Popular Science Monthly/Volume 72/January 1908/Gold
MUCH of the romance and that in former times attached itself to the mental concept and the actuality of gold has passed away, partially because the yellow metal is becoming so common among civilized people, but mainly because in the hurry of modern life we have so many other things to think of. We take it much as a matter of course, just as we do our electric lights, telephones, wireless telegrams and other modern marvels. Yet there is a potentiality and uniqueness in gold that is possessed by no other natural or artificial product in the world, not even diamonds; namely, its apparently unchangeable value.
So far as words and terms go, an ounce of fine gold has been worth among civilized people, and at any time during the last one hundred years, just $20.67, or its equivalent in English, German or French money, and no less, though at times a little more. No other substance that the reader can mention has acquired this characteristic. Violent fluctuations have occurred in the price of every commodity or product. Wheat has ranged from $1.00 to $3.00 per quarter,-wool from 4 cents to 20 cents per pound, copper from $200 to $600 per ton, etc. Even diamonds have ranged from $10 to $50 per carat.
But through all these changes gold has been steadily at one price. At least one could always get the equivalent of $20.67 per ounce for it in coin. Why? Because, by legislative action, all the great nations have agreed to accept it from any source and in unlimited quantity, at their mints, and to transform it into coins of definite weight and purity, at a mere nominal charge to cover the expenses of the operation.
This is what is meant by the free and unlimited coinage of gold. Each civilized nation works up the metal into coins in a way of its own, but all upon the same fundamental principles, and from the same starting point. The result is that the gold coins of the world have a definite and unvarying value in terms of themselves. Thus, the English sovereign always contains just so many grains of chemically pure gold, and so also does the French louis the American eagle, and the German 20-mark piece, the balance being a base metal (usually copper) that is added because gold is a soft metal and would quickly suffer loss in weight if put into circulation in a pure state.
Even the resulting alloy is not so hard as the mints would like it to be, for if you put a score of gold coins in a buckskin bag, and shake them up vigorously for a few hours, you will find that each has lost slightly in weight in the operation; and in the bag, in the shape of fine particles, will be the gold that has been rubbed from each coin by contact with its neighbor.
This is what is called "coin sweating," and if you try it to prove whether my statement is correct or not, do so by yourself and keep the matter dark, for it is against the laws of all countries, and punishable by as severe penalties as those meted out to the counterfeiter. For in appearance the coin will not be altered by a moderate amount of such treatment, and if a man should steadily employ himself in the operation, and could be continually getting a stock of fresh coins to operate on, he might be able to accumulate as much as fifty cents' worth of gold dust per day as the result of his labors.
But it will not do to confuse in one's mind the metal gold with the coin gold. For while the former under the existing laws has an absolutely unchangeable value, expressed in terms of money, the gold coins of different nations vary continually in value as expressed in terms of each other. Thus, the English sovereign fluctuates from $4.82 to $4.89 in American money, and the other European gold coins all vary likewise. This is due, of course, to the exigencies of international exchange, and to the fact that each coin is legal tender for the payment of a debt only in the nationality whose mint has issued it. Thus, when an English wheat or cotton merchant has bought a shipload of either of these commodities from an American producer he can not pay for it in English coin, but must buy American coin to discharge his debt. This he arranges through his bank, and if the demand for American coin for the payment of such debts by Europeans is active the price for the American dollar, as expressed in terms of foreign coin, advances little by little until it reaches a point where the English merchant (or his banker) will find it just as cheap to ship sovereigns (or even uncoined bullion) over to America, take it to the mint, have it melted and manufactured into American coins, and with these discharge the obligation. When such a condition of affairs occurs the gold-exporting point is said to have been attained in London, and the gold-importing point in New York, and because of it you can never tell whether the gold you hold in your hand, though bearing the Goddess of Liberty on its face, has come from the mines of America or from those of South Africa or China. But it makes no difference, for the inherent physical qualities of the metal are the same, no matter at what place in the earth's crust it originated.
