AS MUCH gold was produced in the world in the twenty-odd years from 1894 to 1917 as in the four hundred years between 1492 and 1894. This is indicated by the fact that between the years 1492 and 1894 the world's production of gold was something over $8,000,000,000, of which about $4,000,000,000 remained as the world's gold reserve in 1894. By 1916 the world's gold reserve had increased to nearly $8,000,000,000, an increase of $4,000,000,000 out of a world production during that period (1894-1916) of about $8,000,000,000. During this period of about twenty years, therefore, about half of the gold produced remained in the available gold reserve of the world, or about the same estimated proportion as between 1492 and 1894.

These figures give a most striking illustration of the feverish exploitation of natural resources which characterizes our present-day industrial development. After the Californian gold discoveries in 1848 came those in Australia, Canada, Alaska, Siberia, and other regions. At first the greatest source of this flood of gold was from "placer" mining. De Launay estimated that from 1848 to 1875 placers produced 87 percent of the world's production: but these are now essentially exhausted, so that in 1918 Orchard estimated the placer contribution at not more than 10 percent. Then followed the period of rapid exploitation of "lode" or vein gold mines in various parts of the world--especially in North America, South Africa and Australia. The intensity of gold mining, which was only a symptom of the general intense development of mechanical civilization which characterized the same period, resulted in a world production, which, ever climbing, in 1896 passed the $200,000,000 mark; in 1899 was over $300,000,000; and in 1906 exceeded $400,000,000. In 1915 the world's production is given at $470,000,000, the high water mark for all time. In 1917 the production was $420,000,000; in 1918 it dropped to $385,000,000; in 1922 it was about $319,000,000; in 1923 it was about $367,000,000; and in 1924 it rose to $384,500,000.

To understand and foresee the trend of developments with regard to the gold supply, production and future reactions on the world's economic problems, it is necessary to realize that the world is now passing through an acute stage of exploiting its treasures of rich ores, and that these treasures are definitely exhaustible. Different minerals are exhaustible in varying degrees--coal and iron less so, metals such as gold, silver and platinum, lead, tin and manganese more so. And one of the reasons for the checking, in the last decade, of the sensational increase in the world's gold production, has been the actual beginning of exhaustion at the source of supplies.

At the present time, and for many decades past, the gold production of the world has been mainly from the United States and from the British Empire. Orchard has estimated that in 1913 the British Empire produced about 63 percent of the total world production (principally in South Africa, Australia, Canada, and British India), while the United States produced a little over 19 percent--together 82 percent of the world's production. No other country has relative importance. In 1913 Russia and Siberia produced about 6 percent, Mexico 4 percent; in 1921, Russia and Siberia produced 3/10 of 1 percent, and Mexico, again, 4 percent of the whole.

No nation has ever aggressively and intensely exploited national resources over such a great area as has the United States; and the result is that its rich mineral resources show signs, in many instances, of having passed the zenith. In 1915, when the world had its highest gold production, the United States also was at its highest production (it then produced $101,000,000, or 21.5 percent of the whole); but since then the percentage has been constantly decreasing, till in 1924 it was only about $52,000,000, or 13.5 percent. H. N. Lawrie, writing in the Mining Journal-Press in January, 1925, observes: "In 1925 the United States will become a still less important factor in the world's production, and with the very large increase which has been made in the production of Canada, it would seem probable that in a few years the Canadian production might supersede that of the United States, unless some constructive remedy is applied to improve domestic conditions." (See Fig. 1).

Canada has indeed shown a tendency to increase its gold production. From an average which previous to 1891 was less than $1,000,000 annually, there has been a steady rise, of which one of the principal factors was the placer gold of British Columbia. In 1898, the year of the Klondike rush, the Canadian production jumped from $6,000,000 (1897) to nearly $14,000,000, and from that to nearly $29,000,000 in 1900. As the Klondike placers waned, the gold quartz veins of Ontario, principally in the Porcupine district, came in to fill the gap, so that although the production along 1906-9 fell to less than $10,000,000 annually, in 1916 it was $19,000,000, in 1923 nearly $26,000,000, and in 1924 it reached $31,500,000.

In Australia, the gold rush following 1851 came upon the heels of the California rush. For many years the gold production of Australia rivalled or equalled that of the United States, but about 1905 it began to drop behind, so that by 1914-15 it produced only half as much. The 1915 Australian production was over $49,000,000; in 1918 it was only $29,000,000; by 1921 and 1922 it had declined to about $15,500,000, and the situation has not improved since then ($14,500,000 in 1923 and less in 1924).

