profit in gold mining became so small as materially to affect exploration and production. Another important cause of decreased production was the actual exhaustion of certain mines, and the lowering of the grades of ore available in many others. New discoveries did not supply these deficiencies. In the United States, for instance, physical conditions of one kind or another were responsible for lessening of production from Alaska, Cripple Creek, and California. Minor causes included conflicts in California between agricultural and mining interests over water rights, and a succession of dry seasons which did not afford enough water for the working of placers; and in Alaska difficulties due to litigation over the oil-flotation process of recovering gold from its ores. As a result of all these conditions, many of the smaller mines were closed down, others continued operations only by curtailing exploration and by mining solely the richest and most accessible ore bodies, and there was a general discouragement and lack of inducement to engage in gold mining.
The gold situation has become a matter of great concern to the various governments, since national financial stability and the confidence of the public in the national credit are based largely upon the acquirement of an adequate gold reserve. Both in England and in the United States, committees of experts have been appointed to make exhaustive investigations and present recommendations for measures to stimulate production. The report of the joint committee from the United States Bureau of Mines and Geological Survey gives a comprehensive review of the conditions in the gold-mining industry.1
During the war there was vigorous demand by gold miners both in the United States and South Africa for a bonus on gold. These demands received serious consideration on the part of the governments, but were denied on the general ground of the doubtful adequacy of such a measure to meet the situation, and the danger of upsetting the gold standard of value. In the United States, for instance, a bonus of $10 per ounce was asked for. It did not appear likely that this could increase the annual production from the United States by more than 10 per cent, in face of the physical conditions being met in gold mining. The bonus would have had to be paid on all the gold mined, which would make the increment of production very expensive; to secure an added production of ten million dollars would have cost in the neighborhood of forty millions. Ten millions is only one-third of 1 per cent of the gold reserve already held by this country, and it would obviously have taken a long time for this small increase in annual production to make itself felt in the size of the gold reserves.
Since the war gold has gone to a considerable premium in England, due to the action of the British government in establishing a "free" market,—that is, abandoning the restriction that gold marketed in London should be offered to the government or the Bank of England at the fixed statutory price for monetary purposes. With the pound sterling at a considerable discount outside of England, other countries could afford to bid, in terms of British currency, far above the British mint price. The result is that the South African miner of gold receives a premium due to depreciation of sterling exchange, while the American miner still receives the regular mint price. The agitation for a bonus therefore continues in the United States. However, with the removal of war-time restrictions gold has been allowed to go to the arts, the demand from which is already equal to one-third of the world's gold production, is rapidly increasing, and is temporarily acute due to the accumulation of requirements resulting from war restrictions. This situation has a general tendency to improve the position of the gold miner, though the outlook is still far from bright.
It is an interesting fact that India is absorbing a good half of the free gold. India, in regard to its demand for precious metals and stones, has been described as "an abyss from which there is no return." This is an important contributing cause of the shortage of gold in the rest of the world.