The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1907-09-13

Steel corporations properties, and ex
planned their unfairness.
sin fixing a cash value on mining
property" said Mr., Kellogg, SIT must
be considered that Ia taking out ore
year by year, the owning company is
eating up its invested capital. Real
estate in Minnesota is assessed for
taxation at about forty per cent of its
actual value. Therefore, in all fair
ness, mining properties should not be
assessed above forty per cent of their
value. There is also the fact to be
remembered, that only a limited
amount of ore is taken from nine in
any one season, but that it costs in
terest money to carry the whole in
vestment. Mining must be carried
on on a basis to cover interest as well
as the capital which is being continu-
ally taken out. Then there must be
considered the years when the mines
paid little or no profit, and these years
are liable to come again. No corpor-
alton could ever carry an iron mine on
the basis of value assessed tentative
ly by this tax commission"
NEARLY all mines are now operated
on the lease basis. This is because
few companies care to take the risk of
borrowing the large amounts of cap
ital necessary for direct purchases of
| fee, and risking the outcome in future
years on fluctuations in values. And
in looking over the iron range, it is
unfair to take any one lease as basis
for values. Some companies are will
ing to pay the entire profit of operat-
ing a mine in the lease cost, in order
to obtain steady and sufficient sup
ply of ore for manufacturing. The
average lease price paid by the Oliver
Mining company, is 30.79 cents per ton.
The average on tile Mesaba range for
number of years 25.6 cents. But
these figures cannot be taken as
basis for cash purchase of ore. 1t
must be borne in mind that all leases
are made subject TO cancellation on
short notice. No company is willing
to risk its solyency on paying fixed
price for years ahead"
Mr.. kellogg devoted considerable
time to the subject Of commercial
price, He expla'ae.@ in arriving
at price ore is worth, the lease price
must be discounted for the payment
of interest, or cost of carrying the
lease, Thus, on a % cents per ton
lease to run forty years, on four per
cent basis, ore is worth but 1874 cents
per ton: on five per cent basis, 1l.41
cents per ton; on six per cent basis,
9.S5 cents per ton. The application
of this method of securing ore values,
would bring mine assessments to less
than so per cent of the figures listed
by the tax commission.
Mr.. Kellogg illustrated with the
Stevens mine. BY the application of
the above method, he found the prop
erty to be worth. $7,716,272. against
listing of $l4, 796, 300 by the tax COM
mission.
"The Sauntry Alpena mine," con-
tinued Mr.. Kellogg, "was purchased
in 1900 for 100000 cash or 2.59 cents
per ton of ore. 1t is assessed tenta
lively by this commission at SIS, $780,
9O6. the lapse of time is but seven
years. Ore has not made such an ad-
vance or anything like it, in that pc
iod of time, No one today could af-
ford to pay sl5,OOO,OOO for this prop
erty."
r. f. Cole-"I should like to eX-
plain right here, this mine is not be-
ing operated this year. Its ore con-
tains two per cent of aluminium and
seven per cent silica. This is poor
ore to use in our present furnaces.
Mr.. kellogg explained in some de-
tail about the Mahoning mine. 1t is
listed by the commission at 1874, 900 900.
Its actual value, under 4O-year lease
and allowing a six per cent discount
for interest, is but 100000. In the
same way, the Hull Rust mine, listed
by the commission at S33, zSS,6lS, can
only be figured to be worth SIC, 10000.
"And 1 don't believe" said Mr.. Kel-
logg, "there is any mining company
that would today care to actually pay
SIG .OOO,OO for this property and carry
an interest charge of six per cent"
"If this commission assessed the
merchants on the same basis as you
contemplate assessing the mines,
you'd bankrupt every merchant in the
state. Our books are open to you.
We want you to know all about US.
We believe the more you know the
better it will be for ourselves and the
people of Minnesota. We also realize
that the mining properties are the
life of the towns where the mines
exist. We, too, want to have these
towns supported by fair tax in order
that they may have the best condi-