The production of British India, beginning in 1885, passed the $10,000,000 point in 1903 and reached its peak, $12,000,000, in 1913. In 1918 it was $10,000,000; in each of the years 1922 and 1923 it was about $8,000,000.

The most spectacular flood of gold in the history of the world has been that which, between 1900 and the present moment, has flowed from the British dominions in South Africa, principally the Transvaal. By 1916, the banner year, the South African production had risen to over $211,000,000; in 1923, it was $202,500,000, or about 53 percent of the world's production for that year. And in 1924 the South African production was $211,395,000, or nearly $9,000,000 above 1923.

Between 1880 and 1923 the total production of the British Empire, with all these varying factors, increased from 29 percent of the world's total of $106,000,000, to 70 percent of a world output of about $367,000,000. A great jump in the British percentage after 1896 was due to the acquisition of the South African gold mines, which passed to Great Britain as a result of the Boer War.

The relative standing of the principal gold countries is shown in the following table:


(Percentages of Total Value)
  1880 $1896   1918 1923
British Empire 27 27 } 60 70
Transvaal 2 22
United States 34 26   18 14
Russia and Siberia 27 11   3
Mexico 1 4   4
Other Countries 9 10   15 10

The statistician, some of whose conclusions are given above, interprets past events; the geologist-engineer may help in forecasting the future; and the different pieces of knowledge from all sources combined may be illuminating as to present outlook, conditions and policy. As to the future, I must for lack of space content myself with stating baldly that, in my opinion, the relatively subordinate position which the United States has assumed since about 1890 will be permanent. Great Britain passed the United States as the greatest gold producing nation about 1898, when it acquired in the Transvaal the richest "bed-rock" mines (a term opposed to the gravel mines, or "placers") of all time. In fact, were it not for South Africa (including the Transvaal and Rhodesia), the British Empire in our 1918 figures given above would have contributed only 14 percent instead of 60 percent, for South Africa alone contributed 46 percent of the world's output. In that year British India produced about 3 percent, Australasia 7 percent, and Canada 4 percent. Of the total 1924 world production of about $384,500,000, South Africa is estimated to have produced $197,825,000, or over 51 percent. The Canadian production for 1924 is estimated at about $31,500,000, or 8 percent of the world's production.

Of the chief contributors to the British gold supply, Australasia appears to be about in the same predicament as the United States, being a country where certainly the cream of the gold resources has been taken away. Barring the discovery of new and important fields, the production of Australasia is not expected to increase, any more than is that of the United States. British India has shown no increase in production for twenty years. The sources of supply are chiefly in one district--the Kolar field--and future increases are not to be predicted. The enormous 1924 gold output of the Rand in South Africa comes from mines which, as a rule, are past their zenith. They now are largely worked at depths of several thousand feet, having exhausted their more accessible ores. South African gold production has been immensely aided by the depreciation of English currency, which has caused gold to be sold at a premium in London; and since labor and supplies have been paid for in the depreciated English currency, the gold mines have had a substantial margin which has not been available to the miner in the United States, whose currency, being rated "on a gold basis," has been paid to the miner dollar for dollar--that is, paper dollar for dollar of gold by weight. But the South African miner who brought in a gold pound has been receiving a pound and a fraction in British paper currency, depending upon the pound quotation in terms of dollars. With the return of the pound to a parity with the dollar, which is expected in 1925, this source of profit to the South African gold miner will disappear and its disappearance will be an adverse factor. Further economies and more scientific management may partially offset the disadvantages, but in the long run we can only expect the South African gold production to diminish. Of the important British sources there remains Canada, which may well maintain or increase its present production for some years. Canada, too, much more than Australia and the United States, has an excellent chance of discovering new gold-mining districts, for she has an immense unprospected territory. But even taking that possibility into consideration, as far as we now can tell we must assume that in the course of ten or twenty years there will be a decrease in the gold production of the British Empire also.

As to other countries outside of the territories of the United States and Great Britain, I do not expect Mexico to produce gold sensationally in the future. Her heyday of gold production was when the El Oro district was in full blast--when the production, from 1908 to 1912, was over $20,000,000. But by 1918 it was less than $17,000,000, and in 1923 only a little over $16,000,000.

