Most gold mines shut down right before The Fed was created?
 

I was talking to my dad this weekend. He has a number of gold mines in Oregon and we were looking through the BLM book concerning all the gold mines in oregon and a good percentage of them shut down in the period of 1907-1912.

Up until now I always though that this occurred because of WW1 arriving...

My theory now is that once the debt based system (The Fed) was realized then all the investors pulled money out of mining and put it instead into corporate America and capital investments.

Any comments on this theory?

Re: Most gold mines shut down right before The Fed was created?
 

I disagree. While many mines may have shut down 1907 - 1912 in Oregon, that did not reflect the state of gold mining in all the US. In Nevada, California and Alaska, gold production was high and growing during the period you mentioned. New big finds of the 1897 (Klondike) through early 1900s (Tonopah and Goldfield Nevada), plus the new technology of bucket line dredging increased the output in California and elsewhere. Gold mining actually hit about a 30 year peak in production during 1916.

Inflation was growing all that time, but the price of gold was held fixed at $20.67 since the country had been founded in the 1700s. No new big finds and increased costs began to close mines in the mid teens, and was greatly accelerated by the inflationary effects of WW I. Output dropped sharply in 1918, and continued to decline until the dollar was devalued in the 1930s. Gold production was at an all time low when the great depression struck in 1929. When the price of gold was raised to $35, production increased sharply as mines were profitable once again. Gold mines were closed by the government in 1941 in an effort to force the mine labor into war oriented industries. After WWII, high inflation with a fixed gold price once again killed gold production until the prioce was allowed to float in the 1970s. Soaring inflation with a floating gold price led to high gold prices and increased production in the late 1970s and all through the 1980s.

Chris

Re: Most gold mines shut down right before The Fed was created?
 

thanks Reno Chris