Bisbee daily review., 1918-12-08

the same as the merchant The mer- chant replenishes his exhausted stock by the purchase of new stock at new cost prices and the proven mine re- plenishes its exhausted ore by further development work, which if it discOv- CTS more ore, establishes new deple- tion rates per unit of metal in place in the mine.
 However, in the case of the mer- chant, he knows just what the cost of his new stock will be, while in the case of mines there is no way of knowing beforehand what the cost of new ore will be or whether CT not any new ore will be obtained by the further expenditure for development work.
 DEVELOPMENT MINES INVEST
 MENT IS OF UNKNOWN
 VALUE.
 The investment in the purchase price, development and equipment of mining property has no real value whatsoever except as ores are dis covered in the process of develop ment of a value in excess of the esti- mated cost of their extraction.
 The amount that the receipts from sales of ores discovered and extracted in the course of development exceed the cost of extraction is simply a re- turn of invested capital for use in further development until the net value of ores developed is equal to the amount invested in the purchase, development and equipment of the mining property.
 In the case of business other than mine development, the original invest ment in the merchandise or property has a certain market value at all times, but in the case of development mines, the mine property has a value only as the development exposes profitable ore. The property value may be proven to be nothing, may be less than the investment, or may be proven to be of a value greater than the investment and. therefore, be mine, capable of returning a profit and subject to an income tax upon all its net income from production. NECESSARY TO MAKE DISTINC-
 TION BETWEEN DEVELOP
 MENT AND MINING.
 Out of every one hundred mines promoted it has been estimated that only per cent pay back the original investment in the property and equip ment with interest, about 45 per cent pay back only a partial return of the original investment, and about 50 per cent fail entirely to pay any return whatsoever of the original investment.
 Now, should the net returns from shipments of ore from the 45 per cent that will make only a partial return of the original investment be cOnsid- cred income against which there will be made an estimated depletion charge and on the remainder there be paid an income tax of IS per cent if undistributed and F per cent if dis tributed?
 The abnormally high price of cop per, silver and lead the last several years has enabled certain portion of the development failures that had invested money in the purchase. de- velopment and equipment of mine property in years past and that had developed only unprofitable low grade ore, to reopen and to make shipments of these low grade ores and thereby obtain d partial return of their orig inal investment which had been con sidered an entire loss
 Now. should the net returns on ore shipments from such mines be con sidered income subject to an esti- mated depletion deduction and an in- come tax on the remainder of r. per cent fl distributed and IS per cent if undistributed? Should not such net returns be considered capital re- turned as long as there is any doubt that the original investment will be