South America has for a long time maintained a fairly steady output of gold, principally from Brazil, Chile, Colombia, Peru, and Guiana. The total South American production was nearly $12,000,000 in 1912, $14,000,000 in 1918, and $15,000,000 in 1923. Colombia, whose gold is mostly from placer sources (dredges) has increased her output from nearly $3,000,000 in 1912 to $6,000,000 in 1918, with nearly as much in 1923. Altogether, the average of the South American production should be fairly well maintained for some time.

Perhaps Siberia offers a source for a future increase of gold production. This region produced enormously and steadily for several decades up to the outbreak of the Great War. The production from 1880 to 1916 was between $20,000,000 and $30,000,000 annually. The war and the policies of the Soviet Government reduced the output, so that it was only $1,000,000 in 1921, though it rose to $5,000,000 in 1923 and in 1924. It is probably true that with a good government Siberia can resume its old status and hold it for years.

Surveying the whole field, with due humility in view of our incomplete knowledge, and taking account of possible and even probable surprises, it appears likely that the gold production of the world is, and has been for some years, in the neighborhood of its zenith; further, that the tendency henceforward will be to decline rather than increase. Mining, unlike all other industries, is an act that can never be repeated twice in the same place. So that, giving a long look forward, we at least can see clearly that while the growth of population and industrialism will constantly create vaster amounts of commodities to be dealt in through the world's currency mediums, the relative supply of gold whereupon to base these currencies will grow progressively less. Speaking generally, we appear to have reached the summit of the gold production hill. We look forward and down; for while it is conceivable that the annual production may still increase, it will not in the long run do so in proportion to the growth of wealth and trade.

The gold stocks of the world, in the form of money and bullion, amounted at the end of the calendar year 1923 to $9,407,761,000--nine and a half billion dollars in round terms--of which the United States held $4,247,201,000, or nearly one-half. The rest is widely scattered, Great Britain having $759,174,000, or about 8 percent; France $709,479,000, or some 7½ percent; Germany $119,300,000, or somewhat over 1 percent; Argentina $472,161,000, or over 5 percent; Canada $227,964,000, or over 2 percent; Italy $215,697,000, or 2 percent; the Netherlands $233,876,000, or over 2 percent; Spain $487,687,000, or 5 percent; Switzerland $142,269,000, or 1½ percent; and so on. Taking the principal components of the British Empire, or Commonwealth of Nations as it is more recently called--Great Britain and Ireland, India, Canada, South Africa, and Australia --there was a total monetary gold stock of $1,432,760,000.

More significant than a country's gold stock relative to the rest of the world is the gold stock per unit of population. Viewing the above countries in this light we find that at the end of 1923 the per capita monetary gold stocks of the countries mentioned were: Argentina $54, Australia $39, United States $38, Switzerland $36, Netherlands $33, Canada $25, Spain $23, France $18, Great Britain $16, South Africa $8, Japan $8, Italy $5, Germany $2. (See Fig. 3.)

The per capita gold supply of the principal component parts of the British Commonwealth, above noted, was about $3½; or, if we eliminate British India to make a fairer comparison, nearly $18. And the instance of British India shows that the per capita comparison is only relative between peoples of equal industrial development, activity and trading wealth, for the per capita gold reserve of 36 cents per capita for the three hundred million people of India certainly does not impair the standing of Great Britain and the dominions. Or, to state it in another way, the need for money--that is to say, gold--is in proportion to the amount of commodities handled, a factor which varies enormously with the per capita productivity of individuals and nations and with the activity of trade. It also varies immensely at different stages of the world's industrial evolution. Since the productivity of the average individual in progressive nations has been enormously increased by mechanical devices in the last century, such nations will need a larger per capita supply of money to effect the distribution of their commodities.

