PART VI.

GOLD AND SILVER IN 1923.

1. AN ANALYSIS OF THE PRODUCTION OF GOLD AND SILVER IN THE UNITED STATES IN 1923, BY H. N. LAWRIE, ASSISTANT TO COMMISSION.

GOLD.

The Bureau of the Mint, with the cooperation of the Geological Survey, finally estimates that the refinery production of gold in the United States in 1923 amounted to $51,734,000, an increase of $2,884,900 over the production of last year, but only slightly more than half the record production of $101,035,700 in 1915.

Increases and decreases in the production of gold in the United States in 1923 as compared with 1922, by principal States and sources.

1 Increases and decreases based upon the refinery production of gold in the United States in 1922 and 1923 as reported by the Bureau of the Mint, in cooperation with the United States Geological Survey. In each State the increase in the production of copper, lead, and zinc and the amount of gold normally derived from these metals were used as a basis for the above estimate.

3 The figures in this column are difference figures between the first two columns and the third, checked by an independent estimate of the gold produced from siliceous ores and placer gravels.

It will be noted in the preceding table that the principal increases in produc tion, aggregating $5,235,600, have taken place in States whose gold is derived largely from the base metals-copper, lead, and zinc-all of which have greatly increased in production in 1923. On the other hand, the principal declines, aggregating $2,350,700, have occurred in States which derive gold principally from ores or gravels that do not contain the base metals. This indicates that the production of gold derived exclusively from siliceous ores and gravels declined in 1923.

Independent estimates of the production of gold from siliceous ores and placer gravels presented in the foregoing table substantiate the above statement, the decreases aggregating $3,658,100 and the increases aggregating $1,765,000, making a net decline in the production of gold from these sources of $1,893,100. Therefore, if it had not been for the net increase in the gold derived incidentally from the increased production of copper, lead, and zinc, amounting to $4,778,000, the gold production in 1923 in the United States would have declined to $46,956,000.

The 1913 dollar had a wholesale commodity purchasing power in the United States for 1921 of 68 cents, as indicated by the index number of the Bureau of Labor Statistics. For 1922 the purchasing power of the dollar was 67.1 cents and for 1923, 64.9 cents. The purchasing power of gold having diminished during 1921, 1922, and 1923, the gold-mining industry in this country has been under continually increasing economic pressure, as is evidenced by the continuous decline in the production of gold from siliceous ores and placer gravels. Heavy labor turnovers in many of the gold camps, a shortage of competent labor, and a general decline in the efficiency of labor have also contributed largely in keeping the industry in a subnormal condition.

The 1921 gold production in the United States, amounting to $50,067,300, had an exchange value in wholesale commodities at 1913 prices of $34,045,764; in 1922 the production amounted to $48,849,100, with an exchange value of $32,777,746; while in 1923 the production of gold amounted to $46,956,000 (exclusive of gold derived incidentally from the increase in the production of copper, lead, and zinc), having an exchange value in 1923 of $30,474,444. The marked depreciation in the exchange value of gold indicates the high and prohibitive prevailing production costs which have continually operated to restrict production since 1915. Furthermore, the declines in the exchange value of gold have been greater than the declines in production, indicating that the industry has made every effort to sustain its position in the face of such adverse economic conditions. Meanwhile, however, a great wastage has taken place in gold-ore reserves, mine equipment, and capital invested in the industry, which represents a national loss as well as a loss to the industry.

The net imports of gold into the United States in 1923 amounted to $322,715,812, as compared with $238,294,891 in 1922. Newly imported gold is continually being added to our already disproportionately large monetary reserves, and the consequent demands for low interest rates, which are difficult to resist, will probably result in credit expansion, an increase in the price level, and higher operating costs in 1924.

While the United States has more than half the total monetary gold in the world and more than twice the amount of gold held in 1913, a return to the normal functioning of the gold standard throughout the world will make necessary a redistribution of its disproportionately large gold reserve. Our trade interests will be greatly improved when the gold standard is restored to normal and, therefore, the United States should be prepared to redistribute its gold reserve with as little inconvenience and disturbance to business in this country as possible. To satisfy this condition, the United States must hold a large part of the surplus gold which has been acquired from other countries during and since the war as "free gold" in its reserves, not permitting it to become a basis for credit. Such a policy would not only tend to check inflation, but would insure also the least possible disturbance to business when the gold is released for export, as no credit liquidation would then be necessary. When foreign countries are withdrawing our surplus gold, a normal output of newly produced gold from the mines in the United States would assist in expediting the restoration of the gold standard and still further insure business stability.

