, Volume CXXXVII, Issue 19512, 10 June 1933, Page 6

THE PURPOSE OF GOLD

IF NO LONGER MONEY, WOULD IT STILL HAVE A VALUE?

Specially Written for “The Timaru

Herald.” (By “Kokiri”)

With the approach of the World Economic Conference, currency problems are becoming interesting. What is more, we learn that President Roosevelt has signed the paper which puts the United States officially off the gold standard. This means that forty-six nations have abandoned the gold standard. France is the one important remaining nation. The question might well be asked, what will become of gold if the gold standard is permanently abolished? Will it become valueless? The answer to the last question is no! If gold had no further monteary utility there would certainly be some fall in its market value, owing to the release from bank vaults. But, it must be remembered that gold from the banks can only come on the market gradually. Gold would become a commodity. If its price fell, it would be used to a greater extent for jewellery, for plate and presentation articles. Generally, it would displace silver. Diamonds are not a monetary unit, but they command a high price. Silver was once a monetary unit—still is in some Eastern countries—but when bi-metallism was abandoned, silver did not decrease permanently in price. It can be said with some degree of accuracy, that gold will always possess a comparatively high value.

It seems impossible for the human mind to depart from a tangible concrete thing for a value measure: it seems impossible for man to continue world commerce with nothing to measure price. Perhaps, one reason why the world has become tangled economically is that it has departed from a definite measure of value. The world needs something concrete to base its prices on. Why many economic schemes remain theories is that they are ideals and not practicable, merely abstract ideals. It is conceded that some of them might work for a time, but in the process of operation, they would lead to hopeless failure because of their own intricacies. One essential factor seems to be missing from most of the economic panaceas brought to our notice: they must fail because they include no concrete measure of value. In the past, gold has been a fickle mistress for value. In fact, there are evils which make gold a fluctuating price basis. But, everyone will admit that it is better to possess some price base than no price base at all. We want some yard-stick with which we can measure value and so determine price. Any fool with authority and a printing press could quickly ruin the stability of a note issue. For aeons of years, some human minds have tried to evolve schemes giving something for nothing. Any practical and sensible person must know that he cannot getmuch for nothing! In a nutshell, that is the Mecca of some economic ideas advanced to-day. Notes issued against nothing! Issued against an abstract quantity. The Government or somebody else, to obtain something for nothing. It cannot be done. It must be allowed that although temporarily checked, world commerce will increase more quickly than the world gold supply. This is perhaps, the greatest evil embodied in the gold standard. But, if we have to adopt a new system of currency, the cardinal point must be a concrete value measure. We have our yards and our pounds avoirdupois, and we must have our value measure. When gold is finally abolished, it can only be replaced by something possessed of all its noteworthy monetary qualities, and more than that, the yellow metal must be replaced by something without its faults.