The Cordova daily times., 1920-12-28
TUESDAY, DECEMBER 2S, 1920.
PRICE OF GOLD IS FIXED BY GOV
 EMINENT

There are 4S0 grains in an ounce of gold. By United States statute there are 2322 grains of fine gold in the standard dollar. Dividing the number of grains in an ounce by the number of grains in dollar, the quotient ob- tained is 20.671S dollars, the price of the fine gold ounce. That the govern ment has arbitrarily fixed the price of gold has been questioned, but this fact alone determines the solution of the gold problem. Because the price of gold is fixed, the premium speci- fled in the McFadden Bill cannot be construed as a subsidy to the gold producer, as it constitutes a compen- sation of the loss in the purchase power of the gold ounce, and for the same reason the consumer of indus trial gold who who buys the-metal at the pre-war price is receiving a sub sidy. Fixed in price, gold cannot re- spond to the law of supply and de mand. and market conditions differ altogether from all other products.
 As compared to 1914, the average purchase power of the dollar in terms of the wholesale prices of all commo- dities during the last five years 0915- 1919), was 67 cents. The gold ounce, the only source of income of the gold producer, with purchase power of s2O.s7 in 1914, had an average pur- chase power during the last five years of s1O.67 multiplied to 0.67 or $13.S5. Had the $1O premium been in effect during this fiveyear period the plr- chase power of tho gold ounce would have been s3o67 multiplied by O.67 equals s2O.45, or 13 cents below the fixed price of $20.67 Opinions have already been expressed by our leading financiers and economists that it will he A matter of ten years before the 1914 dollar will have regained even a large part of it's purchase power. and many question that it will ever return to it's purchase power of 1914. It would be more liberal to assume, therefore, that the 1914 dollar will re- gain it's purchase power during the five year period (192O-1924). in which event the average purchase power of the dollar during this five-year per fod would not be less than 67 cents the average during the period of up rising prices 1915-1919. The pur- chase power of the gold ounce. in cluding the S10 premium, based on 67 cents as the purchasing power of the dollar, would be s2O.24 during the perior (192O-1924). the same as if the premium had been in effect dur ing the period G9151919). It is fun damental to the maintenance of nor nal gold production during this ab- normal period that the purchase pow CT of the ounce be restored to nor nal as normal as compared to 1914 The McFadden Bill providing a prem ium of s10 on aunce for the newly produced gold will accomplish this re- suit.
 Had the price of gold ascended tt the average wholesale price of all oth ar commodities during the five-yeal period (1915-1919) the gold producer: would have received for the amour of gold they actually produced $218, 2go ,000 more than the amount whicl they did receive of $4o4.509o00. o the $21S S,2SO,000, the amount whicl would have been paid by the indus trial consumers of gold would hav' been $133,686,000 for the gold actual Y consumed while the governmen would have paid $et,594, 900 upon th monetary gold surplus. 1nasmuch a. the price of gold has been fixed these respective amounts may be con strued as subsidies paid by the gol, producers to the industrial consumer of gold and also to the government which received the monetary surplu in 1919 the industrial consumers o gold benefited by the entire subsid, of $65 ,500.000. It Is reasonable to as sume that if the premium had been il effect during the entire period (1915