—Many people have been tussled recently in the fluctuating price of gold to calculate the relative value of paper and gold.
The relations of the two are determined, not by difference, but by ratto. It is plain that where gold is worth 200 cents in paper, the rate is as one to two; two of paper is equal to one of gold, and one of paper equals a half in gold, or fifty cents.—Similarly, if gold reach 400, paper is worth 25 cents; If it reach 1,000, paper will be worth 10 cents; and if the price of gold could ever touch 10,000, a paper dollar would be worth just 1 cent. In that once the value would be thus ascertained; As 10,000 is to 100, as 120 is to 1.
We have hence the rule—one which every schoolboy is familiar with, but which some financial writers seem to be blissfully ignorant of. As the price of gold in paper is to 100 cents. so is 100 cents to the value of one dollar in gold. To make the thing more plain, we append a table giving the value of the paper dollar for different prices of gold, which may serve for future reference:
- If gold is worth 100, paper is worth 140
- If gold is worth 120, paper is worth 93½
- If gold is worth 140, paper is worth 71½
- If gold is worth 160, paper is worth 62½
- If gold is worth 170, paper is worth 58 14 17
- If gold is worth 172½ paper is worth 58 1-6
- If gold is worth 176, paper is worth 57 1 6
- If gold is worth 186, paper is worth 56 5-9
- If gold is worth 190, paper is worth 54½
- If gold is worth 200, paper is worth 50
- If gold is worth 400, paper is worth 15
- If gold is worth 1,000, paper is worth 10
- If gold is worth 10,000, paper is worth 1