Wanganui Chronicle AND PATEA-RANGITIKI ADVERTISE. "NULLA DIES SINE LINEA." MONDAY, FEBRUARY 15,1886. GOLD AND SILVER WITH RELATION TO NATIONAL DEBTS.

Wanganui Chronicle, Volume XXIX, Issue 11129, 15 February 1886, Page 2

Wanganui Chronicle AND PATEA-RANGITIKI ADVERTISE. " NULLA DIES SINE LINEA." MONDAY, FEBRUARY 15, 1886. GOLD AND SILVER WITH RELATION TO NATIONAL DEBTS.

{" Observer.") The lighthearted way in which many people talk about borrowing tea or fifteen millions of money in addition to our present debt indicates a oondition of the public miud which is at once serious and alarming. The country is intoxicated with repeated loans, and has become so habituated to them that abstinence seems to many to be neither pleasaut nor possible. Yet perhaps it is not too late to sound a note of warning and to point out the dangers that lurk beneath the fascinations of the financial schemes which are luring us to our destruction. I purpose in this short article to lay before your readers some historic facts and economic investigations bearing on the subject of recent and prospective borrowing and its consequences that I think may cause some to pause before they consent to committing the country further to the public fundholder. And here let me say that while writing heartily and with sincere conviotion, I nevertheless lay my views before the public with dim* denoe and hesitation, and rather in a suggestive than a didactic spirit, and with a hope that my remarks will set people of experience in affairs and of wide opportunities of observation in the way of following useful methods of inquiry. For myself, in approaching the subject of gold and silver and their effect upon nations, I am confounded by its astounding magnitude and the vast and complex nature of the probs lems it presents. The subject when it is fairly viewed is gigantic; nay, it is Titanic, for in it 3 contemplation the mind seems lost, and one is almost constrained to aaythis is mental pabulum mete rather for gods than men ! The public debts of Europe alone amount to more thau four thousand four hundred millions sterling. That of the United States has been reduced from six hundred millions at the close of the war to two hundred and sixty millions, and the astonishing proposal is just made by Cleveland in his message to the Senate to lower the tariff on necessaries, because the public debt is getting inconveniently small. Mark this, reader, for it bids us to be cautious in working our problem, and suggests that even borrowing, like dram-drinking, may be good in moderation. We have, than, in Europe and the Statea nearly five thous sand millions of public debt. What a morsel, we might say at first blush,for the Socialist to expatiate upon ? More tyrranous, exaoting, and tenacious, even than the much abused landlord, claiming his full pound of flesh, unaffected by seasons, vicissitudes, or feelings, the fundholder never relaxes his grip, save when his property shrinks or dissolves, and he finds it elude his grasp. But Henry George, the Frince of Socialists, allows that the money-' lender is entitled to his percent., though he would confiscate the land that mighfc be ihe dwindliug security for its due payment, and socialists generally have been so engrossed in their efforts to disperse property more tangible and more easily reached, that they have not made so great a stalking horse of the hoarder of money as they have of the owner of land. In the nature of things, too, they cannot, for money is a commodity that can be taken to the best market, and has a wonderful aptitude for disappearing from the precincts of people who have loose nations of divide ing it equally and fairly among them* selves. This load of debt, then, is likely to remain firm so long as nations are honourable and solvent, and therefore in such countries as I have named must be and is paid to the utm@st farthing. But this debt is of such a nature that it may unexpectedly pass through a process reoembling in chemistry petrifioationSilently, yet surely, it increases in density, though in bulk and appearance it remains the same, till it perhaps doubles or trebles its former weight, and then, too, in so delusive a manner that the most observant amongst us are deceived. In 1872 I saw unwashed wool sold at Morgate-street, which had been grown in the neighbourhood of this town, ion 21| pence per pound. 'This wool would not bring more than half that price now. This means that the ten million of debt then owing by ua could have been paid off by half the number of pounds that would be required to pay it off to-day, la other words, we have to give two pounds of our staple oommodifcy now where we only gave one pound then. Of course if two pounds of wool could be produced now with the same labour as one pound could have been produced before, then there would be no cause for complaint, but the fact is that the labour required in producing one pound of wool is as great as ever. The money lender of 1872 is therefore, taking wool as a measure, twice as well off to-day as he was then. Nor is this illustration, drawn by rule of thumb in a way that ought to come home with force to every farmer, unsupported by inquiries pursued on a more extended scale. The Economist, a London periodical, has for upwards of forty years published annually an index showing the average price of twenty-two principal articles of commerce in En ft« land, with the result that during the last eighteen years pricei have been rapidly coming down so that these articles may now be bought for about half their former price, and also that prices have receded to something like the average of 1849. A decrease of SO per cant, is equal to a rise ot 100 per cent., so that if articles fall oue-half, one huadred pouuds sterling increase in value, or in the language economists appreciate, 100 per cent. Now a portiou of our lo.ui has been spent on goods that have fallen in price; but the greater part was spout before a perceptible fail, and of the other part a good deal has been speut in the polony, where prices have been kept up judiciously by loans, and where iv any i; ibe prices do not coma down afc once in response to distant marketa Therefore I do not think I am outside the mark when I say that, even uiousured by English prices, our loan, taking it for convenience at 80 millions, is us burdensome as fifty millions would have been in 1872 with the same population, und measured in wool is as hard to bear as 6tExmllions would have been tit that time.

