The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1931-10-30
The Gold Standard.

What do we mean by the gold
standard? England has abandoned 1t
temporarily. So have Sweden, Nor
way and Denmark.
Early man, back in the late stone
age, exchanged flint knife for a bear
hide. Today farmers sometimes take
10 pounds of butter into town on
Saturday night and exchange it for 10
pounds of sugar and five gallons OF
kerosene.
But barter is announcement. No far
mer could carry five pounds OF butter
in his pocket in July. Nor can one
well mail six bushels Of potatoes to a
merchant against the price of carpet
sweeper. There must be some per-
manent standard of value which we can
carry, store and transmit.
Man has used the most diversified
objects for such a standard of value.
He has used stone knives, ivory beads,
bronze bars, iron coins, silver coins and
gold money. The fundamental quail
ties demanded in any standard OF value
are scarcity, permanence, IghtneSS and
general utility. Today it must be
something which is relatively as &C
ceptable in Siam as in Wall Street.
When metal was used the first prac-
tice was to measure by weight. The
Lydians in the Seventh Century when
bronze and copper and iron were
scarce they were acceptable standards
of value. But later they became cheap
and useless.
When gold and silver are both used
we have a bi-metallic standard. The
value of the silver which goes into
a silver dollar must be exactly equal
to that of the gold which goes into a
gold dollar. But this ratio is difficult
to maintain, because in some years a
lot of gold may be mined which will
make gold that much more cheap. Or
more silver may be discovered, which
will cheaper silver. If gold is worth
more in the arts than in the coinage
ratio, compared to silver, nobody will
offer it at the mint. Silver will be
the coin in circulation. We had BIZ
metallic standard until 1900 by law,
but rarely in practice.
Silver became so cheap that it could
not maintain its ratio to gold without
making silver dollars far too large to
transport conveniently. In 1900 Con-
greSS recognized the fact and gave us
the single gold standard.
But gold is too valuable to allow the
coinage of small gold coins. So silver
hnc in LOT
venience. But it has its exchange value
because the country agrees to redeem
it at its face value in gold if anybody
calls upon the government to do so.
The same with paper money issued
by the government. If solvent
government agrees to give man $40
in gold when he presents a $40 bill at
the Treasury, then the bill is worth
So AS long as there is no doubt of
the solvency of any government there
will be little or no demand for re-
demption.
The gold standard simply means that
gold Is acceptable the world over as
a measure of value. Other money is
valuable in proportion to its prospect
of being redeemed at full face value
in gold. The degree to which money
other than gold will decline in gold
standard country, when the gold
standard has been suspended, depends
upon the feeling in that country and
abroad that the country in question
will ultimately be able to get back to
its original ability to redeem its pledges
in gold. Its price represents the pre-
yailing odds on that chance.