The steady rise in prices in recent years, due in part at least to the increased supply of gold, has provoked much discussion as to the probable future of gold production and its influence upon prices. Throughout all modern times the search for gold has had a peculiar fascination for men of all kinds and nationalities. Prospecting for gold has been carried on through the centuries and mines have been worked without much calculation of yield or cost. Prospectors have been buoyed up with the hope of some day "striking it rich." But in recent years luck and chance have given place to careful calculation and scientific business methods; instead of a lottery, gold mining has become an industry. Powerful hydraulic machinery is now used in alluvial mining to wash down whole hillsides into the sluices, there to be treated with quicksilver or subjected to other processes for the recovery of gold. In quartz mining the rock containing gold is crushed in great plants, where the ore is recovered by mixing with quicksilver to form an amalgam from which the gold is easily separated. Gold when found in chemical combination with sulphur is extracted by either the chlorine or the cyanide process. As a result of recent improvements and of large-scale operations, deposits of low-grade ores, which under earlier methods could not be worked at a profit, are now being made to yield large returns. It is largely from these deposits of low-grade ores operated on a strictly scientific and business basis that the great increase in the supply of gold and silver in recent years has come.

Many believe that with the placing of the gold-mining industry on a business basis comparable in stability with iron or coal mining "the world need not fear any great scarcity of gold in the future, or any long period of falling prices and industrial depressions, tor any increase in the value of gold should promptly lead to an increase of the supply."1 Others hold that the production of gold has reached its maximum and that prices will not go much higher. It is generally recognized, of course, that a considerable part of the advance in commodity prices has been due to the fact that production of food products and other staples has failed to keep pace with the increased consumption due to the rapid growth of city population. Under the stimulus of high prices and large profits there is likely to be a great increase in the production of farm products which normally should bring about a fall in their prices.

On the side of gold supply some authorities hold that influences are at work which will bring about a decrease in the production of gold. The rising prices which increase the profits of other industries compel the gold-miner to pay more for tools, machinery, supplies and labor. This may so reduce the margin of his profits that he will be forced to abandon the mining of low-grade ores, and so gold production will decline. Professor Meade believes that this movement is now taking place in every gold-mining country. He concludes that-"in view of the small increases in the annual production of gold, and in view also of the certainty that the next decade will see large increases in the production of commodities and in the demand for money, it is unreasonable to expect that prices will much longer continue to increase."2 This opinion finds support in the annual reports of the Director of the Mint, which show that the world's production of gold has been practically stationary for the last five years. The slight annual increases are added to an enormous existing stock of gold, so that the rate of increase is small.

1 Johnson: Money and Currency, p. 209; see also, Fisher: Pur chasing Power of Money, p. 248. 2 The Careful Investor, p. 283.

On the other hand, the demands for money are constantly increasing, notably for bank and government reserves. In this connection Professor Meade notes that in 1900 the national banks of the United States held in specie, mostly gold, $373,000,000, while in 1911 their holdings of gold had reached $711,000,000. "Every time a new bank is organized, and the number is rapidly increasing, a certain amount of money must be withdrawn from circulation and put into the bank's reserve. This represents an increasing demand upon the world's money supply. What is going on in the United States is but typical of development in other countries. Canada and South America are rapidly enlarging their banking reserves. Immense amounts of gold will be sent to China to assist in the industrial development of that country. In every part of the world, in vast regions, railroads are being constructed, mines opened, farms developed, and money - that is, gold - required."1 The possible extent of this absorption of gold by new countries is shown in the case of India, which for two or three years past has taken 28 per cent of the world's production of gold.2 Professor Fisher takes the opposite view, holding that the outlook is toward a continued rise in prices due to a continued increase in the gold supply.3