The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1919-10-30

Yield OF ores, which are necessarily
but estimates and approximations al
best, II might seem natural to con-
clude that all subsequent steps In the
process could, with entire pernissi
bility, be Of only corresponding ac-
curacy-that. indeed. any attempt to
introduce greater retinements than
those imposed at the outset would be
futile and absurd. That Is the con-
ventional theory Of error. Perhaps 1t
/ is justifiable and sound when the OBJ
ject is the attainment Of proper
average. For the probability, or So
called law, of averages will ordinarily
balance individual low results with
corresponding high ones. But in
dealing with this tax problem, we
can not be content with a fair aver
age. We can not satisfy AS COM
plant by proving to him that "B was
let off CORRESPONDENCE easy, so the
thing evens up after all" The essen
tial and reasonable accuracy Of each
individual result Is important.
While it is, of course. unnecessary
to defend the present value method
of mine valuation, it may nevertheless
be well, in view Of the responsibility
which it may have to bear, to analyze
with care what its consequences will
be if used in the taxation program,
and to indicate some of the consider
atoms that in my personal opinion
ought to be given appropriate atten-
ton in such an application.
The valuation engineers of the rev.
enue bureau, as l understand it, are
to answer the question of valuation
that Is comprehended in the imagin-
airy situation of a prospective buyer
competent to measure mine values
and actuated by the hope Of profit to
be derived from mine operation, maxi
ing an offer for mine to the owner
who is likewise competent to measure
mine values and who Is under no OBJ
legation to sell except such obligation
as arises from his belief that the Of
Ter lldue is advantageous W HIN.
Now the first question that a pros
pective buyer would want to deter
mine is the security Of his capital. He
realizes that mining is a hazardous
and uninsura'ble business. Therefore,
he demands a higher return on his
money than he could obtain If he in
n In ,,rfa ~
ing business or in good mortgage.
Since the interest rate must thus In
clude both actual profit and compen-
sation for risk, it is clear that the
determination Of the rate can not be
based on the mining industry in
general as compared with other in
dustries when, as matter of fact,
the degree of hazard varies greatly
among different classes of mines;
clearly enough different rates must be
established for different classes. On
these determinations as well as of
proper interest to be credited on the
sinking funds, much thought may well
be expended.
Let us assume that our prospective
buyer concludes In a given case un-
der consideration that he should have
10 per cent on his money each year
in addition to depletion installment
calculated eventually to return his
capital sum. AS matter of fact, re-
CARELESS of whether he spends 1t out
right or invests it in something else
or places 1t, as theoretically intended.
in sinking fund for the positive re-
demption of capital, his annual deple-
ton instalment, if actually received,
continually reduces his stake remain
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