However, we are considering gold the metal, and not gold the coin, and in again reverting to the subject it is necessary to call attention to another very marked characteristic of the metal, which it shares with but few other substances that man produces. If you are a farmer, and produce wheat, cotton, tobacco or any other of the ordinary farm products, you know very well by experience that when the harvest season comes around again the crop that you sold last year will practically have disappeared, and there will be room in the markets for the new one you have for sale. Your wheat will have been eaten up, your cotton woven into clothing and your tobacco disposed of in the form of smoke. If you are a producer of food animals, or a fisherman, the same will have happened. If you are a lumberman your boards will have been put into buildings or furniture, which in due time must be renewed. If you are a coal miner your crop is transformed by the consumer into gas and smoke about as fast as you dig it from the earth. If you are an iron, copper, lead or zinc miner your commodity begins to deteriorate in value the instant it goes into usage, and in five, ten, twenty or fifty years at the utmost the articles into which the bulk of these metals are worked up will have rusted or worn out and must be replaced.
But not so with gold. The coin you hold in your hand to-day may, for all you know, have been part of the gilding of the dome of King Solomon's temple, in Jerusalem. The case of the watch in your pocket was perhaps taken from the mines of Spain by the early Romans, a thousand years before our era. The ring you give your betrothed may be wrought from a lump of metal washed by the prehistoric miner from the stream beds of Rhodesia or India.
Who can tell? For gold can not be eaten or burned up. It can only be lost, and the whole world is interested in preventing that fate, and in taking the greatest of precautions against its diminution by wear. Hence gold is what may be called a cumulative crop. The quantity in the hands of man would continually increase, if the crop were a regular one and loss could be prevented. To a certain extent the same is true of silver, but there are no other manufactured substances, except these two metals and the gem stones, that do not steadily and even rapidly deteriorate or disappear. Even gold is somewhat subject to the law of decay, for that part of the annual crop that is used in dentistry, in photography and in gilding is rarely employed again for any other purpose, and in a generation or two has gone back to earth.
How then about the annual crop of gold? Whence does it come, what does it amount to, and how long can we go on extracting it from the bowels of the earth without disturbing the qualities that it seems to have in the commercial and industrial world? These are interesting questions that can only be answered by looking backward into the history of the metal, as well as considering its position at the present day.
It is fairly well settled that the gold of the ancients came mainly from three places, namely, Asia Minor, southern India and South Africa. In the first-mentioned locality it was principally obtained by washing the banks and bars, and even the beds of certain streams, while in the last two it seems to have come more largely from crushing the outcrops of auriferous quartz veins. What is known as the Dekkan region of the peninsula of Hindustan, and certain parts of the valleys of the Limpopo and Zambesi, in South Africa, are dotted with the remains of prehistoric excavations on such veins, some of which when cleaned out show that the workers succeeded in penetrating in places as much as two hundred feet into the earth; while in the same neighborhoods we find the relics of human structures whose age is certainly only to be reckoned in terms of thousands of years. In India, after many years of tribulation, a modern gold-mining industry has been successfully reestablished on the basis of the old one, and in South Africa the region now known as Rhodesia, where the ancients conducted very extensive operations, is slowly undergoing the processes of rehabitation.
Many of the rivers of Asia Minor were noted three to five thousand years ago for the gold washed from their beds. Crœsus, one of the kings of Lydia, who became extremely wealthy through the working with slaves of some of the stream beds of his kingdom, was one of the celebrated actual characters of that country and those times, and the river of Pactolus, whose golden sands are mentioned by several ancient historians, was one of the most noted of its metal-bearing streams.
It is probable that in the prehistoric and early historic periods of civilization gold in some quantities (not large) came also from the headwaters of the White Nile in Abyssinia, from southern Persia, from some of the East Indian isles and from China. There is no evidence that the Ural deposits in Russia were known in those remote days, but it seems very likely that a fair amount of the precious metal was obtained from the flanks of the Atlas range of mountains in northern Africa.
When I mention the ancients I mean that period of the world's history (and all the unknown eras before it) that culminated in Phœnician nationality, covering the Egyptian, Babylonian, Assyrian, Hittite and Persian empires, and the vast but quiet civilization in Hindustan, China and Japan. In the main the people of those days were Asiatics and Africans, and belonged to the Semitic and Turanian races, though the Persians and Hindoos were more or less Aryan in race and language and northern in temperament.
