The Washington herald., 1920-02-24
GOLD MINING
DIFFICULTIES
Many Obstacles in the
Way Of Increased
Output.
BIC PRODUCTIVE COSTS
Hazardous Phases of In
dustry Detriment to Sub
stantial Development,
BIC PRODUCTIVE COSTS

ouStfy Detrlment 10 Oub-
stantial Development,
Gold Is our standard of value and
the money OF bank reserves. The
entire body of outstanding indebt-
edness. public and private. fnclud-
ing the Liberty bonds recently
issued, is payable in gold coin of
the present weight and fneness.
The nearly $4,000. .ooo, 900 of loans
which the United States govern
ment has made in the past two and
one-half years to foreign govern
ments are payable in this gold coin.
The outstanding Indebtedness OF
nearly the entire world is contract
ed In gold. Outside of Asia, gold
Is still recognized everywhere as
the unit OF value and the basis OF
monetary systems, although In
many countries the stress of war
conditions and the unbalanced state
of trade have compelled a suspen.
sion OF gold payments. All of these
countries regard such suspension as
temporary. and desire to get back
upon the gold basis and establish a
their currencies in fixed relations
to gold at the earliest possible
date.
Maintenance of UnIversaI Gold
The gold standard the world over
was reached through gradual
process of evolution, as the oeyel-
opment Of commerce and financ al
relations made il more and more
important that there should be a
common basis of values and that fiuc-
tuations In exchange rates should
be reduced TO the narroNest possi-
BILE range. The present chaotic state
OF the exchange and the obstruc-
tion which present rates offer 10
trade illustrate the services OF a
universal standard of value in the
form of a transportable commod .tv,
which can actually be transferre 1
in settlement Of international ball
ances.
Criticisms Of the gold standard
are largely silenced in the r-es-
ence of the disorder which ha- ie-
suited from the fact that Ihder
conditions highly abnormal the gold
standard for the time being is par
TALLY imperative. The first grea
task in financial reconstruct;on is
10 get the recognized international
standard back TO functioning nor.
m q H.
add to the confusion by ATTEMPT.
ing to introduce new and compli.
Gated substitutes at this time.
Gold Mining Not q Casual Industry
1t is fundamental to the rc-estab-
lishment of the gold standard as the
basis of world intercourse that gold
mining shall go on at something like
the normal rate. This requires that
prospecting, exploration and devel
opment shall he carried on co~'inu-
ally, and that the industry shall in
vite investment upon terms fairy
competitive with other industries.
Gold mining under modern condf-
tions is not an industry into which
or from which capital can readih
be shifted. 1; takes a long time 10
find and develop a good gold mine
1t is not a casual industry, wnrc,
can he suspended and resumed
without serious interference with
the volume of production. A con-
siderable portion of the output al
ways is obtained on a small margin
of profit. and il such operations
are suspended and the mines nh
with water, they are likely to be
abandoned permanently.
The Failing Gold Production,
1t is well known that the gold-uin.
ing industry all over the world has
been affected very seriously by the
rising costs OF the last few years. and
this Is especially so of gold mining in
the United States for several reasons
Wages have not risen as much In
South Africa and some other countries
where native labor is mainly employed
as in this country. Moreover. the
South African operators. instead OF
being required to sell their product a;
the Royal Mint or Bank of England
at the coinage rate. as during the war
are now allowed TO dispose of 1t as
they please. and they are able to take
advantage of the high eycnar ge rates
prevailing and thus obtain premium
which at present amounts TO 10 per
cent or better over the mint price.
The United States is almost the only
gold-producing country in which the
producers are not able to obtain a
premium above the mint price.
In the United States the produc-
ers of gold have had to compete
with the demand for labor in copper
and coal mines and in other indus
tries, and pay the high prices pre-
vailing fol VI the supplies required
in mining operations, and they have
been unable to realize any more than
the fixed coinage value for gold
s2o.67 per fine ounce. They have
had no compensation for the ris-
ing costs, and as operations have be-
come to a great extent Improbable.
production is failing rapidly. 1t de-
clined from slO1. .O35,7O0 in 1915 TO
s6S.646.700, in 1918, and competent
authorities estimate that II will not
exceed s55.0o0.ooo this year. It Ger
will continue to decline unless
conditions change.
Gold the Limitation of Credit.
When II is considered that gold Is
the money Of bank reserves. and the
basis of bank credit. IL will be real
ized that here is a factor which def
nitely limits the expansion of credit.
The member banks must have credit
at the Federal Reserve banks up to
a certain percentage of their liabil-