Popular Science Monthly/Volume 54/March 1899/Marvelous Increase in Production of Gold

by Alexander E. Outerbridge Jr.

The Racial Geography of Europe: The Peoples of the Balkan Peninsula - The Greek, the Slav, and the Turk Layout 4

MARVELOUS INCREASE IN PRODUCTION OF GOLD.

By ALEXANDER E. OUTERBRIDGE, Jr.

THE increasing annual production of gold in the world is a matter of such far-reaching economic importance, not only in the financial affairs of nations, but also in their industrial progress and in their civilization, that a vast amount of patient study has been given by eminent statisticians to the subject, and much time expended in compiling, from various historical records and other sources of information, statistical data which can be confidently accepted as approximately correct, showing the annual production of the precious metal from the time of the discovery of America down to the present day.

A publication of the United States Treasury Department, issued in 1897, containing information respecting the production of precious metals, etc., gives statistical tables showing the annual production of gold in the world, commencing with the year 1493. The earlier records are taken from a table of averages for certain periods compiled by Dr. Adolph Soetbeer, and the later figures (from 1885 to 1896) are the annual estimates of the Bureau of the Mint. Other tables show the annual production of gold from the mines of the United States alone from 1845 to 1896, and it is from these official sources mainly that the information has been gathered for this article, supplemented, however, by a full and very interesting communication to the author from the Director of the Mint, giving the latest figures, not yet published, and containing the estimates and deductions of the director respecting the production of gold in the world in 1898. This information is so timely and valuable that the author is of the opinion that the courteous letter of the Director of the Mint in response to his inquiries, if appended to this article, may prove to be—like the postscript of a lady's correspondence—its most important feature.

Students of political economy are well aware of the fact that some theorists have maintained that the annual production of gold in the world (apart from the phenomenal discoveries in California about the middle of the century, which were of an ephemeral character) does not keep pace with the natural increase in trade requirements, if gold is to maintain its position as the standard measure of value and the universal medium of exchange. This theory, after having passed through the various stages of pro and con argument in academic theses, became the "war cry" of a political party in this country composed of heterogeneous elements in the community, all inspired with one common idea that the balance of power in commercial transactions had been destroyed by the overwhelming force of concentration of capital and the "cornering" of the visible supply of gold in the world by a few enormously wealthy bankers. It was shown that, while the average annual production of gold in the world in five years from 1855 to 1860 exceeded $134,000,000, there was a constant decline thereafter, so that the annual average during five years from 1881 to 1885 barely exceeded $99,000,000, according to official estimates; also that the annual gold product of the mines of the United States declined from a value of $65,000,000 in 1853 to $33,000,000 in 1892. Furthermore, although a rising tendency was observed in each subsequent year, the production from the mines of this country in 1894 was still under $40,000,000, as was shown by the statistics of the United States Treasury Department.

While admitting the general accuracy of these statements of fact, it is the purpose of this paper to endeavor to show that the conclusions drawn therefrom were entirely fallacious, because due cognizance was not taken of the wonderful progress that has been made in recent years in mining and metallurgical arts whereby countless millions of tons of ore containing gold in such a finely divided state, or in such a refractory condition, that it was formerly worthless (costing more to recover the gold than the value of the precious metal contained in the ore), have now rendered these low-grade ores the most stable sources of supply of gold. Metallurgists, having knowledge of these facts, have at various times during the past ten years predicted that a golden stream would soon begin to flow from these practically new and apparently inexhaustible sources; but the people at large were wholly incredulous, and they are now astounded at the magnitude of the production of gold in the world in the past two years; and more especially, perhaps, are they amazed at the increase of production in the United States, as shown by the official reports of the Director of the Mint.

The gold production of the world in 1897 amounted in value, according to the most reliable estimates, to more than $237,000,000, and in 1898 to more than $280,000,000; and it is the opinion of the Director of the Mint that the final compilation of figures will show that the production was "somewhere between $290,000,000 and $300,000,000!"

