chapter  XXVI
12 Pages


This cause, originating in the external gold market, has already been noticed; it lies in a persistent change in the profitableness of gold-mining. When at the close of the last century the output of gold showed a marked and continuous increase, the new supplies of the metal, like those of any other commodity, distributed

themselves among their various uses throughout the world at a continually declining value. Clearly the Bank could not check, and ought not to attempt to check, a corresponding decline in the home value of the sovereign. It was both necessary and desirable that a part of the new supply should permanently increase the central gold reserve and should be multiplied by the banking system into a volume of currency which would enable the general price level in this country to move upwards in correspondence with the general rise of prices throughout the world. Some of the effects of a persistent change of this kind may be alleviated by a judicious policy on the part of the banks; but to remove the cause would require more drastic action, such as the abandonment of the gold standard and the adoption of another standard specially selected or devised with the object of providing a unit more stable in value.