The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1917-12-27
War Excess Profits Tax--Injustice of the
Law to Honestly Organized and Conser-
vatively Conducted Mining Companies

ing out with great force and clearness
the unfair and indefinite features OF
the excess profits tax provision of the
war revenue act of October has been
filed with the secretary Of the treasury
by O'Brien, Boardman, Harper q Fox
Kurnal r. Babbitt, and Root, Clark,
Buckner & Rowland, all Of New York,
on behalf of the Utah Copper COM
pany, Nevada Consolidated Copper
company, Chino Copper company Ray
Consolidated Copper company Chile
Exploration company and Braden
Copper company, for which The Miner
is indebted to the Engineering and
Mining Journal:
Not Organized for Stock Speculation
The companies on whose behalf this
memorandum is filed are all engaged
In the mining of copper. They are
substantial, prosperous companies
Their aggregate production for the
year 1916 was upwards of 509,O0O,0OO
pounds of copper. and their production
for the year 1917 will be considerably
in excess of this figure. The stocks
of these companies have not been ex-
plotted on the market They are
widely held by large and small invest
.ors who have purchased them because
OF the substantial values in the prop
critics which the companies own. No
one of these companies is war-in-
spired enterprise. Each of them was
organized, acquired its properties and
commenced business before the COM
mencement of the war; in fact with
two exceptions, all Of these companies
We're engaged in business for many
years prior to 1914.
Present Wording of Law Imposes IN
Just Taxes.
These companies have accepted the
opportunity of submitting this mem
orandum to the treasury department
and its advisers not because the APP
plication of the war excess profits tax
law to copper companies as such pre-
sents any unique problems, but be-
cause these particular companies are
so circumstanced as regards their cap
italization that strict or technical in
depreciation of the provisions of the
law defining Invested capital might
impose upon them grossly unjust and
inequitable taxes. BY this Is meant
that in comparison with other COM
panies engaged in the same or in oth-
er businesses whose organizers have
been less conservative in the matter of
capitalization, these companies would
suffer heavily The copper companies
presenting this memorandum are in
hearty accord with the government s
fiscal policy. They believe in raising
currently as large a portion of the
governments expenses as can be OBJ
tanned without seriously disturbing
business enterprises. They believe,
however, that there is a very clear
duty imposed upon the taxing author
tiles so to apportion this burden Of
taxation that it will rest as evenly as
may be practicable upon each and
every business in the country; and
they have every confidence that the
treasury department and its advisers
will adopt such regulations Cor if ne
cessary recommend such legislation)
as will remove or minimize injustice
and inequality in the apportionment OF
this tax.
In this memorandum these compan-
les purpose to point out the injustice
which would be done their stockhold-
ers II an Interpretation should be plac-
ed upon the definition of invested
capital" which would limit the value
of their mining properties to the par
value of the stock issued therefor and
preclude them from showing the ac-
tual value of their properties on Janu-
airy l, 1914, The bankers who directed
the formation Of all of these compan-
les and determined the amount of the
stock to be issued in exchange for the
mining properties were substantial and
conservative bankers. They We're deal
ing with properties which at the time
had been explored only TO an extent
sufficient to satisfy the bankers that
they contained enormous deposits of
low grade copper ore capable of be-
ing extracted and put upon the market
at q cost which would result in sub
stantial profit.
The precise extent of the ore bodies
had not been determined. A large
body of ore was assured. a further
body of ore was probable and still
further body of ore was possible The
situation at the time these companies
were organized and their properties
acquired by the issuance of stock was
one in which the amount in par value
of stock to be issued for the properties
depended almost entirely upon the at
titude of the bankers engaged in their
organization. If these properties had
been in the hands of persons who pro-
posed to exploit them on the market,
stock could have been issued at a par
value representing the utmost expecta-
tons of the engineers who had exam
ined the properties, and in every case,
as the outcome has proved, such stock
would have been fully supported by the
actual value of the properties. because
in every instance the extent of the ore
body has surpassed every estimate at
the time the properties were acquired |