The Commoner.
s-
.VOLUME 5, NUMBER 3
THE COMING DELUGE OF GOLD
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Many publications whose ditcr- habitually
aneerod at the quantitative theory of money are
jiow giving testimony to the vindication of that
theory in discussing what some of the writers
call "the coming deluge of gold." The men who
ft few years ago said that the quantity of money
was immaterial provided it was all good, are
how afraid that gold is going to become so plenti
ful as to disturb business. It is all right for them
to admit the correctness of the bimetallic position,
for the bimetalli8ts all contend that the volume
of money d termines the value of the dollar, but
it is too early to get scared about an over-supply.
As long as it is necessary to count the same de
posits two or three times, there is still room for
more money without disturbing business.
The Commoner invites particular attention
to three articles on this line. One was printed as
an editorial Wednesday, May 16, in the San Fran
cisco Chronicle, a republican paper. Discussing
"the increased gold output its influence on prices
and the world's progress," the Chronicle said:
It is not unlikely that in the very near
future we shall find some of the uncompro
mising advocates of the single gold standard,
who declared that the volume of metallic
money has no effect on prices, revising their
crude and hastily expressed opinions. The
signs are multiplying that the tremendous
and constantly increasing output of gold is the
principal factor in the present universal up
lifting of prices, and, despite what has oc
. curred already, the belief is now finding ex
pression in commercial circulars and in mag
azine articles that we are just seeing the be
ginning of the gold inflation. If this assump
tion is true we may witness a repetition of
the conditions which once produced in Ger
many a strong feeling in favor of the demo'ne
tization of gold. Certainly there is more rea
son to apprehend a flood of the yellow metal
now than there was during the years immedi
ately following the gold discoveries in Cali
fornia and Australia. Then the dependence
was upon placers, whose riches, it was under
stood, would become exhausted; now the out
put Is largely the, result of : scientific pro
cess which cor" ,.the rocks to yield their
wealth in contfy increasing quantities.
Referring to the rapid enlargement of the
world's stock of gold, the Chronicle said that dur
ing the past eight years the world's output has
exceeded one-fourth of the entire production of
the preceding 404 years. From 1492 to 189G the
world's product of old was estimated at $8,904,
301,000; from 1897 to 1904 inclusive $2,354,049,500,
an annual average of nearly three hundred mil
lion dollars. But, according to the Chronicle, this )
does not tell the whole story, and so it says:
Since the cessation of the Boer war pro
duction has increased steadily. In 1S99 it was
$314,630,233; in 1904 it was $358,893,654; in
1905 it is estimated that the yield will be
$395,000,000. There is no reason now for
doubting that an annual output of over $400,-
000,000 will be reached and steadily main
tained for some time to come.
What will be the ffect of this enormous
injection of gold into the commercial arteries
of the world? The question is receiving a
daily answer in the columns of the newspa
pers, which record the flotation of enormous
enterprises and an expansion of industry, not
even remotely approached in the past. The
announcement of thy placing of $50,000,000
worth of bonds occasions less surprise and
comment today than the marketing of one
tenth of that amount caused thirty or forty
years ago. Railroad companies make bet
terments involving the expenditure of forty
or fifty millions, and a municipality pro
grammes an extension of its transportation
facilities which will require $100,000,000. The
pig iron industry of the country has grown
from eight to twenty million tojis in less
than a decade, and the expansion in other in
dustries and of commerce has been equally
marvelous, as the bank clearings, which in
creased from fifty billions to one hundred and
fifteen billions during this brief period of en
larging output of gold, amply testify.
Let those who have sneered at the quantita
tive theory of money read this frank confession
made in the conclusion of the San Francisco
Chronicle's editorial:
The United States doubtless affords the
most remarkable example of the tremendous,
effect exercised by the constantly enlarging
stock of gold, but its experience is by no
means unique. Germany has developed in a
notable fashion during the past eight or ten
years, and other countries ha e felt the im
pulse. At no period has progress through
out the entire world been more marked than
at present. Even the hitherto backward sec
tions are feeling the revivifying influence of
the large metallic stock and are making ad
vances which would have been regarded as
extraordinary a few years ago. Under ,the
circumstances it is not strange that writers
should manifest a tendency to find analogies
in the present conditions to thcjse which' ex
isted a little more than half V, century ago.
For a while the soundness of these observa
tions will be questioned, but ai time advances
a point of vantage will be gained from which
a backward view may be taken that will re
solve all doubts and thoroughly establish the
accuracy of the contention that the quantity
of metal of which the standard money is
composed exercises a vast influence on prices
and on the-progress of the world- generally. '
.. : t x
Under the headline "Is New Gold Affecting
Prices-?" the. New York Evening Post says:
The Economiste Francals of Paris, M
Leroy -Beaulieu's financial journal, published,
a few weeks since, a rather noteworthy re
view of the latest estimates of the world's
annual gold production, and of the outlook
for the. future. It reckons a probable S4nn
000,000 production for 1905, as against ?& .
$358,800,000 estimated for 1904, the $326 107 .
000 in 1903, and the $202,251,000 as recently 1!
