Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1910-04-06
Gold and Prices

Joslin, ILL.,. April 2.-Editor The
Argus: Speaking of the cost of Iiv-
ing it has been said that it is due in
part to the large production of gold.
Some people do not quite understand
| how this Is, others dispute 1t, and
brief statement of the principle
may be in order.
Commerce, which as a general
term includes all business and trad
ing, is an exchange of equivalent
values, Values are of two kinds. in
trinsic and exchange. Intrinsic value
is that which resides in the COM
modify itself, the useful purpose 1t
serves in the economy of our exist
ence. This value is very nearly con-
slant. the changes being so small and
so slow that they may be disregard
ed. This is sometimes called the
utility. Exchange value, commonly
called price, is that which a COM
modify has in trade or commerce,
and varies according to conditions of
supply and demand. Money, the
medium of exchange, is a commod-
ity like wheat, iron or labor. Being
legal tender for the discharge of
all obligations, it is in universal de-
mand. Everybody wants all they
can get of it. 1t is supposed to
have a fixed value, but the supply
of money is determined by law which
says what shall be and what shall not
be legal tender. The exchange value
of the money unit is affected by the
supply of and the demand for the
metal of which the unit is made.
Having thus established our defini-
tions we take conditions as they ex-
list. Gold Is our only money, for all
our silver and paper, and all forms
of credit, bank drafts, checks, ETC.,
represent gold, and have their value,
in the last analysis, from the fact
that they can be exchanged for gold
on demand. Gold is a commodity as
truly as iron and of much less intrin-
sic value. 1t is an imperishable
commodity. 1t can be used over and
over without any apparent loss or
waste.
Nearly all the gold that is mined !
remains in existence, and is added |
to the worlds stock of the precious |
metal. The production of gold has
increased rapidly in the last Is |
years and is still increasing. There
fore, the supply of gold is large. and |
according to the law of supply and |
demand the exchange value of gold /
should decline, just as any commod-
ity declines in price when the supply |
is large. The exchange value of /
gold having thus declined, it will
purchase in the worlds markets less
of other commodities as wheat, iron
or labor. When it takes more gold to
buy less wheat the supply of wheat
being about the same, we say wheat
Is high, though we might say as cor
more money to buy an average of
all other commodities, we say the
value of the money unit,
which is a fixed weight of gold, has
which is exactly the
present condition. And If the prod
net of gold continues to increase the
prices of other commodities being
stated in terms of gold must go
higher.
It will be said that the demand
Tor gold has increased as well as the
supply. This is true, but the fact
hat all commodities are advancing
n price demonstrates beyond all de-
pate that the supply of gold is in
;reasing faster than the demand for
t. Indeed the demand for gold is
United by the fact that almost all
he business of the country is trans
Icted, pot with gold which is the
,nly real money, but representatives
If gold. Hence comparatively :
mall amount of gold satisfies this |
demand.
The question now arises, why
houId this one product, which is
My an infinitisimal part of the
worlds product of labor, be made
he measure of the value of all the
ther products?