GOLD THE KING.

Dominion, Volume 7, Issue 2013, 21 March 1914, Page 3

GOLD THE KING.

ECHO Ql? TRANSVAAL STRIKE. A good many mine stamps have bora lning up as the result of the strike among miners (says the "Johannesburg Sunday Time?" of January 18), and. the ■ t|«cstkui lias boon asked, "How would a I prolonged curtailment of the gold out- i put aliect the industrial enterprise of j Europe?" i /J.'he ausivor is that a considerable ' diminution in the value of gold exported would create a shortage in Kurope, where the craxo for armaments is stimulating the demand for gold, and there would probably, be a rise in the hank rate, arid a limitation of the world's enterprise. The Rand supplies from a third to a : half of the world's total output of gold, and this riot only finds its way to tiro : various countries of Europe, where it is often hoarded in the. national coffers, ' but drifts away, to India, and Egypt. The "sliiekl" sovereign has been in great tie, ni'and in India because its colour is admired by tho Indians themselves, and it has been exported from South Africa at a premium of five per cent, to bo smelted into Indian ornaments of gold. .Those ornaments in India represent so much gold lost to the enterprise of the world, and as in India, so in Egypt gold is being hoarded and lost—for the time being at least—as a medium for activity and human employment. }ht the immediate effect of heavy curtailments of'gold exports from South Africa would be to crests a scarcity of money, to lower wages, and to increase the purchasing power of the sovereign. As matter* stand at present the enormous output of gold from tho Rand mines hits rendered the sovereign much less valuable as a purchasing agent than it. was one hundred years ago, when gold was scarcer than it- is to-day. The issue of legal tender notes _ can he regulated. to balance this position somewhat, but on broad lines the financial outlook is affected and deteijuincd chiefly by the gold in circulation, and ■by the numbers of jMople amongst whom that gold is properly divisible, and again by tho condition of the food market.? of the world. " 'When there is a shortage of gold tho purchasing power of the- sovereign be colwcs greater all over the world, and less money is likely to bo put into nonreproduetiVo.works, such us armaments. Capital being scares, enterprise k re- ] striated ipso facto, and bonk fold dcposits are drawn upon with effect, to increasa rates of interest ou fixed deposits. A regular proportion, of the- Rand's gold mUivui is spent in South Africa, and any diminution in that output is there-

fare felt: -throughout the. Union Tfii.il groat promptitude. Tho lack of groat industries and the prevalence of merchant ittieldleuieii' soiling oversea goods, establishes a sharp commercial relation* ship between South Africa and Great Britain and America. But tho Wow to local cnnjmercf} was so great at the conclusion of tho last strike tltat ninny oversea firms cut down their credit hills and facilities were, restricted by bills at lessoned sight periods. This was one local effect of a shortage of sold. The present strike will exert a similar effect on tho commercial and industrial position, although it is probable' that a quick ami pariuauent recovery will bo made, and that tliora will bo' so much less industrial unrest, that the possibility of a rocoyefy in oversea confidence will he considerable, with a c-orrespond- . kg influx «f capital. As it is, the gold stamps of the Rand arc makers of financial history.