The Washington herald., 1907-04-28

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l5l3 l30
EnEland's Movement similar.
Clearly. there has been a fundamental
similarity in price movements Of the two
countries, and it seems probable that
similar forces have been at work. In
other countries. as well, a rise of prices
IS reported, although we have no index
numbers for any except Germany and
there the industrial depression OF 1900
appears TO have affected the situation so
luch that the movement has been re-
tarded
That the worldwide rise of prices is the
result Of the recent phenomenal increase
of the worlds gold output is the explaua-
lion that lies nearest al hand, Since 1883
which may be taken as low-Water mark.
the annual production of the yellow metal
has advanced from SSj,3e300) to Sia4. ESQ;
and the end is not yet in sight. The stu
alton Will be made clearer by the follow
ing table. showing the total output of
sod for selected periods since lSSj:
ls5l-so ........ SlgfsHe12 lssl-so...... a053o690
lsjl60........ l532 salo3 lsIl-o5.... 96l6 J05
Compared with the present yearly out
put of S4oiG00,l10. the modest annual
product of &53. 2.S coo for the era Of the
Australian and Californian discoveries
which was considered a veritable deluge
at the time looks small But if the Cali
fornian and Australian gold caused rise
Of prices amounting to not less than -
peg cent between 1850 and 1866 or IS70-
and an agree that il did-it would seem
reasonable 10 believe that since 1897 sim
liar causes have produced a Ike result
II Is an impressive fact that 50 far as
the record goes, and now covers nearly
Tour centuries revolutionary changes sa
the production Of money metals have
never failed TO be followed by revolution
airy changes in prices; while. converse ly.
every protracted movement in general
price levels has accompanied some sis
nincant development in gold or silver
mining.
equality Theory" of Money.
There has been, and stin is. debate con
corning the sO-called quantity theory Of
money" but this has really turned upon
the manner in which the supply of the
precious metals affects prices. and does
not question the relation between the TWO
things The uph0lder Of the quantity
theory maintains that it Is by Increasing
or decreasing the number of coins in cir
culation THAI changing supply Of gold
affects the general level of prices; while
q critic usually contends that a change
in the supply affects the utility of gold
as a commodity among other commodities.
and thus alters the purchasing power Of
the metal contained in the dollar OF eagle.
Upon either theory, an increase in the
gold output viii reduce the value of
money and tend to raise prices; and that
some change of this sort has occurred
since 1857 there is no reasonable doubt.
But II, fundamentally, we attribute the
worldwide change in prices TO the re-
fnarkabie increase in the worlds prOduc-
ton OF gold, il by no means follows that
his force has operated I'm Vacuo without
the help Of other forces. Indeed. the
index numbers for England ana the
United States show that the rise Of prices
in the former country has been little more
than haf as great as in the latter. So
that one is led 10 suspect that some
cause has operated TO neutraliae the ef-
iects OF the new gold in England. or TO
intensity them in the United States Be
tween 1875 and 1906 Mr. SaUerbIck's in
deN numbers advanced from 81 to - or
about Is per cent; while during the same
period the index number of our own Bu-
reau of Labor advanced from 904 TO 1859
or nearly % per cent Clearly with us
the rise Of prices has proceeded at "a
pace nearly 80 per cent greater than that
indicated for England
Trusts Invited 20 Rob.
It may be treason to say It, but the fact
seems TO be that in the English market.
which is open 10 the competition of the
world, prices cannot advance SO randy
as in our own favored land Of tariffs and
trusts. Our present method of manufae-
turing prosperity is TO have the Federal
government through the Dinglev tariff.
bind the consumer hand and foot. and
then invite the trusts to ride the victims
pockets, not overlooking his scarfpin and
other valuables. Meanwhile our prasi-
dent eXtOls the square deal and proves to
you that there Is no possible connection
between the tariff and the trusts. The
result IS prosperity-for the trusts and the /
campaign committee-but the process is /
undeniably expensive.
How long the gold output is likely To 90 (
on increasing is as dfncult to answer as
the further query. How long are the trusts I
10 enjoy their present license to pick our (.
pockets Former prophecies concerning I
the production Of the precious metals (
show that We are not dealing with an ex-
act science. Celebrated economists train /
ed nnanciers. eminent geoIogists-aH alike /
have gone wide of the mark when they
essay the role Of seer. But il is beyond 1
clab0te tiitt tHeIe Is no immediate pros /
peet OF any slacGening in the output OF (
gold, and II seems probable. therefore.
that prices viii advance to even higher /
levels.
An outbreak of war might give the gold T.
production q temporary setback. such as
It received in South Africa in 1893, and in /
dustrial disturbance may for a time give
prices downward tendency as actually
happened in 1901 But in the long run geo
logical conditions and improved processes
OF ore reduction point to a continuance of
the present large output of the yellow
metal. How long this will continue we re-
specially decline to predict Yet as we
read reports from the various gold fields
we feel that, Ike the strip of land on
which Lewis Carroll proposed to prove
experimentahy that parallel lines never
meet the duration Of the present large
production viii be ever so Ions"