Foreword

The treatment gold has received by the United
States government in the past few decades . . . or
ever since the first administration of FDR ... could
easily be designated a crime, and the perpetrators
traitors to the American people. During that era
encouraged inflation has lost these same people close
to 200 billion dollars' in purchasing power.
At the same time our government has refused to
revalue gold to meet the commodity inflation. Neither
has it given consideration to the extra load gold has
been forced to take in handling free world finances.
Adding further injury the FDR administration made it impossible
for America's gold mines to aid by shutting down domestic production.
This was done by Roosevelt's infamous Gold Mine Closing Order L-20S.
He also made it a crime to own or hold gold, ordering it all turned into
the Treasury. One year later FDR raised the price, thus cheating the
owners of the turned-in gold to the extent of $14.33 per ounce.
Then came the Bretton Woods Agreement framed by Communists
in our government employ. It made our donars spent in foreign countries
convertible to U. S. Treasury gold. Our money spent guaranteeing the
safety of foreigners gets like treatment. Likewise American investments
building foreign industries leaves a trail of dollars subject to conversion
to U. S. Treasury gold. Mter converting over nine billions of them there
remains over $27 billion awaiting the conversion process when we don't
have the gold for that purpose. Even using the $12.3 billions legally
needed to back Federal Reserve Notes and Deposits we don't have
enough to make the conversion. This is the plot agreed to by our so-
called monetary managers. What a hold this gives foreign banking in-
terests on our taxpayersl
This volume, while partially fiction, as to its main characters, brings
out undeniable evidence of the above charges. Monetary conditions
described have been approved by Congress and past and present admin-
istrations. Specially named congressmen, by their own admissions have
given their blessing to the Treasury getting rid of all U. S. gold and
putting the nation's vast debt of $315 billion and inflationary losses on
the taxpayers' property and savings.
It is a story of a young New York newspaperman who wanted to go
gold mining in California. It brings out what Washington has done to
a basic industry while relating the mining adventures of its principal
character. It is highly factual, the result of the author's thirty years'
experience in mining publicity.
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Chapter Numbers and Titles
The New York Newspaper Strike,
Gold and Money.
Love's Labor Lost.
Off For California,
E Clampus Vitus,
John Collins - Gold Miner & Economist.
Is The War Emergency Over?
The Banker and the Miner,
Devaluation and the Investor,
Joe and The Mine Broker.
Bureaucracy and The Miner.
George Holmes, The Prospector.
The Coloma Discovery.
The Dogtown Nugget.
Oroville, The City of Gold,
Mining and The "Prudent Man".
The Prospector and the Girl.
Grass Valley, The Depression's "White Spot".
The Mother Lode Gold Country.
What Constitutes A "Discovery"?
The Abandoned Mine Shaft,
The Prospector's Letter To A Congressman,
Geophysical Exploration in Mining.
The Test Case on the War Emergency.
Joe Hears About a Real Gold Mine.
Master-Minding the Gold Drain.
How Does Senator Barry Goldwater Stand?
'Governor Nelson Rockefeller and the Gold Miner.
Prospector Joe Has A Visitor.
The Plot To Give Away All U. S. Gold.
Senator Bible About the Gold Give-Away.
IMF Talks "Liquidity" But No Gold Raise.
Joe Prepares For His Battle With Bureaucracy.
Joe Faces the Bureaucrats and Wins.
Prospector Joe Makes A Real Deal.
U. S. Ignores Its Gold Wealth.
Liberals Would Scrap All U. S. Gold.
The Assassination of President Kennedy.
Prospector Joe's Congressional Report.
The Happy Event.
Any part of this book may be reproduced without permission, but with due credit.
Copyright ® 1964 by J. P. Hall.
2
CHAPTER 1
The N ew York Newspaper Strike
R
ETURNING from a dismal day spent at Typographical Union head-
quarters on the 49th day of the New York newspaper strike, Harold
Wilson and Joe Bacon, news writers on one of the nine struck news-
papers, were more than disgusted with the situation. The lack of their
weekly pay checks had run their savings accounts to low levels. They
and their families had passed a dismal Christmas and entered a new
year without any prospect of their jobs opening up.
On that 49th day of the strike Harold took some encouragement out
of an AP report reading:
WAGNER STEPS INTO NEWSPAPER STRIKE
NEW YORK - Mayor Robert F. Wagner offered yesterday to person-
ally conduct marathon mediations aimed at settling the city newspaper
strike now in its 49th day.
Shortly after a two-hour joint negotiating session brought reports on
no progress from striking printers and publishers, Wagner issued a call
for the marathon sessions.
''I'll personally sit with both sides and will be available at all times
and will emphasize that they must stay here until an equitable settlement
is reached," Wagner said.
"I don't see much chance of the Mayor doing anything for us",
moodily said Joe. "A politician can't take sides; he's got to take both
sides and play the middle."
"Well," responded Harold, <eHe may get some place. Anyway it's
better than waiting for something to happen. I have a home and a
family to support. I will say the folks did their best getting by Christmas
with very little of the usual remembrances as far as presents are con-
cerned. Mter almost two months and no pay check they realized that
it will soon be a matter of eating with no money for the rent collector."
"It's a tough dear, said Joe. "1 haven't a home and a family to sup-
port like you have and I don't like the deal we have to put up with -
going on a strike every time a bunch of hot head Labor leaders want
to show their strength. The printers are now getting $145 a week - and
a short week. How can they expect more? The newspapers are right;
it isn't in the business to pay more. They have tried everything: using
a lot of pictures, big headlines and a fatter linotype slug. Ad rates are
out of sight and if the printers win they will have to go up. I for one
am thinking of trying something else and not in New York. I think I
can bid it Goodbye with a lot of pleasure."
"Reh! What do you mean"? questioned Harold. "You have been a
N ew York news hound so long that you could not make it at anything
else or in any other place".
«That's what you t h i n k " ~ quickly responded Joe. "I'm fed up on
depending on striking printers to make up their minds and with the
Big City's everlasting snow. I am going to sunny California".
3
\Vhile Joe's decision was not exactly a bombshell it did take Harold
by surprise. He had always known Joe to be rather impatient and a non-
conformer. With a natural ability he, went through school with ease but
not with high scholastic honors. He didn't appear to be interested. And
while he made a good newsman he never felt happy complying with
usages and customs particular to newspaper work. He loved outdoors
and although the New York area did not supply locations for the hobby
of rock hunting, Joe gathered quite a collection and in quest for speci-
mens he began to get interested in mining. He read mining books and
was especially intrigued with a gold-covered monthly magazine from
California.
With no real attachments holding him in New York, Joe had really
been attacked by the gold bug. Reading of the many gold strikes on
and off the famous Lode of California, he became an enthusiast.
Of course the publications he read did not recount the hardships, the
labor and the costs of the industry. It was the pictures they drew of the
outdoor, free and easy life of the prospector in acquiring a gold claim
on the land that was free, which more than offset disadvantages. He was
sold on California and the seemingly unlimited prospects in gold mining.
When he told of his plans, already made, Harold was ready with
"J oe, you have been reading too many stories of the gold discoveries of
the ' 4gers. Gold mining has been going on in California for 115 years
- ever since James W. Marshall of Marshalltown, Iowa, made his dis-
covery at Coloma, EI Dorado County, on January 25, 1848. The for-
tunes were made in the early 1850's when you could scoop the gold up
off the surface. It wasn't many years before those who went to the gold
fields had to turn their attention to other work. It was either that or
start real digging into the bowels of the earth. It's a hard game when you
consider the facts. If I were you, Joe, I'd do some more thinking".
"My thinking is all done", responded Joe. "The reading that I have ..
been doing tells me California has 90% of her gold still in the ground.
The state has produced over two billion dollars worth which means
there is still eighteen billions left. I'm going West to get my share".
"Furthermore," continued Joe, "I don't want to work with any part
of Labor that will bring upon the people of a city of the size and im-
portance of New York such a catastrophe as the printers' union has
done. It goes against my grain".
«For once I can agree with President Kennedy when he says:
strike has long passed the point of public tolerance' ".
"1 too, agree with President Kennedy but more concerning the strike
has come to light in a statement issued from the office of our typo
president, Elmer Brown. It's in this evening's paper, read it".
COLORADO SPRINGS, Colo. to arbitration.
Elmer F. Brown, president of the Inter- Brown issued his statement to news-
national Typographical Union, said yes- men after President Kennedy said at his
terday striking printers in the New York news conference that the 75-day-old
newspaper strike would have to vote on strike had «long passed the point of
whether the dispute should be submitted public toleration."
4
«Ours is a democratic union," Brown
said, Hand Mr. Powers shouldn't be con-
demned. He only acts in the way the
membership of his local union wants
him." He referred to Bertram A. Powers,
president of the New York local, who
was criticized by Kennedy.
Brown said, HIt leaves me a little cold
to have somebody (President Kennedy)
condemn us and say we are wrong and
then ask us to find a third man to concur
with him (Kennedy)."
«Anyone who attempts to lay the
blame on our union or any attempt to say
the black-out of newspapers was caused
by the union has forgotten the facts or
didn't know them," Brown said.
Brown reiterated that the union did
not strike five of the metropolitan news-
papers.
"Ever since the strike took place our
union has· constantly told the publishers
of those five newspapers the printers are
ready to go to work on these newspapers
under terms of the expired contract."
Brown asserted, "If there has been any
lack of collective bargaining, it lies at
the doorstep of the New York Publishers
Association and not the typographical
union. We are ready to start bargaining
at once and stay bargaining until a con-
tract is negotiated."
"No doubt there is considerable truth in what our union president,
Mr. Brown, brings out; and he isn't scared to tell the White House
about it, but that isn't settling matters in any way. I'm fed up and 1 am
definitely off to California as soon as I can get ready," said Joe .

CHAPTER 2
Gold and Money
HI think, however, you'd better give the idea some more thought,"
suggested Harold. "I talked to a man the other day who has just made
a trip all through the gold areas of California. He says there is no min-
ing going on, the mill buildings are dilapidated with most of the mines
marked only by dumps of rock that contained no gold. 'Waste dumps:
he called them. He talked to a lot of people on the Mother Lode who
gave the impression that there was no interest in gold mining.'?
«That's just the time I want to get there", said Joe. "The time to go
into any business is when everybody else is off on it.?'
"'I don't think that will hold true in gold mining", responded Harold.
"The administration has found out it can get along easier with paper
money. Gold costs too much; too hard to get. When they can print
money why do all that hard digging?"
"That's the way it looks now but wait till the settling up time", re-
sponded Joe. "Even now when foreigners get our paper dollars they don't
rest until Uncle Sam has converted those dollars into gold. They are
smart and we are the dumb-bells. No nation can have a substantial
money without gold. Look at China before the Commies took over.
I remember what Clair Engle, the California congressman, told w h ~ n
he and a party of government men came back from the Far East. They
went out for an evening but first had to visit a bar for a drink. 'We had
5
one round of drinks', said Clair, <that cost 100,000 yen and we tipped the
bartender 10,000.' China was once a rich and powerful nation. I won-
der if our Washington officials ever think that what happened to the
Chinese yen might also happen to the U. S. dollar."
Harold was impressed. Joe's logic sounded good, but Harold dis-
missed it with, «That all may be so but one more gold miner out in
California will have a hard time to stop the Washington trend.»
<1 don't expect to stop the trend", answered Joe. "The Washington
gold shifters will have to learn that lesson themselves. I can't get away
from the idea that the country will be forced to get back on the gold
standard, but it will be when gold is worth much more than it is now.
I want to get into the business before U nele Sam quits his Rip Van
Winkle. While Uncle sleeps somebody has done a good job of brain-
washing most of our officials. Gold has been good for thousands of years
and we can>t get away from it. That idea is pretty firmly set in my mind
and I want to cash in on it."
"But why California", said Harold. «They tell me they have been
mining gold there for the last 115 years and the mines are all worked out",
"That's communist and international propaganda which California
people haven't done anything to offset. I don't say that California offi-
cials are fellow-travelers but they have let a lot of brain-washing get by
without contradiction. They have been leaning too far to the left when
a proper stand would have been very helpful. When in 1933 FDR called
in all the gold at $20.67 per ounce and when he got it all, upped the
price to $35, not a man in high office said a word. That move cheated
the owners of the gold $14.33 per ounce. And when he issued his gold
mine closing, order L-208, there wasn't a voice raised in the entire Con-
gress, even though the order was unconstitutional. Roosevelt was a tool
for those who would wreck the nation that had the most substantial
monetary system of the world. The results of his acts are still at work.
There's still a chance for us to pull out - if we can get a Conservative
in the White House that isn't the tool of the Internationalists. And I'm
telling you right now our Governor Rockefeller isn't the man."
«Boy! For a sourballed newspaper hoy you are hitting the political
road in great shape", said Harold. "If the hig boss knew you could talk
like that he might have made you the number one columnist, and you'd
now be forgetting all about California gold. And, Joe boy, Washington
international politics doesn't change the gold mining situation in Cali-
fornia, or in any other state. I'm afraid ifs washed up and you're in for
the number one disappoinment of your life. There's no future for West-
ern gold mining - and especially for a tenderfoot. You have been reading
that gold-covered journal from California too long."
"It's true," admitted Joe, «I've been a constant reader of that publi-
cation for more than the past ten years. I'd like to meet the fellow that
puts o u ~ The Journal. I think he's got plenty on the ball. He writes as
if he gets around and gets real information about the gold possibilities
of his state. And he isn't bashful about letting the folks in Congress
6
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know how they are standing for the ruination of not only Western gold
mining but also the monetary system of the USA:'
«I can't help but agree with you that the present gold program is bad
for all of us as well as for the gold miner, but I think that California
publisher kind a strings a long bow sometimes. Some of his mine articles
and discoveries may be stretched like the Treasury dollar. They may
be circulation getters. You've been a news hound long enough to know
how that is."
Harold was having a hard time to shake Joe's confidence in the
Golden State mining publisher. Joe was loaded with information he felt
was true. He led off with a mining engineer's statement that 90% of
Cal£ornia's gold was still in the ground. He quoted the late Walter Brad-
ley, for many years State that there were only two places
in the great Sierra Gold region where gold mines had reached any con-
siderable depth - and they were still in are when Washington made
them quit mining.
When Joe got started there was no stopping him. He quoted another
noted placer mining engineer, James D. Stewart of Gold Run, Placer
County, who stated one small county had 600 miles of ancient river
gold bearing channels that have never been touched. He told the story
of the Western Pacific Railroad's Spring Garden tunnel in Plumas County.
The tunnel cut right through an ancient gold bearing river channel.
And it was loaded. Every time a tunnel worker picked up a good sized
nugget, fearing his foreman would take it, away he went to another job.
The contractor hired six different crews before the tunnel was com-
pleted. Even after that small boys panned the gravel under the rails
when a watchman wasn't looking. Later to hold the flow of water and
keep the panners out, the tunnel was heavily cemented.
"But that didn't destroy the channel", added Joe. "It has been traced
for over 300 miles and it still carries its gold. Much of this is govern-
ment land, open to public entry, which means Y'?u can locate a mining
claim on it. Of course the government boys are not saying much about
this. They don't like mining claims. Washington's refusal to pay a world
price for gold is part of the communist plot to stop private development
of the gold mines."
"Conditions right now are looking that way", admitted Harold,
can you succeed when you have to face such conditions favored by your
own government?"
"Well, my Irish is up and I'm willing to take a chance. I just read
about a man by the name of Baker, who with three Sacramento friends,
out of work during the Big Depression, struck it rich. They started
mining in Mariposa County with a combined capital of only $1,500.
They had the Diltz mine, six miles out of Mariposa, and before their
money was gone they hit it big. Their first strike brought them 46 pounds
(not ounces) of gold. That mine is still there. I thhik I could find
another Diltz in Mariposa County. I have a letter from a Hollis Ander-
son, Horse_ Creek, Siskiyou County, who says the nuggets up his way
7
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are as big as hen eggs. I'd like to get up that way and call on Hollis.
And maybe you might think this is a joke. A miner, Francis Schultz,
near Greenville, Plumas County, had to cut his operating season to 66
days because of his mounting income tax. He reported he and his wife
took out $22,000 in that short season. He told a mining meeting at
Quincy one evening he was getting $100.00 per ounce for his nuggets.
He said ever so often a man came from Chicago to buy his gold. It was
all put out on a table, he said, and separated into three piles: large nug-
gets, medium sized and smaller gold. For the first pile he was paid $100
per ounce; $85 for the second lot and $50 for the smaller gold. So you
see, Harold, the government's price of $35.00, one thousand fine, doesn't !"
apply to all gold. This man Schultz was mining and selling placer gold
- gold in its native state - on which for price the sky is the limit."
"It all sounds good", commented Harold, "but I'd take it with a grain
of salt - not gold. Maybe it will be best for you to find out for yourself" .

CHAPTER 3
"Love's Lablor Lost"
T
hat evening Harold broached the subject of Joe's leaving to Evelyn,
his wife, who for sometime past had been unsuccessful in getting
Joe interested in some of her girl friends. She had him to dinner, along
with eligible girls, on a number of occasions, but while Joe was good
company the get-togethers were without the results Mrs. Wilson had
hoped for. HI thmlght Joe had his mind on some far-away project when
we had him meet Millie Manning. There's a girl who would make him
a fine home and loving wife. I'd better give that boy a piece of my mind.
If he goes to California it won't be long before one of the fast-working
western gals will have him tied up for life.
HI think Joe really liked Millie. I know she was impressed with him.
I was talking to her today. She wanted to know what had become of
him. She has her mind set on a show date for the end of this ,veek.
Maybe we could have them to dinner that evening. A dinner and a show
might give Joe something except California to think about. I know if
I were a man Millie could cause me to forget a lot of things. Let's talk
it over with Joe."
"I'll try anything to get him to change his mind", answered Harold.
''I'll meet him this .morning and see what I can do. I can't promise any-
thing as he is pretty well fed up on the strike and the winter. It will take
some effort to change his mind about California. If Millie can do it I
take my hat off to her."
Admitting that it might be too late to switch Joe's plans the plotters
went to work. Harold said he had one more ace in the hole about the
8
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gold situation, which, combined with what Millie might be able to do
could do the trick.
Continuing with Evelyn he said: "That gold-covered mining magazine
that Joe reads has him sold on the idea that the price of gold must be
raised. He wants to go west before that happens where he knows he can
pick up a mine on his own deal. Our friend Congressman Ben Goodwin,
for whom I plugged in our sheet last fall, is now on the Banking & Cur-
rency Committee. He should know what Congress is going to do about
the gold situation. If he says, 'No soap' it might cause Joe to change his
mind. He's been counting on that raise. Congressman Ben is home for
the weekend. I'll call him. That's my last chance."
The next day Harold thought he ,vas all set and primed to cure Joe
of his desire to go gold mining in the far 'vest. He had spent two hours
with his friend the congressman and taken on what he believed to be
the inside information on what would happen to the gold price. He
went to Joe's apartment and found him packing. He had planned an
easy approach, but with the information he had gathered, direct from
Washington, he felt that before he was finished he would have Joe con-
sidering a change of mind.
"You remember Ben Goodwin who can really thank our paper for
landing him his seat in Congress, representing our district. He now is
a member of the House Banking & Currency Committee and although
he would not commit himself on how he personally stood on what you
would like done about the gold price, he gave me much information on
which he judges there will be nothing done, not only in the present
session but in any session to come. He says is just isn't in the cards.
"The Republicans under Eisenhower refused to consider all the bills
that had to do with gold and money. Then when Kennedy was elected,
the powers that be - the Treasury and the Federal Reserve Bank -
wanted the same monetary program. They didn't want any changes so
they induced Mr. Kennedy to appoint a Republican and an Eisenhower
man, Mr. Douglas Dillon, Wall Street banker, to the post of Secretary
of the Treasury. The management of our gold and money couldn't be
trusted to a president so young as Mr. Kennedy. Harvard ideas on such
an important function of our government as its monetary management
couldn't be allowed to enter. The monetary program of the Eisenhower
administration, framed by the Money Managers, had to go on.
"There has been much talk of the gold drain during the first years
of the Kennedy administration but it doesn't begin to compare with that
of Ike's last two years. Mr. Goodwin is of the opinion that as this gold
leaves for foreign shores it gets into Central Banks of Europe and will
finally land in the coffers of the International Monetary Fund and its
One World Bank. This was the real intention of the Internationalists
when our Congress was induced to approve the infamous Bretton Woods
Agreement, held at Bretton Woods, New Hampshire. When that deal
was signed we had $ 2 4 3 ~ billion in gold in the U. S. Treasury. The inter-
nationalists who met at St. Simon's Island, off the coast of Georgia, had
no other idea than to get control of America's gold, all but 6.8 billions
9
of which had been purchased from foreign countries at a price increased
from $20.67 per fine ounce to $35.00. Those foreigners made a hand-
some profit of $14.33 per ounce. The same process is again working;
the Internationalists want U. S. gold on the other side of the Atlantic;
and they want it at no raise in price, even though it is worth much more
in their countries. That is the monetary program now approved by our
money managers and Congress has to take their orders. The Banking
& Currency committees are not going to act on any bill that would up-
set that program."
Joe listened attentively and was impressed with the information Har-
old had received from their friend in Congress. With Ben on the Banking
& Currency Committee he should be on the inside. After all if there
isn't going to be a raise in the price of gold all those closed gold mines
in California are going to stay closed. And I don't want a closed gold
mine, thought Joe. Maybe some more investigation won't hurt.
In the meantime Evelyn and Millie were busy with their plans. They
took Harold into their confidence who invited Joe to dinner for the fol-
lowing weekend, explaining that Millie was to be there too. As Joe had
delayed his preparations for his trip West a slight diversion wouldn't
hurt; any way, seeing Millie again would be enjoyable. She·s a nice girl
but at the present time girls didn't £it into his plans. His immediate
job was to get more inside information on what really was going to
happen to gold. That was a problem as everybody in New York and
Washington was either sold on the international plan or afraid to take
a stand on keeping the nation's gold for what our founding fathers in-
tended - the basis of our money. Joe had read of Dr. Franz Pick of
Chicago in the gold-covered Journal. He recalled his statement that
you can't believe the half truths the Treasury put out. He further had
read in the Journal about the doctor's interest in gold. One California
producer ha called on him for information on the world's gold situation.
He got it but a half hour of it cost $150.00. He read also that Dr. Pick
had conducted a symposium, attended by executives from all over the
eastern states. The doctor collected $950.00 per hour for that session.
Holy: cow, thought Joe, I couldn't listen to the doctor for five minutes.
No doubt he has published his information. I will have to check.
Evelyn's dinner date came. Millie had spent the afternoon with her,
helping in the preparation, missing few opportunities to dscuss Harold's
plans to prevent Joe from going to California. Joe really enjoyed again
meeting Millie. With her he could forget about gold and California for
one evening at least. He was surprised, however, when she began asking
him about his plans to go mining. She had never before shown any i n ~
terest. He enjoyed telling her of what he had learned and of his plans.
An interested listener was a novelty. It was a decided change from all
his discussions with Harold. He really felt cheered. Occasionally Harold
threw in some doubts about the future of gold, crediting his friend, C o n ~
gressman Ben Goodwin, but apparently they had no effect on Millie.
There was no lag in her interest. In weeks Joe hadn't had such encour-
agement and wnen the discussion turned to a weekend show in which
Millie was interested Joe felt happy in asking her to see it. He included
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Harold and Evelyn in his invitation but they decided to forego the
pleasure. Harold had a letter to write and Evelyn had the dishes to do.
The show was good. Joe and Millie agreed that it was the very best
they had seen for some time. On the way home they discussed it with
a lot of interest. Joe admitted to himself that it had been a long time
since he had had such an enjoyable evening. He was ready to agree with
Evelyn that go a long way before finding as nice a girl as Millie.
His interest grew as she began asking him more about gold and Cali-
fornia. By the time they reached her home she was still very much
• interested in Joe's plans.
;
p.
cCOutside of this mining magazine you read, have you any further
information about the gold mines of California?" questioned Millie.
Joe admitted it was his only source, it had been owned and
operated by one person for the past 30 years. e I will admit that a begin-
ner is apt to make some mistakes and put out misinformation but after
30 years a publisher could be depended upon to print the truth:'
Millie agreed with Joe's deduction but said, «Nevertheless you will be
a tenderfoot in California and there will be lots of sharpers ready to.
take you. I do hope you will be
Joe was more than pleased with Millie's interest. He did not expect
it. Perhaps in the past he had overlooked a friendship that would have
meant much more. It was late but Millie didn't appear anxious to end the
evening. ('Ies been a most enjoyable evening'" said Joe, ,ethe nicest I've
spent for a long time. Before I leave I have matters to look up. If right
with you I will see you again soon and let you know what conclusions
I have reached. Harold has gained some information that may cause
me to change my plans."
«You know I'm interested, Joe. I've always been, so do call again.
I want to thank you for a swell evening." With that Millie expectantly
looked up at Joe who did not disappoint her. The kiss she returned.
Joe promised to see her again soon but had his mind deep on deter-
mining where he was to dig up the information to off-set that given Har-
old by his friend, the congressman. He remembered reading in The
Journal that Canadian mining favored devaluation (raising the price of
gold) . Their country experienced a benefit when their dollar dropped
from $1.06 to 92 cents. They favored further devaluation. Joe had often
seen The Journal quote the Northern Miner of Toronto. Going to his
favorite library he found a complete file of the Canadian paper. He was
encouraged by noting that each month it carried a copyrighted article
by Dr. Franz Pick, the man who said the Treasury Department can't
tell the truth.
Dr. articles not only contained American monetary information
but from all over the world. They showed how foreign conditions af-
fected those locally. Joe soon discovered that Dr. Pick is a prime critic
of the method in which the United States is handling her gold problem.
He proved in each monthly article his statement about the
11
being unable to tell the truth. He brought out that in the Treasury's
Daily Report it failed to deduct a huge loan of $800,000,000 in gold from
the International Monetary Fund or the resultant gold losses from trading
dollars for foreign convertible currencies. He brought out that no matter
how the United States puts out dollars the only way they can be re-
deemed is by conversion to gold. The dollars that are now awaiting
conversion have totalled up to over $27 billion, with less than two billions
left for conversion. Dr. Pick held there was no way out for the United
States except a raise in the price of Treasury Gold.
Fortified with the information he had gained from a Canadian
paper he went to see Harold. His July issue of California Mining Journal
was in the mail that morning. A page one editorial backed up the N orth-
ern Miner's findings. It sure hit the target, thought Joe. I'll feed Harold
a dose of that. It read:
W
ith its refusal to immediately
consider a monetary reform
that would include a raise in the
price of gold, the Congress of the
United States is in a disservice to
national economy. Contrary to the
Constitution, it is leaving the man-
agement of the taxpayer's dollar to
a group of private money changers
bent on selling us out to the Inter-
national Monetary Fund. The plan-
ned sell-out is not to strengthen
world finance but to gain private
control of it. With such a move will
go the American taxpayers' ability
to pay. Congress as a whole must
be charged with this outstanding
sin of omission.
This is not mere talk but the
result of 30 years of observation.
One outstanding action in Congress
will prove the above. Rep. Wright
Patman of Texas, now Chairman of
the House Banking & Currency
Committee, several yea r sago
brought out that the Federal Re-
serve Bank was about to distribute
to its 14,000 member banks a batch
of $15 billions worth of cancellable
bonds, - bonds On which you and
I are paying interest and will have
to some day pay in principal also.
Patman introduced a bill to stop
the distribution and have the bonds
cancelled. When the House voted
on the measure, out of 437 votes
only 60 favored the bill. Has there
ever been a more outstanding ex-
ample of what Congress is doing
to the American people?
Western and California Congress-
men are the leading sinners. They
are definitely afraid of taking steps
to stop the Communist plot (fram-
ed by Communists Hiss & White)
now shifting our gold into foreign
hands. Last fall Western Congress-
men tried to calm Western gold
producers with bonus bills which
would take away the jurisdiction of
newly mined gold from the Bank-
ing and Currency Committees.
They are afraid to openly oppose
the «Invisible GovernmenC - Com-
munist led - now wrecking the
national monetary system and load-
ing the results of the wreck on the
taxpayer.
In the meantime the administra-
tion, in order to substantiate its
claim that the gold drain has been
stopped, is trading dollars for for-
eign 'convertible currency to meet
the gold call. This deal wore out
as three of the foreign "swappers"
became afraid of the dollar, and
now the Treasury Dept. is trading
bonds for IMF gold so it can fur-
ther lie about the gold supply. This
12
..
..
..
lie is told every day in the Treasury
report, yet Congress is afraid to
even whisper about it.
Unless Congress is willing to put
our Money Changers on record as
selling out the nation in compliance
with a proven Communist plot, the
national economy is due for wreck-
ing. Further, when the gold is gone,
nothing remains but our taxpayers'
properties and savings to meet the
call of the Internationalists.
Joe asked Hal to review what his friend, the congressman, had told
him. He was all set to show that either Congressman Ben didn't know
the truth or like practically all other congressmen was taking orders from
the 'Money Changers'. "Your friend has a good line", said Joe, "and one
with which banking and business have brainwashed the public for a
long time. The Eisenhower boys always made a big play for a 'Sound
Dollar' and now with the present administration crowd it's and
Prosperity'. Hal, old boy, do you think we can have these things if we
let all our gold get into the hands of foreigners? Do you think we can
have them with only paper money? Will our paper money be worth
anything without a gold backing? I don't suppose Congressman Ben
told you that right now foreigners are holding 27 billions of our dollars
for which they can demand gold. Ben didn't tell you that as of now the
Treasury hasn't much more than two billion in gold with which to pay
off the 27 billion."
«Y ou must be wrong about that, Joe," said Harold. «I checked on the
Treasury's Daily Report this morning which states that Uncle Sam still
has practically $16 billion in gold - $15,928,000,000 to be exact".
"That sounds fine", responded Joe; "just more brainwash. Add the
gold we have borrowed from the International Boys and several European
countries: deduct $12.3 billion legally needed to back up Federal Reserve
Notes and Deposits and the amount available to continue converting the
dollars held by foreigners has dwindled to very close to only two billions.
How long will that last with Mr. Kennedy stating that going in the hole
about a billion and a half a year gives us a healthy economy? No, Ben
didn't tell you the whole story."
"If all that's true", admitted Harold, "I guess our friend, Ben, hasn't
told me the whole story. Just what will happen when our gold gives
out? Maybe you know more about it than Ben does."
"Well you just have to use your horse sense. As long as every nation
in the world uses gold as the base of its money it will continue to be
the most valuable part of our economy. If you don't have gold to back
up your paper, your nation will not only have a weak system but event-
ually will collapse. That's been proven in every nation of the universe
in the last two thousand years. It's a mystery to me why our Congress
will continue to remain quiet while our gold continues to disappear.
And don't depend upon the Treasury to tell you how much gold we have
left. It doesn't even tell our congressmen the whole story; but I blame
them for being afraid to dig into the truth."
«I hope you are right", countered Harold, "'but I had no idea you had
13
gone so deep into the subject. And I blame other folks for not
knowing of the situation when even our congressmen keep us in the dark.
If you still want to go to California let me hinder you any longer.
The strike is already nearly three months old with no change in the sit ..
nation. I hear some of the New York papers will not be able to resume
publication even if the strike does end, s'o the whole darned situation
looks dark. You have my best wishes on your trip to the Golden West.
Keep us in touch; maybe I could write a book on your adventures. If
things get better here I may be following you. Best of luck!"
Joe felt much better that his pal, Harold, was seeing things his way.
He wanted to call on Evelyn and Millie before leaving. He wondered
how much there was to s interest in him 'and California. He talked
it over with Evelyn who assured him she believed Millie liked him very
much. Joe dated Millie for the following evening.
The bright and cheerful manner in which she met him encouraged
him to tell her he was leaving soon for the West. He told her of his
final talk with Harold and after more talk about California and the gold
mines, asked her how she felt about joining him when he had made a
home for them. She was disappointed.
C<I thought the way you felt the other evening you were very much
interested in my western plans
n
, said Joe.
am more interested in you as a New Yorker", answered Millie.
I would like you as a New York newspaper man, not as a western miner.
All that I have read of the life is that it's a hard one. And I
leave New York. I have too many friends here. I don't think
you will like it either and when you come back 1 will be glad to see

you agaIn.
Joe was relieved. His interest in Millie hadn't grown to any great
extent but still he thought he should find out how she felt. If she wasn't
willing to join him in after he had established a home then she
loved New York more than she did him. He could now leave for the
West feeling that he hadn't broken any hearts.
Before Joe left for California, Harold had some good news for both
of them. Congressman Ben Goodwin lost his news writer in his Wash-
ington office and offered Harold the position. It paid far better than
his newspaper job.
"It's a Godsend and I'll take it", said Harold. "A strike settlement is
just as far away as it was a month ago and I'm out of money. 111 leave
the family here for a while and hit for Washington. It might be that
I will have time to get on the outside of the gold situation while you are
out West trying to locate something good. No doubt with the gold
miners out in California giviI.lg up hope about Congress taking any action
on the gold price you should be able to pick up something pretty good.
Give the whole situation a good investigation before you get too deep.
And keep me lined up with what you are doing. I might want to go to
California myself."
14
to
CHAPTER 4
Off For California
S
O as Joe loaded up his car for his Western trip Harold left for his new
job in Washington. Joe read of a mining gathering in Denver and
thinking he might learn something to his advantage he stopped over.
Colorado is a leading gold mining state, thought Joe, and with the present
urge from the West to get a better gold price no doubt the gold miners
will be at their best in Denver. He sat through three days of speech
making but what made the deepest impression on him was a talk by
Leland Howard, director of the U. S. office of domestic gold and silver
operations.
In his first report to Harold he wrote: can>t see how those Western
gold miners would waste their time and money listening to their worst
enemy. And I suppose the group that engaged him to come out from
Washington had to pay him plenty. And the newspaper printed all his
bad news. I know you will be interested in knowing just how much op-
posed Washington is to giving the gold miners a raise. With the Treas-
ury admitting that is has very lttle gold left to continue paying off
foreigners, there was no answer from the miners to the speaker's
in-Washington' talk. I almost decided to turn back and forget about
becoming a gold miner. Anyway, here's the way one of the western
papers reported his talk - with not one word in comment or contra-
diction:
By GEORGE WEEKS
United Press International
The United States for more than a
quarter of a century has bought and
sold gold at $35 an ounce.
The Kennedy administration has again
reaffirmed its intention to hold to that
price despite renewed pressure from the
domestic industry for a subsidy, and con-
tinuing demands by foreign producers.
for an increase in the basic price.
The U. S. position is "to oppose any
proposals that would lead anyone to
believe we do not think the $35 price
is the proper price for gold."
Why this firm adherence to $35?
Because, according to the U. S. Treas-
ury, tampering with the price would
raise the risk of disrupting the monetary
system "which is so vital to the U. S.
economy and the economy of the Free
World:
The administration's stand was spelled
out in blunt terms to the domestic indus-
try last week before the National West-
ern Mining Conference in Denver.
Leland Howard, director of the U. S.
office of domestic gold and silver oper-
ations, said gold must be considered
from the standpoint of the national
interest as a whole. And, in arguing
against subsidies, he said:
"Any effort to assist a relatively few
people to keep or obtain jobs, no matter
how desirable, would, instead of helping
those in the gold industry, run the grave
risk of disrupting the monetary system on
which not only their own livelihood but
the livelihood of all of us depends:'
Howard acknowledged that gold pro-
duction in the United States has been
on the wane "while Free World produc-
tion has been waxing strong,"
U. S. production was only 4,5 per cent
of free world production in 1961. drop-
ping from $65 million in 1955 to $55
million in 1961, while South Africa's
production was increasing from $510
million to $803 million.
Rhodesian and Ghanaian production
also increased. while Mexico's declined
15
and Australia's held about even,
The U. S. dollar has become a «king_
pin" of international financial stability,
Howard said.
A fundamental reason for this has
been the U. S, policy of buying and sell-
ing gold at a fixed price to foreign gov-
ernments, central banks and others for
settlement of international balances.
"Other governments hold the dollar
because of our policy of buying and sell-
ing gold at a fixed price:' Howard said,
"The dollar is the only currency that
maintains this link between money and
gold, and the monetary system of the
entire free world is hinged to this con-
vertibility which we maintain between
gold and dollars at a fixed price."
But what has this got to do with sub-
sidies? After all, gold is subsidized in
other countries, and agriculture and other
industries are subsidized in the United
States.
«The answer is," Howard said, "that
the monetary units of other countries do
not have the status of the dollar, and
other countries do not have the respon-
sibility of mixed relations between their
currencies and gold.
"Cold in the United States is a mone-
tary metal and cannot be treated as a
commodity, as are products of other
industries, or as gold is treated in some
countries."
Proposals now before congress would
establish a $105-an-ounce price for gold
to be used in the domestic market for
such items as dental fillings. Gold sold
for monetary use would remain at $35.
But the treasury fears that even a
price revision limited to industrial uses
would encourage speculation for a higher
price in the monetary uses.
"We cannot take side excursions in
gold that others will interpret as a sign
we do not think the present price for
gold is correct," Howard said,
The treasury contends that this is an
international as well as a domestic issue.
"We must think of the dollar not only
as involved in our domestic economy, but
as a reserve currency held by others as
a suppleme?t to}he world's gold supply,"
Howard saId. The dollar has attained
this position internationally for a number
of reasons.
"But one essential aspect of maintain-
ing confidence in the dollar and main-
taining a strong and stable international
monetary system is to continue to stand
ready to buy and sell gold at the fixed
pri?e of $35 an ounce and to avoid any
achons that would encourage speculation
for a higher price of gold,"
The treasury is hyper-sensitive about
any action that might lead to internation-
al speoulation on the price of gold.
It fears that any price other than the
?fficial $35 would be construed by cred-
1tors - those countries holding dollar
balances - to mean that the United
States had decided the official price is
too low; that in some way, directly or
indirectly, the U. S. was on the way to
revising the official price.
President Kennedy maintained during
the first two years of his administration
that the United States was not on the way
to revising the official price.
Earlier this week, Sen. Wayne Morse.
D-Ore., asked for a treasury assessment
of reports that France has been encour-
aging other countries to increase their
demands on U. S. gold reserves. He
released the text of a letter to Treasury
Secretary Douglas Dillon asking him to
?omment on the reports. The letter said,
III part:
«There have been in the news recently
reports that the French government is
acquiring American obligations for which
it could demand payment in gold. One
report fixed the amount already in the
hands of the French government at more
than $1 billion.
"Another related report has been to
the effect that the Frenoh are seeking to
encourage European banking houses and
others holding U. S. assets to demand
payment for them in gold.
HI would appreciate your assessment
of these reports. To what extent do you
think they are true, and to what extent
could they threaten our financial sta-
bility?"
The technique of carrying out U. S.
gold policy may vary under different
administrations.
But the basic policy of centralizing
the U. S. gold reserves in the hands of
the government and maintaining a fixed
price of $35 an ounce has held for 29
years.
And it appears that Kennedy is deter-
mined to continue it for at least another
year.
16

CHAPTER 5
The E Clampus Vitus
J
oe pulled out of Denver, headed for California, little enthused with
what he had learned in the "Mile-High" city. From all he had read
he had made up his mind to make Placerville, El Dorado County, his
first stop in the Golden State. It had been called that for many years.
In 1885 it produced $88,000,000 in gold. In 1962 the records would be
hard pressed to show five million. Coloma, the site of the Marshall Dis-
covery is only eight miles away on Highway 49 which traverses the
famous Mother Lode from a point in Madera County, the location of
the town of Coarse Gold, to Northern El Dorado. The Sierra gold pro-
ducing area does not quit with that information, but travels on northward
through the counties of Nevada, Sierra, Butte, and Plumas. There is a
skip in Tehama County, due to the lava filling all the ancient gold-
bearing streams, but gold crops out again in Shasta, Trinity and Siskiyou
Counties, continuing on up into Oregon. It was Joe's intention to learn
as much of these areas with Placerville as his headquarters. It is the
center of the Sierra gold fields, including the Mother Lode.
In two days more he landed at his destination. Placerville was alive
with a celebration. It was January 25th, the day Marshall made his
discovery, one hundred and fifteen years previous. Now, believed Joe,
here he would be greeted with a real gold atmosphere. He felt he had
arrived at a time when he could absorb plenty of the real gold mining
spirit.
The celebration had started that day. The evening was set aside for
a parade by that old time mining organization, the E Clampus Vitus.
It was the lfangtown (Placerville's old name) group putting on the
night's entertainment. Members from other towns and mining districts
had arrived, bringing with them almost a hundred "poor blind candi-
dates" to be initiated into the order.
In his first report on Placerville, the Clampers and their celebration
of Gold Discovery Day, Joe didn't spare the natives. He had to change
his mind that all who came to Placerville on that day of all days should
be out in front doing something about the re-opening of the gold mines.
The Clampers in their parade were dressed in '49 miners' clothes.
As they marched down Main Street, following a seven-piece band, they
shouted to the by-standers and swigged on cans of beer. N a one knew
what they were shouting about and apparently the band was intent
only on adding to the noise. Not being a "poor blind candidate" Joe
could not get into the closed meeting of the organization and the initi-
ation but the stories of the gathering he heard next day didn't improve
his opinion of the assemblage, even if it was attended by the Governor.
several state Senators and other state officials. I guess they got to blow
off sometime he thought. It was in the early hours of Sunday morning
before the noise was brought to a conclusion and the imbibers rolled
17
into bed or were helped to their slumbers. If this is gold mining, thought
Joe, count me out.
The next morning, Sunday, 'he had hopes of something better. The
day's program was to be held in Coloma, the scene of the gold discovery.
The printed program showed evidence of a sounder remembrance of the
day. So he went to Coloma with higher hopes. There was a lunch in
the Grangers' (not Miners') Hall. Participating were County notables,
members of the State Legislature and officials of the State Division of
Beaches and Parks, Coloma having been made a State Park. While it
was James W. Marshall's Discovery that was being celebrated nobody
mentioned the fact. The Governor, the main speaker of the day, forgot all
about Marshall. He was more interested in his legislative program which
included a $3,225,000,000 budget. Itemized in the budget, he reminded
his hearers, was his new $875,000 home and his new $500,000 airplane.
It was bad news to the citizenry who had to sit and take it.
The Governor was followed by Beaches and Parks speakers. They
'wanted more money in the budget to increase the size of Coloma Park
and buy up all private holdings. And they wanted more parks; the more
parks the more jobs. Although they didn't say it, as soon as land was
incorporated into a State Park, mining was strictly prohibited, no matter
how rich in mineral. Joe drew this from an old miner on the edge of
the crowd who didn't appear to be enjoying the occasion any better than
he was. Here was one man from whom he might get some ideas about
mining. He didn't object to opening up on the subject.
He was about 70, hale and hearty and had the appearance of having
had a liberal education in industry and politics. The first thing Joe
wanted to know was what happened to the mining end of the day's pro-
gram; were there any speakers present who could talk about gold and
the advantages of having the state's gold mines again operating. Did he
think there was enough national interest to set a price on gold that would
reopen the mines? As long as there were no speakers to discuss such
matters Joe decided to engage the old gentleman in as much conver-
sation as he could.
John Collins was not adverse to taking up the subject of Joe's ques-
tions. He appeared to be just waiting for the opportunity. "Yes, I know
what you mean. I own a gold mine here in El Dorado County and by
all reports by several engineers it is not 'worked out' by a long shot.
I have two departments of the U. S. Government hounding me right now
trying to get me to sign a statement that my claims are 'non-mineral.'
I am located in the. EI Dorado National Forest and am therefore under
the jurisdiction of the Department of Agriculture. And being interested
in the mineral in my claims I have also to answer to the Bureau of Land
Management of the Department of the Interior."
Mr. Collins was getting beyond Joe who interrupted with, "What
are they trying to do to you? Don't you own the claims and haven't you
kept them legally yours? Don't we have mining laws which protect you?"
18
..
"That's a long story," replied Collins. "My claims were located back
in the 1870's under the General Mining Law of 1872. They have pro-
duced over $100,000 and as yet have not reached a depth of 300 feet.
My grandfather was the original locator and operator. Mint records in
San Francisco will back up the mine's production record. But now we
operate under what's known as Public Law 167. Its intent was to provide
for multiple use of the land on which my claims are located. We don't
object to that, being interested only in what's under the surface. If some-
body wants to build a summer cottage on my claims and fish in the
stream which cuts through them I have no objection. I like company.
But in order to grant multiple use I must agree with the government that
there is no more gold in my mine. That I will not do. I'll give 'em the
timber but I will not sign that there is no more gold in the mine. That
would not only be silly but would be swearing to a lie."
"That does start in like a long story," said Joe. "On what do the gov-
ernment boys base their contention that there is no more gold in your
mine? Have they thoroughly examined the mine?"
"No, they say they don't have to make an examination. They want to
take advantage of present economic conditions, holding that if I am not
willing to operate and sell my gold at the present low price I don't have
a commercial property. And if not commercial they want to say I haven't
made a <discovery: Further, no "discovery' means my claims are invalid.
The government has us in a bind. It refuses to give gold its true value,
hoping to force me to relinquish my property."
"What's economic conditions got to do with the situation?" inquired
Joe.
"'They shouldn't," said Collins. "In my books it's simply a matter of
geology. If conditions are against my operating at this time that has
nothing against the property. If you want :it in a short story it's simply
this: The government wants the land, both surface and underground.
Congress won't raise the price of gold and the bureaucrats are taking
advantage of the situation. They are pushing hard to clean up on the
claimholders before world monetary conditions force Congress to do
something about it."
About that time the Coloma crowd had drifted homeward. Joe
wanted to hear more. The western sun was going down over the v a l l ~ y
and when Mr. Collins let him know he lived in Placerville, 128 Cedar
Ravine, Joe made a date to continue the discussion on the next day.
He really had found a mine of information.
At his motel that night Joe wrote a full report of the day to Harold
with the intimation that it was just the beginning. So far, he concluded,
he had found but one man who realized what was happening to an indus-
tryon which the entire world depended. He wondered why the gather-
ing of the day, celebrating the 115th Anniversary of the Discovery of
Gold in California, shied away from even the mention of the precious
metal for which the entire world had so great a need. There was some-
thing wrong some place. He let Harold know that he intended to find
19
out but would need his help. Perhaps the trouble was in Washington,
District of Columbia.
It was late the next morning when Joe made his way down Main
Street, seeking breakfast. He stopped at the "Bell Tower," famous since
the early days for rousing the citizens for fires or when the hardy miners
went on rampages. It wasn't often when they could get to town with
their poke. But when they did they made a real celebration of the
occasion, usually ending up in the town bastile when the City Marshall
could get sufficient help from law-abiding citizens. A handy restaurant
was located at the Tower. Waiting for his order, Joe picked up a copy
of a local newspaper, the Placerville Democrat. He noted it was Cali-
fornia's second oldest paper, established in 1852. In this he felt he could
find something he was looking for. Scanning its columns he almost
neglected his breakfast. .
After breakfast he continued checking the paper, reading of new
subdivisions to supply new home builders, schools bulging with attend-
ance, their officials wondering if the taxpayers were willing to dig up
more support or vote bond issues. There was news of Sacramento mak-
ing application to take more of the County's water for their municipal
utility district and the proposed new county government center to cost
over Two tv1illion dollars. He continued to look for mention or news
about gold. Finally in the news of "Fifty Years Ago" there was mention
of a gold mine getting started. There were Ads of two banks and a pros-
perous Building & Loan Association, paying the top interest of 4.8 percenC
Joe got a laugh out of one news item. A newly elected tax collector
was taking over the office which had been held for years by the retiring
official. The new collector found several month's of unopened mail, all
containing checks for taxes. At least he could agree with the voters
of the county that they did need a new tax collector. He made up his
mind that he'd like to talk with the newsman on that paper, but it was
time to keep his morning date with John Collins.
It was a beautiful morning. Despite a few patches of snow up Cedar
Ravine the bright sun was out with promise of a clear day. At an ele-
vation of two thousand feet Placerville had only occasional snow, this
year especially mild. Joe had already made up his mind that he had
selected a nice location in which to forget his snow-bound and strike-
bound experience in New York. He was ready for another session with
Mr. Collins, who met him at the door of a neat and well-built cottage.
Mrs. Collins met him with a smile. "1 am glad," she said, "that John has
somebody to talk gold mining to. All the old timers in the neighborhood
can't keep up with him when it comes to gold talk so they usually pass
him by. It's nice that you have dropped in."
Joe let Mr. Collins ,know that he had assimilated most of the infor-
mation he had given him the day before but he still wondered why
Washington was so backward at not realizing the need of not only hold-
ing the gold it had but also urging the American gold miner to add to
its reserves.
20
..
..
"Well, you are getting into another deep subject," said Mr. Collins
when Joe unburdened his thoughts. "Ever since Mr. Wilson was presi-
dent the good old USA has been getting the feeling that our nation
wasn't big enough. Our business and our banking wasn't extensive
enough. We had to go international. A gentleman by the name of Mon-
tague Norman was sent here by the Bank of England to talk international
banking. Chief Justice Hughes, a Republican, was lead man for the
presidency. Norman tackled him about what he thought of throwing in
our fin aces with England. Judge Hughes backed up so Mr. Montague
went to see Woodrow Wilson who gave him more encouragement. How-
ever, it looked as if Hughes was still leading for the seat in the White
House. So Mr. Norman made another trip. He went to Africa seeking
Teddy Roosevelt, then hunting lions, proposing that the lion hunter
return to his home in California and open up a campaign for the presi-
dency, using his Bull Moose Party as his election vehicle.
"Of course you don't remember that election; but I do. I'm still mad.
Teddy split the vote in California and Wilson won the election by taking
the golden state's electoral votes. Hughes was a cinch and we would
have been free of much foreign entanglement had Teddy stayed out
of the race. For a long time we Republicans called our state, 'the boob
state of the union.' That's when our international troubles began, and
it's getting worse ever since.
"That's interesting but something we don't learn in history," said Joe.
"And how does all that fit in with gold and our present situation. I
know the gold is leaving us pretty fast - over $7 billion in Ike's last two
years and with the Kennedy spending it's still going - and fast."
"I note you are makng progress on what's in the wind but 1 must take
you back for a few chapters in Franklin Delano Roosevelt's time. Wil-
son set the nation for international plunder and Franklin fiddled with
the same bow," put in Collins .

CHAPTER 6
JohnC·ollins - Gold Miner & Economist
J
oe was really getting a basic education in U. S. gold and monetary
matters. He was surprised that a man like Mr. Collins, whose interest
mainly was in the production of gold, had been able to get such a
grounding in a subject which most people passed up as beyond their
comprehension. What if every congressman, or at least a majority of
them, had the same understanding of the situation, he thought. He
broached his thought to Mr. Collins.
«Most of them may have," replied Collins. «However, they may not
want to talk. One California Senator, Bill Knowland, shut off one inquirer
21
____ - __
who asked why he hadn't done something about gold with, 'It's too hot
to handle: They just don't want to invoke the wrath of the Money
Changers. Those who have grabbed the handling of our money have
their plans and don't want them upset .. Those who are brave enough
to stand up and question the Treasury and the Federal Reserve Bank
soon find themselves voted out of Congress. Look what happened to
the late Sen. George W. Malone of Nevada. His type of representative
is badly needed in Washington. He stood up before Sen. Byrd's Senate
Finance Committee and had some of the money lords on hot seats. It
took 11 pages in the Senate records for the Nevadan to get one question
answered. The whole record of the hearing occupied 1,606 pages; it
accomplished nothing. I wouldn't call it 'Too hot to handle' but I say
a lot of senators are rather cold on doing something for the financial
benefit of the nation and their constituents.
"It all began back in Roosevelt's time, when Wall Street went broke
and the banks began closing. FDR was one of those who would venture
where angels fear to tread. The crash and the following depression was
too much for congress to handle. It gave over its constitutional authority
'to coin money and fix its value' to a few individuals, including the
bankers who were smart enough to hang on to the money while business
went broke. Congress has never reassumed its rightful power. Several
who have made the attempt have been banished. The Money Changers
can reach out into the most remote congressional district and control
elections; and the boys in Congress don't overlook this fact."
Joe wasn't missing a word. Giving Mr. Collins a breathing spell he
said: Ult surely is a bad situation and as long as it's going to be allowed
we can believe Mr. Kennedy's statement about one-third of the people
of the United States being underfed. But why should men whom we
allow to handle our money have so much power over the nation and
its people?"
"Did you ever stop to consider how few people and even the largest
corporations can't run their businesses without borrowing? I note in
today's San Francisco paper where one of the big telephone companies
is planning to borrow two hundred and fifty million dollars. This kind
of business puts the lenders in power. But we are getting off the track.
I want to tell you more about what happened in FDR's time after the
crash of '29 and during the depression."
Joe settled back in a plush chair and was all ears. He still marvelled
that Mr. Collins had such a grasp of national monetary matters. It's too
bad he couldn't be sent to Congress. For one term, at least, he could
make quite a dent in these Washington hard heads.
remember it was. Wilson who started the sell-out to foreign
monetary powers'" resumed Collins. "The bank closing and depression
gave Mr. Roosevelt an opportunity to step out as a financial expert, even
though he had failed operating a company handling foreign bonds in
the early 1920's. At that time and until 1945 the president had the power
to set the price of gold. During his first term gold was leaving the
22
...

if
..
------
nation fast. England was paying up to $28.00 per ounce, the United
States price remaining at $20.67, the figure for many years previous.
Our supply got down to only four billion dollars' worth, when without
notice, Roosevelt raised the price to $35 per ounce.
Here Collins stopped suddenly with: "Whoa, I'm getting ahead of
another thing that was pulled on our people before the price raise. In
1933, when it was legal to hold all the gold you desired and the gold,
fives, tens and twenties were used in every day trading, Mr. FDR sud-
denly issued an order that all gold must be surrendered to the govern-
ment, the holders being allowed $20.67 per ounce. In the following year,
1934, he convinced Congress it should pass the Gold Reserve Act, making
it a crime to have gold coin or bullion in your possession. The Act also
raised the U. S. price to $35.00 per ounce. Note that on all the gold he
took away from American citizens the government pocketed $14.33 per
ounce. Before the grab our government possessed four billions in gold.
The 1934 raise was a clear seventy percent, or two billion, eight hundred
million. That put our gold stake at $6,280,000,000.
"With the United States price higher than in all the world money
centers, the world's gold naturally gravitated to our shores, the move-
ment keeping up until we had $24,500,000,000, tied up in Fort Knox.
Somebody made a handsome profit on the more than eighteen billions
that shifted to the United States. The American taxpayer paid that profit
-not FDR. les true the new price opened a lot of gold mines in California
and times were good until inflation caught up with that $35 gold price.
Mter that you had to have high grade ore to keep operating. Every time
cost of operation reached the amount of production there was nothing
to do but close your mine. Any way our government had sixty percent
of the world's gold, so why should it or Congress get interested in keep-
ing the gold mines open. We even had men in Washington who held
we had too much· gold and it would be better, as an encouragement to
foreign trade, to give it away."
Here Mrs. Collins entered the conversation, or rather discussion, with
the cheery announcement that perhaps the lunch she had ready would
be appropo.
"Oh, I did not know it was that late; of course we'll partake, and
thanks," responded Mr. Collins.
Serving the lunch Mrs. Collins volunteered the thought: 4<Perhaps
your visitor is getting more about this gold business than he wants. He
may be listening just to be polite:'
"Far from that; I'm taking on every bit of it and ready for more.
Only I don't want to wear out Mr. Collins: answered Joe. "He's been
very good to help me in my anxiety to get at the bottom as to why our
nation wants to risk bankruptcy by giving up all its
As lunch proceeded Collins suggested that they spend the afternoon
on a trip to his mining property, about fifteen miles out of Placerville.
Pleased, Joe approved and shortly they were on their way out U. S. High-
23
- - - - - - - - - - - ~ . = - - - - - - - ~ - - ~ - ~ - - - - - ~ -----
way 50. The trip was a steady climb on a modern highway which Collins
explained was a well travelled transcontinental route, on up over the
snow covered Sierra Nevada mountain range. "It's Placerville's way into
Reno when they want to gamble or get a divorce," he volunteered.
It was a beautiful day for the heart of winter. The highway, main-
tained by the State as a federal-aid road, was in excellent shape. On
both sides of it were tall pines and ponderosas which scented the air
with their pleasing fragrance. Coming to the village of Pollock Pines,
the gold miner turned off to the south.
«I must tell you that we are entering a high grade gold producing
area," volunteered Mr. Collins. "1 probably haven't told you that we are
now off the main Mother Lode of California. Placerville is right on the
Lode, noted for consistently wide veins and deposits. But here is what
is known as the East Belt. The veins are not so wide but rich. My mine
lies next to one that isn't the usual West Belter. It has wide veins and
they are rich. As near as I can get its history it has produced close to
three million dollars. It's one of those mines that can operate regardless
of inflationary prices. It's had a real interesting history. Even though
1 should not do all the talking, I must tell you about it."
"I'm listening and don't let me stop you," said Joe. "I came to Cali-
fornia to learn and you are a good teacher."
«Thanks," responded Collins, "I want to be as much help to you as
possible. I don't suppose I will do much more mining myself, but at
least I can be of help to others."
"That rich mine that joins mine is known as the Myrtle Creek. We
will come to it soon. It has no outcropping ore, that usually leads to a
discovery. The land belongs to a lumbering firm. The discovery of ore,
rich ore, was made when the lumber company's bulldozer was making
a new road into a new block of timber. The timber firm was not inter-
ested so leased the property to some local miners. For several years they
made it with ore that never ran below an ounce of gold to the ton of ore.
Finally the partners had a disagreement so leased to a North Sacramento
man. He continued operating until he took out a cool million dollars
when suddenly he lost his are. He knew of no way of relocating it so
sold out to a Reno group for eighty thousand dollars, half cash, the rest
in a bum note.
«Keeping quiet about the lost vein the Renoites induced a rich valley
rice farmer to come in with them. They took him for plenty until he came
to the conclusion he'd better forget his rice and take over the mine.
He first got rid of the operator. He and his superintendent were at a
loss as to how to proceed when along came a geophysical expert who
said he could relocate their ore. And if they didn't believe he could he
would prove his geophysical survey by drilling. Well, to make a long
story short, the are was relocated, not very far from the shaft. Running
a short drift and they were again milling are. The geophysical engineer
was a whizz. I have reports on a number of mines he worked. I will be
glad to let you read them."
24
..
- ----- - - ---
..
Collins and Joe made a check of the Collins mine and its equipment,
all housed in weather-proof buildings . "We could start tomorrow if we
could get the right price for gold: remarked the owner. "Congress is
sure hurting California and the rest {)f the West by taking orders from
those international Sometimes I wonder if we are a free country.
At that I don't think we put into singing the Star Spangled Banner the
vigor and feeling we did when I was a kid. We certainly have lost
much of the freedom we used to be proud of. It's too bad.
n
Collins had a key to the assay office in which he knew Joe would be
interested. "This is where you find out if you are making it," explained
Mr. Collins. "Our assayer was also our watchman having his living
quarters right back of the office. That gives me an idea. I know you
want to get pretty close to the mines, so why couldn't you make this
your home. I would like to have someone on the property. How about
it?" "Sounds good and I won't force you to make another offer," quickly
replied Joe.
Two birds with one stone, thought Joe. My money won't last long
stopping at that motel and living right on a mine, owned by a man as
nice as Mr. Collins, I no doubt can learn about mining much faster.
Before they went back to Placerville they took in the Myrtle Creek.
It didn't look like three million dollars to Joe as a fire had cleaned out
the mill and its buildings. Following the fire a dispute arose between
the land owners and the operator and with new equipment and labor
out of sight in cost, neither felt that the time was ripe to plan on a re-
opening, at least until Washington did something about a raise in the
price of gold.
Driving back to Placerville Joe felt he had a big day; he'd have much
to report to Harold, especially his good fortune in having the help of
Mr. Collins. The next day he planned on seeing the newspaper man and
maybe a bank. Leaders of their type should know what was keeping
gold mining almost a dead industry. He suggested the idea to Mr. Collins.
"You'd just be wasting your time," remarked Collins. "I have spent
hours with the newsmen and the bankers; they are just not interested.
They even tell you, that is the bankers, what the Treasury or Congress
wants to pay for gold is of no interest to them. They are only interested
in running an institution that will properly handle the money you deposit
with them. The price of gold is Washington's business. Anyway, the less
they know about your business the better it is.
"You haven't told me: continued Mr. Collins, "'but no doubt you will
be interested in locating a claim when you find one you think will make
. "
a mIne.
"That's true," answered Joe. "'However, I'm going to do a lot of
looking and learning before I stake my claim. This California gold
country is mighty big and if my finances will hold out I want to see a
lot of it. From the little I know I think looking for a good gold prospect
is like looking for a good wife; you got to look over a lot of them."
25
"That's one thing Mrs. Collins and I did not ask you: are you mar-
ried," lightly queried Collins.
"No, and I'm not looking, that is, not too hard," answered Joe.
day of course I may find the right one. But right now I'm looking for
a gold mine. My pal back in New York is interested and I want to give
the idea every break. He isn't sold on being a miner as I am, so if he
and others are going in with me and taking my word for it, I got to be
right. Perhaps I'm attempting too much, knowing practically nothing
about mining, but I'm here and I'm going to make the best of it. At least
I've made a good start by having a friend like you, Mr. Collins."
"It's true you have much to learn but there's no reason you can't.
I know you will be far ahead of some of the greenhorns who come here
knowing it all."
Next day was moving day for Joe. He wasn't losing any time in get-
ting as close to mines as he could. He was also counting on Mr. Collins
to be out to the mine often at which time he could continue mining dis-
cussions. He spent the day in making his new home liveable and then
stocked up on food and household necessities. In New York he had had
his batchelor headquarters so that kind of life was nothing new. How-
ever, he'd have to get used to being a great deal of his time by himself.
It would be quite a change from the hurry and bustle of a large city.
His companions would have to be the tall trees, birds and small animals,
and sometimes a deer. It would be rather lonely in the winter but at
other times of the year he would no doubt have plenty company judging
from the many summer cottages around the mines. And he was only
two miles from the lively settlement of Pollock Pines, his post office and
base of supplies, when he did not want to go the longer distance into
Placerville.
Two days later Joe was busy typing out a full report of several days
of his activity when a car drove up to his He was g1ad to see
some one. He was getting lonesome. It proved to be Mr. and Mrs. Collins
who were also glad to see Joe. Their gladness was substantially ex-
pressed with the gift of a pie, a cake and a pot of ham and beans.
nWell, it's nice to see you as it's been rather quiet around here but
I did not expect these food gifts which will be more than welcome. I am
finding out that I'm not as good a cook as I should be," exclaimed Joe.
"That is what I suspected," replied Mrs. Collins. don't want
you to become a hermit. As for the cooking, all our family is grown and
gone so I have no one but John to cook for. You are always welcome at
our home any time you come to town. I won't say anything about your
needing company here at the mine as John has already warned me that
you are looking for a gold mine."
"That's true; the mine comes first," said Joe. that reminds me,
Mr. Collins, I want to get more information about the work of that geo-
physical expert. As little as I know about mining it does appear foolish
26

to do a lot of .blind· digging looking for ore when an instrument will
guide you."
"I have all the reports of work he has done on several California
mines and a few in Arizona which 1 will be glad to let you
responded Collins. "I agree with you that it is the most 'reasonable
method of exploring a deposit. A lot of mine operators won't listen to it.
They are too used to their old methods and don't want to change. The
engineers of the large mining corporations won't accept it as for years
they have been paid for what they know and to change their methods
would be an acknowledgement that there are better ways. N ope, they
just could not do that."
"Next time I'm in town I will drop around to your home and pick up
these reports with many thanks," said Joe. "They could save me a lot of
time and my backers plenty money. I can't understand why mining peo-
ple have to be so pig-headed and backward not to immediately accept
a method when it is proven. But, as you say, they stick to what they
have learned in college and what has been getting them by. That seems
to be the way with a lot of the experts; they don't want to change their
"
ways.

