Remarks on the production of the precious metals / and on the demonetization of gold in several countries in Europe

by Léon Faucher

The three great gold districts, which have lately grown into importance, are, the chain of the Oural and Altai Mountains, California, and its extensions to Sonora and Oregon, and the eastern and southern districts of Australia; let us consider each in its order.

The washings of the Russian streams first aroused public attention from the languor into which the question of gold-working had fallen. The deposits of the Oural, where the first discoveries were made, never gave any extraordinary results; the workings appeared almost impracticable above the 60th degree of latitude, and although begun on a great scale above half a century ago, they have remained almost stationary for the last fifteen years; the annual returns, divided about equally between the government and private individuals, scarcely exceeded [56]5,000 kilogrammes.

The Altai gold district was in a very different position; in spite of the rigour of an inhospitable climate, and the difficulties experienced from any work of labour with a scanty population, the development of produce was extremely rapid. Begun in 1828, the result, after the first eight years, was [57]1,722 kilogrammes, but from that time it increased in a geometrical proportion; it rose to [58]4,000 kilogrammes in 1840, to [59]10,000 in 1842, and exceeded [60]20,000 in 1847.

The year 1847 appears to have been the culminating point of the position of gold in Russia. The “Administration des Mines” report a produce of [61]1744 pouds, or [62]28,521 kilogrammes, as the combined working of the Oural and Altai; admitting that one-fifth of the produce escaped the government tax, the result of the gold produce of 1847, would be at least [63]110,000,000 francs. From that time the decrease has been continuous. The official reports of 1848, give the figures at 1,726 pouds, or [64]28,252 kilogrammes; 1592 pouds, or [65]26,077 kilogrammes in 1849; 1485 pouds, or [66]124,324 kilogrammes in 1850; and 1,432 pouds, or [67]78,000,000 francs in 1851. It is to be observed that the reduction refers exclusively to Siberia, east and west; not only has the activity of the workings in the Oural been undiminished, but it has slightly increased: the produce of 1849 was 342 pouds, being [68]244 kilogrammes more than in 1845.

The decrease of production appears to have been principally caused by excessive taxation. The working of the Siberian gold districts is divided between the Government and private owners, and in the division, the eastern side of the mountains has been retained by the former, whilst the latter have worked the western. The result has been an immense loss to the public treasury, for whilst two-fifths of the washings of the Oural are from the government reserves, the Altai districts do not yield above 5 to 6 per cent. of this produce. The Russian government has endeavoured to collect by taxation what is lost either by abstraction or the washings. The tax was at first one-tenth of the net produce; it was then raised to 15 per cent., and has since been further increased. The new tax, however, only applies to Siberia, east and west. It is a progressive rate, divided amongst ten classes, the rate varying from 5 per cent. on the raw produce, when the working was from one to two pouds, up to 32 per cent. when the working amounted to 50 pouds per annum. The whole tax, however, was, in addition to another tax called “minier,” also progressive, and varying, according to class, from four to [69]ten roubles per pound of gold.

These exorbitant taxes may have acted in two ways, either as an encouragement to fraud, or as a discouragement to production. At the distance at which we live from Siberia, a country where the light of public opinion has penetrated even less than the rays of the sun, it is difficult to decide between these two consequences, both perhaps equally probable. But the fact of the decrease remains undoubted, and this decrease has been to the extent of one-seventh in three years, or about [70]4,000 kilogrammes.

The working of the gold regions of Siberia has not been of the democratic character which it has assumed in California and Australia. There the first comer, provided he were furnished with a pickaxe, a bowl, a cradle, and a small store of provisions, might, without further capital, pitch his tent over some square yards of land, and dig until he has made his fortune. With a license costing 60s. in Australia, and with a tax of 20 dollars a year in California, he may go where he pleases. It is not the government which fixes his boundary, but the regulations of the republic of miners, forming a community along the banks of a river, or at the foot of a hill, forbidding one man to usurp a greater space than he can work with his own hands; the miner himself possessing nothing, and therefore, risking nothing, may dispense with all calculations of profit and loss. If the spot he has selected does not answer his expectations, he shifts his ground, or his occupation. Under any circumstances, the tax, not bearing upon capital, and being moderate in amount, is easily paid; a few days work is sufficient for it; the remainder of his time during the year with his bad or good luck, is at his own free disposal. Such is not the case, in the Altai, where the aristocratic forms attaching to all industry, either at the will of the state, or from the force of circumstances, have exerted their influence over the first commencement of working the mineral districts. By the terms of the imperial decrees, concessions are only obtained on special application, and for a term of twelve years, and the portion assigned to each person never exceeds 100 sagenes (about [71]250 metres) by five wersts, (about 5335 metres); the same person may, however, take several lots, provided they are separated by a distance of five wersts. These contractors engage a certain number of workmen, whom they provide with utensils and machinery, besides feeding them and paying them high wages. Everything connected with the arrangements entails considerable advance of capital, and when the chance of a small return, or sometimes of no return at all, is added to the heavy deduction to be paid to the state, out of the raw material, is it surprizing that members of this community are frequently unwilling to extend their operations, and almost always anxious to conceal the magnitude of their working?

It is said, that in keeping up the amount of the tax, the Russian Government has had less in view the advantage of a larger participation of interests than a desire to check a kind of industry very demoralizing in its nature. If such is really the motive, it might be less critically censured. Whatever the reason, so long as the Russian Government considers it advisable to keep up the present taxation, it is not likely that the increase of production of gold will be considerable; it appears to be limited for the present to an amount probably not exceeding [72]90,000,000 to [73]100,000,000 francs per annum.