PAPER PRICES 
03 
offering goods and services in exchange for) any of 
the new gold produced in the world from month to 
month, and, going further, they sent out a good 
deal of their old stock, both of currency and orna- 
mental gold, into the neutral countries to buy 
munitions with it. Thus the people of the neutral 
countries were offered the whole of the world’s annual 
output of gold and also a large amount of the old 
stock of the belligerent countries, and naturally 
they got it cheap, that is, they did not give as much 
goods and services for each ounce of it as it was 
worth before the War. Soon even this market was 
much restricted, since many of the neutrals, following 
the fashion set by the belligerents, issued enough 
inconvertible paper money to make the import of 
gold for currency unprofitable. 
It is no wonder then that gold fell in value, nor 
that, as there has been no great reversal of policy, 
it remains so low that at the present date it may 
be said that it takes about three ounces of gold to 
buy what two would have bought before the War. 
The wonder is rather that it is worth as much as 
it is. The explanation is to be found chiefly 
in two facts. Firstly, the American Federal Reserve 
Board has hoarded a far larger amount of gold than 
anyone would have thought likely, and secondly, 
the low value of gold has had some considerable 
effect in diminishing the profitableness of the gold 
mines and even“ '" this reduced the output. 
§2. Paper FF. 
A countrv which has the misfortune to be engaged 
ina war anc * “" hard pressed by the enemy acts 
quite reason. cnt rts wil its gold in order 
to buv "i- ~er  ramediate necessity from 
abroad. Ii acingwo.iisc’y ull’: oa orivate 
individui! w..1 ordiner™ common sense does in