New Britain herald., 1930-08-16
GOLD DOES THE TRICK

NNfi.A' i'DA-.' ! ILL IAANh
 Wha, You pay for goods depends upon inc amount Of gold ia the world an5 -he amount being pro. aueel-
 Thls IS the so-ca.led quantity theory Q. money" + holds that in -ha a5ssac, Q: c2unterbalancIng :o--es-.ze 'esr-rricas tend to rary u.-h the amount Of money. based o2 gold n c.-cuauon; and the amount Of @rsa... based on money beng maintained
 All the t.s4sns nations Of thq world are or rho gold standard. Ina, means that the value Of gold derermtr $ the ralue os their money. And the value Of gold necessarily 4epzn6z upon the amount of gold available. l. is rae least stuetuaung or metals; b1, tr tlu-,latos.
 When there is a large amount Of gold relative 10 .he stocks ot goods tn industry and trade. morey IS worth less n the terms ot the goods 7urchasabIe, and prices rise; when the amount Of gold is small reIatit z 10 the stocks ot goods, money is worth more and prices fall.
 Professor Irving Fisher and many other political economists hold that the gold standard cannot stabilize the price Of commodities That they are not well stabilized under present conditions is proven by the fact that their pr'css tend upward and 4owu- ward. Just HOW they are tending downward. The saggtng is q small percentage every month; but in the course Of years this amounts 10 con- siderable. It has happened. for in- stance. tha- prices after thetr peak following the Civil War. went down 10 what they were before the World War; and during that time the pro- duc,ion of gold was below normal. Tn Is42. when gold was discovered in California, prices went up sharp iy They were htgh even before the Civil War started.
 One os the basic causes Of tho rra-ent decline in prices. which real F.. began 1n 1925, is generally held 10 be the relatively small amount Of gold now being produced through oac the world. In recent years only s4ooaa@ooo worth Of gold has been mined annually. Of this amount. d fourth goes for industrial purposes and another fourth to ornamentation and display. Only S2oo.ooo.6oo is left TOT monetary purposes, which is less than q tao per cent annual increase in the worlds gold monetary supply. About three per cent annual ln- crease is dcemeG necessary 10 main- tain the e-a-.s q1o os money and goods: or. Tn other words, tho status 4ao Of prices
 Discovery oe new gold fields would hang ths s.a,gy. h4- tha- Is con- -lIcrad improbable.
 Aga5nsr the inadequate production os new gold there is the possibility D. better hsrHing tecba.~ 10 increase inc amount Of money and credit lasea on the amount O: gold avail able, IL IS hoped that the Bank for International Settlements. in opera ion under the Young Plan, may achieve something in this direction.
 The demand for gold increases while the available supply grows .o@'y In 1927 India abandoned ometallsm. thus increasing the de- loand for gold in that country. And ;, has been suggested that China. the only large nation continuing to use silver as q monetary base also adopt the gold standard.
 After the Civil War commodity prices in The United States fell con- unuously for 3Q years. Nine years after the Civil War prices had fall en 3s 1-2 per cent from the war time peak. Peak prices as result of the World War came in 1920, and nine years later or in the lat ter part of 1929, commodity prices were down 37 1-2 per cent V Ii rarallcling the experience that fol. lowed tho first nine years after the Civil War. The question inevitably arises. will the price decline after the World War continue to duplicate the decline after the Civil War for q period of 30 years?
 If they do we will be back to 1913 by the year 1850.
 Naturally. the decline over q gen. eration and half runs slowly; but,