Montana oil and mining journal., 1936-09-26

\ 10 the reopening OF old properties and to
the bringing In Of properties which were mar
doned because OF increasing costs OF produc-
/ tion Will continue, subject to certain reser-
gations.
These reservations are:
I l. That the tendency for prices to creep up
toward equality with the enhanced price
Of gold is checked
I 2. That the government does not kill the
4 goose that lays the literal golden egg by
excessive taxation.
With regard to the first, Il may we'll be
that the spasmodic increases which history
shows In the price Of gold are explainable,
TO some extent at least, by the fact that for
a time after price increase had occurred
gold production would be stimulated. but that
as the time-lag in the price increase Is gradu-
ally extinguished the search for and produc-
tion Of gold would be thereby gradually dis
couraged until another jump occurred In the
again. This picture would be to some extent
blurred by bonanza discoveries. such as the
placers OF California. Of Australia, and Of
the Klondyke, but such a hypothesis seems
reasonable and It fits fairly well the events
OF the past rs years during which no sensa-
tional new gold discoveries have been made.
With regard to the second reservation
the effect OF Increased and increasing taxa
tion-it would be well for governmental tax
experts to remind themselves that gold min
ing is perhaps OF all industries the most
whose price is fixed there is no way that
the tax or any part Of it, can be passed on
to the consumer.
The law Of diminishing returns will operate
with astonishing rapidity If gold mining is
heavily taxed for the former marginal and
sub-marginal producers will immediately give
up the ghost and the tax return win be NIL
from this class OF properties.
Canada and South Africa are already en-
eaged In the perpetration OF this economic
hlunder. recent visitor from South Africa
reports that In 1888 the Rand mines had q
net production Of $i70 100000 Of which $685.
100000 or exactly SO percent, was consumed
no ~ nd
An excellent example of some Of the various
effects OF revaluation on gold mining In
America is afforded BY operations OF the
Alaska Juneau Gold Mining Co. in the years
1e32-33-34 and 1885. These figures are drawn
from the annual report of the company
which are models Of completeness and Iucidity.
Several results are at once noted. all Of
which are typical and characteristic Of the
Gi) The drop in tonnage in 1885 due to
labor difficulties is probably not wholly
unrelated to the increase in gold price and I
in living cost
(2l The gold yield IN dollars per ton has 1
4s percent from 1892 to 1885, but /
the actual gold content Of the ore has de- I
clined 147 percent. The increase in the price /
Of gold has permitted ore Of lesser gold con- /
tent to be worked. AS a necessary corofary. 4
ore reserves must obviously have Increased
years by SO percent; part Of this is no doubt /
-hargeable to additional depth at which work I
Is being done and to additional development,
but by no means all of it.
"a Milling costs have remained about con-
stant. I think this accords with general ex-
serience. Labor and supplies constitute a much
smaller proportion OF cost than in mining
(5l "Other costs have nearly doubled, In
part due, no doubt, to labor troubles. This
also is the common experience, and in the
;ase Of Alaska-Juneau this figure Is exclu-
i've of federal tax and depreciation.
(6) The net result of all these factors has
,een first a marked increase in excess OF
held per ton over cost for 1888 and 1884 as
compared with 1882, followed by q decrease
n 1885 as compared with 1884 Whether this
win continue remains to be SEEN
suspect It viii in all established gold
properties where the grade Of ore has not
hanged markedly.