Bisbee daily review., 1918-09-29
AMERICA MUST AID
 GOLD INDUSTRY ID
 PROTECT EXPANSION
coU RTNEY EKALB WRITES LEARNEDLY UPON SUBJECT OF NEEDS OF OUR RAPIDLY FIX BANDING SYSTEM OF CREDITS OVER THE CIVILIZED WORLD
By CoURTENAY DaKAGB
I'm the Manufadturers' Record.

It is perfectly clear that the decline in gold production. if not halted by some appropriate action of the govern ment. will soon lead to the virtual eX- tinctiOn of the industry. This is a mat ter that must engage the serious atten- ton of finsnciers. Considered with re- gard to it's absolute magnitude, the out put of gold in this country may not appear large. Normally it is valued at about S110.000,OO0 per annum That is approximately 1-2 per cent Of the total gold now held in the treasury.
 There is, however, another view Of the matter that brings the importance of thts yearly addition of new gold into strong relief. Our trade balance has been growing at the rate Of about S3,000 ,000, ,000 annually until it now ex- ceeds $10 0O0, ,000,0 900. Part Of this is covered by credits to our allies grant ed by the government of the United States. These credits on August ! O. this year amounted to $6492 .040. 000. representing the larger part of the public subscriptions to federal loans and constituting a large portion of he national asset accumulated in our foreign trade relations.
 As long as this condition exists we are in a strong financial position. fer the certainty of an allied victory trans lates this iRtS a dependable resource for covering our imports from abroad. Despite our enormous export trade there is also a steady increase in our impcrtations of foreign goods, and cur growing army in France is calling for heavier expenditures overseas. The tendency at the moment, therefore is townard progressively increasing ng volume of obligations in Europe. that may change the balance that had been rolled up so enormously in our favor. In proportion as that new condition develops, the need of larger gold re- serves to protect our currency, to guar antee our bonded indebtedness and to serve as a basis for credit-expansion will grow more acute Every increment of new gold that can then be obtained will possess extreme importance.
 So far as the federal reserve bank 1 is concerned, the gold reserve held by it admits of loans to member banks in the ratio of two to five. which shows that, for this purpose, the energy-ratio of the gold held is 2.5 Consequently. every years normal output of new gold would have a value, for this single use in credit-eXpansion, of S275 GOO, O6O. This employment Of gold, however. is merely for the relief of excessive strains in commercial credits extended in the course of general banking ope- ratiOns, which are themselves found ed upon confidence in the ultimate ability to liquidate the transactions in- volved in terms of gold It-is. in ef- feet, an expansion of credits founded absolutely on the gold reserves. Its volume is capable of being estimated approximately, but it is never exact ly ascertainable. In normal times the total credit-value of gold is assumed to be represented by the ratio of one to seven. Business activity causes Q rapid increase, and it is thought by many that the duty of each gold dol lar at the present time is about S20 in credits On that basis the utility of the average annual addition to our gold reserve, derivaBe from our do-