Gilpin observer., 1920-04-01
BILL INTRODUCED IN CONGRESS
FOR RELIEF OF THE GOLD MINER
CONGRESSMAN McFADDEN EXPLAINS LEGISLATION TO
PROTECT THE GOLD RES ERyE THE UNITED STATES
FROM INDUSTRIAL DEPLETION d

To meet the urgent request of
the American Bankers associa-
tion that the domestic production
of new gold be maintained in suf-
ficient volume to satisfy all man.
ufacturing requirements, Con-
gresham Louis T. McFadden, of
Pennsylvania, chairman of the
subcommittee of the Banking and
Currency committee of the house,
has introduced a bill. The Ameri-
can Bankers association formulat-
ed this request in a resolution ad-
opted unanimously at the 45th an
nual convention held on October
2, 1919, since which time many
proposals have been analyzed to
accomplish the result without dis
turbing the monetary system.
The bill introduced by Con-
gresham McFadden provides that
on and after May l, 1920, an ex-
else of so cents a pennyweight
($10 an ounce) be collected ON the
sale of all articles containing gold
or gold used for other than none
tary purposes, thereby creating a
, fund from which the gold produc-
er is to receive $40 for every new
reproduced ounce. Since this
transaction is confined to the pro-
duction and sale of gold as a COM
modify only, and without refer
ence to its monetary use, it cam
not in any way influence the mon
etary status of the metal. BY this
means, the jewellers and other con-
sumers of gold will be able to OBJ
tain all of the gold that they re-
quire at the usual monetary price
of $20.67 an ounce. The excise is
to be collected only upon the man.
ufactured article as sold, and not
upon the bullion, which insures a
free gold market in the United
States.
Free Gold
Market Maintained.
Other proposals were consider
ed which would have prohibited
further sales of gold to manufac-
turers, but it is obvious that this
would have created a premium
market for the metal and that the
koarders and holders of old gold
would have profited by the prem
ium, in which event the premium
paid upon old gold would not in
any way have assisted in the pro-
duction of new gold. By the i'm
position of the excise upon the
finished product, there will be no
incentive for the consumer of gold
in manufactures and the arts to
hoard the metal in advance of the
passage of the bill, because it will
make no difference whence the
gold is obtained. To shut off sales
of gold to the trades would also
encourage the excessive destruc-
tion of gold coin, especially as
there is no law in the United
States to prohibit same, and the
result of which practice would be
injurious to our currency system.
Premium to Producer
Not Subsidy.
The enactment of this law un-
der present conditions, where the
gold consumed in the trades is in
excess of that produced from the
mines, will not only be without
cost to the government, but will
create a balance in favor of it..
The premium to be paid to the
gold producer is not a subsidy,
because the government has been
and is now substituting the con-
sumers of gold in manufactures
and the arts. The wholesale in
dex price number of all commodit-
les in 1919 was 212, as compared
to 100 in 1914, which shows that
had gold increased in price in con-
formance with all other commod-
tiles in the United States, the gold
producer would have received for
his 58.5 million dollar production
in 1919, $65,500,000 or 112 per
cent more than the monetary price
which he did receive. The excise
to be imposed upon manufacturers
of gold merely lessons the amount
of this subsidy. The $40 excise
is equivalent to an increase of SO
per cent in the price of the metal
contained in manufactured ar
ticles, while all commodity prices
have risen 112 per cent; conse.
quently, the excise offsets only 4e