About 1000 b.c., when Greek nationality began to assume a commanding position, and when most of the older southern empires had passed their prime, when, in fact, the day of Europe was beginning and that of Asia and Africa was declining, there was, according to history, a very marked decrease in the supply of gold coming into the channels of civilization. The southern African and Indian fields seem to have been deserted, probably because the nation that appears to have conducted operations in these localities (the Phœnician) lost its predominance. Gold gradually became scarce, and its place in business life was largely taken by silver, which came in enormous quantities to the Grecian and Roman world of the period of 1000 b.c. to 500 b.c., first from the mines of Greece, and later from those of Italy and Spain.
The placer-mining regions of Asia Minor had either become exhausted, or, what is much more likely, the industry was ruined by the continual wars that occurred in the days when Asia and Europe were contending with each other for supremacy in that rich and rugged land.
During the early centuries of our own era, when Rome was in its prime, we hear very little of gold mining, and it is extremely likely that the greater part of the yellow metal that was accumulated by the Romans came from the spoliation of older civilizations. When Rome ceased to be a dominating factor in the history of the world, and its vast empire was split into numerous small states, mining as an industry, and particularly gold mining, suffered greatly, and the Grecian and Italian and Spanish silver mines ceased production almost entirely.
It was this fact that ultimately caused the establishment of the institution of banks in northern Italy, the then commercial center of the world, and it is a curious fact that these banks were not places where coined money was deposited or dealt in, but where credits were established and maintained. Thus the great bank of Venice, which for 600 years (800 a.d. to 1400 a.d.) was really the heart of the commercial world of the day, was little more than a great bookkeeping establishment, where the trade between Europe and Asia was kept in balance by a system of transfer of credits, these credits being based upon the actual possession by the principal traders of the time of the merchandise in which they dealt.
Gold coin in the middle ages almost disappeared from circulation, and silver coins were debased by the governments with lead and zinc and tin until they were current only at enormous discount. In the middle of this period the precious-metal mines of central Europe were discovered, but they yielded mainly silver, and not much of that, so that in the fifteenth century, just before the discovery of the New World by Columbus, commercial Europe was really in great need of coin metal.
In 1492 the western continent was discovered, and in 1498 the Portuguese navigator, Vasco da Gama, first made the passage to the East Indies by way of the Cape of Good Hope, and almost simultaneously other navigators of the same nationality landed on the eastern coast of South America and took possession of the country for the throne of Portugal, under the name of Brazil.
History tells what a marvelous change came over Europe as the spoils from the East Indies, consisting mainly of gold and precious stones, and the silver and gold from Mexico and Peru, began to flow into the channels of trade. This was intensified when the Brazilian gold fields (placers) were opened in 1675, and under the impetus of this fresh and enormous volume of new circulating medium the modern era began.
But as yet there was no such thing as an established precious-metal mining industry. The millions that had come from Spanish America and the East in the years between 1510 and 1700 were largely spoils, or the result of crude operations on alluvial deposits, and when the flood began to slacken Europe fell on hard times again, like a young rake that had lived beyond his income. This brought on the era of dissatisfaction that caused the beginning of emigration among the French, English and Dutch to North America, resulting in the partition of the continent among these races, and the formation of the American republic and the colony of Canada, where up to the middle of the nineteenth century (less than seventy years ago) gold coin was almost unknown, and the real medium of exchange was mainly the Mexican silver dollar.
In 1849 the gold fields of California and Australia were almost simultaneously discovered, and during the following ten years more of the precious metal was produced and turned into the channels of trade than had come from the earth for a thousand years previously. But as most of this was derived from alluvial diggings that were quickly exhausted it was really not until 1860 that the modern industry of gold mining began.
Placer or surface mines, where the gold exists in the form of fine grains or dust, are productive and profitable for a time, but are short-lived, while vein or reef mines that extend indefinitely into the earth are permanent, and when these began to be attacked, and machinery was devised to crush the quartz, and quicksilver employed to gather and catch the golden grains, and when finally a smelting industry came into existence, so that the so-called refractory ores could be treated and their precious contents recovered, then and not till then did gold mining become a well-defined business, and the production of the metal fairly constant and regular.
It is a marvelous tale, this history of gold, and wrapped up with it are clues to many obscure points in the story of civilization. For, as the blood to the human system, so has gold been in the commercial world, the circulating medium carrying life to all parts of the social and political organizations that men have constructed.
