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VOL. 2, NO. 40.
SII.YF.U CITY, X. M., WKDNKSDAY, MAW7,- JitiMi. PRICK ó (FATS DEMAND AND SWTLY. How it Has Affected the Price of Gold and Silver, Nnliin InUrcHthii: Farts About the Kultf'M llt-twrttn (iiilil Mini Silver from the Kuril, Ht Tlnief. 1785 Frunce lixt d tin- viilui' of silver at M.UÜJ.. per ounce, and ii 1 SO.'i opened, her minis lo (in unrestricted coinage at Hint ratio. Fur sevcnty'ycars thereafter France thus maintained un unlimited demand for silver lit that vuliu, ntxl lixi'd itH priri- throughout t lit' ctnit uicr cial world. At n very early date we find that the unlimited demand, crealed solely hy ' 'the edict of nations, was w holly respons iable for the price uf both gold und silver bullion. At no time was the ratio of value betweeit gold and silver fixed to conform to the cost of production or the supply of either in'etal. In fact, up to the time of the risu of the "Sherman" school of linancial economists, the op posite had lieeu the policy of govern ments, l'.efore the Christian era, w hen nations had hut liitle commerce, one with another, the relative value of gold and silver varied widely in different parts of the world. Tho Hebrews seem to have accounted silver about one-half the value of gold ; while other nations ' placed the two metals upon an equal basis. Greece, in the time of Herodo tus valued gold at thirteen times as silver. In later years, when the produc tion of gold decreased, the Unman raised the value of silver to one-tenth that of gold. From the time of the discovery of America, we have a more accurate re cord of the relative production and value of the precious metals. In 1497, the ra tio of value of gold to silver was fixed at 10 to 1, and remained so until the in flux oí gold from her ;iew ly conquered territory, induced Spain, fifty years later, to raise the coinage value of gold to 13'jj times thai of silver. As she controlled the supply of the precious metals, she compelled I he other na tions to accept both silver and gold at her valuation. During the seventeenth century, inimiiise quantities of gold, which were received from the Kast In dies, Japan, and lirazil, enabled Port ugal to llx the ratio ; 'whereupon she raised the value of gold 20 per cent. Owing to the decrease of the supply from these sources, Portugal finally lost her prestige. The Spanish colonies in America were then producing chiefly silver! and Spain accordingly raised its vrd'io, in 1 770. tnfl.HO per ounce. In Invariably any change in the ratio was made with the object of enhancing the value ol that metal, whether gold or silver, which was produced by the coun try controlling ihe ratio. Such hud been the pol.cy of the world uniil 1878, when this nation, which was then pro ducing l!8 per cent, of the silver of the world and 111 per cent of the gold, by some "occult influence," was deluded into legislation which struck a fatal blow at one of its greatest interests. At a time when it was in a position to com pel all Kiiropctu acquiesce in ifs valua tion of precious metals, and to control the finances of the world, this govern ment stupidly surrendered to Kngland. An examination of statistics of the comparative (plantilles of gold and sil ver which have been produced at differ ent periods well sustains ihe position that the supply does not affect the ratio of value, so long as there is an unlimited j demand (or both metals established and I ipainlametl bv coinage legislation. From i4!t:i to 1H20, theworld's average annual production of silver was eight times that of gold in weight, while the ratio of value was Unit fixed by legisla tion, J034 ounces of silver being equiva lent to one ounce of gold. From 1545'to lótiO, the average ratio of weight pro duced was lili 0-10 of silver to' 1 of gold, while the ratio of value was II 11-10 to 1. The average annual production of silver from l.")80 to 1000 was 5tl 8-10 limes that of gold, yet the ratio of vulueniily raised to II 8-10 lo 1. From 154.') to 1840, the average annual production of silver was 19 1-10 times that of gold, and the aver age ratio of value was 14 3-10 lo 1. Dur ing the following ten years, the average annual production of silver was only 14 .'i-10 limes that of gold, yet the average value of gold was increased by legisla tion to 15 8:5-100 limes that of silver. Owing lo Ihe unprecedented production of gold in California and Australia from 1850 to 1870, the average annual produc tion of si'ver decreased comparatively lo only 5 4-10 times that of gold, yet gold retained its value of 15 42-100 tin Ho' ol silver. Since the closing of mints to silver by the Cni . d Suites the average annual ratio ol ; pun. uction has been 18 8-10 of silver u 1 of gold, and the aver age ratio of value of gold lo siiver has been 20 ti-10 to 1. From 1491! lo 18-50 Ihe average value of gold was 1 1 It-100 times il.ni ol silvci , while Ihe nerge annual prodiii', inn i. Í silver was Ul 4 10 limes, i Inn of go!d. Of Ihe world's total prodiUM ion of gold fronrHli:! to 1M)4, :7 per cent was pioilllccd thil ing ihe lirsl .58 ears or up lo IK-'iO, in il !" per cent, durii g the 44 years si ce lN5(j; while ti'.' percent, of I lie I oi :il pi'uiluclioii of silver was pro duced ilurn g l he same period of .'58 years ami Ufi per c in during t lit period of 44 years. Thus during the .-ecuinl period as compared with Ihe I i i-.-1 eriil, the prod iii'tioii nl gold increased rela tively in alliiosl l he exact ratio that the production of 'silver decreased; vet with Ihe except ion of l very few slum periods, legisla. ion during the 400 vcars has steadily ami inteulionlly increased the value of gold. From an examination of these figures, it seems that when there was 50 time as much sil ver as gold being produced the value of silver as compared with that of gold was :!0 percent greater than when the production of silver had become less than six limes thai of gold. So long as there was an unrestricted coinage of both metals at a fixed ratio, the price of both gold iind'silver bullion was praeli callv determined by the ratio so fixed, uncontrolled by the amount of product ion or by ihe cost oí production ol either metal. If the v alue is to be governed by (he comparative quantities of gold and silver produced, and the ratio 14 I 100 lo 1 was'lhe corred basis during the 58 years, then I he rat o during the 44 years should have been 5 5-110 to I, in stead of 15'ü lo 1, and tit . the'preseut time the ratio should be 7:l, fo 1. i This law the law of unlimited de I niand was lietter understood us far hack , as l be time of Charles II than it appesrs i lo be today in our legislative hall,s. While Kngland held her mints open to ihe unrestricted coinage of both gold I and silver, the crow n, from time lo I time, fixed the ratio oi their valiie. , This was accomplished by proclamation" j as to the value at which gold and silver coins should be reckom d. It wasosten- ' fiblv wi'li the view of nlwv"'f, '(