There is no better illustration of this thesis than the United States, which showed a gradual increase in per capita gold stock from around $3 in the early seventies to between $18 and $19 in the years 1908-13, the so-called normal pre-war period. Due to unsettled world conditions, it reached in 1924 nearly $40 per capita, as against $19 in 1913. Had it not been for the Great War, the pre-war curve indicates that the 1925 gold per capita would naturally have been around $24 or $25, with a normal gold reserve of about $2,800,000,000 as against the present stock of $4,490,807,000, brought on by the industrial war-anaemia of Europe. But this figure of $2,800,000,000 is nearly a round billion greater than the gold stock of 1913; and if industrial development and population grow--as they both are doing--the United States in ten or twelve years should really need, for the proper transaction of its business on a gold basis, as much gold reserve as it now somewhat unnecessarily and temporarily holds. By the same reasoning, at the close of 1923 (on the above assumed desirable basis of $25 gold per capita) Great Britain and her dominions of Ireland, Canada, South Africa, and Australia should have had a reserve of nearly $2,000,000,000, or over $500,000 more than was actually at hand. In addition, Continental Europe (even excluding Russia and Turkey) should need for its three hundred million of population, even at $20 per capita, a $6,000,000,000 gold reserve, instead of the $2,200,000,000 which it now holds or did hold at the close of 1923. It would therefore appear that at the close of 1923, North America (excluding Mexico) and Europe (excluding Russia and Turkey) together with Canada, South Africa, and Australasia, should have had a gold reserve of over $10,500,000,000. In point of fact, there only existed $9,500,000,000 in the world, so that the needs of Asia and all the rest of the world are not taken into consideration. (Japan's gold stock at the end of 1923 was $602,188,000, or $7.66 per capita.)

Altogether, it would seem that instead of there being too much gold in the world in comparison with conditions twenty, forty, sixty years ago, there is too little, in spite of the great increment of gold stocks and production since 1890.

Since the Great War, gold production in the United States has been unfavorably affected by the high commodity price level, which means relatively high costs of mining, while the price of the product remains fixed. On the other hand, South Africa, British India and, to some extent, Canada, have profited by the depreciation of the pound sterling, for their costs have been in depreciated currency, while they have marketed their gold at par. Until the period of post-war adjustment clears away, therefore, gold mining will also be busy adjusting itself. War brings high prices largely because it diminishes the supply of commodities in relation to the demand, since men are leaving constructive work and using up their energy in destruction; and the time it takes to return to normal economic peace conditions depends upon the amount of construction lost and of destruction wrought. The adjustment took ten years after the Civil War; today, six years after the Great War, adjustment is still in progress. The world supply and consumption of commodities relative to the available gold has decreased since pre-war times, and this is one of the chief reasons why commodities are still high in price. If average peace and prosperity abide with the world in the next few decades, we can foresee a great increase in the production and consumption of commodities in general. But for gold, as above stated, we cannot see any commensurate increase. The indications are that the production trends of gold and of commodities in general will become more and more divergent as time flies, and it is very possible that the world will never again see so large a production of gold relative to the production of other commodities as marked the period from 1898 to 1915.

In the long run, therefore, as measured in gold, the world commodity price index should tend to sag. As it does so, the cost of gold mining will be lessened, and this will tend to increase gold mining and production, and thus offset the secular decline. Another offset to this secular decline will be the constantly greater efficiency and economy in operating mines. But though these checks will flatten out the general declining tendency, they cannot obviate the progressive exhaustion of gold mines, while the increase of general commodity production will rise without any visible limit. Another factor to be considered, which will tend to accelerate the increasing relative shortage of gold money, is the use of gold in the arts, whereby much of it is lost. As observed above, only about half of the recorded gold produced now remains in the treasuries of the world. The world's average consumption of gold in the arts, including jewelry, was estimated in 1922 by Samuel Montagu and Company, of London, at $100,000,000 per annum. But the report of the Director of the U. S. Mint for 1923 shows that during that year the amount of gold used in the arts in the United States was $69,000,000, of which $40,000,000 was virgin metal. Since the total production of the United States in 1923 was $50,000,000 ($52,000,000 in 1924), it is seen that only $10,000,000 remained to swell the world's gold reserves.

With the increasing relative scarcity of gold as compared with money requirements, the general tendency will also be toward a smaller gold basis or "cover" for currency, even among those nations which are "on a gold basis." The possession of gold reserves will be increasingly a matter of export balances, that is to say, a matter of competition in productivity and economy among nations. World trade will tend to distribute the abnormal gold reserves of the United States among the other highly progressive nations. Meanwhile the indications are that for years to come the British Empire will be in an especially favorable position, through its great gold production, and that the position of the United States in that respect will be definitely unfavorable.

Such, briefly,--without any attempt to indicate, still less to analyze, the serious economic and social problems which are bound up with our present monetary system and its gold base,--is the situation with which in the not far distant future civilized intelligence must grapple.

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  • JOSIAH EDWARD SPURR, Editor of Engineering and Mining Journal-Press, author of several volumes on mining and geology
  • More By Josiah Edward Spurr