The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1907-06-05
GOLD INCREASE CAN
MAINTAIN PRICES
Eastern Circles Look for Recoy.
cry From the Present
Low Ebb.

in the recent address before the Bank.
ers' association Of North Carolina.
made by w. H. Glasson. The address
eentered upon gold, and its service as
the compass for all trade. In part this
address, according to the Wall Street
Journal, was as follows:
"Thc metal gold is today the stand
ard Of value of the civilized world, and
economic consequence whether the vol
ume of the world g production is falling
of or is constantly increasing In abnn-
| dance, About twenty OF twenty. five
years ago gold production seemed to be
steadily declining. and there were grave
fears that the supply would not keep
pace with the worlds monetary de-
mand. We were in a period Of falling
gold prices for general commodities and
of consequence appreciation in the pur.
chasing power of gold. This falling of
commodity prices eventually led in the
| United states to great agitation for
an imitation of the currency by the free
coinage Of silver at the ratio of 16 to
with gold. The verdict of the people
of the United States was against such
deliberate and artificial imitation of the
currency
"In our day, by far the most potent
effect of new gold is exercised through
its flow into the vaults Of banks. If
| bankers and business men be hopeful
! for the future, rapidly increasing re
serves VIII mean easy credit. The ex-
istence Of favoring conditions will stir
the imagination Of energetic business
mon and they will boldly undertake
new productive enterprises which prom
Use attractive returns Such ventures
are the more readily launched by reason
of the new gold available for the pur
Oh, 80
largely increased demand for all sorts
Of materials and labor, Those employed
In the new enterprises. or directly or
indirectly drawing profits from them,
are enabled to increase their demand
for the comforts and necessities of life.
So the increased demand comes TO be
felt by the producers Of food, clothing.
household furnishings and general mer
chandisc.
HThe last Bulletin of the Bureau OF
Labor shows that prices reached q
higher level in 1906 than in any other
years of the seventeen covered by its
investigation. Remembering that the
average of prices for the period from
1890 to 1899 is taken as basis of 100,
prices were the lowest in 1897 when the
index number was S9.T. "
"Perhaps we may emphasize what
has happened by getting rid of the
terminology of dollars and putting the
illustration in terms of ounces of gold
The coinage Of gold being free, there
approximately S20.67. So we may say
that an equal quantity Of farm products
could have been bought for 4S.3S ounces
OF gold in 1896 and for 76.39 ounces OF
gold in 1906; an equal quantity OF food
could have been bought for 1888 ounces
and 65.02 ounces in the two years re,
spectively; and an equal quantity OF
x,.~1, Il hnN
1888 ounces of gold in 1896 and l2.57
ounces in 1906. Gold is cheaper than
il used to be You can get more OF 1T
for a given amount of commodities
Notwithstanding the constant IN
Aux of new gold, it must be remem-
bcred that the volume of business to
be transacted is now vastly greater
than il was ten years ago, ana III Is
being conducted on scale of general
prices 80 or 40 per cent higher. Too
rapid an industrial advance means that
the banks NAV find 1t difficult to re-
tain enough gold in their reserves TO
safely finance the volume of business,
If so. there must be a temporary con
traction Of credit. The ever expand
ing business of the interior has con
stituted a drain upon the banks Of the
reserve cities. Higher ranges Of prices
have meant that increased quantities
of money have been necessary to carry
and dispose of merchandise. And the
volume of merchandise handled has
been much greater than some years ago.
SO that, even in period of uneXam-
pied gold production, the requirements
of expanding business may be such that
banks find it difficult to maintain gold
reserves adequate to their needs.
"We have yet TO give some especial
consideration TO the effect of the in
creased gold production upon the, in
terest rate, We have TO do with a
case in which there has been for many
years continuous increase of the sup
ply of gold for monetary purposes. Inc
first and temporary effect of the in"
creased supplies of gold coming INTO
interest rates, Banks do not caro- to
have their funds idle and will make
loans at comparatively low rates OF
| interest. a mere expansion OF money
and credit does not supply the demand
for capital 1t merely raises the level
of prices, The actual things which are
in demand for business purposes are
building materials, metals, mac ninery
and supplies If Industrial prosperity
| continues without serious check, 1t is
to be expected that higher rates Will
| have to be paid for long time loans
than have been paid in the past,
"Despite the rising prices, we can
not count on period OF prosperity
without interruption or end. The faith
of the optimists who could soc moth
ing but good times ahead hns already
received set back. We are expert
! encing halt, unwelcomc and costly
in many quarters. But IL has its bene-
fetal features. 1t is a time for TAX
ing our bearings and for readjustment
TO new conditions Better now than
after speculation had been pushed to
an extreme. We have time to exam
inc into the essential soundncss OF our
business enterprises, to have an ac-
counting of the available stock of cap.
ital goods, and TO. withdraw capital
J from unsafe lines of investment. Bar
/ ring serious crop failures, there seems
to. be no reason why readJustment
should not take place without any ac'
compartment of general hard times. In
fact, the continuance of increased gold
production will be an influence favor
able to further rise Of prices. And
this will ybo powerful factor to pre-.
vent the existence Of long continued
commercial depression