The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1922-01-31

value Of minerals produced was about
81, 500, 600. 600 and thst net profits
about 70 per rent. In 1918 the gross
value had risen 10 fs.b2s. 900. 600 but
the net income wns reported 1T
$500 900 plus the allowance Tor
depletion Of sac. 600. 600. making a
gross excess OF receipts over eXpendi-
lures Oeaving out Of consideration.
probably the investment OF new
capitalJ OF &i,031 600. 900 or 49, per
cent.
l can give one example from my
own Investigations which shows with
fair completeness the proportions be-
tween profitable and Improbable
operations. In the extensive copper
mining district OF Lake Superior. for
five year G9OG-i01O) ~ companies
that had either been profitable al
ready, or were expected TO be profit
able. had earned from the production
! I. 900. 900. 900 pounds OF copper SlS.-
100000 over all expenditures. al
though. even among these ~. five
have shown a loss OF t2.3iA53i. In
addition ~ Improbable mines have
n production OF ma. OOO. 600 pound
showed u loss OF f3gOg. 600. sun
further various prospects may have
cog: aaog: si.se0, 600. making u total
loss OF S5.i0O. 600. hut this leaves
tl3. zoo. coo net gain for the district
from the production OF Liz 900. 600
pounds OF metal nearly I cents %
pound. in a period when M price
averaged i49 cent? a net profit uf
~ per cent Of the gross value. u
II worth nothing that this profit was
gained by only . mines out uf 60 that
were actually operating to sny 10Th
lng Of a large number OF prospect.
For M sake ~ emphasis and to
avoid an possible MISUNDERSTANDING
I repeat that tins prort OF ninc mines
! was the amount lett over after do
ducting all the losses Of rs u|nprofit-
able mines and the cost OF an the
numerous prospecting ventures Of
the region. the nine profitable .oper-
ntions standing alone made f5f.iN6.
Gee from a5t. coo. 600 pounds. this
being "a cents a pound the LOSSES
Of all the rest OF The district amount
ed 20 $500 0OO from i5e. OOO. goo
pounds.
That these results are representa-
tive Is proved by thr fact tina the
dividends paid by The Lake superior
copper mines IN 20 wears averaged 20
shade under 4 cents a pound OF
copper although the metal w,s sold
Tor ta7 cents. and these dividends
us before were calculated on the.
tHtai outpu ~ the district B o.. up-
on copper produced unprontably a.
well as that produced prontably
Moreover these results nro not 60.
cal hut seem to apply with tho sam.
accuracy to an the copper produced
In America I quote from my own
book on the 'Tvgt Of Mining edition
of 1870" q list Of 81 copper minioz
companies certainly not q complete
list. have paid si.i7s. 600. 600 In diyl-
dcnds \ few OF these concerns are
In Canada aud South America hut
their aggregate dividends are Ger
tainly ioss han those Of q. : mines
that are omitted good deal less
The total outpu ot copper credited
to tho United states h some g billion
pounds It is SAFE tina the dividends
IN normal times have averaged about
4 cents a pound"
Again let ~ %cniuhasizc the frri
that this profit Applies TO all the
copper not merely To- the part pro-
duced probably.
Returning now q Mr. ingalls, gen
C~rHlizatious. think We mny CON
] rlud, with fair assurance that they
arr suistantinllv corroct. near enough
for practical purposes; that tho
ordinary excess ~ receipts over cN-
pcndi'ure- In producing minerals b.
between 10 and 20 per cent OF tho
gross sale value. and that this c>-
ress a. partly used 10 supply capital
f"r new enterprises or 60 replace
obsolete plants,
Management and Production Costs
! have long felt convinced that th"
percentage of profit ~ mine u
determined by les power 20 compvt"
with other mines. This power -
partly " functinn ~ to natural ad-
vantages and partly of the ability q
the management u follows that tho
proportion 81 profit to gross value 81
output II likely to remain nearly
constant In spite Of fluctuations In
price. have argued this nj some
length In the Cost ~ Mining. pag -
~. 20 hut as a practical matter the
price level IA probably less Important
TO the producers than Ne are ac-
customcd to imagine. Tho proiucts
Of mines are staples, Indispensable 90
the life of civilization There b. %
constant demand Tor them some
mines can produce morc vhoully thun
uthors The cheap producers trr
profitable: the higher cost producer
are only profitable during temporary
WAVES ~ sharp dcmand Fotlowiug
out this line Of reasoning Il is easy
10 see thht y" uNcfNk" PROM OF "a
mine IN n measure OF IT, advantage
compapd with other mines. in ufher
words its advantages are gained by
competition with other mine II VIII
be found for Instance "a a d given
property h able to pay one quarter
N - gross output IN dividcnds This
simply means that three quarters ui
~ output II conFumed Ia costs. OF
one form or another and that the
remaining quarter goes to h stock
holders. This proportion varies iron
yea 10 year. hut In the long run an
average h established and main
tanned II seems logical TO believe
that this proportion will remain as
fixed as ever. whatever the level OF
prices. Thus We may believe that a
copper mine will pay 2 cents " pound
" the sciling price Of tho metal aver
ages ~ cents. viii be able to pay u
cents a pound II mctnt n tu aver
axe 20 cents I am disposed To dc'
cept this proposition ~ a sort ol
general principle. Perhaps % b. ar
important thing 10 bear IN mind dur
ing the uncertainties attending tine
REIMBURSEMENT n rcconHtruction that
must follow the war There is Of
course some danger Of confusing