Gold Production of the World.

Countries.	1897.			style="padding-top:0.5em; padding-bottom:0.5em;"|1898.
	Fine ounces	Kilog- rammes.	Value.	Fine ounces	Kilog- rammes.	Value.
North America.
United States	2,774,935	84,870.5	$59,210,795	31,107,888	95,200.7	$64,300,000
Canada	299,467	9,164.0	6,190,000	686,502	22,071.1	14,190,000
Newfoundland	3,000	93.3	62,010	3,000	63.3	62,010
Mexico	344,498	10,715.0	7,121,189	365,032	11,354.0	7,668,866
Central America	25,399	789.9	525,000	25,399	789.9	525,000
South America.
Argentina	15,235	473.8	314,907	15,235	473.8	314,907
Bolivia	3,144	98.0	65,000	3,144	98.0	65,000
Brazil	70,732	2,200.0	1,462,120	84,633	2,591.0	1,750,000
Chile	68,096	2,118.0	1,407,544	68,096	2,118.0	1,407,544
Colombia	188,679	5,868.7	3,900,000	188,679	5,868.7	3,900,000
Ecuador	6,430	199.9	132,900	6,430	199.9	132,900
Guiana (British)	101,505	3,156.9	2,098,098	88,617	2,756.0	1,861,393
Guiana (Dutch)	32,983	1,025.8	681,748	28,273	865.3	584,421
Guiana (French)	59,859	1,861.7	1,237,310	66,593	2,038.0	1,376,477
Peru	5,787	180.0	119,628	5,787	180.0	119,628
Uruguay	6,880	214.0	114,600	6,880	214.0	114,600
Venezuela	39,984	1,224.9	814,067	39,384	1,224.9	614,067
Europe.
Austria-Hungary	105,397	3,278.2	2,178,556	105,397	3,278.2	2,178,556
France	10,513	327.0	217,304	10,513	327.0	217,304
Germany	90,921	2,780.9	1,879,357	90,921	2780.9	1,879,357
Italy	10,325	316.0	213,431	10,325	316.0	213,431
Norway	650	20.0	13,508	653	20.0	13,508
Russia	1,046,985	32,408.2	21,538,490	1,216,100	37,217.0	25,136,994
Sweden	3,702	133.3	76,524	3,702	133.3	76,524
Turkey	387	12.0	8,000	387	12.0	8,105
United Kingdom	2,032	62.5	42,001	2,032	62.5	42,001
Asia.
China	321,296	9,992.8	6,641,190	321,296	9,992.8	6,641,190
India (British)	353,147	10,983.4	7,299,554	369,018	11,479.3	7,753,150
Japan	34,509	1,073.3	713,300	34,509	1,073.3	713,300
Korea	34,918	1,086.0	721,765	34,918	1,086.0	721,765
Malay Peninsula	25,000	777.6	516,750	25,000	777.6	516,750
Borneo	4,837	150.6	100,000	4,837	150.62	100,000
Africa.
Witwatersrand	2,511,544	78,112.6	51,913,607	3,554,746	108,790.0	73,476,600
Other districts
⁠S. A. R.	232,466	7,230.0	4,805,072	229,072	7,024.3	4,744,350
West Coast	24,276	755.0	501,793	24,276	742.9	501,793
Rhodesia				10,000	306.3	206,700
Madagascar	19,351	601.8	400,000	19,351	601.8	400,000
Australasia, 7 colonies	2,520,333	77,130.6	52,095,338	2,945,426	91,024.7	61,480,763
⁠Totals	11,399,475	351,486.2	$237,332,456	13,805,407	425,333.1	$286,218,954

The above table, showing the estimated production of gold from all parts of the world in 1897 and 1898, is abstracted from the Annual Statistical Number of the Engineering and Mining Journal (January 1, 1899), and, although these figures may differ somewhat from those of the Director of the Mint, and from the final compilations, they are believed to be not very far from truth.