CHAPTER 7
Is The War Emergency Over?
W
hat Joe had planned to do was to see as much as possible of the
sta.te's gold producing area which stretched from the deserts of
the South to the Oregon line. He wasn't going to be sold on anyone
location until he had learned as much as he could about all the leading
gold districts. It was going to take time and money and he didn't want
to send too much of an expense account to Harold and their other backers.
He had read considerable about the quick returns from placering the
American River. He'd have to question Mr. Collins. On his next trip to
Placerville he did. Collins informed him that for the past 115 years all
branches of the American River and many of their tributaries had been
giving up their gold to those who knew where and how to mine. "There
is still plenty gold for those who have the know-how," he said. "One of
the simplest forms of mining is recovering it from the moss that grows
on the canyon walls of the American. The process is simple: gather the
moss; put it in an oil drum, and give it a good pounding. The gold,
being heavy - 19.1 specific gravity - will drop to the bottom of the
drum where it can be easily picked up. Most of it will be fine, but gold
nevertheless. You won't get it all out of the moss, so dry the moss then
burn it and you will get the rest."
"That's so simple that I should be able to clean up on some of the
yellow metal," said Joe. "That is if I know where the moss is."
27
"This winter we have had two very heavy rain storms; one of them
with falls of as much as 16 to 20 inches of rain," volunteered Mr. CaBins.
"It takes that kind of a winter to bring down new crops of gold. It's
simply a matter of erosion. The heavy storms run rivulets down the can-
yon sides and the moss acts as a trap, collecting its share as the gold
makes its way to the river. All the old-timers wait for the heavy winters
before they think about doing some more placering. It's the simplest
type of mining."
Before Joe made his first trip, having planned to go south on State
Highway 49 to Jackson, a now shutdown mining center, he tried out
moss mining. FrOID his first drum of moss he tramped out a half ounce
of fine gold, putting the moss aside to dry for his second clean-up.
The going was so good that he put in the entire week, cleaning up four
and a half ounces. If it would hold to a fineness of 900, Mr. Collins told"
him, the Mint in San Francisco '\lould pay him $141.75, or $31.50 per
ounce, his gold being nine-tenths pure. Well, thought Joe, that's just
about what I was making dishing up news, and it will all be <take-home'.
He felt very much encouraged and that night got a letter off to Harold
asking if he should sell to the United States Treasury or ship to New
York. Before he received an answer ~ 1 r . Collins told of a store at Coloma
putting fifty cents worth of placer gold in a small vial and selling to
tourists for two dollars, or the fancy price of $140.00 per ounce.
~ 1 r . Collins assured Joe that such sales were legal, as placer gold, or
gold in its native state, was free of government control. It can be bought,
sold or held without breaking the Gold Reserve Act of 1934. However,
he explained, bullion or melted gold comes under the Act. It must be
sold to the government. To illustrate he showed Joe a clipping from the
Los Angeles Times which dealt with the arrest of two Los Angeles men,
charged with possession of 84 ounces of gold bars. He let Joe have the
clipping to "include in his reports. The news story was as follows:
U. S. District Judge Harry C. Westover has agreed to determine judiciously
whether a national emergency exists as the basis for prosecution of two Los
Angeles men on charges of illegal possession of gold.
Judge \Vestover denied a motion for dismissal of the indictment of Robert
Sheldon Pike and Ryk Henry Brouwer for the possession of 84 oz. of gold bars in
violation of a Presidential executive order issued by Franklin D. Roosevelt in 1933.
The government charges that the order is in force because the national
emergency continues to exist and has been re.proclaimed by Presidents Harry S.
Truman, Dwight D. Eisenhower and Kelllledy.
Emergency Definition
Judge Westover granted a plea by defense attorney William Osborn that the
court hold a separate hearing to determine whether the nation is now in a state of
emergency of the nature of that existing in 1933.
Osborn argued that the original order was the lesult of a national financial
emergency, whereas the present emergency is "the international communist con.
spiracy."
Judge Westover set the hearing for November 5, saying he would segregate the
issues and hear testimony from both sides.
Ass't U. S. Att'y Norman T. Ollestad said he would produce expert witnesses
from Washington, D. C., to prove that the national emergency still exists.
U. S. Judge William C. Mathes dismissed an indictment in a similar case last
year, holdin2: that criminal liability under an executive order is unconstitutional
except in war or emergency.
Pike. 62, of 12039 Otsego St., North Hollywood, is a partner in a plastic firm.
Brouwer, 51, of 915 N. Kings Rd., West Hollywood, is a clothing store owner and
a gold prospector. The government alleges Brouwer asked Pike to handle a gold sale
for a prospector friend, and the sale was made to a Treasury undercover agent.
28
..
..
Joe read the clipping with increasing interest. "What do you think
of it?" he inquired of Mr. Collins.
"I think the gold miners' attorney is right. That war emergency has
been over long ago. The internationalists, aided by our Treasury and
Federal Reserve Bank, are after our gold. And there's plenty of evidence
that the unjust restrictions on gold, its producers and holders is 'com-
munist inspired'.
"In fact it was two communists, Harry Dexter White and Alger Hiss,
who franled the whole deal. They were both employees of the State
Department at the time. The former committed suicide while the latter
stood trial, served a jail term and following his release was again taken
back into our government. Dick Nixon, then a member of the House of
Representatives, led in digging up the evidence against Hiss. The com-
munists in our government have hated him ever since. His work was
extremely difficult due to communist infiltration in our government,
which began during the Roosevelt administration. You will remember
that FDR was a close friend of Stalin. ('Good old Joe').
"And as far as the Roosevelt emergency proclamation being re-
declared by the presidents following Franklin, I don't believe it. The
others simply let the proclamation stand. Any judge and jury can now
see what has happened to the nation's monetary system, due to the 'com-
munist inspired' gold regulation. All our available gold has fled the
country. Gold mining cannot be resumed in the United States. If this
'communist inspired' regulation continues Congress will be forced to
pass the Multer Bill which will denude our monetary system of its last
vestige of gold - the 25 per cent gold backing federal reserve notes and
deposits.
"There is plenty of evidence that the Roosevelt emergency procla-
xpation is now wrecking the U. S. monetary system, the principal ob-
jective of the communist world."
"Boy, boy! You should be one of the witnesses at that hearing,"
enthused Joe. "You sure got it down pat. I just wonder if the gold miners
of the West will take any interest in the proceedings. They should storm
that hearing with all the legal help they can dig up. Let me have the
clipping, please. I will mail it to Harold at once. He may be able to
get his congressman, Ben Goodwin, to do something about it. I guess
I forgot to tell you my pal, Hal Wilson, is secretary to a congressman."
"If he does do anything I will be surprised," responded Mr. Collins .
"Outside of now and then introducing a bill and coming West to tell us
what they are going to do, so far the score for gold in Washington is a
big goose egg. We spent ten years educating Clair Engle when he was
in the House of Representatives and we really believed he was our man
but he finally chickened out. He spoke about gold less and less and
when he got into the Senate, beating our ~ G o l d Governor' Goodie Knight,
he completely forgot about .gold. I'll take that back; he did introduce
one bill. I have no confidence in our Senators or Representatives. They
don't represent us; they represent the international bankers, now getting
29
- --- - ---
control of your Uncle Sam's gold and stashing it away as the capital of
the International Monetary Fund. Our financial system is gone if Con-
gress doesn't wake up very soon."
"I just hope it isn't that bad in Congress," offered Joe. «I'm sure there
are a few congressmen who really want to do something to keep our
nation sound financially. Can't you name one who is for us and the good
old USA? Surely that shouldn't be impossible."
"Well, I can say a good word for Walter Baring, the lone representa-
tive from the mining state of Nevada. If Walter could just get a few
more members to go along with him he would get places. But as my
wife says: <They all want to be the bride at the Those who do
introduce bills won't get together on the same hill. They won't form
a gold bloc. As long as that condition exists I'm afraid we won't get any
helpful gold legislation."
Joe did not want to give up. "Surely:' he said, can't be as
bad as all that. There should be a few men in Congress who realize the
situation. Do you think there would be a way to get a resolution passed
by Congress in which it expresses the idea that the Roosevelt-declared
emergency no longer exists? What do you think of my writing Mr. Bar-
ing to see what he could do about it? He seems to be the only one who
wants to say a good word for gold. How about it?"
"Well, you'd only be out a nickel for your stamp. Which reminds me
of the tall schooner of beer we used to get for that nickel when I first
landed in the gold fields. Go ahead; at least Walter Baring answers.
He says he always likes to hear from folks out West."
Joe wrote his letter'that night and sent Harold a copy, suggesting
that he interest his boss, Congressman Ben Goodwin, in the deal. The
letter read:
Han. Walter S. Baring,
House Office Building,
Washington 25, D. C.
Dear Congressman:
What I am writing you about is this: U. S. District Judge
Harry Westover of Los before trying two Los Angeles men for
possession of 84 ounces of gold bullion, has agreed to hold a hearing to
determine if the emergency which brought on the presidential executive
order, making it a crime to own gold, still exists. This hearing is to be
held November 5th.
Would it be possible to introduce and have passed a Resolution
listing substantial reasons why that emergency does not exist at this
time? Such a resolution would be very helpful at that hearing.
The attorney for the two men arrested holds that at this time
the emergency is «the international communist conspiracy". Any way,
to let all our gold go to foreign central banks, to be taken over
by the International Monetary Fund, and, at the same time refuse
to let our mines aid in replenishing the nation's supply is definitely
aiding communism.
Would be pleased to hear from you. Thanks.
Sincerely,
Joseph C. Bacon,
General Delivery,
Placerville, California
30
CHAPTER 8
The Banker and the Miner
J
oe was now ready to start his tour of the famous Mother Lode of
California. He intended to hit for Jackson, the county seat of the
first county south of EI Dorado. He was interested in visiting a district
that had added so much gold to the United States Treasury, which had
been squandered by our Congress agreeing to the Bretton Woods Agree-
ment. He wanted to see the old Argonaut and Kennedy mines, the latter
being the deepest in California - seven thousand, six hundred and forty
feet, straight down. The Argonaut was close to that depth, only three
hundred feet less.
As he was heading south out Main Street to hit the intersection of
State Highway 49 (named in honor of the '4ger miners) he saw the
Placerville office of the Bank of America. Although he had agreed to
take Mr. Collins' advice and not waste any time with bankers he still
had a hankering to try it, at least just once. With difficulty he found
a place to park and then made his way to the bank. It was Monday
morning and the bank was full of customers. However, in a few min-
utes he met the manager and after introducing himself was invited to a
seat. He lost no time in telling of his business in California, inquiring,
"Do you think gold mining in the West is going to make a comeback?"
"Don't ask me that. Before you left N ew York you should have called
on the Wall Street money powers. They are closer to the situation than
we small bankers out here in the West," answerd the banker.
"The New Yorkers, as you say, may be closer to the situation but
none of them have the assets and influence as does the Bank of America.
I'd think when it comes to monetary policy your world-wide institution
would have quite a bit to say," volunteered Joe.
While pleased that Joe recognized the strength and importance of
his bank it was apparent that ,Mr. Banker wasn't going to be involved
in a discussion as to whether gold mines should be allowed to resume
operation. He countered with: 'We have new gold fields in California:
our vast water supply, our vast farm produce, our climate and recreation
constitute our gold mines. They bring in new residents faster than gold
did in the days of '49. We don't need to reopen our gold mines."
Joe studied him a moment, considering whether or not to go deeper
into the gold situation and its effect on the country's economy. With the
thought of now or never Joe said: 'What you say is all true about local
conditions but what about the monetary safety of our economy? I pre-
sume you know ten billion dollars of our monetary gold has left the
country and the rest is mortgaged to the hilt in favor of our foreign
friends, subject to call at any time."
"So I read in the financial publications," said the banker. However,
don't you think the days of gold are over? Our wealth is in other fonns
31
which will back up the issuance of plenty of currency. The chairman
of our House of Representatives Banking & Currency Committee, Mr.
Wright Patman of Texas, said, ·You can throw all our gold into the
ocean and we can get along very well'. Our paper is recognized all over
the world. And if you want to bring in some of your New York bank
paper and deposit it with us we will be glad to recognize it so that you
can begin writing checks on it. I'm afraid I am very much like Mr.
Patman." Joe saw there was no use carrying on the conversation any
longer, so with thanks for the banker's time he left and started his trip
to Jackson.
Driving south on State Highway 49 Joe came to the conclusion that
he'd need a few more sessions with John Collins before he could stand
up to the banker's argument. Hearing the name of Congressman Wright
Patman of Texas did ring a bell for him. He had read of the gentleman
in the gold-covered magazine. As he reviewed it, it was this: Mr. Pat-
man, about three years previous introduced a bill in the House to prevent
the Federal Reserve Bank from distributing to their fourteen thousand
member banks, a block of fifteen billion dollars worth of government
bonds which could have been cancelled. The bill came up for a vote
but out of the four hundred thirty-seven House members the bill received
only sixty ·yes' votes. No wonder, thought Joe, my banker friend wants
to discard gold and take to paper. He can create more debt with paper.
Along the highway Joe noted many abandoned mines marked by ore
dumps. He had visions of ten to a hundred men working in each. He
had read of as nlany as twenty thousand such mines in California alone.
One little county, Calaveras, on further south, has eleven hundred and
two, according to State records. It's a crime, he thought, for Washing-
ton to keep that wealth hidden. Something must be done to correct that
condition. Just what is Washington thinking about?
In Jackson he wanted to meet some of the owners of the shutdown
gold mines. He went to the Chamber of Commerce, met the manager-
secretary and lost no time getting a conversation started on gold. The
chamber of commerce man assured him the organization was doing all it
could to encourage their representative in Congress to pass some bill
that would reopen Amador County's gold mines. But with the admin-
istration, Secretary of the Treasury and the Federal Reserve Bank out
strong against a raise in the gold price the chamber of commerce man
wasn't very hopeful. He appeared to be aware that the nation's gold
was fast leaving the country and that when it was all gone maybe
Washington would do something. Joe reminded him that would be the
time we would be buying it back at a much higher price. Somebody was
out to make a nice profit he suggested.
Joe learned the name of a local businessman who with several others
owned the Italian mine. He went to see the man, Bill Tam, a clothier.
Bill met him, heartily glad that there were folks that were interested in
gold mining. Tam spoke of their property, a big low grade, with a ledge
127 feet wide. It was one of those properties, he said, that would need
a large mill, costing in these days a fortune. It wasn't a small man's deal
32
and was characteristic of the main Mother Lode - wide veins of low
grade ore. He was of the opinion that Joe would be more interested in
a higher grade property on the East Belt.
Tam gave Joe some of the mining history of the Jackson district,
dealing with the many mines now shut down. The Argonaut was not shut
down by the government's Closing Order L-20S. Before that order was
issued the mine, at a depth of one and a half mile, was milling seven
dollar ore at a mining and milling cost of $7.50 per ton.
Mr. Tam spoke of the Central Eureka at Sutter Creek, about four
miles north of Jackson as one of the most profitable in the area. During
one year the are made an average of $25.00 a ton. When that mine shut
down, Tam said, it practically closed the town. It provided steady em-
ployment for one hundred and twenty-five men. "'Our town was a real
live one in the gold mining days," he said. «Mter the closing we had
to get along without them. It's been tough. I do hope we can get a
Washington administration that will see the necessity of opening the
gold mines in order to add more gold to the Treasury now losing its
gold to foreign dollar holders."
Joe purchased a handsome Pendleton shirt, thanked Mr. Tam and con-
cluded his day's tour of the Lode, promising to go farther south on
another day. Before going out to the mine at Pollock Pines he dropped
in to see Mr. and ,Mrs. Collins. He found the former deeply involved in
reading the latest issue of the Northern Miner, published in Toronto,
Canada. The publication is definitely opposed to the United States gov-
ernment treatment of gold and was John Collin's bible. Mr. and Mrs.
insisted on Joe staying for dinner after which the gold miners went over
the lengthy article on what would happen to the investor if our govern-
ment refused to raise the price of gold to make its value comparable to
the present inflated price of every day commodities. Both Joe and Collins
were taken with its straight-forward treatment of the situation. Joe
vowed he would get a copy and mail it to Harold with instructions to take
it up immediately with Congressman Goodwin. Here is the statement
in full:
33
-------------------------------~ --- - ~ ~ ~
CHAPTER 9
D'evaluation and the Investor
WHAT ABOUT U. S. DEVALUATION
AND WHAT ABOUT THE INVESTOR?
Do Smaller Gold Losses Say U. S. Is Avoiding Cut In The Dollar?
- But If Cut Comes, What Happens To Savings, Stocks, Bonds, Goods?
1 - I read a tremendous amount about
the United States losing gold and
notice the big annual deficits in the
Government Budget and how the
monetary business is upheld by the
goodness of Europe and I am wor-
ried. Will we have to revalue gold
and when will this happen?
2 - If the U. S. has to cut the dollar
won't this cut the value of the money
I have in the bank? What will it do
to the bonds, and the stocks I have,
and to my insurance policies? What
about my pension cheques?
The foregoing expresses the fears and
feelings of a great many of the Northern
Miner's readers. (We have the largest
American subscription list of any Can-
adian paper.)
People are worried, all right. While the
gold loss this year has been smaller than
last, so far, the potential for a big loss
looms larger than it has since the Ameri-
can foreign situation became difficult.
Indeed, why the American government
has been able to run this long without
devaluation of the dollar is the great
enigma of our times. Other countries
would have given up the ghost long ago.
All we can say is that America is, as a
nation and people, very, very rich, very
industrious, most highly regarded in the
world outside its borders. It has pro-
found military might, upon which the
rest of the West plants its hopes of s a l ~
vation in the storm of possible war.
Americans are resourceful, ingenious,
courageous. There is nothing wrong vvith
the people. But there is much, much
wrong with the way their successive gov-
ernments have handled the international
and domestic business affairs of the,
country, and the way these governments
have given in to the demands of self-
seeking politioians, of business groups,
labor leaders - all the kinds of folks
who, in a free society, tend to rise to
power. The Government is to blame, but
the people more so, and the same holds
true of Canada, Britain, the countries of
Europe, nOw that these have re-
gained wealth lost during the war, and
the world in general. We often ponder
over what will be the outcome of the
grand monetary and financial spree that
has been so enjoyable, once the cold,
grey dawn of the morning after, breaks.
Devaluation Seems Certain
That the dollar will have to be de-
valued seems certain. Its official worth is
false and indefensible. But in a rich
country, headed by ingenious men, the
process can go on a long time, especially
when the foreign interests who have it
in their power to topple the American
currency are reluctant to do so, and join
happily in every scheme and device that
Washington proposes to stave off the day
of reckoning.
Devaluation of the dollar is coming.
Next week? Perhaps. Next month? Per-
haps. In 1964? Possibly. And we say this
because it is incomprehensible that the
Administration will embark upon an elec-
tion campaign with the Damoclean sword
of sudden devaluation hanging over its
head - only a thin thread saving the
government from the necessity of cutting
its money and throwing the whole econ-
omy into a state of frantic uncertainty
and probably costing it the campaign.
From whence will danger strike?
France possibly, or at least that seems
a likely direction though there are myriad
areas of attack. But France appears re·
calcitrant. It has gained domination over
Europe politically. De Gaulle has it in
his power to dump the dollar overboard.
and in the aot gain more power and
prestige - of a dubious sort. We remem-
ber that it was France that dumped
Britain's currency overboard in 1931,
and brought about that stirring series of
events which led to devaluations right
and left and ended with the price of
gold rising from the price - more than
a century ago - of $20.67, to $35. Brief-
34
ly, France then demanded that Britain
pay her national current debts to France
not in pounds but in gold. The U. K.
ran out of gold and had to raise the price
it would pay in order to attract gold with
which to refill its Treasury. Is there not
an analogy for us to ponder today? There
is.
France Is Key
France is the king pin in the money
world overseas. She has mountains of
dollars in hand or commandable. She can
demand gold for those dollars. And the
United States hasn't nearly enough gold
to meet the demands - plus those that
would crowd in from every side once
other countries, and the private currency
jackals hovering around the edge for the
big kill, see the United States in deep
trouble. Quite a few Americans realize
that their country is sitting on a bomb
with a short fuse - a bomb that could
wreck, financially, as great a disaster as
the nuclear bomb could inflict physically.
Is it in the power of Washington to
avoid monetary catastrophe? It is. Yet
all the reading of currency events of 30
years and more say that governments
hestitate to do the right and obvious
thing. They take half measures which
only reveal their plight to all beholders
and, in the end, necessitate measures
and ensure events that are more bitter
than those timidly failed to overcome.
For instance, the United States might cut
its dollar by lOX. That would not re-
assure the outer world. It would only
advertise the country's plight. It would
not bring in gold to replenish the de-
pleted stocks. It would only say to all
the world that more cuts were to follow
and create at home a state of deep
anxiety and abroad an atmosphere of
nervousness.
America should devalue by a prompt
50%. But we are willing to bet they won't
- not until dire business difficulties force
action. And by such difficulties we need
only mention the '30s. They can come
back. The difference between '29 and
now is that previously the mass of spec-
ulators were out on a margin limb. (At
least, that's the popular story but a great
many other factors were in play.) Today,
it is governments of all kinds that are
out on a limb. and millions and millions
of little people who may not owe money
to their brokers but do owe it to' the car
companies, to the companies that sell
appliances, homes - all the innumerable
companies that have provided the masses
with easy credit.
Orgy Of Debt
Everybody from Washington on out
has been engaged in this piling up of
deficits, of buying more than they have
the ready money to pay for. It is easy to
imagine that never in history have we
seen such an orgy of debt. Big deficits
during a great war are to be expected.
The national life is at stake and paying
the bills is of secondary moment. How
are war bills paid? By inflation. Those
bills are so huge that it is hopeless to
expect that they can be met at the old
price of gold and the new value of labor.
So, it's excusable when a government
embarks upon deliberate inflation so that
the dollar becomes two dollars and the
war bonds are chopped in half and can
thus be paid off. This is rather rough on
the people who kept the war bonds and
bought more bonds and found upon re-
demption date that they wouldn't buy
nearly as much groceries, or labor, or
anything else. as they used to.
We say war-caused inflation is ex-
cusable. But inflation to make the voters
feel good, long after the need of it is
past, is not excusable. It is robbery by
government, and it is not to be condoned
simply because everybody yells for it so
that they will seem to be getting richer
faster, making higher profits in their
businesses, taking home bigger pay
cheques. Unfortunately the spree has
to be paid for in terrible headaches.
There's quite a bit of queasiness around
already. There is unempI0y.nent,. and a
shrinking of profits in business and in-
dustry - masked by remarkable l-rofits
in a few favored places - and there is
a slowing down in the rate of national
growth that frets people who do the
thinking for the rest. And, in very simple
language these anxities and troubles that
beset so many Americans today are due
to lack of confidence in a currency that
has become soft where it used to be
hard, and in a business atmosphere that
has become uneasy where it used to be
eager and bold.
Strong Measures Needed
What is seen today was long ago fore-
told by history students who insisted that
a country that does not maintain its
national credit at a peak level, that lets
its gold stock slip away, that does not
keep its money firm and steady. is asking
for trouble. What is seen today is just
the beginnings - unless the government
turns completely around and installs
strong measures to rehabilitate the cur-
rency and the economy, and to end the
35
everlasting inflation that besets them.
But, can anybody imagine the present
Administration putting a full stop to in-
flation and arousing the ire of labor-
voters, and business interests, and, in-
deed, the people at large? We can't.
Therefore, we are afraid that it will take
a terribly depressing experience to force
a change to sound practices. In the mean-
time, Washington will continue to play
around with schemes and stratagems to
avoid and defer gold losses. One wise
old European codger has likened these
devices to the kiting of cheques - a game
in which a delinquent writes a series of
bum cheques, which he deposits, in order
to meet the first of his worthless cheques.
This is a business, looked upon balefully
by good bankers and by the law, which
comes to a rueful end. A government is
the law, but it does appear that the
United States is accumulating new and
devious promises to pay which it will not
have the gold to meet when the accounts
are toted up.
When Devaluation Comes
We should hark back to the question
propounded by readers who wonder what
will be the worth of their money come
the day the U. S. devalues the currency.
Some weird notions are held by some
in this matter. Some actually think that
on that day they will find their savings
cut in half should the dollar be devalued
by 50%, say. All stocks, they fear will
drop by 50% and bonds, and goods on
store shelves, etcetera. But, that's not
the way it works in democracies. It works
that way in Russia, but Russia is different.
It simply expropriates a percentage of
bank deposits and such-like wealth, and
slaps on a new set of store prices and a
new level of wages. But then, Russia is
not a free economy.
After devaluation the dollar will feel,
look, act like a dollar. It will still buy a
dollar's worth of goods in stores. Ten
thousand dollars' worth of stocks or
bonds will still be worth ten thousand.
That goes for real estate, insurance, mach-
inery, everything. And it will continue
to hold good, this Tule, provided the gov-
ernment sets its face sternly against all
acts of inflation and profiteering. That's
quite a big if. But, in Canada, we had
a devaluation last year and the rise in
the cost of goods has been very small.
And, this is interesting because Canada
is a big importer of all manner of goods
and the bills that have to be paid for
these imports run roughly 10% more than
pre-devaluation.
The big point is that when a country
devalues its currency the effect of the
action is largely external. Internally, the
money is still the same old money - or
should be unless the government runs
wild and lets the people run wild. For
America, the saving grace is that com-
pared with its overall billions in annual
business its imports are very smalL Intern-
ally made things need not be affected,
money-wise. And on the other hand, the
goods Americans export abroad will be
cheaper to the foreign buyer and thus
more attractive; thefll be cheaper be-
cause the foreigner s money will buy
more dollars than they did before the
latter were devalued. That ought to be
good for business in the United States.
It should boost employment and business
in general. Our baby-devaluation has
been good, that way, for Canada.
Will Others Follow?
The whole proposition is "iffy," by its
very nature. If other countries follow the
American action to the same extent and
devalue, too, then the goodness in the
way of help to American business could
be cancelled out - along with the Ameri-
can advantages in buying gold. If the
U. S. devalues by 50% and the U. S. price
of gold would rise to $70 an ounce and
the metal would come flooding back,
lured by this high figure to American
shores. But will other countries stand
placidly by while Uncle Sam grabs all
the newly-mined gold and persuades the
hoarders to sell him their metal. Not
likely, it could be guessed. It all depends
on how much leeway, or lead, the United
States gets, and whether other countries
can, or will, devalue as deeply.
Some persons will say what's the sense
of thinking of devaluing the Amerioan
dollar, it will get the country nowhere.
The response is that this is not true. And
there is no other way out if the dollar
is to hold the world's faith. And the fact
that the dollar is not really worth 100
cents anyway, and the pretense of saying
that 40 cents is 100, sets up stresses and
abnormalities that intensify the money's
difficulties. Anyway, the country can't
go on the way it's going, piling up dol-
lars abroad that are an overhanging
claim on the eroded gold pile. Something
has to be done. It is the hope that some-
thing constructive will be done that up-
holds the stock market.
36
Effect On Savings
And that brings us back to the ques-
tion of how devaluation will affect the
savings and investments of Mr. Man on
...
the Street. There is a point worth noting.
Devaluation will not be undertaken un-
less things look pretty bad. When they
look bad markets will be going down
because holders will be disturbed, and
some frightened out. Or maybe they'll
prudently anticipate such a state of
affairs. The stock markets may be a buy
around devaluation time. That's been the
common experience during the scores
and scores of devaluations that have
taken place in the past SO odd years
around the world. The usual thing has
been that governments delay a deval-
uation until business and personal trou-
bles are all but overwhelming.
Gold shares have come back into trad-
ers' interest in recent weeks and the
reason is that the failure of the U. S.
Treasury to cure the imbalance of for-
eign payments despite their most earnest
efforts. The people in that department
have staunched the outflow of gold to a
considerable extent. However, the meas-
ures they have employed in respect of
gold have made their endeavors suspect,
for they include steps ordinarily used
only by banana republics and they move
far away from the proven attitudes and
actions of a strong and confident country.
Payments Imbalance
It is the imbalance of payments that
disturbs bankers and other monetary
sophisticates. This grows, and the in-
ability to check it contrasts sadly with
the promises, or advertised attempts, of
the Administration to have it stopped,
and turned around, by this time. Pres-
ently, there are suggestions that Ameri-
can interest rates be raised to bring in
more foreign capital and thus offset the
American outflow of funds. But there is
great fear in the land that higher inter-
est charges would bring setbacks in busi.,
ness. Politically, a jump in interest rates
would be anathema.
A big factor in the payments deficit is,
of course, the necessity to defend the
country against an implacable foe that
has the advantage of not being bound
by democratic money principles, and that
can confiscate its peoples' savings, and
command their labor, at will. And the
United States feels compelled to spend
funds freely to rally its allies. It is
scarcely to be wondered at that some of
those allies, including Canada, seem to
Americans not to act as enthusiastically
as could be wished in the common de-
fense.
Another item among the many in the
payments question is the obstacles to ex-
panding American exports. An example
is the suggestion that American steel
prices be inoreased. Such an action could
cut down exports - and increase im-
ports - and thus add to the imbalance.
This goes to show to what extent the
national policy of inflation, and the grip
it has gained on the economy and all
political thinking, endangers the entire
nation. But what party can be expected
to impose the harsh measures that will
stop inflation and turn the country
around!
Surpluses Are Few
The budgetary deficits, which every
party has contributed to, have been cited
as l:l. prime cause of inflation. Might it be
better to say it is but a symptom of the
economic philosophy that has seized the
people. In the past 32 years the govern-
ment has had a surplus over expenditures
in only six years. The national debt in
those years has risen from $16 billion to
$305 billion and the dollar has dropped
from 100 in buying power to a quoted
46 cents - although we should think it
has fallen even lower, judging from the
amount of labor the present dollar will
bring compared with 1940; for just one
thing. That inflation has helped produce
the slow rate of growth that is such a
commOn concern is beyond doubt. Yet a
deficit of $8 billion is spoken of for this
fiscal year, and if the tax cut goes
through it will rise to $20 billion next
year, so many economists insist.
The gold stock has shrunk from almost
$25 billion in 1950 to a net of $15 billion
today. In that period the foreign net
short-term claims on American gold have
soared from $7 billion to over $20 billion.
One writer likens the situation to a
$16,000 house that carries a mortgage of
$20,000, a mortgage due and payable
whenever the holder decides to demand
payment. There is the rub in the gold
question. The demand for American gold
is quiet just now and the losses small.
But who can say when a wave of fear
will sweep over some central banker who
owns dollars but wants gold. The demand
might mushroom to frantic proportions,
and do so overnight. That is why we
started off by saying devaluation might
descend in a week, or a month, or wait
years.
The Cu re Is Known
Through any review, anywhere, of the
monetary field the reader is bound to
detect a thread of futility, almost of
hopelessness. And it is no longer pos-
37
sible to oharge that such reviews are a
product of the gold mining interests.
They are to be seen on every hand in
the American press, and heard on the
air. Yet the outlook is not hopeless. The
cures are available if the courage to
administer them is summoned up. And
all of us have this to give us heart and
encouragement. An increase in the
world's above-ground gold reserves, to
meet the modern needs in these expan-

sionary times, would tremendously bene-
fit trade arid business. It would make
adequate defense supportable. It would
finance the space age. It would permit
something that is close to the heart of
everyone: raise the living standards of
human beings, and calm the cries that
rise from the less fortunate.
Mr. Kennedy has said that there is not
enough gold to meet the needs of busi-
ness. It is hopeful that he knows this .
CHAPTER 10
Joe and the Mine Broker
B
oth Mr. Collins and Joe agreed that the Northern Miner article was
an excellent exposure of the goldless monetary crisis facing the
nation. The question was: would the President, who in other govern-
mental departments has taken a decided leadership, continue to submit
to having his Treasury department run by Internationalists. Mr. Collins
held that surely the President must eventually admit that our monetary
system, originated by Communists, and devoid of a gold backing, would
eventually lead to an economic collapse. Even though the International
Monetary Fund was gathering in our gold the U. S. system of which we
have always been proud, would hereafter be subject to a one-world
organization. We could no longer survive as an independent nation.
The taxes we now pay for the operation of our own government would
be collected by the One-Worlders.
"That is the situation which faces us if we don't quit taking orders
from the Internationalists," concluded Mr. Collins. "There was a start
made in that direction in Congress in the summer of 1962. Congressman
Carroll D. Kearns introduced his House Joint Resolution 816 that would
have stopped the rape of our gold supply by foreign dollar holders. It
would have put an embargo on the shifting of our gold to foreigners.
It would have repudiated the Bretton Woods Agreement, a communist
conspiracy. I don't see what our Congress is thinking about when it
approves the loss of all our gold and an utter dependence on paper
money. We still have enough gold left if a few leaders in Congress have
enough guts and ability to turn the table. I forgot to note that the com-
munists in our government and the foreign gold grabbers saw to it that
Carroll Kearns was not reelected in the November election of 1962.
They have so much influence in our elections that they can reach out
into any state, no matter how remote from Washington. It's a situation
that needs a national expose. If we don't get them they w:ill get us.»
It was late when Joe left the Collins home and headed for his min-
ing retreat. He'd have a lot to report to Harold and decided that he'd
better put in another week at moss mining. He needed travel money.
38
~
-
He was finishing his letter to Harold, containing the Northern Miner
monetary discussion, when he had a caller. He introdpced himself as
John J. Clemens, a mine broker. He was well dressed, drove a Cadillac,
and made a very snappy appearance. He knew all there was to know
about gold mining and knew all the best properties, many of which he
could deliver to buyers or leasers. Joe was curious to,know how Clemens
got his name and found out where he was located. "Oh, Placerville is
a small town and I get around," smiled the broker, immediately starting
in on information regarding his stock in trade. '
He had the best gold mines and claims in EI Dorado County and in
a number of other mining districts. Now was the t ~ m e to get a property,
he said, as everything pointed to the fact that Washington would soon
be forced to raise the price of gold. It wouldn't do to wait until after
the raise. Properties would 'be out of sight. He conCluded his oration
by offering Joe one of his own claims, 20 acres, for a price of $7,000.
He would give Joe an opportunity to get hold of one of his own personal
claims; he wanted Joe to make good.
"I question your idea that we are on the verge of getting a better
price for gold," said Joe. "Before leaving New York I went into this
matter with people who should know and came to the conclusion that
Washington is no nearer to the change than it was five years ago, al-
though I am forced to admit such a move has become a vital necessity;
and not because the gold miner can't operate his property on the present
gold price. Anyway, why is your claim any better than one I could
locate myself at no cost?"
'Well, I'm located right next to one of the county's biggest producers,
the famous Alhambra, which has produced well over two million dollars."
"What work have you done on it?'> asked Joe.
"Being that close to such a rich producer I don't have to do any
work," was the answer.
"'How about 'Discovery' and 'Assessment' work?" questioned Joe.
"That's all done and proof of it recorded in the courthouse," said
Clemens.
"In doing this work what evidence of minerals did you find on the
claim?" asked Joe.
"You don't have to find are," responded Clemens. "The law says you
only have to do so much work. That has been done and the claim is in
good legal order."
"Have you been subjected to Public Law 167 as yet? When you don't
have anything to show and the Bureau of Land Management wants to
take over your tim her and the entire surface of your claim, how are you
going to hold it without a mineral showing? I hav.e been reading up on
that law and just yesterday came across one of the Bureau's statements
39
on just what we are discussing. Here it is." He let Clemens read it.
lt stated:
Numerous recent inquiries on the sale
and purchase of unpatented mining
claims have resulted in an admonition of
caution from Henry Branagh, supervisor
of Tahoe National Forest, who stated
that purchase of mining claims without
a careful check of their validity often
leads to financial loss and disappointment.
"A quit claim deed is worthless if the
claim on which it is based is invalid,"
Branagh said. "A claim may be invalid
for a number of reasons, including im-
proper location procedures, location on
withdrawn lands or lands already filed
upon, absence of a valid discovery, and
occupancy and use for purposes other
than mining."
Prospective purchasers are urged to
inspect the claim site, verify discovery of
valuable minerals, and inspect land status
and location records at the county re-
corder's office. A check with the local
forest ranger should also be made for
additional information.
. Branagh emphasized that it is the pol-
iCy of the forest service to encourage
legitimate prospecting and mining on
open National Forest land. Rangers are
available to assist and cooperate with all
persons engaged in suoh endeavors.
The forest supervisor advised that it is
illegal to stake or hold a mining claim
for purposes other than mining.
During a recent survey on Tahoe
National Forest, numerous mining claims
of doubtful validity were found. Mineral
examinations are currently being sched-
uled for those claims occupied by build-
ings. Where examinations indicate the
claims are not valid, contesting action
will be initiated to restore the land to

Those interested in correct procedures
under the mining laws may obtain, fr«::e
of charge, several circulars pertaining. to
United States mining laws from the Land
Office of the Bureau of Land Manage-
ment at Sacramento. Circular 1941 with
the following additions. Circulars 1961,
1970, 1993 and 2007 are most useful.
An excellent publication, "Legal Guide
for California Prospectors and Miners,"
is available from the State of California.
Department of Natural Resources, Divis-
ion of Mines, Ferry Building, San Fran-
cisco II, for $1 plus sales tax. Also,
rangers on the forest are generally located
so they are readily available for mining
infonna tion.
"Oh shucks, that's just for people who don't know any better'" said
Clemens. "They can't fool me with that kind of stuff. When it comes to
mining claim laws I know better. If you are going to let them scare
you out, you might as well go back to New York. We want miners out
here willing to stand and fight for their rights. A government boy will
tell you anything he thinks you will swallow. They have ruined a lot
of good milling ground.»
"N evertheless without a good mineral showing, and a commercial
supply, I don't think you can hold that claim when they get to working
P. L. 167 on you. If you think you have rich ore you better get to dig-
ging and expose it. Then I might be interested," said Joe, giving his
visitor to understand the visit was over.
The next day Joe called on the Collins, telling of his mining visitor.
He repeated the conversation and was pleased when John commended
him for the way he handled the situation. "That fellow is a Number One
slicker. tried to unload claims on a lot of folks and, as you suspect,
I don't think he can hold them. The Bureau of Land Management will
get to him soon so we won't worry about him. However, the government
boys do pull just about as many tricks on honest -claimholdersas the
phony ones do on the government. They hold if you don't happen to
have a market for your mineral you haven't made a discovery and there-
40
fore don't have a valid claim. They won't let you build a road to your
claims and then because you have no access they tell you you haven't
made a discovery. They won't let you build a cabin on your claim which
makes it impossible for some to develop a claim when they live at a
great distance. Yes, the G-Boys are giving us a bad deal. I note Con-
gressman Baring of Nevada and some of the Colorado House members
want to investigate. the Bureau's policies but with Congress spending all
its time trying to pass legislation that will keep the spenders in power
for another term, what can a few members do?"
Mr. Collins continued his statements about government interference
with claimholders by bringing out late copies of California Mining J our-
nal which he suggested that Joe read. Joe thanked him and that night
gave the pages several readings, desiring a thorough understanding of
just what the claimholder was up against. This is what he read:
The Forestry Service now claims that
the occupants of mining claims must be
booted out so they can properly admin-
ister the surface rights given to them by
Public Law 167. Although they admit
that the law does not permit them to
interfere in any way with mining, pros-
pecting or operations pertaining to these,
they are by-passing this law by declaring
all mining claims null and void.
The top officials of the Forestry Service
now place the ejection of these people
from their homes in the same category
as bug and disease eradication, and are
asking the state and county officials to
assist them in this diabolical plan. The
program for evicting these claimholders,
allegedly written by a B. of L.M. man
on loan to the F.S. in San Francisco, is
contained in a Forest Service Handbook
called "National· Forest Minerals Man-
agement," prepared by Mineral Section
Division of Lands, Region 5, and we
quote:
Mineral Management
"The Bureau of Land Management ad-
ministers the general mining laws through
the Lode and Placer Regulations ( 43
CFR Part 185) and the Rules of Prac-
tice (43 CFR Part 221). An agreement
between the Bureau of Land Management
and the Forest Service provides for joint
administration of the mining laws and
mineral leasing regulations on national
forest lands,"
Suggestions
"'On the assumption that you are in
more or less agreement with these obser-
vations we come to a facet of the mining
law operation with which We are most
concerned, namely that of occupancy.
Before the matter can be logically dealt
with, however, answers are required for
two questions. The first is whether. in
light of having the right to harvest vege-
tative resources on mining claims having
right of access across them and author-
ization to manage other surface resources
of land involved by mining claims, we
are individually and collectively con-
vinced that occupancy is a problem.
Secondly. whether, on an individual and
collective basis, there is willingness to
provide the time and money needed to
do a job. comparable to that being done
in other fields such as in fire, in bug and
disease control, in timber harvesting and
reforestation, in road construction, etc."
Heading Off New Occupants
«For the present, it would be our rec-
ommendation that primarv consideration
be given to one part of the problem.
namely the prevention and heading off
of new occupanCies. Once we get on top
of that job, attention can be diverted to
that of resolving old occupanCies on a
case by case basis and as time and Cir-
cumstances permit."
"Briefly and broadly our thoughts, and
we feel sure ·some of yours, are that ways
and means must be devised for deter-
mining where and when new occupancies
are likely to come into existence. For
instance, county records could be period-
ically searched and whereabouts of new
filings and place of residence or owners
thereof ascertained; arrangements might
be made with county offiCials issuing
building permits to furnish you with a
duplicate copy of permit or notice of
where and when construction is immi-
nent; all forest personnel, patrolmen, etc.,
should be alerted to immediately report
evidence of mining claims and indication
of possible intention of construction
thereon, etc."
41
A Far Cry For Taxpayers
"We are sure your efforts in this regard
can and will become an interesting and
rewarding experience. By no means do
we wish to imply that you are going to
prevent all unauthorized occupancy. We
can say, however, that you are in a posi-
tion to save the taxpayers a substantial
amount of money and yourself and the
Forest Service a lot of time and effort
through timely and judicious effort on
your part."

CHAPTER 11
Bureaucracy and the Mio·er
I
n reporting all the mess created by the Bureaucrats in their manage-
ment of mining on public lands to Harold, Joe could not overlook
stating that it looked very much like our United States government is
definitely against mining despite the statements of the two deparments
- Agriculture and Interior - that they encourage mining. He wrote that
he had about come to the conclusion that the mines, the prospects and
future discoveries were what the Bureau of Land Management was after
- and by hook or by crook.
In further discussing this matter with Mr. Collins, the latter said he
knew of many instances of "dirty work at the crossroads:' He knew of
a boy who had been paid money by a Forest Service official for knock-
ing down claim monuments, and tearing up notices. Another instance
down Sonora way: A very old miner, too old to have to do a job over
twice, told of his shaft having been filled with rocks. The Forest Service
boys at Sonora blamed the thing on boys but, as Mr. Collins held, no boys
would care to work that hard.
Along the same line Collins brought forth a printed statement by a
Mr. Glen Cole of Rialto, California, which showed the duplicity of the
Bureau of Land Management and that as for encouraging mining, their
claims were just so much Indian bush-wah. Cole's statement was as
follows:
For the past seven years I have
watched the Bureau of Land Manage-
ment and the related U. S. Forest Service
spreading out through the fateful loop-
hole known as Public Law No. 167. I
have watched them expanding and ob-
served them growing more bold and
brazen with each passing month until
they now boast that their goal is the
stamping out of all private mining and
the revocation of the mining laws of our
country.
In recent conversations with Edward
F. Kruskie, "Valuation Engineer (Min-
ing)" out of the Riverside office of the
B.L.M., in the presence of witnesses, he
verified the goal of the B.L.M. and
stated that there was nothing we could
do to stop them inasmuch as their actions
were in line with the "Policies of our
President." Kruskie had been sent to the
Blythe area where the conversations took
place, because of the large tonnage of
building stone being shipped from this
area. The primary target of the B.L.M.
was to convince the owners of mining
claims that they must relinquish their
mining claims and apply for a permit
giving them the right to pay the B.L.M.
a .royalty for the stone and other saleable
minerals from their former mining claims.
Kruskie's standard procedure in accom-
plishing this goal has been to contact the
claim holders separately and importune
them to their mining claims,
offering them: (1) The "protection" of
the Gov. while purchasing the materials
from the Gov., (2) They would not have
42
to pay income tax on the royalties paid
to the Gov., (3) They could operate on
much larger acreages than they had
under mining claims, ( 4) They could
have material sales pennits right over
the best deposits of other claim owners
because they were able to apply first,
( 5 ) They would not have to pay "pos-
sessory right" taxes upon the large acre-
ages involved.
If the many promises of «advantages"
failed to get the claimholder to sign
away his mining claim rights, then threats
of imperium followed swiftly. Kruskie
would declare the claims to be invalid
under the common variety clause of P.L.
No. 167 and have the Riverside office
issue a notice of trespass against the
claimholder, with the threat that the
U. S. Govt. would take action against
the individual if he did not immediately
vaoate and relinquish his mining claims
and pay retroactive royalty on all mater-
ials removed or sold from his claims.
I have proof of this on file and also
proof that the B.L.M. has issued Material
Sales permits right over valid mining
claims in the Blythe area, many of which
were located prior to the passage of P. L.
No. 167. The B.L.M. pressure in the
Blythe area is because true "Driftwood»
building stone, an eroded alluvial Wol-
lastonite, occurring only in the Blythe
area, is now the largest selling building
stone produced West of the Mississippi
and our Public Parasites sensed an op-
portunity to obtain substantial additional
royalty payments for their dept. while
simultaneously setting a precedent for
declaring all building stone a "common
variety" in their intent to use P. L. No.
167 to destroy all private ownership of
mineral deposits. Khrushchev should
award them Hero badges for their dedi-
cated efforts in the conversion of our
country to become the U. S. S. R.
To date, the only consistent objection
to this communistic encroachment upon
our free enterprise system has been the
articles published in the California Min-
ing J oumal, which has been discredited
as much as possible by the B.L.M.
I represent a growng group of individ-
uals who wish we could ignore the mon-
strous leech that has been fattening upon
our tax money and now even more upon
the royalties paid by the blood and
sweat of the people who work for a
living, but it is grimly evident that we
must fight or surrender, with surrender
being a substitute for suicide.
To fight, we need weapons, men, and
money. The weapons we need are over-
whelming files of facts and proofs of the
cold war that is being waged within our
midst, using our tax money to destroy
our way of life.
Joe called at the Collins home the next day, wishing further to dis-
cuss this treatment of claimholders by the Forest Service and the Bureau
of Land Management. Collins brought out another California Mining
Journal clipped page dealing with the matter. He explained that the
claimholder within a National Forest had two bosses, the Secretary of
Agriculture and the Secretary of the Interior, the former having charge
of the surface growth and the latter being mainly concerned with the
minerals. "'Between the two of them and their thousands of field men
the claimholder doesn't have an easy bed to lie in," volunteered Miner
Collins.
"'Take a good reading of this second clipping. It was fine for the
Mining Council president to send that page out of the Forest Service
Handbook to a especially a Westerner who no doubt
would be interested in how his mining constituents were being treated
by hjs government, but just how much good it did I will leave to you
after you have read the page. Simply changing the wording of the text
in the Handbook isn't going to change the ways of the field men, bent
on eradicating the c1aimholders. Looks to me as if the brass in Wash-
ington tell the field men: CWhat we put out here is for the general pub-
lic; you're supposed to proceed and get control of those claims and
with the quickest and best method you know. It's public land and should
43
be held for the benefit of the public, not for just a few claimholders
pretending to mine.' If that isn't creeping socialism what is? And it
looks as if Orville Freeman has put one over on Congressman Wayne N.
Aspinall who passed it on to the miners."
Joe took a quick reading of the Journal page with, "Looks like you
are right. Merely changing a word here and there in that infernal Hand-
book is just a blind. They have put it over on the claimholder a g a i n ~
with the help of a congressman."
This is how it was done as stated in the Mining Journal page:
Recently, Western Mining Council ob-
tained a copy of the Forest Service
handbook, wherein it is stated that the
occupants of all mining claims would be
evicted. (See page six of our August
issue). The President of WMC, Ino. took
exception to the language used and sent
the manual to Hon. Wayne Aspinall,
Chainnan of the House Interior and In-
sular Affairs Committee. The Chairman
concurred with WMC as to the language
used, and in a prompt and efficient man-
mer straightened the situation out with
the Secretary of Agriculture. We are
reproducing these letters below in hopes
that the miners appreciate the actions of
Hon. Wayne Aspinall enough to drop
him a letter of thanks.
# # •
Mr. Newell H. Leppert, President
Western Mining Council, Inc.
631 Eden Ave., San Jose, California
Dear Mr. Leppert:
,Further reference is made to our corres-
pondence relative to the statements con-
tained in a training booklet issued by the
Mineral Section, Division of Lands,
Region 5 of the Forest Service titled
«National Forest Minerals Management"
which you submitted for our consider-
ation.
I think you will find of interest the
enclosed copy of a .letter from the Sec-
retary of Agriculture. As indicated in the
letter, the action we took resulted in the
Secretary directing a revision of the man-
ual in order to remove the statements
that· indicated a possible Department
program to preclude new occupants, in-
cluding those under the mining laws.
I appreciate your calling this to our
attention and the result demonstrates
what can 'be accomplished if these
matters are given consideration at Sec-
retary level in the Department.
Sincerely yours,
WAYNE N. ASPINALL
Chairman.
000
DEPARTMENT OF AGRICULTURE
Washington 25, D. C.
August 28, 1962
Honorable Wayne N. Aspinall, Chairman
Committee on Interior & Insular Affairg
House of Representatives
Dear Mr. Aspinall:
This is in response to your letter of
August 9 with which you enclosed copies
of pages 8 and 9 of the Training Booklet
entitled "National Forest Minerals Man-
agement," published by the California
Region of the Forest Service. You ques-
tion the clarity of the third paragraph
under "Suggestions." This booklet has
been re-mimeographed and the material
you mentioned now appears on pages
9, 10, and 11. The latest issue dated
1962, is enclosed.
We agree with you that this paragraph
could be misinterpreted if taken by itself,
and we are asking the Chief of the For-
est Service to have the Region revise it,
so that it will be clearly in line with our
regular procedures.
This Department has always recognized
the rights of the owners of valid milling
claims to occupy and use their claims,
in accordance with the provisions of the
Mining Laws. You will find this clearly
sta ted in the enclosed copy of the revised
Training Booklet of our California Reg-
ion, dated 1962, under D, page 7, and
E, page 8. These. policy statements make
it quite olear that the rights of claimants
are fully recognized.
We regret the possible ambiguity of
the statement you refer to and appreciate
your calling it to our attention.
Sincerely yours,
44
ORVILLE L. FREEMAN
Secretary.
CHAPTER 12
George Holmes, The Prospector
J
oe was very much afraid Harold would get discouraged after having
to read so much about what the government hirelings do to claim-
holders so in his next report, mailed in a real prospecting story about
a discovery that brought the prospector $3,117,000. Mr. Collins had
clipped it out of the Los Angeles Times about George Holmes who
brought a gold rush to Mojave.
Here's the
BY HENRY SUTHERLAND
Los Angeles Times News Service
YUMA - Thirty years after his dis-
covery of the Silver Queen Mine, latest
in a long line of California gold bonan-
zas hard-rock miner George I. Holmes
sho'ok his head Saturday and said of his
find:
«It may be the last."
In a comfortable Yuma residence -
Holmes divides his time between Cali-
fornia and Arizona - he fingered memen-
toes of his 1933 Soledad Mountain strike
that launched the Mojave gold rush.
"The gold is still in the ground," he
said. "As much as ever has been mined.
Any cloudburst may uncover a vein or a
telltale piece of float in east Kern
County, Calif.
Nobody looking
"But nobody is looking for it any more.
Very few know how. the
of those who do is dwmdUng. GlVe uS
another 20 years and all of the gold
miners will be dead."
If Holmes foreboding proves correct
he may be the last of a line, too - last
of the discoverers who stretch back to
John Marshall, knee-deep in Sutter's, mill
race, last of the piok and shovel mmers
who "struck it rich."
Holmes dug $600,000 worth of ore
out of the Silver Queen before selling
out for $3.17 million plus royalties on
Jan. 11, 1935.
The buyer was Consolidated Gold
Fields of South Africa, founded by Cecil
Rhodes, fabulous 19th-century British
Empire builder called the "uncrowned
King of Africa."
During the seven year!! before gold
mining was halted as a war, measure in
1942 Consolidated took a million tons
Df o;e worth $13 to $15 million from
the flank of Soledad Mountain.
Holmes Now 60
Holmes is 60 now, but still lean, hard-
handed and calculating of eye. This is
his story of how he found the Silver
Queen and the reasons why he fears it
may the last of the big bonanzas:
''I've been mining since I was 16:'
he says. "Worked underground in most
of the glory holes of the West - Grass
Valley, Randsburg, Tonopah, Jerome ..
"When I found the Queen I was leas-
ing on Soledad (mining independently
for a percentage of his production) in
Jess Knight's Elephant Eagle." .
Knight, father of fonner Gov. GOOdWIn
J. Knight and a veteran of the Utah and
Nevada gold fields, sold his Soledad
Mountain claims for a reported $520,000
after the Mojave rush.
Association Echoes
The association echoed years later
when Gov. Knight, himself a one-time
hard-rock miner, appointed Holmes to
the California Horse Racing Board for
an eight-year term whioh ended in 1960.
"You have to know that gold miners
are always prospecting," Holmes contin-
ued. "Either while at work underground
or in their spare time. It's like a reflex.
"'That Sunday, Sept. 17, 1933, I de-
cided to go up a draw on the north face
of Soledad and look at a couple of feet
of open ground (unpatented public land)
which I heard might run $12 to $14 a
ton.
"It was high up, toward the top, and
near a small side draw forking to the
left I found this piece of float."
Rock Shown
Holmes pOinted to an ordinary-looking
chunk of rock on his coffee table. a frag
4
ment broken from a similar vein by acci-
dent thousands of years ago and. in the
course of time, "floated" to the surface.
"It's argentite," he said. "Very heavy.
45
This piece weighed about 300 Ibs. before
1 sawed parts of it off.
UI knocked off samples, up there in the
draw, and when 1 got home 1 pounded
some to dust in a mortar and panned it
in an egg skillet. It was high-grade. I
figured it at $1,800 a ton."
Assays confirmed his conclusions a
few days later, Holmes reoalled. The
high-grade streak, about 18 in. wide in
the center of the vein, assayed at 45 oz.
of gold and 377 of silver.
Called Largest
"The main vein of the Queen was
1,100 ft. long," Holmes recalled. "At its
narrowest point, on the 200-ft. level, it
was 20 ft. wide, and at its widest, 100 ft."
After finding the rich float, Holmes
said, his problem was to locate the vein
from which it came.
"If I hadn't found it, r d have been
there yet," he said. "But it wasn't hard.
I trenched only about 15 ft. before I
came on it, 6 ft. under the over-burden.
"Then it was a question of develop-
ment. It took me six weeks to get out
30 .sacks of high-grade with a pick and
shovel and haul them about a mile and a
half down the mountain on my back.
Got $2,000
"But after I shipped them to the
American Smelting & Refining smelter
at Selby, I had $2,000, and that was
enough to bulldoze a rough road up to
the mine. I moved in a small compressor
and stripped out the first carload ... "
Working with typical secrecy, Holmes
mined and shipped 300 carloads during
the first 11 months of 1934, and the pick
and shovel miner became a mining mag-
nate with a $600,000 fortune.
But whispers of the bonanza spread
like ripples. On Dec. 4, 1934, The Los
Angeles Times banner-lined the story
under an eight-column, "HUGE GOLD
STRIKE REPORTED," and the Mojave
rush was on.
"Several sizable strikes were made
within five or six miles of the Silver
Queen," Holmes recalls. "Mines like Har-
vey Mudd's 'Cactus Queen' and Dr. (A.
H. ) Giannini's "Midale Butte: But the
Queen was the biggest."
Why does Holmes fear the like may
never happen again?
"Because gold mining is about dead,"
he says. "Except for the Homestake in
South Dakota, I don't know of a single
gold mine operating in the United States.
"The old prospectors are dying off.
:and no young ones are replacing them.
Without mmmg, young men have no
opportunity to work underground and
learn to know ore. And there is no sub-
stitute for practical experience."
But surely schools of mines can pro-
duce prospectors?
"Did you ever hear of a geologist
finding anything?" Holmes scoffs. "No.
And neither did anyone else. Geologists
never tell you where it is. Just how it
happened to be there after you've found
it.
"A prospector has to know what ore
looks like, and how to judge what it's
worth right now. There's no time to
wait for assays. I don't suppose I ever
missed (the value of) a car load of ore
by over $5 a ton."
Basis of Currency
But gold is the basis of our currency.
Why has gold mining declined to almost
nothing?
"Simple economics," Holmes explains.
"Under present conditions it would be
unprofitable to mine any but extremely
high grade ore.
"In January of 1934 the government
pegged the price of gold at $35 an ounce.
At that time miners' wages were $7 or
$8 a day. Mine timbering, 8 by 8s and
2 by 2s, were $40 a thousand board-feet.
Powder (dynamite) was $8 a c a s e ~ and
everything else similarly priced.
UN ow wages are $25 and up, timber
is around $200 a thousand and power
$18, but the price of gold is still $35.
The price would just about have to
double to restore things as they were.
Double on Market
"It would double. too. on a free mar-
ket. Dozens of mines would reopen and
thousands of miners would go to work.
A whole industry would be revived, but
gold miners don't look for that to hap-
..
pen.
Recently Holmes developed a Yuma
shopping center in association with Lewis
W. Douglas, former ambassador to Eng-
land and one-time U.S. budget director.
"But I'm still a prospector," he insists.
"Right now I'm wearing out my third
Jeep."
What would Holmes do if he found
the Silver Queen today instead of 30
years ago.
"I'd never find anything like that
again in 50 lifetimes," he says. "And
neither would anyone else."
Small Hope Found
Musing, Holmes found a new small
flame of hope:
46
... -
"We just might find out some day," me some samples from farther north.
he said. "I have some ideas about a place He'd been single-jacking (hand drilling)
over in the Chocolate Mountains. Going up there in the rhyolite.
to do some diamond drilling this summer. "0£ course you can't tell, just from
·'And last week an old-timer brought samples. But they looked pretty good .. "
"So there you have the story of George Holmes and his Mojave
discovery," said John Collins.
"Do you think he is right about there won't be any more bonanza
discoveries?" queried Joe. "He says it might be another 20 years before
there would be another discovery like his Soledad Mountain."
"1' d say two years," answered Collins. "It won't take more than that,
or less for Banker Douglas Dillon, the Treasury Secretary, to admit the
jig is up and we have no more gold in our legal reserve. Congress might
wake up then and decide to do something about it. Anyway two years
is the limit I put on the time the administration can keep on fooling the
brainwashed public. The worm's got to turn some time soon. So I would
not believe George Holmes that there are no more discoveries to be made.
The first discovery to be made is by Congress that the nation is out of
gold. The International Monetary Fund, now collecting our gold as it
is converted by foreign dollar holders, will give the signal. At anywhere
between Seventy and One Hundred Dollars somebody is due for the
biggest clean-up in the history of gold. The United States will be forced
to buy it back and then gold mining will thrive again ... and it won't be
twenty years from now. The hand writing is on the wall."
"During the lull in lode or underground mining George Holmes had
forgotten the new gold rush made by the thousands of users of suction
dredges. With an expenditure of from three to six hundred dollars a
tenderfoot can get into gold mining with one of these little dredges.
It's true he has to know something about how and where to work his
dredge but after drawing a few blanks he will get on to the game and
begin to have clean-ups. I'd say there are ten thousand of these dredges
at work in the West right now. The fact that their gold is free from
government control and will bring prices up as high as $140 per ounce
is the big factor that has. kept folks interested in gold mining. Our
friend, George Holmes, appears to overlook that interesting branch of
.. ,,.
mIning.
~ < T h a f s one I have to learn about myself," said Joe. «I might be able
to make the old American River give up some of its gold."
«Yes, that would open up a new type of mining for you but like all
others there is considerable to learn about it/' responded John. "Placer-
ville has been quite a dredge manufacturing center. I have talked a lot
with the makers. and the users and they all think their equipment is the
best. Some operate with the sluice under water. I tried to find out why
they were any better than those with the sluice on the surface. Nobody
seemed to know so I had to come to my own conclusion, that the gravel
under water would weigh less and perhaps handle faster.
"Some makers talked long sluice and others· short sluice, but 1 believe
47
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ ~ -
the water is moving slower at the end and would be better for saving
he long sluice is less apt to let any gold get away. In the longer sluice
the finer gold. Most of the dredges are light and portable making it
possible to get into regions where you couldn
7
t make it with heavy equip-
ment.
«One interesting fact about the dredges is that they can be operated
by girls - and do they like it. The smallest capacity is a two-incher, one
with an intake hose of 2 inches in dianieter. They are called the 'vaca-
tioners' as they usually accompany folks on their vacations. The users
can usually pay for their vacations if they know where to try their
dredges.
48

..:
<CBut what you are after, Joe, is a high. grade lode mine on the
Some day I will have to tell you the story of the Alhambra. It s
one of the new high graders," said Collins. «But first there's some
more information you should have about the Mojave district that the
George Holmes story does not touch. I mean what Cecil and Clifford
Burton did for the Mojave small miners. They had the Tropico gold
mine, a few miles west of Rosamond. Of course when the George Holmes
discovery broke everybody wanted to begin working their claims but
they had no money. The Tropico was a paying mine, thanks to men
who knew how to operate it. They also felt that the district should have
more operating mines. Somebody had to give the claimholders a start,
and Burton Brothers took the lead. They furnished powder, steel and
tools to those who wanted to get their mines open and before long the
district was humming. When the small miners got some are to the sur-
face the Burton assay office at the Tropico told them how the ore was
going and whether continued work wold pay. When they got a few tons
of are out it was trucked to the Burton mill for treatment, after which
the recovered gold was sold to the San Francisco Mint. Burton Brothers
took out the milling costs and the cost of materials advanced, the miners
having the balance to live on and continue their mining. 1 think the great
State of California should have made some move to recognize what Cecil
and Clifford Burton did for the miners of their district."
«I am sure you are right," said Joe. "1 am glad to know the Burton
Brothers story. I am sure every gold mining district would be far ahead
in development and production if they had operators like the Burton
Brothers. I want to remember their story.n
When Joe suggested a trip south to visit the mining districts, espe-
cially Kern, San Bernardino and Riverside Counties, Collins urged that
he put off going south till next winter. my early days when it got too
wet or the snow covered the ground here in the North, 1 spent most of
the winters down south. However, as soon as it got warm 1 would beat
it back to the Northern Mines."
"No doubt," said Joe, can give me a lot of tips on where to go
and what to see in the South State."
"San Bernardino County is the state's leader in the South," remarked
Collins. "It has a great variety of minerals, over 45 which have been
produced at different times. This may be due to the fact that the area
has rocks of every geological age. No matter what mineral you are look-
ing for you can find it in San Bernardino County. At the same time,
with the Interior Department's Bureau of Land Management bent on
disposing of prospectors and claimholders, the mining activity is ex-
clusively done by large companies in a few select minerals. Nevertheless
the county, the largest inJhe United States, can boast of deposits of anti-
mony, copper, gold, iron, manganese, lead, silver, zinc, mercury, moly-
bdenum, vanadium, asbestos, barite, clay, dolomite, bentonite, building
and decorative stone, feldspar, pumice, volcanic cinder, talc, salines,
boron, potassium, salt, strontium, perlite, etc. Anything in minerals you
want you can find in San Berdoo. With Washington's lack of encourage-
49
ment to domestic mining the interest in the area's minerals, outside of
a few very large operations, is now mainly confined to rockbound clubs.
some miners in the area located and began mining dolomite
for roof granules. Of course that may be termed a 'common' usage by
the bureaucrats, but dolomite is very ·uncommon.' Kaiser Chemical uses
it, combined with sea water, to make magnesium metal. I would say
that takes it out of what the Bureau of Land Management is pleased to
classify as 'common: Their law says you can't locate on the 'common
varieties'. So the miners who saw an opportunity of making a little money
off of the home builders were forced off their claims. That is common
in San Bernardino County with no aid from state or < county officials.
The same is true with decorative stone which most anybody would cal]
·uncommon'. So in case you consider going into the area don't overlook
the Bureaucrats. Recently they had so much business in Riverside and
San Bernardino Counties they moved their Los Angeles office to River-
side. The move put them that much closer to the prospectors, claim-
holders and miners.
"This morning I have been reading about the annual AFL-CIO con-
vention in New York. The main squawk was the lack of jobs. There
didn't seem to be any mention of 'the export of labor to foreign nations
and the vast sums of American taxpayers' money spent in foreign devel-
opment. Not one word, or even whisper, was heard about government
action that would open the West's gold mines. No doubt the AFL-CIO
is going along with the Treasury's gold shift program. President George
Meany was urged to work with business and governmental agencies to
create more work. To accomplish that objective he said he'd work with
all groups, 'even the devil himself if necessary to find a solution."
"If you ask me," cut in Joe, "there's been too much work with the
devil already."
Continuing John Collins said: "You can't by-pass Kern County, espe-
cially the eastern section, around Randsburg, in case you go South.
RandsDurg, like San Bernardino, has many minerals, strong on gold and
tungsten. When I read that article about George Holmes getting
000 for his discovery, the Silver Queen, I remember what Goodwin J.
Knight had to say about the deal, while he was Governor. It appears
the purchasers were disappointed in the amount of ore they found in
the mine. They needed adjoining property. It belonged to Jess Knight
and his son, Goodwin. After considerable bargaining the company bought
it for $525,000. 'If it hadn't been for that deal: said Goodie, <I would
never have been able to go into politics'.
"If you really want to find out how much and what minerals they
have in the Randsburg district you must call on Della Gerbracht. Her
camp is quite a ways out from Randsburg and out a real mining road.
She and her cousin, Rolf Meuer of Los Angeles, do the assessment work
on a lot of claims. As different miners in the area had to go to war they
turned their claims over to Rolf and Della. Considerable of the work
was done with a bulldozer, opening up are bodies, and when Rolf had to
50
-

be elsewhere Della drove the tractor herself. You can always get a line-
up of what they have on those claims by checking the prize winners in
minerals at the Kern County Fair, as they win most of the awards, some-
times first and second in the same mineral.
"And before leaving that area be sure and call on Judge James B.
Nosser at Johannesburg. The judge has been interested in mining for
many years, owning mining properties of his own.

-very prolific district, Pinto Basin, is located in the southeastern
portion of San Bernardino and running into. Riverside County. At first
this area was included in the Joshua Tree National Monument, in which
mining is forbidden. The basin is highly mineralized which caused the
miners to demand its exclusion from the Monument. Mter several years
work on their part 289,000 acres was deleted. To former Congressman
John Phillips goes the credit for introducing the bill in the House of
Representatives to open that portion of the Monument. I have seen
assays of gold-copper ore from Pinto Basin that ran as high as $223.00
per ton; and that right off the surface. And while those two government
engineers who examined over a half million acres in the balance of the
Monument reported it non-mineral; I have seen reports to the contrary.
"Bill Keys has gold mines inside the Monument. His Desert Queen
has two ounce ore. Lately he has been beset with Park Service engineers
who are out to take his claims. Every time they bring him to a hearing
he (yes, I said HE) is charged $100.00. I don't know how they get by
with it. I've met a prospector who said he could make it packing lead ore
out of the monument on his back. He reported his discovery running
60% lead. And during the uranium rush prospectors found 5 and 7% ore
in the Monument. One fellow made a rich find close to the Monument
boundary but before he reported it he went to the Park Service office
in 29 Palms where he was told he was safely outside, but after he an-
nounced his discovery the Park Service changed its mind. They ruled
him inside the Monument. And so goes Bureaucracy. Don't get tangled
up with them unless you can't help it. ----l
all when you are down south you must meet Annie Rose I
Briggs. She owns the Lost Padre gold mine, located in Los Angeles /
County, somewhere along the old State Highway after leaving Gorman, !
now on new 99. That be a rich piece of ground. I suggest you read !
Howard Clark's story appearing in the May, 1963 issue of The Journal.
Especially read the part I have marked, as it records the property to be
one of the richest. And Annie doesn't want to sell it, but she will
lease. When you get down that way be sure and see her. You might
make a deal with her. She's got a rich mine."
J
This is the portion of the story !\'fr. Collins wanted Joe
Picture a great canyon, its floor wide
enough to form a valley of proportions.
walled by steep mountains and more than
two miles of it marked with much min-
eralization. This is the region which the
Spanish learned of through Coastal In-
mans. It is not too likely that any of
these were the first in this secluded place.
It could have been the source of gold
before the 1 continent was discovered by
Europeans. But these left impressive
signs and their exploration parties mean-
51
while placed markers for miles around
which hint of plans for further investi-
gation. But the main work was in one
canyon chosen for its rich ore which
could he mined with native workers.
Some word of that came from an
American prospector who got lost and
wandered into camp by mistake. Held
prisoner for a time, he was then blind-
folded and taken by horse out into the
desert so far to the eastward that he had
no idea where he had been. But he had
obtained a grandstand view of what went
on and related it in an understanding
report to Adolph Sutro - a big name in
Western mining history - in San Fran-
cisco. According to the prospector, a
crew estimated at 200 Indians was busy
under direction of Spanish and Indian
overseers. To his report may be added
the stories handed down through three
generations of settlers along the passes
enroute to the Coast, of burro trains at
night, their burdens of casks said to con-
tain tallow - heavy tallow.
Spanish Departed In 1840
For reasons known to history and not
pertinent here, the Spanish departed
during the 1840s. The point is that their
dumps and camps told a story as did
also their miners' symbols known through
the centuries in the Americas, adapted
to their own secret code. In the seventeen
years that I have been in and in touch
with this place I have seen the six-point-
ed star of perfectly laid stone, one point
longer, the overall width fourteen feet.
The long point aimed in the direction of
a massive layout of stones forming a
Hsunburst" on a high flat, miles through
and on the other side of a mountain.
I have seen the serpent symbol - two
of them - curved lines sixty feet long of
stones in single file, the heads circles.
Many stone forms have been disturbed
by hunters, cattlemen and unobservant
persons to whom they meant nothing.
These, I may add, are the bane of all
treasure and lost mine hunters. Parts of
triangles, bars, pointers, crescents, arrows
had helped someone's campfire.
The Mystery of the Sixteen Skeletons
The rusty dumps have finally been
washed away in canyon floods. The
padres went in where possible at the
lowest points so that the packers walked
in and out on inclines or gradual steps,
one line filing in and one coming out
with loaded bags. On departure the
actual points of work were filled in and
camouflaged so perfectly that they have
been passed unnoticed for many years.
They were masters of this art of decep-
tion. A century of weather and acts of
nature have enhanced the effect of nat ..
uralness - one which the miners knew
well how to prepare for. No effort was
too mu"ch in that direction. Only the
secret symbols remained in case they
came back.
One of the most persistent traditions,
if it may be called one, which surrounds
the Spanish evacuation is that One man
remained behind with sixteen Indians to
give the final touches of concealment.
In due time 'he showed up alone with
word that the Indians had been caught
in a landslide or cave-in and thus -were
buried beyond hope. It's too late to argue
the point but in 1930 Mrs. Briggs, owner
of the claims, found sixteen skeletons in
a shallow pit. Better verification of the
main story could hardly be asked. The
next chapter was to be markedly differ-
ent.
Dr. B. F. Bragg Begins Mining
It did not come for about thirty years.
Then in the 1870s a Dr. B. F. Bragg
was active in horse racing at the Lucky
Baldwin tracks when an Indian approach-
ed him on the subject of fine horseflesh.
What the Indian lacked in money he
made up in knowledge of where the
white man could find much gold. Con-
siderably skeptical, Bragg accompanied
the Indian on the long trek to the scene
and heard something of the operations
once carried on. As it turned out, the
Indian in his younger days had been a
foreman of sorts for the early miners,
and as interpreter he had received a
good education from them. True to In-
dian tradition, technically' at least, he
would not point out any concealed shafts
or tunnels but indicated a stringer which
would lead into the same kind of enrich-
ment.
With four trusted associates, Dr. Bragg
moved in secretly and the stringer proved
out at least equal to the costs of work,·
perhaps more. But at the outset it was
unavoidable that another member had to
be included in the party. A fugitive from
the law was living in his shack on a hill
almost overlooking the canyon, safe in
such an isolated hunter's paradise. In the
interests of secrecy he had to be out in
with them. So work went on from spring
to fall for about four years.
$800,000 Deposit Was One-Fifth
Of the Take
As Dr. Bragg told Mrs. Annie Rose
Briggs, the claim owner, many years later,
52
..
they went down on an angle for about
forty feet, then on an incline not very
far, all the way in gold that became
richer with depth. Trouble with water
caused them to suspend operations while
Bragg looked for the kind of pump re-
quired. In New York he arranged with
Fairbanks Morse to design one which
could be operated by donkey power,
made to special order. It is reported on
good authority that the records of the
old Hellman Banks in Los Angeles show-
ed deposits of as much as $800,000 by
Dr. Bragg as his share of the under-
taking, presumably a fifth of the total
take. They had worked with only hand
tools into an eleven foot vein of rotted
quartz and granite where the rock could
be shaken from web and wire gold. But
trouble could not be postponed long
enough.
It's not clear as to who started the
shooting but the only survivors were the
outlaw and Dr. Bragg, with open season
on each other until Bragg managed his
escape, the outlaw also intact. It might
have come about because of that day's
cleanup, a pot weighing in for about
$92,000. It is plausible that the outlaw,
Broncho Charley Riley, was too long be-
deviled by the ribaldry of the others
because he could not go to town with his
share of the loot for an all-winter jag
like they did. Inste.ld he had to listen
to tall tales and go back to his cold-
hearted roost. Whatever the cause, it
marked the end of their labors here, and
permanently for some. Whoever reopens
the shaft may expect to find their bone8.
Riley blocked the shaft with the largest
stones, filled it and removed all traces,
as he said later, and dared anyone to
find it. Later after he had shot several
of the seekers he was found in his cabin
full of bullets .

