eserve, and, with its
tremendous debt and no sources of new production, is of course in a
particularly unfavorable position.

The total amount of gold now (1920) accounted for by governments as
money is not more than 10 per cent of the value of the notes and
currency issued against this gold. Before the war it was 60 per cent. In
the United States the pre-war percentage was 99-1/2 per cent. Since the
war it has been 45 per cent. The ratio of gold to currency is now so
small that the gold standard is hardly a physical fact, but is to be
regarded rather more as a profession of faith. Notwithstanding the
recent falling off in gold production, an increment of approximately 350
million dollars is potentially available each year to be added to the
gold reserves. Whether this increment, or a larger increment which may
come from new discoveries, is sufficient to maintain a reasonable
proportion between gold stocks and the necessary normal increase in
paper currency, has been, and doubtless will continue to be, a subject
of vigorous discussion and speculation.

During and immediately following the war, the gold production of the
world showed rather an alarming progressive decrease. About 1915 the
group of three greatest producers--South Africa, United States, and
Australia,--reached the acme of its production, and output then fell
off. Simultaneously there was a marked decrease of production in many of
the less important districts. This general decline was due in
considerable part to the fact that during the war the price of gold was
fixed and its use restricted to monetary purposes. The price of gold,
which is itself the standard of value, could not rise to offset growing
mining costs and to maintain profits, as was the case with iron, copper,
and the other metals,--with the result that the margin of 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