Los Angeles herald., 1906-05-26

The recent importation of S1,2SO,OOO
worth Of gold from Germany by one
of the city banks-the first since 1895
has caused financiers to devote some
attention to the probable output of the
yellow metal for 1906 since there Is a
very evident lack Of It just now at all
the principal monetary centers. 1t is
thought that the greater demand for
money in the exchanges Of the world
VIII tend to increase the need for gold
as the basis for its represen tative in
the form of banknotes.
In 1905 the gold produced i'm the world
amounted to 1881, 100000. The United
States stood thrd-South Africa being
first and Australia second-in the list
Of producers. but this year the chances
are that this country will pass Aus
tralia and stand second, with an esti-
mated output OF something over $780,
900 900
Speaking Of this matter the other day,
a veteran officer of the Trust Company
of America, whose business experience
goes back over a quarter of a century,
said;
Cold is the basis Of all finance and
commerce. This was striltingly i'm
pressed upon the man In business be-
tween 1862 and 1873 n period when n
merchant had to keep his eye on the
daily price of gold to find out whether
any particular cargo or consignment
of goods would make or break him.
For example, our company is going to
occupy a twenty-five-story building
on Wall street, which. with the land,
will cost $3,000,000 with feelings of ut
most security. If a man had contracted
for that building i'm war times under
agre eement to pay in gold, he couldn't
have told whether he would have had
TO pay $4,000, 900 or S3,5O0,000, or S3,60O
600. At one time 1t might have cost
s4.000,000 or $5.000,0OO. In those times
one might be ruined in carrying on a
profitable business by the Vaccinations
Of lot of spectators who had 1t in
their power to make every dollar he
spent cost him S1.5O oil. $3.50"
Continuing. he said that the system
of trading i'm gold became a regular
profession from the time that the ef
fects of the civil war caused the metal
to be worth a premium over United
States currency and banknotes.
when the banks first refused to
honor bills by payment in coin for the
full face value" he continued, "tho
premiums did not at once rise to any
nigh .IlSuTe, running from lUlH2 III
April. 1862. up to 10S% in July. But on
the 21st of July in that year gold sold
at 120-the result of McClellan's check
before Richmond in the PeninsuIar
The consequence was that
bills owing to foreigners took $1.20 in
stead of 81 to pay: and customs duties.
which had to be settled with coin, ap-
preciated to the same extent. A board
was organized for dealing In gold and
4
of the old stock exchanged place with
n fountain in the center surrounded
by an iron railing. A bank and clear
ing house was also established for the
settlement of transactions. Later on
curb spectators began to meet in a.
cellar in William street, so dirty and
dingy in appearance as to be universal
ly nicknamed the Coal Hole, and this
place soon surpassed the regular board
in the extent of its operations.
"The method of trading was very
simple. One thousands dollars was the
unit and 100000 was called "a hun
dred.' Sales We're either cash or reg
ular, and the buyer borrowed gold or
currency for as long as might be neces-
sary. AS a business proposition gold
speculation was a dealing in the prem
ium of gold over circulating medium. AS
trades were settled at the Gold Ex-
change bank by the collection of a paw
ment of differences between the ag-
gregate of each dealers purchases and
sales for the day, it took comparatively
little capital to speculate and the gam
bling spirit was powerfully stimulated
by the easy means thus provided for
it. A man with $4,000 could
buy 100000 gold at 1874, let us say, and
if it rose ten points, which was moth
ing unusual, he could sell for cash at
144 and win the difference in his favor
between the two transactions, which
would be about $4,000. OF course, he