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The decline in later years was almost general, every producing country of any importance showing a set-back. By reason of its greater steadiness of output the Transvaal, which had 40 % of the 1915 world's output to its credit, claimed 49% of the 1920 total, while the British Empire in the same period advanced from 63 % to 69%, and foreign countriesdroppedfrom37%to3l %. Thisisshown by Table II.

TABLE II. The Decline in Gold Production after 1915. (In millions of pounds at 845. n^d. per fine oz.)

Year

Trans- vaal

The rest of the Empire

Brit- ish Em- pire

For- eign Coun- tries

World

Drop as compared with 1915

Trans- vaal

British Empire

World

1915 1916 1917 1918 1919 1920

38-7 39-5 38-3 35-8 35-4 34-6

22-0 20-1

17-8 !5-2 14-6

13-4

60-7 59-6 56-1 Sl-o 50-0 48-0

35-7 33-9 30-2 28-0 25-0

22-O

96-4

93-5 86-3 79-0 75-o 70-0

I %

7i% 81% iot%

a %

7t% 16 %

i7i%

21 %

3 %

ioj% 18 %

22 %

27*%

6 yrs. Propor- tions

222-3

44%

103-1

21%

325-4 6,5%

174-8

3.5 %

500-2

100%

A decrease of 27 J % in the world's production is a serious matter. Its cause is doubtless to be found mainly in the exhaustion of the mines, but it has also been materially contributed to by the excep- tionally heavy working costs resulting from conditions produced by the World War. For a long time the gold mines did not, as did practically all other industries, obtain any relief from their increased expenses in a higher price for their product, but from 1919 such of the mines as are in the British Empire (i.e. the majority) benefited from the premium on gold, to which reference will be made later. As working costs might, after 1920, be expected to be appreciably ameliorated, the relief should find its effect in a recovery of produc- tion, though the output is hardly to be expected to recover to more than about 80,000,000 a year, assuming of course that there are no new discoveries of importance. There has been no such discovery since that of the Witwatersrand in 1886, and this was altogether exceptional by reason of the unique character of the deposits, their extent and their proximity to coal-fields. It is true that the Klondike- Yukon field dates from as recently as 1896, but like other alluvial finds (California in 1848, Victoria, Australia, in 1851, and British Columbia in 1858), it reached its zenith within five years of its dis- covery, and in its best year contributed only a few million pounds to the world's total.

The earth's surface is rapidly becoming better known, and the more it is overrun the less is it likely that any potential gold-field will be found. It is, moreover, to be noted that the recent rapid growth of the gold output was due not only to new finds but to improved metallurgy, especially the cyanide process of treating tail- ings, so that while not very long ago only some 60 % of gold in the ore was recovered, the proportion has been raised to 90 or 95 %.

It has already been pointed out that the Transvaal contributes almost half of the world's present output, and nearly the whole of that colony's production is derived from the banket formation of the Witwatersrand district from a stretch of ground some 55 m. long and usually hardly more than 2 m. wide.

If one splits up this 55 m. by separating off the eastern and more recently developed 10 m., one gets a division into Old and New Rand, one showing distinct signs of decline, while the other has for the present all the symptoms of healthy growth. Thus :

TABLE III. Yield of Old and New Rand compared. (In millions of pounds at 845. n\d. per fine oz.)

Year

Old Rand

New Rand

Whole Rand

Total to

1907

179,697,000

7,217,000

186,914,000

1908

26,992,000

1,818,000

28,810,000

1909

28,037,000

1,863,000

29,900,000

1910

28,552,000

2,152,000

30,704,000

1911

30,732,000

2,811,000

33,543,ooo

1912

32,664,000

4,519,000

37,183,000

1913

31,197,000

4,616,000

35,813,000

1914

28,670,000

5,454,000

34,124,000

1915

29,723,000

7,542,000

37,265,000

1916

29,529,000

8,579,000

38,108,000

1917

26,313,000

10,705,000

37,018,000

1918

23,288,000

n,535,ooo

34,823,000

1919

22,277,000

12,177,000

34,454,000

1920

21,072,000

12,696,000

33,768,000

538,743,000

93,684,000

632,427,000

Thus the Old Rand's production has dropped 35!% since high- water mark was reached in 1912, while the New Rand has shown an increase every year to date. Moreover, the yield on Old Rand