It will be seen that the principal countries contributing to the grand total in both years were Africa, the United States of America, Australasia, Russia, Canada, Mexico, and India, the names being given in the order of the respective importance of these countries as gold producers in 1898.

It may surprise many readers to observe that India is placed at the foot of the list, for we are accustomed to associate India with gold, Mexico with silver, and Russia with platinum; and it may also prove a surprise to find that the contribution of the Klondike region, which has created such a great sensation, is so trifling as compared to the grand total. In 1897 the Klondike was credited with an output of less than $3,000,000, and in 1898 of a little over $10,000,000.

It will be observed in the estimates of the Government's agents (January 1, 1899) of the production of gold in the United States for 1898 (see the letter of the Director of the Mint, appended hereto) that the gold production of the State of Colorado was more than twice that of the Klondike region, and the production of California was nearly fifty per cent greater than that of the Klondike.

Other surprising facts crop out in studying in detail the increasing production of gold, more especially in the United States. For example, California has always been regarded as pre-eminently the gold-giving State, and until 1897 she led all the other States in the value of gold annually produced. Colorado, on the other hand, was equally famous as a silver-producing State, and while still holding this leading position she has actually passed California in the production of gold. Colorado has thus taken the lead over all the States in the production of gold and silver.

The output of gold in the United States in 1898 was more than twice that of 1890; and the production of gold in the world in 1898, at the lowest estimate, was much more than twice the estimated production in 1890. In the decade just prior to the California gold discoveries, in 1849, the average annual production in the world is estimated to have been less than $13,500,000. In the previous decade it was less than $10,000,000. Assuming these figures of Dr. Adolph Soetbeer (which are accepted by the nations of the world, and incorporated in many official documents) to be approximately correct, it appears that the estimated production of gold in the world in the first third of the present century was but little more than the production in the single year 1898!

It is, indeed, difficult to comprehend the full significance of these figures at a glance: the production of gold in the past five years has amounted to more than $1,100,000,000; and if production should increase during the next five years in anything like the ratio of the past five years, it may be that a new economic problem, the very antithesis of that alluded to in the commencement of this paper, may present itself for solution. At all events, the cry of the Populists and others that increasing scarcity of gold is the cause of much of the poverty and of other ills of mankind, must surely be drowned in the golden stream now flowing from all quarters of the globe, almost threatening to become a rushing torrent, dangerous to the stable foundations of the world's commerce. That this, however, fortunately is an imaginary danger will appear from the following arguments:

Modern gold-getting by scientific methods compels the permanent investment of an enormous amount of capital, and a moderate return only in dividend is looked for as a rule; thus the balance between acquisition and disbursement is likely to be maintained in the future.

One of the chief causes of the extraordinary increase of production in very recent years is to be found in the application of the "cyanide process" to the recovery of gold from "tailings." This process is also largely applied to obtaining gold from very low-grade ores, that, in some cases, contain an average of less than one quarter of an ounce of gold distributed throughout a ton of ore! At the present time there are about twenty-five cyanide plants in this country, and over forty in the Transvaal, where the process has received its greatest development.

Although the fact that cyanide of potassium would dissolve gold quite readily was known long ago, having been employed by Faraday in his experiments with thin films of transparent gold, and used very extensively in the making of solutions of gold for electroplating baths during fifty years past, the practical application of the solvent to obtaining gold from low-grade ores is less than ten years old.

In Utah there is a dry bed of an ancient lake, the floor of which may be said to be carpeted with gold; according to a recent report this bed of limestone, eight miles by ten, varying from twenty to forty feet in thickness, and containing gold in proportion running from six to twenty dollars per ton, is an "ideal ore" for treatment by the cyanide process. A number of cyanide mills are now working the deposit, all paying dividends, and it is said that the only limit to output is the capacity of the mills. It is estimated that there are "5,000,000,000 tons of ore in the district, containing $50,000,000,000 worth of gold!" Although this statement is startling, the estimate is not a wild guess, for the blanket of ore has been cut in many places; hundreds of samples have been taken from different depths, and in all cases the finely distributed gold has been found, apparently having been deposited from solution in a mineral water which formed the lake in prehistoric times.

