The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1927-02-18

One cannot in a few minutes ex-
plain why it is that the price is
about at the average cost of produc-
ton. Perhaps few of US know all
of the factors in the problem, but |
will undertake to mention some
which have a strong influence on
this condition.
"a very important cause of de-
pressed values is an over-develop-
me 1t of the mines. Notwithstanding
that the ore reserve is small in re-
lation to long future demand, very
large part of it has been made Access
sible by the sinking of shafts, open
ing of pits, and the installation of
mining machinery and railroad track
age. The capacity of the mines to
produce is today about 100, 200, 900
tons per year. This over-develop-
ment has been brought about thru
combined operation of several in
fluences. One of them is the tax
system and tax policy of Minnesota,
Wisconsin and Michigan. In all OF
these states the ore reserves are ap-
praised for ad valorem taxation, the
result being that each ton of known
ore in the ground must pay an an
nual tax until it is recovered. Nat
urally the tendency of the operator
is to get that ore out as soon as pos
sible. Minnesota frankly places
much heavier burden of taxation on
iron mines than on any other class
of real property. 1t required an
amo ndment of the Constitution to
permit the legislature to do this. If
l remember correctly, the amend
ment was voted by the people, in
about 1907, the legislature promptly
availing itself of the opportunity
thus presented to relieve rural and
urban property at the expense of
the iron mines to the end that in
given jurisdiction dollar invested
in iron ore bears double the tax
borne by a dollar invested in farm
and half again as much as the tax
borne by a dollar invested in urban
property. But the discrimination
was not permitted to end here. A
couple of years ago tax of 6 per
cent was levied on the income from
iron mining under the name of an
occupation tax. Thus the occupation
of mining was itself made the object
of discriminatory taxation. The av-
erage ad valorem tax on a ton of
iron ore leaving Minnesota is about
so cents. I have no figures to show
how much additional tax is paid by
each ton of ore through the opera
ton of the so-called occupational
tax. In Wisconsin and Michigan
there is no discriminatory taxation
of iron mines. The average tax
paid by the ton of ore leaving these
states is, / believe, considerably less
than half of that attaching to the
ton of ore from Minnesota.
ga second influence of great i'm
portance attaches to the leasing sys-
tenn. Only small portion of the
iron ore is owned by the operator.
He operates under an instrument,
known as lease, which obligates
him among other things to pay all
of the taxes and royalty, but most
important of all is its effect on over
development, a minimum annual
rent which in the case of good many
properties, especially in Minnesota,
amounts to an enormous sum per
year. These rentals must be pail
it matters not what the condition of
the industry is. 1t is the purpose of
most of these leases to encourage if
not compel a rapid development and
exhaustion of the ore.
Finally, we have to say that the
voters in the local tax jurisdictions,
again particularly on the Mesaba
iron range in Minnesota, owning
votes but not mines, have made the
most of the opportunity afforded by
large taxable values in iron ore of
taking large share of this natural
wealth for public enterprises of all
sorts in amounts far in advance of
reasonable needs. Time does not
permit further discussion of this
phase of the situation, but you may
draw your conclusions of what it 'is
when I say that ton of iron ore
worth from $500 to $500 at the
mine pays taxes in the amount of SO
to so cents.
Perhaps YOU now see clearly why
it is that the iron-ore operator en-
deavors to force as much of his ore
as 1t is possible to do on the market
and to develop his mines to such an
extent that he may avail himself of
every opportunity to ship. In the
face of these conditions he finds his
market considerably narrower than
it used to be. Last year there was
imported through Atlantic ports the
equivalent of 100000 tons of Lake
Superior iron ore in the shape of pig
iron, scrap, and iron ore. There is
a tendency for further increase of
imported iron, a further displace-
ment of markets formerly enjoyed
by Lake Superior iron ores.
"All of these factors and others
determine the value of Lake Super
Tor iron ore. In 1926 the operator
received at Lake Erie port $4.25 for
ton of standard non-Bessemer ore
shipped from the great Mesaba iron
range of Minnesota, TIE get that
ton of ore from his mine to upper
lake decks he paid the rail1o Dad 81
cents. From upper lake dock to
lower lake port he paid the ship 80
cents, making total freight charges
sta. He paid In taxes In 1926
probably about SO cents. After pay
ing freight and taxes he had S2.01,