As already stated, gold mining is of two kinds, or rather the metal occurs in two different ways, each necessitating a particular kind of treatment to recover it. In the one case it is found in the form of a fine dust or grains, and to some extent as large nuggets, in the surface soil or débris, and it is gathered by washing such deposits in troughs called sluices with water. The gold by reason of its weight settles on the floor of the sluice, while the lighter gravel and sand are carried away. These are called placer or alluvial mines, and to this class belong the ancient fields of Asia Minor, the earlier Brazilian producing regions, the areas in California and Australia that yielded so enormously in the years between 1850 and 1860, and the Klondike and Nome deposits of Alaska of the present day.
Geologists tell us that the metal accumulated in these places during countless ages, as the result of erosion caused by rain, frost, heat, cold, glacial action, etc., operating on old granitic and schist rocks, in which occur veins, lodes, reefs and ledges (as they are variously termed) of quartz, which quartz is impregnated with particles of the yellow metal, or with crystals of ores of other metals, such as iron, copper and lead, that contain gold in a state of mechanical or chemical combination. And it is a fact that the deposits of each great alluvial field when followed up have led the explorer to areas of country (usually mountainous) where such quartz veins are found, and it is the exploration and working of these veins that constitute the other kind of gold mining, called quartz mining, which is the permanent form of the industry, and which is now in progress in America, Australia, South Africa, Mexico and India, and is coming slowly but surely into existence in Russia, Brazil, Alaska and Japan.
Alluvial or placer gold mining may be and generally is carried on with a very simple equipment. It is not a business that requires capital. With a pick, shovel, pan, some boards and nails, a hammer and saw and a few pounds of quicksilver, the energetic miner may start in business, and will rarely fail to make expenses and good wages. If he is one of the lucky ones, and gets hold of a rich piece of ground, he is rewarded with a fortune in a very short time.
On the other hand, after an alluvial field has been worked by the individual miner in his rather crude way, and is approaching exhaustion by his methods, it is common for a large number of claims to be consolidated under company or syndicate management and reworked. When this occurs systems of operation are inaugurated by which thousands of cubic yards of ground are washed daily, and modern capital may be advantageously employed in the creation and operation of the installations devised to accomplish the work. These consist of long ditches and pipe lines to bring in the water, lines of sluices in which to do the washing, dredges, elevating devices, undercurrents, etc. There have been built to date over 50,000 miles of ditches in California alone for use in this branch of business, and more than 200,000 miles in all the gold-producing states of America.
Placer gravel varies in value. The unit of quantity is a cubic yard. In the early days of a new field the ground must carry at least $1 per cubic yard to be attractive to the individual miner or small capitalist. Later, under consolidation and extensive operation, plenty of money can be made out of material carrying fifteen cents per yard, if the physical conditions surrounding the operation are good; that is, plenty of water available and a good dump. At a number of places in the west and in New Zealand good profits are being made from ground carrying much less than fifteen cents per yard.
The business of vein or reef mining is a very much more elaborate and complicated affair. The lodes or veins of gold-bearing quartz that nature has distributed in certain localities in the rocky crust of the earth are from a few hundred to a few thousand feet in length, so far as their outcrop at the surface is concerned, and from a few inches to a dozen feet or more in width. They extend downward no one knows how far, for as yet the deepest explorations made on any one of them have revealed no termination, though at several shafts in America, Australia and South Africa explorations have been pushed to depths of over 3,000 feet.
But the quartz of the vein changes continually in value. Here there may be but a trace of the precious metal, while a few feet or yards away a ton may contain as much as $50 worth. Generally, however, the gold is dispersed throughout the vein in patches called "ore shoots," so that certain areas are clearly payable and others not. This is wholly a relative term, depending upon the width of the quartz, its hardness, the nature and condition of the walls, the presence or absence of water, the price of labor, of explosives and of supplies in general, the cost of power for hoisting, pumping and milling, etc. In Mexico, America and Canada money can generally be made on a vein of a width of five feet, that will yield gold to the extent of $5 per ton, and in a number of instances, where the vein is larger, ore worth much less is yielding handsome dividends. Thus, the Homestake mine in South Dakota is paying magnificently on ore that produces on an average about $3.50 per ton, while the Treadwell mine at Juneau, Alaska, is doing finely on $1.50 rock. On the other hand, in Kalgoorlie, the great Australian gold district, where the veins are comparatively narrow but rich, and all working expenses high by reason of the desert character of the country, the costs connected with mining and milling rarely are less than $7.50 per ton, and in South Africa, where labor has been poor, company management expenses abnormally large, and the payable reef less than twenty inches thick, costs will average even a little more than in Australia.
