POPULAR CONCEPTION OF MINERAL VALUATION
The total returns from mining may not in the aggregate be far above the expenditure for exploration, development, and extraction; yet the total mineral wealth of the United States, on the basis of earning power and aside from the industries based on it, cannot be far from sixty billions of dollars, and this wealth has virtually come into existence since the 1849 gold rush to California. The mining industry supports a large population. These facts are the solid basis for the widespread popular interest in mineral investment—and mineral speculation. But there are other reasons for this interest,—the gambler's chance for quick returns, the "lure of gold," the possibility of "getting something for nothing," the mushroom nature of certain branches of the industry, the element of mystery related to nature's secrets, and the conception of minerals as bonanzas with ready-made value, merely awaiting discovery and requiring no effort to make them valuable. In the United States a factor contributing to the popular interest is the large freedom allowed by the laws to discover and acquire minerals on the public domain. Perhaps no other field of industry comes so near being common ground for all classes of people. The mineral industry is a field in which it is easy to capitalize not only honest and skillful endeavor, but hopes, guesses, and greed. It is not to be wondered at, therefore, that in the popular mind the valuation of a mineral resource is little more than a guess, and sometimes not even an honest one.
Nevertheless, the mineral industry has become second only to agriculture in its capital value and in its earning capacity. In this industry it is hardly possible to arrive at valuations as securely based as in many other industries, but the elements of hazard are not so hopeless of measurement as might be supposed. The great mineral and financial organizations do not depend on mere guesses, but use well-tried methods. If the general investor were to give more attention to these methods he would doubtless save himself money, and the mineral industry would be rid of a great incumbrance of parasites who live on the credulity of the public. To anyone familiar with the mineral field, it is often surprising to see the rashness with which a conservative business man, who would not think of entering another industrial field without close study of all the factors in the situation, will invest in minerals without using ordinary methods of analysis of values.
In the following account of valuation of minerals in the ground, and the closely related subject, taxation of such minerals, the attempt is made to state some of the principles briefly and simply with a view to making them intelligible to the layman. Values beyond the mine are concerned with so many factors of a non-geologic nature that they are not here discussed.
VALUATION AND TAXATION OF MINES
Intrinsic and Extrinsic Factors in Valuation
It is essential to recognize at the outset that the value of a mineral deposit, like the value of any other commercial material, comprises two main elements; an intrinsic element based on the qualities of the