CHAPTER 13
The Coloma Discovery
A
fter putting in another week at moss mining and doing someinvesti·
gation of suction dredging Joe decided to make a trip north to
Auburn, the thriving county seat of Placer County, so named because of
early day placer mining. Auburn was twenty-eight miles to the north
by way of State Highway 49. He had to go through Coloma. This was
his second visit to the Gold Discovery town. He stopped a short while
to see if there was any of the old gold rush excitement of one hundred
and fifteen years ago, but he concluded it could now be called Sleepy
Hollow. However, a keeper of one of the little stores there gave him a
pamphlet which told the story of S U T T E R ~ S SAW MILL AND- THE
DISCOVERY OF GOLD, which he was glad to have and mail to Harold.
Here's the story that started California on its way up. It took one hun-
dred and fifteen years to reach Number One state in the Union.
From the
CALIFORNIA HISTORICAL
SOCIETY QUARTERLY
Vol. XXVI, No.2, June, 1947
<"This day some kind at mettle was
found in the tail race that looks like
goald."
Thus was first recorded James W.
Marshall's discovery of gold at Sutter's
sawmill, Coloma, California, Monday,
January 24, 1848; simple words to record
the most significant event in the history
of the entire west.
Lumber for Sacramento
The story of Marshall's gold discovery
is largely that of the construction in
1847-'48 of the sawmill long contem-
53
plated by Sutter who recognized the
need for more lumber in rus building
operations at his fort in New Helvetia,
now within Sacramento's city limits.
After several years of scouting, the site
at Coloma was selected as fitting the
requirements of plenty of available sugar
pine and a stream to power the mill and
for rafting his lumber down to the Fort.
On August 27, 1847, a contract was
signed whereby Marshall was to erect
and operate the mill and Sutter was to
supply labor, tools, supplies and
ment. The sawmill site was staked out,
and was called simply the "sawmill seat,"
the name Coloma, or even Colluma, or
other Indian variants, not yet being in
use. Marshall chose the site with the idea
of digging a ditch of several hundred
feet across a bend in the river, thereby
diverting the water with the aid of a dam
through a headrace into the forebay,
through the mill's entire length by aid of
a waterwheel, and thence through the
tail race back to the river, powering on
its trip an undershot water-
wheel for the saw.
At Christmas, 1847, Marshall decided
to expand the mill's· partial operation by
deepening the tailrace, his labor troubles
having been solved by employing a party
of Mormons, Bigler, Smith, Barger, John-
son, Brown and Stevens.
The Discovery
On January 24, 1848, Marshall, on his
usual morning inspection of the
ting, saw something glittering in the
shallow water on the north bank of the
race. He gathered several more similar
pieces, carried them to the mill yard and
announced to the crew, "'Boys, I believe
I've found a gold mine." The metal re-
acted favorably to simple tests, and the
entire crew spent the day picking up
gold flakes to the extent of several ounces,
which was further tested by boiling in
lye water and heating in a hot manzanita
wood fire.
On January 28, 1848, Sutter and
shall carried on secret tests at Sutter's
fort, testing with acids and for specific
gravity. Fully convinced that the metal
was gold, the partners decided to keep
the secret, at least until the mill was
finished. On January 29, Marshall re-
turned to the millseat, where he confided
the results of the tests to his workers,
after pledging them to secreoy.
January 19th
Such is the story of the discovery of
gold on the morning of January 24, 1848.
Another version places the date of the
discovery as January 19th, which is dif-
ficult to believe in face of the evidence
of Bigler's, Smith's and Sutter's diaries,
which all place the date as January 24.
Added to this are statements by both
Brown and Bigler that Marshall sent an
Indian to their cabin to borrow a tin
plate to use in panning the metal; and
the Monnons had not moved into their
newly-completed cabin until the evening
of January 23.
Sutter and Marshall proceeded at once
legally to bind their title to the sawmill
property and the surrounding area, by
consummating an agreement with the
local Indians to insure peace, and signing
a three-year lease on mining privileges;
the Indians to receive $200 worth of
goods yearly for joint occupation of the
land, and to refrain from killing livestock
and burning grass within the area fixed
by the agreement.
Continued Building the Mill
True to their promise. the men at the
sawmill pushed the work at all possible
speed. They had no idea of the value
of the discovery and steady work at the
mill appealed to them more than the
risks involved in looking for gold. How-
ever, on days off and evenings, they did
hunt for the metal, giving Marshall half
their find in return for provisions. Con-
struction work consisted mainly of deep-
ening the tailrace, erecting the upper
frame of the mill structure, putting in a
new waterwheel, machinery and saw.
Two cabins were built, one on a quarter-
section below the mill, to confirm Mar-
shall's and Sutter's title to the land.
By March, 1848, the mill was ready for
full operation, but testings showed that
further deepening of the tailrace was
needed to reduce the backwater which
was slowing the saw. This was done, the
mill gave fair promise of being a success,
and with the arrival of the first few
planks at Sutter's Fort on March 22,
Sutter's dream of abundant lumber had
materialized.
Gold for Whiskey Broke the News
Having faithfully finished the mill,
Marshall's workers now devoted more and
more time searching for gold. ranging
ever f from the Original find in the
tailrace. Bigler found nuggets to the
value of $6.00 in out-cropping a half mile
below the mill, picked up $22.50 worth
in a few minutes, and eventually the
secret became too big to be kept. The;
54
~ ~ ____ ~ - - __ --------____ ~ _ ~ - - - - ~ 4 P ~ - - - - - - - - - - - - ...... ~ - - - - - - .. ----__ q ~ __ .. ~ ~ ____ ~ - - - - __ _
last pretense of secrecy was shattered
when Marshall's teamster, Jacob Wittmer,
offered gold in payment for a bottle of
whiskey, to George Smith, storekeeper
at Sutter's Fort, who wrote of it to his
partner, Samuel Brannan, in San Fran-
cisco. Also, Sutter had been unable to
keep his own secret, having written to
General Vallejo of it previously. The
Mormons wrote their friends at Sutter's
grist mill to come and see for themselves.
And by these various means the news
spread, until parties began to appear at
the mill in search of gold. Permission
to hunt in the tailrace was readily given
by Marshall.
Hunt for Gold in Earnest
The personnel at the sawmill dispersed
rapidly as the hunt for gold began in
earnest. By April, 1848, many were on
their way to the gold fields of Coloma.
Sutter experienced increasing difficulties
in getting laborers for his sawmill, and
by the end of May was forced to close it,
and also his grist mill at Natoma. May
25th, 1848, is the last day recorded in his
diary. That day's entry, "A number of
people continue travelling to the moun-
tains," is revelation enough of the gold
fever that had set in. Local then, before
a year had passed, it was to have its re-
verberations in the far corners of the
earth.
The, Rocker I. Invented
Mining methods improved from the
crude pocket-knife mining, to Indian
basket, pan, and finally Alexander Stev-
ens, unable to find an Indian basket,
devised a wooden dish from a log.
Round-bottomed, it was easier to rock
than to shake, and thus the rocker was
born.
Sutter, in partnership with Hastings
and Henry Chever, started a store in one
of his sawmill bunkhouses. Brannan had
also opened a store and laid out the
booming town of Coloma.
First Mining Report
In July, 1848, Colonel R. B. Mason
arrived, and made a thorough exam-
ination of the gold-bearing placers, com-
plete with maps, and ended his official
report to Washington, D. C. thus "My
most moderate estimate is that upwards
of 4,000 men are working in the disbict,
and that from $30,000 to $50,000 worth
of gold, if not more, is daily obtained."
This report, incorporated in President
Polk's annual message of December 5.
1848, was featured in eastern news-
papers. Publicity increased.
The gold rush to California had begun.
Coloma became the chief distribution
point for the area. Buildings mushroom-
ed into being. With this growth came a
demand for lumber. Sutter's sawmill re-
opened under new owners, Sutter and
Marshall having sold their interests for
$6,000 and $2.000 respectively. Lumber
sold for $500 per thousand. By July,
1849, gold seekers were arriving by way
of Cape Horn and Isthmus of Panama.
Marshall Driven From Coloma
In 1849 the mill closed from depletion
of timber. Marshall was driven from
Coloma for trying to save an Indian from
a lynch mob, his cabin burned and his
claims jumped. By 1853, Sutter's sawmill
stood as mute testimony of a dream of
former days.
Then Coloma settled down to more
normal activity. The gold fever levelled
off. Other sawmills 'opened and closed or
were converted to grist mills, and agri-
culture was challenging gold. Sutter's
sawmill did not even become a grist mill.
An object of curiosity. it had seemingly
passed into obliVion, as it was tom down
by vandals, its timbers to be used in
new buildings, and various parts made
into souvenirs. Only the iron crankcase
of the mill was saved by Marshall, and
presented by him to the Society of Cali-
fornia Pioneers of San Francisco.
Hangtown In 1857
The moving of the county seat to
Placerville ( Hangtown ) 1857, showed
that Coloma was on the down-grade.
Marshall's death in 1885 further marked
the end of the era. Floodwaters entirely
covered the mill site with silt and gravel.
But the site of the sawmill was not
entirely forgotten. A huge bronze statue
of Marshall in miner's garb, pointing to
it, stands above Coloma.
So that's the story of Coloma and I'm told there were many more
eolomas in the Golden State by the time the Gold Rush of the 4gers
was on in earnest, thought Joe. Harold will get a real kick out of that.
N ext stop Auburn. I wonder who I can see there, thought Joe. I
55

could try the Chamber of Commerce or perhaps I'd better see a news-
paper man. He will understand my language. So into the front office
of the Auburn lournal he went. He met a chunky and bald Vernon
McCann, Joe getting off on the right foot by first talking
switching to gold mining as soon as he could.
"Oh, gold mining is all through here long ago," volunteered McCann.
"Water is now our gold and that Placer County fruit that you used to
eat in New York is more of our gold. Gold mining is all washed up. We
had a small rush here back in the early '30's after the price was raised
from $20.67 to $35.00. At that time we had a mining magazine published
here. It's editor kept interest alive until Old Man Inflation took the
profit out of $35 gold and the mines closed down. If you are thinking
about going into gold mining you'd better change your mind and stick
to newspapers."
"You don't think the gold price will be changed?" asked Joe.
"They have been trying to change it for the past 20 years. All the
brass in Washington appears to be against it so the miners have to make
their living some other way. Right now its real estate, recreation and
water development. That's our future. We can't think gold any more,"
answered McCann. With that the telephone rang and the interview was
over. Not much encouragement thought Joe. He'd try somebody else.
He thought he remembered seeing a lumber Ad in the gold covered
magazine. Yes, it was the Auburn Lumber Company. Why not try them.
Here he met, very pleasantly, Wendell T. Robie, company head and
of a pioneer Placer County family. Robie was not afraid to admit he
owned a gold mine, a placer, located up the American River. He wouldn't
much on it right now the way the President and his money man-
3.gers were continually denying that the gold price was to be upped.
However, he admitted that one hundred dollar gold would bring on
another gold rush. There's plenty of gold left in Placer County. "My
old friend and Mining Engineer Jim Stewart of Gold Run states there
are 600 miles of ancient golden river channels in this area that are still
to be touched by a s pick. We used to have it on the surface.
The highway you drove into town on, Highway 40, used to be known
as Auburn Ravine. It paid the' 4gers one thousand dollars per lineal foot.
It's been washed to the bedrock so most of the future mining will be
underground. Howeyer, there ate still some placers which the suction
dredges are now working. Each hard winter like the last will always
bring down a new crop of gold in our rivers. We don't like to see our
national finances get bad but as they do there is one good that comes of
it: we'll have to go back on gold and we will need so much of it that
only a high price Will do the trick."
HWell, outside of one, my friend John Collins of Placerville, you, Mr.
Robie, are the first person to give me any encouragement. I ani
Robie thought Joe would be interested in the story of Pike Bell;.
known as the wad 's most successful gold pocket hunter, who was one,
of the early miners of the Auburn district. He explained that some min-
56
4 ....
ing people don't like what's called a "pocket" country, but despite all
the pockets that Pike Bell found, the lode and other placer mining proved
the county to be a real gold mining district. Here Mr. Robie pulled a
page clipped from that mining magazine that told the story of Pike Bell's
rich findings. This will be great stuff for Harold, thought Joe, especially
the fact that the Auburn area still had undiscovered pockets, or "enrich-
ments," the term mine operators like to use to get away from the idea that
the word "pocket" hurts a mining area. Here follows the story. '--___
By IVAN H. PARKER 3 miles in width. The writer believes thi
..... ,.Heproduced from our Issue, Jan. 1934) rich mineral 'area still oarries more gold
r" than has been recovered in rich strikes
A. O. Bell, who came to Placer County and later underground operations·. In only
in 1852 from Pike County, Missouri, soon a few instances did Bell's operations
became known as the most successful ch a depth of greater than 50 feet.
gold pocket hunter of the early California 'needs onl well directed ca ital to
days. Bell, who was familiarly known as pro uce go m pro lta e quan be.
"Pike," located on Bald Hill, two miles n' ....
north of Auburn, where he raised a large The present lc;>catlOn o. the ill Ice
family. e.
o
. plant .on St., m .Auburn, pro- ,
In his younger days in Missouri he was Vlded an mterestmg story m the annals
not able to attend school, but soon after of .the famous pocket hunter. There was
he settled in Placer County he became the lot a home and .from
expert as a free gold pocket hunter. He hIs mvestigabons Bell ;-yas conv!,uced
seemed to be a veritable wizard in finding t?at on tha.t lot was a hot spot. He
the yellow metal, but in all his operations fmally the owner who agreed
he never went below the surface. As his him for half the recovery.
prospect shafts deepened he sold to put m three unsuccessful, days
others who usually took out small for- gettmg m the way o.f carpenters "Ylth nO
tunes. Bell always would remark in a results, but on mght of the thlrd day
lighter vein that he «didn't want the hole awoke from hIS sleep and made. up hIS
so deep that he couldn't jump out of it." mmd. that what he had been hunting for
Knew His Formations
"Pike" knew the formations that carried
gold and was a thorough and practical
operator in his line. With his pick, pan
and shovel he would follow surface float
colors, sometimes for weeks and months
until he found the gold carrying seam
in place.
The writer, in collaboration with Mr.
Bell's sons, has been supplied with a list
of amounts, the names given to the mines
and the locations. The circumstances
under which many of the discoveries
were made would make many an inter-
esting story.
From the time he arrived in Placer
County, Bell's only occupation and means
of livelihood was his work as a pocket
-hunter. In his operations he recovered
a number of fortunes, but his motto was:
"Come easy, go easy:' and departed this
life in moderate circumstances in 1895.
,Found Gold on Auburn Town Lots
"Pike's" major operations were on the
town lots within the limits of Auburn
and the quartz mineral belt, reaching
northwest about 7* miles, a district about
was In one corner of the cellar. He went
there the next morning and took out
$8,000. And the owner's share paid,for
his house. '-
Took Out Nearly Half a Million
Bell recovered almost a half million
dollars in gold almost completely from his
own individual efforts. Mter many of his
best successes his modest cabin on Bald
Hill took on the appearan{;!e of a jewelry
store.
Following is a list of some of the more
inportant locations:
Green Emigrant, Bald Hill ...... $167,000
Crutcher Lot, Auburn .............. 1,500
Black Lead, Collins land ........ 70,000
Bonanza, Snowden land .......... 45,000
Calf Pasture .............................. 85,000
Mary Bell, near airport .. .......... 6,000
Reed, Brokaw place ................ 9,900
Bull Whang, Bean ranch ........ 2,000
Red Hill, Sullivan place ........ 3,500
Temperance Flat ...................... 10,000
Yolo, McCarty ranch ........... _... 20,000
Broken Shovel, Wilson ranoh .. 1,700
Red, \Vhite & Blue, Walsh place 750
Peter Frink, Jack Walsh ........ 9,000
Wire Diggings, Bald Hill "'_'_" 1,500
57
Slate, Bald Hill ._ ........ _ ........... .
Blanchard, Wilson ranch ....... .
Yonder, Bald Hill ................... .
Homestead, Bald Hill ..... , ....... .
Hammer, Bald Hill ................. .
Horse T, Bald Hill ................... .
Big Rock ................................... .
Ellen ......................................... .
Sunday Diggings, Goard ranch
Big Clabber, J. T. Walsh ....... .
Little Clabber. J. T. Walsh ..... .
Flour Diggings, Columbia ....... .
My Lizzie, Fulweiler ............... .
Johnnie Comes Marching Home
Missouri Lead, Columbia ....... .
Tangle A, Spealman .. __ ...... _. ___ .
Wizzard .......... _. __ ._ ....... _ ........... .
Big By Gad, J. T. Walsh ._ ..... .
Little By Cad, W. T. Walsh ... .
Merich _._ .. ___ .... _ ................ _ ... __ .... _
550
2,200
825
375
400
2,000
580
1,000
125
250
100
320
8,000
400
8.000
8.000
3,000
390
175
180
Blatting Nannie ............. _._._ ..... .
Fulweiler Eighty .... _._ ... _ ..... _ ... _.
Gree Mine, Sec. 17 ..... _ ...... _ ... _.
My Darling, Bissett place _._ ... _.
Ravine, . Wilson ranch _ ....... ~ .... .
Blue Lead ......... _._._ ...... _ .. _ ...... ..
180
13,000
7,350
425
1,700
275.
Total .. _ .................. _ .......... $480,195
Editor's Notes! Bald Hill is just ~ mile'
north of De Witt Hospital. As encour-
agement to amateur pocket hunters we
might add tha:t Ed Bell, son of the fani-
ous pocket hunter, who makes his home
in Auburn, has knowledge of the location
of 8 different pockets in and around Au-
burn. He would have taken them out
long ago if he had been able to make
deals with the owners of the properties.
"'Now before returning to EI Dorado County you will no doubt want
to see some of those suction dredges in operation,>7 reminded Mr. Robie.
~ ' C a r l Miller, a Sacramento manufacturer, is demonstrating on the Bear
'. River, near Colfax."
So that was Joe's next point of his mining education. When he arrived
he was surprised to see a large crowd interested. Miller and his two sons
had operations going. The spectators crowded around when clean-up
time was announced. The mechanism was rather simple. A gasoline
pump supplied the power which sucked up the water and gold-bearing
gravel from the river into a sluice box fitted with riffles which caught
the gold, the gravel and water being discharged at the end of the sluice.
In cleaning the riffles the gold was recovered. The day's demonstration
brought five and a half ounces of gold for. which Miller announced he
had been receiving $100. per ounce, practically three times what the
government would pay.
Joe returned to Placerville feeling he had spent a rewarding day .

CHAPTER 14
The Dogtown Nugget
I
n his investigation Joe hac( been hearing a lot about Butte County,
located about ninety to one hundred miles not:th of Placerville. He
had heard about the Dogtown nugget, a fifty-four pound hunk' of solid
gold found in that district. So to Butte County he went the next day.
He tried the Chamber of Commerce, where everybody was talking about
the Feather River dam, the big project that was to store Feather River
water and transport it almost a thousand miles to the most southerly
58
..
end of the state, San Diego County, at fint taking care of parched areas
throughout the Sacramento and San Joaquin Valleys. It was to cost one
billion, seven hundred and fifty million dollars and the engineers could
not tell how much more. Already in the desert areas of the southern part
of the state the price of land had jumped from a few dollars per acre
to over one thousand on the strength of being supplied with Feather
River water. The real estate men saw to that. Subdivisions were spring-
ing up all over even though the state government hadn't promised water
for at least ten years.
So nobody had any time to talk about gold mining. However, at
Oroville the young lady assistant secretary did give Joe a little time and
presented him a short history of Gold Production in Butte County. She
explained it was written by Capt. John D. Hubbard, a mining engineer
who had passed away two years previous. Joe thanked her for it, politely,
and went his way. It would be more grist for Harold.
Here was Butte County's story:
By Capt. John D. Hubbard. E. M.
Paradise, Butte County, California
Butte County, Cahfornia, has a remark-
able record of gold production in the
100 years of its history. If records had
been kept from the start, on the dis-
covery of gold, there is little doubt that
Butte County would lead all the Counties
of the State, with its $300,000,000 in
gold. Up to 1884, when the State Bureau
of Mines first started keeping records of
gold production, the bulk of the placer
gold had been produced.
Single Pans Ran $1,500
After discovery, the first men to come
were the Oregonians, our next door
neighbors, who had first ne':Vs. They had
the cream, not without work however.
Many of them stayed less than a week
and went home loaded with all the gold
they could carry. Single pans, as at Rich
Bar on the Feather River, ran as high
as $1500 to the pan. Rich runs, where
gold was even· picked up on the surface,
pockets, and concentrations of gold nug-
gets, made these early comers rich, and
in a short time.
The following year, 1849, the hordes
arrived and settled down to business.
Claims staked, side by side, extended
along every stream in Butte County.
Many streams yielded five to six ounces
of gold per man per day, with only pick
and pan. This held for yearS': As diggings
became more elusive, new methods were
invented. Sluice boxes, Long Toms, and
in May, 1854, miners in the Bidwell Bar
area were using canvas and rubber hoses
to wash dirt out of the hills. This prim-
itive hose was the inception of the great
hydraulic mines and giants that soon were
tearing down the hills for their golden
content. Starting with a two-inch duck
canvas hose with a nozzle scarcely an
inch in diameter, soon increased to a
four-inch pipe with a two-inch nozzle.
From this, to the famous Cherokee Mine
which in 1880, used sixteen "Giants"
with five to twelve-inch nozzles, using
40 million gallons of water daily, oper-
ating around the clock for twelve years.
But more of this in its place.
One Nugget Raised a Mortgage
In Butte County many nuggets of con-
siderable size have been found. The kind
of gold found at the old town of Evans-
ville, in Wyandotte Township, was in-
variably "coarse" being found in nuggets
of greater or less size. Some specimens
found there have run over a thousand
dollars each, and a great many have
ranged among the hundreds, one piece
weighing some $1,500, taken out near
Stringtown in the spring of 1853 was
never mentioned in print until alluded
to by G. H. Crosette in his paper in
1878. It was found by an elderly man
whose name is not remembered and who
had left his family in the eastern states
in 1849 to try his fortune in the Cali-
fornia mines. He had mined and pros-
pected from the time of his arrival in
the mines until the spring of 1853 with
no more success than was necessary for
a bare subsistence. His worldly goods
were packed in a sack and carried on his
shoulder. One day he trundled into a
spot where a shaft had been sunk to a
depth of about twelve feet and abandon-
59
..
ed. He let down into the hole and almost
the first blow of his pick turned up a
huge piece of gold the shape of a beef
heart of the value above stated. Of
he was greatly excited, and ex-
pected to be robbed of his treasure before
reaching a bank where he could safely
deposit it. Putting his prize in his sack
and telling no one of his good luck, he
started for Marysville, where he arrived
in due course and safely deposited his
treasure in the bank there. The money
he received for his nugget was sufficient
for him to raise a troublesome mortgage
on his farm in Michigan, and the old
man immediately left for his home in the
east. California had worn him down and
he had enough. But it was a Butte
County nugget that helped him to this
end.

Fluming Operations Returns Big
During the years 1855, '56 and '57,
heavy fluming operations were carried
! on along the Feather River between Oro-
: ville and Bidwell Bar. The Rough and
. Ready and Sailor claims near White Rock,
panned out largely, but the Cape Claim
• of 1857 produced richer dirt and more
of it for the season than any other. The
River was £lumed about a mile and a
half above Oroville, A. S. Hart being the
contractor on this work. One day during
the season with six sluice boxes running,
142 pounds of pure gold were taken out
in twenty-four hours. The day's work
netted $30,672.00 of which $24,000.00
came from one sluice. On the same day
John P. Norton washed from one pan of
dirt 52 ounces of gold. There were taken
out and reported during the season up'
ward of $330,000.
The gold produced in Butte County
for four months in the year 1873 was
$1,036,000, showing that the County's
resources were but little depleted by the
huge drain of former years.
'--- The Dogtown Nugget - 54 Pounds
The Dogtown (Sargent) Nugget, was
the crowning glory of the big chunk
order produced in Butte County. In 1853
Phineas Willard 10caThti---a-t!laim two
miles east of what is now Magalia and
worked it alone for some time. It was
always pretty rich and paid well, al-
though a "high bench" about half way
up from the river to Sawmill Peak. In
1858 a company was formed consisting
of Willard, Ira Wetherbee and Wyatt M.
Smith. The claim was operated by hy-
raulic methods and they had one giant in
operation. On the 14th day of August,
1859, while the proprietors were absent,
Chauncey Wright, one of the men em-
ployed, piped out a chunk weighing 54
pounds in the rough. The piece was in
a slide from the side of the mountain.
Ira Wetherbee was spending the day
in Dogtown, when, in the afternoon, sev-
eral of his men came in hurriedly, picked
him up from his chair and set him on
the counter. Thinking a terrible calamity
had befallen somebody, Wetherbee in-
quired in alarmed tones, what was the
matter. They told him he would have to
treat before he could find out. This pre-
liminary matter being adjusted, the news
was broken gently to him, after which
high carnival was held all night. In fact,
when the word spread rapidly, for three
days and nights, by the hilarious miners
from all the creeks. The «big chunk"
was left to fare for itself out in the mid-
dle of the road while the celebration
went on. At intervals the miners went
out and formed a ring around the nug-
get, started with a single ring to the right
and all men in motion, and when some
individual shoved close enough to tag the
nugget with his foot, his was the enviable
position to "set them up" for the crowd.
These tough eggs stood this for three
days and nights around the clock and
then returned to their claims, while the
nugget was retrieved and dusted off. Dr.
A. K. Stearns was superintendent of the
mine and the following notice was sent
to George H. Crossette at Oroville:
«Dogtown, 14th, August, 1859, Editor
of Butte Record; Sir: Messrs. Willard &
Co. today took out of their claim one
small nugget weighing the small sum of
fifty-four pounds and five ounces of fine
gold. Pretty good pay this. Beat it who
can! The claim is superintended by our
worthy citizen, Dr. A. K. Stearns."
The chunk was taken to San Francisco
and melted into a bar weighing
pounds and netted $10,690. The fine
gold taken out that day amounted to
$3,000, making an entire yield for the
day, $13,690. This claim was owned by
Wetherbee, Willard and Smith until
1861. California produced many other
nuggets far larger than the Sargent Nug-
get, but as this was the first one uncov-
ered it made a great stir.
Cherokee Hydraulic Produces 13
Million
The famous Cherokee Hydraulic Mine,
the largest in the world, produced some
$13,000,000 in gold in its history. A
60
..
...
book could be written on this mine, but
we must be content with a few of the
highlights. Supplied with water from 92
miles of ditches and reservoirs, Concow,
Wasteweir, Hutchinson, and Round Val-
ley, and numerous local reservoirs, in all
holding 355,000,000 cubic yards of wa-
ter. Forty million gallons of water were
used daily, or three times the supply re-
quired by the city of San Francisco at
that time. The ditches and pipes cost
$750,000. About 180 men were em-
ployed, around the clock, and an excel-
lent system of electric lighting was em-
ployed. The mine ran every day for
twelve years and lost only one shift,
September 19, 1881, when President
Garfield was buried. In 1880 President
and Mrs. Rutherford B. Hayes, and Gen-
eral William T. Sherman and Mrs. Sher-
man, visited the mines. Many other no-
table visitors were guests of the Cherokee
Mine. Sixteen giants ran day and night,
with nozzles from 5 to 12 inches in dia-
meter.
The gold was very pure, running from
973 to 983 fine. One bar cast (for fun)
weighed 317 pounds and was valued at
$74,400.63.
The gold produced in the Spring Val-
ley Claim alone, from 1870 to 1880, was
$2,650,809.18. In 1878, $315,000 was
taken out.
The Cherokee Mine is not yet worked
out and the immense tailing pile can be
reworked at a profit. Also the pipe clay
in Cherokee hill produces diamonds that
are very pure and valuable. In May.
1864, a miner found three diamonds in
Cherokee Flat. The first five diamonds
produced were worth $375. Sixty were
found up to 1882, from * to 2 } ~ karats
in weight.
Butte Quartz Mines
Butte County has produced some five
million dollars in gold from its quartz
mines, notably in the vicinity of Forbes-
town. The Gold Bank Mine of Forbes-
town produced about two millions in
gold, of which $500,000 was net profit;
worked from 100 to 125 men; shut down
by strike about 1900 that was never
settled, and «grass grew in the streets
of Forbestown" (even trees) as one side
had predicted. In this case everybody
lost, miners, owners, merchants. The
last work in the Gold Bank in 1916 by
A. J. Eagle produced about $20,000.
The Shakespeare Mine, also in Forbes-
town, produced some $137,000 in gold
and silver, but lower grade ore forced
a shutdown. There is much galena in
this ore.
The Surcease Mine produced $200,000
to date, by various owners, up to the
time it was taken over by HoeHing
Brothers. This mine also produced some
zinc and copper during the war. Other
quartz mines, such as the Banner, Chal-
lenge, Vernon, Princess, Yank6e Hill and
others, added to this total.
The Mathewson Mine, part quartz and
part placer, produced some $1,500,000 to
date. Mostly pocket formation, some 300
feet wide and ninety miles long, partly
covered by lava Haws, and really a con-
tinuation of the Mother Lode on the
strike Northwest. In 1916 the Springer
Consolidated Mining Company set up a
plant and produced 700 tons per day,
but on account of faulty tailing disposal
were shut down by Government order
until such condition was corrected. It
was not corrected, so stayed shut.
Channel Mining
Ancient river ohannel mines in Butte
County have a great record of gold pro-
duction. The Perschbaker Mine was
probably the richest in the world in its
class. This mine, together with the
Emma, Indian Springs, Oro Fino, Min-
eral Slide, and others, were rich produc-
ers over a long period of years. Many
other smaller mines added their quota.
Within a radius of ten miles of Magalia
some fifty millions in placer gold was
recovered.
Dredges Produced Over 40 Million
The lone Shore Line deltas from an-
cient river channels in Butte County
built up the richest dredge field in the
world. From 1900 to 1910 Butte County
dredges produced some three million
dollars in gold per year. At one time
there were 35 dredges operating by
twelve companies. Three dredges were
in operation in Butte County in 1947.
Up to 1916 some 40 million dollars in
gold had been produced by the Butte
County dredgers.
Summary
Butte County could easily be made the
subject of a book, but summing up we·
. have: The richest hydraulio mine in the
world, the richest dredge field in the
world, the richest ancient river channel
in the world, and the greatest gold pro-
duction of any county in California,
which also includes the world. Production
of this rich county was about as follows:
Quartz gold production $ 5,000,000
61
Dredger gold production
Ancient river channel pro-
duction
55,000,000
45,000,000
Placer gold production
from 1848 to 1947
For a Grand Total of
200,000,000
$300,000,000
In mailing in the Butte County story to Harold he stated that Mr.
Collins assured him that there were more Dogtown nuggets to be found,
the only trouble being that there were so few prospectors. If they could
retire and live off the government, what is the use to provide transpor-
tation, grub, a pick and a pan and endure the heat of the summer and
the cold of the winter. When there will be more prospectors, there will
be more discoveries.
The present-day prospectors, however, won't have to encounter the
dangers that sometimes beset the 4gers. To illustrate, Joe included th€
following story, clipped from the Feather River Bulletin, Quincy, Calif.:
By Bill Shepard
It has been reported that during the
early 1850's when migration to Califor-
nia was booming, one miner adventured
off alone to the rugged Del Norte coun-
try along California's north coast. He
prospected the foothills of the coast and
struck a rich gold deposit along a stream
in the redwood country.
The miner worked hard all day and
many times into the night digging gravel
on his claim and panning the rich gold,
until he gathered what is supposed to
have been a fortune. His goal had been
to accumulate enough until he could re-
turn to his eastern home and live the
good life.
Everything went well with the miner
until a band of Indians found him. They
left him lying on the ground, presumably
dead. The Indians went to burn the
mao's wilderness cabin to the ground,
but left without finding his cached gold
supply.
The miner recovered after the Indians
left and wandered out of the deep forest
and down the coast until he came to a
settlement. The attack had left his mind
a blank. and he had no memory of the
gold he had accumulated nor of his wil-
derness claim site.
He was somehow sent back East to his
family where he lived for a short time
before his death. The man is said to
have recovered his senses just before his
death in time to tell his friends about
the rich strike in the golden state. He
described the claim in minute detail. but
none of his friends were able to locate it.
There were other similar stories during
the gold rush. -and they all helped spur
the development of the north coast and
particularly the settlement of Crescent
City, which served as gateway to the
southern Oregon and northwestern Cali-
fornia gold fields. It's enough to make
us suspect that a land promoter with
city lots to sell might have had a hand
in encouraging the stories.
They still talk about the Lost Cabin
mine in Crescent City and a few people
think they know about where the cabin
could have been.
Another story in that area is about two
brothers who had a cabin in the wilder-
ness of the north coast. Only one of the
brothers was woodsman enough to pick
his way through the canyons, deep for-
ests and towering redwoods to get from
the settlement to the mine.
Needless to say, the brother who could
not find his way was never sent off alone
to town to fetch back supplies.
While at their claim one of the bro-
thers suffered a heart attack and died.
It turned out that he was the woods-
wise brother who knew how to locate
the claim. The remaining brother man-
aged to get back to civilization. but had
no recollection of how to find his way
back to the cabin and gold left there.
The Lost Brother mine is another that
is still searched for now and then in Del
Norte county.
Miners along the Smith river and along
Myrtle creek were making from -$12 to
$15 a day digging gold in 1854 and 1855
and the area had a great influx of pros-
pectors. The frontier merchants followed
the area prospected as a gold center for
awhile.
Jackson in southern Oregon was one
of the richest gold mining" camps in that
region, and for awhile the southern Ore-
gon miners figured they. were Califor-
nians. They voted in both states and
paid taxes to neither until it was made
official that Jackson and its neighboring
camps belonged to Oregon.
Crescent City, the jumping off point for
62
..
all the northern mibers, is still a thrivip.g
community. The rivers and beaches at-
tract people today, but noW' the visitors
are enjoying the golden life of leisure in
the beautiful North Coast country.
Coupled with the ideas about pros-
pectors and non-prospectors, Joe couldn't
resist sending this to Harold:
. Hymn to the Welfare State
The Government is my Shepherd.
Therefore, I need not work.
It alloweth.me to lie down on a good job.
It leadeth me beside still factories.
It destroyeth my initiative.
It leadeth me in the path of a parasite
for politics' sake.
Yea, though I walk through the valley of
laziness and defiCit-spending
I will fear no evjI, for the Government is
with me.
It prepareth an economic utopia for me,
by appropriating the earnings of my
own grandchildren.
It filleth my head with false security.
My inefficiency runneth over.
Surely the Government should care for
me all the days of my life,
And I shall d,well in a fool's paradise
forever. -Anonymous.
(Sent in by Sid Boise, Rt. 3, Box 596,
Salem, Oregon.) .

CHAPTER 15
Oroville" The City of Gold
W
hile Joe knew Harold and associates were far more interested in the
1963 possibilities in gold mining than in the old mining history, he
felt that as a newspaper man Harold, at least, would be interested in the
story of Oroville, located on the Feather River and in the heart of some
of the richest' 4ger ,gold fields of the state. While in that city he picked
up a copy of The Oroville Press, a page from the Old North
Californian, which was a going newspaper in Oroville in 1855. It con-
tained a lively story of the old gold mining days as follows: .
The Feather River and its tributaries
below Table Mountain made shadows of
other territories in the Far West as re-
ports concerning the fabulously rich de-
posits of gold spread across the conti-
nent. Assays revealed the placers dug
from ravines and .river beds in the area
to be the highest grade in the United
States, ranging between 900 and 990 on
a scale of 1,000 pure. It was incredible
to believe that two miles of· river-bed
just above Oroville would yield the rich-
est placer deposits in the world. As the
Argonauts prospected for placers, they
soon unearthed some of the largest and
richest quartz deposits in the state.
In October of 1849, the first claims
were staked and· the Long brothers
opened a store on a bar, which still bears
their names, two miles above Oroville.
During the same month, Alexander Simp-
son and James Law erected a store at
Ophir Flat, christened for the Biblical
city by James M. a pioneer attor-
ney. In 1855 the name would be changed
to Oroville.
Prices were high, and a banel of
whiskey, no trivial possession on the
frontier, sold for $4,000. However, the
claims paid fantastic returns}, and thou-
sands Hocked to the gold ttelds below
Table Mountain in the spring of 1850.
What once was a rugged, lonely section
of California, covered with pines, man-
zanita and oaks. became a booming,
bustling bonanza lode. Mining camps.
sprang up almost over night. Within
walking distance of one another were
Stringtown, BidweR Longs Bar, Oregon
City, Thompson Flat,.. New Philadelphia,
Adamstown aJ1.d Baghdad. There were
Centerville, J,..ynchburg, Veazie City,
Yatestown, Union Bar, Rich Bar. Natchez,
and of course,. Ophir. Nature had been
63
lavish in her deposits of gold in this
region, and man at last began to scrape
the thin surface of earth to pocket for
his own economic and social gain the
most precious and beautiful metal in the
galaxy of nature's handiwork. But gold
was not the only mineral which saturated
the earth. Soon the miners found dia-
monds, iron ore, coal and platinum.
First Mining Camps
Longs Bar sprouted several saloons and
gambling halls firsf, and heaps of pure
gold were won and lost over the tables
every night. On Sundays the happy
miners would spread blankets out on the
ground and divide their gold by the soup
ladle. But there was continuous shifting
to new diggins, and what was the lead-
ing town one day might be deserted the
next, only to become the center of activ-
ity once again no more than a week later.
About this same time Oregon City was
founded by the first immigrant party
from Oregon. Peter Burnett, first Gov-
ernor of California. came with this party
and resided in the busy town on top of
Table Mountain.
However, one town was making steady
gains throughout these infant years of
turmoil and bonanza. Someday it would
survive all its ambitious competitors. Of
all the colorful gold camps in western
folklore, none was to become more no-
torious than Ophir City, now Oroville.
Along the banks of the Feather River
grew the wildest and most dazzling
frontier metropolis of the entire early
West. By 1856 it had absorbed the other
towns already 'mentioned and developed
into a western citadel of considerable
prominence in the affairs of California.
Its reputation as the «devil's nest of Cali-
fornia" was thoroughly known through-
out the state and was. strangely enough,
guarded zealously by the denizens of
Oroville. Reform circulars, in criticizing
other towns for their "wicked ways" in-
variably concluded with, "Why, it's an-
other Oroville!" One journal even went
so far as to call the city a «drunk mill."
Granted, there were all of 65 saloons in
1855, and that number would increase
to well over a hundred a year later.
However, despite the low groggeries,
bordellos, frequent killings and general
high living of the gold-seeking Argon-
auts, the grand city possessed far more
of the so-called civilized qualities than
most towns basking in the dull Victorian
manners of the day.
Charlie Lincoln published the rousing
"North Californian," when George Cros-
sette edited the crusading «Butte Rec-
ord." In 1855 Bela N. Seymour, a young
Congregational missionary, and his bride
Emily, arrived in Oroville to' found and
build one' of the first churches in the
state. Over eight lodges met regularly,
among them, E Clampus Vitus, whose
singular reputation for good times was
unsurpassed. It was said that a man was
so embarrassed after his initiation into
the lodge that he left town until he
could bring another prospect to endure
the same.
However, what may oause even more
surprise for a community of such ad-
mittedly slovenly and obstreperous habits,
it boasted a debate club and two thea-
ters, which catered to the finest thespian
troupes from San Francisco and New
York. In no other northern mining town
was the avid pursuit of the theater evi-
denced more than in Oroville. One of
the largest theaters in the West was
built to prove it. The Oroville Musical
Hall on Lincoln Street was built to em-
phasize another cultural entertainment,
featuring opera and the Ophir Orchestra.
A City Is Born - 1855
Oroville was a busy place in the year
1855. Dewitt Downer, Ralph Bird and
Jacob Morse secured title to most of the
town and laid out streets, naming them
after themselves and friends. New build-
ings were going up all over the place,
and lots sold at exorbitant prices. Hu-
man activity ran thick, and the two
newspapers complained daily about the
piles of bricks and lumber which blocked
the boardwalks and streets. Still, amidst
frantic construction, the citizens found
time to erect the fashionable Metropoli-
tan Theater in the fall of that year to
accommodate the increased population
which would no longer fit into the Amer-
ican Theater on Montgomery Street. The
Metropolitan was a handsome, two-story
frame structure of notable dimensions,
on the corner of Bird and Huntoon streets,
directly across, from the Courthouse. It
boasted a commodious stage, large gallery
and ornate decorations of the period.
Upon its elegant stage would appear the
finest theatrical companies which trouped
the West, in spite of the fact that it was
thirty miles off the beaten track- which
took in Sacramento, Marysville, Nevada
City and Downieville.
64
'"
..
..
Joe, returning to Placerville, submitted the Oroville story to ~ 1 r .
Collins. He read it with interest but cautioned Joe to refrain from get-
ting too interested in the more-than-hundred-year-old news. Most of
the old • 4ger stories had one bad effect, he said, of leading most people
to believe that all California gold has already been mined. These stories
are used, he added by the Internationalists who are now getting control
of Uncle Sam's gold.
For Joe's benefit he told of some late gold mining in the Oroville Dis-
trict. At Morris Ravine, a few miles north of the city of Oroville, all dur-
ing the last war a rich gold mine was able to operate even though pro-
duction was limited to only 100 cubic yards of gravel per month, and the
operator could only use miners who had reached the age of 46 years.
Production was $3,500 per month, as the gravel ran $35.00 per yard. So
there are still bonanzas in California.
Collins spoke of the millions that had been dredged in the Oroville
district. Some of the dredges could not reach bedrock where always is
the richest gravel. Some day, he said, those fields ,vill again be mined
as bucketline dredges can dig now to a depth of 120 feet below the water
line. They will get the riches off the abandoned bedrock.
At one time in the last gold rush, when gold was raised to $35.00 per
ounce, consideration was given to dredging. the present site of the city
of Oroville. Mining engineers estimated there is enough gold under the
city to pay for its move to a new site and leave a handsome profit. A
former mayor of the city bored a well in his yard, panning the gravel
as it was brought to the surface by the drill. The gold he recovered, he
said, bore out the contention of the engineers.
Of course all mining ventures are not successful, said Collins. Some
of those who do not get very enthusiastic about the industry even say
more money had gone into the ground in search of the yellow metal
than has been taken out. However, he said, to be a success in any bus-
iness you got to know it. Then he brought out a story of the investment
of twelve million dollars jn Butte County on the famous Feather River
that turned out a total loss. Here it is:
THE McLAUGHLIN STORY ....
Santa Cruz Beach Hill Mansion linked to
A $12,000,000 Feather River Gold Project
In two weekly installments the Oroville
Press has run a very interesting story on
a gold mining project, the remains of
which can still be seen at Bidwell Bar,
8 miles up the Feather River from the
city of Oroville. It has to deal with what
is now known as "McLaughlin's Wall,"
built by Major Frank McLaughlin, with
the aid of $12,000,000 of British capital;
object: to mine the bottom of"lhe Feather
River. The plan: put in two miles of con-
crete wall through the center of the river
to divert the water to half of the stream
bed while the golden riches were recover-
ed from the other half.
With this introduction, The Journal is
herewith running the last installment of
the Oroville Press story. It is of special
interest to Santa Cruz as McLaughlin
spent the last years of his life in Santa
Cruz in a Beach Hill mansion, now known
as Monte Carlo, which he built with
British money. One interesting feature
of the mansion is its dining room, the
walls of which are covered with elephant
hide. There are perhaps folks still living
65
in Santa Cruz who remember the sad
ending of this story.
It runs as follows:
• • •
Along about 1888 McLaughlin took to
visiting the stretch of river north of Oro-
ville and staring at it for hours at a time.
To him it seemed that the gold being
taken from the banks and shallows of the
stream was only a small portion of what
must surely lie in the bed of the river
itself. The big problem lay in getting to
it and the Major thought he had a way
of doing just that. All he needed was to
find a few parties with enough of the
gold ready to finance the job.
One bright morning he checked out of
his hotel, shook a couple of hands in the
lobby and grabbed a stage heading south.
The next thing anybody knew, McLaugh-
lin was in Merrie Old England.
It wasn't by accident that he landed
there. The woods of the Sacramento Val-
ley were full of Englishmen who had
their hooks in the mining industry. Most
of them, after getting their hooks set
tight, left these "Colonies" and returned
home. They spiced their tea with tales
of the gold fields of Northern California.
These were times when their guests all
but choked on their crumpets as they
listened to the stories of the fabulous
golden fleece.
They didn't know it then but the
fleece, or at least a fleecing, was around
the corner. It got there when Major Mc-
Laughlin stepped off the boat at Liver-
pool.
The Major set about convincing some
of the more loaded residents of the isles
that there was still more than just a
smidgin of gold to be picked up on the
Feather. All it would take, he said, would
be for some smart fellow to divert the
river and then wade probably hip deep
in gold in the original bed of the stream.
To the British, notoriously slow at
catching on to a gag there was nothing
funny about this proposition. They pung-
led up the pound notes almost before
the Major had time to decide how many
lumps he wanted in his tea. In no time
at all, he was assured of all the financing
he would need to perform the task that
was to make him famous. McLaughlin
promptly took the next boat back to the
United States.
Back in Oroville, the Major began to
make his plans. He talked of his idea
over the bar at the hotel and he discus-
sed it on street corners with the more
prominent residents of the town.
Had he looked real close, he might
have seen some of the original u4gers"
grin out of the sides of their mouths and
wink at each other. But McLaughlin had
no eyes and no thought for anything
except the project ahead.
In addition to his English investors,
he let his old friend Edison in on the
deal. He also sold a slice of the proposi-
tion to Dr. James Pearce, the news of
whoseuGolden Medical Discovery" -
a miraculous physic - was shouted from
every barn in the country for over half
a century. As it turned out, Dr. Pearce
should have stuck with his first discovery.
Finally, in 1892, McLaughlin got his
project underway, with George Mathews,
the foreman of one of his mines.
Mathews began recruiting workmen
and soon had several hundred signed up.
The Major would pay top wages, but no
weaklings need apply. This was to be
"The Golden Feather," the greatest min-
ing project in the West.
And so the job got off to a hustling
start. A thousand men toiled in the sizz-
ling canyon and a wall that resembled
the meandering Great Wall of China
began to take shape. Huge boulders,
handled in the primitive fashion of almost
all construction work in the gold country
of that day, were blasted and tom from
the walls of the oanyon and then horsed
into position by sheer brute strength.
Through the summer of 1892 and into
the spring of 1893 the work continued.
By then the outline of the wall serpen-
tined its way downstream for almost two
miles. The high water of the spring of
'93 slowed the work but didn't halt it.
Into the hot summer of 1894 the work
continued and now Edison came to Mc-
Laughlin's aid. The great inventor pro-
vided electric lights for the job, the first
time electricity had ever been used on
a construction job anywhere in the world.
McLaughlin promptly put on another
shift so that work could go on around
the clock.
News of the project spread and it
became one of the nation's wonders.
Engineers from all parts of the country
and· the world visited the job. The
nation's metropolitan newspaper,s carried
detailed accounts of the operation.
By tpe fall of 1894 the project was
a well-organized affair. The men had
built themselves a town at the head of
Morris Ravine, complete ,,.;,ith postoilice
and naturally saloons.
And so the work went on, t h r o u ~ h
66


1894 and 1895 and then into 1896 when
the huge log dam and the great spillway
were finished. The wall was completed
for its full two miles. The time was near
when the bowels of the river were to be
laid open.
In the summer of 1896, the great day
arrived, when the river was diverted.
With a rush and a roar the water poured
through the flume and into the bypass
behind the great stone wall.
Excitement grew by the hour. Business
suspended in the town of Oroville, as
the residents rushed to the scene for the
historic occasion. Among them stood the
group of old-timers, smirking and wink-
ing at oach other.
At last the bed of the Feather lay
naked. This was it!
However, this was not it. It was the
shock McLaughlin and his investors got
when the men began to delve into the
sands and the rocks at the bottom of
the river.
It wasn't gold they found, at least not
muoh gold, but did find a lot of other
things. Old picks and shovels, buckets
and wheel-barrows; the trappings of an
earlier mining operation.
It was then the old-timers who had
confined themselves for years to grins
and Winks, let loose some gusty belly
laughs. It was the laugh they had waited
for - the last laugh.
For, almost 50 years before, they had
diverted the river with a wooden flume
and had taken the cream off the bed of
the stream. When a flood hit the diggins
one spring and washed out their flume,
they didn't rebuild, having already come
to the conclusion that they had taken out
all that was worth taking.
Oh, there was gold there, several mil-
lion dollars worth, the experts declared.
But there also was quite a problem. The
corporation already had sunk $12,000,-
000 into the construction of the wall and
other work. The best available estimates
said there was not that much gold in the
river bed. What little there was lay so
deep in the rocks it would have to be
mined. Obviouly the most logical thing
to do was to forget the whole deal as
quickly as possible.
The investors had taken a bath and
they weren't happy about it. Only Mc-
Laughlin seemed to come out of the
deal with a financially whole skin. The
reason for that turned up very shortly.
It seemed that the Major was not a
stockholder but only a salaried man. And
what a salary I
It became clear that the Major was
loaded and that fact caused some of the
Englishmen to point the ugly finger of
suspicion in his direction. They didn't
call him a thief or even come right out
and say he had taken them for a ride.
They confined their feelings to loud wails
that reached the ears of Her Royal Maj-
esty, who called on Scotland Yard to in-
vestigate.
The Yard sent a dapper little investi-
gator to Oroville to check out the opera-
tion, much to McLaughlin's vigorous in-
dignation. He brooded about the insult
for some time and passed the broad hint
that the town was not large enough to
hold him and the detective at the same
time. The investigator left ahnost imme-
diately.
About that time another mining com-
pany notified the Major that a portion of
the Golden Feather was located on its
claim. On top of that, the dark sugges-
tion continued to be bandied that Mc-
Laughlin had feathered his nest at the
expense of the other birdies.
It was time for drastic action, and the
Major acted.
He planted 1,000 pounds of dynamite
under the Hume and another half-ton at
the log dam. Then he stretched out a
fuse, lit a match and turned his back on
one of the wonders of the mining world
as a dream vanished in a rush of Harne
and black smoke.
The Golden Feather was no more.
And, as it turned out, neither was the
Major.
He left Oroville and lived ten years
after that in a majestic mansion he had
built at Santa Cruz while the Golden
Feather project was under way.
He entered politics and quickly be-
came head of the state's Republican
Party. He was asked to run for gover-
nor but refused. In 1898 he was credited
with carrying the state for President Mc-
Kinley. As a reward, he was offered a
seat in the cabinet, but turned it down.
Then, on November 17, 1905, Mrs.
McLaughlin died and a little more of
the light went out of the Major's eyes.
He and his adopted daughter, Aggie,
still unmarried, lived on in the great man-
sion, but life was not the same.
67
The Major could not get over the death
of his wife. Neither, it seemed could he
forget the disappointment that had been
his on the Feather; nor could he en-
tirely shut out the sound of those ohort-
ling old-timers.
Too, the California he had known was
passing, and he was only the shadow of
a past that people no longer seemed will-
ing even to talk about. The flowing tides
of industry and new populations were
drowning one of the West's really great
personali ties.
The Major had just about all he could
stand. On Nov. 17, 1907, two years to
the day after the death of his wife, he
grasped the gun he had carried for so

many years, and with one pull on the
trigger sent a bullet crashing through
his daughter's brain.
Then the Major sat down for a drink,
a real strong drink - a highball of strych-
nine and lemon juice. It probably didn't
taste any worse than some of the drinks
he'd had with Masterson in Dodge City,
nor was it any more bitter than the gall
of defeat he had suffered on the Feather.
But it did what the Major intended it
to do. As he slumped back in his favor-
ite easy chair the sound of those old-
timers as they cackled in their beards
and slapped their bony knees probably
echoed in his ears to the very last.
CHAPTER 16
Mining and The "Prudent Man"
R
eturning from his Butte County trip, Joe called at the Collins home
to report back and discuss his trip discoveries. Mr. Collins explained
that the Dogtown nugget was found in massive white quartz with a sur-
face washing operation. Apparently it was a lone enrichment or pocket
as not much more value was recovered. Of late, Collins added, a pro-
moter got hold of the ground, planning to use the story of the fifty-four
pound nugget to sell stock. The scheme didn't work. Collins cautioned
Joe that he would always have to be on the lookout for schemes of this
kind. Even the State Corporation Department, which iss1)es stock selling
permits, can't guarantee the worth of any project, the mining knowledge
of the proposed operators or their business ability or honesty. There are
just too many angles to be considered by an investor. The fact that the
State has given a company a permit to sell stock is no guarantee. "'If you
don't know the property - and few people do,- the operators and govern-
mental conditions under which the operation must be conducted, you
might as well forget it,» added Mr. Collins. «It's much safer to be a pros-
pector like George Holmes of Mojave."
looks like the gold miner does need a lot of information and guts.
Mining is no place for the Interior Department's man'''' laugh-
ingly responded Joe. "With all that the miner is up against and with our
government nOw in dire need of gold you would think the administration,
Congress, and every department of government would not only offer
encouragment but security to the man with fortitude enough to put in his
68
...
..
money and labor to improve the government's financial security with
more gold."
"Boy, you got a lot to learn about our Government. It's strong for
helping the but not for the who helps himself
and digs up tax money to support a lot of those receiving government
checks. Furthermore, our Government would rather help the larger and
more influential individuals and corporations. It takes the attitude that
a small man should not be in mining. That's why the Bureau of Land
Management is now driving to eliminate claims and take over our pros-
pectors' "discoveries of the last one hundred and fifteen years. They want
control so that they can lease to those whom they consider fitted to carry
on the s mining according to a government yardstick. And the
Bureau even goes beyond the law, (Public Law, 167) to put over their
stuff. I just received a beautiful postcard from the Swank gold mine,
Kittitas County, Washington, picturing almost solid gold in calcite - a
hundred pounds of it. The mine is on an unpatented claim which the
U.S. Forest Service has declared Non-Mineral. The U.S. Mint can prove
otherwise as the mine has been in' operation since 1890. The card offers
this advice to those federal department officials concerned in the claims:
U.S. Forest Service District Ranger has said: "The Forest Service
is in favor of prospecting and mining conducted according to the Min-
ing Law.
The question then is: Mr. Secretary of the Interior, Mr. Secretary
of Agriculture, Mr. Assistant Secretary John A. Carver, Jr., Mr. Public
Lands Management Director Karl S. Landstrom, ARE yOU GENTLE-
MEN SELF APPOINTED JUDGE, JURY AND INTERPRETORS OF
THE MINING LAW in the matter of dispossessing Swank Gold miners
of their mining claims?
"Every congressman should get a copy of that postcard," finished
Mr. Collins.
Joe was right back at him with: "I got an idea I might be able to
do some good. You know the Republicans are now giving the Democrats
hell for present conditions and especially on the gold situation. In yes-
terday's paper I noted Han. William E. Martin, a congressman and chair-
man of the Republican National Committee, was in Los Angeles stirring
up the minority party. I was surprised that he talked about the drain
of our gold to .foreign dollar holders, so I sat down and wrote him.
a copy of the letter:
Hon. William E. Martin,
House Office Building,
Washington 25, D.C.
Dear Mr. Martin:
We read in the Los Angeles Times an
interesting account of your talk in that
city, bringing out that there is but four
billion dollars in gold in the U.S. Treas-
with which to meet the provision of
the Bretton Woods Agreement-the con-
version of foreign held dollars into gold,
of which there is now outstanding over
$27 billion.
How is it that in order to head off the
Democrats we Republicans never use
what's happening to our gold as the real
crisis in our government? The Demo-
crats themselves admit it to be their
Number I headache. yet we Republicans
make no "hay" of the situation. We
think it OUT best bet. Under Democrat
rule it will be impossible to have a
sound dollar, always the boast of our
Party.
For your infonnation I would like to
comment on your $4 billion estimate of
gold we have left to meet the conversion
69
-
of foreign-held dollars. That figure, even
with the meager information we get out
of our money managers, is less than two
billion dollars. In the same issue of the
Los Angeles Times that contained the
account of your talk was a Paris dis-
patch by Gaston Coblentz of the New
York Herald-Tribune which showed how
Treasury Secretary Dillon had been able
to apparently stop the Gold Drain. Dur-
ing the months of November and De-
cember, 1962, he has !l:350,OOO,OOO in
hard (gold convertible) currencies from
West Germany, Italy and Switzerland.
He has met the call on our Treasury
gold with this money and led us to be-
lieve the drain on the Treasury gold has
been checked and therefore times are
getting better.
This three hundred and fifty million
as the drain during the early
months of 1963 was met in the same
manner, and an $800,000,000 gold loan
from the International Monetary Fund
has never been accounted for as addi-
tional loss of gold. Thus the Treasury's
daily gold balance is a downright un-
truth; further evidence that the admin-
istration believes that it is alright to lie
about our most important government
function.
Why won't your Republican N ationa}'
Committee go into the matter and reveal
the real truth of our dangerous gold sit-
uation to the American public? It ap-
pears to me to be a Number One policy
for your strategy committee.
Thanking you for an early reply, I am,
Sincerely yours,
JOSEPH C. BACON,
General Delivery,
Placerville, California.
Listening with interest Mr. Collins said: "That's a good but
I don't think it will get you results. I don't think you will even get an
unless it is one of 'I am glad to receive your letter and
to have your views on this most important subject, etc.' If you can get a
congressman to commit himself on the loss of our gold, where it is going
and who is getting it, I'll buy you a new hat. And when it comes to
monetary matters the Republicans get their orders from the same source
as do the Democrats. Just remember who named the Treasury Secre-
tary." (Later Joe had to admit that Mr. Martin failed to answer.)
«But," interjected Joe, the Republicans the
Party'? Do you mean to tell me they will let all the gold leave the coun-
try and not do anything about it?"
"Thafs just what I mean," responded Collins. "It's all cut and dried.
The One World Bank of the International Monetary Fund wants our
gold for their paper backing. In fact, it will have to have it if it carries
out its plan to be the World Banker and serve its 101 free nations.
"But that will leave us dependent on a foreign monetary power,"
"Worse than that. Unless we repudiate the Bretton Woods Agree-
ment, when we run out of gold (and that will be very soon) we will be
paying our taxes to that One World organization. That's the commie
deal to reduce America to the level of the poorer countries, with the
One-World bankers following in their wake to be our money masters.
But we are getting into heavy matters. I have something more pleasant.
The Missus has asked me to invite you to dinner and to meet a nice girl
who works on the local paper. She wants to meet aNew York news-
..
paper man.
"Now, you've gone and done it,» said Joe. You know I haven't any
time for girls. I'm looking for a gold mine, not a girl. Anyway, Mrs.
Collins has been so nice to me that no doubt I will have to accept. Don't
tell her I was grouchy about it." So it was arranged. Joe would meet
his first California girl.
70
..

CHAPTER 17
The Prospector and The Girl
E
ven though Joe didn't worry much about making an impression at:
Mrs. Collins' dinner he did worry about shedding some of his mine
clothes and appearance. He was already used to the prospector's life,
and batching as was at the mining camp, he did not feel prepared to
accept dinner invitations to meet "nice girls." He had to admit to John
Collins that his education along that line had been sadly neglected.
He dug up the best suit he had brought from New York and pro-
ceeded to the Hangtown barber shop for the works, and arrived at the
Collins home on Cedar Ravine refuSing to look forward to an enjoyable
evening. He was welcomed by Mr. and Mrs. Collins and a nice appear-
ing young lady by the name of Constance Morrison. "Connie," as Mrs.
Collins called her, was sure to be interested in hearing all. a bout the
making of a newspaper in the big city, was the way Mrs. Collins put
it. While Joe, in his pursuit of a good paying gold mine, was glad to
forget all about newspapers. He liked Connie's looks and her pleasing
manner. Add to that the excellent home-cooked meal and Prospector
Joe was forced to admit he was in for a pleasant evening.
Joe was mostly interested in the Hangtown newspaper business, Con-
nie explaining that she was a sort of all-work girl doing news writing,
proof reading and helping in the business office when there was no
rush going to press. She did the social page, re-write stuff, and was
sometimes given a feature story to write. She liked the work and looked
forward to sometime owning her own paper -"Not a big one, just a
small-town sheet," she said. She wasn't backward in telling one on her
proof reading. The item was telling of some new work the
city's water lines. It read: "The new line is hooked up to the old main
on Pacific Street." When the readers got hold of the paper it read:
"The new line is hooked up to the old maid on Pacific Street."
uThat one cost me quite a treat to the force out of that week's pay
check/' related Connie.
Joe was reluctant to talk much about New York papers. He said he
wanted to forget the hurry and bustle, deadlines in meeting editions,
having beats to cover in winter snows and summer heat. And if he never
found a gold mine he would never return to the Empire City. He did
want to talk to however, on why there never was any mining
news in her paper. He related haVing gone through every line of
one issue on his second day in Placerville, looking for news of the mines.
But he found nothing but an item in the One-Hundred-Year-Old
when mining hadn't yet got over the 4ger gold rush.
Connie was quick to defend her paper. must remember," she
said, «that's history. You read that in a book. It's for historical societies
to pour over. We now need all our space to tell of EI Dorado County7 s
water wealth gold,' and about Sacramento's Utility District COID-
71
ing into the county, taking our water and power and making wealth out
of it serving the capital city. We have our tourism to promote. Some
of our Supervisors think a new County government center, costing over
two million dollars is needed. We've got to go pro and con on that.
Our schools are bursting with attendance; what to do about it makes
g a l 1 ~ y s of type. Our orchardist readers demand to know what our Hor-
ticultural Commissioner is doing to stop the 'pear decline' that's cost
the pear growers millions of dollars. Our United States Highway 50,
leading into the Nevada gambling centers, is always a source of news.
So you see we just haven't time and our readers haven't the interest to
go back to an industry thaf s practically washed up:'
That expression, "washed up" waked Joe out of a good listening
mood. "'That's what I thought you'd come to. 'Washed up" eh? That
sounds like the money managers in Washington who want paper money
only. Has your paper ever considered what would happen to the na-
tion's economy if we lose all our gold and there is no more gold mining
to supply what I call the 'new solid wealth: Has your paper ever run
an editorial on this situation when there is still at least a billion dollars
worth of gold left right here in your own county? Before I get steamed
up on this matter I better cool off as I know you are not responsible.
But I can't help but think the newspapers of the Golden State are over-
looking a bet. They are letting an uninformed and misled group of
Congressmen sell the whole West down the river:'
Connie saw that Joe really meant all he had said and was quick to
retort with: "From the little I know about the gold mines I know what
you mean. Mr. Collins has told me plenty about what gold mining has
done and still can do for us, but newspapers have to go along with the
doings of the day. I'll bet you, Joe, you are the only prospector work-
ing in the county today. If you make a big discovery - a bonanza-
I'll be the first one to give you a front page forty-two paint head. We
did run several about the Alhambra mine when they were taking high
grade are out of it. By the way, wouldn't you like to take a trip out
to the village of Kelsey, where the Alhambra is located? Maybelle and
Wilber Timm, the original owners, still live on the property. I know
you'd like to meet them. Tomorrow is my day off. How'd you like to
wheel me out to the mine in your trusty Chevy?" ,
Joe hadn't planned any such headway in a social line, but when he
saw an opportunity to get some more gold mining information, especially
from a producer, he accepted and made a date for ten o'clock the next
morning. Before leaving he got some advance information from Mr.
Collins. Wilber Timm retired from the Oakland, California, police force,
came to Placerville and bought what he thought was a stock ranch, some
twelve miles or more northeast of Placerville, in the Kelsey Mining
District. Whether Wilber bought it to raise cattle, or knew it was high
grade ground, Mr. Collins did not know. It cost but $10,000 and already
had produced close to three million -"and there is plenty mineable
ground remaining," assured Collins. With this pre-approach Joe con-
eluded Connie and the Timms could provide the rest.
72
...

A beautiful spring day, a nice county no-traffic road, bordered by
tall Pondarosa pines, and agreeable company pleased Joe to the extent
that he though his avoidance of female company in the past might have
been a mistake. Connie was agreeable company even to a confirmed
bachelor. However, Joe could not hold for California newspapers
looking the fact that their silence on the gold situation was aiding and
a betting the Communist plan to destroy gold as the basis of our money.
He said that what might be termed selfishness on the part of the gold
mine owners could well be overlooked considering what new wealth and
employment operating gold mines would bring. "I can't understand," he
said, "why the Washington administration and Congress have been so
backward in taking steps to correct a bad and dangerous condition."
"Perhaps most newspaper publishers don't understand the situation,"
said Connie. our paper it's a weekly grind and with others in the
larger places a daily grind. Keeping up with going events, conditions
and local politics is about our limit, although I do admit the conditions
you describe should be of interest to everybody. But who or what will
wake them up?"
'''1 have given up asking that question," responded Joe. "'I hate to
say it but another depression - not just a recession - I am afraid is the
only answer. In a time of debt and deficits the politicians are pushing
the taxpayer too fast and to too great an extent. It can't last much longer.
It gets me down and the more I understand the situation I feel that our
government - the people - will again be compelled to learn the
ing of economy. Our political leaders and government officials have
completely forgotten the existence of such a word."
Arriving at the spacious Timm home Connie was pleasantly greeted
by both Mr. and Mrs. Timm. Connie introduced her friend Joe as an ex-
newspaper man looking for a gold mine. "I don't know why you'd want
one now," immediately offered Mrs. Timm. "Of course we've had one,
and a good one, but the way WasWngton is treating us now a gold mine
is no longer an asset on which we have to pay taxes. And Washington
is giving no indication that there's going to be a change. Like Andy of
the movies and television, regusted'. ,.
While the remark brought a laugh it was their thought that is was
not a laughing matter.
Connie explained that Joe was out to gain all he could about gold
mining and if he could find a property that would stand up against
present conditions and costs he would be interested. "If one could get
by now,n Joe added, "I should be able to bank on it when the gold price
is raised."
"Oh, you think the price will be raised?" queried both Maybelle and
Wilber Timm.
·'What else can happen?" asked Joe. "There isn't anything that shakes
the Washington confidence like the loss of Treasury gold, despite all
the talk by Wall Street banker Douglas Dillon, whom JFK had to ap-
73

point his Treasury secretary. The Amerioan gold mines are closed. With
twenty-seven billions of foreign held dollars that must be converted to
gold and the available amount for convertibility down to bedrock there's
no way for Washington to turn except to do something to stop the gold
drain. And to do that the road is rather narrow. Congress must take
one of two moves: repudiate the Bretton Woods Agreement, which tied
us to the conversion of foreign held paper dollars, or raise the gold price.
And the time for action is not far off:'
'Well, on the face of it that does appear to be the situation, but for
years we have been waiting for Washington to take the action that would
cause our mines and properties to again be of value to us," put in Mr.
Timm. "And I don't put all the blame on the President, except that he
allowed Ike to name his Treasury Secretary. Ike, although posing as a
Republican, the supposed ~ H a r d Money' party, was never the friend of
the gold miner. I remember when Plumas County sent a gold nugget
to Clair Engle, then our Congressional District Number Two Represen-
tative, to present to Ike, then president. He accepted the gold with the
statement: 'I'm glad to have a souvenir of a past industry'. That sure
got my goat.
"Ike had a lot to say about financial conditions under President Ken-
nedy. However, he doesn't say a word about the loss of seven billion,
four hundred million dollars in foreign balances during his last two years
in the White House. And he and Nixon didn't say a word about the gold
drain until after Nixon was defeated. All this proves to me that both
Republicans and Democrats are taking orders from the Money Changers,
whom 'Mah Friend' Franklin .promised to 'drive out of the temple'. The.
whole kit and kaboddle of them are puppets Qf the bankers who have
gone international. If we don't get a change for the better in Washington
soon we not only won't have gold mines but all our properties will be
in s!oak to the Internationalists. That's what is in line for us in the build-
up of the International Monetary Fund and its present harvest of your
Uncle Sam's gold."
Both Joe and Connie were impressed with what Mr. Timm had to
say, Joe remarking that Timm and his friend, Collins, should be sent to
Washington to inform Congressmen of what was going on. Congress,
he said, appears to. be interested only in trivialities. Joe did add that he
hoped Connie was getting some information that might be used in the
Placerville paper. However, Connie gave a doubtful shake of her blond
head.
After a delightful lunch presided over by Mrs. Timm the party made
a tour of Alhambra mine during which Joe gathered a great deal of
information about one of El Dorado County's richest mines. Shortly after
the Timms purchased the property they found that an old report told
of $400,000 being taken from a very shallow working on the property.
They began remaking a mine of it when a company which took the name
of Alhambra-Shumway made an offer of $100,000 for it. The Timms ac-
cepted giving the company only a portion of the property.
74
..
-
It wasn't long before the Alhambra-Shumway was making strikes of
high grade variety. They delivered their gold to the Mint in San Fran-
cisco, having a pennit to make shipments up to $20,000. One day they
alarmed the mint and the State Division of Mines with six ore sacks
containing $120,000 of practically pure gold. The Division's high grade
derectiY"e held that there was no such mine in California. So the detective
and the late Walter Bradley, then head of the Division, made a trip to
the mine and found that the mine really had it and the company officials
who made the delivery were not members of a highgrading ring.
The Alhambra-Shumway had a production of over two million dollars.
No reason for its shutdown was given but evet: since it has had legal
trouble. The Timms made another deal for another portion of their land,
known as the Atlanta, a company offering to pay Two Hundred and Fifty
Thousand dollars in royalty for the property. They never got operating,
the Atlanta still being available. Mr. Thrun and a few men did some
development work on it and as winter was on decided to shut down until
spring. The last day of work was an unlucky one for Timm. The shaft
had been sunk to a depth of 185 feet. Timm entered the cage to make
the descent when it broke loose from the cable and plunged to the bot-
tom. Wilber was frightfully injured, many bones broken and badly
bruised. He was six months in a Placerville sanitarium before he could
be taken home.
Joe made up his mind that the Timm property was in a high grade
area and one of the best in the Mother East Belt. There are still
no deep holes on the property, it not being an out-of-the-way conclusion
that there is still plenty of gold in the ground. He made up his mind
to question Mr. Timm on the use of a geophysical instrument to locate
the high grade enrichments. Timm had heard and read a lot about geo-
physical reports but was skeptical. Being a tenderfoot Joe did not press
the matter but made up his mind that before he ever put in a lot of shaft
sinking or drifting he'd work with the benefit of a geophysical report on
his mine. He had heard of miners driving tunnels for several years with
nothing ahead of them but more barren rock to penetrate.
Before Joe and Connie left the spacious Timm home Maybelle told
of the difficulty they had in getting a patent on the claim on which their
home was located. It took sixteen years, she said, before the Bureau of
Land Management, then known as the U. S. Land Office, was convinced
that their home claim was mineral bearing - sufficient for the granting
of a patent.
The short spring day was nearing an end as Joe and Connie drove
back to Placerville, discussing all they had learned on their visit. "It does
seem o,ut of reason that our government is keeping our gold mines closed
when the gold is needed so said Connie. wonder what it's all
about."
next time you visit the Collins home just get J obn started on
that," replied Joe. "That good old guy has all the I am sur-
prised that a miner would have such an understanding of national and
75

international money matters. If your boss would let you use it John
Collins could supply you with a column each week that might wake up
your brain-washed readers. I hate to use that term but that's just what
has happened to the American people. As long as the employed continue
to get raises as the cost of living goes up and as long as our government
continues to make relief a career there won't be an awakening. The wage
and relief wells have got to run dry. And that means another depression.
I'm afraid that will be when the Internationalists with their One-World
bank get most of the world's gold. And what a crash that will be when
the world bankers begin to put on the screws. Here's hoping that America
will wake up before that happens.>'
"Joe, you scare me. I think things are going along pretty good. With
the help of the boys in the office I have learned my job. I get a raise
every six months. I am paying for my little roadster. And although it's
small I can aHord an apartment. And I have a nice friend by the name
of Joe Bacon."
That put a sudden stop to Joe's monetary and gold thoughts. What's
going on in that little newspaper girl's head, he thought. Disregarding
his driving he took a hurried glance at his companion hoping to find out
just how serious she was with that last statement. He concluded not to
open up any discussion, like the angels who fear to tread, but did say,
c'Well, thanks for those kind words and for your company on this nice
spring day. Got to get back on the job tomorrow. Been here three
months now and all I have been doing is listening to the raw deal the
gold miners are getting from their government. Tomorrow I leave for
the mines of the Grass Valley district and on up into Sierra County,
where they tell me are the richest mines in the West.»
wish I could go with you:' said Connie. "But I must get back to
work myself. Why don't you drop around to the office occasionally.
I know my boss would be glad to see you and talk about New Yo.rk news-
papers. I don't think you even have had your name in o.ur paper. How

now, none of that," quickly responded Joe. "No. publicity.
I don't want to meet any. sharks with gold mines to sell. I am hoping
I can find it myself. With the help of our mutual friend, John Collins,
I think I will make it. However, thanks for the invitation to call. If I do
show up it wo.n't be on press day."
Reaching Connie's apartment she inquired, ··Want to see my little
nest? It isn't much but it's comfortable and easily taken care of."
Joe agreed it was.
"Some evening if you don't mind I could have dinner for you," said
Connie. «For myself I don't cook much but I could promise not to send
you away hungry."
c<Thanks for the invitation. I'll try not to bring a miner's appetite.
Got to go and get ready for my northern trip. I want to see Mr. Collins
76
..


too before I leave to get some ideas about the mines up that way.»
Connie opening the door for Joe, held out her hand as a goodbye
gesture and then suddenly gave him a kiss that was more than a mere
peck. Startled Joe was speechless and walked to his car in a daze. This
had never happened to him before.
He didn't want to see Mr. Collins just then. He had to do some think-
ing by himself. Was Connie already falling in love? She was a nice girl,
an agreeable companion but love was something else - something which
was practically a stranger to Joe. He drove out Coloma street a mile or
two till he found a parking place under a large pine tree and parked to
do his thinking. After an hour or two all that his thinking amounted
to was he was getting no place. He liked Connie but as for a deeper
and lasting aHection, which he had an idea love should be, he was com-
pletely lost. With that he gave up trying to think it out and drove back
to the Collins home.

