The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1912-06-15
GOLD, CREDIT, AND PRICES.

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GOLD, CREDIT, AND PRICES.
we hnd In recent number Of RI
nanclal America an editorial dealing
with 'Gold and Credit, especially a
related to the effect OF gold and credit
upon the current prices Of the neces
sites of life, Quoting the Londor
Statist. tho New York paper comments
upon the London opinion that the I'M
mcnsc accumulation of the yellow
metal in this country gives but slight
assistance TO trade. Financial America
says that it has itself emphasized this
point frequently, Showing that our
Treasury gold is not reserve basis
for credit, but is merely vast hoard
Of tho precious metal, against which
warehouse receipts or gold certificates
Issue dollar for dollar And 1t then
quotes the comment Of the London
Ststist as follows:
What does affect prices is not the vol
ulne OF gold, or even the incrcs sing pro-
ducuop Of gold hut credit: and increas-
Ing production Of gold does help the
countries which have a well organic zed
banking system 10 Increase the credit
thcN clNc, as. for example. has hap-
pened IN England and Germany. where
little OF the new gold has been retained
Financial America comedies in this
view, stating that emo student of scien-
tific currency and banking will ques-
tion the correctness of these conclu-
slons,' 1t argues that credit and not
gold is the dominant factor in price
regulation, since "'the state Of credit
affects prices moro violently than
changes in the quantity Of gold, and
prevents any definite calculation as to
the lstter's real effect' And it there
upon proceeds TO emphasize the eff
cheney Of n good banking system, such
as England and Germany have, through
which their gold is thoroughly utilized
TO increase credit And on this point
1t quotes further from the London
Statist as follows:
in spite OF the enormous accumulation
OF gold in tho United States. the bank
ing system broke down absolutely in
1907 because that system was radically
bad And recovery from the break
down has been delayed so long because
there has been so unreasonable a. delay
in remcdying the evils which the crisis
Of 1907 brought home TO everybody,
The New York paper follows up the
By saying that "our bank
ing and currency system is so unscien-
tific that the gold in our treasury is
of comparatively small help TO US"
Therefore, its demand is that this gold
be made available for trade purposes.
to the end that credit shall be increased
and the enormous gold hoardiugs of
our Treasury be many times multi
piled in helpfuluoss for banking, for
credits, and for trade purposes.
This sort Of thing is fair example
Of good deal OF the discussion of
ba ankiug and currency affairs, espe-
sially in their relation to current prices
IF necessary articles. According to the
in the above, it is credit and
he expansion Of credits that govern
prices more than the production or ac-
Of gold, England and Ger.
many have such sound banking sys-
ems that credits are immensely in
'reased and the boarding of gold is
lot necessary in those countries. Ac.
,ordingly, since these credits are so
increased, and since cred
Is are the real factor in increasing
he prices of the necessities of life. |
me would naturally expect TO find
hose necessities higher priced in Eng
A
states, whore VIC have no such eXpan-
ion Of credits and no such '.sound |
,anking system AS they have in Eng
and and Germany, But, is this the |
act? BY no means. Quite the re-
'erse is true. Articles Of nearly every
lecessary kind are cheaper In England |
nd Germany than In the United States
The United States is notoriously the |
,lace Of high prices. of high wages,
nd of costly living And if the gold |
IL the Treasury could be released to |
Increase credits. prices would 90 higher |
'et. Such is the argument!
lnasmuch as there is such sad lapse |
'ctwecn the premises and the conclu-
ere set forth from Financial America
nd from the London Statist, such
ivergence between the assumption and |
he fact we must be excused If we
ind il impossible to follow the reason
ng Of those authorities for If what
hey allcge to be true is, in fact, true.
hen precisely the opposite results
houId follow from that which they de-
lare; and, as a matter Of fact, pre-
lsely the opposite results do follow;
herefore, either their premises or their
rgumeDtation is wrong.
As al matter of fact, we think both
heir premises and their conclusions
re Inaccurate. They are reasoning
rom a false basis throughout; for it
not the abundance OF gold nor the cx-
ansiou Of credit that is primarily re.
ponslblc for the advance in the prices
The uecessarIes Of life; of clothing,
foods, aud Of shelter, But, as we