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ERY few people realize that Thomas A. Edison is one of the best-informed men in America on the production of gold. Edison is known the world over as America's greatest inventor, probably having done more to make practical the use of electricity than any other living man. He, however, is a much broader man than one interested simply in electrical and mechanical investigations; in fact, he is wonderfully well informed on almost every subject.

Although during the last few years he has had more time to give to general topics than previously, yet it is probably through his chemical research work that he has become interested in the "gold theory"; in fact, he and his great organization in some of their experiments have come very close to discovering a process whereby gold may be extracted profitably from common clay. The tremendous importance of such a discovery has frightened him.

Few men give so little thought to money and have so slight a desire for it as Mr. Edison; therefore it was not the possibility of making gold for himself that thrilled him while carrying on these experiments, but the fear that—should his experiments be successful—he would shake the entire commercial, industrial and investment world to its very foundations. Certainly such a discovery would cause a greater world panic or industrial and social revolution than history has ever witnessed.

This is not all. Mr. Edison's experiments have not been limited to the walls of his laboratory at Orange, New Jersey, as he has spent large sums of money in the South on practical and extensive operations. As is well known, in a certain section of the country there is a kind of clay that contains almost enough gold to make its working profitable. I know of no mines that are being worked at the present time wherein there is less than about three dollars to the ton, although I have been told that some ore has been treated profitably that assays less than this amount. The most important of these great beds of clay run about a dollar to the ton; and when some process is discovered that will enable these dollar clays to be operated profitably something vital will happen to our gold standard.

It was chiefly to talk over these matters that I met Mr. Edison a short time ago in his library at Orange, New Jersey, and listened to the most striking discussion of gold production that I have ever heard. Among the many things that Mr. Edison told me was that under the city of Philadelphia was a stretch of clay, forty miles long, which assayed thirty cents to the ton, and that in this little belt alone there was more gold than all the free gold today in the vaults of the United States Treasury. After telling me about this and other deposits, he spoke of the very limited use of gold in the arts and manufactures; and then, smiling in his good-natured way, he said: "Babson, doesn't it seem strange for the entire financial systems of the world's greatest countries to be founded on a metal for which the only use we have is to gild picture-frames and to fill teeth?"

Of course no discovery has yet been made to use these low-grade clays; but Mr. Edison told me that it is not only entirely possible but very probable that some such discovery will be made within a reasonably short time. The World's Production of Gold from 1874 to 1909, Inclusive Experiments, which he and others are making, are bringing such discoveries nearer every day, and even tomorrow some chemical process may be found successfully to bring about this most wonderful and farreaching result. When it is considered that this clay exists in very large quantities throughout the entire United States, and that even the sea-water is said to contain five cents' worth of gold to every cubic yard, the great importance of the work is self-evident.

Now a word as to the gold theory. At the present time the monetary systems of the world are based on the fact that the Bank of England must, by law, be ready to purchase all gold of standard fineness at seventy-seven shillings nine pence a troy ounce, and that any person can bring gold to our United States Treasury and receive gold certificates therefor on a similar basis. The result of this is that any one having a gold mine is in a different position from almost any one else in the world, as his product is not subject to supply and demand in the ordinary sense, but he can take it to the Bank of England or to the United States Treasury and receive money for it at this fixed rate, which money he can use for the purchase of any goods.

T, THEREFORE, will be seen that if some man should discover an unlimited amount of gold he would not bring down the price of that gold in the terms of money, the same as if he discovered any other commodity, but he could go to the Bank of England or to the United States Treasury and obtain an unlimited supply of gold certificates in exchange. Now it can readily be seen that, although some man might have an unlimited supply of gold and could obtain an unlimited supply of bills from the Bank of England or the United States Government, as soon as the people, who own real commodities—such as wheat, iron and merchandise—became aware of this fact they would not sell him their real commodities at the prices at which they held them before his discovery, but would immediately advance their prices. In other words, the more money he might manufacture the less they would care for it; and consequently they would want more of it for the real commodities that they gave him in exchange. For a ton of iron, a bale of cotton or a bushel of wheat is much more useful intrinsically than a thousand dollars in bills, or even the actual gold that these bills represent.

Of course this is a radical illustration; but Mr. Edison insists that a process similar in principle is now slowly going on—that is, that gold is actually becoming more common; that the miners are rushing it to the United States Mint too rapidly, and that the merchants to whom they offer it are unconsciously feeling that it is depreciating in value and consequently are raising the prices on their goods to correspond. Of course this is hard on those of us who have not gold mines and are dependent on fixed salaries or on long-term bonds, but it is impossible for the storekeeper to have one price for the miner and another for the wage-earner; therefore we must all pay these increased prices.

This great increase in gold production, about which Mr. Edison talks, is well illustrated in the chart that I have prepared showing by a heavy solid line the world's production of gold; by a heavy dotted line the production of gold in the United States, and by a light dotted line the production of gold in the Rand mines. It will be seen how the total yearly production has increased from 5,749,306 fine ounces in 1890. The estimated production for 1910, not shown on the chart, is 23,000,000 ounces.

This increased production is causing a general increase in commodity prices. The increase, however, is equalized throughout the entire world. If wages and incomes could be raised likewise there would be no direct harm from this. Theoretically prices, wages and incomes should all rise together; but unfortunately this is not true in practice.

When this increased production increases too rapidly it is like giving a boy too much money to spend. It causes a certain recklessness among the wealthy and great discontent among the poor, spreading the seed for a financial and social revolution: an effect which, to my mind, is the real evil of the increased production of gold.

The last and most interesting effect is on the investor and the prices of stocks and bonds; and this is best described by Mr. Edison's own words, which I herewith submit verbatim, Mr. Edison having written in longhand these conclusions after very careful thought; in fact, I have his original notes in my possession. They read as follows:

"All the great government, state, municipal and railroad loans of the world are represented by long-term bonds. These bonds are payable in a certain commodity of a certain weight and degree of purity. This commodity has very little intrinsic value—little is used in the arts, it is kept in vaults and shuttlecocked between financial centers, melted, coined and remelted. It is a mobile commodity which is accumulative; has been accumulating since the dawn of history. Its only value resides in the brain of man. All men agree to accept it as a measure. Nearly all other commodities are desirable to meet physical wants which will never change; but gold is a commodity of the imagination.

"Modern methods in mining, modern chemical discoveries, increased intelligence and scientific business methods have led in the last fifteen years and are still leading to the production of an immense amount of gold. Every year the average will increase at a greater ratio; and when science has advanced a little more, the gigantic and absolutely inexhaustible deposits within the low-grade rocks and clays of gold countries will be worked at a high profit. The world's business has increased so enormously that the increased production of gold has heretofore fitted in; but this point has been passed. Gold production will hereafter increase faster than business.

"The mass of this commodity will become a burden. Thinking masters of capital will hesitate to loan money to be repaid at some long period in the future with this commodity. It they loan at all, and place themselves at the mercy of a steam shovel and a chemical works, the