CHAPTER 18
Grass Valley, The Depression "White Spot"
I
n discussing his trip to the Alhambra, Joe was able to get Connie off
his mind. Collins was very familiar with the mine's history and veri-
fied the information Joe had gained. They then started talking about
Grass Valley and the high grade mines of little Sierra County. John
stated he had been checking up on back issues of the gold-covered
Journal and in the March, 1957 issue found a lot of interesUng items
about the Northern Mines. Of course, he said, some of it is out of date
but it would give Joe information of the leading gold mines of the area.
Joe was glad to get the clippings and planned to send them to Harold
in his next mailing. Here is what a Los Angeles Times article had to
state about what had been called the ~ ~ W h i t e Spot' of California during
depression of the early '80s:
By BILL MURPHY
In L. A. Times, Jan. 7, 1957
John Sutter, baron of the vast Sacra-
mento Valley, reached for the brandy
decanter with a trembling hand. The
news James Marshall had brought him
this January night in 1848 came as a
shock.
Marshall had been building a sawmill
for Sutter on the American River. He
observed a few flakes of gold on the
bedrock of the tailrace, anCl hurried back
to Sutter's sprawling fort and trading
post at Sacramento to convey the news.
Sutter knew the consequences. During
the 1840s his fort had been the supply
center of the western frontier. His vast
herds furnished the settlers with beet
while his mills supplied flour and lumber.
News of the gold strike would send his
own workers stampeding in search of the
yellow metal, while strangers would
swarm across the lands he had developed.
Empire Collapses
Marshall's discovery was soon known
throughout the nation. Gold seekers came
77
by the thousands, trampling Sutter's
crops and killing his cattle. He was push-
ed ruthlessly aside and his empire col-
lapsed.
Today Sutter would derive some mea-
sure of satisfaction in knowing that the
industry he opposed is now engaged in a
downhill battle for survival.
Mine operators, who are sitting on top
of a treasure which would have astound-
ed the Spanish plunderers of Mexico, are
going broke.
Prior to World War II, there were 1600
gold mines in California. By 1953, 98%
of the State's output was coming from 10
mines, and today these mines are closing
one by one.
The miners, faced with rising costs,
can no longer economically afford to ex-
tract gold from the earth at the rate of
$35 an ounce established by the govern-
ment in 1934.
By law, the gold mined in the United
States must be sold to the Treasury at
the fixed rate, that is except Placer Gold.
At Grass Valley, On the northern fringe
of the Sierra Nevada's famed Mother
Lode, Jack Clark, superintendent of the
Idaho Maryland Mine, surveyed a desert-
ed shaft.
High Costs Blamed
"Before the war, we had 1000 men
working here," he said. "We closed down
in December of 1955 and it will be im-
possible to resume operations under ex-
isting economic conditions."
Increased costs of labor, steel, blasting
powder and lumber used for shoring
have been instrumental in bringing gold
mining operations to a standstill, while
a fortune in the precious metal remains
beneath the earth.
"We'll have to let the mine Hood
itself," Clark explained. "We're down
2000 feet and you can divide that off
in 140-foot levels where we can follow
the veins of the are. You've got to be
taking gold out of the ground to afford
to keep your pumps going.
"We're trying to salvage some of the
machinery before it's under water, but
sometimes it's cheaper to leave it down
below:'
Another To Quit
At the nearby Empire-Star Mines Co.
in Grass Valley, Hopkins R. Fitzpatrick,
general manager of the concern, awaits
reports from his few remaining workers
who were struggling thousands of feet
underground to dismantle valuable equip-
ment before floodwaters submerged it.
A
The North Star portion of the Empire
Star Mine is 11,800 feet deep, on a 30
deg. incline, the Empire section 8050
feet, and an adjacent shaft, the Penn-
sylvania mine, reaches a depth of 5,100
feet. In July a strike brought all activity
to a halt.
"This mine has been in operation for
105 years," Fitzpatrick said. "Now we're
at an impasse. At the present time there
appears no reason for any optimism con-
cerning an early settlement of strike con-
ditions."
L. L. Huelsdonk, secretary-treasurer
and general manager of the Best Mines
Co. examined a discouraging report on
his firm's Brush Creek Mine at Downie-
ville.
"In order to maintain an operation at
all, we have been forced to select our
are and take only those higher grade
portions which will pay us to mill," he
pointed out.
"In doing this we have to leave our
marginal ores behind to the detriment of
our are reserves. During our operation
over the last several years, we have been
depleting these ore reserves to an esti-
mated amount of 90%. Even with a 100%
increase in the price of gold ore, this lost
are could never be recovered.
In recent years the Best Mines Co.
abandoned work on three other mines.
"We have also been compelled to sell
the Ruby Mine from which we mined
the finest collection of placer gold in the
world," Huelsdonk added.
"To sum things up, we are not oper-
ating on what could be classified a pros-
perous manner, but we are rather mark-
ing time in the best way we know in
order to hold our organization
until such time that things may
Donald H. McLaughlin, president of
the Homestake Mining Co., San Fran-
cisco, and considered one of the country's
leading authorities on gold, has some
interesting observations on the plight of
his industry.
The Homestake Mine his company
operates in the Black Hills of South
Dakota is the in the United States,
with an annual output of $20,000,000
in gold.
"Cold is now grossly undervalued in
terms of the already depreciated paper
dollar," he declared. "Foreign holders of
dollars can convert them into gold
through Central Banks abroad, but this
privilege is denied the American citizens
who are still not allowed to own gold
except under many restrictions.
78

,
I
II.

"The gold miner is in a partiCularly
difficult position, for he must accept
paper dollars for his gold at a rate set
in 1934, and yet is denied the protection
against inflation that his gold could give
if he and other citizens could own· and
retain it. He must meet his payroll and
buy his supplies with the paper dollars
he receives and each year they buy less
and less.
Profits Are Low
"We are still running at full capacity,
but in spite of continued technical im-
provements, our profits are not what
they should be. I am proud of our record
but, as I have commented before, we
are simply running faster in order to
stand still."
McLaughlin advocates a restoration of
the gold standard, with the dollar and
gold freely convertible at a ratio that
would be determined by the present pur-
chasinl power of the dollar and the
stable value of gold. This would mean
a much higher price for gold - probably
not less than $70 per ounce.
Huelsdonk is a member of the State
Mining Board. He has just returned from
an extensive trip to Europe, where he
talked to leading bankers in France,
England, Switzerland, Italy, Spain and
other countries.
Eu ropean View
Industrial gold is that metal which is
used in the fashioning of jewelry, elec-
tronics and for many other purposes in
manufacturing. The dental profession
uses a considerable amount," he said.
"Prior to World War II, the amount of
gold required for industrial use was less
than $1,000,000. During the war this
required amount steadily rose to amounts
above $100,000,000 annually, and was
issued through special licenses to the
industrial users for $35 per ounce minus
}4% handling c h a r ~ e .
Industrial Picture
"This same gold was supplied to the
Treasury Department by the gold oper-
ators under law for $35 an ounce, less
the handling charge. Once this gold is
obtained by the industrial users, the
increased price for its sale is not regu-
lated and the industrial user is able to
multiply his profit many times.
"It is nO more than fair that he should
be required to pay a tax which would
not interfere with the official price upon
acquiring this monetary gold. This tax
in tum should go to subsidize the gold
operator's increased production costs and
thereby guarantee a continued flow of
badly needed gold to support our mon-
etary needs."
The gold miners want the restrictions
on the purchase, ownership and sale of
gold by United States citizens to be
abolished. They would encourage use of
gold coins once more, pointing out that
although Americans cannot buy gold in
their own country, they can legally buy
and hold it in many foreign countries.
"The European bankers have built up
a solid wall against any official increase
in the price of gold," he said. "They are
all agreed that the United States is hold-
ing the price down and must do so as
a responsibility to the rest of the world
in order that monetary management and
balance of payments will not be upset. Increase Foreseen
Their reasoning is that increasing the In concluding an address before the
price would be inflationary. American Mining Congress in Los Ange-
"These same bankers were amazed to les last October, B. F. Pitman Jr., presi-
think that the United States would allow dent of the Yuba Consolidated Gold
95% of her gold mines to close without Fields, a San Francisco concern, said:
some kind of internal help that would "Is a higher price for gold around the
not affect the official price. They pointed corner? Probably not, but it might be.
out tax relief in South Africa and sub- In my judgment, it will come without
sidies in other countries." warning."
Huelsdonk is in favor of a government In Grass Valley, a veteran miner gazed·
subsidy as the only solution to the prob- at the rusting equipment of a deserted
lems which face the mining industry shaft and shook his head sadly.
today. "Something better happen," he said,
«I am wholly convinced that it could "and it had better be quick. Otherwise,
be almost wholly financed through a tax we may as well leave all this ,aId to
levied on the industrial gold sold from the ages." - (Sent in by Harry C. Will-
our monetary stock. Let me explain. iams, 9709 - 6th Ave., Inglewood, Cal.)
Handing the clipping to Joe, Mr. Collins could not resist having his
usual comment. He said:
79
«While much of the contents of the accompanying story is not news
to those of us who live in the gold fields of Northern California it is of
interest to know what the L. A. folks read about the gold miner' and his
troubles.
"But while attempting to suggest a cure for the sad situation the
Times does not bring out that neglect of gold is not only wrecking the
gold miner and a portion of the state's wealth, but also giving the non-
miner a bad case of inflation jitters. Every American has just as much
at stake in the situation as does the owner or stockholder in a gold mine.
This, taking orders from the Money Changers, is hidden from the Times
readers."
John, too was very much interested in the comment of a member of
the State Mining Board, Lew Huelsdonk, manager of the Best 1\1ines,
Inc., Downieville, California. It was the first time he noted, that a state
official was brave enough to place the blame for lack of action on ad-
justing the gold price at the door of the real culprits. He told Joe:
«The findings of Mining Board member, Lew Huelsdonk of Sierra
County, bear out my statement, made time and again, that there is just
one aim of international bankers - the control of U. S. gold. Legally it
is known as a <Reserve: but practically the 27 billion foreign holdings
against it now disqualifies it from being a reserve.
«It's a reserve for the world bankers allright, and as soon as it gets
into their coffers you can expect to see gold revalued.
"And we have been misled by Washington monetary moguls in call-
ing the mortgage <foreign holdings,' when our own Federal Reserve Bank
constitutes the main factor in international finance. Money knows no
nation, political party or belief. What Mr. Huelsdonk discovered is the
fact that American bankers are part and parcel of the international clique
planning to grab America's gold. They too, are not quite ready for a
raise in the gold price."
Joe felt well fortified the next day as he started north but as he drove
along Highway 49 an off-note persisted in keeping his mind off his driv-
ing and on the object of his search - a good gold mine. He couldn't
get away from thoughts of that newspaper girl, Connie. He wondered
why. Could it be that she had really made a deep impression on the
confirmed bachelor? If so he was worried. But he had to shake the
thought as he entered Grass Valley, 52 miles from Placerville.
With the two big mines of Grass Valley shut down, and in all prob-
abilities never to be opened again, due to excessive cost of rehabilitation,
he did not know where to turn. He tried the Chamber of Commerce.
The girl there had plenty of the history of mining of Nevada County,
and especially of Grass Valley, but knew of no new operations or of any
move by her organization to get gold mining back on its feet.
One pamphlet designated Grass Valley the "White Spot of
That was when the depression of the early '30s was with us and a!ter
the price of gold was raised from $20.67 per ounce to $35.00. Two mInes
80
..
tit
alone at Grass Valley, the Empire-Star and the Idaho Maryland, worked
2,200 miners, the total gold mine payroll of Nevada County being close
to three thousand. The Grass Valley payroll ran $475,000 per month and
everybody wanted to go to Grass Valley. These two mines have been
closed for years, now being filled with water. Perhaps gold at $105.00
per ounce might be incentive enough for their reopening.
The Empire-Star is really a deep mine. It was entered by a 3D-degree
incline shaft for a depth of 10,800 feet. After a ride on the skip to that
depth the miners who worked the fartherest from the end of the incline
walked 4 } ' ~ miles to work, with portal-to-portal pay. There is still plenty
of good ore at the bottom of those two big mines. They are often cited
as evidence that the Great Sierra gold mining area will produce gold
for centuries. The area has been mined for over a century and only in
two places for any great depth, Grass Valley, Nevada County, and Jack-
son, Amador County.
Joe picked up a pamphlet telling of the discovery of gold in Grass
Valley. It appears that a man by the name of Knight was looking for a
lost cow. He stumbled over a rock and found it to contain high grade
gold. It wasn't long before a mine was opened on that spot. The spot
is now marked by a monument.
As the gold mines of the district opened the operator found they had
few men who knew mining. To offset the shortage tin miners from
Cornwall, England, were imported. With the Cornish men came their
songs. They always went to work singing, finding gold mining in Ameri-
ca far more profitable than working in the tin mines in England. They
always had a large choral group which still sings. One Christmas before
the Idaho Maryland closed they sang their chorals on the 5,000-foot level
of the mine, the singing being broadcast by radio.
The late Errol MacBoyle owned a 54% interest in the Idaho Maryland.
It was financed with the sale of stock, mostly in San Francisco, at $1.50
per share. In the early '40s it was rated as a $35,000,000 project, the
stock selling at $8.00 per share. It paid regular and extra dividends.
The Washington monetary program has rendered it valueless as of today.
Attracted by the many reports of the high grade mines of Sierra
County Joe made Alleghany, in that county, his next stop.
Alleghany is the home of the famous Original 16-to-1 mine, rated as
the state's richest. This mine is one of the best examples of placer de-
posits being evidence that at some place not too distant is the lode origin
of the placer gold. A man by the name of Johnson used this theory to
trace and locate the I6-to-l. It appears to be a very simple theory as
all placer gold originates from lode deposits from which it erodes and
gravitates to some stream. Every heavy rain brings down a new crop.
Getting into Alleghany Joe was sorry to hear that the state's richest
mine was closed down. Here he intended to get a lot of history of gold
production. That mine, theOriginalI6-to-1, for years known as a leading
high grade property, had been shut down several months previous to
81
Joe's visit. It had been for years one of the few mines that could remain
operating despite the inflated prices of material, machinery and wages.
For years it had been Alleghany's payroll and the source of many news-
paper stories of its riches. During its early operation it paid monthly
dividends. The shutdown caused the little town to which it owed its
existence to shudder. It took heart again, Joe was told, when it was an-
nounced by the management that a maintenance crew of ten miners
would remain on the payroll. Previously the town lost heart when two
lower levels, containing $500.00 to $1,000 gold ore were allowed to be
submerged by water. one old time miner was reported to have
said, s method in the madness of the engineer; mine timbers are
preserved better under water than when exposed to air."
So the noted mine was again to see operation, Joe learning it was
common gossip that a new group was quietly buying up company stock.
One report stated the transportation was to be completely re-
habilitated and modernized, the first improvement to be a several com-
partment main shaft. It had been determined that are haulage had been
too costly of late. The system dated back to the time when a mule,
which was stabled underground all the time, pulled the ore cars to the
main shaft.
Some of the highgrading stories appeared fantastic, but it was sup-
posed that the installation of a modern "change room" cut down consi-
derable of the management's losses. One driller tells this story on him-
self. While busy drilling he could tell he had hit into solid gold by the
manner in which his drill stuck. The miners, he said, hadn't had a high
grade party for some time. Ordinarily he placed his shots so that the
are would fall out on a steel plate from which it was easily shoveled by
muckers into cars, but this time he changed the pattern of the shots to
throw the are high, wide and handsome, along the drift. And so the high
grade party was held, some of the miners going home that night with
rich are specimens.
Higrading has always been a problem for management in the richer
gold mines. A Nevada City (county seat of ::Nevada County) court story
brings out how difficult it was for management and the courts to handle.
A highgrading arrest was made. Exhibit A was a powder box of rich
specimen ore recovered from the accused, who demanded a jury trial.
The box was passed around among the jurors for inspection. It came
back to the prosecutor empty and the jury found the prisoners UNot

Joe could not quit Sierra County until he had visited the county seat,
Downieville, one of the state's real pioneer towns. Here he met Gene
Stowe, editor, publisher and printer of the Mountain Messenger. They
swapped newspaper stories a while and in between Gene dug up some
reports of the local mines. He took Joe in to see the famous
gold collection which is borrowed for fairs whenever the fair manage-
ments can supply enough theft insurance. It formerly belonged to Mrs.
C. L. Best, widow of the inventor of the well-known Best Tractor. After
Best sold to Caterpillar Tractor he engaged in mining in Sierra County.
82
..
He kept the best of his nuggets for a private collection. Mrs. Best re-
ceived offers up to $80,000 for it but felt that the County should have it
for exhibit purposes, so let it go for $32,000, the government price.
And so Joe found out why Sierra County is called the "High Grade
County."

CHAPTER 19
The Mother Lode Gold Country
R
eturning to Placerville, Joe called on the Collins to report on his
Sierra County trip. His enthusiasm was somewhat dulled when
John told him the Sierra Miners had too many ups and down. They were
either rich as Croesus or as poor as Job's turkey, he said. They never
know when they are going to hit it, he added.
"Well, wouldn't that be an ideal spot to do some geophysical explora-
tion," questioned Joe. Why all the hard and costly work of sinking a
shaft then driving drifts when you don't know where you're going?"
«That's a good question that very few mining people have answered
for themselves," responded Collins. "Many of them don't believe in it
and many more are not ready to accept it. Just think what an upset it
would make in mining engineering. Hundreds have spent money and
years in time learning their profession and if a man can come along with
an instrument that will tell one dumbbell miner where to find his gold,
how do you think that would fit into their profession?"
"That does look rough on a hard-working profession, but nevertheless
we all have to keep up with new discoveries and inventions or we soon
get left behind," said Joe. "And furthermore, I'm going to get more in-
formation on geophysical exploration. Gold is too low priced to waste a
lot of money in looking for it blindly."
CCI can agree with you, but what are you going to do when mine
operators won't listen," responded John. "They are like the old dogs that
won't learn new tricks."
Before really getting down to the business of locating a mining prop-
erty Joe wanted to make one more trip south on the Mother Lode on
Highway 49 .. He had heard a lot about Calaveras County (Calaveras
means skulls) which, according to State records had 1,102 known gold
mines and prospects. In his mind he multiplied that by ten, as each
could stand a working force of at least that many. Opening those prop-
erties would put at least eleven thousand men to work. Such a program
would create real development, populate the bare hills and commence
rebuilding the U.S. Treasury's gold reserve.
The money for such a program,- well, that is a question, thought
Joe. How about this: Governor Brown wants development. He has
83
created a state organization for the purpose. Why he ask the
Legislature to vote a sufficient sum of money to open up a few of Cali-
fornia's gold mines? Operated by efficient engineers and managers the
State could stockpile the gold and sell it to the Treasury as soon as Con-
gress is forced to raise the price of gold to $105 per ounce. With good
management the State could make a profit on the deal. But, thought
Joe, Governor Brown's only idea, like the President's, is spending money.
On the road to Mariposa County Joe passed through Jackson, Amador
County, San Andreas, Altaville and Angels Camp, Calaveras County. It
is at the last-named that each year is held the World's Championship
Frog Jumping contest. Far more effort is put into that, Joe learned, than
in trying to get the county's 1,102 gold mines reopened. One lone citizen
who tries to keep the gold spirit alive is Charles Crespi, a retired man-
ager of the Angels Camp branch of the Bank of America. He has a col-
lection of high grade gold specimens worth at least $50,000.00. Differ-
ent counties borrow it for exhibition at their fairs. Just lately Mr. Crespi
sold the collection to the bank's home office in San Francisco.
Continuing south on Highway 49 Joe passed through the thriving
city of Sonora, Tuolumne County, which has a gold history since 1850.
Here more attention is being paid to attracting tourists than getting the
gold mines reopened. One operaing gold mine, Joe observed to himself,
might be a leading attraction for tourists, especially if they could pur-
chase a gold nugget or some high grade gold quartz.
Joe entered Mariposa County near Coulterville, where Mariposite
(green stone), one of the walls of the Mother Lode gold vein, was first
discovered. The green, streaked with white quartz, makes beautiful
building stone. Due to its adjoining the gold bearing quartz it usually
contains some gold. Not long ago it was selling in Los Angeles for $40.00
per ton. One shipment, however, contained $28.00 to the ton in gold. It
had to go into building as to take out the gold would have destroyed
it for that purpose.
Proceeding along Highway 49 Joe passed the ruins of the State's first
mint at Princeton. It minted the ' 4ger gold into $50.00 slugs, used as
legal tender. The story is told that an early day tax collector was making
his rounds taking in taxes with which to operate the county government.
It was winter time and he had to cross a swollen stream. He make
it and was drowned. With him went his pouch of fifty dollar slugs. Ever
since the region of his drowning has been searched for the golden trea-
sure.
Previously Joe had heard the story of the Diltz mine, located about
six miles out of the town of Mariposa, now owned by John J. Fulham,
Sr. and Jr. In the last gold rush starting just as President Roosevelt was
a bout to raise the gold price four Sacramento men out of work concluded
to try their hands at gold mining. They raked together all the funds
they had, one of them, a Mr. Baker, later saying, were crazy enough
to think we could go gold mining with fifteen hundred dollars." How-
ever, they got hold of the Diltz and before their meager funds were
84
..
"
- ~ - - - - - -- ---
spent they hit a bonanza. When the quartz was cleaned out of a seventy
pound hunk they had 42 pounds of pure gold. That start kept them
mining until the depression was over.
Joe made a side trip to the little town of Hornitos, where Henry and
Molly Kowitz, with their restaurant and service station, keep the town
from going ghost. This is an extra rich old time gold mining center with
ninety per cent of its gold still in the ground. The M t. Gaines mine
there has a great production record followed by years of litigation. When
the early 30's gold rush began the mine was bought for $50,000. The
operator was doing well with it when a San Francisco attorney convinced
the original owners that they had been cheated in the deal. They started
suit and in order to get the operator out of the way had him jailed on
a trumped-up charge of using the mails to defraud. The poor man lost
the mine which was kept in litigation until the Closing Order L-208 and
inflation shut it down. Years later it was bought for a song by an insider.
Joe was interested in the old buildings at Hornitos, most of which are
now in ruins. Parts of the building where Ghirardelli made his first
chocolate still stand. Only a few years ago an old three story hotel,
where President Grant spent a night while on a tour of the nation, was
burned to the ground.
Seeking additional information Joe picked up the story of the bandit,
Joaquin Murietta. It was an interesting story of a man who was law-
abiding until he and his girl friend were brutally attacked by a group
of hard hearted American miners.
When Joe got back to Placerville he spoke of Murietta to Connie,
wishing that he had the complete story. "Me to the rescue," said Connie.
r can take care of that order. One of our weekly contributors, J. Barton
Hasslet, has written that story in his Portals of the Past. I'll check the
file and clip it out for you."
"You are a life saver, Connie. My Mariposa trip would not be com-
plete without it. Happenings of a hundred years ago are now hard to
pick up."
The next day Connie brought in the Joaquin Murietta story as printed
by the Mountain Democrat and Placerville Times. It completed Joe's re-
port on his Mariposa trip, being as follows:
When John Rollin Ridge wrote the
story of Joaquin Murietta he was after
a sure-fire best seller and he knew what
the public of that day liked to 'read.
Californians relished well-spiced reading
and Ridge gave it to them. The small
paper-covered book was an immediate
hit.
Joaquin Murietta, according to Ridge,
was a young man of excellent reputation,
"gracefully built and active as a young
tiger.» He came from a good family and
had a school education. In his 17th year
he fell in love with Rosita, a young Mexi-
can girl who was ··dark-eyed and volup-
tuous."
The two were able to be alone quite
frequently and. "given such a condition.
and the passionate Spanish natures of
such a boy and girl, the evil must in-
evitably result. Rosita realized this only
when her honor was compromised."
The young couple stole away from
home and crossed the border from Mex-
ico to California and settled in the gold
regions. Here they were doing well un-
til one night a party of America!lS fell
upon their camp and struck Joaquin re-
85
peatedly with a whip. 'When Rosita pro-
tested they bound Joaquin and then
"<Rosita was deliberately violated by these
beasts in the fonn of man. They then
left, telling Joaquin that if he were found
on the claim in 10 days he would be
killed."
The couple then moved to Murphy's
Diggin's, where Joaquin's half-brother
lived. Here, soon after he arrived, his
half-brother was hanged by a mob and
Joaquin was whipped against a tree.
Then said Joaquin, ""I now swear an oath
of most awful solemnity, that my soul
shall nevennore know peace until my
hands are dyed deep in the blood of my
. "
enemIes.
From here on Ridge's narrative lives
up to his promise. Joaquin takes to the
hills with his beautiful Rosita, ""who "W'ere
cohabiting without being legally married,
but their relations were hallowed by mu-
tual, abiding love." Joaquin gathers a
group of followers and proceeds to rob
and kill at a pace almost impossible for
a flesh-and-blood bandit to maintain.
"The scenes of murder and robbery shift
with the rapidity of lightning."
With all this slaughter and theft, Joa-
quin still manages to find time to help
maidens in distress and steal from the
rich and give to the poor. Even the cut-
throat "Three-Fingered Jack" quails be-
fore the young chief. From time to time
Ridge writes in a little extra gore for his
eager readers. Says Three-Fingered Jack,
HAb, Murietta, this has been a great day.
I have been hanging up Chinese miners
by their queues and slitting their throats.
Damn 'em!. How my knife lapped up
their blood!"
The story runs on and on and finally
concludes with Joaquin's death and de-
capitation at the hands of Captain Harry
Love and his Rangers. This came just
in time. hints Ridge, since Murietta was
almost ready to execute his grand plan
for a full dress revolution against the
hated whites.
How much of this story was accepted
as fact will never be known. At any rate
the little book was headed for great suc-
cess when something happened - a bit
of bad luck that changed a best seller
into a forgotten volume.
Joe picked up another part of the Murietta story while he was at Hor-
nitos. There was a saloon there that had a cellar. From the cellar ran
a tunnel which ended across a road in a thicket of willows. When Joa-
quin was being chased he usually headed for this saloon. He would
wait in the saloon until it was surrounded and as his would-be captors
broke into the saloon, into the cellar went Joaquin to make his way by
way of the tunnel to his horse secreted across the road in the willows.
By the time those who gave chase learned that their bird was not in the
saloon Joaquin was miles away on a fast horse .

CHAPTER 20
What Constitutes A "Discovery"?
R
eturning from his Southern Mother Lode trip Joe was of the opinion
that it was almost time for him to be doing something toward get-
ting hold of a property. First, however, he thought he'd better have a
consultation with Mr. Collins. He had learned this much, many mistakes
can be made by a tenderfoot and advice from a man with as much experi-
ence as John has had is invaluable. The evening after he returned from
Mariposa he dropped in for a with the Collins. They.
glad to see him, as usual, and lIstened to the account of hIS t.np WIth
interest. He broached the idea of it being time he was getting hold
of a claim.
86

Buying a deeded property, he thought was out of the question, Mr.
Collins agreeing. «Every mine owner thinks his property is worth a
million dollars," he said. "They won't realize that a prospective purchaser
is going to need practically all of his money, and more, to reopen a mine.
They tell you of the thousands of dollars the property has produced and
can only guess at what might be taken from the mine in a new operation.
And their guesses run into high figures. Further, if you. do take over,
get the property in shape for operation with conditions looking favorable,
and get short on money the owner is going to let you do the worrying.
I think you are wise in looking for a claim - but get a good one: one
that the Bureau of Land Management can't take away from you. I sug-
gest you read over my copy of "Legal Guide for California Prospectors
and Miners," published by the State Division of Mines and revised
in 1960."
Mr. Collins explained that the Division had no legal authority on its
staff and in its 1960 edition used legal opinions of the late Charles L. Gil-
more of Sacramento, considered by many to be the state's leading mining
attorney. "It is my belief that he has never lost a case involving claim-
holders and their problems with either the Forest Service and the Bureau
of Land Management," said Collins. "rve watched those cases for years,"
he added.
Mr. Collins went on to explain that the most trouble a miner has
with the two bureaucratic governmental divisions is over the meaning
.of a "discovery." "If we take their definition it is almost impossible to
mine and comply with their legal findings," added Collins. He explained
that the government boys used a court decision to get their definition
of a "discovery." "It's known as the 'Prudent Man' decision and very
cleverly explained by Attorney Gilmore in the State Division of Mines
Legal Guide with the following:
«I am well aware that the definition
of «Discovery" as given to the general
public by both the Forest Service and
the Bureau of Land Management is as
set forth in the 'prudent man' concept.
However, in actual practice and under
the method of enforcement of that rule,
both departments of government depart
from it a considerable distance. Today
in any hearing held to determine the
question of the character of the land and
to determine whether a valid discovery
has been made on' that claim, and in
every case that 1 have had (and 1 have
handled many.) and in every other one
that 1 have heard of or have seen, the
decision concerning it, the rule is that
the discovery must be of sufficient value
to prove that the mine may be operated
at a profit, however small."
". . . If the location is for gold, the
locator is faced with an almost impos-
sible condition. For example, a location
'-:"'en made in 1934 with gold at $35.00
per ounce, might easily have been a pay-
ing proposition in the earlier stages of
development. In 1959 a far different
condition faces the locator. The infla-
tion of the dollar and greatly increased
costs of mining make the 1934 ounce of
gold worth about $16.00 in 1959 pur-
chasing power. So the paying mine of
1934 would now be found nonmineral
in character by the Bureau of Land Man-
agement, because it would not now pay
to work."
And further,
«1 have never seen an official definition
of a 'prudent man" nor have I ever seen
a prudent man rule applied except in
the most arbitrary manner, simply be-
cause of the fact that it is incapable of
being defined. No hearing examiner that
1 have seen and no judge on the bench
in any court before whom I have prac-
ticed during the last 40-odd years, has
ever been able to look into the mind of
any man and determine whether that
87
man is a prudent man or not. Finally, I
never saw a prudent prospector nor did
I ever see a prudent miner." " ... Some
of the best mines in the west, and par-
ticularly in California, that were pro-
ducers before 1942, were operated, not
by prudent men, but men who were at
the time described as the greatest fools
that ever adorned God's green footstool."
ForJoe's benefit Mr. Collins brought up other ways both the Bureau
of Lan Management and the Forest Service have of stopping mining
on valid claims. Public Law 167, passed in 1955 was for the purpose of
getting multiple use out of public lands, and turning over to the Forest
Service the control and management of timber and all other vegeta hIe
growth. It also turned over to government control specified non-minerals:
sand, stone, gravel, pumice, pumicite,cinders and clay, unless such non-
minerals contained valuable minerals. "The poor claimholder can always
depend upon having plenty of trouble convincing the bureaucrats of the
occurrence of values in the non-minerals," assured Mr. Collins. «The gov-
ernment boys can always work the 'prudent man' decision on the miner,"
he added.
John went into further ways the bureaucrats have of stopping mining
on public lands. "If you don't happen to have a market for your mineral
at the time they take a notion to get interested in your business, they
hold that you haven't made a declared Collins. "Your claim
will get the same treatment if you have no road to it; and in most cases
they won't let you build a road to your claim. I know of one case where
a thousand dollars worth of bulldozing would have given two claim-
holders a road but in a hearing a government boy stood up and swore
that a passable road would cost $20,000. Even if it did that has no bear-
ing on the mineral value of the claims."
"Those G-boys also make hay with their 'common varietY ruling,"
went on Mr. Collins. "Their own Director in Washington strictly defined
'common variety' as substances that had no special use. I read of many
claimholders down in San Bernardino County being run off their dolo-
mite claims, the bureaucrats holding it to be a common substance. They
would not be influenced by the fact that Kaiser Chemical mixes dolo-
mite with sea water in making magnesium metal. So you see, Joe, you
have plenty to contend with if you are going to be a claimholder.
"Well, it's either battle with the bureaucrats or listen to mine owners
peddle reports about the wealth of their properties and maybe in the
end get a gypping:' answered Joe. "That Mt. Gaines story I picked up
at Hornitos is a sample. Some day I want to get all the facts on that deal.
So now, John, I'm going to need your help on where and how to pick
up a good gold claim."
Joe seemed bent on doing his mining in El Dorado County, so Mr.
Collins suggested he consult the State Division of Mines' El Dorado re-
port. Published in October, 1956, it is known as Volume 52, Number 4,
California Journal of Mines and Geology. "This report won't tell you
the best place to mine, or how much gold there is still left in EI Dorado
County, but it will tell you of the last 115 years of mining in the county
and the condition of the mines when last operated," volunteered Collins.
88
~ < I f you don't find anything in the report that looks good I have a notion
I might steer you on to something. However, I will not guarantee it.
It will be up to you to make a mine of it."
"I'm not bent on doing much mining myself," replied Joe. What \ve
want is a property large and rich enough to interest a large company-
when and if Washington ever does something about the gold price. We
don't expect to find an Alhambra, a Myrtle Creek or a Black Oak, but
no doubt there are available properties that could be assembled into a
workable deal."
"There's a property not far from mine and near the Myrtle Creek
that I believe has promise," offered John. "When Myrtle Creek was at its
best it was located by two men close by. Of course they banked on its
closeness to Myrtle Creek but after they shut down I spent some time
looking it over. It's got a good out-crop down with a shaft only 50 feet,
sunk on the vein, when they quit. I saw their assays, some of them well
over $30.00, from a 4-foot vein. The original locators did not keep lip
their assessment work or their taxes. It's wide open for relocation. I
suggest, however, you hold off filing on it till after September 1; then
your '63-'64 assessment work of $100 to the claim does not have to be
done until September 1, 1964. But you have 90 days in which to do
discovery work, which in this property will be to sink the shaft an addi-
tional 10 feet. In your discovery work you must take out at least seven
cubic yards of material. As this will be on the 4-foot vein you can have
it assayed as you go down."
"As I get it," said Joe, "locating after September 1st all I have to do
to hold the claim is to sink the shaft another 10 feet; no assessment work
till in 1964. When can we take a look at the property?"
"I can meet you out at your camp tomorrow morning," responded Mr.
Collins. «rn expect you to furnish lunch."
«Agreed," said Joe.

CHAPTER 21
The Abandoned Mine Shaft
J
ohn Collins always enjoyed driving out to his mine. He enjoyed that
real feeling of actual possession which no government bureaucrat
could take from him. The intent of the law at that time of location was
the settlement and development of the West. The transcontinental rail-
road had been completed, with the driving of the golden spike, three
years previous. The road needed work to do; the mines could supply
ore hauling into the manufacturing centers. The U.S. Land Office co-
operated with the U.S. Bureau of Mines in showing operators where to
mine. There was no Bureau of Land Management and Forest Service
89
field men breathing down the miner's neck. It was a pleasure to do
business with the Federal Government in those days. Prospectors were
encouraged, made their discoveries and turned them over to developers
who made mines of them. Now with the Department of Agriculture in
charge of timber and other vegetable growth and the Department of
the Interior in charge of the minerals the miner had two bosses, each
with their own set of laws, rules and regulations with which to comply.
Further, the State has its own mining laws.
r----
The abandoned prospect was but a short distance from the Collins
camp, between it and Myrtle Creek. It was apparently in good prolific
territory. Its quartz outcrop was easily traced. The surface wasn't too
rough, making it easy to walk over the ground in tracing out a claim,
1,500 feet along the outcrop and 600 feet across the ends, a regular
rectangle. Mr. Collins explained that when actually locating, monu-
ments must be established at each corner and in the middle of the ends.
He also explained about the written location notices, one to be posted
on the claim and the other to be recorded with the County Recorder in
the Courthouse at Placerville.
~ ___ The small single compartment shaft, going down vertically on the
outcrop was in good shape, the work having been done only a few years
previously. With Mr. Collins' recommendation Joe decided to give it
some investigation before locating. The only record of the 50 feet of
shaft work he had to go on was that which John had learned while the
former locators were at work. He would have to establish his own record.
The only way of entering the shaft was by a wooden ladder. The former
operators hadn't got to a point were they thought it was necessary to
install a hoist. It was evident that are was brought to the surface by a
rope and bucket. "} oe, you will have to get a little more modern if you're
going to operate that hole," said John Collins.
It had been some time since Joe had been entertained at dinner by
Constance Morrison. He felt rather guilty at not having at least called
to see her or gotten in touch with her at the newspaper office. He'd have
to make amends. He went to the office shortly before quitting time- and
found her ready to make her way home. She was pleased to see him
with a 'Where have you been since I last saw you? I began to think you
had quit California and returned to the salt mine in New York."
"Don't you ever think it," replied } oe. rm in California for good,
even if I don't ever find a gold mine. I don't know why I stayed in New
York as long as I did. But I should have called you after you took pity
on the bachelor-miner with that nice dinner. And I want to have the
pleasure of returning the compliment. How about dinner with me to-
morrow evening? And may I walk home with you?"
It was Yes to both questions from Connie, with; '·Now I want to
know where you have been and all about your travels. And have you
found a gold mine? Perhaps I could write some stories for the paper if
"
you approve.
"No publicity," quickly responded Joe. "I don't want the mine own-
90
..

..
ers or the bureaucrats to know what I am doing or that I am even in the
State. 'Mum's' the word." However, Joe told of his trip south, taking in
the southern Mother Lode area and especially about the Diltz mine.
"That would make a good story any time even though it happened
SO years ago," remarked Connie. "Forty-six pounds of gold in one chunk!
Just think of it! I wonder if there are more like that."
"It will take another two hundred years of prospecting to answer
that, and after that they will be still finding gold in the West." Joe was
pleased to note that Connie was getting a touch of the fever.
"Got to get back to the camp before dark so I'll get along," said Joe.
"I'll be in town early tomorrow afternoon and see you about 4:30. See
you at the office at that time," Thinking of his last parting with Connie
he hadn't made up his mind as to just what was expected of him. He
liked Connie. She was a nice girl. Perhaps he'd better not presume; so
with a hurried "I'll see you tomorrow," he headed for the camp.
Although it wasn't time to locate his claim he did want to get a look
at the walls of that shaft and see if there was pay-dirt on the bottom.
John Collins had told him if are would pan it was rich enough to pass
up paying the expense of assays. However, if it would not pan and he
still wanted to know what was in the are he should take it to an assayer.
So next morning, armed with an are sack and a miner's pick and pan
he ventured into the shaft. He didn't trust the ladder too much, tread-
ing as lightly as possible. He noted some are still in the sides of the
shaft in spots, concluding that in places it proved wider than the shaft.
That was encouraging. He reached the bottom. He chiselled and picked
at the ore and finally Blled his sack.
Loaded he began the ascent. It was no easy task. He made up his
mind that if he located on the claim he'd see to it that the shaft would
be equipped for transportation for men and are. He had just about
reached the top when the ladder rung he was standing on gave way.
The break was so sudden that he didn't have time to get a firm hand
hold and down he went to the bottom. It was a long and hard fall.
Doubled up in the bottom of the shaft, at first he was unable to deter-
mine the extent of his injuries, but when he tried to get up his leg gave
way, and he knew it was broken.
Alone in the bottom of a 50-foot hole with a broken leg, he remem-
bered what Mr. Collins had warned him: C<Never,H he said, "go into a
mine alone. That's one of the first rules of mining. Mines are dangerous,
especially old and abandoned ones." It was too late now, thought Joe,
to begin taking that advice .
Back in Placerville at the newspaper office it was past the time when
Joe said he'd meet Connie. She knew Joe ·was very prompt. She waited
a full half hour and called the Collins' home. She explained to John that
she was sure Joe would have been in town by this time. Something must
have happened. When she told John of their date he said: "He'd come
here first as he keeps his best clothes here. If he said he' dmeet you at
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4:30 he would have been here at least by four o'clock. He must be in
trouble. We'll have to get out there as soon as possible."
«1 will go too, if ifs all right with you, Collins," said Connie. "If
he's hurt, 1 want to help."
On the way to the camp John was of the opinion that if Joe was
hurt it would be at the shaft on which he intended to file his location.
The last talk they had together about the shaft Joe had wondered about
when he should do some sampling. "I'll bet a dime to a dollar Joe went
into that old shaft to get a sample," said John. "And 1 told him not to
go into that shaft alone. He's so anxious, about not letting anyone know
what he is doing that he no doubt has gone out there alone. It's too bad."
Mr. Collins drove straight to the shaft in which Joe was interested.
His guess was a good one. Joe heard the approach of the car and was
shouting for help as John and Connie approached the shaft. Shouting
down the shaft John questioned, nAre you badly hurt, Joe?"
Up from the bottom of the shaft came Joe's answer, "My leg is broken
and I can't get around. If you could let down a rope I could get a hitch
on myself and I could be pulled out of here."
"We knew something had happened to you but we did not know it
was this bad," replied Collins. "We didn't come prepared as a rescue
crew but I'll drive over to Pollock Pines, get plenty of rope and some
more help. Miss Morrison is with me. If she likes she can stay here.
I can be back in less than a half hour. O.K., Joe?"
"O.K.," responded Joe. "But will Connie stay? I've been hours down
in the bottom of this hole. Maybe if she will talk to me it might ease
the pain."
"I'll stay and be glad to/' quickly responded Connie. "You go, Mr.
Collins. I will be all right. Nobody will bother me here. I'll do my best
to be company to poor Joe. But do hurry, Mr. Collins."
John left hurriedly for Pollock Pines. ·'Don't get too near the shaft
opening, Connie, cautioned Joe. One of us down in the bottom of this
hole is enough. How did you and Mr. Collins figure to come looking for
me here?"
"Well, you said you would be at the office at 4:30. I waited until
after 5:00; then went to the Collins home. I didn't know you kept your
best suit there. Mr. Collins said you would have called there by not
later than 4:00 and immediately concluded that you were in trouble. So
out we came and here I am. I am sorry I can't get any closer to you
than fifty feet. We are lucky that we had that date for this evening:'
"And I am lucky that I know a nice girl like you who would come
all the way out here to find out what's wrong. And you're going to miss
dinner,
'We can have dinner any time, but it isn't every day that I can help
rescue a nice boy from the bottom of a mine shaft. And get to
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worrying about my writing up your accident for the Mountain-Democrat.
I know you want to keep your doings quiet so I will let you know in
advance, so you won't be worrying. There'll be no publicity. We'll just
keep it to ourselves."
"That's the good girl, Connie; and thanks. I hope Mr. Collins gets
here soon. This old leg of mine is giving me fits. Keep talking."
Just then Mr. Collins drove up. Two men hurriedly jumped out of
the car. John followed with a coil of rope. It was uncoiled and let
down to Joe.
"Get it around you and under your armpits," instructed John. "And
tie it tight. We can't have any more accidents."
In a short time Joe called out that he was ready to go. The three
men started to pull slowly. Connie cautioned them to take it easy to
prevent Joe from being bumped on the side of the shaft. She thought
of his broken leg and the pain he was suffering. The men pulled slowly
and steadily and shortly Joe, his pick, pan and sack of ore were on top.
He was carried to the car, put in the rear seat with Connie who made
it as comfortable as possible for him. Joe thanked his rescuers who were
taken back to Pollock Pines and then Mr. Collins headed for the Placer-
ville Sanitarium. A doctor took charge. Connie didn't want to leave.
"We can't be of any more help to him now," urged Mr. Collins. «Let me
take you home. I know Joe will be glad to see you tomorrow."
John wanted to give Joe another lecture about going into a mine alone
but he reserved that for some other time.
Joe felt rather pleased at Connie's concern but assured her that Mr.
Collins would have told her of his move. "It's nice of you to be thinking
of me. When I left New York I didn't know I could find such nice friends
as you and Mr. and Mrs. Collins out here among the gold mines. I
thought everybody would be so interested in getting some of the gold
that they wouldn't have much time for the other fellow. It sure is nice."
The next morning Joe was stirring around early, as much as his crip-
pled leg would allow. "We've got to establish a research department.
As long as I can't do any leg work, at least I can learn something about
this mining industry," said Joe. "The first thing I want to get hold of is
all the information about that firm that does the geophysical work. I
have looked high and dry for some advertising of the firms that do that
type of engineering. I wrote to Harold in Washington, D.C., about it.
He went to the Commerce Department. Before getting an answer they
had to check with a number of other officials. Their answer was that
there is no such authorized advertising because the government holds
there is no instrument that can locate gold underground. That, of course,
doesn't check with what we read in our favorite mining publication. It
has made complete investigations at every mine engaging the geophysi-
cal surveyor. So to get the actual facts we will have to consult the pub-
lication's reports."
"That should not be any trouble," responded Mr. Collins. "I have
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the complete file of the publication. Let's dig it up."
"1 want to first call your attention to a letter I wrote this morning
while you were up town after the mail," said Joe. "I got all riled up at
the way the Los Angeles Times reported the gold drain hearing held by
the Congressional Joint Economic Committee. One Washington AP arti-
cle was headed: DILLON OUTLINES FIGHT AGAINST DOLLAR
DRAIN. Another leads off with: DEMOCRATS AND REPUBLICANS
GANG UP ON TREASURY. If you did not know how serious the situa-
tion is those headlines would make you laugh. Dillon isn't doing any
fighting as our gold is going where it was planned - into the coffers of
the International Monetary Fund. And that "gang-up" - those Congress-
men don't know what a "gang-up" is. They surely missed the boat, and
I am telling one of them so. Here's what I wrote him:
Hon. Thomas B. Curtis,
House Office Building,
Washington 25, D.C.
Dear Congressman:
I have been watching the plans of the International Monetary Fund
to take over U.S. gold. As you know by now that plan was foisted
upon us by two known Communists, Harry Dexter White and Alger
Hiss.
We are glad you questioned the Treasury Assistant Seoretary Roosa,
on expenditure control. However, this is only a minor matter as com-
pared with what the Administration and Secretary Dillon, with the ap-
proval of the Federal Reserve Bank, are doing to bring about the Com-
munist plan to denude U.S. of its gold.
The Treasury Department is putting out a lie every day in its daily
report on the gold balance. It fails to deduct $800,000,000 borrowed
from the IMF; also amounts involved in "'swapping dollars with foreign
countries for their convertible currencies to meet the foreign gold call,
and further, the amount in bonds we have turned over to the IMF to
satisfy other foreign gold calls. These deductions, the amount of which
the Treasury refuses to make known to Congress, would greatly reduce
the Daily Gold Balance. They are being used as "cover-ups" in order
to show a decent balance. Your Joint Economic Committee should force
the Treasury to bring these deductions to light so that the taxpayers
will know just what the condition of our monetary system is. Your
committee is allowing the Treasury to keep us in the dark. Mter all,
when the foreign dominated IMF gets all our gold, plus other obliga-
tions, our taxpayers will be subject to its call.
We don't mind paying high taxes to our own government, but we do
object to going through with the Alger Hiss-Harry Dexter White deal
of paying tribute to a foreign dominated monetary organization.
We don't believe Congress realizes what is going on. The gold drain
is a matter of fact. It must continue as there is no other way to meet
the call of foreign dollar holders. Different schemes of the Treasury
listed above have worn out. The Administration's plan of using $75
million of foreign currencies in the Treasury is only a drop in the bucket
as compared with the $27 billion of foreign dollar holdings.
We must repudiate the Bretton Woods Agreemenr by raising the
price of the Treasury gold we have left. That is out only way out.
Sincerely,
JOSEPH A. BACON.
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"That's good stuff, but I'm afraid it's Love's labor lost," said Mr. Col-
lins. "You are right when you stated to the Congressman that you are
of the opinion he and his co-members did not know what was going on.
You remember the letter you wrote in June to Senator Harry Byrd, head
of the Senate's Finance Committee? Well, anyway you have an answer
in today's mail. What do you say we first review your letter so we will
know just what you wrote. It takes so long to get a letter from Wash-
ington that you forget what you have written. That's what the boys on
Capitol Hill figure on, I guess."
Joe dug up the copy of the letter to Senator Byrd. It read:
Hon. Harry F. Byrd,
U.S. Senate,
Washington 25, D.C .
Dear Senator:
Have read with interest the article, "Promises of 1932 Never Kept:
in the May 4 issue of Human Events.
We are glad to note that you did not swallow the New Deal as
planned by FOR. On the other hand we, the taxpayers, are getting a
worse deal than they did under Roosevelt. This is especially noted in
what the Senate is allowing to happen to our Gold Reserve, with the
Treasury's daily report failing to give the actual condition. This is due
to several schemes that have been used in order to show no losses from
the Treasury's supply. We refer to what was called "swapping" U.S.
paper dollars for West Germany, Italy and Switzerland convertible cur-
rencies. This does not show on our daily Treasury balance but will
have to be met with gold in the eventual settlement. There's no doubt
that the swapped dollars will have to be converted to gold. Would like
to have you check me on this.
The "swapping" was started in the fall of last year, $350,000,000
going out in November and December. No further figures were given
out as the "swapping" went on in the first months of 1963. There was
evidence that the plan played out when in May the Treasury an-
nounced bonds would be issued to the International Monetary Fund
for gold to meet the call of foreign dollar holders. Could you let us
know to what extent such bonds have been issued?
We would like to call your attention to the fact that a gold loan
from IMF is never aoknowledged by the Treasury in its daily reports.
It is well known that the IMF will never accept anything but gold for
settlement. The loan was for $800,000,000.
As chairman of the Senate Finance Committee we desire an answer
direct from you. We have received answers from the Treasury which
were very unsatisfactory. It has ways of dodging the truth, we are sorry
to state.
In today's paper we read of your birthday. Congratulations, with
well wishes for your continued good health.
Sincerely yours,
June 11, 1963 JOSEPH A. BACON.
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CHAPTER 22
A Prospector's Letters to Congressmen
A
fter several days at the sanitarium Mr. Collins suggested that Joe
could avoid the expense if he would consent to come to their home
and use their spare bedroom. Joe wouldn't hear to it. "1 can't be such
a burden to you and Mrs. Collins," he said. "It wouldn't be right for
me to impose on you. You live simply in your pleasant home which you
don't want cluttered up with a broken-legged invalid."
"Now listen, Joe," answered John, «we do lead a quiet life; too
quiet. We never told you but we had a son who died in an auto wreck.
Home has never been the same since. Both Mrs. Collins and 1 would
like to have you. You won't be a burden. You can get around on your
crutches; we can talk some more mining and by the time you are able
to be out again you will know where you want to locate your claim.
«We had to laugh at you when you showed up out of that shaft; you
still were hanging on to your sack of are. And, by the way, we had it
assayed. It went $70 to the ton - two ounces of gold to each ton of are.
Not bad at all. I hope your fall will not scare you away from giving
that hole some more attention. And now about coming to the house;
what do you say?"
«Well, John, the way you put it I guess I can make it, but listen, I
don't want to be a moocher. I want to pay my share of the household
expense. I wouldn't feel right any other way.
"All r i g h t ~ you will have your way. I'll notify the sanitarium man-
ager. I have the car outside. We will gather up your things and tote
you over to the house. I'm glad that's settled.
The next day after work, Connie stormed into the Collins' home ready
for a fight. She had gone to the sanitarium for her usual visit and was told
the patient had left, bag and baggage. They didn't know where but
thought the doctor might know as they presumed Joe would need some
further attention. The doctor was out. Connie's next guess was that Mr.
Collins might know. She went that way and found Joe established in
a lounging chair.
"You never told me you were leaving the sanitarium when I saw you
last night. How corne?"
"I didn't know it myself till about two hours ago. And I wouldn't
have been here if Mr. Collins hadn't been such a good talker. 1 don't
think these kind folks will object to you visiting the patient. You won't
have to be restricted to visitors' hours."
<'Well, I'll forgive you this time, but don't let it happen again. 1 didn't
know what to think when the sanitarium folks couldn't tell me what had
happened to you."
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,
"Thanks for bringing my mail, Mr. Collins. Let's see what good old
Harry has to say. Oops, he doesn't say much but sends one of those
cover-up letters from the Treasury. Anyway, let's read it," said Joe.
My dear Bacon:
This is in further reference to your letter relative to Treasury financ-
ing practices. I have received the enclosed material from the Treasury
Department in connection with your inquiries. I hope that it provides
fuller information on the subject.
You may be assured that I am closely watching the Treasury gold
situation, as well as our balance of payments situation. I regard this
as one of the most serious problems confronting this nation today.
I greatly appreciate your interest and hope you will not hesitate to
communicate with me whenever there are matters of mutual interest.
With my very best wishes.
Faithfully yours,
July 11, 1963 HARRY F. BYRD.
Dear Senator Byrd:
I am happy to supply you with information which will assist you in
responding to the inquiry quoted in your letter of June 25, 1963.
The purpose of "swap" transactions is in reality the opposite of
that described in the statement made by your correspondent. Dollars
swapped with foreign central banks provide the United States with
foreign exchange which is used to mop up dollars which would go or
have gone into the hands of the foreign monetary authority and which
would likely result in purchases of gold from the United States. The
dollars originating through swap transactions are repurchasable by the
United States with the same foreign ourrencies originally drawn and at
the same exchange rates. The central bank credited with swap dollars
is thus protected in terms of its own currency and is willing to hold
these dollars where it might not hold dollars otherwise obtained.
The swap transactions are especially designed to offset temporary
flows of funds which it is expected will be reversed within a fairly short
period of time. When the reversal takes place, the United States can
then acquire the necessary foreign exchange and reverse the swap with-
out loss of gold. All of the swap transactions completed to date have
been fully successful in this respect. There are enclosed copies of two
reports by the Federal Reserve Bank of New York on HThe Treasury
and Federal Reserves Foreign Exchange Operations" which explain the
nature of swap transactions and the actual results of those completed
through February of this year. Treasury borrowings in foreign cur"
rency. which in SOme respect are similar to swap transactions but are
designed to cover longer term flows of funds, are also discussed.
Swap arrangements were first made in March of last year, reaching
a total of $1,150 million by year-end and $1,550 million at present. I
cannot reconcile the figure of $350 million given by the writer for the
amount of swap transaotions in November and December of last year
with our records. It may interest your correspondent to know that an
announcement of each swap arrangement has been made at the time of
its institution. A copy of the most recent Federal Reserve press release
dealing with this subject is attached.
The arrangement of a swap does not, of course, mean that any
amount is automatically drawn or used and, in practice, only a small
part of the total availability has ever been outstanding at anyone time.
Reports on the use of swaps have been made in the articles previously
referred to.
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The reference to an announcement in May concerning the issuance of
bonds to the International Monetary Fund for gold is incorrect. There
was no such announcement. The writer, may perhaps be referring to
press speculation on the possibility of a U.S. drawing from the Fund.
The final reference to an $800 million loan from the IMF is also
incorrect. What is probably referred to here is the sale of $800 million
in gold by the IMF to the Treasury with the right of repurchase. These
sales, not loans, totaling $800 million, took place in 1956, 1959 and
1960 and the right of repurchase of the IMF is noted in the monthly
Treasury Bulletin.
I trust this information will prove useful. It is always a pleasure
to be of assistance.
Sincerely yours,
JOSEPH W. BARR,
Assistant to the Secretary.
"You were right the first time, Joe. The senator apparently doesn't
know anything about the Gold Drain, or at least he won't commit him-
self. It's too bad that we have to be represented by bureaucrats. This
nation is sunk if we don't get a change soon. Anyway, let's see what
the gentleman from the Treasury means in his two-page letter.
«He doesn't appear to agree with you on that "swapping" deal. Of
course it does save the Treasury from having to dig up some immediate
gold, but I agree with you that the sends more dollars out of
the nation and they all become subject to the Bretton Woods Deal. I
note the honorable assistant secretary shys away from writing anything
about that ·commie' deal. I have read that the foreign exchange that the
Treasury gets in the 'swapping" deals is all convertible to gold. You can
bet your last dollar that those foreign countries are not going to let their
convertibles go unless they know they are to be replaced by gold. So
I just can't believe Mr. Barr's explanation. His 'swapping' does relieve
the Treasury of digging up some immediate gold but it does add to the
amount of foreign-held dollars which eventually will have to be met
with gold. These 'swapped' dollars are no different than any other dol-
lars that get out of our hands.
«And note what Mr. Barr says about the 'temporary flow of our
funds expected to be reversed in their flow .' Hell's bells I There's noth-
ing temporary about that flow of our dollars and our gold. It's 'planned
that way: It's a steady all in one direction. It will never start back
until we are entirely out of and then in order to give our currency
some sort of standing in the commercial world we will have to buy it
back at a much greater price than that at which we are now letting it
leave the country. That's just common horse sense, and Mr. Barr should
know that he can't put over that stuff of his. As long as we insist on
keeping our gold price at the low figure of $35.00 per ounce the flow is
going to be out. Europe is now hoarding much of your Uncle Sam's gold
because they got it at a low price, and as soon as we run out it is going
to be worth much more than $35.00 '
«Mr. Barr pokes one at you because you did not know how much
his 'swappings' deals amounted to. You had it at only $350 million when
he admits to over one and a half billion dollars. Anyway we are glad
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to know that. He tries to put it over that the 'swapped' dollars won't
meet the same fate as the dollars that we are spending in foreign aid.
I can't 'swallow that.
"Mr. Barr has a queer explanation of the $800,000,000 in gold the
Treasury borrowed from the International Monetary Fund. He calls it
a 'sale' with the right of repurchase. That's a hot way of explaining a
loan. The IMF will not only have the 'right of repurchase' but it will
be a demand for repayment. The IMF is not in the business of letting
any country play with its g o l d : ~
"That's sure good stuff, Mr. Collins," said Joe enthusiastically. "It's
too darned bad we don't have you as a Congressman for this Mother
Lode Gold District. 1 don't think that 'Bizz' Johnson understands what's
happening to our poor old dollar. Anyway, when all our gold is gone
he, like a lot of others in Washington, is going to have a sad awakening.
But it will be tough on the taxpayer. He will have to buy back all the
gold our Washington folks have squandered. I see what you mean when
you say we are not getting representation at the national capital. When
you write a letter to a Congressman you get a reply from a bureaucrat.
Time for another Boston Tea Party. But let us get on to finding out
more about Harold Ferrin and what he has done for the gold miners
with his geophysical instrument."

