VALUE OF GOLD 
23 
people think there is going to be a general rise of 
prices they think—without knowing it—that gold is 
going to fall in value, and act accordingly. Their 
joint judgment is more likely to be wrong than their 
joint judgment about iron or tin or houses because 
they do not take the particular circumstances affect- 
ing the commodity into consideration. This is per- 
haps the explanation of the fact that at one period 
for no definite discoverable reason people generally 
overestimate the prices of the future and therefore 
cause a boom in the prices of the present with the 
result of subsequent fall and depression. 
Whatever the cause of a boom, the high prices 
which mark it are synonymous with a low value of 
gold, which seems in strange contradiction with the 
ordinarv visw “at in a boom ‘every one wants 
money.” But th: contradiction disappears if we 
bethink ourselves what every one wants the money 
for: it is to buy commodities and services in 
hopes of making a profit because “ things are going 
up.” People may want money, but they only want 
it because they want commodities and services; 
the fact that commodities are supposed to be going 
up makes it desirable to lay money out on them at 
once : if the money is kept, it will not buy so much. 
The pressure is not to add to money stocks by selling, 
but to deplete the stocks of money by buying as far 
as can be done without too great inconvenience and 
risk. Individuals and banks will try their hardest 
to carry on with the smallest possible stocks of gold, 
when gold is the one important thing which they do 
not expect to rise in value. 
Thus, even if every one always paid in gold for 
everything immediate’ on receiving it, a preponder- 
ance of expeci-tinn oi higher general prices (lower 
value of golc) in the future would to some extent 
raise general pices (lower the value of go'™ in the