Los Angeles herald., 1907-03-25
COLD PRODUCTION;
BREAKS RECORDS
YIELD FOR 1906 PLACED AT
S41o,oo0,ooo
Direct Effect Of the Great Supply on
Public Enterprises-Higher Re-
turns for Money-credlt
Expansion

In 1906 the gold mines Of the world
broke their record in production. The
Yield is reckoned at about S410, 900,
as against $376,OOO,O0O in 1905, $346,0Oo,-
900 in 1904 and 1925, 100000 in 1903. OF
the 1906 total the United States and
Alaska produced about $95,OOO,O00, be-
ing second only to South Africa.
To the economist the increase In the
gold supply of the world is by far the
most important phenomenon of the
year. Gold Is the basis of all credit
and the mainstay of all commercial
growth. 1t is, therefore, when 1t comes
in an increasing flood, powerful slim
ulant for industry, tremendous agent
in commercial expansion. This is Its
primary function. 1t tends, also to
raise the interest rates which are de-
manded on loans, but this Is a some
what temporary tendency, which is
often overcome within short period
by the expansion of industry following
the gold supply.
To the people of the United States,
says the Worlds Work, the effect OF
the great gold supply comes home di-
rectly. Men are seeking higher re-
turns on the money they invest than
they sought a few years ago. Conse-
L1ey Dullu
blocks, new railroads, traction lines,
industries, all of which pay the build
ers high annual returns on the money
invested. The more adventurous seek
out the forgotten places of the world
and carry commerce into the deep Tor
ests of South America or the Congo.
There is great demand Cor labor and
the prices of this commercial necessity
rise steadily. The makers of steel, the
miners OF coal, the hewers and savers
Of lumber are called upon to supply
constantly increasing demand for these
primary factors of industry. All over
the country, prosperity is at high tide
The reflex result upon the people is
a constantly rising cost of food, Oh
clothing, of all the necessities of life
AS the demand for labor outruns the
supply the wages rise. With them rises
the cost of producing everything. The
farm hand demands more money, be-
cause the railroad in the next county
is offering two dollars a day for labor.
The farmer finds his profit vanishing,
so he holds his cattle and his corn for
better prices. The consumer, who has
to pay the new prices, finds his income
too small. If he is living on money
invested he seeks a new investment
which will give him more income. If
he is on salary he asks for more money,
or else is forced to curtall his eXtraVa-
| gances.
Reaction Is Threatened
The present period is witnessing al
these phenomena. The unparalleled ac-
tivity in the building of new factories
the expansion of the old, the creation
of new railroads and traction COM
panies has forced the wages up. With
them, the prices of all things have
advanced. We have come to a point
where this progression threatens a re-
lapse, because the rising prices have
frightened the great manufacturers
and the railroad builders. Mr.. Daniel
Willard the vice president of the Chi
cago, Burlington e. Quincy railroad,
voices the general feeling when he
says that his railroad will not spend
so much money on Improvements and
expansion in 1907 as in 1906, because
the cost of labor and materials has
risen to a point where economy Is nee
essary. This tendency is naturally
found first in the railroad, because 1t
is the one corporation which cannot
raise the price of its product to meet
the cost of production. 1t produces
transportation and nothing else, and
the rates for transportation are now
practically limited by law.
To all these tendencies there is but
one natural end. 1t comes when money
becomes scarce throughout the coun-
try. 1t may startle the average reader
to learn that the amount of cash in
circulation among the people of the
United States increased nearly $780, 0,000,-
900 in the twelve months ending De-
cember 81. 1906, but such is the case
So long as this condition continues all
will be well. The danger of it lies in
the fact that our credit has been ex-
panded to the limit to secure this
money. If some untoward event in
Europe, or anywhere, were to suddenly
compel the paying off of our COM
mercial debts, or very small part Of
them, in cash, the pinch would be i'm
mediately felt in every industry from
the Atlantic to the Pacific.