into use as to influence commodity prices on the ascending scale. Perhaps the following tabular showing will make this point clearer:

One final test may be applied to the developments of the last five years, keenly suggestive of the fact that we have within that time, despite the continued rise in gold production, been losing our stock rather than gaining any new surplus for monetary uses. In the annexed table the world's statistics of production and consumption for 1910 are compared with 1906 as nearly as may be, with the percentage of changes, which will visualize the situation better than words could do:

Were a comparison with 1911 attempted, the showing would be more unfavorable. The United States Mint estimates an increase in world gold production over 1910 of less than three.

* To March 31, 1911. † Decrease. ‡ Actual percentage of increase.

per cent.; a recent estimate by the President of the British Board. of Trade makes the gain less than two per cent. On the other hand, the average yearly increase in the consumption by the arts is materially greater (in 1910 and in 1909 it exceeded ten per cent.), while, as unofficially reported, the net imports of gold by India in the fiscal year to March 31, 1912, indicate an expansion of nearly sixty per cent.

Are there legitimate reasons to believe that the demand for gold will not increase faster than the supply? The table last given furnishes ground to think the reverse. So far as the absorption by India is concerned, the steady progress made in developing the resources of that great region indicates that its favorable trade balance will continue to mount up faster than the rate at which the habits of the people are changing with respect to the use of gold as circulation or for settlement of internal exchange balances. At the pace at which the United States is consuming its own wheat crops, we are in danger of ceasing in not many years to be an appreciable factor among the breadstuffs-exporting countries of the world. Such a change. would increase Great Britain's dependence upon India for her supply of wheat and thereby expand the latter's credit accounts in international commerce. Our cotton production is too variable not to tend, unless we deal with this crop differently than we have done for long years past, to stimulate the export of Indian cotton. The enormous expenditure by the British Government for irrigation works in its Hindu Empire has increased the stability of production in India in recent years, so that there follows no such disaster when the monsoon fails, partially or completely, as occurred on those occasions a dozen years ago or earlier. The interruption to trade by famine is being reduced to a minimum; increased sanitary education and establishment of sanitary conditions are lessening the blight of plague. Even the population is increasing: by the census of 1891 it was 287,000,000; in 1901, 294,000,000; in 1911, 315,000,000, showing a growth of about ten per cent. in twenty years.

The industrial consumption of the precious metal is also bound to expand as the world's population grows, as new regions are opened to civilization and to settlement. The uplifting of

the masses in the United States-the now well-established tendency to luxury-leads to increased use of gold in jewelry, ornaments and utensils. In this country alone the value of new gold material for manufacture and the arts has trebled in the last two decades. The world's industrial consumption has shown the following expansion in the last ten years, according to our Mint estimates:

Here is an increase from 1901 of nearly forty-one per cent. It is immaterial whether twenty or thirty-five per cent. of the amount was supplied from coins: the total is a loss to the monetary supply. As has been shown in earlier estimates, this industrial consumption has absorbed in the last sixty years 3,000 millions out of a gold production of 11,000 millions. At the recent rate of growth, it is not extravagant to say that within a few years the arts will take half the world's gold output, unless the latter enlarges at a far faster rate than recorded in the last quinquennium. It would require independent treatment to do justice to the increasing demands on gold for banking reserves. It is to be remembered that in the last analysis it is not alone outstanding paper against which sound banking principles require an adequate reserve: the coin held by a bank is pledged also to the payment of all demand liabilities. In the case of the United States the gold reserve of $150,000,000 is not solely to be considered in relation to the $330,000,000 of outstanding "greenbacks." Upon it really rests our entire system-conglomerate and mosaic-of treasury notes, national bank notes, silver certificates and silver dollars. For while back of the silver certificates and in the coins is the actual value of the white

* The United States report for 1911, not long issued, contains drastically revised estimates of industrial consumption, erring probably on the side of conservatism. The writer, however, has used the reduced figures in all calculations as to the industrial demand.

metal, that actual value is nearly seventy cents below the nominal worth. Moreover, any forced sale of the metal would demoralize the market. As regards the national bank circulation it may be objected that it is amply secured by United States bonds; but in the event of a break-down in the gold reserve defence, Government securities would collapse and it might be that but a small part of the face value of this paper could be realized. It is true that this is assuming an extreme and highly improbable case; nevertheless, its conceivability is to be permitted in any argument as to the adequacy of the monetary stock in Government treasuries and private banking reserves. The same criticism applies to the British banking system, which is supported by the credit of the Bank of England plus only six per cent. of ultimate reserve! The world has built up a tremendous mass of credit instruments * and we frequently see, when some event temporarily shatters confidence, a universal scramble for gold with which to rebuild reserves and reconstruct that confidence. And if we continue to preach the substitution of the gold standard among countries which still adhere to a silver currency and standard we shall create all the more demand for the yellow metal for reserves we shall multiply the needs of it for monetary

purposes.

Discussing the silver question in his work Money and Currency, Professor Joseph French Johnson said, in its April, 1907, edition, when speaking of the Free Silver arguments of 1896: "The silver man assumed that gold was destined always to increase in value, and that prices, therefore, were bound to continue downward. Yet even while he was making his argument forces were at work to bring about a change in the value of gold and cause prices to rise. The increase in the value of gold after 1873 was due to extraordinary circumstances, the demand for it having been so greatly increased by its adoption as the standard of prices in most of the civilized countries of the world. That gold will ever again be subjected to such a strain is not possible."

*The annual report of the Director of the Mint for 1911 shows (for the banks of Europe, the United States, Canada, Australasia and the South African Colonies) an increase in notes in circulation from December 31, 1889, to December 31, 1910, of 75 per cent., and an increase in loans and discounts of 164 per cent. Bank loans since December 31, 1899, have about doubled.

In the light of the statistics of mintage and other consumption; in view of those seeking to establish an absolute gold standard and a gold currency for the 315,000,000 people of India; that there are those who would make a like monetary change for the 329,000,000 people of China-may we not bè preparing to put a new strain upon the yellow metal which, in a long cycle, will work out appreciation of gold's value and a general depreciation of prices? Or, if we have no occasion yet to be disturbed by such a possibility, may it not be reasonable to think that, through the investigations of the proposed International Commission on Prices, we may be brought to look elsewhere for an economic explanation of the prolonged rise in commodities-that, as a matter of fact, in the last decade at least, it will develop that there actually has been no redundancy of gold and that there is none to-day, when the vast extent and the complexities of commercial operations are considered?