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Rh oz., largely in Shanghai, Hong-Kong and New York, at a net premium of 1,388,319, or 233. 8d. per oz. Therefore, they se- cured an average of io8s. 8d. per fine oz. for gold whose " value in currency " was but 855. On July 24 1919, with the assent of the Imperial Government, the gold producers of the African colonies entered into an agreement with the Bank of England under which they agreed to send all their gold to the Bank of England on condition of their being then allowed to sell it in the open market and receiving a licence to reexport it at any time within five weeks of its arrival at the Bank. Under this arrangement gold first arrived in Aug. 1919, after which time there was a market for gold in London, but merely for current production and not for stocks already there. From then to the end of the year the price varied from g6s. 8d. to ins. sd. per fine oz. and averaged icis. zod. as against the normal or Bank price of 843. iod., the average premium being 20%. In 1920 the price of gold varied between 1273. 4d. in Feb. and 1023. iod. in June and averaged 1123. 6d., representing a premium of 325%. The premium was hardly a premium at all. It merely meant that as long as the United States maintained an open mint, gold could be handed to that mint at the normal price of $20.66 per fine oz., and the resulting dollars could then be realized in London at a price based on the rate of exchange. The gold in fact was sold at gold par, but the resulting British cur- rency obtained for it represented a premium in paper, simply because that paper was depreciated. A recovery of the N.Y. exchange to par would mean the reduction of the London price for gold to the normal 845. iod. per fine oz.

The gold of South Africa, Rhodesia and West Africa was sold under this arrangement to buyers all over the world, and at first the East was a heavy purchaser, but whether there was a demand for it or not the mines had always the U.S. mint to fall back upon, and in practice such of the gold as was not bought by others was sent to that mint as a matter of course. And as a matter of course also, the price was always based upon and closely followed the N.Y. exchange, which if it were, for example, $4.00 instead of $4.87, meant a premium in London of 215% or a price of 1033. per fine oz., and so on.

During the period Aug. 1919 to March 1921, 14,311,000 fine oz. reached London and were sold under the Bank of England agreement already mentioned. Of this 3,928,000 oz. were taken by India and 954,000 oz. by the Straits Settlements, the East thus accounting for 34-1%. South Africa took i,o2i;ooo oz., or 7-1%, affording the strange spectacle of the South African banks buying sovereigns in London at 253. gd. apiece in order to replace sovereigns handed over their counters in the colony at 205. to be smuggled to the East. South America took 6-8%, other countries 1-6% and the jewellery trade 5-6%, leaving 44-8% to go to the N.Y. mint. In 1919 60% of the out- put of these mines went to the East and only 10% to New York, but in the six months to March 1921, only 25% went to India and as much as 965% to New York, reflecting the tem- porarily changed conditions of the world, India and the newer countries showing a strong reversal of trade. The gold taken by India was bought by the India Government up to June of 1920 (private importation of gold being prohibited except under licence until that time), and was resold by it at a considerable 'profit on the bazaars. The price it paid to the producers plus transport, etc., charges averaged about nos. per oz. and the price of resale on the bazaars was probably between 1353. and 1453., a difference of about 6,000,000. After free im- portation of gold was permitted the bazaar price approximated to the world (i.e. New York) price.

This sale of gold at a considerable premium in currency brings to mind the parallel of 1813 during the Napoleonic wars, when gold commanded 1203. per oz. in paper.

The consumption of gold, or rather the destination of the output, is perhaps best shown in mass figures (Table IV.).

The figures of the last quinquennium were of course markedly affected by the World War. Prior to 1915 the industrial arts and India, with variations attuned to trade cycles, were rapidly increas- ing their demands, and as soon as normal conditions are restored they are likely to reassert themselves. The recent absorption of

TABLE IV. Consumption of Gold iSpg-ipiQ in Quinquennia. (In millions of pounds at 845. u\d. per fine oz.)

1895-99

1900-4

1905-9

1910-4

I9I5-9

Industrial consump- tion of Europe and America. India's absorption (years to March 31 following) Egypt's absorption. China's absorption.

World's gold produc- tion .... Available as money. Aggregate stock of gold money (exclud- ing India, China and Egypt) at end of period Aggregate stock of gold money per head of the world's population

65

24 8 o

79

32 15

2

95

50 ii

2

121 96

4 3

90

Si i

17

97 253

128 306

158 431

224 470

157 430

156 958

I.STfl.

I 7 8 1,136

I72d.

273

1,409 204d.

246

1-655

2291!.

273

1-927

258d.

China is abnormal and may not persist in the near future, for it is to be expected that that country will, like the India of decades ago, first show a greater appetite for silver. The amount shown as available as money after the demands of these first claimants have been satisfied has been sufficiently large to permit of a marked increase in the world's stock per head, which before the war resulted in a considerable rise in the prices of commodities, but the table hardly reflects the recent considerable decrease in the gold production already referred to, and it is to be expected that in the future the balance available as money will shrink so as to maintain the per- head figure for some time in the near neighbourhood of the 258d. shown for 1919.

As a result of the war gold has become largely demonetized partly by being collected by Governments and partly by being hoarded, and most countries have prohibited its export. The result has been that the new production available and a further part of the existing stock has flowed into the State Banks and Treasuries of the world. The following is an attempt to show the position:

Dec. 1913

i>

June 1920

Xi

Change

i>

Held by the U.S. Treasury. Held by State Banks and other Treasuries.

In private banks, in circulation and hoarded World's stock of gold money (ex- cluding India, China and Egypt). .

266,000,000 749,000,000

445,000,000 1,075,000,000

179,000,000 326,000,000

1,015,000,000 572,000,000

1,520,000,000 420,000,000

505,000,000 152,000,000

1,587,000,000

i ,940,000,000

353,000,000

Thus the United States had increased its proportion of the world's stock from 17 % to 23 % (and the whole of the United States from 245% to 28^%), and State Banks and other Treasuries from 47 % to 55 j %, while the remainder in private banks, in circulation and hoarded, had dropped from 36% to 21 J%.

In the IO years before the World War the net coinage of gold in Europe and America was about 677,000,000, or 68,000,000 per annum, and of this amount 171,000,000 was issued from the Royal Mint in London, 103,000,000 in Australia, 183,000,000 in the United States and 220,000,000 in other countries. The effect of the war was to reduce the total to probably under 15,000,000 per annum for 1916 to 1919, the United Kingdom and United States coinage tailing off to nil, and the total being mainly contributed to by Australia and Mexico. In the latter country, as a consequence of its disturbed conditions, the note issues were made inconvertible and gold and silver coins disappeared, in accordance with Gresham's law. In due course of time the notes became waste paper, and in 1919 gold and silver were again minted and declared the only legal currency, so that Mexico has returned to a metallic basis. This transition from hard money plus notes to inconvertible notes which rapidly became of little value, and then to hard money again, all took place within the few war years, and in it can be seen the probable programme (when they can afford it) of the more hardly hit Continental countries. In the United Kingdom the policy was to revert to an effective gold standard, and as a preliminary the Cur- rency Committee's recommendation that 150,000,000 of gold should be concentrated in the central institution had already been carried