A similar deposit of silver was found in New Mexico about twenty years ago and was christened the "Silver Lake" Mine. This was worked profitably until the great fall in price of silver made the operation a losing one. The "blanket" still contains millions of ounces of silver, and it is probable that cheaper methods of recovering the metal from the ore will be devised whenever the price of silver shall have fallen low enough to enable it to take its place among the so-called "economic" metals, having far wider application in the arts than have the precious metals. At present silver holds an unfortunate place "betwixt and between" the precious and the economic metals.

Twenty years ago aluminum was more valuable than silver is today, and its production was correspondingly limited. Last year the price was reduced to a point which so widely extended its use that the production increased from 1,900 pounds in 1888 to more than 5,000,000 in 1898.

Although the gold deposit in the Camp Floyd district in Utah already alluded to may actually contain several billions of dollars' worth of gold, it will cost some billions of dollars' worth of labor and capital to recover the precious metal and will consume much time in the process; so that there is little reason to fear that gold will become so plentiful on account of this discovery that it will cease to be regarded as a precious metal. About forty years ago the assayers of the United States Mint announced that the clay underlying the city of Philadelphia contained more gold than had been brought from California and Australia, and this remarkable statement has never been disproved or even questioned. The gold, however, still remains locked fast in the clay, and the value of the precious metal has not yet fallen in consequence of the announcement of this old discovery. At that time the idea of profitably recovering gold from low-grade ores had not been born, and it is an interesting fact to note that in California gold is now being obtained from clay (by hydraulic washing methods) in which there is but little more than the average proportion of gold to the ton that the assayers found in the clay under the streets of Philadelphia. This does not prove, however, that it will now pay to excavate under the streets of the Quaker City, and undermine the buildings in order to wash out this gold, and until Philadelphia shall be provided with a far more copious water supply the most sanguine or suave promoter of great undertakings would find it impossible to obtain subscriptions to any scheme to recover this fugitive gold, or even, perhaps, difficult to give away shares of stock to influential individuals either in or out of councils.

An impression has prevailed that the production of gold in South Africa attained its maximum point in 1897, and that thenceforth the annual output would be smaller. On account of this fear the "Kaffirs" (South African gold-raining stocks) suffered a decline in the London stock market some months ago, but the statistics showed that the output during the first half of 1898 was larger than in the previous half year, and in the latter months of the year the increase was even more pronounced.

In an address given before the Mining and Metallurgical Section of the Franklin Institute on Mining and Minting of Gold and Silver in November last, the writer said that the production of gold in South Africa in 1898 would not fall far short of $70,000,000, and would probably be nearer $80,000,000. The estimate of the Director of the Mint fixes the amount almost at the latter figure. The United States, in spite of the considerable increase over 1897, takes second place as a world's producer of gold, Africa having contributed in 1898 an amount*equal to that of the United States and Canada (including the Klondike) combined.

The startling announcements of discoveries of virgin gold in the Klondike and of rich placer gold deposits in other localities have had little to do with the enormous increase in production of gold in the world in recent years, though formerly such discoveries constituted the main source of supply of the precious metal. Digging for nuggets is a lottery pure and simple, in which a few prizes are obtained and many losses are suffered. It is said that for every dollar in gold taken out of the Klondike to date, two dollars have been carried in, and this is perhaps a conservative estimate. In fact, it is easy to prove by figures, if the value of labor be counted even at the lowest wage rate, say one dollar per diem, that far more money has been lost by the many goldseekers than has been gained by the few fortunate ones in this twentieth-century search for the golden fleece.

