THE DEPRECIATION OF GOLD AND ASIATIC COMPETITION.
[To THE EDITOR OF THE "SPECTATOR."] Slit,—Yon have permitted me now and again during the past eight years to draw attention to the inevitable depreciation of gold because of the metallic inflation of the world's currencies. I have not read Professor Ashley's articles to which you referred on October 22nd; but he makes no new discovery, in that Mill's "quantity theory" of money has not been relegated to Saturn. The real novelty of the present position of prices is in this,—the prices of perishable commodities (food) are being pushed up by the unexampled increase of our gold-supplies. But the great fall in the silver exchanges (especially since 1906) is enabling Asia and cheap Asiatic labour to supply all non-perishable products into which labour enters largely, such as pig-iron, at unprecedentedly low prices. Hankau is now delivering pig-iron in whole cargoes f.o.b. for 161 taels per ton, which at the present rate of exchange is about two guineas, whereas this 161 taels at the old rates of exchange (1873) would have been 25 10s. No furnace attended by white labour can approach any such figure of cost of production as two sovereigns (gold) per ton, and with the exploitation of the great Shansi iron and coal field our Western furnaces must, it seems to me, close down unless exchange greatly advances. For it is not only that Asia can now sell pig in our markets at prices hitherto inconceivable, but the wages of our ironworkers must needs advance because of the advance in food prices. What applies to pig-iron will be found to jeopardise also such staple industries as cotton, jute, leather, and especially all steel products. We cannot compete with China unless the price of silver rises one hundred per cent.—I am, Sir, &c.,
MORETON FREWEN.
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