The Calumet news. [volume] (Calumet, Mich.) 1907-1938, 1910-01-28
TIE COST oE LIVING

Ecohohlc authorities, particularly
those connected with our leading col
leges. lay great stress upon the i'm.
crease of gold production as the chic
cause for the rise in commodities
while observers i'm closer touch witt
everyday affairs are equally insistent
that prices are governed by numerous
other causes more influential than the
/ gold supply. 1t is therefore interest
ing to examine how far the gold theory
fits the facts. A comparison is here
! offered between the course of the
worlds gold supply and Sauerbeck's
index figures; the latter being selected
because they represent the yearly av-
crage price OF As commodities. and
because London is not only the larg-
est market in the world but the freest
of artificial influences.
From 1870 to 1873 Sauerbeck's Index
Number rose from SO to III, which was
the highest point since 1920. The
worlds gold production in 1870 was
$92,000,000, or somewhat less than for
several years and in 1873 it had risen
only To S960O0OO0 Certainly this adj
vance i'm commodities could not be
positively attributed to an increased
gold supply.
From 1873 10 1896 there was an al
most continuous descent in prices.
which brought the index figure from
III down to 81, the lowest on record
and decline of about 80 per cent.
Within the same interval gold produc-
ton rose from $4,000. 900 to $2O2 .OOO.-
GOO. showing a continuous fall in values
in spite of a steady rise i'm the pro-
duction of gold. Here we have an in
crease of more than 200 per cent. in
the gold supply within % years ac-
companied by fan of about 50 per
cent. in commodity values. This is not
in accord with the gold theory.
From 1896 to 1900. following defeat
of the silver agitation. there was a rise
in the index figures from 81 to Is.
accompanied by an increase i'm the
gold supply from $2O2 900, GOO to s254.-
100000. The effect Of the gold supply
would bc difficult to prove here.
After 1900 there was a temporary
drop in the index figures to so. fol-
lowed by rise 10 so in 1907. the gold
supply rising in that interval from
S2'4'ooo'OOO to S4O4.0O0,00O. Here we
really have very striking increase in
tho supply OF gold coincident with n
marked rise in values. and similar con- |
ditions prevailed up to the end of
1903. when the yearly gold OUTPUT had |
reached its maximum or s457 600 600 /
and prices generally were at their high
level.
These facts, allowing the coinci-
d"ncc Of the rise in values since 1896 |
do not conclusively support the gold |
theory on the contrary. thev show |
that other powerful influences were at
work with little intermission from 1874
to 1896 which more than counteracted
any increase in gold production: and |
that afterwards other important fac
tors were potent in the rise
II is not here contended that prices |
are uninnuenced by gold production mr.
rheapening the dollar, but rather that
these considerations have very much
less effect than commonly believed.
While it is true that the worlds gold
output has been tremendously expand- |
'd by South African development bav-
ing risen about 400 per cent within
me last twenty years, which is out of
'H proportion TO the growth of popu-
alton; it must be recognized that with |
IN that period there has been n pbe- /
nomenal development in the worlds
commerce sufficient to make heavy
.nroads upon any increase i'm the avail
able supply Of gold. Moreover the
amount utilized inathe arts has greatly
increased, and the growing prosperity
Of the Orient. especially Egypt and
india, had doubtless stimulated the
hoardings of gold by the natives in
those sections. Since it will be readily
conceded that so great an addition To |
'he supply of gold must prove a pow
'riul stimulus to credit, to commercial |
activity and speculation. gold NAV be
accepted as considerable element i'm |
the phenomena of high prices. New
'rtheless. its influence has been great
~ exaggerated; is difficult To trace
and has tended to obscure some of the
other important influences i'm the ron-