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


at this time to indicate either the
present attitude Of the bureau on this
subject or my own. opinions regard
ing Vt, | wish to emphasize that sug-
gestions from the mining industry as
to the application Of this discovery
clause win be welcome In Washing
ton and will undoubtedly aid in the
solution of this important question.
Particular attention may well be d.
rected to these questions: What is
meant by discovery Of a mine, what
constitutes discovery according to
that meaning, and when is such dis
covery achieved or completed?
Question has been raised as to how
or at what rate depletion is to be al
lowed for instance, whether coinci-
dent with the exhaustion of the de-
posit, or at faster or slower rate
This is another of those matters upon
which professional advice will be well
come In the meantime, / may con-
fess that the plan of allowing deple-
ton in direct proportion to the actual
exhaustion of ore seems to me most
equitable and simplest OF application.
In this connection it may be pointed
out that If the coincident rate of de-
pletion is adopted, the actual deple-
| ton allowances should be computed
on weight of metal actually produced
rather than on number Of tons of ore,
assumed to possess average grade,
mined during the year
The remarks thus far made with
respect to valuation are related pri-
marily to the relation between mine
values and depletion deductions. The
matter of proper depreciation allow
ances on physical property must also
be decided and in this connection ar
effort will be made to determine the
intent of the law with respect tc
those three main factors ordinarily
comprehended in the inclusive tern
depreciation, namely, physical veal
or decay, obsolescence and inadequa'
cy. Also effort will be made ito settle
on sound principle of depreciation
that is, to decide as between one o.
the several methods now current, sucl
as the straight line method, the re-
ducing balance method or some 9th
err. Due consideration ought to b.
given to the fact that the usable lif'
of equipment may outlast the life o
the property on which it is to be uset
and CORRESPONDENCE rapid rate o
depreciation therefore allowed from
the start.
THE excess profit tax raises prob
; lens which all of us might well wisl
to escape but which nevertheless
must be faced and solved. No effor
; will be made in this paper to go int
its details, but I may express tn
; conviction that the assistance whic
! the valuation engineers will afford Il
, arriving at the fair quantities to b
taken for invested capital and paid-i
surplus for the mining industry vii
, necessarily arise from the sound an
accepted economic theory that in thi
hazardous industry, occasional grea
! gains to lucky or shrewd investor
| must be accepted with equanimity;
policy" of control that is ''too grasp
ing over REACHES itself" For, QUIT
outside any ethical questions tina
f may be involved this practical situa
, ton has to be faced, that taxes whic'
take up to 80 per cent of net incom
, must be applied with due considera
/, ton of the necessity that profit-mak
, ing industries must survive in orde
| to supply the heavy taxes that wi
apparently be required for years t
come. To whatever extent is proper
, also, account should be taken of tn
, fact that the pre-war average of earn
= ings of the mining companies was o
higher percentage level than tn
. earnings of ordinary enterprises be
, cause as already emphasized thos
] earnings include cost of insurance |
! the one instance but not in the othel
Quite apart from the direct consid
. eTdllpIlS VI liit SuuJCSl vi ICuCihi t"H>
, alton of the mines Is a matter t
which many of the mining companie
, have already. no doubt, given atten
( ton, namely, the effect of the feders
! tax policy upon state county and 10
, cal taxation. Deliberate valuation
must of necessity be applied by tn
! government to most of the profit
, making mines and other producers c
J natural resources in the country. L
no other group of industries will sue
official and conspicuous valuations b
applied. 1t may easily follow there
, fore, that the true values set upo
, mining property, which are likely t
| be higher than most previous value
for local taxation purposes have beef
will result in the mines of those re
gions where the property tax pre-
wallis carrying a disproportionatel
heavy part of the local taxes for tn
, reason that all the other property eX
cept mines win not be brought u
: correspondingly to its true marke
value level In securing the benefl
to be derived from full and fair valti
alton Of their properties for the fed
eral income and excess profit taxes,
is to be @hoped that the mining com
; panies will not suffer injustices arts
1 II l.. A. h. IL