Various
Appletons' Popular Science Monthly, March 1899
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.
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 to-day, 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 animal output would be smaller. On account of this fear the "Kaffirs" (South African gold-mining 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 gold-seekers 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,"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 $57,633,861, 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:
"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:
"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:
"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 for 1898.
THE CALIFORNIA PENAL SYSTEM
By CHARLES HOWARD SHINN
Theoretically every new commonwealth in organizing its institutions can measurably avoid the errors of older communities, and can venture upon promising experiments elsewhere untried. In practice, however, new States are usually compelled to face unforeseen difficulties, and although their various departments gain something in flexibility, they lose in systematic organization. They have the faults as well as the virtues of the pioneer.
Penology, like every other department of human thought, is a battlefield of opposing principles. But I know of nothing in print more inspiring to the officers of the State engaged in prison and reform work than Herbert Spencer's Essay on Prison Ethics. It is likely that many of the people who should read it are not aware of its value and interest to themselves. Beginning at the foundations, Mr. Spencer makes a lucid exposition of the necessity of "a perpetual readjustment of the compromise between the ideal and the practicable in social arrangements." As he points out, gigantic errors are always made when abstract ethics are ignored.
If society has the right of self-protection, it has, as Mr. Spencer asserts, the right to coerce a criminal. It has authority to demand restitution as far as possible, and to restrict the action of the offender as much as is needful to prevent further aggressions. Beyond this point absolute morality countenances no restraint and no punishment. The criminal does not lose all his social rights, but only such portion of those rights as can not be left him without danger to the welfare of the community.
But absolute morality also requires that while living in durance the offender must continue to maintain himself. It is as much his business to earn his own living as it was before. All that he can rightfully ask of society is that he be given an opportunity to work, and to exchange the products of his labor for the necessaries of life. He has no right to eat the bread of idleness, and to still further tax the community against which he has committed an aggression. "On this self-maintenance equity sternly insists." If he is supported by the taxpayers the breach between himself and the true social order is indefinitely widened.
Such principles as these could easily have been made a fundamental part of the California prison system when the State was organized, for the famous Code of Reform and Prison Discipline, prepared about 1826 by a New Orleans lawyer, Edward Livingston, was well known to some of the ablest men of pioneer California, and a strong effort was made to obtain its adoption in complete form. That remarkable code known as the Livingston system agrees with the Spencerian principles of ethics, and has been a source of inspiration for the most advanced penal legislation of recent years. Louisiana adopted it only in part, but Belgium has the Livingston code in its entirety. California, suffering under difficult local conditions, took a course in the liberal pioneer days that has for a time rendered progress along the lines of modern development extremely difficult.
California is a large and populous State, many portions of which are thinly settled and hard to reach. In early days it had many Spanish and Mexican outlaws, and became a refuge for criminals from all parts of the world. When the State was organized, money was extremely abundant, and every one had golden dreams. The idea of self-supporting prisons seemed absurd, not only because the rich young State seemed capable of supporting any expense, but also because no manufactures were yet established, and the most active penologist would have found it hard to find suitable employment for prisoners.
As time went on, the very strong labor unions of California, aided by many newspapers and politicians, accepted the principle that every dollar a convict earned was taken from some citizen, and that the State was bound to support its criminals in idleness. Numbers of good and earnest men in the service of the State as prison commissioners, wardens, and other officials studying methods elsewhere and mindful of local conditions, have made untiring efforts to stir the public conscience, and to gain recognition of a criminal's right to earn his own living by productive labor. As long ago as 1872 Hon. E. T. Crane, of Alameda County, chairman of a joint Assembly and Senate committee, made an excellent and progressive report on prison reforms. Something has been gained since then, and, though working under adverse conditions, the prisons have been excellently managed. But these results are due to individuals, not to the system, nor to the well-meant but often injurious enactments of legislatures meeting biennially for only sixty days.
Under the system of biennial State appropriations, nearly all institutions suffer at times from mistaken kindness, and at other times from undue parsimony. Since there is no general supervising board for the two State prisons and the two State reform schools, and no settled ratio of appropriation based upon the number of inmates, the friends of each institution naturally do their best to obtain as large appropriations as possible from each new legislature. Hence arise special visiting committees and combinations between legislators from different parts of the State to "take care of" institutions whose regular annual income should not be dependent in the least upon politics.
The appropriations made by the last two legislatures for all purposes connected with prisons and reform schools, including salaries of officials, are shown in the following table:
State Appropriations from July 1, 1895, to July 1, 1899 (Forty-seventh to Fiftieth Fiscal Years, inclusive).
