Economic and financial section > Interim report of the Gold Delegation of the Financial Committee

INTERIM REPORT OF THE GOLD DELEGATION
SCOPE AND OBJECT OF THE REPORT.
Although our work is not yet completed, we consider it desirable to submit now an interim
report on one aspect of the question submitted to us. Our terms of reference may be interpreted
as covering all fluctuations of the purchasing power of gold, whether over long or short periods
and whether resulting from a disequilibrium between the supply of gold and the normal
increase of production and trade or from other causes. The long-term and the short-term
movements, however, while no doubt in some measure connected, involve problems which are
largely distinct; and we desire to make it clear at once that we have thought well, at this stage,
to confine our attention to the former. Consequently, we do not propose to deal with more
than part of our terms of reference on this occasion. The question we have examined here is
whether the current and prospective production of gold on the one hand and the normal increase
in demand as world production and trade increase on the other are such as to make it likely that
the general trend of prices over a series of years (and apart from short-term oscillations) will
be in an upward or downward direction. We desire to reserve for further consideration
the problems of the distribution of gold, of the effect of price fluctuations on general
prosperity, of the manner in which such variations can best be measured, and of cyclical
as distinguished from long-term movements.
In dealing with the particular problem to which this report is devoted, we have left out of
our calculations the possibility of the discovery of important new gold areas or of technical
processes of a kind at present unknown which might bring into production unworked mines in
existing areas. We have, however, not failed to consider whether the recent fall in commodity
prices is likely to result in any substantial increase of production in existing areas by known
processes.
Our object has been to state as exactly as possible the situation which may be anticipated
in the absence of the deliberate adoption of remedial measures to deal with it, in order, first,
to show whether and to what extent such measures are necessary and, secondly, to form a basis
of suggestion concerning the direction in which they should be sought.
Confining ourselves thus to the problem of the long-term trend, we have not entered in any
way upon the questions connected with the measures which may be adopted to deal with short¬
term price fluctuations. But we think it is appropriate to make the following remarks. It is
obvious that when, throughout any period, there is a long-term tendency of prices to fall owing