A NEW WAY TO PAY OLD DEBTS

Hokitika Guardian, 7 May 1921, Page 4

A NEW WAY TO PAY OLD DEBTS

“Good Australian,” writing in the “Bulletin,” says:—ls it too late to put _ in a plea for the creation by the nations of a new standard price for gold? The U.S.A. holds 75 per cent of the | world’s stock, and although the British Empire produces 64 per cent of the supply its reserves are steadily decreasing. And so is the Empire’s annual gold yield. Take Westralia as a typical example. In the ten years ending 1620 her gold output fell from £6,246,848 to £2, 624,424. Australia’s yield is tailing off every month, and is about to drop still more quickly. Gold is no longer currency, yet every day it becomes more and more vitally liecessaij as a basis for credit. The Royal Mint pays £3 17s 10Jd per oz, and for trade purposes and for hoarding bullion is today worth £6 an <w. It is lairly open to question whether the Australian Gold Producers’ Association should nnv longer he permitted by the Commonwealth’ Government to export gold and make a private profit out of the lifeblood of our internal commerce and external trade. Gold, after all, is “the royal metal,” belonging absolutely to the Crown, which is the Federal Government.

It would lie no great hardship to raise the price of gold at the branches of the Royal Mint in Sydney. Melbourne, and Perth to the net price the Gold Producers’ Association receives abroad, and buy its gold instead of allowing it to export. The association would not lie any worse off for being paid in Commonwealth notes, and the note issue would bo strengthened by keeping our own gold in our own banks’ vaults instead of shipping it abroad to fill the congested Yankee vaults, and the stockings and kerosene tins of our racial enemies. The nations of the world ought to be asked by the Allies before they break up to agree to a new and higher standard for gold for, say, the next fifty years. The agreement must t>e universal and long-standing to ho effective.

In pre-war days the I'rising of the monetary standard in value would have put up the price of commodities. Disordered exchanges and dumping will effectually prevent that happening nowadays. Gold, being merely a credit instrument, has a small volume and value of trade. Supposing tJie standard* price of gold wore internationally declared to be double its present mint price, it would be worth 67 155.9 d per oand excepting jewellery it is questionable whether any other commodity would lie affected in price. The world is working on paj>er currencies, mostly without any gold backing, its proper protection. If gold were worth 67 15s o<l per oz, closed goldmines would bo reopened and unpayable ones become profitable the world over.

From a selfish standpoint, an enhanced price for gold would give Australia a great thrust forward in prosperity. A higher price for gold would double the value of the gold held by Australia and the Empire (and, incidentally, the United States'!, and so enable them to buy and extinguish many millions of debased war bonds. Possibly the increased value of gold might lower the purchasing power of money, but, anyhow, that would benefit posterity by enabling it to pay off our war debts more easily. Shortage of gold is at the back of the high cost of living and restricted trade and credit. and disordered exchange and shortage of gold can be partly corrected by doubling its value, and by inducing the miners and speculators of the earth to go forth and get more and more gold.