Morning journal and courier. [volume] (New Haven [Conn.]) 1848-1894, 1883-05-25
Friday, May 20, 1883.
GOLD AND THE FALL IN PRICES.

GOLD AND THE FALLIN PRICES.
Mr.. Goschen recently made an elaborate
argument to prove that gold has appreciated
| in value. He pointed out that Italy, Ger
| many and the United States have all during
recent years absorbed immense quantities of
gold for currency purposes. Their aggre-
gate requirements have amounted to about
81, 900, 600 ZOO, and concurrently with the up
springing of this enormous new demand there
has been falling Off in the annual gold pro-
duction. Upon the available gold supplies,
therefore. great strain has been put, and
the tension has been all the greater because
year by year population has grown and the
volume of the worlds trade has expanded.
On the other hand, considerable economies
in the use of gold have been effected, but in
Mr.. Goschen's opinion these economies have
not counterbalanced the reduction in the
available gold supplies and the increase in
the currency requirements. Accordingly
gold has become more valuable and prices
have fallen.
This is plausible, but it is forcibly dispu-
ted. Mr. Thomas B. Moxon finds very diff
ferent and perhaps equally plausible reasons
for the fall in prices which has taken place
He asserts that of late years there has been
material decrease in the cost of beth produc-
ton and distribution. Az regards the latter
he points out that, in Great Britain. owing to
the competition of cooperative societies and
the extension OF the ready-money system in
the retail trade there has besn a marked re-
duction in retail prices. He holds that this
reduction also applies, not fully but quite
notieeably, to wholesale prices. Selling for
cash to far greater degree than they did
ten years ago, retailers are able to buy
for cash or on much shorter credit Thus
they make their purchases on bet
ter terms than before. There has also
been a considerable saving of interest
through the increased speed of transporta
ton and the freer use of the telegraph. This
influence operates with special force on the
traffic between Europe andithe East, though
it affects the interchange of commodities all
over the world. The saving acts in two ways
directly, by lessening the interest charge,
and indirectly, by diminishing the per centage
of profit, for the more often merchant
turns over his money the more cheaply he
can afford to make the turn. Again, trans
lower figures. Goods are carried in such
enormous quantities that the carriers can af-
ford to do business at rates which would
have been ruinoas on the smaller business
done ten years back. Another cause for q
low range of prices is found in the cost of
production, which has been reduced partly
by keener.scompetition and partly by de-
crease in the price of the raw materials
used in manufactures as we'll as by
the operation of the influences enumer-
ated above. For last reason, in many
industries, notably in the cotton and iron
branches, production, which for time
Jagged behind consumption, has not only
overtaken, butt passed beyond it. This ex
cess, the inevitable result of profitable man
ufacture will in time be corrected by un-
profitable business, but while it lasts it re-
duces prices.
The London Economist also picks flaw
in Mr.. Goschen's argument by finding fault
with his estimate of the absorption of gold.
Instead of Germany, Italy and the United
States absorbing 100000 900, as Mr..
Goschen claims, the Economist says that but
1896, 600, 600 have been absorbed by these
countries. Whether Mr.. Gosohen, Mr.
Moxon or the Economist is nearest right we
leave for our readers to determine.