CHAPTER 23
Geophysics in Mining
M
r. Collins had gathered up all the back issues of California Mining
Journal in which appeared reports of Ferrin's findings on a num-
ber of gold mines.
Collins told Joe that Ferrin was first located at Mesa, Arizona, adver-
tising under the firm name of Ferrin Geophysical Exploration Company.
Later when he had many calls from California and Oregon he made his
headquarters at Reno, 105 Lake Street.
"I first met Mr. Ferrin when he was called to a mine close to my
property and somewhat closer to that shaft you fell into/' said Collins.
It always was a good producer of high grade are. It had no outcrop
but was discovered when a lumber firm, which owns the ground, was
bulldozing a road. The lumber firm leased the property and then began
the history of one of California's best gold mines.
"The first operators, a cooperative group, never handled less than
ounce ore. Their production was never given out. After several years
they sold to a single operator who, according to his own word, took out
a million dollars. All of a sudden he lost his ore and concluded the mine
was through. He sold out to a Reno, Nevada,. company, which paid him
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$80,000, half down. They needed operation money so took in a wealthy
rice grower who knew nothing about mining. The head of the company
was involved in litigation elsewhere where he was required to refund
money or sweat it out in jail. The rice grower kept putting up money,
most of it going to keep the company head a free man. The rice man
finally got on to the deal and took over. It was at this time that Ferrin
entered the picture. I
"Ferrin's geophysical instrument showed that the are loss was due to
a fault but that it could again be encountered not very far from the
shaft. To convince the operator a drill hole was put down which pro-
duced the are. So pleased was the operator that Ferrin was given an
interest and a cash contract to report on the entire propery.
«After trying his instrument on the next location Ferrin announced
that the gold are would be found at a depth of 200 feet. His drill picked
up the ore at 203 feet. In the second hole he encountered ore at 202 feet.
Several other holes were drilled on the property, after geophysical tests,
the cores of which assayed well. About that time a Denver, Colorado,
engineer came representing a Canadian company. He spent three weeks
in Placerville trying to make a deal to purchase the mine, offering $1,100,-
000 for it. The operator and the owners got to figuring the possible in-
come tax. As the property had no cost to deduct, the tax would be sky-
high, so the offer was turned down."
Joe took in every word Mr. Collins had to say. He was intrigued
with all details of the Ferrin geophysical surveys. "Why don't more
mining companies use these surveys and save a lot of cost, trouble and
hard work?"
"They don't believe in it," responded Collins. engineers have
steered them along certain lines for years, and to accept anything new
would be to find much of their mining education was wasted. That
wouldn't do."
"You once told me you met Mr. Ferrin when he was working on that
mine; what did he have to say about what his instrument can do?"
questioned Joe.
"He didn't say a great deal and I don't blame him. There isn't an-
other instrument exactly like his that anybody knows of. It is made over
according to his ideas, and I know of nobody that gets proven results
as he does. There might be others claiming to do it but I have never
heard of or seen any
"When you talked to Mr. Ferrin how did he explain the working of
his instrument?" questioned Joe.
"The only explanation he gave me was this: every metal or mineral
has its individual wave length. You can note that when you examine
a picture taken in a spectrographic analysis. There are lines on the photo
for each mineral separated from each other. When he is testing ground
for a certain mineral he tunes out all others so any reaction he gets is
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due to the presence of the mineral he is looking for. A geologist who
had given Ferrin's methods a lot of study went for advice to Cal Tech.
The professor there in charge of geophysical engineering agreed that
Ferrin can do what he claims but the professor was at a loss to know
how Ferrin could determine at what depth the are would occur. That
was the only thing that stymied the professor. I'd say Mr. Ferrin really
has something."
"Outside of our favorite mining publication what do the others have
to print about Ferrin and his instrument?" queried Joe.
"As far as I know, nothing. I guess it is too revolutionary for them.
It's too far beyond what they can learn in the mining schools, I guess.
The Journal made a close check with all the mines that employed Ferrin
and went to a great deal of trouble to get all the details of each job. One
of the last The Journal published was one up in Sierra County at that
gold town of Alleghany. Everyone who has a claim in and around Alle-
ghany is privileged to believe they have another Sixteen-to-One. Produc-
tion of a number of the camp's gold mines has proven it to be the state's
richest.
"Well, for sixteen years the owner of four claims in the Alleghany
district tried to get a patent on them. Apparently he had the goods be-
cause at one time the office of the Bureau of Land Management at Sacra-
mento approved the patent and sent its report on to Washington. Here
the Agricultural Departmenfs Forest Service objected. The claim owner,
Thomas J. P. Shannon of Redlands, California, to their notion hadn't
made a discovery sufficient to cause the 'prudent man' to throw up his
job and start mining. At this juncture Mr. Shannon employed Mr. Ferrin.
His instrument told him where to drill. Under 45 feet of overburden he
encountered the gold vein. Proceeding a short distance deeper he pro-
duced a core which he turned over to the engineers of the Forest Serv-
ice. Ferrin wanted the Forest Service to make their own assays. The
assay came back $266.00 to the ton in gold, rich enough for a half dozen
good mines.
"Mr. Shannon got his patent but only a short time ago I read in The
Journal that he passed away."
As Joe checked on the accomplishments of the Ferrin Geophysical
Exploration Company he made up his mind that to start gold mining
without a Ferrin survey was out of the question. He was intent on get-
ting more· data on the subject and made up his mind to meet Ferrin at
his first opportunity. He broached the matter to Mr. Collins.
"That would be fine but first I have another pressing job for you,"
said Collins. "Day by day the gold critics become more pressing in
Washington. You read about it in the papers every day, and furthermore
they are getting closer to the real truth about the situation. In today's
mail I received my copy of Charley Willis's Pay Dirt, the Arizona Small
Miners' organ, published in Phoenix. It runs a story that Sen. Mike
Mansfield of Montana, the administration's number one man in the
101
Senate, has come out for a raise in the gold price, stating 'the $35.00
price should be scrapped.' I think we should get out an air mail letter
to the senator at once, backing him up to the fullest extent. With what
he has done for the Democrats he should have a lot of influence. \Vhat
do you say?"
"Sounds all right," responded Joe. However, what I learned before
I left New York from our congressman is that the President doesn't have
the say about the gold price. He isn't running the show; he's only the
mouthpiece for the Secretary of the Treasury and the Federal Reserve
Bank. He gets his orders from those two agencies. No doubt the Presi- "-
dent thinks a lot of Senator Mike but does he have influence with Treas-
ury Secretary Dillon?"
"That no doubt is true, Joe, but there could be such a thing as the
President kicking over the traces. He will have to do something. He
can't face the election of next year with the gold situation as it is today.
I move you write to Sen. Mansfield."
«1 second the motion," approved Joe. I'll unlimber my trusty type-
writer." So Joe wrote the following letter:
Hon. Mike Mansfield,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
We 11-0te in an Arizona publication you have come out for "scrap-
ping the $35. gold price in favor of $65. or $70." It quotes you as
stating this at Butte, Montana. Why not advocate this in the Senate,
which has just gone through a week in which the Gold Drain was a
Number 1 problem? I believe you will agree with me that this is the
Administration's Number 1 headache.
As a majority leader you have done the President a good job, and
the time has come when he should listen to you on this most important
problem. I think you will admit that is the nation's Number 1 problem
although Congress is letting others have precedence.
I further think you will agree with me that the President face
the 1964 election with the gold problem unsettled. Right now all he
thinks about is the annual imbalance of the trade outgo of dollars.
That appears to be a sin of omission by the whole of Washington.
They ignore that $27 billions of foreign-held dollars, standing ready to
be converted to gold that we don't have. Your Administration thinks it
can quiet the nation by slowing down the imbalance when those for-
eigners are eagerly awaiting gold. It thinks it can feed them their own
currencies when they want and can have convertible currencies. Those
nations who give up their convertibles must have convertible dollars
when being repaid. The Administration's plan will slightly delay
the smash. As a majority leader you should enlighten them.
You should tell them that an immediate raise as you advocate would
stop the drain and force foreign -dollar holders to use those dollars to
purchase our produce. That would also solve our slipping foreign trade.
We hope you note that there is danger in delay.
Thanking you. for your attention, I am,
Sincerely,
July 22, 1963 JOSEPH A. BACON.
102
"Well, here's the letter, Mr. Collins. I'll bet a dollar to a hole in a
doughnut that Sen. Mansfield does not answer. Those senators have a
habit of talking for home consumption. Take notice that Sen. Mike does
not talk that way in the Senate." Later, Joe had to admit there was no
answer.
"1 guess you are right, Joe, but we got to keep at 'em. As long as we
know we are right and the nation needs a gold raise that will stop the
How of our Treasury gold into the hands of foreigners we must continue
our fight. There are none so blind as those who won't see. Sen. Mans-
field should be able to convince his administration that if Congress would
put the price of gold at $105 per ounce it would have a triple accom-
plishment. The outflow would stop; the $15 billion of gold we can now
--
J
lay our hands on would be worth $45 billion, and those foreign dollar ,
holders would not take out gold at that price; they'd use their dollars \
to buy our produce. I wonder if that's too simple for Washington to \
understand." I .. _______ /
UAs I said before, Mr. Collins, you should be in Washington I won-
der of the good people of the Mother Lode country would recall cBizz'
Johnson and send you in his place."
cel wouldn't think of it," replied John. "Congressman <Bizz' keeps
them fed up with what he is going to do but never produces. But they
seem to like it. And by the way, I received something in the mail this
morning that will interest you and everybody interested in freeing gold
from the strangle hold the International Monetary Fund is getting on
it. It is about three different cases of men who have been arrested for
acquiring and holding gold bullion. The No.1 case was tried in Los
Angeles, the judge finding those accused not guilty, holding that the
emergency of 1933 has long been over, making the law unnecessary. In
the No. 2 case a diffe.rent judge postponed the case stating that before
he proceeded with it he wanted a federal hearing to determine whether
or not the Cemergency' is really over. 'That hearing, you will remember,
will be. held in Los Angeles on November 5th, 1963. And while we are
awaiting that hearing and the disposition of case No.2, along comes
another. A new York Court is holding two men for having $7,500
in gold bullion, the federal judge, Sidney Sugarman, refusing to go along
with the decision of the California judge. I think we should give these
cases thorough study and go to that November 5th hearing well fortified
with reasons showing the Emergency of 1933 to be over long ago.
s look at the New York case, if you will excuse me from inter-
rupting your geophysical investigation. This is really important. The
whole West should be aroused as to what a favorable answer out of that
November 5th hearing will mean. It won't be easy as Washington has
that the Treasury Department will have all their monetary experts
on hand."
'With the mess those experts have made in handling our gold I should
think they would be ashamed to appear at any hearing,"cut in Joe. (cAny_
way I agree that the hearing will be important. We should know all the
angles of those cases before the hearing comes up. So let's dig into them."
10&
- - -- -----
CHAPTER 24
Is the War Emergency Over?
W
ith Joe's willingness to put aside his geophysical studies Collins
brought forth a July 12, 1963 copy of the Coin World which gave
a complete account of the handling of the New York case by Judge
Sugarman as follows:
T\VO NEW YORK MEN TO FACE TRIAL FOR
VIOLATION OF U.S. GOLD LAWS
A New York District Court judge-
taking an opposite stand from that of a
fellow judge in California in interpreting
the nation's gold regulations - has ruled
that two New Yorkers must face trial in
criminal court for violation of gold laws
and executive orders.
Sidney Sugarman, United States dis-
trict judge, United States District Court,
Southern District of New York, has de-
nied a motion to dismiss a three-count
indictment against Stanley Lane and Jo-
seph Valle, returned August 3, 1962, by
a New York grand jury.
The two men were charged by the
government with unlawfully acquiring
and holding approximately $7,500 in gold
bullion without a license and with con-
spiracy to defraud the government.
Judge Sugarman's decision pointed up
the fact that the east-west judioial twain
does not meet: William C. Mathes, judge
of the Federal District court of the
Southern District of California, central
division, in an August 16, 1962, decision
declared it was legal for Americans,
other than collectors of coins issued be-
fore 1933, to hold or possess gold.
The California case was filed under
United States of America, plaintiff, vs.
James Briddle and Harold Donald Mit-
chell, defendants. The court dismissed
the criminal indictment against the Cali-
fornians who acquired, }:leld and trans-
ported 21 ounces of gold bullion without
a license.
Dr. Leland Howard, direotor, Office of
Domestic Gold and Silver Operations,
said earlier the California case· had no
bearing on the holding of gold bullion
by .private individuals. He pointed out
that on March 25 the government re-
newed the court battle to declare the
gold holding illegal that legislation
of 1933-1934 and executive orders of four
presidents, f,rom Franklin D. Roosevelt
to John F. Kennedy still stand.
Dr. Howard said the Gold Reserve act,
which is another statutory basis for gold
regulation was not involved in Judge
Mathes' ruling.
Judge Sugarman studied the United
States versus Briddle case in California
as he considered the Lane-Valle motion
for dismissal, and he pointed out that
the defendants were relying on the Brid-
dIe decision.
However, he said in his opinion, the
indictment in the Briddle case differed
from the Lane-Valle case in two respects.
The New York men were indicted on
two "substantive" counts, one for ac-
quiring and the second for possessing
gold in violation of Title 12, United
States Code, Section gSa. The California
case contained only one count, charging
both acquisition and possession of gold
in violation of that statute.
The second difference, Judge Sugar-
man pointed out, is that there was no
count in the Briddle indictment charging,
as in the third count against the New
York men, a conspiracy to violate Title
31, United States code. sections 440-443.
"If I were to follow the holding in
Briddle, the defendant's motion would
have to be granted as to both the first
and second counts of this indictment,"
said Judge Sugarman. "Finding
unable to agree with Briddle insofar as
that decision affects the two substantive
counts of the indictment before me, I
state my reasons ... :"
The Judge then proceeded to review
the history and reasoning behind the
regulations involving gold, starting with
World War I, and said in the light of
. this history he could not accept the Cali-
fornia judge's thinking that President
Truman and President Eisenhower's pro-
clamation and executive orders merely
prolonged the great depression of 1933.
Judge Sugarman summed up the gold
regulations of the nation in his opinion
as follows, as he spelled them out in con-
densed form:
104
.•
..
«Based upon a presidential proclama-
tion on April 5, 1933, of a national emer-
gency in banking, President Roosevelt in-
voked the control of gold permitted by
the Trading with the enemy Act and on
August 28, 1933 in Executive Order No.
6260 set forth the method of establish-
ing and maintaining that control.
"President Truman proclaimed a new
and different national emergency on De-
cember 16, 1950 caused by the world
conquest of communist imperialism.
"President Eisenhower, on November
29, 1960 and again on January 14, 1961,
because of and to meet the continuing
national emergency declared by President
Truman continued the control of gold in
the manner adopted by President Roose-
velt originally, on August 28, 1933 with
certain amendments thereto, not here
pertinent.
"The criminal sanctions contained in
Section 5 (b) of the Trading with the
enemy Act as amended, Title 12 U.S.C.
No. 95a were applicable to violations of
Executive Orders No. 10896 and No.
10905 and were in full force on May 23,
1962, the date of the crimes charged in
counts one and two of the indictment
herein.
"By the March 9, 1933 amendment to
the Trading with the enemy Act, the
Congress delegated to the President the
power, by the proclamation of a national
emergency, to make operable in the vari-
ous ways mentioned in Section 5 ( b) of
that Act, Titile 12 U.S.C. No. 95a, the
control of gold and made the violation
of any such presidential orders punish-
able by fine and imprisonment or both.
This, the House Judicial Committee ac-
cepted as a postulate by its conunittee
prints of March 18, 1958 and January 25,
1962, the latter as recently as three
and one-half months before the crimes
charged in the first and second counts of
this indictment. I discern no persuasive
reason to do otherwise.
"Had President Eisenhower simply re-
peated the appropriate language of Pro-
clamation No. 2914 and that of Execu-
tive Order No. 6260 it could not be ser-
iously agreed that the effect would have
been to prolong the 'Great Depression:
"On the contrary it would have been
clearly the proclamation of a distinct na-
tional emergency caused by communist
imperialism and the activation of the pro-
visions of Section 5 ( b) of the Trading
with the enemy Act as amended, Title
12 U.S.C. No. 95a, including the crim-
inal sanctions therein contained.
"That he chose to incorporate them by
reference does not, in my view, alter the
result. Accordingly, the first two counts
of the indictment each state a public of-
fense.
"As to the third count, charging a con-
spiracy to violate the Gold Reserve Act
of 1934 as amended, defendants' sole re-
liance upon Fuller vs. United States, 114
F.2d 693 (9th Cir. 1940) is misplaced.
The indictment in that case did "not
charge a conspiracy to defraud the United
States as does the present indictment. It
simply charged a conspiracy to acquire
and transport gold without the license re-
quired by the Gold Reserve Act of 1934.
"In that form, as the Fuller decision
emphasizes, it charged a conspiracy to
commit an offense against and not to de-
fraud the United States. Inasmuch as
the Act permitted, by certain exceptions
therein contained, the acquisition and
possession of certain gold without a li-
cense, the indictment was held defective
for failure to allege that defendant was
not within those exceptions, for if he was,
his acquisition and possession of gold was
not an offense.
The present indictment charges a con-
spiracy to violate the Gold Reserve Act
of 1934 and the regulations issued there-
under and thereby "to defraud the United
States in the exercise of its governmental
functions of regulating the value of
money, stabilizing the exchange value of
the dollar and regulating the acquisition
. . . (and) holding . . • of gold" without
a license. It states the crime of conspir-
ing to defraud the government under Ti-
tle 18 U.S. code, section 371 and it is
therefore unnecessary to allege that de-
fendants were not within those excepted
from the license requirement.
n
~ · W ell, thae s that,n said Joe. You could not expect anything else from
a New York grand jury or a New York federal judge. They are under
the thumbs of Wall Street bankers, the Treasury Department and the
Federal Reserve bankers. We even have a Wall Streeter for Treasury
Secretary, Mr. Douglas Dillon. What can we expect?"
105
«It does look like we are sewed up pretty tight," responded Mr. Col-
lins. "The Eastern banker knows little of the Western producer's prob-
lems and cares less. The Eastern 'money changers' are not willing to give
the Western gold producers any say in what their gold is worth in these
days of inflation. The price of everything else has tripled. The bankers
have a reason for holding the price of gold to the 1933 level. When their
international conspirators, the International Monetary Fund and its ane-
World Bank, get all our gold you will know their reason. But let's no\v
look over those California cases and the decision of the California judge
with which our New York friend, Judge Sugarman does not agree. We
will find it in The Journal. It's on page 15 of its October, 1962 issue and
reads:
FEDERAL COURT VOIDS GOLD RESERVE LAW;
HELD NO LONGER NECESSARY
(From Los Angeles Herald-Examiner)
Los Angeles, Aug. 17 -A Federal judge
here today threw out of court charges
brought under the anti-gold hoarding
presidential decree dating back to FDR's
bank holiday of March, 1933.
Had Gold Bullion
Federal Judge Willian Mathes dis-
missed charges of possession of 21 ounces
of gold bullion, brought against James
Briddle, 32 and Harold D. Mitchell, 44.
The two business men had been engaged
in what they thought was a perfectly
legal plan to bring Mexican gold into
the United States.
Was for Emergency Only
The "gold reserve" presidential order
was issued in a time of national emerg-
ency. President Truman later kept it on
the books because he said the Commun-
ist threat constituted a national emerg-
ency.
Judge Mathes took today the attitude
that the national emergency no longer
exists. He said:
"If we use the Communist menace in
this fashion as an emergency and declare
ourselves in a crisis. I think it improper
to act like a Communist just to fight the
Communists.
Treasury Using Red Tactics
"In Communist countries the executive
oan declare a violation to be a crime and
it is a crime, but here it is up to Con-
gress to declare an act to be a crime."
Quotes Kennedy: IiNo Crisis"
W. Bryan Osborne, attorney for the
two men, read the court from a recent
issue of The Los Herald-Exam-
iner quoting President Kennedy as say-
ing that we have no national crisis.-
(Sent in by H. R. Hildebrand, 1319
Orange Grove, Glendale 5, Calif.)
Editor's Note.- The federal judge who
several years ago handled an appeal in
a similar case in Portland, Ore., ended
his opinion with the statement that the
emergency being over and our govern-
ment refusing to repeal the law, was not
only damaging our monetary system but
also holding back the development of
our gold producing states.
«So there you have the California case," said Collins. can't see
that it is any different than the New York case. In both, men are accused
of 'acquiring and holding gold bullion.' I think Judge Sugarman's deci-
sion is just a lot of words to satisfy the, 'money changers' and the Justice
Department. He has to live with them so he can't go far afield from
their usual thinking.
"There was a follow-up story in The Journal on the same matter,
taken from The Los Angeles Times, telling of the decision of the Justice
Department not to appeal the case handled in Los Angeles by Judge
Mathes. It's rather important especially when the Justice Department
shows a change of heart. Here's what it said:
106
..
Y.
..
FEDERAL COURT VOIDS ANTI-GOLD LAW;
JUSTICE DEPARTMENT WILL NOT APPEAL
ersfield, and Harold Donald Mitchell, 44.
of 2259 Santa Rosa Dr., Altadena, were
named in a grand jury felony indictment
charging that they "acquired, held and
transported" 21 oz. of gold bullion.
In the October issue of The Journal we
printed an article concerning a court case
in Los Angeles. The defendants were ac-
cused of having 21 ounces of gold bul-
lion in their possession. The Judge threw
the case out of court and held that the
law no longer applies. Now comes the No Criminal Violation
announcement in The Los Angeles Times However, U.S. District Judge William
that the Justice Department will not ap- C. Mathes threw the case out of court,
peal the case. agreeing with defense attorney W. Bryan
So, if you have any gold bullion buried Osborne that Mr. Roosevelt's 1933 execu-
in the backyard, you'll be happy to know tive order was no longer in effect. There-
there is now some question whether fore, the judge ruled, there is no criminal
Uncle Sam can send you to jail if he law for the men to violate in possessing
finds out. gold bullion.
The government has been able to pun- May Ask for New Law
ish gold hoarders as felons on the basis The Justice Department. which first
of President Roosevelt's 1933 executive '
d d d
filed notice of appeal to the Supreme
or er issue during the ark days of the Court, by-passing the Circuit Court of
bank holiday.
A depression-born congressional act Appeals, by scrapping the appeal may
still stands unchalleneged as authority be indicating that it agrees with Mathes.
for the government to sue gold hoarders Or it may simply be indicating it is
in civil proceedings _ for triple damages. planning to ask Congress for a new law.
But in the field of criminal prosecution Where did Briddle and Mitohell get
it· appears the government has thrown in the bullion? Osborne said it was an as-
the towel, at least, for the time being. say sample in a business arrangement
wherein they planned to buy gold in
Appeal Withdrawn Mexico for $32.50 an ounce, f.o.b. Tia-
The Justice Department has filed no- juana and sell it to the U.S. Mint in San
tice in Federal District Court here that Francisco for the official price of jl,lst
it is withdrawing its appeal to the U.S. under $35 an ounce.
Supreme Court in a case involving two An order issued last year banning U.S.
Southern California businessmen. citizens from possessing gold in foreign
The men, James Briddle, 32, of Bak- countries torpedoed the plan.
"While it would appear that we are getting places when it comes to
the rights of gold miners, it is a significant fact that only two newspapers
in the whole United States printed he news of the Justice Department
backing up on that case handled by the California Judge," volunteered
Mr. Collins. "That came out in the April, 1963 issue of the American
Mercury, page 65. Can i ~ be that the international gold grabbers have
that much influence with the American newspapers? I saved the Ameri-
can Mercury's statement. Here it is:"
WHY THE SILENCE?
JUDGE RULES THAT AMERICANS CAN LAWFULLY OWN GOLD
Los Angeles - Is it still unlawful for American citizens to possess gold
(except for certain jewelry, tooth crowns and collector's coins)?
Only one or two U.S. newspapers have carried reports on an impor-
tant federal court decision which now gives Americans freedom enjoyed
by residents of most other nations. The federal court of the southern
district of California on August 16, 1962, held that the federal govern-
ment no longer has the right to confiscate gold.
107
Since 1933, U.S. presidents - to cooperate with international banking
interests and the Soviet Union - have issued presidential «decrees" pro-
hibiting Americans from «holding" gold.
Judge Mathes of the California court pOinted out that there is noth-
ing in the Constitution which would permit "the Congress to delegate
to the executive the power to make criminal what was theretofore law-
ful" - the private ownership of gold - except in a national emergency.
As a matter of fact, the Roosevelt Administration seized gold during
the depression under the so-call 1917 "Trading With the Enemy Act.»
President Kennedy's order against holding gold, (officially known as Exe-
cutive Order No. 6260) is supposedly based upon the Korean hostilities
which came to an end more than ten years ago.
To use such far-fetched excuses, says Judge Mathes, "would be to
condone the methods of the enemy. For if the President of the United
States is permitted to create crimes by fiat and ukase, without Con-
stitutional mandate, there is little to choose between their system and
"
ours.
It is notewarthy that Bobby Kennedy's Justice Department began
an appeal of this decision and then dropped the appeal. Because this
case is extremely important to American freedom and to our national
economy, the lack of publicity it has received suggests an official pro-
gram of silence.
«That 'Why silence' of the American Mercury is a logical question,"
said Joe. "It no doubt is more news management of the administration.
And foxy Bobby Kennedy is pretty smart in dropping the appeal. He
could not put it on without a lot of publicity and thafs just what the
administration wants to avoid until its foreign friends get all our gold
at the world's lowest figure.
"When the American people wake up and find all that gold gone and
in a further awakening find their monetary system is no good without
gold backing, what do you think will be their next move, Mr. Collns?"
CCNothing more than what I have been saying for years. For thou-
sands of years the world financiers have learned that it takes gold to
make a substantial monetary system. We willieam that too but it will
be too late to hold on to any of our $35.00 gold. We will pay through
the nose to get it back from our foreign friends. And we won't get it
back for less than $100.00 per ounce. And who do you suppose will. ..
make the $65 per ounce profit? I just can't see why our Congress can
be so dumb and so involved in follOWing the administration into national
bankruptcy."
"It's got me guessing too," said Joe. "Will there be an awakening
before it is too late?"
"That should be up to our newspapers;" answered Mr. Collins. "Those
published in the Gold Mining districts should be the first to lead, as their
economy needs operating gold. mines. The others, especially the big city
108
..
dailies, should follow on behalf of a sound national monetary system.
None of them appear to realize what gold means to a sound dollar and
a Number One aid to foreign trade. Do you think we could get Connie
to sell this to her boss?"
"I hardly think the local paper would see it even though this gold
region of EI Dorado needs it more than any other part of the nation,,'
responded Joe. '<Local newspapers mainly depend on local business
houses, all of whom do business with their favorie bank. Some of them
build up cash reserves but most use their credit at the bank to borrow.
They look to their banker for banking and monetary information, who
can only put out the information he gets from banking centers, all of
which comes from New York and the Treasury Department in Washing-
ton. At the present time Washington is not telling the truth about the
gold and monetary situation. So the business lnan and his newspaper are
unknowingly a part of the plot to keep the public uninformed. They
would be the last to listen to a gold miner.
"To most people gold and the miner belong to the past. Back in the
big city I remember reading in The Journal about the time Plumas
County sent a gold nugget to President Eisenhower. The presentation
was made by Clair Engle, then your congressman from the Mother Lode
district. At that time Clair was really working for the gold miner. What
do you think Ike said when he received that nugget? It was this: 'I am
glad to receive a memento of a past industry'."
"Clair must have succumbed to the same idea. Since he got into the
Senate he never even whispers about gold. And if you take it from me,
it was the gold miner that put him into Congress," added Mr. Collins.
wonder what he and the other Western Congressmen are doing to
appear for the gold miner when Judge Harry Westover has his hearing
in Los Angeles to determine whether or not the ·war emergency,' that
caused Roosevelt to ban the holding of gold, is over. You don't hear a
word about it in Congress. That hearing could be made the turning
point in the gold controversy. Months ago you wrote Representative
Walter Baring of Nevada about the hearing. Did you ever get a reply?"
"N at a line," answered Joe. 'Writing Congressmen is just a waste of
time, eHort and money - since an air-mail stamp has gone up to eight
cents. I sometimes wonder what we would have to do to get a group in
Congress who would really oppose the rape of our gold supply. They all
seem to be sold on turning all our gold over to foreigners. And that's
what will happen if Congress still continues to obey the Bretton Woods
Agreement. Further, they won't let us mine any new gold. It's beyond
me. I feel there is one hope: The Democrats can't face re-
election with our present montary situation. And there isn't a ghost of
a chance of it getting better under present policies. If the Republicans
don't use it in 1964 they don't know how to win an election. Perhaps we
should sound them oue'
"In one breath you say it's no use to write, and in the next you want
to write some more letters," said Mr. Collins. "1 have the same thoughts
109
myself; we can't give up. The only thing that's helpful in gaining our
purpose is that conditions are as bad as they are."
"'In the meantime I must get back to my geophysical investigation.
If Harold Ferrin keeps on proving his system anyone is foolish to start
mining without first engaging his services," said Joe .

CHAPTER 25
J!oe Hears About A Real Gold Mine
J
oe got out Mr. Collins' Journal file to check further on the work of
the Ferrin Geophysical Exploration Company. He was especially
intrigued with the work done in EI Dorado County. He was drawn to
that location after carefully reading of Ferrin's work, and was pleased
to note it was near Mr. Collins' mine.
In checking the June, 1961 issue of The Journal, Joe read the report
of a company making arrangements to lease the property. Concerning
the mine The Journal said:
In reporting on the geophysical work,
followed by drilling, done by Harold
Ferrin of Sierra Diamond Drill Company.
The Journal in past issues revealed the
property to be one of California's rich-
est. The January. 1950 issue contains the
following:
Proves Up Two More Ore Locations
Mr. Ferrin was in The Journal office
November 16. He brought maps showing
the resultg of two more drill holes, one
in which his instrument said he would
get the gold ore at a depth of 200 feet
and another at 270. One of these is 1,400
feet away from the nearest of the original
three drillings, the drill passing into a
gold vein at exactly 200 feet of depth.
It cut this vein at an angle, computation
later giving it a width of 12 feet and ore
assay as high as $24. The center 5 feet
is rich. After passing through the first
vein there was a footage of broken gold
hearing ground, not as rich as the veins,
of approximately 20 feet, when a similar
and parallel vein of like richness was
encountered.
The entire area of approximately 46
feet wide is all gold bearing. either of
the veins being big and rich enough to
support a highly commercial operation,
the entire 46 feet being an ideal open
pit operation once uncovered.
Not a Characteristic East Belt Mine
The property is located in the East
Belt of the Mother Lode, in many other
locations not noted for wide veins or long
ore shoots. To date the operators have
run one shoot over 700 fee+ and are still
in ore. This, Ferrin states, is remarkable.
for the East Belt. The veins run east-
west.
At no place is there any outcrop.
When a former operator ran out of ore,
due to a fault, a bulldozer was worked
overtime looking for new ore unsuccess-
fully. It was only when Ferrin was
called in that he located the faulted ore
and put down two more holes, 303 and
302 feet deep, that put the mine back
in buiness. An estimate of the addi-
tional ore located may he gained by the
fact that the owners of the mineral rights
are asking $300,000 for it. They are now
receiving 10 per cent gross royalty, with
the amount of production to date well
past two million dollars.
Government Take Hurts Deal
Two months ago a Canadian company
offered $1,100,000 for the property and
operation and are willing to up this price
with the location of new ore reserves.
However, the proposed sellers would be
hit for so much capital gain that they
would come out of the deal with only a
110
..
shoe string.
A Canadian geophysicist has been on
the ground lately and begging Ferrin to
go to Canada with his instrument. We
believe Harold is pretty well satisfied
with the fact the Mother Lode in the fu-
ture will do its share· in paying off the
national debt.
---
Reading over the above Joe was further intrigued: Who ever heard
of a rich body of gold ore 46 feet wide. He'd have to consult Mr. Collins
on it. To a greenhorn it looked as if working the 46 feet of ore in con-
nection with the mine would be the thing to do. This needs investiga-
tion, thought Joe.
The day's mail was of much interest to Joe. In it was the long-Iooked-
for letter from Congressman Walter Baring of Nevada, and a very un-
expected one from Millie Manning. The Congressman wrote:
"I have been traveling for the last their position on gold. The internation-
twelve days and, consequently did not alists are certainly running this country,
get your letter until my return to Wash- and a few more years of foreign aid will
ington. I appreoiate your comments re- just about polish us off. As you know,
lating to the urban affairs bill, so I am there are' bills in here to do away with
sending you copies of my releases whi<:h gold and silver. All I say in this re-
I know did some good toward defeating gard is that there are a few of us here
this bill which would lead us into cen- who will fight to the end should they ever
tralized control. press the enactment of these bills. It was
"Even though I attended the gold hear- my own Senator Key Pitman who dic-
ings at Sacramento, I myself,_ do not be- tated the silver purchase paper, and
lieve we can get the bill out of the In- Senator Me-Carran who fought for it for
terior Committee and signed by the Pres- years, and I know that the Nevada dele-
ident. All four of my gold bills are be- gation will fight bitterly should they
fore the Banking and Currency Com- press to do away with either gold or
mittee, and I have been to the Treasury, silver.
as you know, and I know where the op- They criticize people if they write pa-
position comes from. triotic letters, but they don't criticize
Backdoor Spending this powerful group of leftists, namely
"Actually, the route via the Interior the ADA, which is just as bad for the
Committee would be labeled backdoor country on the other side of the ledger.
spending, for we bypass the Treasury I for one, think that the powerful leftist
Department, and therefore, I think this group is more dangerous because they
would be enough to kill it. are in power more than the patriotic
"With the national debt at $315 bil- groups. There has to be a return of gov-
lion, I am only hopeful that the Admin- ernment to those who respect the Con-
\ istration will see the futility of spending stitution. WALTER S. BARING
out of existence and will change Congressman for Nevada. l
Reading over Walter Baring's letter, Mr. Collins
that Mr. Baring was a Democrat I'd say he'd make a good Republican."
is such a thing as 'a lot of good Democrats getting fed up on the
administration and turning toward the Conservative group. The Nevada
congressman's letter reads very much as if he would qualify for a Con-
servative. I'm very much interested in his ideas about the gold bills that
have been introduced. He gives those bonus bills, which would be heard
by an Interior committee, little chance of passing.
HThat idea of getting a raise in the price of gold by way of the Interior
Department is old and worn out. It was first originated by Clair Engle
when he was chairman of an Interior sub-committee. He called it a <new
approach: He thought he was slick enough to out-smart the Treasury
and Federal Reserve Bank, having his bill by-pass the Banking and Cur-
111
\
\
\
I
\
\
I
I
I
I
I
rency Committee. By this time Clair has seen that his 'new approach'
won't work but the Western gold congressmen who followed him still
think they can fool their constituents into believing they are still work-
ing for them. I am glad Baring is showing them the error of their ways,"
added Collins. "There should be more in Congress who speak out in
Washington and not only in their home districts."
"Isn't that a new crime of the New Frontier - bills to do away with
both gold and silver in our monetary system?" asked Joe.
"That's a new one on me," said John. "The next question I'd want to
ask is: If our government does away with its hard money who's going to
get it? I know that foreigners are getting our gold; who is in on the
silver racket?"
"If you want my idea," answered Joe, "we need a government within
our government as a watch dog. We citizens can't do the job. If you
will excuse me I have another letter that will need some attention. It
is from a New York girl who likes me as a New York newspaper man but
is off on me as a California gold miner."
"I will excuse you to take time off to see if she has changed her mind,"
said Mr. Collins.
The letter:
Dear Joe:
You have been in California for months now and 1 haven't heard
from you - not even a postcard. You could have been sick and died or
been scalped by Indians and I would never have known what happened
to you. Evelyn says by now one of those speedy western girls no doubt
has you lassoed. Whenever I see Harold on his not-too-frequent trips
home he puts me off with "Nothing for publication." You newspaper
men are too smart.
If you can quit thinking about gold and gold mines for a few min-
utes please write. I really am interested in what you are doing and
what's happening to you, but most of aU when you are going to quit
Calif.()rnia and come back to New York. the newspaper srike is over
and you can get your job back with a raise. You know, as I told you,
I could love you as a big city news man. So let me know when you
will be headed back to me and the big city.
With love and affection, MILLIE.
Well, thought Joe, how did she ever get the idea that I would be so
ready to pull up stakes and head back to the snows of New York. Maybe
I did not impress her with the idea it was California or bust. When I get
time I will have to see that she is so informed.
Mrs. Collins noted letters were getting Joe's attention. She hoped
everything was all right in Joe's home town. "I guess they are," answered
Joe. "Except when I left New York one young lady didn't believe I had
seen enough of the big city to do me a lifetime."
"Well, don't be too hard on the girls, especiany those that are inter-
ested in you," said Mrs. Collins. "1 don't blame the girl for not losing
interest in you."
112
«Thanks, Mrs. Collins. It's really New York that I am off on. Twenty-
five years of it is all I can stand."
«I'm glad you like it here in California, Joe. Your coming has done
a lot for John. Before that he was taking less and less interest in life.
Your being with him has brought on a change for which I am very

didn't realize that, Mrs. Collins. I stiU think I'm the one to be
thankful. With both my father and mother gone you and John have more
than taken their place. I will never forget what you both have done
for me."
Joe had completely from his broken leg and moved out to
his camp at Mr. Collins' mine. The question now was whether to locate
the claims on which the 50-foot shaft was located or consider something
else. He could not get away from considering the location in which
Harold Ferrin had found the gold ore body 46 feet wide. Being 200 feet
underground was the problem. He would have to check on the owner-
ship, in the County Assessor's office. In his report on the ground Ferrin
did not make it plain as to whether it was a part of the mine or not.
First of all, of course, he'd have to talk it over with Mr. Collins.
Collins was thoroughly familiar with all of the Ferrin geophysical re-
ports, especially the one that had arrested Joe's attention. It was too
near his own mine to be overlooked. In· discussing it Collins said: «By
itself I don't think it would make a mine but in connection with the
existing mine it has excellent possibilities. If you like, I will accompany
you to the Assessor's office and check on ownerships." Joe agreed, and
together they went to the courthouse. The mine property was drawn
out in the plat books and apparently did not contain the ground on which
Ferrin had located the massive 46 feet of gold are, it being approximately
1,400 feet off and appearing in the Assessor's maps as government land.
This startling disclosure caused Collins and Joe to cease their investi-
gation and retire to the Collins home for a discussion.
«With all the publicity that piece of ground has had 1 wonder why
in thunder it is still vacant," said John. ""I can't understand that."
"I think I can give you an answer," Joe said. "If Ferrin's work was
accepted generally by mining people, it would be a different story. But
with ilinety:-nine out of a hundred passing it up as just another <doodle-
bug' contraption you can account for the lack of interest. For years mine
owners have been fooled by <doodlebuggers' and they no longer pay at-
tention to their claims. They have been used to doing their mining the
hard way and won't consider any other. That's the way 1 would explain
it."
""That sounds logical," responded John, "and it puts you in a good
spot. You are thoroughly convinced that Ferrin's work is on the level.
You have his map he .. made from his geophysical findings, the report
showing the ore encountered at depths indicated by his instrument, and
the assays of his drill cores. You are a lucky boy. The fact that nobody
113
c--
believes in Ferrin's ability fixes it fine for you. All that you have to do
is 'to locate the ground. I suggest you do it right after September 1st.
That eliminates your doing assessment work until next year. You can use
the Ferrin report as discovery work."
"That sounds good; and 1 won't have to bother with that shaft 1 fell
into. And what about a Ferrin report as 'discovery' work?" questioned
Joe.
'1 don't see how they can refuse to approve it. Remember what you
learned about what the Forest Service was driven to do when Ferrin
used his instrument on that Sierra County ground? He let them make
their own assays on the ore he drilled into at the depths his instrument
indicated he would find it. What more do you want?"
"Usually what does 'discovery' work consist of?" inquired Joe.
~ - - -
"You should have a copy of the <Legal Guide for California Prospec-
tors and Miners: issued by the State Division of Mines, Ferry Building,
San Francisco. It it you will find complete details on 'Discovery Work',"
replied Mr. Collins. "1 will give you the principal details but you should
~ it all carefully."
Within 90 days of the date of location you must do your discovery
work. In a lode location it must consist of a shaft at least 10 feet deep;
in a placer, the removal of at least 7 cubic yards of material. This work
must be done regardless of whether it is a new location or a relocation.
Failure of the locator to do his discovery work renders the location
null and void, and no portion of that location is subject to relocation by
the same locator within a period of three years. Your discovery work,
of course, should be recorded."
"Thanks, John, for the information. I'll get a copy of that Legal Guide
and study up. There is one more question I would like to ask. I would
have asked it in the Assessor's office but I thought I'd better ask you
later. It's this: all over the Assessor's maps I noted the two letters, 'RR'.
Just what does that men?"
"That means a great deal," responded John, "and it's about the worst
deal that has ever been put over on us. Those 'RR's' mean that the land
so marked belongs to the railroad company. Originally this land was
granted to the Central Pacific Company by the United States govern-
ment as an inducement to get the company to extend and complete its
transcontinental road. The company was given every other section (640
acres) on both sides of its right-of-way for a distance of 20 miles back.
In addition to the use of the surface, the grant contained a provision
that the railroad company could retain all deposits of coal and iron.
When the company's mining engineers got to making some checks on
the grant lands, it was discovered that they were highly mineralized with
far more minerals than just coal and iron,- gold, silver, lead, mercury,
manganese and copper being the most important. And this is where the
shenanigan comes in. The company was not satisfied with just coal and
iron; they had to have the whole smear. So on the quiet it rushed in and
114
filed for patents on all the grant lands, which they were granted on
the QT.
"In the meantime prospectors not interested in coal or iron had made
many discoveries of the other minerals on the railroad lands, especially
gold, silver and copper. They were ordered off their claims by the rail-
road company. Some of the locators were rich enough to fight the rail-
road in court, one of the cases going as high as the U.S. Supreme Court.
And here's where the miners got another crooked deal. That court ruled
that the granting of the patents to the railroad company was definite
evidence that no mineral except coal and iron occurred on the grant
lands. This decision was made in the face of thousands of discoveries.
It is one of which 1 believe the highest court in the land is not veqr prou
'"_----' "I remember one case down in Tehachapi. Dan McGrew pe'ited/ up
a claim on which his gold ore was running $125.00 per ton. He was
ordered off the ground by a lime company, leasing from the railroad
company. Dan was a special friend of a Colorado senator, who for three
years directed Dan's legal steps. The case came to a final decision with
all the evidence in Dan's favor. That decision would have upset the rul-
ing of the Supreme Court. It was never made, with the railroad continu-
ing to hold much of the grant lands illegally. So don't file any locations
on those lands marked 'RR' unless you have plenty of time and money
for lawsuits." <: ~
«Thanks again, John," said Joe, "for addii1gUrterta" my mining edu-
-- cation. I guess this 'RR' land matter is just a case of 'to him who hath J
shall be given'." /"./"
',., e ore Joe left Placerville that evening he remembered he had an
uncompleted date with Connie. Before quitting time he called at her
office to remind her. She was pleased that he remembered.
"You have a good memory, Joe," she said. Anybody that will fall 50
feet into a mine shaft and be laid up weeks with a broken leg and still
remember a date has a very good memory. I have been so interested in
your getting back on your feet that I didn't remember."
"Will you keep the date?" inquired Joe.
"Of course, silly. Wasn't it lucky we had that date?" So after two
months Joe and Connie had their belated dinner.
They had much to talk about. Joe was interested in what it takes
to get out a country weekly and listened with interest to the happenings
of Connie's five-day week. He couldn't help but contrast it with the rush
of a New York daily and its numerous editions. "You can be glad you
are working on a weekly in Placerville," he told Connie.
Evidently Connie had been in touch with Mrs. Collins of later. She
had learned something of Joe's personal affairs in the big city. She did
not know how to approach the matter but she did want to find out what
Joe's feelings were about the girl he had left in New York. Finally she
concluded a direct approach was the only way. She knew Joe wouldn't
115
advance any information on the subject.
«What's the latest from Millie?" she ventured.
"What do you know about Millie; who's been talking?" queried Joe.
«Perhaps a little bird," answered Connie.
"And the little bird is my good friend, Mrs. Collins?"
"I'm not saying, but anyway I've heard about you and that New
Yorker so you might as well tell me all about her. I'm interested."
"I could let you off with 'no comment," but that would give you the
idea that I really have a girl in New York. There's nothing to it. My
pal's wife thought she had a match made. after having us to dinner sev-
eral times. We took in a show just before I left for California. I thought
r d sound her out. She thought she might like me as aNew Yorker news-
paper man but drew the line at a California gold miner. That's as far
as I and Millie Manning ever went. There's no story about the girl I left
behind me."
"So you are whole heart and fancy free," said Connie.
«That's it," responded Joe.
And so passed an enjoyable evening. Joe couldn't help but think of
Connie as a real companion, and he was of the opinion Connie had a like
opinion of him. They were just good friends.
Joe let Connie know that he was getting close on the trail of a good
gold mining property and for a few weeks he would be busy complying
with the government regulations that would make it his.
"N a publicity of course," said Connie. "But \vhen you do make the
big strike I want you to know that my paper gets the scoop."
"That's a deal," said Joe. However, unless Washington makes up its
mind to do something about the price of gold, the strike may be a long
time off. How about that paper of yours throwing some hop into Con-
gressman 'Bizz' Johnson? U.S. gold is going fast into the hands of for-
eigners. We need to stop the drain and reopen our mines, or else."
"The folks around here seem to think Harold Johnson is a pretty good
congressman," said Connie. "How about some of your New York con-
gressmen ?"
"Oh, they are under banker control. We don't expect anything from
them except to take Wall Street orders. But a congressman from this
district, containing nineteen gold producing counties, should have differ-
ent ideas. He should take his orders from closer to home. Oh, well,
things are looking better right now. Nearly every day some congressional
committee has the administration or Treasury Secretary Dillon, on the
carpet asking what can be done to stop the gold drain. It can't go on
much longer. And this is for you: if there were no such things as gold
mines I would never have met you."
116
"
"Well, thanks, Joe. I'm glad you like me and I want to thank you for
a delightful evening." Joe felt the same about the evening, and in part-
ing at Connie's home he let her know about it.
Before leaving Placerville that evening Joe made a date with Mr.
Collins at which he would get his help in locating his claims. He was
in the best of spirits driving back to his camp, enjoying the moonlight,
the odor of the forest and the thought that he had some wonderful friends
in California. He now felt he was getting somewhere in 'quest of a good
gold mine and would soon have a real report to mail Harold. He was
. happier than he'd been for a long time.
Joe had borrowed Mr. Collins' copy of the Legal Guide and put in
a day reading up on the law, rules and regulations on the location of
mining claims. He found that he had three bosses: the Forest Service of
the Department of Agriculture, the Bureau of Land Management of the
Interior Department, and the State of California. He brought that out
the next day when he met Collins.
--'1bat's true," said John. «However, stay away from those bureaucrats
just as long as you can. If you know the law and all their regulations you
won't have to hunt them up. Let them come to see you, and when they
do give them as little information as you can get by with. If they carried
on their business, observing the real intent of the law you could trust
them. Their whole program is to reduce the mining in the West until
such time as the prospectors and miners give up in disgust. But when
you know the law and stick to it they have no other way to go except )
along with you. We pay them salaries and a lot of expense solely for the
encouraging of mining. You will find that the encouragement they give \ /
' ___ . So watch your step when you start dealing with the \ /
On September 2, 1963, Joe and Mr. Collins were on the
Harold Ferrin had located and described in his report. It was the ground \
on which he had located the parallel veins with gold bearing placer be-
tween. The first vein, 12 feet wide was at. a depth of 200 feet; the second I
at 270 feet. In between these was the broken gold bearing quartz, which )
could be termed a placer. However, on the advice of Mr. Collins, Joe
locating the ground claims. ___ --/ .. ________________ ..
After several days' work the locating was done. Three claims each
measured 600 feet wide and 1,500 feet long. The corners were marked
by 4-inch posts or stones at least 18 inches high. In the middle of the
end lines, or 300 feet in, posts or rocks were also established. A Notice
of Location was posted each __ ---------------- .. .. - ..
l...--When The notkes were posted Joe inquired as to when the notice
had to be recorded with the County Recorder. John brought out that a
locator had 90 days in which to record. Some, however, record as soon
as the location work was done. This was done, he said, to prevent claim
jumping, but if Joe wanted to avoid publicity he could take the full 90
days, at which time he could also record his discovery work. "I don't
think there is any hurry as right now gold mining is as dead as a dodo
bird," said John. "The miners all think Washington will never give us a
117
raise in the gold price; they have given up hope; they are not interested.
You have almost got the entire West to yourself. No doubt as soon as
you record your claims and discovery work you will begin to get some
attention from the Forest Service. You are in the EI Dorado National
Forest and the boys will be caning on you. So I'd advise that you take
full 90 days.
Joe hadn't thought he would have to name his claims until John in-
quired, "'What names are you going to give these claims? That's one of
the requirements."
"That never entered my mind," answered Joe. I didn't know they had
to be named, but if so we'll name 'em. What do you suggest, Mr. Col-
I
· ?"
Ins.
"The Myrtle Creek has had a lot of play and if you are thinking about
hooking it on to your three claims how about Myrtle Creek Extension,
No.1, 2 and 3?"
"Sounds good," said Joe. "'But how did you know I had designs on
Myrtle Creek? I thought I figured that out all by myself."
"That's the only thing to do if you want a real mining property and
I presumed that was your intention. That would be another reason to
put off your recording for the 90 days. If you want a lease on tvIyrtle
Creek you will have to go at it mighty easy. When the mine owners get
an idea somebody wants their property they get mighty cagey. So take
it easy."
Mr. Collins. I'll give that a lot of planning and if it is not
asking too much I will need your help."
«You have it," replied John.
Joe now figured he was getting some place and would be in the
business of mining if conditions were right and finances were available.
He would bring Harold up to date with plans. He'd have to do it in
detail, so began a long letter.
September 3, 1963.
Dear Harold:
It begins to look as if 1 am getting some place. I am all set to lo-
cate three gold claims that have all the marks of being bonanzas. Just
think of two veins, each 12 feet wide and assaying $25.00 to the ton in
gold. In between these parallel veins is a body of gold bearing broken
slate. The ground taken in with the two veins and the placer between
extends for a width of 46 feet. Can you imagine that much gold all
in one place?
The only problem in mining this vast body of gold bearing material
is that it is 200 feet underground. That will have to be worked out.
This is only half the story. A few hundred feet to the north of my
three claims is the famous Myrtle Creek mine which has produced up-
wards of three million dollars. It is now idle. It is owned by local
people whom I can easily contact. I know you will be interested in
its history.
118
..
..
It was discovered by lumber people. \Vhile bulldozing a road they
cut a high grade gold vein. The lumber company didn't want to mine
so leased it to a group of local miners. They had no trouble making
money, as none of the are ran less than an ounce ($35.00) to the ton.
This group operated the mine for several years but never gave out
their total production.
The next operator was a North Sacramento man. He took a million
dollars from its veins when all of a sudden he ran out of are. He
thought the mine was through so sold it to a Reno, Nevada company
for $80,000. The head of this group was in 'dutch' with the law. He
induced a rich California rice grower to come in with him. Instead of
putting the rice man's money into operation of the Myrtle Creek he
used it to keep out of jail. It wasn't long before the rice man got on
to the deal, got himself a superintendent and took over. But they still
hadn't found their ore.
About that time Harold Ferrin of the Ferrin Geophysical Explora-
tion Co. entered the picture. He put his instrument on the ground and
assured the operator he could again put them in touch with their ore
and they could continue mining it through their shaft. This statement
needed proving, so Ferrin then drilled to the location indicated by his
instrument and picked up the are. So the mine was again in business.
After Ferrin demonstrated the wealth of the property with other drill
hole3 a Canadian company sent an engineer to check the property.
They offered $1,100,000 for it. A French company, with headquarters
in New York, was also interested. However, the operators and owners
of the ground turned down the offer, fearing an excessive amount of
income tax. Shortly after, a fire made the mill and the plant a com-
plete loss and the mine has been shut down since.
Now Harold, this is what I'm leading up to: The three claims which
I have located are on ground contiguous to the Tnine. Drifts in the
mine workings are headed to my claims. As explained to you before,
the claims contain a body of gold bearing are 46 feet wide: two 12-foot
parallel high grade veins with a body of gold bearing placer in be-
tween. Continuing the workings of the mine into this vast body of ore
would, I believe, make one of California's richest gold mines.
As it now stands, r have the three claims. Quoting our friend, Mr.
Collins, gold mining is dead throughout the "Vest. It would be itnpos-
sible for the owners of the mine to interest operators. No one here
believes the administration will do anything about gold. This accounts
for the lack of interest. If we acted soon, say, within the next six
months, I believe we could lease the mine if we can demonstrate our
ability to operate. Within the next three months I will have located
our three claims, follOWing which we should begin negotiations to get
hold of the mine.
r can give you a lot more information but I think this will do for a
preliminary. In the meantime learn all you can about what's in store
for gold with the administration and CO:D.gress. Your boss, the Honor-
able Benj. Goodwin, should be able to bring you up to the very latest,
being a member of the House Banking and Currency Committee.
With best wishes to you and Evelyn,
JOE.
Awaiting a reply from Harold, Joe began gathering more information
on the mine. In its October, 1956, report the State Division of Mines
stated the property contained two main nearly parallel gold bearing
veins, 40 feet apart. One is 5 to 6 feet wide, the other 5 to 12 feet. These
are exceptionally wide yeins for the East Belt Mother Lode. Being high
grade made the property that much more valuable.
119
CHAPTER 26
Master Minding The G,old Drain
I
n a short time Joe received an air mail reply from Harold. He must
be pretty well interested, thought Joe, who remembered that it was
only early that year that Harold tried hard to talk him out of going West.
His letter:
Dear Joe:
Received your long letter which was certainly jnteresting. It be-
gins to look as if you are getting pretty well next to conditions. How-
ever, I guess you owe a lot of that to your friend, Mr. Collins. I would
enjoy meeting him some time. And don't go falling into any more mine
shafts. I don't think I need to give you the same advice about falling
in love. You never were much of a hand for the girls.
I let the boss, Congressman Ben, read your letter. He's almost as
interested as I am. He is going to dig into the gold situation here in
Congress and promises to give me the low-down as he picks it up. He
did give me this:
The U.S. gold reserve is now down to its lowest level since 1939.
It doesn't speak well for the master minds now managing our mone-
tary affairs. The gold stock, he says, will continue to decline and even
the Administration is looking for an increase of up to $4 billion in the
imbalance of payments. This means that in our business with the rest
of the world we have run $4 billion in the red just in one year. And
the worst part of the situation is that that difference is all payable in
gold. When we signed the Bretton Woods Agreement we agreed to
convert into gold all dollars held by foreign countries. And listen, there
are now over 27 billions in foreign-held dollars awaiting conversion.
This, Congressman Ben says, is a very unpleasant prospect, and
none of the propaganda artists in Washington or in the Federal Reserve
Bank can cope with the truth.
What the Administration has done to stop the gold drain Ben calls
"childish measurettes" which won't work. He thinks Washington is
hoping the general public will have faith in its "measurettes" until the
next election.
I'll continue digging and keep you infonned. And when the time
comes let me know if and on what terms that mine can be leased.
Evelyn joins me in best regards to you. No news from Millie. If you
are interested, ask.
Sincerely,
HAROLD.
Both Joe and Mr. Collins read Harold's letter with much interest.
«I don't understand why it is that \",hen a congressman has such a grasp
of the situation as does your friend Goodwin he doesn't do something
about it," remarked Collins.
"Ben is from New York, the money capital," answered Joe. "The
Federal Reserve lives in New York as do all the rest of the money chang-
ers. Ben is one of their representatives. He's got to live with them and
be answerable to them. I believe it's the Western congressmen who
really are most to blame. For years they have known all about the plight
of the gold producing states and now they know how the loss of gold is
120


endangering our entire economy. They have a double reason f01_' action. f
What's holding them back?"
·'1 guess you have me answered," admitted John. "The urge for a
better price for gold should start with the West. I note you hring out a
double reason for Western action: the benefit to the Western gold pro-
ducer and the benefit to our economy at large. It's going to be tough
if we lose all our gold, fail to reopen our own mines and have to repur-
chase our lost gold from the foreign holders. That's when we'll be held
up. The foreigners are not going to let us have that gold back for $35.00
per ounce. That's a foregone conclusion."
Taking the advice of Mr. Collins, Joe was delaying the recording of
his location notices with the County Recorder at Placerville. He notified
Harold and gave him the reason for the delay. Harold was showing
increased interest in the gold project and began making an intensive
study of the gold and monetary system as far as Washington was con-
cerned. He wanted to get on all sides of it. He dug into the reasons as
to why we, the greatest nation on the globe, were running so far behind
in our balance of payments. Here's what he learned, which he promptly
sent to Joe:

The reason we are not earning enough
foreign exchange to compensate for our
expenses abroad, and our purchases
abroad, is that we are not competing
with anything like our full capacity. And I
the primary reason for this is that the)
wage level has climbed to artifioial highs;"
another is because automahBIl is ars:
couraged; a third is the high cost of
maintaining a government that spends a
$100 billion a year; and a fourth is be-
cause our capital plant is in too many
cases nearly obsolete.
The villain in the piece, in the first
and second instances, is monopoly labor
union power; in the third and fourth, it
's unrestrained, and shortsighted govern-
ent.
If we could reduce the cost of some

of our key manufacturing products by as
much as 15 or 20 per cent, we might
hope to sell a billion or two or three
dollars worth of goods abroad, in excess
of the present rate. Increased foreign
sales would mean increased employment
here; increased employment means in-
creased production and, among other
things, increased revenue for the govern-
ment.
But as long as there are monopoly la-
bor unions around controlling labor mark-
ets, and threatening strikes, local and na-
tional, the minute you profess reluctance
to pay an electrician $200 for a 20-hour
week, or a diesel fireman $150 for doing
nothing at all, then we cannot hope to
recover our competitive advantages.
"-)
Everything that Harold filed with Joe was given close consideration
by both him and Mr. Collins. "That's very good stuH. I wonder why it
doesn't influence Washington thinking," said John. «The administration
is hoping that foreign conditions will catch up with ours and that will
settle the cat hop. I just wonder how long it will take for Europeans to
pay electricians $200 for a 20-hour week and a diesel fireman $150 for
sitting in his cab. And did you notice that over in Albuquerque recently
I *:: ::0 w:::' that we are going to
our minds about bringing up foreign living stan¢lards with ours. Long \
ago we wore out that ;idea, but Washington hasn't found it out yet," re- \
sponded Joe.
121
------- ~ - - - - - - - - - - - - - - - - ~ - - - - - - - - ~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
~ .
----- The following week Harold was back with some more stuff hot off
the New York press griddle. A New York Journal American writer, Sam
Shulsky, opened an article with: «I am sick of the whole gold contro-
versy." The Northern Miner of Toronto, Canada, came back at him with
this:
He is not alone in being sick of hear-
ing about gold. The President is sick,
and the Treasury Secretary, Mr. Dillon is
sicker still. Mr. Dillion had to admit to
the Joint Economic Committee of Con-
gress last week that he had changed his
position. The V.S. imbalance in foreign
payments would, he confessed, require
"several years" to correct. He used to be
quite optimistic. Correction was just a
year or so away was his former advice.
But recent progress has been "unsatis-
factory." It is quite an admission.
Northern Miner readers do not need
to be told that it is this everlasting im-
balance in international payments which
has decreased the V.S. gold supply to
the lowest point in 24 years, has occa-
sioned a loss of $10 billion of gold, and
brought the mighty U.S.A. to the point
where it must jockey with other and
lesser countries in ingenious but demean-
ing schemes to spin out the remaining
gold before two alternatives confront the
Administration: (1) Raise the American
price and try and attract more gold into
the Treasury coffers, or, (2) take the
$12 billion of gold now set aside for
backing of the monetary structure and
throw it into the general pot.
«Isn't that a new idea, John; taking the $12 billion in gold we have
to back up our paper and throw it into the general pot?" asked Joe.
«No, that idea has been buzzing around Congress for the past two
sessions. A new Congressman from New York, Mr. Abe Multer, has twice
introduced a bill that would do that stunt. That $12 billion, you know,
must be legally kept as a reserve to back up $48 billion worth of deposits
the Member Banks have with the Federal Reserve system. It is further
reserve for the notes, the paper money the Federal Reserve Bank has
issued, the stuff you carry around in your wallet. The first time Mr.
Multer introduced his bill the Banking and Currency Committee hur-
ridly called a hearing. It was hoped to put it over before America woke
up. There were over five hundred who filed objections and requests to
be heard at the hearing. The hearing was cancelled. The Banking and
Currency Committee couldn't face the music.
'"Before Bretton Woods Agreement and when we had $24 billion in
gold in our Treasury, every bit of paper money was backed by 90 cents
in gold. After World War II and when we began tu finance the world
it dropped to 40 cents. President Roosevelt wanted to scatter more gold
around the world, and induced Congress to pass a bill lowering the gold
requirement to 25 cents on the dollar. It is at that point now. If Con-
gress ever passes the Multer Bill, the Lord help us. Those Communists
and foreigners in Washington will do it if they get an opportunity. It
behooves some level heads in Congress to watch that foreign-loving
crowd.
122
..
CHAPTER 27
How Does Sen. Barry Goldwater Stand?
"Thanks for the new information about our money and the way Wash-
ington is trying to handle it," said Joe. "Surely there is somebody
in Congress to speak up before all the gold leaves the country. I note
in today's paper that Senator Barry Goldwater will support ,Rockefeller
if nominated by the Republicans. He gives as his reason, <mainly because
u.s. cannot stand another four Democratic years.' Do you think there
would be any change in the gold situation if Rocky got into the White
House?"
"I do not," answered John. The Democrats are carrying out the mone-
tary plans of the Rockefeller family. Rocky's brother is one of New
York's leading bankers. No, I do not think we'd help the gold miner or
the taxpayer in general one bit by electing Rockefeller. He is for build-
ing up the International Monetary Fund with Uncle Sam's gold."
«Well, what can we do about it? I wonder if Goldwater really wants
to see Rockefeller in the White House," questioned Joe.
«It wouldn't hurt to get his idea," answered Collins. "Surely he isn't
in favor of the way foreigners take over our gold. Why not write him?"
"Do you think I would have any better luck with him than with
others we have written to in Washington? So far the only one who has
answered is Senator Harry F. Byrd, and he let an assistant in the Treas-
ury write the letter. Trying to get actual representation out of our Con-
gressmen is certainly discouraging. However, I will try Senator Barry.
He may be the exception.
Joe wrote the following to the Arizona senator:
Hon. Barry Goldwater,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
We were pleased to hear the radio report of Sen. Russell of Georgia,
a leading Democrat, approve your candidacy for the presidency. We
believe the South as a whole will approve Sen. Russell's stand.
We don't believe in the plan of the Congressional Republicans of
California to send an uninstructed delegation to the San Francisco Con-
vention. We would much prefer to let California Republicans select
their man with a presidential primary. In the past we have had to take
whoever the GOP thrust upon us, thus voiding the primary law.
Western Republicans are very anxious this time to (and by that we
mean the Conservatives) take a leading part in naming the candidate.
We believe the South will join the West in not only getting back to a
constitutional government but also in a revival of more attention to the
protection of American business and industry. Less attention to foreign
development and more to home industries we must have. We hope you
will take a lead in this policy.
Coming from a Western state you are fully aware of the poor sup-
123
port domestic mining has had during the present administration.
And at this time we think it's timely to put the question: "Will the
Democrats dare face reelection with the balance of payments in its pres-
ent deplorable state?" Are they willing to continue converting foreign
held dollars until the Treasury gold supply is gone? Do they approve
of a purely paper money policy? We think you will agree with us that
without a quick monetary reform movement that's what now faces us.
Can we forsake our national money policy and depend upon continued
borrowing from the International Monetary Fund? These are questions
that should now be put to the Administration and to its Congressional
support.
In addition to Civil Rights, on which you have an excellent grasp,
the voters must be made aware of our present dangerous lTIOnetary con-
dition. Giving up our gold and refusing to reopen our domestic gold
mines should be charged to the present Administration.
Sincerely,
JOSEPH A. BACON.
Marking time before locating his three claims previous to opening
negotiations for leaSing the Myrtle Creek, Joe was pleased to again hear
from Harold. Harold had started on interviews with individual Con-
gressmen at the suggestion of his boss, Benj. Goodwin. He tackled the
Honorable Thomas B. Curtis of Missouri who appeared to be taking
quite an interest in the nation's monetary affairs. Curtis agreed to give
Harold an answer by letter. Here's what he wrote:
ear Mr. Wilson:
I have read your letter with interest. As you know I am greatly con-
cerned with the loss of gold that is occurring as a result of our balance
of payments deficit, and on July 8th I introduced a resolution in the
House of Representatives expressing the sense of Congress that achieve-
ment of balance of payments equilibrium should receive highest priority
in the formulation of our national economic policy.
I do feel, however that the IMF has a real value because of the vital
role it plays in stabilizing the world payments mechanism. A breakdown
of this system would involve heavy costs for the United States and the
entire Free World. In my view, a breakdown of this sort might very
well occur if the U.S. were to raise the price of gold at this time.
Thank you for your letter expressing your thoughts on this problem.
You may be certain that I will continue to give developments in this
field my closest attention.
With best wishes.
Sincerely,
THOMAS B. CURTIS.
Mr. Collins and Joe read the Curtis letter with much interest, being
startled with the congressman's idea of the International Monetary Fund
being so helpful to the United States. "Of all things it's America and its
gold that's helping to build the IMF," said Collins. "To be able to serve
the world's bankers the IMF must have our gold and that's what they
are driving for. And unless our Congress takes some immediate action
the plot is all set for the foreigners to clean us of every ounce of gold we
have. As we learned recently, they hold over $27 billion all subject to
conversion. That's the reason the drain of gold is to continue. We can
stop it only by raising the price or renig on the Bretton Woods Agree-
ment, which means an embargo on gold.
124
.. a _
"The gentleman from is thinking more of the International
Fund than he is of his own United States. Why should we
build up a foreign dominated monetary organization at our expense? If
we let it all get into foreign hands how much do you think we will have
to pay for it to get enough of it back to keep our money worth any-
thing? That's the deal we have got into by agreeing to the deal cooked
up at Bretton Woods. What a profit somebody is going to make when
the IMF cleans up! Mr. Curtis thinks if we upset the IMF deal by rais-
ing our gold price it will cause a breakdown in the IMF, resulting in
heavy costs to the U.S. The Missouri congressman would have to talk
pretty fast to make me believe that statement. With its tie-in with the
Central Banks of Europe the IMF is gathering up our gold at the cheap-
est price in the world. Fine business for them, but where is it leading
us? I just wonder if there are many congressmen laboring under a similar
delusion. If this is a condition in Congress it certainly needs an expose.
It wouldn't hurt to have your pal Harold check into the situation. And
although we don't get many results by writing congressmen perhaps we
had better sound out some more."
"N ot a bad idea," said Joe. So far we have left 'Bizz' J ahnson alone.
Why not try him out? With the Treasury Department having shot do\vn
his bonus bill and his measure to set up a gold procurement division
under the Interior Department, he now might be in a mood to listen to
some horse sense. I'll try him . Here goes:
Hon. Harold (Bizz) Johnson.
House Office Building,
Washington 25, D.C.
Dear Mr. Congressman:
Now that the Treasury Department and the money changers have
shot down your bonus bill and your measure to establish an Interior
Procurement Agency, don't you think you should change your tactics
and switch to a bill that would stop the gold drain?
As you know, the gold drain is the administration's worst headache.
You know by this time that the bankers are not going to let any Interior
Committee handle any bill dealing with gold. You can't by-pass the
Banking & Currency Committee. So now why not a bill to stop the
gold drain? It is inevitable that all our gold will leave the country un-
der present conditions.
You can stop the drain with a higher gold price and render your
administration and the nation in general a much desired service. Our
Treasury gold should be set at a high enough price to force the foreign
dollar holder to pass up asking for gold and use their dollar to buy our
produce. That's the only move left for Congress to take to save the
foundation of our monetary system.
Would appreciate your comment.
Sincerely,
JOSEPH A. BACON.
125
Hon. Barry Goldwater,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
We read in today's papers that you will support Rockefeller if nom-
inated mainly because the U.S. can't stand another four years of the
present Administration. Have you any reason to believe that, especially
as pertains to our monetary and gold policy, Gov. Rockefeller will be
any different than under the Democrats?
Washington is now carrying out the gold policies of the Rockefeller
family. Would Rockefeller make any changes?
Our group is for you, but like many other members of the Senate
you have remained quiet about the drain of our Treasury gold and
what it will lead to. Secretary Dillon has tried a half dozen moves to
stop it, all of which failed. He keeps talking about reducing the bal-
ance of payments, completely ignoring the more than $27 billion of
foreign held dollars that must be converted with gold that we do not
have. No one in Congress has given consideration to the idea that if
Congress would revalue gold the foreign dollar holders would use their
dollars to purchase U.S. goods and products.
The question is always asked: "Will the Democrats try to face re-
election without taking care of the gold situation?" There has been no
answer. That question is headache No.1 of the present administration.
This applies also to Mr. Dillon and the Federal Reserve bankers. The
Republican Party doesn't appear to have the guts to face this issue or
to use it. We would appreciate very much your stand on this situation.
Thanking you for an early reply, I am,
Sincerely yours,
Placerville, California JOSEPH A. BACON.
The next time Joe met Collins in Placerville he had a letter from
a senator, the Honorable Ernest Gruening of Alaska, who had been taking
a leading part in gold legislation, but like everybody else was getting
no place. «At least he answered, but his letter is of no help or encourage-
ment to a man who wants to go gold mining."
uLet's have a reading of it," said Collins. He read the following:
Dear Mr. Bacon:
Thank you for your letter of August 1 and the interesting newspaper
article enclosed concerning hearings I conducted recently on legislation
to aid the gold mining industry.
While I realize that proposals so far considered to increase
tion of gold would not greatly increase the supply necessary to restore
the national gold reserve to a healthy condition, I believe we must work
for measures that will maximize gold production. Certainly, this is im-
portant to domestic gold miners, therefore, to the domestic economy.
Further, whatever gold would be added to our national reserve would
be a worthwhile contribution.
As for measures to halt the alarming drain on our gold reserve
caused by the foreign aid program and other policies of foreign
tions, I have been opposing and will continue to oppose legislation
which has the effect of further depleting our national gold reserve.
With best wishes, I remain
Cordially yours,
ERNEST GRUENING, U.S.S.
126
"You're right, Joe. That letter isn't of much benefit to a gold miner
or anyone else for that matter," put in John. "'The gentleman from
Alaska doesn't appear to realize where help - immediate help - is needed.
Opposing moves of the administration which are increasing foreign held
dollars - we would expect that of any congressman, but that isn't the,
number one problem right now. It's the 27 billion foreign held dollars
that is hurting. Something must be done to stop the forced conversion
of those dollars when now we have available only about $3 billion in gold
to carryon the conversion."
«I agree with you, Mr. Collins, and doesn't it get you down, that
damnable Bretton Woods Agreement, by which we tied ourselves up to
giving foreigners gold for their paper dollars was pushed over on us by
Communists in the employ of our government. A number of years ago
I remember of reading about this in The Journal. It was a copyrighted
article from the American Mercury telling that the deal was hatched up
at a secret meeting on St. Simon's Island off the coast of Georgia. The
article gave 70 of the names of the 90 who attended. It was the crum-
miest and lousiest of Communists, socialists and a few Americans that I
have ever seen in print. That's who cooked up that deal and why decent
Americans now in Congress would live another minute bound by such a
damnable agreement is more than I can figure out. I wonder if 1 could
get that over to Senator Gruening."
«It won't hurt to try, Joe," responded Mr. Collins. That St. Simon's \
Island appears to be where all the bad deals are cooked up for us Amer- )
icans. Back in 1913 that Federal Reserve Bank was hatched in the same
P
lace."
.
«I don't know much about the <Fed,' as some of the news hounds call
the Federal Reserve Bank. I'd like to know more about it. I do remem-
ber something The Journal carried for a long time on its editorial page.
It quoted a statement by Malcolm Bryan, president of the Atlanta branch
of the Federal Reserve. The quotation was introduced by Sen. Wallace
F. Bennett of Utah at a hearing of the Senate Finance Committee. It
read: ______ ,
"If a policy of active or permissive inflation is to be a fact, then we \
can secure the shreds of our self-respect only by announcing the policy.
This is the least of the canons of deoency that should prevail. We
should have the decency to say to the money saver, <Hold still little fish;
all we intend to do is to gut you'." /
j
«Yes, Joe, I do remember that. But what gets has
taken place and nobody appears to be the wiser. It now takes three dol-
lars to do the work of one. In the gutting process nearly $200 billion of
purchasing power was lost. And now if Congress does not stop the gold
drain and save what gold we can still lay our hands on, there will be
more gutting. Congress as a whole must have sold out to those who are
promoting a One World Government, the International Monetary Fund
and its One-World Bank. .
«I wonder if it would be possible to get a check on Congressmen as
to whether or not they approve our putting the taxpayers' money and
127
gold into that damnable international pot," questioned Joe. "1 think they
should all be put on the spot."
"Well, you already have one admitting that the IMF is of real value
to us. When we begin buying our gold back from the IMF I wonder
what he will think."
"Before I forget it," continued Mr. Collins, "I want to review some of
Sylvia Porter's writings in the last five issues of the Los Angeles Tinles
on devaluing the dollar, which in a simpler statement means raising the
price of gold."
"OK," answered Joe. '1 never can see much in her financial writing.
Of herself I don't think she knows much. She's always quoting some",
body else."
~
"You said it. Thaes the way she started her series which has run in
the Times during the past five days. Right off the reel she quotes Mr.
William McChesney Martin, head of the Federal Reserve Bank. He says
to raise the price of gold would be the end of the world. How silly can
a big banker get? He admits that the gold drain (we have lost almost
$10 billion) is serious and must be stopped. However, in the whole series
of five articles there is no plan put forward that will stop it. This leads
me to believe that Martin and the Treasury Secretary, Mr. Dillon, do not
want it stopped. Ies going just to suit their plans -landing our gold
into the coffers of the One-WorId Bank. All that the Administration is
doing or promising is smoke screen until all our gold is gone.
"Miss Porter tries to tell us that raising the price of gold would be
as bad as if Russia took over the nation. How silly can she get? I hope
few Americans get scared of such drivel.
"The writer goes on about the calamities that would occur in prices
of commodities in case we devalue the dollar. Roosevelt devalued the
dollar in 1934 by 70 per cent, and it had no eHect on prices, what we
would pay for imports or what we would get for exports. I just wonder
if business will get scared after reading her stuff. It's too bad the news-
papers can't get an intelligent writer to do their devaluation stuff.
"When sometime after Roosevelt devalued the dollar England did the
same to her pound, dropping it from $4.03 to $2.80, this had no effect on
the prices of commodities. The lady admits that other nations are de-
valuing and she admits the moves to be helpful. But not for the U.S.
Why? For the simple reason that the International Monetary gang, now
gathering in our gold, as yet hasn't taken it all in at the lowly price of
$35.00 per ounce."
128
1
- I
I
CHAPTER 28
Governor Rockefeller and the Gold Miner
T
he next time Joe was in Placerville at the Collins' home he broached
the subject of how and when he should attempt to get a lease on the
Myrtle Creek. He was holding off recording his three claims until well
along in the late fall, thus keeping his plans quiet. He was willing that
other people should think that gold mining was a lost industry until he
had tied up the property he wanted. In his almost a year of looking
over the gold fields of the great Sierra mining region, which included
the famous ~ f o t h e r Lode, he was of the opinion that regardless of what
Washington did about the gold price, proper management could make a
go of the Myrtle Creek with the addition of his three claims.
Joe looked to Mr. Collins to guide him in getting that lease. He real-
ized John was an old-timer with an excellent reputation. He owned his
own mine and stood for all that was honest in mining. He was lucky in
having been so fortunate as to have made such a connection. He men-
tioned the subject of the lease to John.
Mr. Collins was of the opinion that it was yet early. After Joe located
and recorded his three claims he thought would be soon enough. He
would sound out the owners, both of whom lived in Placerville, and find
out if they had any new plans for the property. He was of the opinion
that they, like everybody living on the Mother Lode, were not optimistic
about the government doing anything that would aid the gold miners.
All the bills that had been introduced to reopen the gold mines had been
beaten down by the Administration. There didn't appear to be any im-
mediate hope for a change but anyway it would not hurt to sound out
the owners in the near future.
Collins explained this to Joe and then drew his attention to a head-
line on the front page of the Los Angeles Times in which Gov. Nelson A.
Rockefeller of New York was quoted in big type as attacking the Ken-
nedy monetary policies. They both read the article with interest, John
stating, "It's about time the Republicans were getting on that subject.
You'd think they would never let up on the mess the administration had
gotten the nation into financially. I wonder if we could give the New
York governor the idea of putting the question to the Democrats as fol-
lows: WILL YOU ATTEMPT GOING INTO A RE-ELECTION CAM-
PAIGN WITHOUT HAVING STOPPED THE GOLD DRAIN?"
"Boy, that would be a good one," enthused Joe. "It would have a
double edge. If they did something which stopped the gold drain-
and there are but two moves that would do that - it would be helpful
to the gold miner. If they didn't and the Republicans continued through-
out the 1964 campaign asking that same question, the voters would
finally get on to what a substantial gold reserve means to their economy."
"That sounds good," said John. «Suppose we cook up a letter to
'Rocky.' Give him a pat on the back for going after the Democrats and
129
~ ~ - - ~ ~ -----------
add a few pointers as to what we think should be done."
«Will do," said Joe. «I will get after it right away and forget about
the mine lease for the time being."
The next day the following letter went to Governor Rockefeller:
Hon. Nelson A. Rockefeller,
Governor of New York,
Albany, N. Y.
Dear Governor:
We read today in the Los Angeles Times of your attack on the
Kennedy monetary policies and commend you for treating this as a
Number 1 matter in what's wrong with the Administration.
In your recommendations for correction you failed to bring out the
principal factor in the whole U.S. monetary system that needs imme-
diate action.
It's true the Kennedy spending you point out has brought us to near
financial collapse, but what's worrying Washington right now is the
$27 billion of our currency held by foreigners AND CONVERTIBLE
TO GOLD.
If we are to continue abiding by the Bretton Woods Agreement in
converting the foreign held dollars, where will we get the gold? At
the present time there is but $3 billion in gold in the Treasury to con-
tinue the conversion. Will we be forced to sacrifice the $12 billion in
gold legally backing Federal Reserve Notes and deposits? You know
there is such a bill in Congress right now for that purpose by Congress-
man Multer of your state.
So you see, Governor, the No. 1 move right NOW is to stop the
conversion. There are two ways: a gold price raise (sufficient to cause
foreigners to use their dollars to purchase our produce) or an embargo
on gold. I think you will agree with us that either of these two moves
must be taken.
And getting down to politics, why don't Republican leaders put
forward the question: WILL DEMOCRATS ATTEMPT RE-ELEC-
TION WITHOUT STOPPING THE GOLD DRAIN? When the voter
gets On to what the gold reserve means to him he would turn against
the Administration. However, we should ask that question every day.
Thank you for your comment.
Sincerely,
JOSEPH A. BACON.
Joe sent a copy of the Rockefeller letter to Harold asking him for a
report on anything new on the Washington front. In a few days he re-
ceived an air-mail reply.
"My boss, Congressman Ben, and I have been keeping our ears to
the ground. We don't like what we pick up. One of the New York sena-
tors, Mr. Javits, was recently quoted in the papers as <looking upon U.S.
dollars and our gold as being helpful to the world's monetary reserves:
Doesn't that mean we should throw in with the International Monetary
Fund? He is a close associate of Gov. Rockefeller who would go along
with Javits. That bird is the ranking member of the Joint Economic
Committee and is on the Senate Banking & Currency Committee. When
it comes to turning our wealth over to foreigners he is in a key position,
130
t.
dangerous to our monetary position. He would be one of the first to pull
for the Multer bill which would throw the $12 billion in gold backing
the Federal Reserve Deposits and notes into the general pot so that we
could keep on shifting our gold into foreign hands. What the Adminis-
tration and the Treasury are doing to stop the flood of gold to foreign
countries is only a smoke screen. They are for the build-up of the inter-
national banking plans which need our gold - all of it - if they are to
be successful. Yes, Rocky and his friend, J avits are dangerous to a U.S.
monetary system if we are to have one .