1896. The article questions continued?
crease at this pace, but shows why it i- at
all eveats possible, and adds r. word on "the
relations of such a movement, in the writer's
opinion, to prices.
Then follows an extract from this French
writer's article in which he intimates, although
he is unwilling to expressly predict, that ten years
hence the gold production will be twice as W
as it is today. te
In Public Opinion for May 6, Henry C. Nicho
las has an article entitled "The Coming Delugo
of Gold." Mr. Nicholas says that the production
of gold during recent years has been nothing
less than marvellous and reads almost like a fairy
tale." He attributes much of the enormous in
crease" of gold during recent years to the im
proved methods of mining, and he says "there
is every indication that the production during
the next decade will be even more stupendous, and
that the world is on the eve of an unprecedented
deluge of gold." Mr. Nicholas says: "It is he
lieved by many economists that the world's pro
duction of gold during 1905 will amount to moro
than four hundred million dollais, and that with
in two or three years the annual production will
exceed five hundred million."
Pointing out that during the first five years
of the present century the gold production will
have amounted to $1,600,000,000 Mr. Nicholas
says:' "The world-wide economic significance of
this unprecedented gold production can be best
appreciated when it is recalled that the total
production of gold during the sixteenth century
was only $520,000,000; the production during the
seventeenth ' century being $628,000,000 and the
production during the eighteenth centurv being
$1,308,000,00." He adds:
To say that the production of gold since
the opening of the Twentieth century has
been unprecedented is putting it mildly. The
output for many years to come promises to be
at a rate greater even than during the last
four years. One may well pause and ask
what effect this- deluge of gold will have upon
the trade and commerce and industries of the
world.
The parallel which immediately pecurs to
mind is that almost miraculous world
wide uplift which followed the discovery of
gold in California in .1848. The enormous
increase in the production of gold which fol
ofr gave an impets to the industrial pro
gress of the world which continued with lit
tle interruption until the close 0: the century.
It might he interesting to compare some of
these candid statements with the editorials ap
pearing in the same publications relating to me
money question and denying the quantitative
theory of money editorials which were conspicu
ous during the campaigns of 1896.
A GOOD JOKE ON THE PRESIDENT OP YALE
The Springfield (Mass.") Renuhlinnn iia .at
tention to the suggestion made by President
Hadley of Yale a few years ago to the effect th it
trust magnates should be punished by ostracism
from society and, referring to his recent announce
ment of a million dollar donation from Rockefeller,
asks whether the chief of the trust magnates has
played a joke on Yale's president.
. While no one ever regarded the ostracism plan
a sufficient one :t is n.thc- amusing to see the
author of the suggestion paying homage to the
most odious of all the trust magnates. It is safe
to say that with one million of the tainted dollars
in the college treasury President Hadley will
never again advise turning the cold shoulder to
any one who has meney, no matter how he got it.
But while we smila at the fun Mr. Rockefeller
is navlng with Yale's president we must not for
get the temptation to which the college presidents
arm trustees aro subjected. These men are en
trusted with the care of institutions of learning
and they find it difficult to secure endowments.
, e lV colleges self supporting they would
tho -tr?,8e the tuItion and that would lessen
l'e ttendance nnri wiion n, , .1 A
"ic ns ignore the 'appeal- forVaia it taxes their
moral courage to refuse aid from the trust bene
ficiaries who are willing to purchase public favor
with money collected from the people by unjust
methods. They ought to refuse, but refusing
wo, I bj much easier if the colleges were better
supported.
I have had some experience in this matter.
Illinois college, located at Jacksonville, Illinois
is one of the most deserving of the small colleges!
It needs money to enable it to do the work it has
in hand. As a member of the board of trustees
I have opposed accepting money from the trusts
and have appealed to die public for aid for it
But a fewa vry few have responded. The
total amount received as a result of the appeal
has been less than $1,000. The failure of the
masses to support the imall colleges'is liable to
be construed as indifference to the insidious ef
forts now being made by the trusts to subsidize
our co eges. Nothing would so much encourage
the colleges to refuse tainted money as an out
pouring of contributions from those who want 'o
keep our institutions of learning free from pollu
tion. If the farmers, business men, professional
men and laborers would send what they could
spare with assurances of interest it would
strengthen those colleges which are still inde
pendent. No amount is too small to help. One
thousand readers of The Commoner giving $50
apiece could together raise $50,000. Four thou
sai 1 readers giving $25 each could raise $100,000.
Fifteen thousand readers giving $10 each could
raise $150,000. twenty-five thousand readrs
could by giving $5 eaci raise $125,000. One hun
dred thousand readers giving $1 each would liana
somely endow a college. If some other college is
preferred, help it, but let the college officials
know that you aro willing to make a little sacri
fice to keep our collegas from being silenced by
denationb from 'the high priests of "frenzied
finance." I am especiary interested in my Alma
Mater, Illinois college, but thore are several hun
dred small colleges that need assistance. WW
you help according to your means?
JJJ
Do the superintendents of insurance li&v0
access to the-salary accounts of the big insurance
companies? If so, why have they not discoverea
the reckless -waste of trust funds on eminent
statesmen? Or do the aforesaid statesmen earn
the money by preventing hostile legislation?
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