The sun., 1908-02-28

90 be broken. but tho cheapest currency In the
worldl. CargOes OF merchandise have
changed hands. but the gold. in terms Of
which the values OF these cargoes have been
quoted, has remained stock still on a num-
Der Of trucks In cellar in the Bank OF Eng
land.
The daily average value OF bills and checks
passing through the london Clearing House
amounts to about c4O.OO0. 900. Perhaps the
vastnoss or this sum may DO better realized
by saying that the figures represent 800 tons
Of a0vereigns.
The unsuitabIIity Of gold for transactions
OF any siSo u at once manifest when we con-
slider the cost In labor. the risk and the delay
IN constantly cartlng tons OF gold through
London streets: while a. a medium Of foreign
barter the use OF gold coin presents yet fur
ther disadvantages.
These further Disadvantages are quite
obvious to those who have the intimate knowl-
EDGE OF the subject which Is born OF daily
drudgery at lt, but they are not apparent to
the onlOoker who does not take frogs" or
snakes into consideration.
The fundamental fact too, that a legal
sovereign oan and does differ in intrinsic
value to the extent OF I'D. has little weight
with person whose habit OF mind associates
gold coin with small transactions He argues
that for all conceivable purposes one sover-
eign Is as good a. another: that In his eX-
perience the purchasing power Of n sovereign
is fixed and inFallible. He has never known
any one. at home or abroad. who would re-
luse payment In that form. He makes no
doubt that what is true OF small transactions
is also true OF large transactions.
me man In the street does not recognize
the tmpossibility OF the use OF coin in large
transactions: this Is evidenced by the wide
spread belief that the difference in value be-
tween our imports and exports amounting
to some EiSO. 100000 Tor 200 tons of sover-
eignsl. Is made up by annual disbursements
OF British sterling coin.
This belief. which probably owes its origin
to the fact OF values being quoted in terms
Of coin. has been publicly professed by
Colonial Premier and is an accepted canon
among the savants of the bar paTlor on both
sides Of the world. Apart. however, from
this fraternity, there are to be found men OF
education and ability whose ideas of the
function Of gold coin are evidently based
on experience OF small transactions.
The writer has before him a letter from the
editor Of a London newspaper In which ap-
prehension IL expressed as to what would
be the result were foreign importers te de-
mand gold coin in payment OF the bills of
exchange held by them in respect of cargOes
delivered.
Apprehension. however. Ia unwarranted.
a. this country would and does invariably
gain by the transaction. and except in such
GASES as are justified by market conditions
such demand would involvsa correspond
ing loss.
The merchant is fully alive to the many
objections TO the transport OF gold in the
shape OF either bars or coin. and consequently
he never ships 1t unless it is- specifically re-
quired In the ordinary course OF business
IL Is then handled In exactly the same way
as any other commodity
The movement Of gold implicitly obeys
the laws Of supply and demand. To those
localities where gold is in demand gold will
be attracted so long as other forms Of prop
erty are offered in exchange for it at re-
munerative rates. Gold becomes active"
when the balance OF exchange cannot be met
otherwise than by the shipment Of gold ;
also in circumstances Of disturbed credit
when IL will always go to a premium and a
loss will be incurred by the community whose
credit is disturbed and by those who hold
the securities involved
Ignoring eddies and disturbances, gold
travels on a well beaten track, obeying the
same laws as ivory or oranges or chalk.
All commodities proceed from localities
where they are plentiful or where they are
easily produced or obtained to localities where
these conditions do not obtain.
The difference between the value Of an
ivory tusk in central Africa. where it is used
rs a stake In the pallsade OF the kings kraal
and where there are neither the tools nor the
knowledge nor the desire to turn It to better
account, and its value on its arrival in Lon
don is striking example OF the enhanced
KRlue conferred upon commodities by the
action OF trade.
Gold producing countries, such as the
United States of America, Russia the Trans
vaal and Australia, all export god to those
countries which produce insufficient quanti-
ties or none at all The British Ises pro-
duCs no gold or silver worth mentioning, and
consequently all precious metal used in this
country 10 imported; and IL is paid for by
US In the shape of some corresponding benefit
conferred on the countries producing it.
There are no exports Of British gold from
the United Kingdom.
It is a sef-evdent proposition that no
country can export that which it does not
produce.
This country is large consumer Of precious
metals exported from other countries.
Distinguished statesmen who advocate
she monetlzation OF silver would probably
reconsider their opinions II they could be
Afforded the opportunity Of days practical
experience In handling large quantities of
the two metals.
On this head we may perhaps point out
that II silver coin were called into existence
to discharge the function now performed by
gold coin. or any portion of that function, an
enormous increase in counting house and
banking expenses would result pro rata. To
raise the silver token to the position Of a coin.
that IL, to make It's intrinsic value and face
value exactly the same. the silver coin would
need to be twice Its present size and weight,
This would involve using coins twice the
size Of the present tokens. or twice the num-
Der Of them. Where transaction was settled
in these coins In lieu OF gold coins the bulk
OF metal required would he about fifty times
as great as that now employed
Gold has appreciated in terms OF silver
owing to recognition OF Its superior fitness
for variety OF functions. and more especially
fer coinage.
That gold and silver have both deprecated
in terms Of labor is due to the discovery of
large quantities of ore and the discovery of
new and cheaper methods Of extracting the
metal from Il. circumstances which have not
been counterhalanced by a correspondIngly
increased demand. The recent enormous
variation in the relative values between the
two is due to a cheap supply OF silver on the
one hand and the preference given to gold
for purposes OF coinage on the other In
exactly the same way that gold has recently
replaced silver and silver long ago replaced