CHAPTER 29
Prospector Joe Has A Visitor
O
ne Saturday shortly before noon Joe was busy at his camp checking
over notes and correspondence when he heard a car door slam and
a "Whoo-hoo" from a female voice. When he saw it was Connie she
greeted him with "Surprise! Do I get a welcome when 1 come unan-
nounced?"
"You sure do," answered Joe. "You can't imagine how lonesome it gets
out here. Furthermore there isn't anybody I'd want to see more than
you. Welcome to the mining camp, such as it is."
"Hope you don't feel hurt but I brought a ready-made lunch with
me and all the makings of a real dinner. And my stomach feels that it's
lunch time right now."
"If you think that will hurt me you don't know how to hurt a fellow.
Let me help you in with the loot. Now, 1 know I'm going to get it. 1
haven't done mv breakfast dishes. We'll have to do 'em or we won't
have anything to eat on."
"Well that won't take long," said Connie. But you're just like every
other old batch. Before 1 leave here I ,,,ill have to give you a few in-
structions on the womanly art of keeping house. You sure need it, or is
it a wife that's missing?"
"I guess one would come handy," remarked Joe. «I never learned
housekeeping in a newspaper office. How come you are an expert and
still work in a newspaper office?"
"Reserve that <expert' idea. I don't know any more about housekeep-
ing than mother made us learn. I guess some mornings that I get up late
and have to rush off to the office my apartment wouldn't take any prizes."
"Well, let's see what's for lunch," said Joe. "You came at the right
time. I didn't have much for breakfast and now I have a real appetite.
You're a life saver."
131
<TIn glad I'm some good for you," smiled Connie. "We will proceed
to see if I brought along the right food. I may fall down at judging men's
ideas about eating."
"I'll take a chance," said Joe. "'After nearly a year of batching you
will find me, I think, not hard to please. So on with the lunch."
Connie didn't have any complaints to make about how Joe greeted
her offerings. He thoroughly enjoyed himself. "If this is a sample, regu-
lar fare must be out of this world. Thanks for remembering the old
batch. When we get the dishes done I'm for declaring a half holiday
and showing you around the diggings. The weather is grand and the
trees are now putting on their fall dress. After 25 years in New York I
never knew there was country like this. I have often heard them talking
about God's country. They must have meant EI Dorado County. ...
"If they did they didn't miss it much," answered Connie. "Of course
I have seen other parts of California, which you are pleased to call the
'Golden State'. I don't think I'm wrong when I say California has every-
thing."
"I will agree with you if it will show me some gold," said Joe. "'I'm
for again demonstrating that it is the 'Golden State'. Mr. Collins tells me
he thinks 90 per cent of the state's gold is still in the ground. He points
to the fact that in only two places have gold mines gone to any great
depth, Jackson, Amador County and Grass Valley, Nevada County.
With lunch and the housekeeping disposed of Joe and Connie set
out to enjoy the afternoon. They looked over the surface of Mr. Collins'
mine and his mill which had been idle ever since the government closed
the gold mines during the war, with the Gold Closing Order, L-20B. "A
lot of money tied up in that machinery and a lot of are in the ground
for it to treat if Washington would give the word," remarked Joe.
"Why is it when you say we have very little gold left in our Treasury
that the government will not pay enough for gold to allow the mines to
reopen?" inquired Connie.
"That's what I have been writing to different Congressmen to find
out," replied Joe. "I also have my pal Harold and his congressman in
Washington both on the job trying to get the answer. They report very
few will give them an answer; and I don't think irs because they don't
know. < ~ 1 u m ' seems to be the word. Harold's final conclusion is that the
majority of Congress is sold on giving all our gold to a foreign money
concern and they don't want to raise the gold price until practically all
the gold is in the hands of foreigners. After that takes place Harold
thinks Congress will be willing to raise the price of gold."
«But," interjected Connie, can we operate our money without gold?"
«I don't think so," responded Joe. «And that's where the rub comes.
We can't operate our finances without gold so we will have to start buy-
ing it back from foreigners. Although we have helped them a lot since
132
the war they have never been our friends, and what do you think they
are going to charge us for gold?»
"So that's the racket," said Connie. "And will any of our bankers on
this side of the Atlantic be in on the deal?"
"That's what we haven't found out yet," replied Joe. "But consider-
ing that our monied men are never satisfied I wouldn't be a bit surprised.
They surely wouldn't let 243f billion in gold leave the country without
having some interest in it. What's wrong is that the United States and
its business isn't big enough any more for our money changers; they
have to take in the \vhole world. That's the plan of the International
Monetary Fund and its One-World Bank, and they need our taxpayers'
gold."
"Will there be anybody in Congress that will stop this plot before it
is too late?" inquired Connie.
"That's the $64 question," replied Joe. "And as yet there's no one in
Washington brave enough to find out the answer."
Leaving Mr. Collins' mine they visited the shaft which was account-
able for Joe's broken leg. Joe told Connie that although it had the mak-
ings of a good mine he now had something lined up that is so much
better, that it was one shaft he would not have to go down again. "That's
one time I was lucky. I had a girl friend in Placerville. Mr. and Mrs.
Collins never expected me in, and unless I had made that date there
would have been nobody else miss me. Somebody was looking out
for me."
<'I'm glad that somebody was I," remarked Connie. "When you didn't
show up in town I had a hunch something was wrong and that I was
needed. You know, Joe, i1's wonderful when you feel that some one near
needs you and that in following the urge the need proves to be so real
as it did that time. I'll never quit giving thanks that I answered the call
for help that night."
«You were my guardian angel that time and I'll never stop giving
thanks," said Joe.
"'How about sealing that idea with a kiss, Joe. You have been neglect-
ing me of late. A girl has got to have a reminder once in a while."
"A reminder is good for the gent, too," responded Joe, and with a long
blissful embrace he found out just how sweet a girl Connie really was.
This was a new experience for him. He had never gone beyond enjoyable
companionship with the gentler sex. He wondered if this was love and
then began to further wonder why, at his age, he knew so little about
girls. He certainly had been missing out on a big part of life, he wanted
to conclude.
"Now let's go over to the mine adjoining my three claims where I'm
going to make my fortune," said Joe. <CIt's just a short distance over the
trail.
133
That section of the country was beautiful and they enjoyed the walk.
The early fall weather was invigorating, the forest odors from the pines
and ponderosas were very pleasant and the companionship most enjoy-
able. But when the mine was reached the blackened remains of the mine
buildings presented another picture. Mter taking a quick view of the
remains Connie said, "This doesn't look like a fortune to me."
"It will after the mine gets going again. I've looked all over the
Mother Lode and I don't think there's a gold deposit that will compare
with it," answered Joe.
"How do you know there is gold in that dark, rocky ground?" asked
Connie.
"We have a complete geophysical report on the ground. To verify
it we have drilled to the depths indicated by the survey. With the drill"':
ing we have found the are. The drill has brought it up in cores which
have been assayed. So we know exactly how rich the are and how wide
the gold bearing veins are. It's all mapped out for us. I admit those
blackened mill buildings and the old concrete foundations don't look
promising but they don't indicate what's underground. When we get to
going and the are shoots are opened up we will show some rich gold
are and your paper can have a real mining story. That's a promise."
"I'll be waiting for it and I'm wishing you a lot of luck," said Connie.
"Does Mr. Collins have as much faith in the project as you do?" she
questioned.
"He certainly does. He believes it to be the East Belt's greatest gold
mine. All that's lacking now is the proving."
Joe and Connie enjoyed another walk back to the Collins camp, and
after a brief rest Connie proceeded to think about getting dinner. "J oe,
it won't hurt you to have a cooking lesson. I'm not an expert but I can
give you a few pointers that will be helpful," offered Connie.
"Never too old to learn," replied Joe. Together, both enjoying it, they
prepared the dinner. They finished partaking of it with further enjoy-
ment when Joe noticed that it was sundown. "You'd better get over
the road to the highway at Pollock Pines before it gets dark," said Joe.
"It's not a very good road to drive in the dark. I'll faithfully promise to
do the dishes when I come back. I want to go to the highway with you
to see that you make it all right and I'll walk back."
"It's too bad you have to walk," said Connie. "'I'm putting you to a
lot of trouble. And even after your long walk you will h a v ~ to do the
dishes. You will be giving me fits."
"I will not," responded J oe. "It's been a long time since I have had
such an enjoyable afternoon and evening. And I can't thank you enough
for all of it."
In a short time they reached U.S. Highway 50 at Pollock Pines.
Connie stopped her car for a few last words with Joe. She said, "'I have
134
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- - ~ - - - - - - ~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
put off telling you what I have been considering. A Sacramento news-
paper wants me to join their force and offers me more money than I'm
getting here. I have almost made up my mind to make the move."
Connie's news hit Joe rather hard. "After this wonderful day we have
had now you want to spoil it with that bad news," he said. "You'd better
think more than twice before you leave a nice place like Placerville to
go into a big city newspaper. In Placerville you are your own boss. In
Sacramento you will have a half dozen bosses. You will have to do twice
the work and always be in a rush. I know what working on a big city
new spa per is and I never want to do it again. It won't be long before
I will be a busy mine executive, and when I want to see you I won't
want to go all the way to Sacramento."
"Well, said Connie, "if you feel that way about it I will change my
mind. It's a good thing I haven't told the boss about giving up my job."
"Furthermore," put in Joe, "now that that's settled let's seal it with
a kiss.
There was no objection, and Connie drove back to Placerville, marking
the day as a milestone in her life. Joe, too, enjoyed his walk back to
camp and before he went to bed kept his promise to do the dishes.
Several days later Joe was in Placerville to see if Mr. Collins had done
any investigation regarding the lease and to replenish his food supplies.
John was glad to see him. However, he told Joe that it was early yet to
make inquiries, holding that the worse conditions looked for gold in
Washington the better it would be to get an easy lease on the mine. ~ ~ I
don't look for a gold price raise until next year and that only in case
the Republicans make it so hot for the President about the loss of our
gold to foreigners that he will ask Congress to do the trick," said Collins.
"That's one of the best moves for the GOP to make. When there is so
much worry about the gold drain they should have sense enough to use
it in the election.
"There's a good one in today's Los Angeles Times and the Chicago
Tribune. I just wonder if it will get the attention of the Republicans.
It heads off with this: 'EUROPEAN GRIP ON U.S. FISCAL PLANS
CHARGED. A Mr. Danielian, president of the International Economic
Policy Association, makes the charge. He said Europeans are looking for
us to pass the Multer bill which would free $12 billion more of our gold
.. to get into the hands of foreign dollar holders. If that bill were passed
our gold would leave this country in billion lots. The tax on foreign
securities held by Americans is not so much to stop the loss of gold as
it is to reduce American control of business in Europe, the deal being
cooked up in the Paris office of the GECD. He comes out flatfooted and
says: 'European thought and leadership are in a large measure deter-
mining Washington policies as to balance of payments, fiscal and budget-
ary plans and agriculture plans: I just wonder what the Republicans
think of that."
"If that doesn't wake e'm up I don't know what will," said Joe.
135
The next day John Collins drove out to his mine to see Joe and tell
him the bad news about the property on which he had designs. He had
to tell him that it had already been leased and the leasers were already
setting up a field office. "I'll have to change my mind about the lack of
interest in gold mining, the stuff I have been trying to put over on you,"
said John. "So mark me down as a sort of a dumb ell on the gold situa-
tion. I'm sorry you have to give up the idea of getting hold of that
property. Anyway is was probably more than you could expect, and the
terms would have been more than a small company could handle."
"But where does that leave me?" questioned Joe.
"You have your three cleams bang up against mine. I would record
them immediately. With that solid 46 feet of gold bearing are you have
a lot with which to deal. When the new company finds they can enter
your vast body of are by way of one of their drifts they will be coming
to see you. So come in to Placerville tomorrow and we will record your
claims."
"Furthermore," continued Collins, «with gold getting hot and a price
change near, my mine is going to be a good one. You and your group
can have it any time you say. Even with gold at $35.00 it's a good prop-
erty. And with a few additions of more modern equipment you will be
all set up to go."
n\Vell, thanks, Mr. Collins. I sure did not make a mistake when I
made your acquaintance on the day I arrived in California. As I under-
stand it we have those three claims all monumented and staked. All we
have to do now is to make out the location papers, post a copy on the
property and record a copy with the County Recorder."
«That's correct, but let's get at it," added Mr. Collins .

CHAPTER 30
The Plot To Give Away All U. S. Gold
I
n Placerville to do his recording Joe received the following letter from
Congressman Thomas B. Curtis, Republican of Missouri:
Dear Mr. Bacon:
Thank you for your letter and your further comments on our bal-
ance of payments problem and the gold outflow and the article entitled
"Gold and Money." I think that raising the price of gold, while afford-
ing temporary relief from our gold shortage because foreign dollar hold-
ings will be able to buy less gold, will have very adverse eHects in the
long run because those people holding gold abroad, never knowing
when the next increase in the gold priceo will come. will not want to
hold their dollars. There will be even greater pressure to convert these
dollars into gold.
136
The role of the International Monetary Fund in the future of inter-
national trade will be to provide a base of liquidity on which such trade
can be based. This liquidity is presently provided by the U.S. balance
of payments deficit, and the accumulation of dollars in foreign banks.
When we eliminate our deficit, and no dollars are forthcoming from the
United States, there will have to be a new source of liquid funds for
western expansion. I believe that the organization that can best provide
this liquidity base is the International Monetary Fund. It will be inde-
pendent from the working of national policy, and will thus inspire a
confidence in itself that would not be forthcoming if the country's deal-
ing with it were forced to look for the influence of national interest in
its decision. I do not mean by this that the United States should do
anything against its own self-interest. However, steps that must be
taken in our national interest, namely correcting our balance of pay-
ments deficit create problems of internationtl liquidity that the western
trade network cannot bear too frequently. Therefore, I feel an organi-
zation such as the International Monetary Fund should begin to collect
the resources to deal with future liquidity problems.
With best wishes.
Sincerely,
September 4, 1963 THOMAS B. CURTIS.
\.
Collins and Joe immediately got into a huddle on the Congressman's
letter. UThat one certainly needs an answer," remarked the former. uThe
gentleman from Missouri evidently thinks the only use we have for gold
is to give it to foreigners. He doesn't seem to know that if we raised the
price of gold to $105 we would clean up our gold debt with just one-third
the gold. And if the foreigners don't like that price they would begin
using dollars to buy our produce.
uThe gent seems to be all wrapped up in the International
Fund. And I'll bet he's a Rockefeller backer - a Liberal (liberal with
OPM). Mr. Curtis writes: "Vhen we eliminate our deficit -->' it being
over $27 billion which we have to pay in gold. What a chance when we
haven't got the gold! And he's in favor of giving our 'liquidity' to the
Fund. And Mr. Curtis believes that the IMF should 'begin to collect the
resources to deal with future liquidity problems.' He doesn't need to
worry about that; the Fund is gathering our gold - and fast.
"So, Joe, that's your next job; write the gentleman a letter. Not that
I think it will do any good, especially if Curtis is a Liberal."
"O.K., Mr. Collins, but if I'm to do much more letter writing I'd better
hire me a secretary." Joe wrote and mailed the following:
Dear Mr. Curtis:
Thanks for your letter of September 4. I can't understand your alle-
giance to the International Monetary Fund, which cannot take care of
the free world's business unless it gets ALL of our gold. That's their
aim now but where does it leave the U.S.? Are you in favor of giving
all our gold to the IMF, leaving us nothing but paper money?
Have you noted that the administration is now considering the Mul-
ter Bill which would eliminate the 25 cents in gold backing the Federal
Reserve Deposits and Notes, so that we can continue converting to gold
foreign held dollars?
And do you know that there are now over 27 billions of those for-
eign held dollars which must be converted unless you and co-members
137
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- -- -
}
do something to stop the gold drain.
And do you realize that if we stopped the drain with a higher gold
price foreigners would use those dollars to buy our produce and thus
take care of our foreign trade problem?
I note in the news that you are a good Missouri Republican. I was
laboring under the impression that due to your following the adminis-
tration's fiscal policies you were a Democrat.
I think you will admit that the biggest Democrat headache is the
Gold Drain, yet in pre-election talks and policy making we Republicans
are not even whispering about the gold loss. Don't you think bringing
before the voting public what that gold loss means would be our best
bet to get a change in the White House?
I am afraid that with Congress following your ideas we very soon
will become a third-rate nation.
Sincerely,
------
---"---JOSEPH A. BACON.
....-1teading it over with Joe Collins remarked, "That's a good one.
Wonder if we will get an answer." (Later Joe had to admit the lack of
an answer.)
"On further thought," said Joe, "1 will send a copy to Harold. He
and Congressman Ben should be getting on the firing line. They are
right in the midst of the deal by which Uncle Sam is to be relieved of
all his gold. It's time we get some helpers in Washington."
"And we sure need 'em," added John Collins. «1 was knocked for a
loop upon reading my copy of the Los Angeles Times today. Take a good
reading of this, a hot one on the Gold Drain by Robert S. Allen and Paul
Scott. It appeared in the editorial section. 1 wonder why the Financial
editor didn't handle it. Here we have been worrying about that damnable
bill of Abe Multer's which would cancel the 25 cents in gold backing
Federal Reserve deposits, when, if this article is true, Secretary Dillon
of the Treasury Department can kill the 25-cent reserve. That would
give him another $12 billion in gold to pass out to foreigners, while he
thumbs his nose at Congress. That body passes a law that our money
in the Federal Reserve must have gold protection and now along comes
the Treasury Secretary saying there's another law which puts the first law
out of business.
The article brought out that in a meeting of the Joint Economic Com-
mittee, Senator Jack Miller, Republican of Iowa, asked what would be
done in case the gold dropped below the required 25 cents on
the dollar. There are $48 billion in Federal Reserve deposits and notes
that need this backing. Secretary Dillon then said he could resort to a
little-known emergency power, suspending the 25-cent law. That was
news to the entire Congress and would make the Multer bill unnecessary.
"That certainly puts a new light on the gold drain situation," offered
Joe. If Secretary Dillon is correct he can shove all our gold out of the
country where it will gradually gravitate into the coffers of the Interna-
tional Monetary Fund. That's the communist plan of Alger Hiss and
Harry Dexter White when they deluded Congress into approving the
138
..
Bretton Woods Agreement. Communist control of the United States
could come with a weakened money system. And I say, divorcing gold
from our economy is the surest way to bring on Communism.
"I just received an answer to my letter to Senator Barry Goldwater
but it is disappointjng. I'll read it to you. It states:
Dear Mr. Bacon:
Thank you very much for your recent letter and your remarks con-
cerning the 1964 presidential campaign.
Although I am not seeking the presidential nomination and have
already announced my intention of seeking re-election to a third term in
the U.S. Senate in 1964, I am naturally most appreciative of your inter-
est in this regard.
I recognize, of course, that circumstances might develop which could
compel me to alter my present course, but until and unless they do, I
trust you will agree with me that I should devote my efforts to assuring
a continuation of the opportunity to serve my country as a member of
the U.S. Senate.
Sincerely,
September 19, 1964 BARRY COLDWATER.
UBarry doesn't give you much to go on, Joe," said Collins. "If, as the
newspapers state, he is today top man for the Republican presidential
nomination, and our best chance of getting rid of the Democrats, we got
to know where he stands on quite a few important matters."
"That's what I thought," responded Joe. "And last night when I was
feeling all het up about the Dillon plan to dump all our gold, I cranked
one out to the Arizona senator. I want your OK on it before it goes.
Here it is:
Han. Barry Goldwater,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
Thanks for yours of the 17th, although disappointing. The matter
of whether or not you are to be a contender for the presidential Repub-
lican nomination has been news every day for months. What we must
have is the answers to a few outstanding leading questions from the
considered candidates.
So far Rockefeller won't answer on the question of what to do about
the gold drain. Being a Western business man, that should be a ques-
tion close to your heart. Our organization, turned down by the money
managers in the consideration of all free gold bills and others pertaining
to gold price raises or bonuses, had a last hope that when the drain
cut our gold supply down to the legal limit ($12.3 billion) required for
backing Federal Reserve Bank's deposits and notes, the Treasury De-
partment would be forced to ask Congress for devaluation. Now we
find that the 25-cent law doesn't meau anything, Treasury Secretary
Dillon telling your Joint Economic Committee that our money managers
are not bound by the Reserve law and can turn loose the $12.3 billion
to continut:? converting foreign held dollars.
Is Dillon putting one over on us or does one law actually repeal the
other? If Dillon has his way about it our dollar is due for collapse.
I don't believe you will support a move to take all our gold out of our
national monetary system.
139
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It is very evident that the administration will go along with Dillon's
plan which will put the rest of our gold in a way to be taken over by
the International Monetary Fund, a foreign dominated organization.
Our organization is for you. We were deeply impressed when 4,200
persons paid to hear your Los Angeles talk. However, we think every
candidate and every Senate and House member should come clear on
the gold drain situation. May we hear from you again? Thanks.
Sincerely,
JOSEPH A. BACON.
After reading the letter aloud Joe admitted it was putting Barry pretty
much on the spot, but John was right back at him with: "It's time all our
Senators and Representatives were getting back on the spot. With
Barry now looking a likely candidate for the White House we should
definitely know where he stands on our monetary policies. If a man of
his type is going to back up on this most important question, like many
of the congressmen are doing, it's going to be just too bad for not only
us gold miners, but for every taxpayer in the nation.
"Our nation has a gold reserve for just one purpose: to back up our
paper money with something of value. Gold was chosen because its value
is recognized by the entire world. There's a lot of sense in the statement,
<as good as gold: We have nothing in our system to take its place. So
why give it all away?"
"Why didn't you speak out sooner? I could have put all of that in
my letter?"
Hon. Alan Bible,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
Thanks for taking time to write me yours of Sept. 18. However, it
is disappointing.
As you were writing Treas. Sec'y. Dillon was before your Joint
Economic Committee sounding the death knell of the law which pro-
vides 25 cents in gold to back Federal Reserve deposits and notes. And
there hasn't even been a whisper in Congress opposing his move.
By now you should realize that there is no chance to get a bill ap-
proved that only is intended to help the gold miner. The big and most
important action in regard to gold is to stop the drain of Treasury gold
into the hands of foreigners.
With the Dillon move it is very evident that he intends to send all
the gold out of the U.S. I don't have to tell you what this will mean.
It will leave us with worthless paper and we will then be depending on
the International Monetary Fund, a foreign dominated body, operating
with U.S. gold, to which we will be forever paying taxes.
Looking over the personnel of your Interior and Insular Affairs Com-
mittee it appears to me that ti should be able to get some place on this
matter. If not we would like you to instigate a move by said committee
to investigate if what Dillon says is true - that there is a law by which
he can kill the 25 cent gold reserve law. And further, if there is such
a law have it repealed. If this isn't a treasonable act r d like to know
the definition of "treason."
Can we get some rapid action on this? Thanks.
Sincerely,
JOSEPH A. BACON.
140
""
«Anyone from the gold state of Arizona knows that," responded John.
"What we want to know is if Barry will go along with the Democrats,
shifting our gold over to foreigners, in obedience to a Communist plot."
''I'm looking for the answer to one question which has eluded me," '7
said Joe. "With a lot of foreigners eligible to take over our gold at a
price much lower than in their free markets, why don't they grab it be-
fore Uncle Sam changes his mind and repudiates that commie agree-
ment?"
"That's a good question," responded Mr. Collins. "It's one that as
yet hasn't been answered by the experts. This is my answer: The foreign
dollar holders can't get their gold unless it comes through a Central Bank
of Europe. The Central Banks are the biggest part of the International
Monetary Fund and its One World bank. That organization has its own
plan for Uncle Sam's gold and they will euchre things around until the
gold lands in their vault. They don't want to approve the gold call too
fast for fear of waking brain-washed America. However, they can depend
upon Mr. Dillon who has finally spilled the beans."
"Thanks, Mr. Collins for the answer. I was afraid some sharper would
hand me that one. Received another letter today, from Senator Alan
Bible of Nevada, the silver state. But it's disappointing. He writes:
Dear Mr. Bacon:
As to gold, I reli!ret to say I cannot hold out much hope for an out-
right increase in price in the immediate future. Recently our Minerals,
Materials and F'uels Sub-committee held hearings on S. 1273, which
would have authorized incentive payments of up to $105 an ounce for
newly mined domestic gold, but the Treasury Department, as it has
in both Republican and Democratic Administrations, was adamant in
opposition to what it insisted on calling the «two price system for gold."
This is the same position taken by the Eisenhower Administration.
Accordingly, some of us concerned with our Amerioan gold mining
industry and our country's plight with respec,t to gold have worked out
a bill which avoids reference to price. Rather it would authorize pay-
ments based on the difference between the cost of production in 1934,
when President Roosevelt raised the price of gold from $20.67 an ounce
to $35.00 an ounce, and production costs today, I would appreciate
your views on this proposal, a copy of which is enc1osed.
Thank you for writing me,
Cordially,
Sept. 18, 1963. ALAN BIBLE.
)
Reading Senator Bible's letter Mr. Collins remarked: "We'd better
give Bible's bill a good reading. Some day, perhaps, a senator might wake
up and introduce a bill that will really hit at what's keeping our gold
mines closed. I will study it tonight."
The next day John was ready for a report to Joe on the Bible letter
and bill. He didn't like it, characterizing it another bureaucratic measure
under complete regulation and control of the Secretary of the Interior.
It was titled, «To Revitalize the American Gold Mining Industry.n The
stated purpose was to restore profitable domestic gold mining. It would
direct the Secretary to pay producers a price that would compensate
141
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them for the difference between operating costs as of Jan. 1, 1940 and
the costs of the present, as directed by the Secretary. The producer would
have to make application, his eligibility to be determined by the secretary.
A Board of Differential Payments Review would be provided by the
bill, procedure of such board to be established by the Secretary. Quot-
ing directly from the bill: "The Secretary shall, by regulation, establish
a procedure for review by the Board of applications of producers whose
claims are denied, disallowed in part or reduced.
"You'd better write Senator Bible and tell him the real trouble," recom-
mended ~ 1 r . Collins. "His bill won't stop the gold drain; that's the Num-
ber 1 move to make right now. And I note that Senator Kuchel of our
state is a co-author. It wouldn't hurt to give him a letter also. Other
authors are Senators Gruening, Bartless, both of Alaska, and Metcalf.
They should know better. They are fiddling while Rome burns."
Joe agreed to write Senator Kuchel but observed that he had just
been reelected for another six years and could ride along devoting little
interest to the predicament of the gold miner. "I did notice that some
years ago he came out with a blast about how much gold we would have
to give the foreigners, but of late he has been very quiet. No doubt as
the Internationalists' plan for the disposition of Uncle Sam's gold be-
comes more apparent the boys on Capitol Hill are going to talk less and
less about gold. They let Mr. Dillon do all the talking, which is all about
what he is going to do. Anyway, I'll give Tommy, as you golden staters
call him, a round-up.
The next day the following went to the senior California senator:
Hon. Thomas H. Kuchel,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
Senator Bible has written, mailing a copy of S.2125, of which you
are a co-author.
I have written Senator Bible drawing attention to the fact that all
gold bills, the main intention of which was aid to the miner, have been
met with defeat, due to Treasury opposition. As long as Congress will
take the word of Secretary Dillon and Federal Reserve head, Martin,
there is no use presenting this type of bill.
What is really worrying Washington and the Administration right
now is the gold drain and the fact that over 27 billions of foreign held
dollars await conversion to U.S. gold, when we have only $3 billions to
do the job as long as we honor the Bretton Woods Agreement, a deal
cooked up by Communists Hiss and White.
The Republican Party has always prided itself as being the party
of «hard» money, meaning currency, backed by gold. How can we
live up to this reputation and obey the B. W. Agreement?
Now comes the last chapter in the Communist plot to rid U.S. of its
gold. At a hearing of your Joint Economic Committee, Secretary Dillon
told it he does not have to obey the law which provides a 25-cent-per-
dollar gold backing of Federal Reserve deposits and notes. He stated
to the committee there is another law by which he can tUrn loose the
142

..
$12.3 billion in gold reserved to back our paper. Is this true? How is
it that we have never before heard of this law?
The siuation has now gotten down to this: All of the attempts to
stop the gold drain and the piling up of the imbalance of payments
have failed. Now that they have failed, Secretary Dillon intends to use
our last gold to carry out the Hiss-White Communist plot. Our "hard"
money Republicans are remaining silent about the situation. If you
want to win an election why not use the information this situation has
developed?
Thanking you for an early reply, I am,
Sincerely,
Sept. 28, 1963. JOSEPH A. BACON.
As Joe was mailing his effort to Senator Kuchel he received an answer
from Governor Rockefeller of New York state. Now, he thought, we
should get something that we can really set our teeth in. But it wasn't
a letter from "Rocky," but a short note from his secretary, inclosing a
statement by Mr. Rockefeller, on "The Balance of Payments - A Grow-
ing Crisis," issued to the press Sept. 2, 1963.
Joe was again disappointed. He read it over carefully and passed it
on to Mr. Collins, asking his opinion. John gave it the once-over. '<It
sounds just like Mr. Kennedy," he said. "We have been reading this stuff
in the newspapers for years. Remember when Sam Dawson used to do
it for the Associated Press? Now Sam let's Sylvia Porter do it."
Both Joe and Collins checked the New York Governor's recommenda-
tions which opened with blasting Kennedy for lack of action, but what
followed sounded very much like JFK's statements. He wanted a tax cut
but no reduction in the budget. He called for that worn out «more real-
istic monetary policies," a sharp reduction in the dollar drain, more ex-
port trade, but failed to show how these could be attained, while facing
the mess in which the New Frontier has landed us.
"Looks to me," volunteered John, "in the face of the predicament now
confronting us, <Rocky's' statement is pretty mild. I'll bet a dollar to a
doughnut it was written by 'Rocky's' brother, David, head of the Chase
Manhattan Bank. I am sure the Wall Street bankers don't want any up-
set in the way our gold is getting into the coffers of the One WorId bank.
Looks to me as if "Rocky' doesn't even mention the 27 billion of foreign
held dollars that must be converted with our gold when we now have
less than three billions in gold to do the job. I recommend you write him
and remind him of that fact. Put it up to him and ask him how he would
d 't" o 1 •
"Will do," responded Joe, «but you had better get me that stenog-
rapher. My hunt and peck letters aren't getting much action in Washing-
ton."
Collins came back at him with, «Well, cheer up. There's another letter
from Congressman Harold (Bizz) Johnson of our District II. When you
get done with 'Rocky' we'll see what Bizz has to say. He snould be away
out in front on this gold and monetary business, as everyone of his nine-
teen counties are gold producers. His district contains the famous ~ 1 o t h e r
143
\
Lode. Its fame won't last much longer unless Bizz gets in and does some
pitching. I'm afraid Bizz doesn't know what its all about. I don't think
he's a real gold man. I remember the first speech he made when he
started to run for Congress. It was up in Nevada City, made the white
spot of California by gold mining when the big depression hit us. He
actually stood up before those miners and told them gold mining was
through, and what they needed was the spending of government money
in their district. You'd better give Bizz a good one, but take care of
'Rocky' first.
Following is the letter to Mr. Rockefeller:
Hon. Nelson A. Rockefeller,
Governor of New York,
Albany, N. Y.
Dear Governor:
While you were away on your European trip your secretary sent us
a copy of your paper, "The Balance of Payments - A Growing Crisis,"
in answer to my letter to you dated Sept. 3rd, 1963. It shys away en-
tirely from the questions asked in relation to the Gold Drain.
If we want to replace Mr. Johnson with a Republican in the White
House we can do it by attacking inflation and the gold loss and not
with the mild treatment you give it in your paper. If I am not mistaken
that paper was written by your brother, David.
You write about "coming to grips with the problem," but you don't
tell how. You state we should have a "vigorous and effective export
drive," when Labor has priced us out of the foreign market. You don't
even suggest we quit exporting labor. For instance: The Tide Water
Oil Co. is having oil tankers built in Japan. With our present unem-
ployment we need that work here. Japan is shipping steel into Califor-
nia, in competition with the Kaiser plant at Fontana, (this county, San
Bernardino) at a price $40.00 per ton cheaper than their home price.
This is the way the Democrats want us to do business, the GOP over-
looking it.
Getting back to the gold drain: the continued imbalance isn't the
immediate danger. Foreign held dollars, subject to conversion, now
amounting to over $27 billion, is what hurts. You and our Republican
friends overlook what can happen if a conversion call comes all of a
sudden. Further, you insist that we continue to obey the Bretton Woods
Agreement, cooked up by two Communists. And now comes Treas.
Secy. Doug Dillon with the statement to the Joint Economic Committee
that he doesn't have to obey the law providing 25 cents in ,gold back-
ing Federal Reserve deposits and notes. As we now have less than $3
billions in Treasury gold to continue conversion he wants to send abroad
the only thing of value left behind our paper. You don't say a word
about all this, neither does the GOP.
We don't see how you can promote your candidacy for president
and ignore the present monetary mess. As stated above, we can lick
the Democrats by letting the public know the real truth. Or don't you
favor such a move?
Appreciating an early answer, I am,
Sincerely,
JOSEPH A. BACON.
Before starting his letter to Bizz J ohnson,_ Joe wanted some low-down
on the Congressman. "Why do they call him 'Bizz'/' he questioned.
144
,.
"'Nell," responded John, "maybe it's part of the word 'business.' But
that doesn't ring true as he hasn't been delivering when it comes to the
gold miner. He's been getting the 'business' from the money changers.
I note he incloses a list of the members of the House Banking and Cur-
rency Committee, headed by that Wright Patman of Texas. There are
31 members, three from California, all unfamiliar with gold mining. They
didn't even put 'Bizz' on. And that Wright Patman, the chairman, is a
total loss as far as gold miners are concerned. He only got to be chair-
man because he has been a member of the committee longer than anyone
else on it. That's poor business, I would say. When his party is worry-
ing itself sick about the gold drain Patman comes out with the statement,
'You can throw all of our gold in the ocean and the nation would get
along just as well.' Can you imagine such a character being head of that
committee? And further, he has sold out to the Federal Reserve Board.
He promised the chairman, Mr. Martin, that he would not take up any-
thing 'controversial' with the board when the entire gold and monetary
situation is the most controversial matter in Washington today. When we
have such men in the lead in Congress how can we expect to get any
place with vital matters? It sure gets me down, but there's no use giving
up. So write 'Bizz' a few real facts. Of course he is a Democrat and if
they are sold on selling out to the Internationals, what can poor 'Bizz' do?
First take a gan at the make-up of the House Banking and Currency
Committee which 'Bizz' sent you. At least I will agree with 'Bizz' that
that crowd wouldn't do the gold miner any good, but they should· at
least listen to some one warning them about selling the American tax-
payer out to a bunch of international gold grabbers. This is the line-up:
CONGRESS OF THE UNITED STATES - HOUSE, OF REPRESENTATIVES
COMMITTEE ON BANKING AND CURRENCY
Room 1301, Longworth House Office Building
Washington, D.C.
Eighty-Eighth Congress
WRIGHT PATMAN, Texas, Chairman
Albert Rains, Ala. Bernard F. Grabowski, Conn.
Abraham J. Multer, N.Y. Charles H. Wilson, Calif.
William A. Barrett, Pa. Clarence E. Kilburn, N.Y.
Leonor K. Sullivan, Mo. William B. Widnall, N.J.
Henry S. Reuss, Wis. Engene Siler, Ky.
Thomas L. Ashley, Ohio Paul A. Fino, N.Y.
Charles A. Yanik, Ohio Florence P. Dwyer, N.J.
William S. Moorhead, Pa. Seymour Halpern, N.Y.
Robert G. Stephens, Jr., Ga. James Harvey, Mich.
Fernand J. St. Germain, R.I. Oliver P. Bolton, Ohio
Henry B. Gonzalez, Tex. W. E. (Bill) Brock, Tenn.
Claude Pepper, Fla. Robert Taft, Jr., Ohio
Joseph G. Minish, N.J. Joseph M. McDade, Pa.
Charles L. Weltner, Ga. Sherman P. Lloyd, Utah
Richard T. Hanna, Calif. Burt L. Talcott, Calif.
Wm. Summers Johnson, Clerk and Staff Director
Dear Mr. Bacon:
As I have indicated to you in the past, I do believe that the present
course of action in seeking a solution for the gold mining industry is
through the Interior and Insular Affairs Committee on the House of
Representatives and Senate. However, it is very possible that with
145
Wright Patman as Chairman of the House Committee on Banking and
Currency there may be in the future some change in attitude toward
the gold situation. I would point out to you, however, that looking
over the overall membership of the Committee, which is enclosed, a
great majority of the members are residents of the area east of the Mis-
sissippi River. Few have any orientation towards the mining industry
in general or the gold industry in particular.
It is possible that the International Monetary Fund Meeting now
going on here in Washington will come up with some revisions of the
monetary systems which could alleviate this situation. I think it is too
early to say now, however.
In conclusion. I noted your last comments, "let's introduce some leg-
islation to stop the gold drain." I certainly would be very happy to
do anything and consider any proposal to stop the gold drain because
this is an overriding problem which this country now faces. If you
have any suggestions as to how this can be done or what legislation
would be effective in this direction, I would be very happy to consider
it. Sincerely yours,
Oct. 1, 1963 HAROLD T. (Bizz) JOHNSON.
Han. Harold (Bizz) Johnson,
1031 House Office Bldg.,
Washington 25, D.C.
Dear Bizz:
Thanks for yours of Oct. 1. We think you will have to give up the
idea of getting a better price for gold via the Interior Department and
its mining committee. The attempts that have been made, with failures,
should convince you of this. .
Gold is money, a precious metal, and cannot be treated as a com-
modity. That's simple. The bankers realize this, and even though the
Banking and Currency Committee refuses to consider gold bills, it will
never let an Interior committee take over its work. Furthermore, all
the bills that have been introduced have been helpful only to the gold
miner, while the whole nation suffers from inflation and loss of Treas-
ury gold. You will also have to meet that argument when introducing
your type of bill. Why don't you form a Gold Bloc in the House and
Senate - a Joint group?
We now have less than $3 billion in gold to continue converting for-
eign held dollars, and Secretary Dillon has told your Joint Economic
Committee that he doesn't have to obey the law providing 25 cents in
gold backing Federal Reserve notes and deposits. By law that requires
a reserve of $12.3 billions in gold. Are you people representing the
gold producing states going to let Dillon get by with the conspiracy to
give all our gold away? If this happens your Congress will be held re-
sponsible.
We have kept close tab on the recent meeting of the International
Monetary Fund. What they call reform, both from the standpoint of
the Fund's ideas and those of the Paris Club. lead only to the inter-
national group taking the rest of our gold. In fact. the IMF can't prop-
erly finance their over 100 nation members without our gold.
Will Congress continue to do nothing and force U.S. to become a
beggar nation - begging the IMF to keep it financially afloat? You cer-
tainly have a big obligation you are flunking, at the same time fooling
your constituents with introducing bills that not only won't pass but if
they did would not help the nation at large.
Sincerely,
JOSEPH A. BACON.
146
....
Joe Bacon was watching his mail closely and came to Placerville
nearly every other· day. That was the reason he gave John and Mrs.
Collins, but they noted he was a regular caller at the newspaper office
in which Connie Morrison was employed. When they showed interest
and questioned him his only answer was: HN 0 .comment."
"But I do have some comment on an October 15th letter I received
from the office of Governor Nelson Rockefeller referring to the long (and
I think intelligent) one I wrote him October 7th. It was written by a
secretary, Margaret C. Fowler, and is as follows:
Dear Mr. Bacon:
Governor Rockefeller asked me to acknowledge for him your kind-
ness in writing him in detail concerning his paper entitled "The Balance
of Payments." He is glad to have your views on this troublesome prob-
lem, and I know he read your letter with much interest.
With best wishes,
Sincerely,
MARGARET C. FOWLER.
~ < I t made me so darned mad," said Joe, "that I just sent his old letter
back to him after writing this on it:
Dear Governor Rockefeller!
This letter is an insult to my intelligence. I listed for you a number
of national problems but you refused to even comment on them, as if
it is none of our business to know what an aspirant to the presidency
thinks of these important matters.
In reference to U.S. gold losses - with $27 billion subject to foreign
call- are we to conclude that you, like the Democrats, are in favor of
putting the nation on a paper basis? If so we might as well keep them
in office. You are a Liberal -liberal with the taxpayers· gold.
Sorry to have to write this.
Sincerely,
JOSEPH A. BACON.
Before shooting Rocky's letter back to him John Collins looked it over.
He agreed with Joe. UBy all means," he said, u we have a voter's and tax-
payer's right to know a prospective presidenfs views and policies and
what he plans for us. I would have been tempted to write him a stormer.
I note he now is out here in California trying to head off the start that
Barry Goldwater has on him. I don't think Barry will let him get by
. without forcing him to make an expose of his politics. He will have to
if he gets anywhere near Barry in the primary race for the Republican
nomination.
«Rockefeller has no sympathy for the gold miner, nor the American
taxpaying public for that matter. We have had a multi-millionaire in the
White House; let's have a poorer man next time - one who knows the
value of the dollar."
Joe no more than got "'Rocky's" letter into the post office when he
was knocked over by one from Senator Alan Bible. The senior senator
from Nevada, one of the leading mining states of the nation, wrote say-
ing what was practically a tribute to those in Washington who would
147
i
, ,
dump the 25 cents in gold backing Federal Reserve notes and deposits
in order that we could give foreigners more of the little gold we have
left in the Treasury.
When Joe gave it to John Collins the latter blew his top. "Of all
things," he exclaimed. "How the senior senator of Nevada can put out
such stuff is beyond me." He grew more angry as he read it .

CHAPTER 31
\ Sen. Bible Approves International Gold Plot
I
I
!
I
I
Dear Mr. Bacon:
As the senior Senator from one of the foremost mmmg states, I
naturally am most sympathetic with the basic p u r p o s e ~ of the Western
Mining Council to expand and improve Western mining. I am, of
course, interested particularly in gold, and I have done my best to bring
about an increase in price.
However, I cannot concur with the implication in your letter that
Secretary Dillon is committing a "treasonable» aot when he advocates
repeal of the present law requiring 25 percent gold backing for Federal
Reserve notes. A number of people whose patriotism and dedication to
America cannot be questioned are of the same opinion.
Proponents of repeal of the gold reserve provision argue that one
cannot get gold for his notes in any event, and that the only realistic
backing for our paper currency is the vast resources and wealth of the
United States, and the credit of our American government. It is argued
that repeal of the gold provision would make our currency stronger, in
that it would establish the fact that the backing for our currency was
the over-all wealth of the United States- and not a diminishing and ex-
haustible gold supply.
While proponents of this school of economic thought may be, and
in my judgment are mistaken, it most certainly is not "treasonable" for
them to hold such ideas.
I may say that such charges on the :part of mining men do not do
the cause of mining any good, in my judgment.
However, I think there is little likelihood of a repeal of the gold
provision in the Federal Reserve Act any time in the immediate future.
This law is found in Title 12 of the United States Code. Section 41a as
amended in 1954. If a bill to repeal the 25 percent reserve provision
comes before Congress for approval, you can be certain that I and a
number of other Senators will resist.
V
Sincerely yours,
ALAN BmLE, U. S. S.
John read it out loud and by the time he finished he was almost
frothing.
Hyou know, Joe," he said, «that's just what your favorite mining pub-
lisher predicted long ago. The world bankers want to get all our gold,-
24.6 billion dollars' worth, and then load the over $300 billion debt and
the results of inflation on us poor property owners. They have already
148
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reduced the buying power of our meager savings by at least two-thirds,
and now they want to load the big debt and the gold loss on the property
of the taxpayers. If that isn't a Communist plot I'll eat my hat!
"And what do you think of our Nevada friend, Senator Bible, holding
that we can't question the of those who back such a plot
against us? And throwing all our gold out to foreigners will <make our
currency stronger.' How does he get that way? So - Mr. Bible lets the
cat out of the bag. And what a cat! He should hear from you, Joe, at
once.
Hon. Alan Bible,
U. S. Senate,
Washington 25, D.C.
Dear Senator:
As the senior Senator of Nevada, a leading mining state, you should
not be blowing about what you have done for gold. You put out hun-
dreds of press releases and hit the press on about every other subject
but what your administration is dOing about getting rid of the taxpayers'
gold. You are thus serving the Communist gang that framed the Bretton
Woods Agreement and the international banking group that see the
Communist plan as a way to get control of the $24.6 billion of gold
we formerly held.
If there is any reason at all that Federal Reserve notes and deposits
should have a gold backing then your reverence for those who would
repeal the 25-cent law (which was 40 cents until FDR started the fnter-
national gold shift) is certainly misplaced. And your idea that a repeal
of the 25-cent law would strengthen currency is the most crack-pot
idea I've heard for some time. It's more of the commie plot to destroy
the dollar, and will put an additional load on the taxpayer.
While you don't actually advocate the above yourself we don't see
you opposing it in the Senate. Backing up paper money with private
property rights would be our end as a free nation.
I will have to inform you that it will not even take a repeal of the
25-cent law to shift all our gold to foreign dollar holders .. Secretary
Dillon has told your Joint Economic Committee that he already has a
law that would offset the Reserve provision. Can you get us a copy of
that law? Looks like we have been caught asleep at the switch. "
Sincerely,
JOSEPH A. BACON
«1 am glad you told the gentleman from Nevada that his kind words
about the ·patriotism' of those who want foreigners to have all of our
gold, are aiding and abetting the Communist plot to reduce our econ-
omy to that of the world's lowest nations. Senator Bible doesn't appear
to know that the gold give-away was framed by Communists in the em-
ploy of our State Department. One of them, Alger Hiss, was sent to jail
and the other, Harry Dexter White, committed suicide. The banking
fraternity has been hit so often with the statement that they are operating
under a system originated by Communists that a Hearst writer, Morrie
Ryskind, took up the job of proving Mr. Hiss a saint, 'convicted by per-
jured testimony and framed evidence.' All you have to do is to note how
well Russia is conserving her gold while we are tossing ours out to every
foreigner who gets hold of a dollar.
149
"Maybe you remember reading in The Journal the story of the meet-
ing of the gang that cooked up the Bretton Woods Agreement. It was
first published in the American Mercury magazine. And such a lousy
bunch it was, Communists and socialists from all over the world, with
a sprinkling of a few of ~ 1 r . Bible's American 'patriots.' Tom Dewey was
among them. They met on St. Simon't Island, off the coast of Georgia,
and the account of what they did to the American taxpayer never did
appear in any American newspaper. Perhaps there were a few more
'patriots' present as twenty refused to sign the list of those present. I sug-
gest you recommend to Senator Bible that he secure and read a copy
of Dan Smoot's 'Gold and Treachery: He might change his mind about
those 'patriots: I have been reading Dan's other book, 'The Invisible
Government: I just want to read you one paragraph from page 106.
Listen:
'America was founded, populated and developed by people seeking
escape from oppressive governments in Europe. Now our leaders ask
us to give up the freedom and independence which our forebears won
for us with blood and toil and valorous devotion to high ideals, to be-
come subjects in a governmental system that would inevitably be more
tyrannical than any which our forefathers rebelled against or any that
presently exist, If the World Government included the despotic and
oligarchic and militaristic and feudalistic and primitive systems of Asia,
the Middle East, Africa and Latin America, it would necessarily become
the bloodiest and most oppressive tyranny the world has ever known', ..
"'That sounds pretty bad, John," said Joe. "I wonder if it could be
that bad and if we, the free people of America, would go for a deal like
that."
"We have already given up much of our freedom by way of laws pro-
moted by the 'Have-Nots' and their organized minorities. To get anything
from the Federal government you must give up more than you receive.
When balancing time comes you will find a teriffic shortage in your
freedom, wealth and property. Every day Congress is passing laws that
sink us deeper into what Dan Smoot predicts. The Government shut
down my gold mine because a gold miner is the freest man on earth.
This was followed by a debt buildup and loss of the dollar's purchasing
power that now just about equals the value of my mine. If I were now
called to settle up with my government Washington would send out
some of those sharpers who would chisel it down to little or nothing and
I would still be in debt to Washington.
"You paint a picture just about as bad as Dan Smoot's," said Joe.
"Well, isn't Senator Bible letting you know whaes in store for us?
What more do you want?"
"What I'm thinking about right now," responded Joe, "is what are·
Barry Goldwater's ideas about all this? Can and will he do anything to
stop the foreign avalanche? Ike didn't. Dick Nixon wouldn't have. And
further, Ike saw to it that President Kennedy didn't have an opportunity
to appoint his own Treasury Secretary. Ike shoved Doug Dillon, a GOP
Wall Street banker on him. The Communist money program given us
by the Bretton Woods Agreement had to go on, and Mr. Kennedy had
150
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....
to take it. That's what gets me down! I firmly believe that a oon as
we have lost all our gold to foreigners we will be in a hellofafix. But
Mr. Bible thinks this will be just dandy. Who does his thinking? And
will Barry Goldwater have to do that kind of thinking? Really, John,
when you have time to think about the whole world mess it scares you."
. "Looks like you haven't been reading your favorite mining magazine
lately," answered John Collins. The October, 1963 issue, page 3, reads:
'In response to our questioning of Senator Goldwater regarding his
policies on llold, he has sent us a letter with the following statement:
"As for establishing a higher price for gold, it is my belief that gold
should be allowed to find its proper value on the free market place, and
that any artificially derived value is not desirable."
.. "Well, that's something," asid Joe. And in your opinion, Mr. Collins,
just how much good would that do us?"
"1 think Senator Goldwater is right," responded John. If we had a
free market, really free from banker control, it would not be long before
the gold miner would get the world price. Shortages always control
·price. All the experts will agree. with you that there is now a real gold
shortage. Even the International Monetary Fund and its One-World
Bank is now suffering from a gold shortage. The more than one hundred
nations it serves are asking for more loans than it can handle because
they don't have enough gold to back up their paper. That's why they
are after your Uncle's pile, and as our bankers and Dillon are now One-
Worlders they are willing to sacrifice u.s. gold and let the nation's prop-
erty owners back up the paper money and the vast national debt of
$315,000,000,000.
"And as to a world gold price - before France had to devalue her
franc a few years ago she called on her people to sell their gold to the
government. It offered $65.00 per ounce and bought only 25 per cent of
the amount needed. The French gold hoarders know what their gold
is worth. Since then the world's debts have vastly increased with the
real value of gold increasing in like manner. It's only in the United
States where our ninnyhammer congressmen think we can get along
without gold."
"Thanks, Mr. Collins, for that review of the situation. And that means
that we will get on the Goldwater bandwagon. The Democrats want to
give our gold away and Rocky would travel the same road. I read in the
paper yesterday that Rocky is trying to throw a monkey wrench into
Goldwater's campaign by insisting Barry is opposed to the World Bank
and the IMF. However, the Arizona senator isn't letting him get away
with it. He came right back with this statement: '1 have advocated use
of the World Bank and the International Monetary Fund as means of
providing loans to those nations which need them.'
"1 would agree with Goldwater on that score. We have financed those
poorer nations long enough. They should combine their resources and
borrow from that combination. But I am opposed to the Bretton Woods
gold shift which will end in the World Bank having all Uncle Sam's gold,
151
T leaving him among its <poor relations.' We were all right when our sys-
tem had a $24.6 gold basis, even though it was accumulated at an ad-
vance of $14.33 per ounce. When the price again goes up and we are
obliged to buy it from the IMF the taxpayers will be hit again. This is
what Rocky is looking forward to, and you can bet the Rockefellers are
not going to be caught short when it comes to the clean-up."
1 "Dogonit, John, I think you got something," exclaimed Joe. "That's
just what those Wall Street bankers are planning - a clean-up at the
expense of American taxpayers. rArthough I don't like Senator Bible's
playing footsie with those f e l l o ~ e calls <patriots,' I think we got to
thank him for putting us wise. Now that we have it from governmental
sources it's beyond the opinion stage. Those Congressmen who really
believe in continuing to live in <the land of the free and the home of the
brave' should know what to do. It is in their hands, and Senator Barry
Goldwater should be their champion:'
After Joe mailed his letter to Senator Bible he made a dinner date
with Connie. He felt that he should tell her what was coming up as
soon as the Forest Service noted the location of his three claims that
backed up the mine. The original locator was requested by the Forest
Service to relinquish his right. The only excuse the FS gave for its re-
quest was its intention to build a road across the claims. It didn't use
the usual damning verdict: "Non-mineral in character; No discovery of
valuable mineral has been made." It was held that the location left a
cloud on the title.
The original locator complied with the request of the Forest Service,
Joe holding that his signing off put the three claims back as public lands
and subject to another location. The FS hadn't given out any of their
plans for the land except its use for a road, which Joe held would in no
way interfere with its mining. However, he knew that as soon as the
FS found out about his recorded locations they'd be camping on his
trail. Accepting the Ferrin geophysical report of the ground made it one
of the Mother Lode's richest spots. Mr. Collins, of course, understood
the situation and if there was to be trouble about it Joe wanted Connie
to know the full particulars. He made a date with her for dinner at the
Blue Bell Cafe.
Connie was in a very happy weekend mood,- no proof reading, clas-
sified ads or news rewriting till Monday. Besides she was in Joe's com-
pany. Joe, on the other hand didn't feel so good. He didn't know how
Connie would take the situation. Gold mining was practically dead. All
the miners had been forced to take up other work or go on relief. The
Forest Service had other plans for the Mother Lode's great gold produc.;'
ing area. The portion they didn't want to set aside as wilderness they
would like to lease for summer homes, despite the fact that underneath
the surface there was a vast amount of wealth that was badly needed
in the nation's economy. The FS was willing to sacrifice all that wealth
in order to facilitate their far less important plans. They had used the
Chamber of Commerce and local civic organizations, not forgetting the
Sierra Club, to advance their cause. Gold mining was through, the peo-
152
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pIe needed playgrounds; tourism was the industry that needed develop-
ment. The general public and newspaper readers had been well brain-
washed to go along. A tough deal, Joe thought.
Connie was quick to note that Joe was not in his usual jovial frame
of mind. After being seated for dinner she didn't waste any time in try-
ing to find out the trouble.
"What's gone wrong, Joe boy?" she inquired. «Has that New York
girl gone back on you?"
"Long ago," answered Joe. "That's a closed chapter in the life of Joe
Bacon."
"Well, I'm here. 1 haven't gone back on you. And remember, I did
not take that Sacramento job. Open up and let's hear what's bothering
"
you.
Joe gave himself a few moments' thought as to how best to approach
the matter. "You know," he said, «1 haven't made many friends here.
Outside of Mr. and Mrs. Collins and you I didn't want any more. I was
satisfied to have you as close friends, and put most of my time on the
object of my coming to California. Limiting my friendship to so few
you have become very close to me, in fact, the best friends I have ever
had. I would hate to have something come up that would lose for me
that friendship. And 1 can use a stronger word than <friendship' in your
case as you have become very dear to me.
"There will be some happenings come up very soon that no doubt
you will have to use in your paper. I have recorded my location notices
on three very rich claims that back up a rich mine which lately has been
leased to a strong company. I don't know if they know of the richness
of the claims, but I suspect they do. They are well able to make a real
project out of the mine, plus my claims. If my locations hold good they
will have to do business with me."
Then Joe launched into all the mining details of his three claims and
what might happen if the new company and the Forest Service contested
his right to the claims. "It will be a real mess and a fight, and your paper
will no doubt have to run it as news. 1 will be called a New York slicker,
an interloper and a claim-jumper. And you know what used to happen
with claim-jumpers! I wanted you to know the story in advance and its
real facts. Mr. Collins assures me I am in the clear and I'd like to have
you feel the same. That's what is the matter with me. Two thirds of my
Placerville friends are with me, what about the other third?"
"Well, of all things!" exclaimed Connie, '<do I amount to only one-
third of your friends; and am I only a friend? You have to do better
than that."
"Lately I have been having hopes of something better, Connie, but
with this claims matter coming up, with its bound-to-be adverse pub-
licity, I was afraid it would cause me to lose you. You have become
153
)
very dear to me and if you want to be three-thirds of my friends that's
all right with me."
nyou are such a sill. Don't you know that I love you? Don't you
know that ever since I helped pull you out of that mine shaft I have had
my brand on you? When are you going to wake up?"
~ ' W e I I , I'm awake now and knowing that you will be with me will be
a lot of help. I will be open to a lot of local criticism; the Forest Service
will see to that. I will be painted almost as black as Black Bart. I wanted
to warn you. I am very happy that you feel the way you do about the
whole matter. And as for my love for you we will have to do something
about that as soon as I get :Sfty thousand dollars for my three claims."
"That's a bargain we will have to seal as soon as I can get you alone,"
happily announced Connie.
«I'll see that Main Street jeweler tomorrow. I want to get you wearing
my ring before that claims case comes up. The Forest Service and the
new owners of the mine will be sure to take me into court."

CHAPTER 32
IMF Talks "Liquidity" But No Gold Raise
A
few days after Connie and Joe became engaged Joe received a fat
letter from Harold. Hal excused himself for not writing sooner, ex-
plaining that his new duties in the office of the Congressman had kept
him on the jump. He explained that his boss had let him off during the
days the International Monetary Fund was having its annual meeting in
Washington in late September. Here is his letter:
Dear Joe:
I know you have been waiting to hear from me. After talking with
Congressman Ben he gave Ille his. opinion that unless there is some kind
of an upset the fate of gold lies in what action was to be taken in this
year's meeting of the International Monetary Fund. So he let me off
all week and I took it in. What struck me most was the fact that our
big United States. which long ago had won its freedom from foreign
control, now had to listen to the money managers of one hundred and
one forei211 countries to find out what to do with its gold and money.
That surely should rile the owner of a Western gold mine.
Previous to the opening of the annual meeting of the Fund on
September 30th, Robert V. Roosa, under secretary of the Treasury,
was out with a statement that monetary reform for the free world was
necessary. I know you gold miners of California would agree with that
but not the kind of reform that Roosa was urging. From what followed
at the convention it was very evident that there was to be no rush for
any immediate changes. all foreign nations, both creditor and debtor,
remembering that Uncle Sam still has some gold, $15.5 billion, if we
are to believe the Treasury's daily report.
Roosa had several reform plans to offer, all of which would run up
154
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against the Fund's lack of gold, with its borrowers suffering from the
same malady. He even went so far as to suggest the approach to the
old Lord Keynes stuff which would do away with gold, dollars and
pounds sterling. This is what Yale "theorists" have been promoting for
the past five years. It's a WBOG (without benefit of gold) theory.
Leading foreign representatives in the Fund showed a tendency to go
along with this idea, but I gathered that they would be willing to for-
get the policy as soon as your Uncle Sam had been relieved of all his
gold. And you'd be surprised how little the word "gold" was mentioned
during the whole convention.
"Liquidity" appeared to be the word used most by the delegates,
but none of them reached the conclusion that it would take much more
gold than there is in the world today to get that liquidity, at the pres-
ent low gold price, or a faster How of international business. One U.S.
official suggested an enlargement of bilateral borrowing. Under suoh
a system Mr. Roosa reported he had defended the stability of the dollar.
What he meant whenever there was a foreign call for converting dollars
he borrowed foreign convertible currency with which to satisfy our
foreign creditor. He didn't say, but this is one of the tricks with which
of late he has been able to show no decline in Treasury gold. But he
will have to repay in dollars, all of which must be covered with gold.
This is just one of his temporary juggling transactions to keep the
Treasury gold balance looking good - at least until the 1964 election.
There was just one man in the whole wide world gathering who
did talk about gold,- Dr. T. E. Donges, Minister of Finance for South
Africa, the world's leader in gold production. Her output runs better
than $750,000,000 per year. As I stated above, until the final session
gold had been pointedly ignored or rudely brushed aside by represen-
tatives of all major powers. I did not see how they could get by with
it when it's the lack of gold that is now giving the finance officials of
all free nations their biggest headache. However, Dr. Donges did not
let them forget that, regardless of their jockeying around without gold,
the yellow metal will be the final master.
He gave notice that his nation considered a study of gold fundamen-
tal to any examination of the problem of international liquidity and an-
nounced that it proposed to put its views forward when the Fund un-
dertakes its liquidity study.
A revaluation of currencies in terms of gold is not, as has been said,
a "radical" proposal, Dr. Donges pointed out. On the contrary, he s ~ i d ,
it is essentially a conservative proposal, specifically envisaged by the
Fund's Articles of Agreement and, it is designed to give greater weight
to the traditional role of gold in international payments rather than to
experiment with new, untried and perhaps over-ambitious mechanisms.
There are three main forms in which international liquidity may be
increased. The first is through an increase, actual or potential, in the
supply of foreign exchange, i.e., dollars, sterling, and perhaps certain
other convertible currencies. The second is the creation of a new inter-
national currency, i.e., claims against some international monetary or-
ganization or "world central bank." The third is an increase in gold re-
serves through an upward revaluation of gold in terms of all curren-
cies. Only by revaluing gold, the South African minister maintained,
can we be really sure that the delicate structure of international financial
confidence will not be impaired.
The governors were reminded that the Fund's Articles of Agreement
make specific provision for a unifonn change in par values. Dr. Donges
recalled that at the formation of the Fund at Bretton Woods 20 years
ago the South African delegate made a comprehensive 'statement on this
section, pointing out that this approach was "the only one which of-
fered a hope for an orderly change of the relationship between gold and
currencies in the future:' There was no disagreement with this state-
155
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ment at that time although the U.S. representatives did say that such a
change should not be lightly made. This, Dr. Donges contends, shows
that the Bretton Woods conference did contemplate a change at the
appropriate time.
No doubt, Joe, you and Mr. Collins and many more Western gold
miners are very much interested in just when is that "appropriate
time." I was greatly put out that not one of the world monetary lead-
ers present supported Dr. Donges' statement although I considered it
the conclave's outstanding conclusion.
All the rest of the nations' finance ministers kept harking back to
the question of "liquidity," or how to make their money work without
gold. Our goldless hero, Mr. Douglas Dillon. will head one grou1?,
known as the "Paris Club" to make a study of "running the world s
finances sans gold. Dillon will lead the Club which, in its bargaining
sessions, will rule out as a solution any change in the price of gold or
the fixed rates at which currencies now exchange.
The Fund will have an additional study group to come up with
plans as to how best to operate without a gold price change. No time
was set for reports but I would hold it would be some time after more
of our gold is shifted to foreign nations. Also attention must be given
the election.
What gave me the most thought is why Secretary Dillon is forsak ..
ing the Fund and joining in with the Paris Club, even being its leader.
It is composed of only ten of the Fund's membership of 101 nations.
Of course France will be a leader in the Club. Dillon is continually
talking against devaluation when it is only a short time ago that France
devalued her franc - and howl Also. not over a year ago when De
Gaulle was stepping out, President Kennedy put out the idea that in
case France and Russia combined their dollar holdings they could clean
up on our gold available for foreign conversion. All in all I'm at a com-
plete loss to understand why U.S. is so bent on getting rid of her gold.
I hope this gives you a picture of what happened at the 1963 meet-
ing of the International Monetary Fund. I see no conclusion other than
the world's monetary centers need a little more time to grab the rest of
Uncle Sam's gold.
Let me know what's going on with you and Mr. Collins. Best re-
gards. Sincerely,
HAROLD.
A few days after Joe had cleaned up on his letter writing in his en-
deavor to get the answer to Harold's question as to why the United States
did not think it best to conserve her gold, he dropped in to see the Collins.
"You just missed him," greeted John. «He just left."
«Just missed whom?" puzzled Joe.
"Haven't you been expecting a visitor from the local office of the
Forest Service? The chief of the EI Dorado National Forest paid you a
call. I don't know why he came here but I guess his rangers have picked
up a report that we are 'partners in crime.' I had to tell him you were
making my camp your headquarters, so before long you will be having
a caller."
"Well, if that's the next step we had better get together on my defense
if it's all right with you." .
<'Nothing will please me better," responded John. HI know you have
156
a clear case; that is if your location notices were recorded before the
Forest Service made any deal with the land. Their only reason, as you
found out, for requesting a former locator to abandon his right was to
allow the Service to put a road across the claims. \Vhen the first locator
abandoned his claims that reopened them for mining entry. Up to the
time you located the government had given no notice of any type of with-
drawal. I am very much of the opinion that you are in the clear.
"What do you think will be their procedure?" asked Joe.
"They will treat you nice at first," said J obn. Be "glad to know you"
and all that, and ask you plenty questions. When they can't get what
they consider satisfactory answers then they will pull abandonment
papers on you. 1'd give out as little information as possible. The main
guy will have a witness and shorthander to take down every word you
say that will be used in case you have to go to court. I suggest you stay
here today so that we can frame up our defense."
"Will do," said Joe, "but first I want to drop down town for a chat
with Connie. If they knew you and I were associated no doubt they
have picked up the information that I know that newspaper gal. Also,
if I know how they use local newspapers they will be spreading plenty
on the <claim-jumper from New York.' 1 am glad 1 have already given
Connie the full story. 1 don't think they will be able to put anything
over on her. Any way, I'd better see her as soon as possible."
Joe called at the newspaper office just as Connie was about to leave
for lunch. "'Am 1 glad to see you, Joe boy," she exclaimed. "Got a lot
to tell you."
"'I thought you might have," answered Joe. "'I have just come from
seeing John Collins who had a report. Let's go down to the Bell Tower
for lunch. Maybe we can find a corner where we can talk."
«I think 1 have a better idea," suggested Connie. "I am pretty well
up on this week's paper. I'll ask the boss for an extra hour, then we can
go to my place where 1 can fix you up a lunch and we can do our talk-
ing without any interruption."
"That's very nice of you, Connie," said Joe. ~ ' I shouldn't put you to
so much trouble on a working day."
C'What do you mean, ctrouble'? When was being with you ctrouble'?
I'm surprised at you. I know you and Mr. Collins have been busy but
1 just don't see enough of you. So no more such talk."
"All right, Connie girl, I'll be good. That will be easy. You know I
would like to be with you all the time. You haven't any corner on that
idea, although perhaps I do get wound up in this mining business. When
I first thought about coming to California 1 didn't know it would take
hold of me as it has."
"'I'm glad it's only mining," laughingly exclaimed Connie .... If it was
some of these good looking EI Dorado girls, I'd be worrying. Let's go
home."
157
While Connie was preparing the lunch she told Joe that she, too, had
a visitor from the Forest Service office. I don't know why he'd pick on
me but I guess a little bird has been talking. Placerville isn't a big city,
and things get around. If they didn't I wouldn't be able to dig up usual
quota of small news. Any way, the gentleman was certainly looking for
information - and, he didn't get it; not from me any way."
"As far as you could tell, just what does he already know about me'?"
inquired Joe.
«He does know you have located and recorded three claims, and
when I asked him what's wrong with that, he clammed up. He wanted
information on every thing I knew but wasn't open for an interview. I
asked some more leading questions but did not get very far with the
man. I even pretended I was interested from a news standpoint for the
paper but all he would say was, "It will come out: From that I would
judge the Forest Service is planning quite a case. Those three claims of
yours must be good."
<eI'll say they are," responded Joe. «I can't talk as an expert but from
the little I do know, I'd have to go a long way in the Golden State to
find a deposit as wide and as rich. Its story has been in The Journal,
and I guess the Forest Service and the new leasers know full well about
it, although neither would have a good word to say about the method
by which it was discovered. Maybe they will know more about it before
this case is over. I guess they are going to give me the works. John
Collins is waiting for me now. As we are planning my defense I'd better
get back. That extra hour is up too. Time goes too fast when I'm with
vou. Thanks for the nice lunch and for the information about the G-man.
Joe demonstrated his thanks with a caress that Connie had been missing
for several days.