In an exceedingly interesting aocountof ♦he fluctuations in the value of wool published in the Ashftftrfcon Mail of January 12th, 1884, it was «shown that the lowest point touched in the present oentury were 1849 and 1884, when the price was in encli yeur '22 shillings per tod or 281 b«. The highest was in 1864, when it was 64 shillings per tod, the highest point reaohed since 1815, when 50 shillings was touched. Taking wool ag a criterion of value, a loan of 30 million* effected in 1864 would now press upon us Avith the force'of 90 millions, or about the eighth part of the English national debt. It ia the opinion of many recent observers that the cause of tho fall of prices is the diminished output of gold. This view suddenly sprang into prominence a few years ago ; but although supported by strong fact and able argument, has not been received without muoh reservation and doubt, aiad is even warmly disputed. The history of the riae of this vi6W is somewhat singular. A member of the English Parliament casually remarked in the House iht»t, wich regard to depression of trade, the cause could be found in the late rapid appreciation of gold. This was in 1883. Ia reference to this speech, the London Times published an editorial on tha subject, and remarked that an unexp9Gted solution had been suggested The subject was then taken up by Mr George J. G-oschen, who, in a speech reported in the Times of April 13th, 1883, and afterwards in a letter published on the 11th of May following, seis out very forcibly that gold has lately acquired a much greater purchasing power. The question thus fairly set going, has been discussed pretty froely of late without any decided concensus of opinion, and evenMr G-oschen, in a recent speech, acknowlodged that he may have attributed to tho scarcity of gold more than was due to it. The facts, however, are very strong. In the sixteenth century large aocretiona of the precious metals followed the discovery of the new world, and was sue* ceeded by an e,nor»nous rise in the value of property in Europe, This rise was again experienced after the great gold discoveries of the present century. In 1849 prices were at their lowest ebb, when as I have just mentioned wool stood at the present price. In 1864 prices were at their highest, During this time the new gold had got into circulation at the rate of thirty millions a year for about six years, and then, keeping a high average for many years, gradually diminished till the present annual output for the world is estimated at only about seventeen millions, and is declining without any hope being held out in any quarter of a rise. Here in two yell known instances in history a rise in prices follows aninoreaseof gold, and in our own experience a fall of prices follows fast in the wake of a diminishing supply of gold. Nor is the conclusion altogether an empiric one, for from the very nature of trade and aooording to all the experience of commercial men suoh results should follow as we have found.