Now that, at last, after centuries of irregular and haphazard production, the business of gold mining is on a stable and permanent foundation, it will be interesting to take account of the current annual crop of gold of the world. That the reader may acquire a mental grasp of its physical proportions it will be well to start with the fact that for the year 1906 this crop weighed nearly 674 tons. A cubic foot of pure gold will weigh just 1,20-1 pounds, so that the product of the world's gold mines for that year could be all packed in a room ten feet square and nine feet high. This cube was worth in money $407,379,893, and it came from the following places:
|South Africa (Transvaal, Rhodesia and West Coast)||$133,634,506|
|America (United States and Alaska)||96,101,400|
|Australia, Tasmania and New Zealand||82,237,228|
|Russia and Siberia||22,469,432|
|British America (Canada and New Foundland)||12,116,432|
|Central and South America||10,970,187|
|Japan and Korea||7,000,000|
|Europe (except Russia)||5,616,039|
|All other countries||4,169,608|
|Gain over 1905||$29,411,750|
Judging by the experience of the last thirty years, during which the industry has been forming and steadily acquiring those characteristics that indicate stability, it is probable that under normal conditions, and if the laws governing the discovery and exploitation of gold mines in the various countries and those affecting the selling price of the metal (coinage laws) do not materially alter, each year will show a gain of about 5 per cent, in the amount and value of the annual crop.
At the present time, according to calculations and estimates made in 1900 by the director of the United States Mint, the gold that has been taken from the mines of the world since the discovery of America has amounted in quantity to about 21,424 tons, and in value to more than $12,600,000,000.
Now, of this vast total, the astonishing fact is that nineteen per cent., or nearly one fifth of the whole, has been taken out in the last ten years; thirty per cent., or almost one third, in the last twenty years; forty-one per cent, in the last thirty years; fifty-four per cent., or over one half in the last forty years; and sixty-eight per cent., or more than two thirds, in the last half century.
Assuming that no increase at all occurs in the annual output, this amount will be doubled in thirty years, while, if an annual increase of five per cent, is attained, the doubling will be accomplished in less than twenty. What effect on the commerce and trade of the world will result from the creation in so short a time of so immense an amount of new and indestructible wealth, with a debt-paying quality based wholly on tacit agreement among nations, remains to be seen. That a general advance will occur in the market price of all other commodities may be confidently expected. That interest rates as a whole will decline should be quite as certain. That wages should advance seems also natural, for with that amount of new capital arising in so short a time every department of human activity is bound to be stimulated, and this will create an enormously increased demand not only for all those things that machinery and art can produce, but also for those that can only be brought into being by human hands and human service.
Of course strikes, tumults and wars may for a time cut down even the normal output, as was the case when the South African mines were closed by the Boer war, but this is very unlikely. The financial world has experienced the discomfort that occurs when its gold supply is interfered with, and is not likely to permit another such happening. In other words, the gold-mining industry, like all other international industries, makes for international peace.
An examination of the table of production for 1906 shows that nearly eighty-three per cent. of the total output was made by the Anglo-Saxon world. This is a most significant fact, and the proportion is so overwhelming as to leave no doubt whatever as to the communities that are to stand at the apex of material humanity during the twentieth century. When one looks for the causes that have led up to this astonishing predominance it is necessary candidly to admit at once that it can not be only a question of race, for the gold mines of North America, Australia and South Africa were unknown when Britain sent out her sons to these new lands. It was the lust for gold that sent the Spaniards and the Portuguese abroad, but it is the desire for homes that has spread the English people over the face of the earth. Back of this is the love of freedom, resulting from a national life that has evolved through the centuries a code of human laws fostering individuality and encouraging individual effort. So long as the great men of the race whose dwelling places encircle the globe preserve these ideals, so long will they remain secure and in the lead.
And the commanding position they hold at the present time may be credited entirely to the establishment and growth during the thousand years of English history of the principle (somewhat obscured in certain parts of the English-speaking world) that the land and all that is in it belongs to the people, and that the usage thereof is their direct and inalienable and rightful heritage.