CHAPTER 33
Joe Prepares.For Battle With Bureaucracy
B
ack at the Collins home Joe reported what he had learned from Con-
nie. Both he and John concluded that the claims were important
enough in the eyes of the Government that it would make a real fight
to prove the locations invalid.
"Let's get our heads together," said John, "and before seeing an attor-
ney, plot out a defense. 1 have followed many of these cases in my time
and of late I have watched the growth of bureaucracy which now
threatens every claimholder in the West. In the field and in Washington
they are working overtime to put the claimholder out of business. The
claimholder is in their way of building the Bureau of Land Management
as one of the biggest businesses. And you know what I
think of the Government in business. I was certainly glad to see Barry
158
..

..
Goldwater come out for the sale of that big monstrous electric concern,
the TV A, to a private company. Our Government now runs seven hun-
dred types of businesses, when I don't think they could make a profit on
a peanut stand. They don't have to make profit when they can charge
their losses to the taxpayer.
"'You'd better throw up a red light, Joe. When I get started on that
subject there's no stopping me. We've got a job on our hands so we'd
better get at it."
nOK, John, I will start with a few questions for which I need an-
swers. 'What do you think will be the nrst move of the G-men?'"
''I'll bet a dollar to a doughnut that he will be out to your camp this
afternoon. That's all they have to do and he will stay on the job until he
catches up with you. He will be armed with a paper for you to sign which
would dispossess you of the claims. He won't find you there today but
you can look for him tomorrow.>7
"1 won't run away from him so will be looking for him tomorrow,"
said Joe. "So - what reason is he going to give me that would make me
think I should give up the claims," asked Joe.
"That's a good starter," answered John. "You know the bureaucrats
work that word, 'discovery' to death. The first thing the gent will tell
you is that you haven't made a 'discovery.' In his dictionary a discovery
means that there must be sufficient gold in your claims to cause a pru-
dent man to drop everything and put his time and money in on making
a mine of your claims. Did you ever think of just what would constitute
a 'prudent' man?"
"Yes, I think I know just the kind of an individual a 'prudent' man
would be," responded Joe. "He'd be one who had a job at some work,
financed by others. He'd be one that would look forward to receiving
his pay check days before it was due; and when he'd get it he would turn
it over to the wife who would have every cent of it budgeted. When
you really consider the bureaucrat's requirement for a 'discovery' it
makes you laugh, and heartily. Imagine, how much of that man's pay
check would the wife have budgeted for gold mining. And you mean to
tell me, John, that the Forest Service and the Bureau of Land Manage-
ment gets by with that interpretation of what constitutes a 'discovery'?
"And what's more," answered John, "the Washington bureaucrats
have our congressmen sold on that kind of stuff. It's true some Western
congressmen have promised reform 'measures, especially in defining what
constitutes a 'discovery.' Even if they did, the law would not control the
actions of field men who interpret the law to accomplish whatever they
want. They have a habit of dealing singly with claimholders, and when
they get 'em scared they put over any deal they want. This p r e p o n d e r ~
ance of power vested in the government's land bureaucracy is what's
causing the trouble. The intent of the laws passed by Congress may be
O.K., but they don't control the intent of the bureaucrats. There's no
getting around it, the Bureau of Land Management is bent on building
159
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up the most powerful land outfit in the world. It's worse than
ment ownerships of businesses. It's just what you, Joe, have to face if
the Forest Service takes you into court. And they will do it. They will
proceed with the idea they have a perfect case against you. So when
that gent from the FS catches up with you, watch your step. Tell him
nothing, but find out, if you can, what their procedure in court would be.
Do you think you are ready to meet him?"
Receiving assurance that Joe felt able to hold his own with any Forest
Service man John warned him to watch his step and to return with a
good report as soon as he had his session with the bureaucrat.
Two days later Joe was again at the Collins home, brim full of how
Bureauracy works. However, he told John Collins the Forest Service
man had given him a liberal education on what the FS intends to do
with mining on public lands. The G-man, he said, even indicated that
later even those claims that had been patented would, "upon proper ex-
amination" be turned back to the government. Following this statement
Joe launched into a full scale account of his brush with the Forester.
"He wanted to know all about me, where I came from, where I was
now living, what I had done before coming to California, and on ,vhose
authority I presumed to locate a mining claim. «I'm a citizen," I said.
Then he admitted that would make me eligible. But why locate those
certain three claims, he wanted to know especially when no discovery
has been made: 'How do you know a discovery hasn't been made/ I
questioned. He then wanted me to admit that on the surface there was
not even an indication of a gold mine. Here I told him that perhaps he
hadn't made a good examination, stating that government engineers had
been known to pass on claims without even going on them. That drew
his ire and he characterized my statement as 'hog-wash: I went right
back at him with the statement that just with an advertisement in a news-
paper that would never be read by the claimholders, entire blocks of
hundreds of claims are wiped out, the government never having an
gineer on any of them, yet they were declared 'non-mineral in character
with no discovery of valuable minerals being made.' Well, he hadn't seen
any of those advertisements. Then I pulled that one on him about the
Joshua Tree National Monument. You remember the law that was passed
eliminating 289,000 acres had a provision which called for a mineral
examination to determine if the remaining 500,000 acres could be classi-
fied as mineral. In complying with that section of the law two engineers
spent two days on foot examining the half million acres, turning it down
flat. They wrote their report from talks with the Park Service boys at
their Twenty-nine Palms headquarters. That's something more he didn't
know. I told him he should read up on these matters. He didn't like
that, saying he had plenty of reliable and authentic reading matter at his
command, especially 'right from Washington:
"You can see, John, he wasn't getting any real information from me,
so then he begin to threaten to 'take me into court'. He thought I would
scare. We can now note just what the Forest Service's contention will be.
eNo discovery of valuable mineral: They don't know we have the com-
160
plete geophysical report of the ground, made by Harold Ferrin of the
Ferrin Geophysical Exploration Co., which was followed by drilling."
Here Mr. Collins broke into the conversation. Forest Service
is going to object strenuously to geophysics being accepted as reliable
evidence of existing mineral."
"But," answered Joe, "Ferrin proves his geophysical report with drill-
ing. His drill brought up the gold ore from the depth indicated by his
report. The 'proof of the pudding' should convince the court and lick
the Forest Service."
"You are right there," responded Collins. "The law recognized geo-
physical reports as evidence of assessment work for at least two succeed-
ing assessment years, that is if done by an 'expert: That leaves the gate
open for the FS. Only they are
"When it comes to this 'expert' business," said Joe, "I believe any
court would judge by results rather than an assumed professional classi-
fication; don't you?"
"I'll go· along with you on that," agreed Collins, "but now let's get on
with what arrangements we will have to make for a trial. r sure the
Forest Service will go the limit with you. We've got to come to conclu-
sions as to whether or not we want a jury trial. They cost money and
might be dangerous. Since gold has slipped as a local industry, due to
Communists having too much say in Washington, a lot of local residents
think gold miners are just in the way. The Forest Service has seen to it
that that idea has gained ground. That high-powered Sierra Club from
its headquarters in San Francisco has promoted the same idea, advocat-
ing the Wilderness Bill. No doubt you have noted that a majority of our
residents have been brainwashed with the same idea. You might get a
bunch of pensioners on a jury whose gold is their monthly Treasury
check. And believe me, the FS attorney would see that no friends of gold
mining were on that jury. So, 1 would advise you to forget about a jury
trial. We have a Superior Judge in this county who would give you a
fair decision."
Joe accepted Mr. Collins' suggestion with: that we have to do
now will be to wait until the Big Hawk lights. No doubt he will be out
to the camp soon with his papers."
"Well, keep me in touch," said John. "As soon as he makes his next
move, come in and report."
Joe was getting off a late report to Harold when his expected caller
showed up. He came with a demand that Joe cancel his location notices.
It was all prepared in an official-looking document. All that Joe had to
do was to sign. "What will happen if I don't sign it?" asked Joe.
"That will be for you to find out," angrily replied the FS man.
"You can't peddle that paper here," responded Joe. you might as
well be on your way."
161
The next day at the Collins home Joe reported. "What do you think
will happen next?" he inquired.
"Several things," answered Collins. "They might file a trespassing
charge against you or bring you into a Bureau of Land Management
hearing and make you show cause why you shouldn't give up the claims.
In that case the big brass will be up from Sacramento but that shouldn't
scare you.
"But I've got a hunch, Joe. I think we should go out to the claims for
a check-up. I am suspicious."
"0£ what," queried Joe.
"Well, a gent who used to be in charge of a National Forest was ac-
cused of having claim boundaries destroyed. The accusation was made
by the boys he hired to do the job. They ",'ere to tear down the location
notices and kick over the monuments and boundary marks. So I think
it would be a good idea to do a little checking.
The next day John and Joe visited the claims. The former's suspicions
proved to be correct. All evidences of the locations had been destroyed.
"Got to get busy and do all the location work again," said John. "You
will need three more notices, properly made out, for posting on the
ground and your corners re-established with monuments. If you don't
mind I'll help you tomorrow. I'll bring out the new notices. I'm not
going to let those guys beat you with such a low-livered trick." And so
the three claims were again made legal.
Several days later Joe received a registered mail notice to appear at
the local office of the Forest Service and answer to a charge of. illegally
holding U.S. government land. The hearing was set for one week after
the date of the summons. This called for another get-together of the
"partners in crime:' Joe and his best friend, John Collins. Their plan of
action was pretty well agreed upon. Collins decided to sit in with Joe
at the hearing and Joe called at Connie's office to see if the newspaper
had any news on the event. There was none, both Joe and John con-
cluding that the lack of advance news might be an indication that the
bureaucrats weren't so sure of winning their case. Anyway they bolstered
their confidence with that idea .

CHAPTER 34
Joe Faces the Bureaucrats and Wins
T
he day of the hearing came, opening at 10 a. m. Judging from the
array of government boys Joe didn't have a chance. However, num-
bers didn't scare him; he felt confident. Judging from the brass in attend-
ance, Collins silently came to his conclusion that the government had
162
42
much at stake in the case. There was the chief of the Sacramento office
and two legal aides, also two officials from the San Francisco office. The
El Dorado chief opened the hearing, stating the charge. He first deter-
mined that Joseph A. Bacon, charged with illegally occupying U.S. Gov-
ernment land, was present, which Joe admitted. Upon questioning, he
further admitted locating and recording the three legally described claims
in question. Here a forest man cut in with: "Do you know how to locate
a claim?"
"I think 1 do," quietly responded Joe. "I followed the law very care-
fully, beside I had expert advice from an experienced miner."
The FS man came back with: "Your kind of locating doesn't show
that. You omitted entirely to post your notice on each claim; neither did
you put up your monuments to outline the boundaries of the. claims."
Then addressing the government men present he said: "I find the claims
invalid due to the fact that they were not marked or properly posted."
"I beg to differ with you," responded Joe. "The claims are properly
staked and posted. And before this group declares them invalid on the
grounds you propose, I demand they be inspected by your officials."
Joe's apparent assurance threw the Foresters off their well-oiled track.
Following a conference among themselves it was announced that it was
now so close to lunch time that the session adjourn, to reassemble on
the claims at 3:00 p.m. Joe agreed.
As Joe and Collins were leaving the FS office the latter remarked,
"Well so far doing all right, but I'm still suspicious. It's yet an
hour before lunch. We could have got to the claims in less than an hour
and if they had to have lunch we could have made it at Pollock Pines.
In the next four hours those claims could be again Let's
forget about lunch and get out to the ground immediately."
"John, you ARE suspicious," said Joe. We pay those boys good sal-
aries and they should perform their work honestly. I could never get
used to that kind of business."
"You still have something to learn about the government land grab-
bers," responded Collins. "They never will let up until they have all our
land, and they don't care how they get it. Their chiefs in Washington
put out press releases about what wonderful jobs their departments are
doing 'for the people: and at the same time close their eyes to methods
used by their field men. So let's guard those claims until three 0' clockl.
We can get there before any of their claim destroyers make it."
"O.K., I'm with you," said Joe. "Let's go. We'd better warn Mrs.
Collins though. They did, and the good lady hurriedly packed a lunch.
They arrived at the claims by noon and after lunch inspected the
posting and monuments which were found in good order. About 1
o'clock, a man carrying a gun, showed up. He could have been a hunter.
However, Joe and John engaged him in conversation and stayed .with
him until he decided that if he was going to get a deer before nightfall
163
-
he'd better be on his way. He was carefully watched until he passed
the claims and disappeared. "We are now ready for the next act of the
show," laughed Joe.
Promptly at 3 o'clock the government party showed up. The claims
were thoroughly inspected and found "not wanting." "Something is
wrong," said the El Dorado Chief. "One of our best rangers just a week
ago was on the ground and brought in the report that the claims were
not marked or posted. This hearing will be resumed at the Forest Service
office at 10 a.m. tomorrow."
The government party returned to Placerville, trying to figure out
why their plans went awry. However, they were not ready to give up.
After a "closed-door" session at the FS office they spent the night at the
city's best hotel and went into the hearing the next day with what they
thought was an iron-clad program. The hearing officer opened with:
"We request the clerk to enter on the minutes this statement: 'The three
claims in question are properly posted'." He then introduced one of the
legal lights who took over.
He opened with: "Mr. Bacon, the government finds that you have
nothing to support your claim of a You should be fully aware
that it takes a 'discovery' in order to make a claim valid. Do you know
what it takes to constitute a lawful 'discovery'?
'1 think I do," answered Joe. "Perhaps you can further enlighten me."
And that's what the attorney proceeded to do, launching into a
lengthy discourse of the 'Prudent Man' court decision.
"I am fully aware of the improper use of that decision by your or-
ganization," countered Joe. "It isn't law, only being a political decision
to accomplish an illegal take-over of land orginally intended for private
development. The U.S. Bureau of Mines is yearly granted a big appro-
priation to be spent in urging private operation of mines, with your or-
ganization hampering their work with your 'prudent man' policy. Do you
realize how much private mine operation there would be if done only
by 'prudent' men?"·
"Weare not here to listen to your opinion of Forest Service opera-
tion," angrily stated the hearing officer. "You haven't made a legal dis-
covery on those three claims and the government is herewith demanding
that you relinquish any right you think you have to them. We can't have
you clouding the title."
"Does the location of mining claims on public land cloud the title?"
question Joe.
The answer: "It does when the government has other use for the
land."
"And, if I may ask, just what use do you have for these highly mineral-
ized claims? What notice did the Forest Service give in the Federal
Register of any withdrawal of the land constituting my three claims?">'1:;
164

Joe's questions stopped the conduct of the hearing for a few minutes
while the hearing officer and his legal aides got together. The officer
concluded the conference with the announcement that the hearing would
be continued at 2:00 p.m. that afternoon.
"Looks like you're going great guns, Joe," said Mr. Collins as they
proceeded to John's home for a round-up. "You should have been a
public lands attorney. If I'm not mistaken you have those bureaucrats
stymied and as yet you haven't really opened up on them. I don't see
anything they can do about it till two o'clock except eat their lunch. I'm
really enjoying the hearing. I'm quite proud of you."
At two o'clock the hearing was reopened. The hearing officer intro-
duced one of the attorneys who announced that the hearing would have
to be concluded that afternnon. He then made the charge that Joe had
located the three claims properly but had failed to make a legal dis-
covery. He pointed to the fact that at no place on the surface was there
the least bit of evidence of the occurrence of mineral. He ended his talk
with: "I see no other stand for the duly qualified officers in this hearing
to take other than to <declare the claims in question as non-mineral and
therefore invalid'."
Here Joe concluded it was time to play his "hole card." Digging into
his brief case he came out with a Ferrin geophysical report on the three
claims, backed by drill holes. The assayed cores taken from the hole
showed the land to be some of the Mother Lode's richest in gold. The
drill hole cut the gold bearing area on a slant at a depth of 200 feet.
Here the vein was 8 feet wide, an over-all average running $21.90 per
ton. The center 5 feet was much richer. Then the hole cut through 20
feet of black slate, all of which was broken and containing gold. At this
point the drill entered a parallel quartz vein, 10 feet wide, that assayed
$34.80. Joining this was a 7 foot vein of silicified schist, assaying $8.40.
"If this doesn't constitute a <discovery,' then I would say there is no gold
in California," concluded Joe.
This proven display of riches, however, didn't stop the hearing offi-
cials. They were determined to hold the claims as devoid of a "discov-
ery." "Our government doesn't recognize geophysics," announced the
hearing officer.
"Even though the geophysical report located the gold bearing ground,
I don't ask you to recognize geophysics as a sure-shot method of locating
mineral, but you can't turn down the assays from the drill hole," said
Joe. «Your U.S. Bureau of Mines will tell you that."
«The U.S. Forest Service has never based its decisions on such deals
and does not intend to do so in this case," said a FS attorney.
«I beg to disagree with you," answered Joe. «You surely know about
the recent Shannon case at Alleghany, Sierra County. Let me review it
for you. For over 16 years the Forest Service held out against the late
Thomas J. P. Shannon of Redlands, California for a patent on his four
claims. Shannon procured the services of the Ferrin Geophysical Explo-
165
ration Co., the same firm that did the work on my claims. There was no
outcrop on the Shannon claims. Ferrin's instrument located a heavy
showing of gold are under 45 feet of overburden. The drill was sent
down to get the samples which were turned over to an engineer of your
Sacramento office. He made his own assays that ran to $266.00 per ton
in gold. On that showing you approved the granting of a patent. I have
a deposit of gold ore 46 feet wide assaying from $8.40 to $34.80. That's
enough are for ten mines; you can't turn down those claims. If you did
you would be the laughing stock of the mineral world."
That last statement of Joe's appeared to take all the wind out of the
sails of the bureaucrats. None of the officials were ready to carry pro-
ceedings any further, the examiner quietly announcing the close of the
hearing.
As Joe and Mr. Collins left the Forest Service building the former ap-
peared puzzled. "Why," he said, «the outfit never rendered any decision."
"They didn't have to," responded John. "When they couldn't prove
the claims 'invalid' they were through - all washed up. They were so
taken aback that they did not feel like telling you the claims were yours.
Anyway, they didn't have to; they didn't meet for that purpose. They
had other fish to fry. I'm glad that fish didn't prove to be you."
"But what I'm thinking about now is the presence of two men who in
no way were connected with the hearing. If I don't miss my guess they
are mining men. I smell a rat. I'll make you a bet they are with the
company that has the mine. They want and need your claims. They have
come to the same conclusion you reached last spring. Your claims, tied
to the mine, will make the Mother Lode's richest property. In a few
days you will have some callers. They will be seeing you about a deal,
so name your price.

CHAPTER 35
Prospector Joe Makes A Real Deal
T
hat evening Mr. and Mrs. Collins and Joe and Connie celebrated with
a dinner at the Blue Bell Cafe. John assured Joe that he had won
his case against heavy odds, mainly because most claim holders didn't
know their rights. Ninety-nine out of a hundred were not brave enough
to face the bureaucrats. They always backed down when faced by a
government man parading a lot of authOrity. And if they didn't know
mining law they were licked before they got started. "This condition,"
added Collins, "has made the G-boys overbearing. They forget they are
working for us, the taxpayers. However, Joe, you were well prepared
and you took the enemy into camp. I must congratulate you."
"You are the one to be congratulated," said Joe. "In less than a year
you surely have taught me a lot about mining and mining law, and don't
166
...
think I don't appreciate -it. If I had gone to college instead of learning
to peddle news I might now have become a mining lawyer, and saved
the bacon of a lot of claim holders who have had to surrender their
properties. ,.
"You're doing all right, Joe," responded John. "Just watch your step
when tllOge two mining men come to see you. They know what your
three claims are worth."
"I'll need some more lessons from you, John. Will drop around to-
morrow and learn how to deal with big shot mining men."
"Will be looking for you," assured Mr. Collins. "And don't let us
spoil your evening. Take us old folks home and then you and Connie
can have the whole evening to yourselves. And don't waste it all talking
about newspapers."
Joe and Connie got a real kick out of Mr. Collins. "He's a real nice
man and we'll take his advice about not talking newspaper," said Connie.
"If I'm not mistaken we have much nicer matters to talk about. What
are your plans when you get that fifty thousand?"
"You mean 'our' plans, don't you?" quickly responded Joe. "We are
full-Hedged partners, you know. But I still have one more battle. The
only firm who can use my claims is out to get them. As John says, they
will be around to see me soon. So wish me luck. While I'm going to ask
$50,000 I can't expect mqre than 10 per cent down."
"That's a nice piece of money," said Connie. "Can we get started on
that?"
. "We can if you are willing," answered Joe. "It isn't a great deal to
launch out into married life, but I'm sure we can make it."
"I'm sure of it, too," said Connie. "Anyway I'd marry you if you didn't
have a cent. Love would find a way, you know." And so Joe and Connie
were ready for their next adventure.
Two days later the mining company representatives hunted up Joe.
To his inquiry they told Joe the Forest Service had told them where he
could be located. "We had hoped," they admitted, "to make a deal with
the Service but you beat them to it. They had made no withdrawal of
the claims so that they would have been in a position to make a deal
with our company. Although they did not tell you following the hear-
ings your claims are good, with no assessment work due on them until
September, 1964. So we are not going to fool around with you. We are
ready to make a deal with you right now. What's your price?"
Joe didn't expect such rapid action. He was taken by surprise. He
wanted to do some more talking. "I wonder if you h ~ v e any estimate
on the amount of ore in those claims?" questioned Joe.
"We don't know any more about it than you do," answered the spokes-
man. "But a block of gold are 46 feet wide is practically unheard of.
Tie it up with our mine and I think we'll have a real property that will
167
do well even if Washington doesn't get off the spot and raise the price
of gold. If you will deal with us we plan to get Ferrin back here with
his instrument to check the whole property. We have watched all his
work here and in Arizona, Nevada and Oregon. We are satisfied he
knows what he is doing. So let's get going. What's the best price you
can make us on your three claims?"
~ 1 didn't expect to get a deal this soon on the ground,77 admitted Joe.
"I just haven't got used to feeling that they are mine as yet. I wanted
to study the matter of a deal; inquire around some."
"We think you realize it would be too costly for you to operate it
yourself and that our mine and plant is so located that it would be worth
more to us than to any other company."
"Yes, I have a rough underground map of your property which
shows that all you would have to do would be to continue one of your
drifts to enter my 46 feet of are:' replied Joe. "Since I noted you were
at the Forest Service hearing I presumed you had plans for the claims
and I have been giving the matter of the value of the ground consider-
able thought. How would $50,000 strike you?"
"'Well, that's a lot of money, even in these days of inflation, but we
don't think you are too far out of line. If you wouldn't ask too much down
I think we can do business. Would you go for $10,000 down?"
Joe was surprised but he did his best not to show it. It was his first
mine deal. Without too much ado he agreed to go on with the deal and
arranged to be in the mining office the next day at 10 o'clock. He then
drove to Placerville to tell John and Connie the good news. Connie sent
him back to camp early that evening so he'd be at his best to complete
the deal.
The deal went over smoothly, Joe assuring the manager that his com-
pany was an excellent one to do business with. Of course the conversa-
tion drifted to the price of gold. The manager told of the work the com-
pany secretary had been carrying on with different Congressmen thought
to be friendly with domestic gold mining. Joe told of his efforts along
the same line, stating that, judging from results, the American gold miner
doesn't have many friends in Washington. He then proceeded to tell of
his experience to date in trying to interest the administration in not only
preserving a prime domestic industry but also adding gold to the nation's
fast diminishing reserve. He said:
"From the President down and from the newest Congressman up, all
are apparently tied to the movement of our gold into foreign hands, with
the International Monetary Fund and its One-World Bank in the offing
handling U nele Sam's gold as it arrives in Europe converting foreign held
dollars. The Administration, Treasury Secretary Dillon and the Federal
Reserve Board chairman, Mr. Martin, keep insisting that a raise in the
price of Treasury gold would be bad for our economy. They refuse to
note the improvement in Canadian finances when their dollar was de-
valued from $1.06 to 92 cents. They won't admit when it now takes three
168

dollars here in the U.S.A. to do the work of one that \ve already have our
devaluation.
«When that bird from Texas, Wright Patman, became chairman of the
House Banking & Currency Committee we thought we'd have a friend.
He used to stand on the Roor of the House and tear the Federal Reserve
Bank apart. He even accused it of distributing $15,000,000,000 of our
bonds (that could have been cancelled) to its 14,000 member banks. He
introduced a bill in the House to head off the distribution but received
only 60 votes out of 437 in favor of passage. You would think he, of all
Congressmen, would be aware of what the 'money changers' are doing
to us. But he won't make a move to preserve the foundation of the U.S.
dollar. He even promised Reserve Board Chairman Martin he would not
bring up any controversial matters affecting the Board's program - when
everything now being done with our gold and money is highly contro-
versial. He's a complete washout.
«Then I had the notion that Senator Harry F. Byrd, chairman of the
Senate Finance Committee, for years designated the 'watchdog of the
Treasury' might do us some good. I wrote him mainly on the drain of
our gold supply. He wrote me a friendly letter of thanks and then stuffed
his envelope with a printed and lengthy blast of the Federal Reserve
Board's plans in regard to gold. As far as the Board is concerned we have
nothing to expect from them but a complete compliance with the Bretton
Woods Agreement until our last gold dollar is gone.
«Next I noted that Sen. Mike Mansfield of Montana, Democrat Senate
leader, and close friend of the President, made a speech out in Arizona,
urging $65 to $70 for gold. I wrote him asking why not that speech on
the floor of the Senate. There was no answer to that letter. No doubt
the play was to wean the votes of Arizona away from Barry Goldwater.
You can mark the senator from Montana as far from being a friend of the
American gold miner.
«I also noted the activity of Rep. Thomas B. Curtis, Republican of
in regard to our national finances. 1 wrote him. He proved to
be against the proper stability of OUf dollar, and all for the administration
plan of shifting our gold to foreign shores. I was about to give up when
I thought of Sen. Alan Bible of that fine mining state of Nevada. Here
1 thought I'd get some help. But he, too, is sold on a complete drain of
all our gold, writing it would be better to base our monster national debt
and the ravages of politically induced inflation on our property and sav
ings. If that isn't the plan of our Supreme Court protected Communists,
I'll eat my hat! Boy, was I mad when I received that letter! It made
me ask: 'Where are we headed?"7
«1 can tell you where we are headed," said the mine manager. HAnd
I certainly want to compliment you on the wonderful job you have done
stirring up those foreign loving officials in Washington. Their only excuse
is that they are doing it to stop world Communism which, to my notion
is the best aid the commies have. In fact, it is THE Communist plot to
weaken our nation and drag us down to the level of the lowest. I didn't
169
know that there was anybody out here in the Western gold field that had
such clear ideas of just what was going on in Washington, D.C.
"I have another deal for you. Our secretary, with his other numerous
duties has been trying to carryon the same thing you have so successfully
done with Washington. We must now completely equip the mine. It
will be a full time job for our secretary. How would you like to come
into the company as assistant secretary? I understand you have been a
newspaper man in New York. We will have need for such an employee
on our staff. At first we can't go too heavy on salary, but how would
$125 per week do?"
This was another complete surprise for Joe. It was so unexpected. He
lost no time in accepting but then caught himself up sharply. "It sounds
fine but I will have to accept with some reservation." He told them that
his original intention in coming to Californa was to do some mining of
his own. He'd like to accept the job with that understanding. Further,
he was planning on getting married. He and the girl hadn't set the date
as yet but he'd like to get at least two weeks off when the event occurs.
"I think we can take care of your ," said the manager.
"And I want to be the first to offer congratulations. As far as going into
mining yourself, underground mining costs a lot of money. Right now
unless you know just what you are doing, all about the potential of your
property, also your ability to handle the labor situation, most operators
would be out of luck. Anyway, I think you will want to watch the de-
velopment of your three claims and being in our office would be your
best opportunity. Then as we get into operation I'm sure we can offer
you a better salary. We are a new company with three of the best gold
mines in California and there will always be room at the top in our or-
ganization."
The entire deal sounded good to Joe and he accepted without any
further ado. Going back to Placerville with a new job and a $10,000
check in his pocket he felt he had plenty of good news to divulge to
Connie and Mr. and Nlrs. Collins. He felt it was the happiest day of his
life, now being able to tell Connie they could go ahead with their plans
to be married. He also felt that forever he could forget a feeling that
his leaving New York and his newspaper job had been a mistake. He
could not wait till closing time. He rushed into Connie's office and put
down his big check with the statement, "I want to pay my subscription:'
Although startled, Connie looked at the check saying, "That will pay
you up for 2,500 years. Do you want to make it that long?"
"rn make it forever if you go with it," said Joe. "Can you make it off
for the rest of the day?" And so preparations for their life together began.
Connie agreed that she could be ready in another month, although
Joe said he only needed a day. Where would they live? Joe was due to
work for the mining company at once. In the month's time both could
get off for a two weeks' honeymoon. Upon their return, Connie could
stay on her job temporarily while Joe commuted to the mine office daily.
170
...
Connie's apartment would he nice for the love birds for a short time till
a larger home was available. If Connie could get away from her job at
that time that would suit Joe. "However," he said, "if you can't quit
then or want to stay on a while it will be all right with me. We have our
whole lifetime to plan and I don't know of anybody I'd rather do that
with than you."
That night Joe though he could stand a telephone call to Washington.
He called Harold and gave him the good news. Almost thunder-struck
Harold exclaimed: "Boy you are a fast worker. You haven't been in Cali-
fornia a year yet; you have made a $50,000 mine deal; have a good job
and are getting married. I hardly realize it's all possible."
"Well, it is, and I want you and Evelyn to be at the wedding," an-
swered Joe. It will be in about a month from now. We'll know the exact
date soon and I will let you know. Anyway, I want you to look over the
deal here. You might be interested yourself. When you make your ar-
rangements with Congressman Ben give the old hound my best. How
about it?"
"We will do our best and will let you know soon," answered Harold.
"You're a lucky dog. If I thought I could do half as well I'd stay in
California myself. How come you have been so shy about letting us
know about the girl. Evelyn wants to know all about her in your next
letter, and right away."
"Will write full particulars in the morning," promised Joe.
On the following morning Joe went to work after a delightful week-
end with his bride-to-be; And they did not forget their best friends, Mr.
and ~ 1 r s . Collins.
As assistant secretary of the mining company his first move was to
get an idea from his immediate boss, the secretary, in regard to what was
expected of him, especially in the line of public relations. He wanted
to know just what the company's poltical policies were and how far the
secretary had gone in contacting Washington in reference to gold. After
an hour's talk the secretary concluded with: "You and I hit right down
the same alley. I would approve everything you have done in your re-
search. I think our government is entirely on the wrong track in not tak-
ing definite steps to really stop the flow of gold from this country. More
than ever the United States needs that gold. I can see a dismal future
for the taxpayer if he is to be forced to put up his property and savings
to guarantee the high-handed spending that has characterized several of
the past administrations and especially the present one.
"I don't see any national future for America with our gold in the
hands of an international group of bankers. I hold with your idea that
forCing us to give up our gold will eventually put us on the level of the
poorer nations. And I recognize this as just what it started out to be-
a Communist plot. Why our leaders in Congress fail to recognize this
fact has been a mystery to me for many moons. I agree with you one
hundred percent. Carryon."
171 ~ _____________ ~ _________ ~ ~ _____ ~ ~ c __ ~ ~ _ ~ ~ _____ ~ __________ - __ _
Joe was happy that he and his boss clicked. He wanted to sound him
out on just one more thing. "Who, in your opinion should we back in
the 1964 presidential race?"
'1 don't think we will disagree on that point either. We don't look
to President Johnson for any help. The late JFK gummed up the admin-
istration when he had to accept the Wall Street banker, Mr. Dillon, for
his Treasury Secretary. He could have kept control of the whole mone-
tary and economic situation by naming his own Treasury Secretary. You
remember it was Ike who urged the appointment of Dillon. Under Ike
the imbalance of payments were hitting us just as hard as they were
under Kennedy. During Ike's last two years it ran over $7 billion. There
wasn't a word said about this until Kennedy was elected. And then both
Ike and Nixon started talking about the gold drain. If we want to do
something for gold mining I'd quit listening to anything Ike has to say
and I'd eliminate 'He's My Boy, Nixon' as a presidential possibility. We
know his record on gold.
«And l\1r. Rockefeller is a strong supporter of the policy of tieing us
up to the International Monetary Fund and its One-World bank. I don't
mind paying taxes to my own government but I draw the line at sup-
porting a foreign dominated international government. They can call
me an 'isolationist' if they want to but I would say I'm a 'Nationalist.'
'Foreign entanglements' are far more dangerous now than they were
when Washington left the White House. However, it's going to take some
time yet before a lot of Americans realize it. We have a real campaign
of education on our hands. We even must run the gauntlet of being
called 'extremists' to do the job."
«I'm certainly glad to hear you talk that way," said Joe. "Will you go
along with me in supporting Sen. Barry Coldwater for the presidency?"
«I sure will. He's the only man in the Senate who has come out with
a real gold cure - a world free market. If, when we start producing gold,
we can sell it any place in the world we will be on the right track. Just
think of the value our government has sacrificed in letting our treasury
gold go to foreigners for the lowly price of $35.00."
With that leading question settled Joe went happily to work at his
new job.

CHAPTER 36
U. S. Igolo,res It's Gold Wealth
E
ach morning before starting to work the mine secretary and his assist-
ant Joe, conferred on matters concerning gold and the nation's mone-
tary matters. One morning Joe touched on a recent report of the 1962
gold production of South Africa, which ran to 25,506,144 ounces, worth
172
1

$889,000,000. "That's getting close to a billion dollars," remarked Joe.
"Just think how much that would mean to us in business, new wealth,
employment and development. Give that amount of gold the real world
price and Washington could quit worrying about the gold drain."
"And an ounce of gold," said the secretary, "isn't like a basket of
peaches. The peaches are consumed, representing value for a short time
only. The gold is indestructible and if not hoarded enters into and re-
mains in business channels. I just can't understand the attitude of our
government servants, from the President down, ignoring gold and the
wealth and power it can represent if used properly. I would say that
present treatment isn't far from treason. Bring that out in the letters you
send out today."
"Will do," responded Joe. "Thanks for the tip."
Another morning the conversation got on the subject of what would
happen to living costs and our savings if Washington finally made up its
mind to give Treasury gold its real present value. "A lot of folks have
been misled on that subject," said the secretary. "Those who want to
corner our taxpayers' gold have brainwashed the public into believing
that in case the price of gold would be doubled the value of their dol-
lars in the bank would be cut in half and their cost of living would be
doubled. I just checked a back issue of the Northern Miner, Toronto,
Canada. It covers that subject in answering a question from a BuHalo,
N. Y. subscriber. It handles the matter in a way that any school boy
could understand. Here it is:
Some reader of this item may think
we are biased because of our mining c{)n-
nection. It would be better if we re-
peated what a highly reputable American
publication, Business Week, has said:
"A man with money - in the bank or
in cash - would still have the same num-
ber of dollars. Remember that the change
would be only in terms of gold. Debts
would not be altered. Payments on a
house would be no larger. A savings
bond would be worth the same number
of dollars as before.
"Insurance policies would continue to
carry the same face amount.
«There would be no automatic effect
on the value of your house or other prop-
erty. Of course, the question of inflation
would arise. If devaluation were to set
off widespread fears of inflation, causing
people to run from the dollar and into
goods or property, then there could be
some rise in prices. That, however, is
not something that would happen over-
night ..
"So far as stock prices are concerned,
the initial reaction could be deflation-
not a price rise, but a decline. Devalua-
tion might be taken as a signal of dollar
weakness, causing a jolt in the market.
«Foreign owners of dollars might run
from dollars into gold, and take their
g o l d ~ back home. Abroad, 'some of this
gold could go into private hoarding.
That is not prevented everywhere as it
is in the United States. The result could
be actually to cut down on the base for
U.S. credit and money supply.
"Thus there could be a sharp initial
decline in stock prices. Later, if infla-
tion were to take hold, there would be a
rise in the market, but whether this came
about would depend on many factors be-
sides devaluation.
"Nobody could know in advance what
would happen to the cost of living or the
general price level.
"The devaluation of 1934 had little
effect on prices then or for some years
afterward. At that time, the White
House announced almost daily changes
in the price of gold. The idea was that
prices of farm products and other things
would rise along with gold pricef'. Noth-
ing of the sort happened, much to the
surprise of President Roosevelt and the
authors of the devaluation program."
173
"In other words," said Joe, "our dollar will be the same old dollar
when devaluation comes. John Collins takes the Northern Miner. I won-
der if he missed that,"
"'By the way," questioned the secretary, "what's Collins planning on
doing with his mine?"
"'I have the promise of a lease on it when conditions are right," an-
swered Joe.
The secretary took that in rather knowingly and from that time Joe's
status with the management was on the rise.
A few days later the secretary approached Joe on the advisability of
extending encouragement to Sen. Barry Goldwater with a special letter
thanking him for an outstanding talk at Pittsburgh, Pa., especially aimed
at the administration for its lack of encouragement to domestic industry.
He handed Joe a dispatch, the contents of which marked the Arizona
senator as the national leader now needed in the White House. It read:
PITTSBURGH - Sen. Barry Gold-
water (R-Ariz.) said the monstrosity of
government spending and taxing is sap-
ping U.S. economic vitality and costing
millions of jobs.
The Arizonan called for a long-range
federal spending blueprint, coupled with
"evidence that those shaping our policies
have some understanding of the dyna-
mics of economic welfare and progress
in this free society."
"A free economy cannot flourish un-
der the shadow of a sword clasped by
a heavy-handed government, ready to
slice off incentives to work, to invest and
to earn," Goldwater said in a speech to
the Harvard Business School Association.
Lost in Limbo
The conservative lawmaker, a top
prospect for next year's Republican Presi-
dential nomination, said the U.S. econ-
omy should be creating at least 1.25 mil-
lion new jobs every year to keep a grow-
ing labor force at work.
Goldwater said «millions of new jobs
are, simply and sadly, lost in the limbo
of investments not made, risks not taken,
enterprise not dared - because of the lack
of confidence that becomes a reflex as an
ecenomy is regimented and regulated."
Goldwater said economic trouble will
continue "so long as political leaders re-
main fearful of plain talk about what
this fiscal and tax monstrosity is dOing
to the vitality of our economy."
He said the federal government «must
have clearly stated effective procedures
for developing and adhering to a longer
range expenditure policy."
No Perception
"We cannot continue on a shortsighted
course of having the budget preempt a
rapidly growing proportion of our na-
tional income," Goldwater said. "That
is, however. precisely what will happen
so long as we wobble from one budget
to another with no clear perception of
where we ought to be going."
He said the tax structure is acting like
a ball and chain, and the President's
proposals for tax reduction and revision
- now before the Senate Finance Com-
mittee - «do pathetically little to correct
this."
Goldwater said he views the key prin-
ciples of the U.S. economic system this
way:
«First, every man should be free to
make his contribution to the production
stream where his talents fit best. What
he receives should be determined by his
performance, measured impersonally in
the market place. . . .
"Second, every person ought to be free
to try out any idea for a new product or
new method. , . , He should reap the
reward if the idea survives the imper-
sonal test of the market place, and he
should take the losses if the new idea
cannot survive this test.
«Third, these rewards tend to be tem-
porary because of competition. . . . Thus
the fruits of new ideas have been trans-
mitted widely and quickly throughout
the economy,"
Goldwater said when the system goes
awry, its troubles are only "miscarriages
of a system with a powerful capacity to
174
generate economic progress." step in.
But he said there has been «an insist- He said no part of the government has
any right to force its policies upon un-
ent attempt ... in recent decades to willing persons, businesses or industries
turn our national philosophy around by except ... when Congress passes legis-
180 degrees" by having the government lation to that effect."
~ ' I agree with you," said Joe. Barry has wrapped up a lot of our trou-
bles in that talk. If the American people can't see where the New Fron-
tierites are taking them it's just too bad."
~ ' Y e s , but a lot of those people have their feet 'in the trough.' Don't
forget that those big businessmen who compose Dan Smoot's 'Invisible
Government' are reaping most of the benefits of Foreign Aid. They want
a tax cut but don't want to help pay part of the tax cut by having the
budget reduced. The game must go on. They are the ones who will be
behind the scenes at the San Francisco convention plugging for -some
candidate other than our friend, Barry. Boy! have we got a job on our
hands I What Al Smith said long ago still goes: 'Who wants to kill Santa
Cl
?' "
aus.
The next day Joe hit the office with another dispatch, this one from
Washington, D.C. And he was angry. «Just think, only about two months
ago I tried to sound out Sen. Harry F. Byrd on our gold loss when all
he would send me was a printed report from Treasury Secretary Dillon's
office on what steps had been taken to keep foreigners from getting our
gold. Now the senator, who prides himself on being called the 'watch-
dog of the treasury,' comes out with the statement he is getting lots of
mail on our 'fiscal situation and especially our loss of gold'."
"Well, what are you mad about? I'd say you are getting results.
Let me see the dispatch. It read:
BYRD SEES U. S. DEBT AS ELECTION YEAR ISSUE
Adamant Senate Finance Chairman Won't Hurry Tax Cut
Warns of Deficit Budget, Cites Gold Loss
WASHINGTON - The people are wor-
ried about national solvency and may
register their opposition to the Adminis-
tration's spending in next year's election,
Sen. Harry F. Byrd (D-Va.) predicts.
Byrd Heads Finance
Bryd, who heads the Senate Finance
Committee, said in an interview there is
more concern about the mounting na-
tional debt than he has encountered at
any time in his 30 years in the Senate.
His committee takes up next week a
House-passed bill to extend the $315
billion debt limit.
"I think the people generally are
awakening to the fact that after having
deficits for most of 30 years we've gone
about as far as we could go in adding
to the debt," Byrd said.
Gold Loss Cited
«Judging by the mail I get and other
evidences, there's more concern about our
fiscal situation, especially our loss of our
gold, than in any other period that I've
seen in the Senate.
"We've lost two-thirds of our free gold
because of our unfavorable balance of
international payments. If we lost all of
the free gold because other countries
elect to take gold instead of dollars, the
dollar would plunk down like you throw
a rock off a precipice."
The finance committee chairman chal-
lenged Mr. Kennedy's Thursday news
conference statement that "'the economy
will suffer", unless the Senate acts quick-
lyon the tax bill. Brydmade it clear
the measure won't be ready for Senate
consideration until next year.
175
-- -- ---
passed bill to cut taxes $11 billion unless
expenditures are reduced.
Planned Deficit
Byrd has scheduled hearings to run
through Dec. 15. At Friday's session,
Sen. Vance Hartke (D. Ind.) moved to
wind them up at once, but lost 12 to 1.
Byrd termed Hartke's motion "a publicity
stunt."
"Never before in the history of our
country has any President advocated a
planned deficit in order to reduce taxes,"
Tax Reduction on Borrowed Money Byrd said. "I feel that it is very
"When the President started this idea ly because we've already got a deficit this
of a tax reduction on borrowed money, year of $9 billion. A tax cut of $11 bil-
He predicted a recession if his bill wasn't lion will be added to the public debt and
enacted quickly," Byrd said in the inter- within two and a half years the admin-
view. "It hasn't occurred." istration itself admits that the debt will
Byrd, who maintained silence in the be $334 billion."
1960 election when fonner Vice Presi- In elaboration his opposition to the
dent Richard M. Nixson carried Virginia, President's tax cut plan, Byrd said, "To-
said he is reserving judgment on the next day we're enjoying unusual prosperity.
Presidential contest. The profits of the corporations are higher
Gambling With National Security than they ever have been. The gross na-
But he said President Kennedy is tak- tional product is high and the depression
ing a "very serious gamble" with national or the recession did not occur."
solvency by proposing to cut taxes and Besides, Byrd said, he doesn't believe
increase spending at the same time. He a tax reduction will have the impact that
said he will vote against the House- Mr. Kennedy claims.
After reading that blast Joe still thought he might be able to get some
leading questions answered by the Senate's Finance chairman, so he wrote·
Senator Byrd the following:
Hon. Harry F. Byrd,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
A few months ago when I wrote you concerning the Gold Reserve
situation, asking some very pertinent questions, all that you mailed me
was a printed explanation of the Treasury's swapping for foreign con-
vertible currencies so as to keep from reporting losses of gold in the
Treasury Daily Report.
I wanted to know if when the Treasury uses the swapped convert-
ibles it eventually would have to supply convertible dollars in payment.
There was no answer. I wanted to get across to you that our continued
imbalance of payments isn't as important as the fact that we now have
over $27 billion, all convertible, held by foreigners. And that eliminat-
ing the $12.3 billion in gold needed to cover Federal Reserve Notes
and deposits, there remained only $3 billion to convert the $27 billion.
On this there was no comment.
Since then, Treasury Secy. Dillon has told your Joint Economic
Committee that he doesn't have to obey the 25-cent law; that he can
use the $12.3 billion to continue converting foreign held dollars. He
states he has another law to back up his statement and can use this gold
"in case of an emergency." And of course he can always find an emer-
gency. On November 5 a Federal Judge in Los Angeles, backed by the
Treasury, held we are still in a "war emergency," and therefore ti is
illegal to hold gold bullion.
I have clipped from the Los Angeles Times a two-column article
(AP Washington dispatch) quoting you strongly on this whole financial
mess. Taking Dillon's word, he does not intend to stop the gold How
to foreign dollar ohlders. This should call for action. Can't your Fin-
ance Committee'urge Banking and Currency to either put an embargo
on gold or put a price on Treasury Cold that will cause foreigners to
176

use their dollars to 1?urchase our produce or manufactured articles?
If such an action isn t taken our currency will be stripped of all its
gold backing.
Lees quit worrying about the Negroes and get after something that
really is important. Let's find out how it is that the Treasury can go
along for months showing no loss of gold when we are willing to let
it go at the world's lowest price. Best wishes.
Sincerely,
JOSEPH A. BACON
Joe later had to report that there was no answer to this letter, and
went home talking "liquidity' knowing full well that the only way they
could get that liquidity is by grabbing on to our gold. "You remember
Senator Bible wrote us of the plan, stating that those who favored it felt
it would be better to back our vast debt, the ravages of inflation and the
Administration's spending programs on the taxpayers' property and sav-
ings rather than on gold. In that way we are tied up stronger than ever
to the 'pink' monetary management now in vogue in Washington."
"Well, Congress is our only help. We can only appeal to its mem-
bers. Have you sounded out Sen. Gruening on the gold drain?"
"He is going down the same road as all the rest. He doesn't appear
to be interested in stopping the drain by which the IMF is getting con-
trol of the gold we have left. However, his bill S.2125, aimed at only
aiding the gold miner, is the only one that has made any headway. It
has sub-committee approval and assurance of 'no opposition' from Secre-
tary Udall. But who knows how long Udall will stay on the job under
President Johnson. He is one Kennedy appointee who has stirred up
plenty of trouble for Washington .

CHAPTER 37
Liberals Would Scrap All U. S. Gold
F
or Joe the days Hew by. He liked working with the mine secretary.
His evenings he spent in Placerville with Connie. They did not
neglect Mr. and !virs. Collins, who appeared to be just as happy as if
Joe and Connie were near relatives. While most of the conversation had
to do with the wedding and the future plans of the happy couple, Mr.
Collins could not refrain from introducing some recent gold news, know-
ing of Joe's intense interest.
He had just received his December issue of Pay Dirt, the official organ
of the Arizona Small Mine Operators
J
run by Charles F. Willis, owner
and publisher, and R. G. Moore, editor, at Phoenix. He called attention
to an article about the proposal to repeal the Gold Reserve law which
provides for 25 cents in gold to back Federal Reserve deposits and
notes.
177
"This whole thing sounds fishy to me," said Collins after Joe had read
it. "Secretary Dillon has already told us he can use the $12.3 billion in
gold to continue paying off foreigners. Says he has another law giving
him that power. If this is true why are they talking about the repeal of
the 25-cent law? I'm afraid Congressmen are letting the Treasury's gold
jugglers get by with a lot that will not stand the light of day."
"It sounds like that to me," put in Joe, "and note the article states
~ s a l e s of gold' to foreigners. I don't call that a ~ s a l e ' when we have to dig
up the gold to foreigners to cover the dollars they hold. Somebody's
using the wrong word. And do you note that phrase, 'Support of the
International Dollar?' We give the dollar gold support when it gets into
the hands of the Internationalists. This further supports our conclusion
of many moons ago that the communist plot is working, supported by
the present Washington administration. It is impossible to come to any
other conclusion. The International Monetary Fund must have all of your
Uncle Sam's gold. I must bring this to the attention of the boss tomorrw."
"This all getting too serious:' said Mrs. Collins who was always a very
good listener. "I want to know more about the plans for the wedding.
What is the date? And Connie, can I be of any help to you? John tells
me you are still working on the newspaper."
"Thank you, Mrs. Collins," responded Connie, "I'm getting along fine.
My dressmaker helps me a lot, and Joe comes to town every evening to
keep me in good humor. And he doesn't even talk about gold mining.
The wedding is to be two weeks from today, at the little church around
the corner; wedding luncheon at the Blue Bell. Honeymoon? 'No com-
ment: as Joe would report. Further, you and Mr. Collins are to stand up
with us. You are our closest friends.
The next day Joe wrote the following letter:
Hon. Ernest Gruening,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
We want to congratulate you on getting subcommittee approval of
your S. 2125.
Personally we have been more for something that would stop the
gold drain, especially when we have over $27 billion in the hands of
foreigners subject to convertibility. However, if we can't do anything
about that we would settle for anything that will reopen the gold mines.
With the President now calling for jobs for an additional five
million men, could you sell him the idea that your bill would be quite
an assist in digging up those jobs? No doubt during your time in the
Senate you have had opportunity to get well aoquainted with him.
Why not try him? He appears to be a good mixer. When he was out
for the nomination for the presidency three years ago he was my selec·
tion. I hope he hasn't lost his natural conservation.
Sincerely,
JOSEPH A. BACON
178
.. - ~ - - - - - - - - - - - - - - - - - -
CHAPTER 38
The Assassination of President Kennedy
I
t was Friday, November 22nd. Joe was at the mine office early and
ready for a big day's work, into which he had already launched. The
company had taken on two new mines, doubling the secretary's work,
part of which he assigned to Joe who still had a lot of correspondence
with congressmen to clean up. It appeared very hard to get the boys in
Washington to commit themselves on gold.
Joe had word from Harold and Evelyn that they would be in Placer-
ville several days before the wedding. Harold wanted some time to look
• over what Joe had been doing before he and Connie would be off on
their honeymoon. He was surprised at what his pal, Joe, a rank tender-
foot, had accomplished in less than one short year. He just couldn't real-
ize it. His and Evelyn's attendance at the wedding was only part of their
reason for making the trip to California.
Joe was well into the day's work when the awful news of President
Kennedy's assassination came over the radio. Operations came to a dead
stop. For four days America hung on to its radios and televisions, tak-
ing in every word and action of the broadcasters. For that four days
there wasn't a commercial, which usually represented millions of dollars.
Nobody appeared to know who paid the bill, or if there was one. As the
news came out from Dallas, Washington, New York and other centers it
hung like a pall over the entire nation. Never before had the nation re-
ceived such a shock. But in less than an hour a new president was sworn
into office and Lyndon B. Johnson of Texas took over.
Politics, business, governmental agencies and foreign nations were
alerted. What would be the policies of the man from Texas?
When the days of mourning were over the mine management and
some of the leading investors met. All wanted to know how the events
of the past several days would affect gold mining. The company had a
large sum of money invested and plans called for larger expenditures in
equipment, engineering and operation. With actual operation hundreds
of miners would be employed. Wages would be practically trebled what
they were when Roosevelt shut the gold mines down. A great deal was
involved in the new enterprise. Management had to, as much as possible,
arrive at what were Washington's plans. Both the secretary and Joe
brought the directors up to date on their efforts to get a line on the possi-
bilities.
A close tab was kept on all Washington reports. Among o t ~ e r state-
ments President Johnson announced he would "preserve the stability of,
the dollar." That sounded very much like the statements coming from the
Eisenhower and Kennedy administrations over the past several years.
After his ""stability" statement the first bill the new president signed was
to extend the limit of the National Debt to the enormous sum of $315,000,-
000,000. Can we have stability without gold? That was the question that
179
------------ ---
bothered the gold mining company leaders. All attending the gathering
took a hand in the discussion, Joe, as assistant secretary, making notes of
the discussion, to be later supplied to directors and stockholders. Joe was
well received by company heads.
The next day Joe had an early morning session with the Secretary,
letting him read the Pay Dirt's comment on what would or would not
happen to the $12.3 billion in gold, the only safeguard our paper money
now has. He gave the secretary John Collins' thoughts on the matter.
Their discussion centered around the question as to just how much of
the Kennedy policies would be followed by the new president, Lyndon
B. Johnson. "I believe Johnson is a good business man," remarked the
secretary. «He's had years of experience as a law maker. He's a success-
ful agriculturalist. He was not born with a silver spoon in his mouth, nor
with millions at his command, as was Kennedy."
"Yes," added Joe, "I noted in a California paper, the San Bernardino
Sun, that he had a very lowly start. While a young fellow he ran an
elevator in San Bernardino, and while there was no elevator to operate
he slung hash. There was no Harvard or Boston for him. So if coming
from the ranks means anything LBJ is off for a good start."
"O.K., but let's get down to brass (I mean gold) tacks," remarked the
boss. That's our meat. In today's papers you will read Johnson's policies
on everything but gold. He shys away from it very religiously. We must
find out if there is anyone in Congress brave enough to adopt a domestic
gold policy and stick with it."
"<That's been uppermost in my endeavor for the past six months, and
I must confess that I haven't got very far. I about reached the bottom
of the barrel when Sen. Bible of -Nevada heartily approved the interna-
tional plans for our gold. He termed our gold reserve 'diminishing and
exhaustible' and that losing it all to foreigners would strengthen our paper
money. What he means is we are now willing to kiss our gold goodbye
and put the burden of our vast debt and the ravaging results of inflation
on the property of our taxpayers. That's what that Harvard man, Ken-
neth Galbraith, i:alked to the late president. His idea that if we Ameri-
cans don't continue buying bonds to perpetuate the squander, the planned
deficits could be loaded on our property. And now it looks as if Wash-
ington is losing no time in heading that way. Will President Johnson call
a halt? That's the question."
"The late Mr. Kennedy did a lot of talking about gold and the drain,"
cut in the secretary. Eisenhower and Nixon kept quiet about it until
Nixon lost in the last election. Then they both opened up on Kennedy
when gold losses were heavier under Ike than they have been under
JFK. During Ike's last two years the imbalance ran over $7 billion. I
don't believe the presidents have any say whatsoever about our gold and
money. They are just the mouthpieces of the Treasury secretary and
Federal Reserve Board. Long ago Congress ~ s o l d us down the river' when
they gave up monetary management. I don't believe in the government
in business, but as long as the taxpayer must guarantee the debts of his
180
..

government his representatives in Washington should exercise the guid-
ing hand."
"'I'm with you said Joe, «but so far there is no one in either
the House or the Senate that will take a hand in the situation. That
Wright Patman of Texas who used to use the press to berate the Federal
Reserve and Wall Street bankers, has turned out to be a complete Hop.
We had an idea that when he became chairman of the House Banking
and Currency Committee we'd get somewhere with gold and monetary
reform. But somebody stuck a pin in Wright and he just phizzed out-
a complete loss. I have written him twice - no answer. I tried Tom
Kuchel, California's senior senator, who should be a real leader for the
Golden State,- no answer. «Bizz" Johnson, who represents the great gold
mining area of California - nineteen counties from Inyo to the Oregon
border - persists in shying away from gold as money. He and a· number
of others in Congress think, when it comes to gold, they can by-pass the
Banking and Currency committees. A number of years ago when in the
House, Clair Engle called it the 'New Approach: The boys who really
run the gold show let them play around with their bills that would only
help the gold miners. There were no bills that would stop the gold drain
and protect the American taxpayer from the situation so highly recom-
mended by Senator Bible."
"And who else in Washington have you been writing to?" questioned
the secretary. «Surely there must be some few members in either house
on whom we can depend. How about Sen. Ernest Gruening of Alaska,
where there are billions in gold still in the ground awaiting an oppor-
tunity to add liquidity to the U.S. dollar? You probably noted among
the world money managers that word 'liquidity' is a favorite. But they
don't want to realize that liquidity comes with the amount of gold at
d
"
our cornman.
"'That's what struck me when at this year's meeting of the Interna-
tional Monetary Fund," remarked Joe. «They accomplished nothing, shut
up shop and went home talking 'liquidity,' when the only way they can
get that liquidity is by cabbaging on to all our gold. The Treasury says
it still has $15,582,000,000 in gold to give away. And Senator Bible rec-
ommends we continue the giveaway. It would strengthen our paper
money, he says. When you have men of that type in the highest branch
of our law making body what is there to do?"
"Congress is our only source of information and help. You will have
to keep at them. How about Senator Greuning?"
«He's just like a lot of others," answered Joe. He is not interested
in stopping the gold drain, which of course would interfere with the IMF
cleaning up on what gold we have left. However, his bill, S. 2125, is the
only one that has made any headway. It has been approved by a sub-
committee of which Greuning is chairman. says he has received
assurance of a 'no-opposition' report from Interior Secretary Udall. But
who knows how long Mr. Udall will stay on the job under President
Johnson. He is one Kennedy appointee who has stirred up plenty of
181
-
trouble for Washington. One of the best reports I've seen on Greuning's
bill appeared in Charles Willis' Pay Dirt. I think we should give it a
good reading. Perhaps if we agree to let the IMF fatten up the liquidity
of its paper with our gold the One-Worlders might let our gold mines
reopen. Joe handed over the Pay Dirt clipping, given him by John Col-
lins. It read:
SUBCOl\fMITTEE APPROVES GOLD BILL
New Measure Would Provide Compensation Payments
to U.S. Gold
Amount Would Be Determined By Cost-ai-Production Factors
Hearings on a new gold bill, the Gold
Mine Revitalization Act of 1963, were
held October 23 and 24, by the Sub-
committee on Minerals, r>.laterials and
Fuels of the Senate Interior and Insular
Affairs Committee, Senator Ernest Gru-
ening, chairman. The measure - S. 2125
- had been introduced on September 9
by Senator Gruening with Senators Bart-
lett, Bible, Kuchel and Metcalf as co-
sponsors.
Early in November the minerals sub-
committee voted to approve the bill, with
minor amendments, and the measure is
now before the full Interior Committee
for consideration.
S. 2125 would authorize the govern-
ment, through the Secretary of the In-
terior, to make "compensation payments"
to gold miners, the payment being the
amount by which the cost of producing
gold today exceeds the cost of equivalent
operations in 1940, the peak production
year in the United States. Provisions of
the bill are the direct result of previous
hearing'S on proposals to aid the domestic
gold mining industry, particularly the
July hearings on S. 100 and S. 1273. As
those bills met strenuOus opposition from
the Executive Branch of the government,
Senator Gruening decided a totally dif-
ferent approach was needed.
In introducing the bill, he called at-
tention to government actions which had,
to all intents and purposes, destroyed the
domestic gold mining industry. The fixed
price of gold, established at $35 an ounce
in 1934, was cited as the first reason gold
miners are unable to operate profitably;
the second, the Senator pointed out, was
the War Production Board's Order L-208
issued in October 1942, which closed all
domestic gold mines. As a result, he
said, even mining operators that might
be able to make a profit at $35 an ounce
have been unable to begin operations be-
cause of the great expenses involved in
opening closed mines.
At the hearings, Gruening recalled that
"any attempt ... to ameliorate the con-
dition of the American gold miner by in-
creasing the price the American govern-
ment would pay to him" has been met
with arguments by the Treasury Depart-
ment that this would "upset the interna-
tional financial applecart; that is, if the
American Treasury were to pay an Amer-
ican gold miner a subsidy of $70 an
ounce for his American gold, in addition
to its price of $35, bankers in Switzer-
land, England, and elsewhere would be-
come upset and might demand payment
in gold for the dollars they hold." He
also noted that an American cannot get
gold for his dollars, but a Swiss banker,
or an English banker can and does get
gold for his dollars.
Senator Gruening explained that while
the Treasury's argument was not accept-
ed as valid, the threat of a recommended
veto made it useless to pursue the earlier
proposals for aiding the gold mining in-
dustry, and a new approach was neces-
sary.
He emphasized the point that S. 2125
does not, in any way, change the price
paid by the Treasury for gold, or men-
tion the cost of gold. The bill was draft-
ed, he said, so that it does not have any
effect whatever on gold as a monetary
unit. Therefore, it would simply be a
means of assisting the gold mining in-
dustry regain prosperity, and, by avoid-
ing reference to gold prices, escape ob-
struction by the Executive Branch of the
government which has been based on the
premise that aid to the gold miner would
damage international financial stability.
In his testimony supporting S. 2125,
Senator Bartlett of Alaska called atten-
tion to the drastic drop in U.S. gold pro-
duction - 4,870,000 ounces of new gold
182
..
in 1940 vs. only 1,526,757 ounces in
1960. «Last year America's domestic
gold production was not even sufficient
to supply the needs of America's domes-
tic industrial gold market," he continued.
"American new gold supplied but half of
the industrial gold demand. The rest,
irnports." He insisted that government
policies have subsidized commercial pur-
chasers of gold, and that this continued
support of one sector of the economy at
the expense of another is not justified.
Also testifying in support of the bill
were Representatives Chenoweth of Colo-
rado and Johnson of California.
Merril E. Shoup, president, and Max
\V. Bowen, executive vice-president, of
the Golden Cycle Corporation of Colo-
rado Springs, told the hearing that pass-
age of S. 2125 would mean the resump-
tion of profitable mining operations in
many of the gold mining camps of the
West and Alaska, reduce unemployment,
lessen welfare loads, and at the same
time increase the production of gold
which is becoming increasingly short sup-
ply in this country.
Cost and production data were pre-
sented to show the benefits which would
be derived from the provision of S. 2125.
For the Cresson mine of Cresson Con-
solidated Gold Mining and Milling Com-
pany current costs were estimated at
$88.90 an ounce of gold against a cost
of $34.43 in 1940, a difference of $54.47.
However, the assistance limitation im-
posed by applying the Cost of Living
Index would reduce the "compensation
payment" to $41.31 per ounce.
For the Ajax mine, a smaller tonnage,
higher grade ore mine, current costs
, were estimated at $74.57 an ounce, com-
pared to $35.02 in 1940, indicating com-
pensation payments of $30.55 per ounce.
In their brief, Shoup and Bowen ex-
pressed the hope that S. 2125, "a simple,
straightforward solution to the gold min-
ing problem, will not be emasculated
through amendments, administrative reg-
ulations and excessive red tape to the
point that all of its provisions are so
weakened as to make it ineffective or so
complex that the small operator cannot
afford to take advantage of the same."
Dr. Elgin Groseclose, a financial and
investment consultant, directed his tes-
timony prinoipally to need to stimulate
domestic gold production because of the
shortage of international liquidity. While
admitting that the present proposal would
not expand U.S. gold production suffi-
ciently to meet the world problem created
by reason of our monetary excesses, Gro-
seclose does see the bill as preparing the
way for a more fundamental solution of
the gold question.
A statement submitted by Dr. Donald
H. McLaughlin, hoard chairman, Home-
stake Mining Company, repeated his
views expressed in earlier testimony and
emphasized his contention that "if special
aid in some form is not provided soon,
all mines in the U.S. that are dependent
on gold alone will be forced to close be-
f " ore many years pass.
Senator Gruening reported briefly on
recent correspondence he had with Sec-
retary of the Interior, Stewart L. Udall,
then stated: "I am happy to report that
possibly in consequence of this corres-
pondence, I have had several long tele-
phone conversations with Secretary Udall
and the result is that there will not to-
day be an adverse report from the In-
terior Department. There will be for the
time being no report whatever and it is
agreed that the matter will be studied,
the new aspects fully considered and an
effort made to see whether approval can-
~ o t ~ ~ worked out along these or similar
lmes.
Throughout the hearings two points
were stressed: first, that the Federal Gov-
ernment itself is directly responsible for
the present distressed state of the gold
mining industry; and second, that S. 2125
would in no way change the. pricc paid
by the Treasury for gold, and would have
no effect on gold as a monetary unit.
"Well, that's something," remarked the secretary. A very good report
of the hearing on the Gruening bill. Getting Udall's agreement to layoff
on any adverse report will be helpful. However, paying $80 to $100 to
the domestic miner with the Treasury continuing to convert foreign held
dollars at $35 just wouldn't make horse sense. The real truth is that we
are letting our treasury gold go at one-third its value. It's criminal."
"That's what gets me down," said Joe. < ~ A n d about that bird Udall,
183
who knows how long he \vill stay on the job? His handling of public
lands, especially mining claims, has made him extremely unpopular.
And now that he wants to shift Northern California water into Arizona,
the entire Golden State is up iIi arms against him-even his friend, Gov-
ernor Brown. I don't think President Johnson is going to take a chance on
losing that big California vote."
«Anyway it should help to give Senator Gruening a commendatory
letter. He's worked hard on his bill," said the secretary. "And give me
another quick rundown on your letters and answers from those congress-
men and others whom you supposed were the most likely to take an in-
terest in the gold miners' cause:' "Will do," said Joe .

