The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, DECEMBER 3, 1927. GOLD PRODUCTION.

Hokitika Guardian, 3 December 1927, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, DECEMBER 3, 1927. GOLD PRODUCTION.

j Tim decline in gold production is causing concern now in financial circles. According to a New York banking journal (which is itself perturbed by the trend of events, apprehensions expressed in Europe relate chiefly to declining gold production. The coinage value of gold is the same as before the war, but mining costs have advanced, with the general rise i of wages, machinery and mining supplies, causing a. serious decline of production, which threatens to continue. Production in the United States has declined about one-half since 1915. The Australian production, long a. very important factor in world supplies, has dwindled to small proportions, and the Commonwealth Government recently gave an adverse decision upon an appeal that it bear the expense of exploration work for the purpose of reviving the gold-mining industry fn Western Australia. The great Transvaal field, which is now yielding approximately one half of the world’s production. is at peak production, but authorities say that it will begin to fall off rapidly within a few years, as many of the large mines are approach-

ing the limits of the ore bodies. Mr Samuel Evans, one of the men best known in connection with the Transvaal mining industry, in his Presidential address last year, as head of a section of the South African Association for the Advancement of Science, made the following statement: “The next important fact disclosed in the Government Alining Engineer’s report is that, in the event of no fresh capi tal being introducer! to open up new mines, or to extend materially the areas -and capacities of the existing mines, the shrinkage of the Witwatersnnd gold mining industry will take place approximately as follows, taking the position in 1925 as 100:—1925. 100; 1930, 7G.8; 1935, 52.1; 1940, 17.9. Tt will bo seen that this estimate was predicated upon tiler being no new investments in the field and no new areas of ore opened, hence, while the production probably will decline, the rate of decline may not lie as rapid ns indicated by these figures. Also, the generally unfavorable prospect for gold production may be changed by discoveries. and a reduction of mining costs would quickly cause increased production from low grade ores, but the situation ns it stands is the subject of serious discussion. The follow ing extract from an editorial in the j London Statist presents the case as it

appears to many well-informed observers: “It may seem premature to talk of stabilising world price levels through tho medium of the gold standard, seeing that the international gold standard itself is as yet imperfectly re-established. Tho memory of the incredible movements in commodity price levels that took place in European countries after the war is still recent enough to make such fluctuations as occur under the gold standard secun insignificant by comparison. Yet there is one paramount reason why the question of control of the international gold standard should he considered thus early. It lies in the fact that, ever since the gold basis was restored by the British Empire and a group of European countries in May, 1925, there has been a disheartening rise in the value of the monetary standard. Now, whatever opinions may be hold as fo the advantages or disadvantages of a rise in price-levels (i.e. a fall in the value of the monetary unit), there can lie no question but that a fall in price-levels miltiates against the return of economic prosperity. Most authorities are agreed that the inability of this country to lift itself out of the slough of trade depression is due directly to the monetary deflation attendant on the restoration of the gold standard. No doubt other factors may be cited, such as industrial strife, high taxation, excessive social expenditure and international tariff barriers and trading restrictions. It remains, however. that deflation lias been the chief blighting influence. Under deflation, producers’ selling prices fall in relation to money costs of production, chiefly wages; the debtor interest is put at a disadvantage; the burden of debts and taxation presses more heavily.’’ A great economy in the nsc of gold is being effected by the general discontinuance of coinage and common circulation. Its monetary use is now practically confined to bank reserves, and the settlement of international balances. Moreover, since gold payments now consist almost wholly of transfers from one central bank to another and back again, it seems quite reasonable to say that these boards necxl not increase in .strict proportion to the total turnover of domestic business in Ihe several countries, ft is evident therefore that gold coinage will be held more and more in reserve for securiiv purposes until the banking authorities evolve some plan as regards financial stability which will permit of gild being discarded That however, is very remote and in the meantime there will lie a measure of uneasiness all over the world in regard to the decline in gold production.