Evening star., 1928-12-06
COMPETITION HITS
MINING INDUSTRY
Secretary Davis Says Over
stimulation Has Worked
4 Adversely in Coal.

A warning that the entire mining
industry is inviting disastrous competi-
tiSn by ovcrproduction was given By
Secretary Of Labor James J. Davis in
Ell address today at the convention Of
IL American Mining Congress during
:, Session devoted TO the coal situation.
"A certain amount of competition is
dqubtless q stimulant and stimulart
is sometimes needed. but the coal indus
try has been so overstimulatcd that 1t
now resembles a man in the condition
known as having a jag on. :" Secretary
Davis declared.
"Overcompetition in this industry
has made. not for prosperity but for ad-
versity." he added.
Living Standard Lowered.
Unreasonable competition. he pointed
out, seems to have paralyzed some parts
of the mining industry. both metals and
coal. The frightful competition has
seemed to have had tendency to lower
the standard of living not only OF the
workers. but of those who have invested
in mining" he said. I'm the matter
of coal. it is a falsehood to say that
competition is the life of trade"
Secretary Davis stated that the indus
tries producing luXuries or seml-hlxur-
les are STRIVING TO cneapen ot piedh
down the price Of coal.
The men in these industries have
but one thought. how to buy coal and
other materials as cheap as possible
He declared they seem TO forget the
purchasing power of the coal producer is
an important factor in the economic
life.
Taxation Is Protested.
A protest that the mining industry
"has been singled out for special forms
of taxation and has been discrimlnateo
against by taxation authorities general
IL" was lodged with the cnoventlon to-
dav by Mckinley w. Kriegh chief OF
its tax division.
eff the industry is to survive and con-
tinue to develop and expand in sufficient
measure to meet the ever-increasing
needs of our growing population. home
labor and other industries" Kriegh de-
clared. "th Federal Government must
maintain a fair and just policy in the
application of the income tax law 10
mining"
Mr., Kriegh was one of the principal
sneakers at the session in the May
flower Hotel devoted TO taxation. others
who addressed the Congress on penang
tax LEGISLATION were Mitchell B. Carroll
-,oratfons division of commercial laws,
Department of Commerce: E. c. Alvoro.
srecial assistant to the Secretary OF the
Treasury. and H. B. Fernald OF New
York.
Amendment to Be Studied.
Congress is about to consider an
amendment to the tax law provldlng
for the determination Of depletion a.
lowances in case of mines as nxed
percentage income, Mr.. Kriegh told the
convention.
"The Treasury Department and con-
preSsional committees over period OF
fhe last four years have been engaged
in studies of depletion allowances IN the
mining industry" he said.
According TO the Treasury Depart
ment's statistics of income, the aggre.
cate fair value of the mines ana
oIlarries and oil and gas wells OF Lhe
United States. approXimates $1,000
oo0 non This amount may be termed
the capital sum for purposes OF de-
nletion. If the methods applied In the
determination of annual depletion AL
lowances do not permit this capltal
sum to be restored to taxpayers In the
mining industry free of income tax,
then the industry is not receiving the
reasonable allowances provided oy
law. No part of this capital value
should be taxed as profit from the
mining and sale of the product. the
annual depletion allowance OF the MN
ing industry should be equivalent 10 the
value in place of the mineral extracted
and sold.
cat the present time the law pro-
vides for depletion of oil and gas wells
as a fixed percentage of gross income.
The Joint committee on internal rev.
enue taxation may recommend per-
centage of f-net-income basis for deple-
ton of mines. Whichever percentage
plan is proposed. 1t must be adequate
TO provide for the return to the mining
taxpayers the value of their mineral
in place over the life of the mining
properties. Any other change in the
depletion basis or in the methods for
the determination of the depletion al
lowance must have for its purpose the
maintenance of the capital return OF
the mining industry free from income
tax or 1t viii be opposed by the entire
industry. Any effort that may be made
now to change the fundamental prin-
ciple of depletion whereby the Federal
Government may subject to income tax
rs profits that portion of its gross re-
ceipts which represents return OF its
capital values employed in the industry
would be manifestly unjust
New York Supplants London.
Foreign mining taxes and double
taxation relief we're discussed by Mr..
Carroll. The United States has been
a pioneer in granting relief from double
taxation" he said.
Under some of the treaties European
nations and under the Geneva conven-
ton. he pointed out. the state of ORR
gin foregoes it's tax on certain items OF
incomes in favor Of the country of resi-
dence.
The benefits under such arrange
ments are obvious" Carroll said. II
the Americans we're exempted from tax
abroad on certain kinds of income. they
would then pay tax only in the United
States at lower rate than that in
many foreign countries, and the United
States Treasury would collect Its full
tax
Mr. Carroll stated that in practically
every country where mines or oil wells
exis5 special provisions concerning them
are found in the national tax laws. He
analyzed the tax laws of various for
eign countries. including those Of Great
Britain Canada. Germany, France and
of Latin America.