CHAPTER 39
Prospector Joe's Congressional Rep,ort
<·On the whole, very few in Washington are interested in doing any-
thing about gold mining or stopping the flight of gold to foreign
countries," reported Joe.
"Rockefeller and his banking family are all for the International Mon-
etary Fund. I wrote him twice. All I could get from his office in Albany
was two short notes from a girl secretary and a printed press release. I
noted the name of Rep. Thomas B. Curtis, Republican of Missouri in the
news. He is for the IMF and talked about more liquidity to aid world
trade. And if you take it from me the only way the IMF can get that
liquidity is by getting all of Uncle Sam's gold. I have had several letters
from "Bizz" Johnson, who represents this California district. I tried to
sell him on the idea that the gold drain was America's No.1 headache
which should be cured. He then challenged me to propose a bill that
would stop the drain. He no doubt remembered the Iowa congressman
who introduced a bill to put an embargo on gold. The bankers made
quick work of him. In the following election he wasn't even nominated.
The money changers come first with congressmen.
·'Rep. William E. Martin, chairman of the National Republican Com-
mittee was in Los Angeles early in 1963 talking about the gold drain.
Here, I thought was an opportunity to get to rich ground and make a
clean-up. I wrote him a nice letter, getting NO answer. Then I thought
Sen. Harry F. Byrd, supposed to be the 'watchdog of the Treasury,' might
give me some help. He was 'glad to get my views' but sent a printed
explanation of Treasury swapping dollars for foreign convertible curren-
cies, with which it met the foreign calls for our gold. In this way calls
direct on the Treasury were evaded, but no doubt the swapped dollars
would have to be met with gold at some time later. There was no com-
ment by the gentleman from Virginia, but about two months later he hit
the press with a loud blast about what was happening to our monetary
condition.
184
,"
...
..
"Then I noted that Sen. Mike Mansfield, the man closest to the ad-
ministration, was in his home town, Butte, Montana, mending his poli-
tical fenses. He made the statement that the U.S. Treasury should be
now payng $65 to $70 for gold. I couldn't let this get by so wrote asking
him why not make this statement on the floor of the Senate and in the
White House. NO answer. I wrote Sen. Thomas Kuchel, California's
senior senator; NO answer. Following that I went after Sen. Alan Bible
of Nevada, whose hills are lined with unmined gold. You already know
the result. According to Mr. Bible we should let the IMF have all our
gold. He wrote that this would strengthen our paper money, as the debts
of the nation and the results of years of inflation could then be saddled
on our property and our small savings after income tax. If that isn't a
Communist idea then I will eat my hat. It sounds exactly like the advice
that Harvard man, Galbraith, gave the late president.
"So with such results the cause for gold in Washington looks mighty
weak. As you suggest I'll write Senator Gruening and perhaps President
Johnson would be interested in hearing from a California gold bug."
"No doubt Senator Gruening is interested in getting support for his
gold bill; also his co-authors," stated Joe's boss. «As for President John-
son, he's just too interested in a thousand other matters to start anything
with the Treasury and Federal Reserve, both of whom are dead set
against the gold miner. What I can't understand is why Western con-
gressmen and those business men who want a sound dollar don't get
together. Or is the 'sound dollar' talk just so much baloney? As matters
now stand the dollar is sound only for the foreigner. Joe, do you think
we can work on that idea? What has become of the real Americans in
Washington? Take it from me: America is suffering right now, morally,
m ~ n t a l l y and financially obsessed with the idea of what we owe foreign-
ers. They can call me an isolationist if they want to but if there ever was
a time when some isolation would do us some good it is right now. I
just wonder if President Johnson ever gets that idea."
"I have been watching Washington reports pretty close," said Joe,
"but so far the new president hasn't mentioned gold or that 27 billions
of foreign held dollars awaiting conversion to Treasury gold. His ideas
and plans about nearly everything else have been given wide publicity.
Furthermore Treasury Secretary Dillon has been very quiet. Under the
late President Kennedy he was forever assuring us that the dollar would
be stabilized, but I don't know what with; at least not with gold which
is heavily mortgaged to our foreign friends.
"By the way, yesterday I had a note from the publishers of my favor-
ite mining publication, Newell H. Leppert. He called attention to a gold
plan written for him by a Los Angeles man, Robert Gains. The publisher
doesn't think much of the plan; neither do I, so last night I whacked out
the following and put it in the mail this morning:
I have your note asking an opinion on Robert Gaines' gold plan,
appearing on page 17 of the December, 1963 issue, California Mining
Journal.
I agree with your comment that it would take too much time to ac-
185
cumulate a reserve of $10 billion in gold, paying only $50.00 per ounce.
Mr. Gaines objects to taxes that would be necessary to pay a gold pro-
duction bonus, when his plan could not be carried out except with addi-
tional taxes unless the Treasury put a price of $50 on the gold pro-
duced under the Gaines' plan. Fifty dollars per ounce would open too
few mines in the United States considering present costs of operation.
There is no plan that would increase the U.S. gold reserve suffi-
ciently to aid the general economy. All the plans submitted so far are
for the benefit of the gold miner only. None of them can get the ap-
proval of the Treasury Department and the Federal Reserve Board, un-
less the constitutional duty of coining money and fixing its value is re-
turned to Congress where it belongs. Under present conditions the
Executive department of government is usurping a power and duty
that does not belong to it.
Dr. Franz Pick Has the Answer
Now turn back to your page 16 article, same issue, in which you
quote Dr. Frank Pick, taken from the Northern Miner, Toronto, Canada.
Doesn't it appear to you that he has the answer? For the benefit of your
readers I am reproducing a portion of the article as follows:
A few weeks ago, the Republic of Liberia announced through the
highly respectable banking firm of Leu & Co. in Zurich, the sale of L$
(equal to the U.S. unit by the grace of whioh it exists) 20 gold coins,
containing a net of 16.8 grams of fine gold. About 10,000 coins, bear-
ing the effigy of President Tubman, were minted in Switzerland. Worth
$18.90, the coins are being sold at $34.00 each. The gold to make them
came from Fort Knox. The currency in Liberia is the U.S. paper dollar,
the effective central bank is the First National City Bank of New York.
Another issue of gold coins, also minted from American gold, will be
featured by the Bank of the Netherlands Antilles. About 1,500 sets of
four, or a total of 6,000 coins, will be sold at $190 each, with a gold
value of $95. These coins are only forerunners of more to come.
Other Countries Profiting On U. S. Gold
The "Black Republics" of Central and West Mrica, "bought" be-
tween $700,000 and $1,900,000 each of gold from the U.S. Treasury,
according to official statistics. Rumors are that they too want to have
their national gold coins - naturally, sold at a 100 per cent profit for
their rulers - and we can easily visualize Senegal ordering such coins
with her newly acquired $1,700,000 of U.S. metal from anyone of the
commercial mints of Europe. Unfortunately, such events remain un-
known by the general public, as the American press does not consider
them fit to print.
There you have the answer. And Congress has the answer. The an-
swer from the highest monetary authority in the United States, backed
by U.S. official records. If. with this going on, the Banking and Cur-
rency commitees are not interested, then there isn't much of a chance
of Western gold miners reopening their properties.
However. no Western mining organization should stand by and let
this crime go unnoticed by their Representatives in Washington. Here-
tofore the only information we had to work with was that handed out
by the gold swindlers themselves. Now we have information from a
very authentic source. backed by official government figures. It is not
only definite information that gold in foreign countries is worth twice
the U.S. Treasury figure but also that in Washington there now exists
some agency -making a huge profit off the taxpayers' gold. The whole
mess calls for an immediate and searching investigation. All Western
Mining organizations should make such a demand on their congressmen.
They should ask the American Mining Congress to lead the demand.
186
..
After writing the Journal editor he also got letters out to the Treasury
Department and also to the New York bank that handles the gold deals
on this side of the Atlantic. Both he and the mining company secretary
were anxious to see what the official explanations would be.
After Joe got his letter off to the Mining Journal publisher he wrote
the following to Senator Gruening:
Hon. Ernest Gruening,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
Here is definite information, backed by an official source, that U.S.
Treasury gold is being shipped to foreign countries, where it is coined,
after which it doubles in value.
If you and co-members let this pass without immediate action we
might as well give up the fight to get our gold mines reopened.
We just can't let these gold profiteers get by with their swindle at
the expense of the American taxpayers. We expect action.
Sincerely,
JOSEPH A. BACON
"With that going on," remarked the secretary, "I wonder what else
our congressmen, or for that matter, Treasury Secretary Dillon, need to
give consideration to some gold legislation. The U.S. Monetary system
surely needs that extra gold value now going to foreigners. And many
of our gold mines could reopen with that $70 price. We could give Presi-
dent Johnson a part of that additional five million jobs he needs. Perhaps
the Studebaker move to Canada might give Washington a jolt. Instead
of doing something to protect jobs and make new ones most everything
that Washington does eliminates them or shifts them to other countries.
Taxes and excessive labor costs will be our downfall."
"I noted something else in that Studebaker move announcement by
their president, Byers A. Burlingame, that could be a lesson to our money
managers. In addition to lower wages and fair government treatment
the Studebaker company's dollar will buy 14 per cent more in Canada
than in United States. That's due to Canada lowering its paper dollar
value, now 92 cents, formerly $1.06. It also brings them more for their
gold. We, in this country, appear to be too dumb to realize that. Before
sending that article to the publisher I will have to let John Collins read
it. 1 will go to see him this evening, and if you hear a blast down that
way it will be John blowing off. And before I forget it, some day soon
1 want to read what you have on John's mine. He gives it a very good
record."
The next evening, after work, Joe hit for Placerville, expecting two
lectures, both for neglect. He hadn't seen Connie for two days and the
Collins for a whole week. He'd have to frame up some good excuses.
Work had doubled in the mining office, and when hit by the Kennedy
assassination the activity came to a complete stop. He hoped that would
get him by. And it did. Connie was lovely. "I knew you were more than
busy, Joe:' she said. "And now the boss who had just bought a paper in
187
,
Jackson, the next county seat south of here, wants us to postpone our
wedding trip. But I told him ~ n o t h i n g doing'; and that our arrangements
were made long before he bought that paper. I have been shuttling back
and forth to Jackson, helping out there as well as keeping up here. The
trips are nice along Highway 49 but I've been keeping late hours."
Together Connie and Joe called on the Collins. "Where have you folks
been keeping yourselves?" inquired John. "Don't you know you both are
now our children. We want to see you once in a while. We know you
have been busy but that doesn't make any difference. First thing you
know you will be eloping and we'll miss attending a wedding."
"That's one event you won't miss," responded Joe. "But that isn't
what is bothering me just now."
"I'll bet I know what it is. I've read the December Journal and all
about our Treasury gold being shipped to foreigners who have it coined
after which it doubles in value."
"Yes, .T ohn has been storming around the house for a whole week
waiting for you to drop in for a council of war," added Mrs. Collins.
"Well, what are we going to do about it?" stormed John. "That's just
more than I can stomach. I want to know what our congressmen are
dOing, allowing some shysters to make a $35 an ounce profit on 0 DR
gold - the gold the taxpayers have paid for. The colored folks and their
sympathizers are marching on Washington for a whole lot less than that.
Do you think we could stir up the gold miners for a march on Wash-
ington? We've got to do something right now or else we are lost. If
Washington can get by with that highway robbery we might as well kiss
our gold mines goodbye."
John was really angry but he calmed down as Joe handed him the
article he had prepared for the mining publisher. He read it with a
great deal of interest. "That's a good one," he said, "but what can we do
about it?"
"Do you remember the day I met you," questioned Joe. "Sure you do.
lt was Gold Discovery Day at Coloma. The Clampers were all soused
and making whoopee while the politicians and the Beach and Park boys
were trying to make speeches. There wasn't one word said about gold.
That day, like Andy, you were 'regusted.' You wanted to talk to some-
body about gold and the bad deal the gold miners are getting from Wash-
ington. And I wanted to meet somebody who knew a lot about gold
mining. It was a lucky day for me. Don't you remember, John?"
"That gives me an idea," said John. "There's another Gold Discovery
day coming up next month. January 24th is the day Marshall discovered
the gold in Sutter's mill race at Coloma. January 24, 25 and 26 is a week-
end on which all of California could get together and insist that Wash-
ington use our taxpayers' gold so that we get its full value, and so that
any congressman win be convinced that to keep our gold mines closed
is utter foolishness. This could very easily be tied in with Senator Gold-
188
water's monetary policy of having a free market for gold. We might
even be able to get the Senator to come to Placerville and be the main
speaker for the gold mining part of the day's observance. In fact, the
entire West should join in such a movement. I am at a complete loss as
to why business, both large and small doesn't appear to realize what the
loss of our gold means to them."
"The fact is, they are not told the truth," responded Joe. "And they are
too busy digging up enough business to pay taxes and keep going. Day
after day the Treasury Department puts out reports showing that there
is no gold leaving the country. For months it has published the same old
Rgure as being the amount of gold On hand - $15,528,000,000. Does it
want us to believe that when our gold is worth $70.00 per ounce in other
countries foreigners are not taking it; especially when they can get it for
$35.00?
Then Joe announced that he had received a wire from Sen. Ernest
Gruening of Alaska in regard to his gold bonus bill, S. 2125, dated Dec.
13, 1963. It read:
S. 2125 WAS REPORTED UNANIMOUSLY BY THE INTERIOR
AND INSULAR AFFAIRS COMMITTEE TODAY. COMMITTEE
ACTION WAS TAKEN IN FULL REALIZATION ADMINISTRA-
TION OPPOSITION WILL PRESENT GREAT DIFFICULTY FOR
PASSAGE BY THE SENATE. THANK YOU FOR YOUR HELP IN
THIS MATTER.
REC'D. 4;OOP PST ERNEST GRUENING, USS
"How much good is that going to do us if the gentleman from Alaska
hasn't sold his co-members in the Senate, and if there is so much admin-
istration opposition?" questioned ~ 1 r . Collins.
"I have already given Senator Gruening the information about our
Treasury gold bringing $70.00 an ounce in foreign countries," responded
Joe. I wonder what he needs to convince his friends in the Senate that
our taxpayers are losing plenty every time an ounce of gold goes to a
foreign country."
"Give him another letter on the same subject and ask him what it
takes to convince the Senate of what the Treasury is doing to us," urged
Collins.
"Will do," responded Joe. The next morning the following letter was
dispatched:
Hon. Ernest Gruening,
U.S. Senate,
Washington 25, D.C.
Dear Senator:
Thanks for your wire announcing the approval of S. 2125, unani-
mously by the full Interior and Insular Affairs Committee.
You make no comment on the proof furnished you that our Treasury
gold, coined, is bringing $70.00 per ounce in foreign countries. Is there
anything preventing you from getting this information on the floor of
the Senate with a demand for an investigation by the appropriate com-
mittee? Would this be by Harry Byrd's Finance Committee or by
189
Banking and Currency?
Our efforts for a better price for gold are useless unless you use
this information.
Would it be possible to summon Dr. Franz Pick of Chicago before
the Senate. I know he charges $150.00 per hour to talk to him, but the
taxpayers are losing far more in letting our gold get into the hands of
foreigners at $35 per ounce.
Best wishes for the Holiday Season.
Sincerely,
Dec. 14, '63 JOSEPH A. BACON.
Before there could be any more talk about gold mining or congres-
sional bills concerning the same, Mrs. Collins broke in with: "What I
want to know is when there is to be a wedding? Let's talk about that
for a while. I'm fed up on this gold business."
"Now mother, what \ve are talking about is important," said John.
"So is getting married," answered lady Collins. «So let's hear about it."

CHAPTER 40
The Happy Event
H
ere Joe and John woke up to the fact that they were utterly neglect-
ing the lady members of the house. Joe hurriedly offered apology,
asking Connie to tell their plans for the happy event.
"It's all settled," she said. «Joe has promised to make me a happy
woman, with the help of the clergy, at noon this Saturday. Mr. and Mrs.
John Collins are going to be our main witnesses. There will be a few
more, with luncheon at the Blue Bell. Joe won't let me tell where we
spend the honeymoon, but we both have two weeks off and won't be
back until next year. So if you want to wish us a Merry Christmas and
a Happy New Year you better be doing it now. I am the happiest girl
in the whole of what Joe calls the Golden West. Now he and Mr. Col-
lins can go back to talking gold mining." Which they proceeded to do.
"I don't understand why Senator Gruening or any other Western
member, supposed to understand the gold situation, refuses to confront
Congress with the information· on the price of our gold in foreign coun-
tries, provided by Dr. Pick. That refutes the continued reports by the
Treasury and IMF that there's no difference in the price throughout the
world. It demonstrates that our taxpayers are losing $35.00 per ounce on
every bit of gold that leaves the Treasury. Further, we should know who
is getting the profit. Does it go to the foreigners, or is there somebody
in our government in on the swindle?"
"You are asking some sixty-four-dollar questions," answered John.
"However, ever since Woodrow Wilson was president, the ~ m o n e y chang-
190
..
..
ers' and not Congress have run our monetary matters, despite the fact
that the Constitution says it is a power and duty of our lawmakers.
Every once in a while Wright Patman of Texas, now head of the House
Banking and Currency Committee, used to break out against the way the
Federal Reserve Bank is running our money business, but since he has
reached the top place in that committee evidently the Board has twisted
his tail as he is now a very gentle animal. He takes no part whatsoever
, in a great many matters that are our business in which he should be con-
cerned. But we should not put all the blame on the gentleman from
Texas. There isn't a member in either house of congress that will prop-
erly represent the people when it comes to the management of our money.
"Take another reading of that wire from Senator Gruening. After
getting full committee approval of his bill he is ready to give up when
he brings up the 'administrative opposition: He wants us to believe he
has done his part and let it go at that. He, like all the rest of his co-
members, are afraid to force the Treasury to admit that our gold, with
government approval, is bringing $70.00 in those foreign countries. Is
President Tubman of the Republic of Liberia and the ruler of the Black
Republic of Africa, making that $35 profit, or is the National City Bank
of New York in on the deal? We, the taxpayers, who have paid for that
gold, have a right to know. But apparently there is no one in Congress
who will see that we get our rights. Our Congressmen would rather
spend their time and our money in seeing that a colored gentleman gets
a right to go to college or eat with the white folks. Like Andy, I too, is
'regusted' ."
"1 don't blame you," put in Joe. "For the past 30 years you have been
battling this deal. Under right conditions you have a gold mine ready to
prod1:lce a million dollars. Under the same right conditions the gold fields
of the West are worth billions - billions that are badly needed by our
government and its people today. With the President talking about the
nation right now needing five million new jobs I wonder if he ever gives
any thought to what putting the right price on gold would do to help.
Or will he go along with the rest of our presidents, taking orders from
the 'money changers'? You remember FDR said he would drive the
<money changers out of the temple,' but he let 'em in stronger than ever.
And worst of all, Co'ngress refuses to battle this condition which means
that it will take a terrible depression before the money managers will
give an inch. And remember, it's in times of depression when those who
have the gold, O'UR GOLD, our $24.5 billion worth, will make the
cleaning. Just recall what that Atlanta, Georgia, banker, Malcolm Bryan
said: <Hold still little fish; all we want to do is to gut you",'''
HYes, I remember that running in the Journal for a long time. But
nobody seemed to worry. And Bryan was at that time the president of
the Atlanta Branch of the Federal Reserve Bank. I just wonder what the
managers of the other eleven branches of the bank thought of his state-
ment. The banker's statement was brought before the Senate Finance
Committee by Sen. Wallace F. Bennett of Utah. But Wallace never
again brought it to their attention. Who stopped him?
191
"1 don't want to interrupt," here interposed Connie, «but, Mister Joe,
are you forgetting very soon you have to head for the Sacramento air-
port to pick up your pal, Harold and wife, Evelyn?"
"That's right, I guess I was forgetting," responded Joe, explaining to
the Collins that Harold planned to do some looking around Placerville
and the mines before he and Connie deserted them to start their honey-
moon.
«Bring them around; we'll see if we can make a gold miner out of
your friend," said Mr. Collins. "Take them out to the camp. That mine
could be working with very little encouragement from Washington. I
sure would like to see it operating again. The missus and I don't need
to make any more money so we'd be glad to let you have the property
without royalty; just take over and go to work any time a paying opera-
tion is possible."
"'Well, John, that sounds good," Joe said, almost with tears in his eyes.
"Nobody has ever been as good to me as you and Mrs. Collins. And if
I can speak for Connie, too, we both will always remember you." With
an approving smile Connie wished the Collins a Merry Christmas and
then again reminded Joe that it was time for them to leave for the S a c r a ~
menta airport.
Approaching Sacramento on U.S. Highway 50 Joe remarked that he
was glad the Sacramento Valley fog had disappeared. He wanted Harold
and Evelyn to land in the sunshine and the usual flowers and winter
greenery. "Maybe we can make them forget the cold and snows of New
York and Washington," he said.
Mter crossing the snow-capped Sierra, Hal and Evelyn had a perfect
landing and were more than happy in again seeing Joe and meeting his
bride-to-be. Joe and Harold had much to talk about, and Connie and
Evelyn were soon happily discussing the coming happy event. Evelyn
was especially interested in Joe's prospects. "Harold and I can't make
out how in less than a year he has been so successful, when we both had
the idea that long before the end of the year Joe would be back in New
York looking for his old job with the newspaper. His success is really
remarkable."
"You are right. 'Remarkable' is the word and Joe is a remarkable
boy," offered Connie. «And I'm not saying that because he is to be my
husband. Of course he owes a lot to Mr. Collins. Those two, regardless
of one being young and the other over 70 get along splendidly. It may
be that when Joe came here he realized that he knew nothing about min-
ing, except what he had read, and was ready to learn from a man with
50 years' experience."
«But in New York we never thought Joe was anything like the success
that he turned out to be," said Evelyn. «He did his work and kept his
job on the same paper that Hal worked on, but he was never outstand-
ing. He never seemed to get enthused about anything. He just didn't
seem to fit in."
192
..
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I.
"Well, he fits in here; and how," responded Connie. "But I still, as he
would too, give Mr. Collins a lot of credit. I want you to meet both Mr.
and Mrs. Collins. They are real folks. Just today Mr. Collins told Joe
when things are right for gold he can have the Collins mine. It has all
its machinery ready to go. And Mr. Collins wouldn't ask a penny from
Joe for his part - royalty, they call it. Just think of that. In addition to
being a remarkable boy, I guess Joe is also lucky.
'1'11 say he is," added Evelyn. "But what does Joe intend to do with
Mr. Collins' mine?"
"Whenever you folks in New York and Washington decide that gold
is worth more than it is now bringing no doubt Joe will be interested in
operating it; or leasing it to an operator. I do think, however, that he
wants to do some mining on his own. He always says that's what he came
to California for, but I think he came here to marry me." Both girls got
a good laugh out of that, Evelyn assuring Connie that was at part
of what was to happen.
That night before retiring, Harold and Evelyn compared notes. They
were charmed with Connie. "The lucky dog," said Harold. "Coming to
California has been the making of that boy. We are both to meet his old
friends, the Collins, tomorrow, and go out to the mine where Joe has
been living."
"Is that the mine Mr. Collins is going to give Joe?" questioned Evelyn.
"What do you know about that?" asked Harold.
"Oh, Connie told me all about it. That girl is pretty smart herself.
Joe is lucky in more ways than one. What's he plan to do with the mine?"
"We'll find out tomorrow. Joe wants me to meet the men at the
ing office where he works."
The next day the mine officials were glad to meet a man, secretary to
a congressman. Here's an opportunity they thought to get some
hand information right from Capitol Hill. Harold explained, however,
that getting information on the gold situation in Washington was
cult. "The Treasury has its cut and dried policies, all of which amount
to its determination that there will be no changes in the gold price-
"too upsetting for foreign exchange." They do say something about
'liquidity' which they think they can obtain without keeping our gold,
and encouraging legislation that would reopen our gold mines. They
don't appear to think that gold is the best means to liquidity."
"Congressmen don't want to talk about gold," reported Harold. Even
those who are the direct representatives of those of you who could now
be producing gold remain silent. When my boss gave me some time off
to talk to your Western Congressmen they were always too busy doing
something else. They worry about foreign aid, civil rights, unemploy-
ment, their party's political future, but shy away from gold and what
the lack of it is doing to our economic situation. As I reported to Joe
on this year's meeting of the International Monetary Fund, the main topic
193
was <liquidity' but no one appeared to bring out that it takes gold, and
more of it, to get that desired 'liquidity:. The only fellows who talk
about gold are the 'money changers: and their talk is not for publication.
They do hit the press once in a while but only when you gold producers
and others interested need some additional brain washing. There is no
open admission that you taxpayers are now building up an international
monetary system, with your gold and your ability to pay taxes. When
you check the trend, that's the way it looks to me."
"Yes, that's what Senator Alan Bible of Nevada wrote me," added
Joe. "He stated it is best we let our gold get into international channels
and that our vast debt and other monetary obligations be guaranteed by
the taxpayers' property. When you consider that every man, woman and
child in the U.S. owes over $1,700 that's a terrible load for the taxpayer
to take on. And if President Johnson continues the policies of the late
Mr. Kennedy, we haven't seen anything yet."
Here again Harold led the conversation with: «,I thought you gold
miners missed an opportunity when President Johnson announced that
in 1964 the nation would need 5,000,000 new jobs. If we could get a $100
price for gold, which, when considering present commodity prices, is not
out of line, how many jobs could the gold mines of the Western States
provide?"
Mr. Collins, who came along with Joe and Harold, was asked to give
the answer. With his 50 years of Western gold mining he was well quali-
fied to at least give an estimate. "There are 20,000 gold mines and pros-
pects in California alone," he said. "In the entire West and elsewhere in
the nation I would not be out of line in raising that figure to 100,000.
In the past some California gold mines have employed as many as 1,000
men. In the late '30's Empire Star at Grass Valley had 1,200 men at
work; the Idaho Maryland, 1,000. (And let me add that last-mentioned
mine, under the late Errol MacBoyle, was worth $35,000,000. That prop-
erty now, due to the antics of our Washington government, has only real
estate value. )
"Pardon me for getting off the track, but every time I think of what
our government has done to the owners of gold mines it makes me see
red. It's no less than a crime, with Congress standing by.
"Each one of the hundred thousand gold mines in the nation, em-
ploying only an average of ten men, could give President Johnson 20
percent of the present employment increase he wants. And he is worry-
ing about a mere six thousand now losing their jobs at South Bend, In-
diana, with Studebaker moving to Canada."
The group thanked Mr. Collins, then the mine secretary put the ques-
tion to Harold as to whether he thought the necessary change in the
White House would have any effect on the gold situation. «Not if Presi-
dent Johnson is committed to the Kennedy policy," he quickly answered.
"As Joe no doubt told you," he went on, «I attended the last conven-
tion of the International Monetary Fund, opening in Washington Sep-
194
..
tember 30th. Summing up the whole several days' discussions, they
amounted to but one idea, expressed in one word, 'liquidity.' And al-
though the monetary experts present from 101 different nations did not
say it, they could not but arrive at the conclusion that it is going to take
more gold, and more gold value, to give the nations who are members
of the Fund the liquidity necessary to carryon their international busi-
ness. They would not admit that the lack of gold is now the cause of
monetary difficulties all over the free world. But before long I believe
they will be forced to this inevitable conclusion, that there isn't enough
gold value in the free world to aid the transaction of business. After a
great deal of study and observation I believe this is what we can look
forward to. As you probably read in the papers, the convention split
into two groups at the closing, both to give the matter of liquidity addi-
tional study. Our Mr. Dillon, Treasury Secretary, is a leader of what is
known as the Paris Club. The other group's study will be under the
jurisdiction of the Fund. I was unable to learn why the split or why
Dillon allied himself with the Paris group. At the close of the conven-
tion Dillon gave out that by early summer of 1964 his group might know
what was in store for us. Personally, I believe time is being marked until
more of the U.S. gold is scattered, making it more accessible for inclu-
sion in the gold of the Fund. Joe tells me he has letters from Congress-
men approving this idea.
«As for President Johnson, he has called in every line of endeavor for
suggestions, even colored integration leaders, but no gold producers.
This would force me to believe he will play along with the policy of the
late Mr. Kennedy. You probably will remember that Dillon was Eisen-
hower's choice and recommendation. There might have been a difference
if Mr. Kennedy had .made his own choice. There still may be something
yet to come in the Treasury situation. President Johnson has brought
into his office Robert Anderson, one of his Texas associates and former
Treasury head under Ike. There may be a change in the Treasury per-
sonnel but not in the policy until the Fund comes to a conclusion as to
the amount of gold it needs.
"With our Western congressmen going international and no help
among the Easterners for the gold producer, what do you suggest we
do?" asked the mine secretary.
"You can't lie down," answered Harold. "You have too much at stake.
Joe tells me you have definite information that our Treasury gold is sell-
ing in Liberia and Africa for $70.00. I would not let Washington forget
that. I would put that to every member of both houses of Congress. I
would take it up with President Johnson and demand an immediate
investigation - not by the Treasury but by the Joint Economic Com-
mittee. You have information that is of more value to you than the help
of a dozen congressmen. Use it - and use it quickly. You have an elec-
tion coming up. It's time to act."
The group thanked Harold for his ideas after which he, Joe and Mr.
Collins went to the Collins mine camp. Both complimented Harold on
his grasp of the world gold situation. "You have come a long way in that
195
line," said Joe. "How did you do it?"
"Give all the credit to Congressman Ben, my boss. He gave me time
off and many contacts, but there's a lot more to learn. Gold and money
is the people's business but there is nobody in Washington brave enough
to open up the subject and let the people know what's going to happen.
The 'money changers' are in control. They hold it's up to the taxpayers
to put up the gold and let them handle it. When the gold gives out the
taxpayers can then put up their savings and property to keep the Inter-
nationalists in business."
"If President Johnson can't see his way out of this mess," questioned
Joe, «what have we to look forward to?"
"You wrote me that you already have the answer in that Senator Barry ,
Goldwater, now leading in the race for the Republican nomination, is for
a free gold market. Under strict control, U.S. gold coined in foreign
countries has a value of $70.00 per ounce. If Barry gets us a free market
that market is open to gold producers. Seventy dollar gold would put
most of our mines back on production. And before conditions are finally
settled it now looks as if the yellow metal will have to have a price around
a hundred dollars."
"With Goldwater the only prospective candidate offering any way out
for the gold producer, and the man who wants a sound dollar, we got
to get behind him," said Mr. Collins. "And not too far behind. As for a
conservative administration, there never has been a time in our history
when we needed one more than now. All that our U.S. government
amounts to now is spending tax money to get votes. There is no longer
such a thing as economy in government. LBJ is now making a big play
on cutting down expenses. That sounds good to our tax ridden citizens,
but the gang President Johnson has to work with is not that kind. They
learned their stuff under FDR and have been on the spend ever since.
I used to think LBJ was at least half-way conservative, being a farmer
and one who had a rough start in life, but I've changed my mind. I don't
think he knows the difference between politics and economy. On the
radio this morning in commenting on big foreign aid spending he said:
<If I wasn't for it I wouldn't be a Democrat. In the coming election I think
Mr. Johnson will find a lot of Democrats who would rather have economy
than political success. As long as President Johnson whoops it up for
the Kennedy spending program, with an announced budget of over a
hundred billion dollars, there will be many Democrats who will turn him
down. I haven't much sympathy with those Kennedy followers who talk
and write about 'hate: Nobody hated Mr. Kennedy; they just didn't like
his program. And there is nobody hurt worse with that program than the
owners of a gold mine. What was a million dollar property in 1940 isn't
worth a plugged nickel in 1964. That doesn't make horse sense."
Both Joe and Harold heartily agreed with Collins and congratulated
him on his ability to keep up with the gold mining, industry and the
politics which had wrecked it. Joe was anxious to have Harold see the
Collins mine and its equipment. «It's got everything," he said enthusi-
196

astically, "from ball mill and rock crusher to the smelter that turns out
the bullion. Not a thing to buy, all in nne shape and ready to go to work
as soon as you hook up the motors to the power line. All we need is a
favorable administration in Washington."
That evening while Connie and Evelyn were putting in the final
touches on the wedding dress and the bride's trousseau, Joe and Harold
were deeply involved in talking over what could be done with the Collins
mine. Both realized that with only a slight raise in the gold price it would
be a bonanza. The equipment was in excellent shape; there was paying
are in sight and underground conditions were right. Mr. Collins and Joe
recently had hooked up the hoist to power and had checked the timber-
ing. It was in good condition with no caves. In a day's time it could be
running full blast, handling 50 tons of ore every shift. Mr. Collins loved
that property almost as much as he did his wife. He insisted on frequent
inspections to keep it in operating order. All of this was of exceptional
interest to Harold. If Joe had done so well in California why couldn't
he? If Joe had plans for operation he'd need help, in finances as well
as operation. He'd give it a lot of thought and in the meantime he would
have another talk with Congressman Ben about what the new adminis-
tration might do about gold. He talked it over with Evelyn. She, too,
was of the opinion they might become residents of the golden state. If
Joe had done so well there was no reason why Harold couldn't also.
Evelyn had already considered Harold brighter and a better worker than
Joe.
The wedding day for Connie and Joe dawned. The little church in
which miners worshipped back in the 1850's was the scene, with Evelyn
and Harold the chief witnesses. Mr. and Mrs. Collins were also happily
in attendance as well as a few close friends of Connie's who worked on
the paper. Joe unconsciously held up the party on the way to the church
by announcing he had an air mail letter from Sen. Ernest Gruening of
Alaska in which he fin:J.lly acknowledged taking cognizance of news that
U. S. Treasury gold, coined in foreign countries, took on a value of
$70.00 per ounce.
Joe was quite put out with the senator's comment that the $70 state-
ment ~ ' i s very interesting and would require careful study before using."
He turned the letter over to Harold with instructions for him to make
an early call on the gentleman from Alaska as soon as possible. "I don't
understand why Congress wouldn't be right up on its ear with that in-
formation," he said.
"Say, Mr. Bacon, don't you know you have a wedding on your hands
and a honeymoon coming up," urged Connie. ~ ' I f I hear any more about
gold mining during the next two weeks you are liable to be threatened
with a divorce."
"What, before we are married? Come along, my beautiful bride-to-be,
before you change your mind. Hal, take this letter and do your stuff.
We will want a report."
197
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And so Connie and Joe were married and irnlnediately left for Santa
Cruz on their honeymoon.
When Joe let Connie know where they were going she said: "1 know
what you want to do. You want to bother that California Mining Journal
editor who has his office in Santa Cruz. Remember what I said about a
divorce."
The Senator Gruening letter, given to Harold, read as follows:
Dear Mr. Bacon:
Thank you for your letter of December 14 concerning the gold legis-
lation. All of us who are concerned with enactment of a law to aid the
gold mining industry must be aware that, although the Senate Interior
and Insular Affairs Committee has reported S. 2125, it will still be ex-
tremely difficult to bring this legislation to the floor of the Senate. This
is, of course, because of the opposition expressed by the Executive
Branch - a circumstance which presents a very substantial obstacle to
getting S. 2125 scheduled for Senate consideration. Despite the difficul-
ties we face, I believe the action of the Senate Interior Committee dem-
onstrates the existence of strong pressure for assistance to the gold min-
ing industry which will be recognized by the Executive Branch.
Your information concerning a $70 per ounce price for United States
gold abroad, is very interesting. This, of course, requires the most care-
ful study before using it as an argument in behalf of gold assistance
Ie gisla tion.
As for your suggestion of expert testimony on the subject by Dr.
Franz Pick, there is no money available for payment of his fees. I will
however, keep your suggestion in mind.
Thank you again for writing to me as you have.
With best wishes, I remain
Cordially yours,
Dec. 17, 1963 ERNEST GRUENING, U. S. S.
Joe and Connie had the bridal suite at the Dream Inn in Santa Cruz,
the city's newest hotel, located on the bay just where scenic West Cliff
Drive begins. They both wanted to be by the ocean, at least that was
Connie's first thought. The next day she decided Joe had additional
thoughts when he announced he wanted to get in touch with that Mining
Journal editor.
«Remember what I told you about a divorce," Connie reminded.
"Well, there won't be any more gold mining until we get back to
Placerville," promised Joe. "I want to get something off my mind before
we get to taking in the city and surrounding area."
HI have been reading up on Santa Cruz, and there is a lot I want to
see and do here," Connie informed her husband. "I want to do the stores
and I haven't been to a show for six months. I want to visit the Begonia
Carden and see 'The Last Supper.' I want to go out West Cliff Drive
and drive up San Lorenzo Valley on Highway 9, which my tourist book
says is one of the state's most scenic roads. I got to look over the new
University grounds. (We may send our children to it.) Then we want
to go to Monterey, Carmel and Pacific Grove and the 17-Mile Drive."
"Wait a minute," broke in Joe. "Where have you been getting all
198
the information? You are jjust a sweet little lady from Placerville, and
you talk like a Santa Cruzan. Anyway I just want to have one talk with
the Journal editor. After that the honeymoon two weeks will be all
"
yours.
"All right; that's a promise, and if you don't keep it please relnember
my threat."
Joe had his visit. He wanted to inform President Johnson of what he
had learned by reading in The Journal of our Treasury gold bringing
$70.00 per ounce even in darkest Africa. Both he and the editor agreed
that it was queer that the Africans had a better idea of what gold was
worth than our U.S. money managers. They agreed that President J o h n ~
son should be sent the following letter:
Dear Mr. President:
The day's radio news told of your discussing unemployment with
your Labor Secretary. Considering a great many conditions under which
domestio industry must operate today, employment conditions are not
going to get any better, unless we undo many government moves of the
past decades. Steps must be taken more foverable to our own industries.
I would like to call your attention to a domestic industry that has
been closed for a number of years due to poor monetary management.
You, as a long-time member in the legislative branch, know all about
this. Perhaps you will agree with me that an appeal to Congress would
be useless as that body during the big depression, fearful of conditions,
gave up its power and duty of managing money to the Treasury and
Federal Reserve Board. Both those agencies have plans now to use our
gold in the build-up of the International Monetary Fund. Secretary
Dillon is now leading the Paris Club in a "liquidity" study, overlooking
the fact that at present there isn't enough gold value in the world, at
the low U.S. price of $35.00 per ounce, to finance the Free World,
the aim of the Fund.
At the same time, U.S. Treasury gold is being shipped to foreign
countries and coined, after which it is sold at an advance of 100 percent
above our legal price. This has been disclosed by Dr. Franz Pick, the
noted Chicago monetary expert. He brings out that the National City
Bank of New York is concerned, that one lot of 10,000 coins went to
Liberia after being minted in Switzerland, the deal there being handled
by the banking firm of Leu & Co. in Zurich. These coins, rated at our
price, had $18.90 worth of gold. In Liberia they brought $34.00.
The Bank of Netherlands Antilles handled similar deals for African
Republics, a $95 gold coin selling for $190. «These African nations
have 'bought' between $700,000 and $1,900,000 each of gold from
the U.S. Treasury, according to official statistics," quoting Dr. Pick.
No one objects to our government making a profit, but today there
are 27 billion foreign held dollars which must be converted at $35, as
long as we comply with the Bretton Woods Agreement. When our gold
is worth twice that figure why does your administration persist in the
conversion at the low price? And why does your administration persist
in keeping our own gold mines closed by refusing to give them the ad-
vantages of the foreign gold market?
We note that Robert Anderson, former Treasury Secretary, has
joined your office. He no doubt knows all about this. Refusing to offset
inflation with a proper gold price is hurting every taxpayer. RefUSing
to reopen our own gold mines is adding to unemployment and keeping
a large portion of the Western States in a ghost town category, at the
same time practically rendering valueless gold properties that in 1930
to 1940 were worth millions. It certainly does appear that we are over-
199
looking a vast field of national improvement.
Mr. President, this letter is intended for your personal consideration.
Please do not turn it over to any monetary agency. If you don't have
time to give it a thoughful answer, I won't expect to hear from you.
Wishing you success in the world's toughest job, I am,
Sincerely yours,
JOSEPH A. BACON.
Placerville, California.
During Joe's and Connie's absence on their honeymoon, John Collins
saw to it that Joe's mail was not neglected. Joe had told him to open
and read it upon receipt and hold it for his return. John was cocked and
primed to light in on President Johnson's office for the shoddy little letter
that came in response to the long one he had written the President on
January 2nd. Here is a copy of it:
Dear Mr. Baron:
The President has asked me to thank you for your letter. It is
helpful to him as he assumes his new responsibilities to have the think-
ing of our citizens on matters of interest and concern to the Nation, and
he appreciates your taking the time to write.
Sincerely,
RALPH A. DUNGAN;
Special Assistant to the President.
When John read that letter he was fit to be tied. He was really angry
and Mrs. Collins had to listen to his tirade. «Joe wrote that Texan a fine
letter and it's an insult to get such an inane reply. It was when President
Johnson was all het up about needing five million new jobs and just about
the same time that Studebaker decided to move their factory to Canada.
Joe wrote an excellent letter about how reopening the gold mines could
supply a lot of those new jobs.
"J oe reviewed the whole gold situation, especially about our continu-
ing to payoff our foreign debts in gold at $35 per ounce, while a New
York bank was shipping our gold to Switzerland, where it was coined
and sold to Mrican countries for $70 per ounce. When the president
won't listen to facts of that type conditions must be getting pretty bad
in Washington. The Bobby Baker stuff doesn't begin to compare with
the gold scandal, if you ask me."
"Joe and Connie will be home tomorrow," cut in Mrs. Collins. "They
have had such a nice time that you'd better not show Joe that letter for
a few days, at least until after Joe has swung into his job at the office."
"OK," said J ahn, «but I know Joe will want to get a size-up of how
President Johnson views the gold situation as soon as he can."
"As you state he won't get it from that letter," responded Mrs. Collins .
. "He just wasted his time and effort. It's too bad there isn't somebody in
Washington who will consider the situation as very serious. I don't know
much about it, but from hearing you and Joe talk there must be some-
thing decidedly wrong."
"Anyway, we still h a v ~ Barry Goldwater to depend upon," said John.
"If he can convince the voters that President Johnson and Rockefeller
200
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are both out to give all our gold to the Internationalists we may have a
chance to put Barry in the White House and really go back to putting
this nation on a conservative basis. LBJ and Rocky are so darned liberal
with our taxes that if either of them get back in for another four years
you can expect a depression that will rock the very foundation of the
nation. Barry Goldwater is our only salvation."
Upon their return from their honeymoon in Santa Cruz, Joe and Con-
nie lost no time in calling on Mr. and Mrs. Collins. Mrs. Collins was
right. They were so happy that it would have been too bad to drag them
immediately into the Washington political mess as far as it concerned
gold mining. It would not hurt to let them have a few days to get settled
in Connie's cozy apartment. They certainly were two happy kids and the
Collins were just as happy as the newlyweds.
As Joe got back to work at the mining office, however, he spent some
time in catching up on his correspondence. As John predicted, he blew
his top when reading the scanty and completely useless reply from Presi-
dent Johnson's office. That wipes up Mr. Johnson as ever taking a hand
in correcting the gold mining situation, concluded Joe. Like Ike and
Kennedy, the man from Texas is under complete control of the Interna-
tional Monetary Fund, he further concluded: «It appears that Washing-
ton is bent on giving our gold to the IMF and mortgaging the property of
our taxpayers to mop up inflation results and our vast national debt," he
said to Collins when he got back into the swing of his work.
"We \vill just have to depend upon someone else in Washington,"
agreed John. "President Johnson has proven to be a complete washout."
A few days later, dated January 30, 1964, Joe received a press release
on a new gold bill from the office of Representative Walter S. Baring
of Nevada. It was very similar to the Greuning bill which received In-
terior subcommittee approval but could get no further due to Senate
opposition.
Joe couldn't get any encouragement from the Baring bill, HR 9756,
and lost no time in writing the following to the Nevada congressman:
Dear Congressman:
Received your press release on your HR 9756. Isn't it very similar
to Senator Greuning's S. 2125? We have a letter from the A ~ a s k a n sen-
ator, written following his getting a unanimous vote of the subcom-
mittee, in which he practically gave up, with the statement that it will
be impossible to get the Senate to go for the bill.
Considering this fact, why another similar bill in the House? \Vhy
haven't members of both houses become interested in the fact that U.S.
Treasury gold is now being shipped to Switzerland, coined, and then
sold for $70.00 per ounce in Africa. It appears to us that this is right
for an attack and an immediate investigation. This has been exposed
by Dr. Franz Pick of Chicago, the nation's leading expert on gold and
monetary affairs.
If I were you I would forget about any more bills, form a gold oom-
mittee, with members from both houses, and press the Treasury for a
full investigation. Telling the truth, the Treasury could no longer hold
201
to the statement that $35 is the world price.
Sincerely,
JOSEPH A. BACON.
When Joe talked over the Nevada congressman's move and his letter
on it to his boss and Mr. Collins he admitted that he had just about
reached the end of his rope. "If Walter Baring won't call for an imme-
diate investigation I will be ready to give up," he said.
"I still have another idea which may prove helpful," said Collins.
"Let's have it," responded Joe. "But it's got to be good. Washington
doesn't seem to listen to anything for the benefit of domestic gold min-
ing. Shoot!"
"For years I have been watching Clair Engle, first in the House as our
representative in our District II, and now in the Senate. He certainly
did a lot for us while in the House, but after getting in the Senate some-
body appears to have put a buckstrap on him. He's forgotten all about
the gold miner he did so much for while he was representing our Mother
Lode in the House. As you know he has been sick since last August but
now is on the improve. He got back in the Senate for a few days just at
the end of the first half of the present session.
"Regardless of the fact that he was on the improve a number of Demo-
crats with ambitions to grab his seat in the Senate, led by Governor
Brown, started a move to get Clair to resign. The governor had several
cronies willing to take over Clair's $22,500 job. When that didn't work
they made all sorts of moves to get Clair to say he would not be a candi-
date for re-election in this year's election. Governor Brown made several
trips hack to Washington to work on Clair and Mrs. Engle, hut each time
came back empty handed. About that time Clair announced he would
again be a candidate, a number of the Democrat hopefuls, with ambitions
to take his seat, letting it be known that unless Clair could produce a
medical statement that he was fully able to make a vigorous campaign
they would be out against him.
"That old Governor's antics made me mad. Many times I have met
and talked with Clair, and I could not forget all he had tried to do for
us gold miners. I'm not much of a letter writer hut I spent several days
writing Clair. I haven't mailed the letter as yet. I wanted you to read it.
Here it is. I hope you approve. This is what John wrote:
Dear Clair:
I hope you will pardon the use of your first name, but I have met
you and talked to you a number of times and never overlooked all your
efforts to do something for the Western gold miner. That appeared to be
your main work in the House, but since you went into the Senate it
looks as if you have forgotten us. As you probably remember, I am the
owner of an EI Dorado County gold mine, worth a million dollars back
in the '30's but not worth a tinker's dam since the Closing Order L-20B.
I well remember when you first went into the Legislature from Red
Bluff, Tehama County. You did not waste any time trying to get that
body interested in trying to get our gold mines reopened. You were
one of the first to join Western Mining Council, Inc.
202

The late State Senator Thomas McCormick, then president of the
Natomas Gold Dredging Company, gave the mining organization a
dinner at the Sutter Club in Sacramento. You and Senator McCormick
were the only legislators present. Somebody wanted you to get a good
grasp on mining so sat you next to Bob Dahlberg of Auburn, Placer
County, who learned his mining in Colorado. From that time on you
did your best for mining, continuing when you were elected to the
House of Representatives for District II, the 19 counties of which are
gold producers - when Washington will let them.
Just as soon as you reached Washington you met the late Senator
McCarran of Nevada, a mining leader. You and the senator were the
first to come out for a world free market for gold. You both brought
out the idea that the "liberal" spenders had dethroned gold as the basis
of our money because it acted as a police on holding down government
spending.
I remember during Eisenhower's administration you asked the West-
ern Mining Council to get you a gold nugget to present to Ike. You
had an idea that if he had one for a pocket piece he might be more
favorable to the gold miner. Little Jane Osmeyer of the Plumas County
Chapter provided the nugget from her private collection. When you
presented it to Ike do you remember what he said? I was mad for a
week when I read his reply. It was, «I am pleased to have a memento
of a past industry." He should have been made to eat those words,
but you were too polite to tell him so.
This did not discourage you, however. Some of the Counoil lead-
ers got the idea that the Treasury Department had led us astray about
the provisions of the Gold Reserve Act. We did not believe that placer
gold was the same as gold bullion and was under the jurisdiction of the
Treasury. We took up the matter with you and you boned the Treasury
about it. It took you fully three months to get an answer. The Treas-
ury had to admit that placer gold, or as the law puts it, "gold in its
native state" is free of government control. You can hold it or sell it
for any price that you can get. That decision was very helpful. Since
then I know of placer gold that has brought prices from $100 to $140
per ounce.
When you got into the Senate no doubt you humped into a lot of
opposition to your plans for gold. Senator McCarran had passed away,
and all the Senators appeared to be for shoveling our gold out to for-
eigners in converting the dollars the administration so lavishly spent
in foreign countries. They thought more of obeying the Bretton Woods
Agreement than they did of keeping a solid base of gold behind our
$35 billion worth of paper. And that's the situation as of today.
It now looks as if you will not only have the opposition of the lead-
ers of your own party in the coming election but will have to face a
strong oontender from the Republican ranks. The mess your Democrat
friends have stirred up will no doubt be helpful to any Republican
candidate.
At this time I cannot help but be reminded of the steward in the
gospel who was about to lose his job and was called upon to render
accounts to his master. The steward was old, too proud to beg and too
old to get another job. When preparing his accounts he called in his
master's debtors and excused each of them parts of what they owed.
When the master observed what he had done he commended the
steward for his prudence in planning for his future when he no longer
would be steward.
Now Clair, with the greater part of your last year in the Senate
before you, you still have a wonderful opportunity to do something
for the gold miner. Sen. Ernest Gruening needs help for his gold bill
which has received unanimous approval of an Interior committee. You
and your friends could supply that help. You could revive the move
for a world free market. There is not enough gold in the whole free
203
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world to carryon its commerce. A higher price is necessary. The U.S.
Treasury and the Federal Reserve Board can no longer get behind the
argument that $35 is the world price as it has been exposed that our
Treasury, with the help of the National City Bank of New York, is ship-
ping gold to Switzerland, where it is coined and sold in Africa for $70.
per ounce. With this proven fact you can break the banker's hold on the
future of gold, and forever win a place in the economic history of the
nation. I am inclosing a page out of the December, 1963 issue of
the California Mining Journal, quoting Dr. Franz Pick of Chicago, who
has revealed the $70 gold deal now being participated in by the U.S.
Treasury.
With best wishes for a continued improvement in your health, I am,
Sincerely,
JOHN COLLINS,
Placerville, California.
('Why, John, that is a Jim-dandy," enthused Joe. HIt's a historic and
political masterpiece. Knowing Clair Engle as you do I hope it will have
some influence on the California Senator, and that we get a good re-
sponse from him. With Engle and Gruening in the Senate and Baring in
the House perhaps we still have a chance to get a complete investigation
of our Treasury gold bringing $70: per ounce in Africa. Why don't we
write the Treasury Department? It would be interesting to hear its ex-
planation."
"A good idea," said John. "The three boys we are depending upon
might be backward in boning the Treasury. That department has run
our monetary affairs so long that most congressmen approach them with
fear and trembling. But we don't look upon them that way. Sec. Dillon is
just another government worker living off our tax money. I say, give him
a letter." And so Joe wrote the Treasury the following:
Information Department,
U.S. Treasury,
Washington 25, D.C.
Dear Sirs:
Your attention is called to a page olipped from the December, 1963,
issue of California Mining Journal, which reports that U.S. Treasury
gold is being shipped to Switzerland, coined, and then sold in Africa
for $70. per ounce.
This Was first printed in the Northern Miner, Toronto, Canada,
which gave Dr. Franz Pick of Chicago as the authority of the report.
With Dr. Pick's knowledge of world finances we believe there is noth-
ing wrong with his report. We would like the Treasury's statement on
this highly important revelation.
How can your department hold that $35 is still the world price of
gold when transactions like this are now being carried on? We would
appreciate an early reply.
Thanking you we are,
Sincerely yours,
JOSEPH A. BACON.
Placerville, California.
«And that Alaska boy, Senator Gruening, hasn't given us an answer
concerning the $70. gold in Africa," said John. ~ < L e f s give him another
letter.. If our gold is bringing $70. I want to know who is getting the
profit. The last we heard from him was that there was no chance of get-
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...
ting his gold bill through the Senate, so all the work he and his Interior
Committee did is a complete loss. Long ago they should have learned
that the Treasury, the Federal Reserve Board and the International Mon-
etary Fund are not going to submit to a gold bill being handled by the
Interior Department. Handling our money and gold is a special job,
handed them by Congress, and they will not let any other department
horn in.
"And as long as it is impossible to get approval of any bill that -will
improve the position of domestic gold mines there is but one way left
for us. That is to press for a complete investigation of the Treasury's sale
of our $35 gold in Mrica for $70. That should be as plain as the nose
on your face. We must keep after our Western gold members in Congress
until they make the necessary move. If I'm not mistaken this has been
going on for years. 1 remember when Senator Knowland of California
and Senator Ferguson of Michigan brought this up on the floor of the
Senate. They both agreed at that time that our government was allow-
ing foreigners from $70 to $77 per ounce for their gold. The Senate, most
of whom are under the thumbs of the International Bankers, now gain-
ing control of our gold, were not impressed by the assertion of their two
leaders. No doubt it will take a bomb to get the age-encrusted Senate to
realize that a Communist plot is ruining our monetary system."
"I agree with you, John," said Joe. "Let's dig into Dr. Pick's revela-
tion and use it for everything it's worth. The Treasury will have to have
some kind of an answer. I'll put them on my letter list. In the meantime
I will give Senator Gruening another letter in a try to make him see that
an expose of the $70. gold deal is practically the only move we have left.
I will sell my boss on this idea and suggest that I keep at it until we get
some action."
"That's all there is left for us to do," answered John. Our years of
effort have brought us to no other conclusion."
Hon. Ernest Gruening,
Senate Office Building,
Washington 25, D.C.
Dear Senator:
Considering your belief that there is no chance of getting the Senate
to approve your S. 2125, why don't you accept our suggestion that you
demand of the Treasury a full explanation of our Treasury gold bring-
ing $70. per ounce in Mrica?
We have written Clair Engle. who knows the gold situation from
A to Z and also Walter B a r i n ~ of Nevada who has introduced a bill
similar to your S. 2125. There s no doubt of his bill meeting the same
fate as yours.
Thanking you for keeping us informed as to your efforts for gold,
and awaiting your reply, we are,
Sincerely yours,
JOSEPH A. BACON.
Placerville, California.
Consulting with John about the letters they had out awaiting an-
swers, Joe suggested writing that bank in New York that Dr. Pick re-
205
ported as being involved in the transactions that brought the value of
$35 Treasury gold up to double that value.
"A good idea," stated John. "That bank is the first to handle the gold
as it leaves the Treasury. 1 note in today's paper that bank is quoted as
stating the $3.6 billion loss in the balance of payments of 1962 has been
cut to $3 billion for 1963. However, it does not mention the over 27 bil-
lion of foreign held dollars awaiting Bretton Woods Agreement treat-
ment. I wonder why."
J De wrote the bank:
First Nation City Bank of New York,
New York, N.Y.
Dear Sirs:
We are looking for information.
In today's Los Angeles Times it quotes your bank as stating that
the Balance of Payment situation of 1963 has improved over that of
1962 - $3 billion as compared with $3.6 billion.
While this is a slight improvement you omit the fact that there are
now over $27 billion of foreign held dollars awaiting conversion to
Treasury gold, when there remains only about $3 billion to do the con-
version. Why do you omit this most important detail?
Another matter: we note that Dr. Franz Pick, the noted Chicago
monetary expert, has connected your bank with some U.S. gold trans-
actions that do not look good to us. It is stated that you have access
to Treasury gold which you ship to Leu & Co., Zurich, Switzerland.
There it is coined and sent to African republics who pay $70. for it.
We would like to know how you get away with this when the
Treasury Department continues to hold that the free world price of
gold is $35. Also we would like to know who is making the $35 profit.
Thanking you for an early reply, we are,
Sincerely yours,
JOSEPH A. BACON.
Placerville, California.
With the letter on its way to New York, John Collins thought it was
time to begin to sum up his and Joe's efforts to determine what else could
be done. "No doubt your boss at the office is awaiting a report so we
might as well be hatching it up," said John.
"While we have put in a lot of plugs in important places," remarked
Joe, we have practically drawn a blank as far as results for the gold
miners are concerned. Congress as a whole is going along with the Com-
munist plan of Alger Hiss and Harry Dexter White to take all the gold
out of the U.S. monetary system. In the whole of Congress there hasn't
been a voice raised against the Bretton Woods Agreement, the Hiss-White
frame-up, by which we not only lose all our gold but end up owing for-
eign countries billions. And if I know what I am talking about, the In-
ternational Monetary Fund will be glad to take over that debt as long
as we are suckers enough to pay all the taxes Congress votes on us."
"I think that's about the size of it," said Collins. "But let's make a
check and determine who in our government is responsible for this
monetary mess."
206
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"Let's start in with Senator Alan Bible of Nevada, a man who should
lead the move for keeping the dollar sound for American taxpayers. He
was the first to tip us off that the Administration plan is to give all our
gold away and make our property back the national debt and all the
adverse effects of inRation. Bible objected strenuously to my designating
the Washington leaders traitors who approve the Hiss-White deal. If
those two Commies can be called traitors why not those now carrying
out the Hiss-White plan?
Coming closer to home and reviewing the record of our own Mother
Lode congressman, Bizz Johnson, I still haven't found out why the 'Bizz.'
He has kept insisting on treating gold as an ordinary commodity instead
of money so that his bills would not have to be submitted to the Bank-
ing & Currency committee. And every time he got anywhere near a hear-
ing it was always Banking & Currency boys who licked his bill. He did
not realize that any bill pertaining to gold would have to go the banking
route. Senator Gruening's bill, S. 2125, was the same type. After he re-
ceived full approval of his Interior committee he was still up against the
senators who take bankers' orders. He was through."
"However," cut in John, "you will have to admit that Gruening has
been the only one who took notice of that deal by which our Treasury
gold, coined in Switzerland, is bringing $70. per ounce in Africa."
"You are right," answered Joe. "That's the only ray of light that has
shown up in all our endeavors. I am now trying to get Senator Gruening
to start an investigation of that Treasury deal. But we are getting ahead
of the parade of congressmen and others responsible for the bad deal
now being handed to domestic gold miners. After checking on all those
we have contacted I intended to bring out that Senator Gruening was
on to the $70. deal. However, if you remember, I wrote him three times
before he took notice of the African deals. We must check some more
with him and the $70. gold sales.
"We have determined that Gov. Nelson Rockefeller, who has designs
on the White House, is a complete flop. He refused to answer the sim-
plest questions put to him on gold. He has sold out, lock, stock and
barrel, to the Internationalists. Ditto for Sen. Thomas Kuchel, your own
California senator, especially -since he has taken on the job of heading
Rocky's campaign in the Golden State. (John, I wonder if we will have to
quit designating it as such.)
"When it comes to doing something for domestic gold, President
Johnson is no different than the late Mr. Kennedy. The International-
ists have him roped and tied, hand and foot. He's in the same class as
Rocky; not one iota of difference.
«For a while I thought that good Republican, Thomas B. Curtis of
Missouri, might be of some help to us but he, too, proved to be sold out
to the Internationalists. The Hiss-White deal is working both Democrats
and Republicans. A good American gold miner hasn't a look-in with any
of them. Congress is a complete washout. An investigation of the Treas-
207
ury's $70. racket is about our only opportunity to get something started
but I doubt if there is anyone in Washington who would go after it.')
«Right you are," agreed Mr. Collins. "1 can't help but think of those
'patriots' Senator Bible wrote you about. However, when you get down
to bedrock a congressman would need a lot of guts to really go after the
money changers who have wrecked our gold mining. I remember back
in 1934, when the monetary mess wasn't nearly as bad as it is now, a
member of the House, Louis T. McFadden, let off a blast on the floor
about what a corrupt institution the Federal Reserve had turned out to
be. And he didn't let up with one speech. He accused Sen. Nelson W.
Aldrich, who introduced the bill which founded the 'Fed' as 'the tool of
European bankers, who for nearly twent), years had been scheming to
set up a central bank in this country and who had spent vast sums to
accomplish their purpose.' Well, to make a long story short, Congressman
McFadden did not live long after those speeches in the House. Two
known attempts were made on his life. He was poisoned at a govern-
ment banquet but was saved with a stomach pump. Next, some one took
two shots at him but missed. But a short time later he died a mysterious
and unexplained death. So it would really take guts to go after those
who are keeping our gold mines closed."
"Good God! Mr. Collins, can that be so?" exploded Joe.
"You don't have to trust to my memory, although rn put it up against
a lot of folks my age," responded John. "The whole mess has been pub-
lished in a pamphlet by Forum Publishing Co., 324 Newbury St., Boston
15, Mass., which you can buy for 50 cents."
"Well, no wonder our duly elected Representatives and Senators shy
away from taking up matters at the fountain head," said Joe. "Maybe I
will be a marked man with those letters I have written the Treasury and
the New York Bank which shipped that $70. gold. We should be hearing
from them soon. As soon as I get the answers I will be bothering you
. "
agaIn.
"No bother," said Mr. Collins, <cand bring Connie. We are always glad
to see you both."
A week later Joe and Connie called at the Collins home. Joe had
letters from the First National City Bank of New York, that shipped the
gold, and also from Leland Howard, Director of the Office of Domestic
Gold and Silver Operation, a Treasury official. Both had the same story.
The gold coins minted in Switzerland were 'commemorative' coins, mark-
ing celebrations. This, the writers asserted, accounted for the bonus of
$35. which they brought. "That could account for the 10,000 coins that
went to Liberia," explained Joe, «as the celebration marked the inaugura-
tion of President Tubman, but there were many more shipments of our
gold that went the same route to Mrican nations that were having no
celebrations. It is very evident that the African New Republics, buying
this gold need it to back whatever currency their government has issued.
They have more respect for gold than does our government. I wrote Mr.
Leland of this fact.
208

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...
Mr. Leland Howard,
Director, Office of Domestic
Gold and Silver Operations,
Treasury Department,
Washington 25, D.C.
Dear Mr. Howard:
Your statement about our Treasury gold, coined and sold for $70.
per ounce in Africa doesn't appear to stand up to facts as revealed by
Dr. Franz Piok of Chicago.
The first lot of 10,000 coins that went to Liberia might have been
commemorative coins selling for a premium, but there was no event to
commemorate another 6,000 coins of a gold value of $95 each that sold
for $190. each. And what about the $700,000 to $1,900,000 that went
to other Black republics?
And what about Dr. Pick's statement: «These coins are forerunners
of more to come." It looks as if there are more explanations coming.
Sincerely yours,
JOSEPH A. BACON.
Joe had written Mr. Howard further, especially in reference to the
commemorative idea. It was evident however, that the Treasury official
did not want to be questioned further. He cut Joe off with the following
snappy letter:
Dear Mr. Bacon:
This is in further reference to our recent correspondence concern-
ing the sale of gold.
There is more that I can add to my letter of March 9, 1964,
inasmuch as the infonnation I gave you in that letter explains the cOn-
ditions as they happened.
Very truly yours,
April 9, 1964 LELAND HOWARD.
The next evening Joe and Connie called on the Collins. John lost no
time in latching on to Joe while the ladies took to another room, knowing
they would not have an opportunity to get into the conversation when the
men got together.
"Did you see the Los Angeles Times today?" questioned John.
yet:' answered Joe. "The office has kept me on the hump today."
ell, the big hawk has lit. Mr. Dillon has convinced the Joint Eco-
nomic Committee that the 14,000 member banks which have over $48
billion invested in the Federal Reserve Bank don't need the gold backing
these deposits have with the Federal. Nine of the 16 members of that
committee are in favor of scrapping the law which requires 25 cents in
gold per dollar backing those deposits. This can be done by passing the
Abraham Multer bill which has been kept on ice through the last two
sessions of Congress.
Joe was all ears. he said, what Senator Bible of Nevada
brought out in his last letter. You remember he wrote that it was held
that ditching all our gold would strengthen our paper money, as then all
our debts and our $30 billion imbalance of payments to foreigners would
be levied against our people's property and savings. That's where the
squanderings of present and past administrations are taking us. How do
209
you like it?"
"I don't like it," responded John. "The gold miner has had the rotten-
est deal of any industry in the nation, and now we will have to put every-
thing we have in hock to pay for the acts of a government steered by
Communists in the State Department."
"'It does get you down," Joe said, "but just remember, even though
our communized government turns against gold in favor of paper prom-
ises it is still very much desired by the International Monetary Fund and
the bankers of the rest of the world - even Russia. A lot of nuts in U.S.
say gold is worthless because you can't eat it. Mr. Khrushchev knows
better than that. He used his gold so that his people might have bread."
"'No doubt you remember, Joe, that this Joint Economic Committee
was told by Mr. Dillon that he did not require the repeal of the 25-cent
law, as he had at his command another law which would offset it. If this
be true why is the Committee pushing for the Abe Multer bill? I'd like
the answer. Has Mr. Dillon been kidding us?
Maybe we can take heart in the fact that the committee has some
Americans on it who oppose the move. There are five - all Republicans
- Senators Jack Miller of Iowa, and Len B. Jordan of Idaho; Represen-
tatives Thomas B. Curtis of Missouri, Clarence E. Kilburn of Kentucky
and William B. Widnall of New Jersey. We can also believe that Barry
Goldwater will go along with these and make it one of his campaign
issues. He has already declared for a free gold market, which, if adopted,
would put the Bretton Woods Agreement out of business as well as make
the move of the Joint Economic Committee useless."
Joe had another letter, this one from Sen. Kuchel of California. He
explained that it was in answer to one he wrote in 1963. "'In my book,"
he said to John Collins, ""Tommy gets the prize for the longest delayed
letter. So much happened since I wrote the senator that I thought I'd
better give him a history lesson. Here's his letter and my reply:"
Dear Mr. Bacon:
My efforts to improve the domestic gold mining situation have not
been and are not half-hearted. The fact of the matter is that I am one
of 100 Senators; there are also 435 Members of the House of Represen-
tatives. All these Members of Congress have a voice in the matter. I
cannot do the job alone, nor can Senator Gruening, nor can all of us
who have co-sponsored S. 2125.
Little or nothing will come to pass on this legislation until the Ad-
ministration removes its threat of Presidential veto. Heretofore the
Administration had not had an opportunity to say it disapproved of the
compensatory payment approach of S.2125. That is why we sponsors
of that bill thought it might have a chance. We wanted to put the
Administration to a test on the matter. Unfortunately, the reactioh was
the same as it has been to all other proposals for helping your industry.
I hope that you do not think that because of this ultimate reaction
of the Administration that I was wrong in exploring the possibilities. I
am sure that the other members of the gold mining industry in the
United States would not wish me to withdraw from working on their
behalf merely because the President of the Western Mining Council,
Inc., undertakes to criticize me whenever the Administration frustrates
210
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my efforts. That is why I will continue to work for the benefit of those
in your industry, even though you do not appreciate that work.
Sincerely yours,
April 14, 1964 THOMAS H. KUCHEL.
United States Senator
Han. Thomas H. Kuehel,
U.S. Senate,
Washington 25, D. C.
Dear Senator:
Thanks for your long-awaited answer. Much has happened in
gard to gold since I wrote you, all of which you and co-members should
be aware.
Dr. Franz Pick of Chicago has brought out that the Treasury is
over $4 billion off in its Daily Reports, in its failure to take into
sideration gold loans from the IMF, dollars swapped for convertible
foreign currencies, and other transactions to keep the reports looking
good to us, the brain-washed public.
Dr. Pick has also brought out that Treasury gold is being shipped
to Switzerland, coined, and sold to the new Mrican republics for $70.
per ounce. The Treasury is trying to get by with the statement that
these gold coins were for commemorative purposes, but this was only
in the case of Liberia.
Eleven Democrats on your Joint Economic Committee have voted
to scrap the reserve law which calls for $12.3 billion backing Federal
Reserve Notes and deposits. You took no part in backing up the five
Republicans on that committe who filed a minority report. I really
don't think you are a Republican any more. We can't have a sound
dollar if we scrap our gold reserve.
Your support to Senator Gruening's S. 2125 is useless, as the Interior
Department has no jurisdiction over money; and gold is money. Your
Banking and Currency Committee will never let an Interior committee
handle its business. It's a backdoor approach to the situation that won't
work.
Senator Barry Goldwater is the only one in the Senate who has
come out with the proper gold reform - a Free Gold Market. But tied
up as you are with Governor Rockefeller you can't do anything about
this. He is a liberal internationalist willing that all our gold gets into
foreign hands. I am certainly sorry you have tUrned against California
and its efforts to get back to producing gold, a monetary commodity
now needed by the entire world.
Sincerely yours,
JOSEPH A. BACON.
California.
should hold the senior senator from California for a while," said
John Collins. «He certainly has proven a blank for Western gold miners
and he further showed his uselessness by taking over the management of
Rockefeller's presidential campaign in our state. The Rockefellers are
part and parcel of the internationalists, bent on securing the control of
your Uncle Sam's gold; first selling the American public the idea that gold
is no longer necessary in our monetary system, in order to make the steal.
Their big profit will come when we, the taxpayers, will have to buy it
back."
«What do you think the price will be to us softheads?" questioned Joe.
211
"U sing the proper ratio between money and commodity and service
'Costs it can't be less than $105. per ounce/' answered John.
"'Then," quickly responded Joe, «with that additional value of gold
we could meet the cost of President Johnson's 'war on poverti and it
wouldn't cost the taxpayers a penny.»
"The Money Changers didn't ~ p l a n it that way' Joe. It is intended
that we boob taxpayers put up the costs of LBI's spending so that the
IMF can hold the gold until profit time comes."
"And how about that $15 billion worth of cancellable bonds that the
Federal distributed to their 14,000 member banks?" asked Joe. "You told
me about that steal last year, if you remember.»
"1 sure do. That was the time Hon. Wright Patman of Texas intro-
duced a bill in the House to stop the distribution. It received only 60
House votes out of a total of 437. That $15 billion would practically win
LBJ's poverty war. But he, like other presidents, is now taking orders
from the Money Changers. The cost of the poverty war must be charged
to us, the taxpayers. The Honorable Mr. Patman is now chairman of
the House Banking & Currency Committee, a position in which he could
really do something about the situation now. But he looks the other way.
"Well, then what's the answer?"
"There's only one answer, Joe - Barry Goldwater's World Free Market
policy. It would put the Bretton Woods Agreement out of business, stop
the drain of our Treasury gold to foreigners and reopen the West's gold
mines. Furthermore, those foreign dollar holders who would not want
to pay the new price for gold would use their dollars to buy our produce
and manufactured articles."
"That would be a real program for the whole nation to adopt," en-
thusiastically added Joe. «I move that Sen. Barry Goldwater of Arizona
be our standard bearer in the 1964 presidential election."
"I second the nomination and urge that it be spread on the minutes
of every mining organization in America," responded John Collins.
And so ended an evening, the discussion of which lined up more work
for Joe. As he and Connie made their way home he offered his excuse
for taking the entire evening talking gold with Mr. Collins.
«Mrs. Collins and I did not mind," replied Connie. "We had an enjoy-
able evening. And if it were not for gold and mining my name wouldn't
be Mrs. Joe Bacon."
THE END
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