The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-02-14
ON THE GOLD BASIS
NOW THE ATTEMPT TO GET rueee
WILL AFFECT THIS COUNTRY

wv" '6e ATTEMPT TO GET rheee
WILL AFFECT THIS COUNTRY
"s Cannot Buy Gold and Keen r. xv,.,...
raging Dearly For It-Hov IN. o.,s
Basis Policy Would Crush q. ~ A..
Other Creditor Country.
As strong a thinker as Ricardo sa;d
.nas gong to a gold basis in England
A1ter the Napoleonic wars, was onlv a
ma1ter OF per cent difference between
nank OF England notes and gold. He
nved long enough, however. to discover
and acknowledge his mistake. He did
not take into account the change that
must take place in the value of gold t..
eelt consequent upon the competition
1or gold that would follow the resump-
uon OF specie payments by England and
otner countries that had displaced gold
Dy the issue of inconvertible paper. The
per cent difference proved to be insig-
n'ncant as compared with the change
That took place in the value of gold itself.
so now it is generally assumed that
already we are on gold basis; that the
money standard is settled at last for Eu-
rope and the United States at least, and
that as soon as confidence is restored
prices will become settled and business
be established on a sure foundation. But
are we sure that the ''gold basis" under
the conditions that exist now is any
surer than it was in 1915?
AS during the resumption period fol-
lowing the Napoleonic wars the compe-
tition for gold and its redistribution over
Europe changed the level of gold the
world over, in like manner will not the
new competition for gold consequent
upon the exclusion of silver from money
supply for India and the United States
and the extension of the single gold
standard to Austria Hungary change the
gold level to as great an extent as the
change in the early part of the century
or as that which resulted from the act
OF 1872 The extent of the appreciation
Of gold under these new conditions can
not be foretold, but the changes made in
the monetary situation during 1898 have
been the greatest in the worlds history
and have added more than $50, OOO, 900 of
people to the number Heretofore Compel
ing for gold for money supply, which
cannot otherwise than materially affect
the value of gold the world over.
But whatever may be the effect of this
change on gold one fact may as we'll be
accepted first as last, for it cannot be
escaped-that is, if gold is made the pric-
ing instrument the results of this meas
urement must be accepted. In other
words, we cannot have the single gold
standard and at the same time maintain
range of prices inconsistent with this
standard. The idea that we can have a
gold standard, and then by tariffs, or by
selling bonds, or by issuing more cur
rency, or by expanding bank credits
maintain q range of prices inconsistent
with the standard itself, might as we'll
be given up first as last, for it must be
given up.
Many people, and among them not a
few bankers, seem to think that if we
have a gold standard it makes little diff
ference about the quantity of gold there
u in the country or in the world. It is
quality and not quantity, they say, that
concerns US. In the minds Of such peo-
pie single lump of gold. weighed,
marked and kept. like the pound weight,
In the archives Of the government, is all
that is required. The rest may be credit
Or anything. But when the Barring fail
ure threatened the reserves of the Bank
Of England there was no question about
the quality of its gold or its other money
it was quantity that was wanted. It
was sovereigns, or what would make SOW
ereigns, that the bank must have, and
the Bank of France was accordingly ap-
pealed to not to make good any defect
in the quality of the gold or of the money
on the British side of the channel, but to
supply pounds sterling.
Indeed one might as we'll expect to
sail a ship on faith, only touching the
water now and then, as to expect to con-
duct the vast business of the world on
confidence" referring only now and
then to gold as standard of value A
Vessel u1dy IlUo lOI uOuucuC Oh CQ0
crest of wave or sink into the trough,
but it can safely rest only on the level
sea. So business may be temporarily
supported by confidence" and prices be
lifted up on the high waves of credit, but
settlement day will come, and when it
comes the tumble begins and ends only
at the price level of gold. We cannot
ride always from crest to crest of credit
waves.
If, therefore, we decide to go to a
gold basis, we must 60 there, and as
gold grows dearer as the result of in
creased demand for it prices must fol-
low in the opposite direction, and all at
tempts by legislation or by devices of
any kind to maintain range of prices
above the level of gold must in the end
prove futile. We might as well propose
to increase the size of the bushel meas
ure and at the same time expect our
wheat crop to show just as many bush
els, or to declare that an hour shall here
after contain 100 minutes of go seconds
each, but that there shall still be "a
hours in day.