THE WORLD'S GOLD-SUPPLY. T HE remarkable outburst of speculation in South
African mining shares, to the effects of which we referred last week, naturally calls attention to the question of the gold-supply of the world at large, and the results that may be expected from the enormous additions that are now being made to its volume, and the still greater developments in the near future that are confidently prophesied by experts who have studied the question. An economic writer, of rather eccentric views, recently pub- lished an article in which he endeavoured to demonstrate that all the periods of intellectual and general activity which have brightened the pages of modem history, have been accompanied and caused by large discoveries of the precious metals, and most currency specialists have laid stress on this theory that gold and silver are the very life - blood of civilisation, and that the plenti- fulness or scarcity of their supply sufficiently accounts for any quickening or deadening of human endeavour and progress. The author of a history of currency which appeared not long ago, went so far as to contend that the great Revolution in England was caused less by the revolt of an independent nation against an irresponsible despotism, than by the general dissatisfaction with the condition into which the national currency had been allowed to fall, and the consequent distress and depression of trade. Such theories as these are interesting examples of the false perspective of the specialist, and serve to enliven dull treatises on recondite subjects ; but life has never been entirely a matter of s. d., and currency-writers often mislead their readers by falling back into the old error which was at the bottom of the Mercantile theory, and treating money as wealth, when it is only a means of exchanging wealth. After all, men never could feed on gold, and even when an adequate supply of coins was most important, it never had so much effect on the general welfare as the supply of commodities, although, of course, the defective currency systems with which mediEeval Europe was cursed had a restrictive effect on industrial and productive enterprise. Now, however, since by the development of the banking system we have practically returned to a state of barter, and carry on 95 per cent. of our commerce by means of notes, cheques, bills of exchange, and other fiduciary forms of remittance, only using coins occasionally to adjust balances, it is evident that the precious metals retire into a position of much less importance. We keep all the conveniences of the metallic system by using coin as money of account and calculating values in terms of sovereigns, marks, or francs, but at the same time we economise our coins, preserve them from wear and tear, and multiply their utility a thousandfold by leaving them untouched in a safe, while we " turn them over " many hundreds of times in transactions which are settled by an interchange of paper.
Nevertheless, though the precious metals are a less important factor in economic life since the development of the credit system, it must not be forgotten that they still form the foundation on which that system is built up, and the superstructure cannot be widened indefinitely without danger unless the foundation also receives a pro- portionate extension. There is a story told of a Boer who had lodged £10,000 with a bank at Cape Town, and walked in one day and demanded his balance in gold. Ten thousand sovereigns were immediately counted out and handed over to him, and he straightway pushed them back across the counter and said that he had only wanted to see that they were still all safe. The Boer was a, barbarian who did not understand banking, but the most highly developed communities are subject to moments of hysteria, in which an inconvenient number of people are seized with a simultaneous desire to know that their bank-balances are still all safe, and it is to provide against these moments that an abundant supply of the metals is still necessary, in spite of all our fiduciary refinements. This being so, the enormous increase during the last half-century in the supply of gold becomes a matter of common interest. Most newspaper-readers have a vague idea that gold is more plentiful, and is being more rapidly produced ; but probably very few, outside the circle of financial experts, are aware of the extent of the increase. We confine our attention to the single metal, because the double standard has long been rejected by the leading commercial nations, and the figures we give below effectually dispose of its advocates' contention that commerce is starving owing to the inadequacy of gold to bear the double weight. It appears, then, that in the first fifty years of the present century, the gold produced was worth £163,248,560, showing an average output of about n millions' worth per annum. During the succeeding forty-five years, taking the output for 1895 at a fair estimate, the gold won will have been worth £1,153,088,600, having been turned out at the rate of about 258 millions' worth per annum, and the average value of the results for the ninety- five years comes to a little less than 14 millions a year. The gold turned out last year was valued at £33,400,000, and this year's mining is expected to result in a return of 40} millions. These figures, most of which are taken from " Le March6 Financier en 1894-1895," a trustworthy and interesting work compiled by M. Raffalovieh, are quite- sufficiently startling, showing as they do that this year's output of gold is nearly three times as great as the average annual yield during the present century. But when we look forward and take into account the confident pre- dictions of experts whose forecasts have hitherto proved singularly correct, the possibilities of increase in the immediate future open up a still more remarkable picture. At present the world's production may be divided, very roughly, into four equal parts, which are contributed respectively by Africa, Australia, the United States, and " other countries." But it is expected that the output of the chief field in Africa will be more than doubled within the next few years, and a proportionate increase is looked for from the other established fields in this highly auriferous region. An enormous amount has also been invested lately in Rhodesia, though the possibilities here are still a matter of conjecture. As to the probable yield from WesternAustralia opinions are very much divided, and the Londonderry fiasco certainly encourages careful esti- mates. The field has hardly been scratched as yet, but there seems little doubt that it is extraordinarily rich on and just below the surface, and a large addition to the Australian return is expected from this tract. Moreover, British Guiana is said to be developing well, and it is maintained that there is untold mineral wealth in Central America if only capital could. be raised to work it. Apart, however, from hypothetical additions to the world's supply of gold, it is safe to estimate that early in the next century the annual output will be worth from fifty to fifty-five millions sterling, or about sixteen times as much as in the early years of the present century. As to the results of this addition to our monetary re- sources, it is difficult to foresee them clearly, and their discussion leads one into very rugged and difficult paths. It is obvious, however, that bankrupt States which are struggling on with dirty and unsanitary paper-money will have a good opportunity for establishing a metallic currency, and that the use of gold in the arts will be considerably increased. There is no doubt that the rife in the buying-power of gold has stimulated its pro- duction ; but it is not so certain that the expected increase in its amount will cause a rise in general prices. On the contrary, it is very probable that the abundance of gold may lead to a further expansion of the credit system and a consequent development of the production of general commodities which would prevent any material advance in their values. The output of gold has been increasing fast and steadily during the last twenty-five years, and prices have been falling Tani passu, though the conditions have been so much complicated that it is possible to argue that the fall in prices would have been far greater if the increase of the gold-supply had not happened at the same time, and that henceforward, assuming that the cheapening of transit and the improvement of industrial processes are not carried still further, the weight of gold in one scale will force up general values in the other. The next few years will solve the problem ; but probably, even when they have passed, economists will differ as to the actual meaning of the solution.
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