In 1915 the United States produced 21.5 per cent of the world's highest production of $468,799,812 and has since contributed a continually less percentage, until in 1923 it has become reduced to 14.4 per cent. With the present outlook for the industry, this country will become a still less important factor in the world's production for 1924. Can the United States afford to lose its prestige as one of the principal gold-producing nations, to ignore the trade advantages and business stability which would come from expediting the return of the gold standard in foreign countries, and finally to become dependent upon foreign sources of supply for the basis of its monetary system?

SILVER.

The Bureau of the Mint, with the cooperation of the Geological Survey, finally estimates that the refinery production of silver in the United States in 1923 amounted to 73,335,170 ounces, an increase of 17,095,122 ounces over the production of last year. The value of the 1923 production, as estimated by the mint, however, amounted to $60,134,839, an increase of only $3,894,791 over that of last year.

The production of copper in the United States in 1923 increased 55 per cent; the mine production of silver-bearing lead in the Western States increased 39 per cent, and of zinc 57 per cent. It has already been pointed out that the

gold production last year would have declined about $2,000,000 except for the increase in the production of base metals. Because of the fact that the base metals, especially lead, carry relatively more silver than they do gold, an increase in the production of the base metals results in a much larger yield of silver than of gold. On account of the income which is derived from the sale of copper, lead, and zinc many ores are mined that in the aggregate yield substantial quantities of gold and silver which would not otherwise be produced. There is, therefore, a considerable quantity of gold and a still larger quantity of silver which would not be produced except for a favorable demand for either one or more of the base metals. These facts as to the source of the precious metals must be taken into account in determining the economic condition of the gold and silver mining industry.

Domestic producers of silver, whether the silver was derived from base metals or siliceous ores, sped up operations in order to take advantage of the $1 price as against the world's market price of about 65 cents per ounce before the expiration of the Pittman Act. Ore that was mined and delivered to smelter bins in the latter part of 1922 and silver-bearing flue dust and other smelter products, which had been accumulating for months, were run through, refined, and the silver bullion sold. Cyanide and stamp mills were cleaned up, yielding silver which had accumulated from past operations. These factors contributed in artificially increasing silver production in 1923.

Increases and decreases in the production of silver in the United States in 1923 as compared with 1922, by principal States and sources.

1 Increases and decreases based upon the refinery production of silver in the United States in 1922 and 1923, as reported by the Bureau of the Mint, in cooperation with the United States Geological Survey. In each State the increase in the production of copper, lead, and zinc and the amount of silver normally derived from these metals were used as a basis for the above estimate.

The figures in this column are difference figures between the first and second and third and fourth columns, checked by an independent estimate of the silver produced from siliceous ores.

It will be noted in the preceding table that increases in production, aggregating 17,095,122 ounces, have taken place principally in States whose silver is derived largely from the base metals, copper, lead, and zinc, all of which greatly increased in production in 1923. On the other hand, declines, aggregating 723,303 ounces, occurred for the most part in States which derive silver principally from siliceous ores. This indicates that the production of silver derived exclusively from siliceous ores probably did not increase much, if any, in 1923. Independent estimates of the production of silver from siliceous ores presented in the foregoing table indicate that a small net increase in production took place, 1728-24-SER 3-17

amounting to 473,833 ounces, the increases aggregating 2,177,860 ounces and the decreases aggregating 1,704,027 ounces. Therefore, if it had not been for the net increase in the silver derived incidentally from the increased production of copper, lead, and zinc, amounting to 16,621,289 ounces, the silver production in 1923 in the United States would have been reduced to 56,713,881 ounces.

The 1913 purchasing power of the domestically produced silver ounce (price $1), in terms of wholesale commodity prices in the United States in January, 1923, was 64.1 cents; February, 63.7 cents; March, 62.9 cents; April, 62.9 cents; May, 64.1 cents; and in June, when it was no longer possible for the domestic producer of silver to obtain $1 an ounce under the provisions of the Pittman Act the price dropped to 65.4 cents, and with it the 1913 purchasing power of the silver ounce dropped to 42.4 cents, July to 41.7 cents, August to 41.9 cents, September to 41.7 cents, October to 41.6 cents, November to 42 cents, and December to 42.8 cents.

