New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-08-11
Gold Only Article
That Has Not Risen
In Ratio to Costs
British Authority Says Mar
ket Value Does Not Reckon
Mining Expense

ton, Limited, identlhed with the W It.
watersrand gold industry in the Trans
vaal, in a recent address in London at
the annual meeting of the concern.
The full text of the speech has just
reached this country.
with the solitary exception Of
gold" he said, "all commodities have
risen, at least in the ratio of their in
creased cost of production. Fine gold
(if we include the small amount now
permitted to be used for trade pur-
poses, which has risen to something
like 115s per ounce has remained sta
tionary at the standard price Of SIS
per fine ounce That the raw gold
from South America is worth more
than the price paid for it in paper cur
rency is not difficult matter to de-
monstrate in general terms.
at is extremely difficult to assemble
the data required to prove the amount
Of the increased value. That awaits
solution. If we assessed its value
according to the rates of exchange, 1t
must be admitted that the Exchequer
made a very profitable bargain. But
the rates of exchange are not the true
measure of its value, because it is
used partly to regulate those rates, and
without our gold the adverse exchanges
would have been still higher. We must,
however, not lose sight of the fact
that our gold can only be disposed of
in markets able to consume it on the
one hand and give commodities or
credits for it on the other. We could
not, therefore, if we had free market
during the war, have hoped always to
ship our gold to the particular country
among our allies or neutrals that at
any moment needed it most.
Future REIMBURSEMENT of Exchange
"When peace is restored and trade
once more flows into it's natural chan
nels, it may be assumed that gradually
rates of exchange will approximate to
prewar normal conditions, but there
will be an intervening period, and per-
haps a long one, before that happy
stage can be reached. Meanwhile, the
restoration of our position in this
country would appear to require as
much gold as we can possibly attract
to our mint. AS far as gold producers
are concerned they would, of course,
have to take their chance if there is
to be a free market for gold, and they
might find themselves not unhappily
placed under such conditions, but if
the control now reigning is to con-
tinue, especially in peace times, then
the situation calls for an authoritative
review and settlement, the fairness
of which is unimpeachable.
"The value of our gold in the worlds
markets takes no cognizance of the
yield or cost OF working the mines.
The subject is complex and delicate.
desire to deal with it fairly and in no
partial spirit. We have steadily
watched the increasing losses to which
the gold mining industry has been sub
jected from q variety of causes, but
we contend mainly on account of the
adverse exchanges"
Why Prices Have Gone Up
In enumerating the reasons for the
general rise of prices Sir Lionel ex-
plains his theory of imitation in its
relation to the gold supply.
"In considering the chief cause of
higher working costs" he said, "of
tie Witwatersrand gold fields We are
confronted with a situation that ap-
pears anomalous in some respects.
The war has had a very serious effect
upon the gold mining industry of the
world. A country like Western Aus
tralia has suffered even more griev-
ously than we. Why nave wages and
stores risen? Largely because they
are paid for in a paper currency that,
owing to imitation, has deprecated.
If there has been enough gold TO
pay for the balance of external trade
in the precious metal exchanges would
have remained normal and the Gre
alton of paper money. to transfer the
predominant part of internal trade
from the ordinary channels into the
hands Of the government, would not
have caused the great depreciation we
have witnessed of its value.
eve are in vicious circle. A rise
in commodities involves rise in wages,
and vice versa, and thus the SNOWFALL
of national debt goes on growing from
rising prices. Every thoughtful econo-
mist looks at the future with grave
misgiving.
Debt Paid by Commodities
debts incurred by commodities at
high cost must some day be paid
for in commodities. The higher their
price the less in quantity needed to
square the account. On these premises,
the greater the imitation and the higher
the value of commodities the easier
the extinction of debt. Unhappily the
reverse of this reasoning may have to
be faced. A time may come when the
supply of commodities will exceed the
demand and depress prices. We live
in competitive world and shall hence
have to meet our obligations in com
modities at the cheapest rate at which
they can be supplied from any part of
the globe. For the extinction of ex-
ternal debt there is only one substi-
tute of commodities-gold."
Dividends