Some small appropriations for improvements are necessarily included in these totals, but nothing more than may be expected every year or two. It is proper to rate the average annual expense of these institutions at nearly half a million dollars, nor can this sum be materially reduced until the State accepts the fundamental principle that prisons should be made nearly or quite self-supporting.
San Quentin was once managed to some extent on the contract system. Furniture-makers and other manufacturers paid half a dollar a day for each convict employed, and at one time as many as eight hundred men were thus utilized, giving the prison an income of twenty-four hundred dollars a week. The system was so violently attacked by labor unions that it was finally abandoned, and now I am told that convict-made furniture, stoves, and other articles such as were formerly made at San Quentin are brought to California from Joliet, Illinois, and other places by the carload.
Having abandoned the contract system, the State decided to make jute bags, chiefly for grain, and to sell them as nearly as possible at cost direct to the consumers, so as to help the agricultural classes. Machinery costing $400,000 was obtained in England, and after many difficulties a factory was established at San Quentin. The price of raw material fluctuates greatly, and the mill has sometimes lost money, sometimes made a somewhat nominal profit. During the fiscal year ending June 30, 1891, for instance, 2,574,254 pounds of goods were manufactured at a total operating expense of $160,684.07, and were sold at a price which nominally gave $40,275.07 profit. But no sinking fund was allowed for, to cover wear and tear of machinery, nor did the operating expenses include even the maintenance of the convicts while at work. The following fiscal year the profit estimated in the same way was $39,293.18. During the fiscal year 1893-'94 the loss on the jute mill was $14,660.22; in 1894-'95 there was a profit of $6,670.56; and in 1895-'96 a loss of $12,288.45.
In five years, therefore, there was nominally a profit of about $60,000 in this department, but since neither interest, sinking fund, nor maintenance of the laborers is included among the expenses, the system can be looked upon only as a means of giving needed exercise to the prisoners and cheap grain sacks to the farmers. Financially it is a burden to the taxpayers. The old contract system had its drawbacks, but it at least afforded a profit, and gave convicts a chance of learning something about certain trades at which they could perhaps work when released; the jute mill not only offers no such opportunity, but is in other ways peculiarly unfit for modern prison requirements, since all operations in such mills can be stopped or delayed by the misbehavior of a few operatives. Far better are industries wherein small groups or individuals are engaged in various separate minor operations. Besides this, the sacks made by prison labor will probably have only local uses hereafter, because of a recent act of Parliament which is held to prevent wheat shipments in such sacks.
The Folsom Prison owns a magnificent water power and enormous quarries of granite. Between 1888 and 1894 convict labor amounting to 683,555 days were expended upon a dam, canal, and powerhouse, and over 2,000 horse power can already be used. About 250 horse power is now utilized by the prison for electric lights, ice manufacture, and other purposes. The quarries are being worked to some extent, and crushed rock for roads is sold at cost or nearly so. There is a farm that supplies many articles at less cost than if purchased in the market. At Folsom, as at San Quentin, the authorities do all in their power to economize, and to utilize convict labor, but the policy of the State prevents definite progress.
Meanwhile the reports of the prison directors and wardens and the messages of Governors have urged in the strongest terms a change. The biennial report of 1892-'93 and 1893-'94 says respecting the great Folsom water power: "If we can use this power solely with regard to profitable results to the State, we can return each year a surplus into the State treasury. We do not think that the State should refrain from working its convicts or utilizing its advantages because it may have some effect upon other businesses. All over the United States prisoners are engaged in manufacturing, and our investigations lead us to believe that the effect of prison competition, so called, is greatly overestimated."
The biennial report of 1894-'95 and 1895-'96 returns to the subject, states that the jute mills can not be a success under the restrictions of the present law, and urges that they should be run on a business basis, for a profit. It continues, "One source of profit would be to make use of the granite owned by the State" (at Folsom). It suggests a consolidation of the two prisons at Folsom, where, with prison labor and free power, and granite on the ground, a model prison could be constructed. Warden Aull, of Folsom Prison, in discussing the subject in 1896, said that for nine years the improvements there have employed the convicts, but now some new scheme must be devised. "The convicts must be kept at work. Every consideration of discipline, economy, reformation, and health demands this." But he believes that it will not pay the State to make shoes, blankets, clothing, brooms, tinware, etc. (as has been suggested at various times) for the eight thousand inmates of our State institutions. There are over two thousand convicts at Folsom and San Quentin. Only a small part of these, he says, could be utilized in making goods for State institutions, nor would there be any profit unless manufacturing was on a large scale for the outside markets as well. The experiment that New York is making will be watched with much interest here.