It was inevitable that the sudden and extensive decline in the purchasing power of silver which took place in June, at the termination of the Pittman Act, would result in a greatly diminished production in the last half of 1923. Additional proof that the production in the last half of the year greatly decreased lies in the fact that many mines, principally those whose silver is derived from siliceous ores, were shut down during the last seven months of the year. Since there are no intermediate statistics available, it is impossible to determine accurately the amount of silver produced in each half of the year. However, the mint accepted final tenders of silver under the Pittman Act between January 1 and June 2 amounting to 49,834,123 ounces, which substantiates in general the above statement. Based upon the tenders under the Pittman Act, a conservative estimate indicates that not less than 45,000,000 ounces of silver were produced in the first six months and not more than 27,000,000 ounces in the last half of the year. Should either the price of silver decline or the commodity price level increase in 1924, or both, the purchasing power of the silver ounce will still further decline, with continued adverse effects on production and the profitable operation of silver mines.

Further evidence that the silver mining industry is in a serious condition lies in the fact that the 1921 silver production in the United States, valued at $53,052,441, had an exchange value in wholesale commodities at 1913 prices of $36,075,660; in 1922 the production, valued at $56,240,048, had an exchange value of $37,849,552; and in 1923 the production, valued at $46,505,380 (exclusive of silver derived incidentally from the increase in the production of copper, lead, and zinc), had declined to an exchange value of $30,181,991.

Though many mines were shut down during the last half of 1923, the disas trous effects of the sudden drop in the price of silver under the Pittman Act to the present price of from 62 to 63 cents per ounce can not be determined until the industry has fully adjusted itself to these adverse conditions for at least another year. A great wastage, which will probably continue under present unfavorable conditions, has already taken place in silver ore reserves, mine equipment, and capital invested in the industry. It is obvious that such wastage represents a national loss as well as a loss to the industry.

PART VII.

NEW USES OF SILVER.

1. PROGRESS REPORT OF THE INVESTIGATION BY THE BUREAU OF MINES TO DEVELOP NEW USES OF SILVER SUBMITTED TO THE CHAIRMAN OF THE SENATE COMMISSION OF GOLD AND SILVER INQUIRY BY THE SECRETARY OF THE INTERIOR.

PRESENT USES OF SILVER.

The present uses of silver can be divided into four classes: (1) directly in coinage; (2) as a reserve against which paper or base metal coinage is issued; (3) industrially, using the term to indicate such uses as those in the photographic industry; and (4) commercially, using this term to indicate its use as a metal, as for household articles. Any increase in the use of silver would be as the result of increasing the consumption in one of the present uses or finding new uses. This report is confined to the possibility of increasing its use industrially or commercially, using these terms in the senses that they are used above.

Briefly, the properties of silver are that it is a white metal which takes a very high polish; it has conductivity of 106.2 as compared with copper 100; it is very tough and malleable, it being possible to make silver leaf of a thickness of only 0.00025 mm.; it has a melting point of approximately 962° C. and a specific gravity of 10.53. When molten it absorbs oxygen very readily, which oxygen is given up on cooling, causing the so-called "spitting" of the metal. It volatizes at white heat; the pure metal is resistant to attack by caustic alkalies. By action of reducing agents on salts of silver it forms solutions which can be reprecipitated by electrolytes. Colloidal silver may be formed by several reactions.

Silver has been known in the remotest antiquity, and since it is found native in the metallic state it was probably used by some of the earliest civilized peoples. To-day if a new industry is founded it normally has to compete with established industries, and in order to do this successfully research usually of a highest order is essential. This was not true of the older industries. Usually such industries have been very slow to take up research and thereby avail themselves of the benefits derived therefrom. Very little systematic research has been done with the idea of developing uses for silver, except in photography, but rather silver has been allowed to fit into the places where it would satisfy the requirements.

STERLING SILVER.

The principal uses of sterling silver in commerce are for tableware, jewelry, and ornaments and decorations.

SILVER-COPPER ALLOYS.

The principal and practically the only alloy of silver in use are alloys of silver with copper. All the alloys of silver and copper, except the one made up of 28 per cent copper, are subject to liquation or separation of the constituents on cooling. Also copper being a metal easily oxidized does not have any desirable properties as regards nontarnishing to contribute to silver, but rather is more easily tarnishable than pure silver. However, since the silver-copper alloys were developed and put into use before present methods of research were available, it is not strange, due to the fact that copper was known and plentiful, that silver-copper alloys were developed and used.

POSSIBILITIES OF INCREASING USE OF STERLING SILVERWARE.

The custom of buying silver articles for permanent use is well established in Europe, but has not been taken up to anywhere near the same extent in this country. If the American public could be led to purchase and own as much