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The C:r'liliittee :prc$i.Ced 6.~~r by Lord lnch~~~±:~hich was B.;p:pointed. last Septem'be~ .
to com:id.ar and repo':'t lrpcn the e:.ffect of the wai U.pcn the gv1d j.:'roduction of~.the . ·
British Ihpire, with, refar3ncs p~..rUc1.:.larly to the treatment of low-grade ores and
ho.w· f<:Jr ~ ~ 1nay bs of· ~r.npC~Ita~1·~'C ·to .the national :i.r.te1·ests to secu.rs the continuance
of the t:;.·t~a.i.lr.ani• of S\~.cp. c~.~·&s, an=i. g(~nera.JJ.y :how to •;t·)JI.~uJ.at:e tllS ~)ro·iuction of gold,
r..a.s submitted i'.;s repolf~ to the 'l':.·eanur;r. The C~;l~~.tt3e says i'; i3 n:>t prepared to
reoooU!'".end a."ly b~unty r:Jt ~l:.btddy' fvr the PUl'POSe uf stii:ll:tlati::'l.g ~he t::old ot·.tput of
th3 Enpire, G::~ld beirig ·th3 standard of value, no more ca., l'fjc:per ly be paid for it
than its value j.n cur:re.:1ay.
In 191'7 ti1r-re wa.s a. reduction as compn.red~th the previous yr3ar in the valus
of the g()1.d J;;roC.uce,d !.n the Enpire o:Z -t3 •429, ln5, a:1d :n 1915 a furth3r fall of
t4! €52, 207 • as ~:on:r,t. a.l:'€:d ~dth. the 1917 pl·odu.ction, is a:.~ticj:pated. T'ne d<3cline in
the Transva-'ll la.tl'ii year .was due to a caubinaticn of ehortaee cf expJ..os:ives and
shvrtage of la:)ou:: a;;1d inl913 mainly to the shortage of labat:.r, not d"L'e tb any
large ex·ten·~ to. the ;ve.:t. J!he clscli.le in AuEitrs.la.sia. in 1917 a.."ld 1918 \\'aS norrual
and due i1~. t:be main to natural ca.,'..ses. but it was a.ccelern.ted b;r the ,.ncr.ea.se of
costs and d.ecrease in the efficien~y of labour cause.d by the Wa.t' up to the date of
the Canmi ttee Is a.?lJO:lntmE>nt.
, The treatment of l~w--grade "='e in the Transvaal has net t,o eny exten~ Which
co:.1.ld be deter.-o.inad bee~'l r.,:,du~ed. by tha wa:r.. Fro:.:.1 tl'J.S :t.•oint of view solely of gold
procluctio:r. the a.bandonmQnt of the treatment of lfJW'-8l'ade ore in fa•rcu:':' of higher
grade ore will not wi t.h:h~ ar...jl meaS'l.U'able 'P~riod. :~edace the total cr:ttpu.t of the Enpire, and the ct.nt:.n'tk'"'Jlcc o:: t!.te working o:'lo'.'l-g. ·v.da
.
mines w:1ich a:e unable to work
a.t a profit to th$Js'31ves io not the:.'efore a mat·cer of eny great i.'1lpo::+:,anr:e ":io
na~iona.l inter'9sts.
·
S~SIDY
WCULD ENRA17CE PRlC:t<JS.
A s-.;~.'bsiC~t for
~~"lt.ally '\lnsound..-
the. :p~od~1ct:.on cf gold 3-ppaar J to the Comud t ~Ele to be f\L'lda-.
G'ilc't has b<:>or: l;j.ro:~1ted as the st.anca:L'd of '7<t.l·!le because byreMon of
"op~ra.tio'.'l cf ns.tu.x·al causes :i. t i a available in su~h Cl'J.a.r..ti tie::: ar~d at such a. cost
of 'Production in torus :;;,f :;;,th3r co~odi ties as to ·give it a more or less .stable
value. Its ~·al1.1.e ~n t(;)rms oil'i:.>c.c.mroodi ties j s d.irontly inf.11.en0ed ~1 the laws of supply and d(Jlland. Period:;; of tncraE-sei gold :produ<::.tion, foJ..loNin~Ztne discovery of
tu:t>thel' de:posit:: of geld ca;.tiab::.e of extractio11 at a lo·,., co~t. have been ma.rked by
an· increase in t:1~ ~rice of com:nocli ties, ~"b.e exba~.utior. oft these sources of supply
has bean a~compar.. iee. br a deolina in the price of corwodi ties. The intention of the
rob$idy il"t:ggostPd by the goJd j?rOd\:.Cf\rS is tO enable gold tO be pr0d1:10ed Which
other~.se would not., nonf..:r.nabl~r w~~th the econa:nic laws of supply a;.'ld demand, be pro. dueed a.t e-ll. Oth,3r -~hillgs be~ng equal, the z·esul t .wo"11ld be that the purchasing
P9·.ver_ of the w:,.vh of the worlU.'s gold would be d1:minisbed. p:ro tru.'lto.
The value
in terms of gold ofthe callllod.ities for which it is eY..chal"lgcd would ri.ae.
It is undoubtedly dos:i.l'able (Tha Cot.~it,tee go on to sa.y) that considerable g~
reserves should be held in this co'l,n·~ry, but in our Yi~w th~ IL'Ost important functieil,
of a. gold: rase::.-ve is that it shoulc. be available for exr-ox-t at the stallda.rd price
whan re.qJ.iren ·co raeet forei~ ir.d.et tednee.s. We think ~.t ess.,mt5.al to preserve a
·free markt:t :Cn eold, bu~ clearly it ''rould ~.ot be a 1-)us:'l.noss :pro:~osi tion to do so if
we had to pay iJ.:. :'.Cs. 3d· fer an ounce of go1.d in ordor to oxport it at ~. l7s•j;•, ..
lO~d. •. We can ot.lyma!.ntain c·:.1r gold reeerves if th~ va.luo of our exports, visibl(/
and ·invisible, axoee1s on the balance the value cf:JO't'.r impcr·.;e.
The I,ondon Clll"4lber of 0cr!.ltnerce appreh9r..d thai~ price.s mav fa11 ra.p~.dly at :peace,
th dlsa!\lt.-ous results to ind\1s~ry 1 a.."ld contend ths.t it might 'be tn the ~ublio
· terest to take ''Steps to pre:~n'l; :th~ rapit:i. .fall in the p::-ice of' commodities by
.,,,.""'~o~•Qting th.~ prc¢1oticn c.f' gold a.~ tr...e exp(3nsa o! t!.l.a ·~a..x:pa.jl'~r.
w~; nsi ther share
a.p:QI'ahen!'i:ton ~t)l a.coept ~~be!r con~tion. We have no. .J.'ea.aon to believe that
'will no~. l1e fo~th~cmir~g from. ~a 'Br~i ti~:l?, ~pir~ on a. pari t~r b"-9i~ ae ~~ gold
shall neeet fdr th~ p'J.J.jj)ose cf: ·~~~1.11tt:Qur ·' :- · · re~erit•3a, but i.n any e&IO
tio:r:La.l .?m ••tt-.nt of [;old which at best we «i~ti ap.p to secure by a subsidr
Sl.l the orinio~l of our· ~.ta.essAs• be of .~~,:••t4'3 to this country for
up' reserves "tmle:se we can a.ffozod to J::e$J! f.{h
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