The diamond drill., 1903-08-22

properties and of the Rockefeller ore
On the other hand. such properties
as those Of the tin plate, steel look
and sheet interests cannot. ON the basis
of earnings. be rated worth ~ much
as was paid for them, their contribu-
tion to the steel corporation being
much in the way of furnishing an out
let for steel produced by the other
bran ches.
The large amount OF 'swater" in the
corporation s securities was represent
ed by book values for mineral pro-
perties very much in excess of any
which before the corporations forma-
tion had been assigned to them. 1t
became a question then OF the corpora
tion's ability to realize on these
mineral properties the values thus as
signed. A true understanding of the
case was much beclouded by state
ments made before the Indutrial Com
mission and in the Hodge litigation,
which statements by no process of
reasoning could be reconciled with the
interest and dividend obligations
which the corporation had assumed.
Thus the ore and Contemporaries were
put as being equal to four r-sevenths Of
the corporations 5 securities issued at
one time, while at another time ii was
intimated that the COKE properties
would last 80 years and the ore pro-
perties perhaps 60 years. 1t requires
no involved process Of reasoning to de-
duce that il these were the facts it
would require an enormously high rate
of return on ore and coking coal as
they are taken out of the ground to
maintain interest and dividends on
the securities which appeared to have
been issued against them. IL ton Of
ore is to remain in the ground for go
years, and yet have a security issued
againts it on which interest or divid-
ends must be paid every year for 60
years, then the realizable value of that
ton of ore must be extremely high
when it is finally taken out of the
ground or its present value, as com
puted from the realizable valde go years
hence, must be extremely low. This,
in n nutshell was the dilemma found
by those who attempted to study the
corporation from the standpoint of
information furnished.
As shown bv the operations of two
and quarter years, the real position
Of the corporation is quite different.
It's mission is, not TO rely upon SUP
ply of minerals for half century to
come, but TO convert these minerals as
rapidly as possible into cash, to be in
vested in plant continuously earning
profits
1t has been customary TO assume that
the corporation or IN sight amounted
to about 700, 000, 900 tons, with book
value OF dollar ton. In 1902 the
corporation mined 10000. 600 tons of
ore, and with not a particle of i'm
crease, this rate would exhaust 700,
600, 600 tons of ore in "a years There
is every reason TO believe. however,
that the rate of mining will increase,
and il can hardly be considered ex
travagant, in casting about for a
measure of the probable increase, to
take that year in the past which, com
pared with the total ore shipments in
1902, shows the smallest rate of in
crease in the interval. That year was
1890 IL we take 1890, we take that
year in the past which will show the
smallest rate Of increase for 1902. In
1890 the Lake Superior shipments were
o, 003, 725 tons, and in 1902, 27,57l, 121
tons were shipped. This shows an
average annual increase, one year over
the preceding. of almost an even 10
per cent. Now, il we assume an
average annual increase for the steel
corporation OF 10 percent, then roo
900, coo tons will have been mined In
seventeen years, beginning with 1902. ,
On such basis Of computation the
year 1918 would see the last Of 700, 000 :
900 tons mined by the corporation.
In that comparatively short period
whatever of actual value there is in the
which are set down at
book value of $7O0. 600, 600 would be
realized. and the funds, If proper
were followed invested in
actual continuous revenue producing
plant, barring that portion which may
be used 10 retire bonds.
IL is OF paramount importance, then,
to observe whether the sinking funds,
depreciation and reserve accounts, and
surplus each year harmonize with the
rate of mineral exhaustion. II they
do. then the corporation has the op-
to make the required con-
yarqipu ~ ;,,t, olaf