ore has declined from 315. 9d. per ton in 1908 to 245. 8d. at the normal price of gold in 1920; and the profit of 133. 3d. per ton in 1908 would to-day be represented by a loss at that normal price. The New Rand on the contrary has improved its yield and maintained its profit per ton. The result is that the total working profit of the Old Rand, which was 11,224,000 in 1908, is now represented only by the gold premium, while the New Rand has advanced in the same period from 787,000 to nearly 5,000,000 per annum. The latter field, therefore, affords the one instance of real importance of a rapidly increasing output. Incidentally one sees in the above table the result of the efforts put forth to increase the output in the earlier part of the World War, especially noticeable in 1915 and 1916. The fact that so many mines are now being kept going by the gold premium indicates that their production is likely to be severely diminished when the premium disappears. The New Rand is not likely to reach its zenith until about 1930, but the Witwatersrand district as a whole on the present outlook will show a continuance of the fall experienced since 1916, though its life, on a constantly diminishing output, is not likely to end until after 1960.

Gold and Currency. While the producers of other com- modities were able to secure higher prices for their products as the World War went on, and so were able to counteract the rise in working costs, gold-mining companies were not in that happy position. In the Rand district the annual average costs were 173. 6d., 173. iod., i8s. 7d., ips. 8d., 215. nd., 233. id. and 255. 7d. per ton for the years 1914 to 1920, and the normal value of the gold won was but 263. 6d., 263. 3d., 265. gd., 275. 2d., 273. i id., 283. 7d. and 283. for the same years, so that the margin of profit on that normal value was reduced every year from ps. per ton in 1914 to 2s. sd. in 1920. Throughout the war the mines had only one outlet for their gold owing to the system of prohibitions of import and export, the Bank of England taking it at the normal price of 773. pd. per standard ounce. This arrangement was satisfactory so long as costs were not materially higher and so long as the currency received was felt to be worth par. But when it became clear that payment was being made in terms of depreciated paper, and that the Imperial Govern- ment was benefiting by selling the production abroad free of depreciation, the mining companies became restive. In their report of Aug. 15 1918, Lord Cunliffe's Committee on Cur- rency and Foreign Exchanges after the war (see Cd., 9182) had recognized the position, though British currency was not then openly quoted at a discount:

" It is not possible to judge to what extent legal tender currency may in fact be depreciated in terms of bullion. But it is practically certain that there has been some depreciation, and to this extent therefore the gold standard has ceased to be effective."

In July 1918, a committee representing the gold producers of the British Empire approached the British Government and pointed out the rise in working costs, the decrease in output and the fact that the gold was paid for in depreciated currency, and they suggested a special grant in some form during the abnormal times to meet the abnormal conditions. The Gold Production Committee (chairman, Lord Inchcape) was ap- pointed by the Government, reported on Nov. 29 1918, and flatly refused the proposal:

" To give more for an ounce of gold than it is worth in currency appears to us out of the question. . . . We are not prepared to recommend any bounty or subsidy for the purpose of stimulating the jold output of the Empire; gold being the standard of value no more can properly be paid for it than its value in currency."

Thus the Committee, three of whose four members had joined in the Currency Committee's report of three months before, completely ignored the undoubted depreciation in the currency and refused to give the mines the premium in paper which that condition of things justified. The gold producers, however, did not abandon their attitude, and the real depreciation of the currency became apparent when the N.Y. exchange, which bad been artificially maintained at $4.76! to the throughout the war, was " unpegged " in March 1919, and by the end of July had dropped to $4.35. The first to benefit were the Aus- tralian mines, the Australian Government agreeing to remove the embargo on the export of gold for a trial period of three months from Feb. 1919, a period which was subsequently ex- iended from time to time. These mines, in the 16 months to June 1920, produced 1,324,000 fine oz. and sold 1,170,000 fine