The business of extracting gold from low-grade ores by scientific methods on a large scale, where the precious metal is evenly distributed throughout the matrix or gangue, is a legitimate field for the investment of capital, because the element of chance is reduced to a minimum, and even may be eliminated altogether. The margin of profit per ton of ore is not large as a rule in these operations, and thus the stability of value of the product is assured, whatever the output may be.

"Treasury Department, Bureau of the Mint,

"Washington, D. C., February 1, 1899.

"Alexander E. Outerbridge, Jr., Philadelphia, Pennsylvania.

"Sir: In answer to the inquiries in your letter of January 31st, I take pleasure in sending you such information on the production of gold in the principal gold-producing countries in 1898 as is at this early day available, comparing it with the gold output of the same countries in 1897. And first of the United States:

"Inclosed you will find an estimate made by the agents of the bureau of the gold yield of the several States and Territories in 1898. The aggregate outturn was $65,782,667. It must be clearly borne in mind that this is only an estimate, not the ascertained actual production. In 1897 the gold product of the United States was $57,363,000. Assuming the estimate of the gold product of the United States in 1898 to be correct, there was an increase in the latter year over the gold yield of 1897, in round numbers, of $8,420,000. '

"The gold product of the Witwatersrand in 1898 was 4,295,602 ounces crude, and of the whole of the South African Republic 4,555,009 ounces crude, representing a value of $79,801,025.

"As the gold product of the Transvaal in 1897 was $57,33,861, the increase in 1898 was $22,167,164. The figures here given are those published in all the leading papers interested in such matters in England and on the European continent. They are not, any more than the figures given below, official to the Bureau of the Mint.

"I have not yet seen any figures of the total gold product of Australia in 1898, but the output of five out of the seven colonies has been published. The figures are as follows:

	1897. Ounces crude.	1898. Ounces crude.
New South Wales	292,217	341,722
New Zealand	251,645	280,176
Queensland	805,928	918,100
Victoria	812,765	837,258
West Australia	674,997	1,050,183
⁠Total	2,837,549	3,527,439
		2,837,549
		689,890

"There was an increase in the gold product of these five colonies of $13,107,910, the ounce crude averaging about $19 in value. The total gold product of Australia in 1898 was, as I estimate it, about $67,792,000. In 1897 it was $55,684,182. As yet no figures of the gold output of the two Australian colonies—Tasmania and South Australia—have come under my observation.

"Persons not connected with the bureau, but whose opinions are entitled to respect, have estimated the increase in India's gold output in 1898 at about $500,000, and in that of Canada (including the Klondike) at $8,000,000. I have thus far no data on which to predicate an increase or decrease in the gold yield of Russia. The product of these last-mentioned countries in 1897 was:

India	$7,247,500
Canada	6,027,100
Russia	23,245,700

"The increase in the principal countries mentioned above, of their gold product in 1898 over 1897, reduced to a table, gives a total of $52,195,000, as follows:

United States	$8,420,000
South African Republic	22,167,000
Australia	13,108,000
Canada	8,000,000
India	500,000
⁠Total	$52,195,000

"The world's product in 1897 was $237,504,800. In 1898 it will probably not be less than $289,699,800. My opinion is that it will be somewhere between $290,000,000 and $300,000,000.

"If any further information reaches me within a week or two, I shall be glad to communicate it to you.

⁠"Respectfully yours,

"George E. Roberts, Director of the Mint."⁠

Agents' Estimate, January 1st, of the Production of Gold in the United States far 1898.

⁠States and Territories.	Gold.
Alaska	$2,039,930
Arizona	3,185,490
California	14,883,721
Colorado	24,500,000
Idaho	2,273,902
Michigan	65,000
Montana	5,209,302
Nevada	2,959,731
New Mexico	360,000
Oregon	1,343,669
South Dakota	5,841,406
Texas	7,500
Utah	2,170,543
Washington	599,483
Wyoming	5,168
South Appalachian States	337,832
⁠Total	$65,782,677