248 VALUATION, DEPRECIATION AND THE RATE-BASE
Valuation of Mines for Taxation in Various Localities
In a general way some methods of valuing mining property for
taxation purposes will now be outlined.
Alabama, California, Towa, New Jersey, New York, Oregon,
Washington, and West Virginia appraise mining property in a
similar manner to real estate and other property. They have
no laws pertaining to the valuation of mining property. This
method requires a perfunctory valuation of the surface improvements
and of the ore body, the latter in some cases being entirely
ignored.
Michigan, Minnesota and Wisconsin assess their mining properties
on a basis of the estimated value of the ore body and the
surface improvements giving weight to all the elements that
enter into value.
In Michigan the present system was introduced by Mr. J. R.
Finlay in 1911. Data are compiled from the reports of mine
operators in sworn statements. Then an inspection is made by
the State Geologist and his assistants to estimate the reserves
and check up other data. The State Tax Commission passes
on the figures and after a public hearing the final results are
reported to the local assessors. The valuation is based on four
elements — ore reserves (developed and prospective), average
annual profits (five-year average), life or expectancy, and the
rate of interest. The developed reserves consist of ore blocked
out above the bottom levels. Prospective reserves consist
of the expected extension of the ore bodies downward
or laterally beyond existing workings. The average annual
profits are estimated from a five-year record when such exists.
Undeveloped properties are judged by the operations of other
mines. The expectancy of a property is taken at the ratio of
the estimated reserves to an average five-year shipment. The life
of the undeveloped mines is estimated by comparison with adjacent
operations. The interest rate is now 6 per cent for both
principal and sinking fund. It was 5 per cent and 4 per cent
respectively in 1grr when Mr. Finlay had charge. The criti-
