Mohave County miner and our mineral wealth., 1920-11-06

ished gold in periods of high prices and high costs tends to reduce prices and costs again" This is not borne out by the facts. The gold produc- tion of the world has declined from $469, 100000 in 1915 to $350,000,000 in 1919, a reduction of 25 per cent in the last four years, and yet prices throughout the world have risen enor- mously. Commodity prices in this country continued to increase between May 1, 1919, and May 1, 1920, not withstanding the loss by excess eX- portation from the United States of $445, 100000 in gold, or 14i2 per cent of the highest gold stock ever pos sessed by this country. Furthermore, during the period when the gold re- serves of foreign nations were being greatly reduced by what they sent to this country their prices advanced even more rapidly than those in this country. This indicates that the re- verse of the Committees observations is true, that the depletion of gold re- serves at a time when currency is rap idly expanding is mainly accountable for accentuating the increase in pric- es. The degree of imitation is meas ured by the ratio of the gold reserve to the volume of the circuating media, and it must be apparent that an in
 crease in the gold reserve without an increase in the circulating media would reduce the degree of imitation. It must also be evident that the ef feet on prices of the supply of gold in active circulation is relatively small compared with that of the credit cur rency based on gold which is not
 free," but locked up by the Treasury and Reserve Banks and used indirect ly as the basis for larger volume of currency. If this gold were really free and circulating, it could not be so used. The true remedy for infla- tion is to return the gold to circula- tion, from which it has been so great ly withdrawn as the basis for infla- tion. Of the total gold stock of the United States, which amounted on October 1, 1920, to $2,7O4 4,672, 2,5O4, $2,003, ,072,000 was held as the gold re- serve of the Federal Reserve System and thereby was tied up by the Fed eral Reserve Act, B per cent against net deposit liabilities, and 40 per cent against the note liabilities of the Fed eral Reserve Banks. After satisfy ing the reserve requirements of the net deposits there was on October 15, 1920, gold cover of 46.6 cents for every Federal Reserve dollar note in circulation, of which there were $3,- 353, ,271, ,000. The gold cover on Oc- tober 15, 1920, of the Federal Reserve note was but 6.6 cents per dollar above the amount required by law, which is closer than conservative if nanciers would like to see it.
 Deflation Not Remedy
 While the business affairs of the county are gradually adjusting them selves to normal, it will in the minds of most bankers and economists, be many years before the dollar will re- gain it's purchasing power of 1914; in fact, that time may never come. Consequently, temporary means must be provided to sustain the gold min ing industry over this period of grad ual readjustment. While it is true that there has been an attempt made to contract the credit structure of the country, I would call your attention to the continually increasing volume of currency in circulation and the de- cline in the gold reserve ratio of the Federal Reserve System. While the