January 18, 1918.

THE COLLIERY GUARDIAN.

123

The predominant factors in thin coal mining success
are: (1) Less rock dislodged; (2) increased tonnage;
and (3) increased concentration of effort, by the same
working force. The last of these essentials can only
mean rapid face advance, and, in attaining that, the
regular cycle of face operation should be continuous:
the one following the other without rest, irrespective
of hours worked. But, inasmuch as labour imposes
conditions relative to the number of lawful hours a
man may work, the successful application of the
economic law of continuous operation has to be carried
out under a proper arrangement of cutting hours, over
a definite length of face, in a certain loading time, and
limited repair hours: in a word, involves systematic
organisation and design. Speed in mining is only
possible in its entirety by having all the major opera-
tions of the face done by machine, and until operators
realise the fact that the adoption of one type of
machine is only a partial relief from their necessities,
the thin coal problem will still remain only half-solved,
and can only be approached with caution, and be
viewed wjth apprehension, because certain useful know-
ledge is wanting. Lack of knowledge breeds fear and
hesitation, and both these are elements of failure.
What is wanted is a bolder policy; and the citizens of
a country where the thin coal question has become
acute have a right to expect it from those in posses-
sion of coal lands, and who possess capital, to prose-
cute the necessary experimental work. With the sub-
ject of thin coals facing them and a closer union
between the operator and the manufacturers, there is
no reason why the machine problems of the thin coal
mine should not be satisfactorily and successfully
solved. It is true to-day that some of the types of
machines for thin coal work are only in their infancy:
imperfectly designed, and crudely made; but the fact
that this is so is somewhat due to lack of demand, and
more so through the inability of the coal operator to
state clearly what is wanted. A great and successful
advance in machine methods has taken place in recent
years, and it is certain that there will be a greater
one in the near future. Past experience has shown
that once the demand for special labour-saving
machinery is established, by the realisation and con-
crete expression of the requirements for this or any
other class of mining, the machine needed has always
been forthcoming.

Factors of Success.

In thin, as in thick, coal mining, four major oper-
ations are involved in the process of extracting the
‘coal:—(1) Undercutting the seam; (2) breaking down
the coal; (3) loading away; and (4) attending to the
support of the face and roads. Undercutting—the
hardest part of the miner’s work—was the first to be
done by machine, with results now well known, as shown
in the utilisation of undercutting machines in ever-
incfeasing numbers. The breaking down of the coal is
the oldest part of the work carried out by a power
agent, namely—explosives; but this has, to some
extent, been directly influenced by the introduction of
the cutter.

In the older longwall systems, when the tonnage of
coal obtained from the seam was relatively smaller, few
roads were required to take away the coal. In the
newer machine-mined sections, however, where more
coal is obtained per day, it was found that additional
roads were needed in order to ensure that the day’s
cut of coal was certain to be loaded away, to make
room for the next machine cut, at night. This, in
turn, meant more fallen stone work for every road in
the section, and,, in addition, there was a faster and
a greater shovelling of the coal to the road-head. To
overcome these conditions, the face conveyor was
invented, which reduced the rock handling in the road-
head by the simple expedient of eliminating all roads
except one or two, such as the main hauling road and
a ventilation road. Further, it provided the miner
with an appliance immediately at his back, into which
he loaded his coal, thus also eliminating the turning
over and shovelling of the coal along the face, which
is not only an arduous task in the cramped quarters,
but an operation that took up half the miner’s time,
and added to the breakage produced.

The loading of the coal into the conveyor is the last
operation still being done by hand. To get machines to
accomplish this work—which should be the case—there
is yet to come into existence the low underground coal
loader : a travelling machine like the coal cutter, which
will pass up the face after the web of coal has been
broken down, and will load it into the conveyor at its
side.

Machine mining has generally the following economic
advantages: —

(a)	A much increased output from a given area.

(b)	The undercutting cost is less, by the large
increase of output per man.

(c)	Owing to better and advantageous control of
the roof, the cost of timbering and explosives are
both reduced.

(d)	Better coal is produced: less slack being cut
by the machine than by hand mining.

(e)	There is greater safety at the face.

The most important point is the recognition by
management and men alike of the changed conditions
introduced in the mine: such as piecework division of
the labour; “ tuning up” needed with the increased
output; and the regularity of service. The foregoing
remarks apply equally well to conveying and loading
.operations.

The medal of the Order of the British Empire has been
•awarded to Mr. F. E. Hall, of Sheffield, the rescue appar-
atus foreman of the Mining Engineering Company Limited,
for undertaking dangerous experiments at on,e of H.M.
munition factories.

Scottish Oil Fields Development. — A new method of
obtaining oil is being pushed forward under Government
auspices in the Scottish oil fields. Jt has been found that
existing plant is capable of extracting oil from cannel coal,
and various companies are being urged to extend their
retorts, while at three selected collieries special retorts are
to be erected.

INCIDENCE OF TAXATION UPON
METALLIFEROUS MINING.

In the course of a paper read before the Institution
of Mining and Metallurgy on Thursday, January 17,
Prof. Henry Louis reviewed the decline of metalli-
ferous mining in the British Isles, and asserted that
not the least important of the contributing causes are
the methods of taxation adopted by our fiscal authori-
ties. No doubt one great reason why fiscal legisla-
tion has never taken the slightest account of the con-
ditions peculiar to the mineral industry is to be sought
in the fact that in this country mining has never had
an accredited mouthpiece; if we had had a Minister
of Mines, or a representative of a Government Mining
Department capable of placing before Parliament a
proper view of the injury that its fiscal policy was
inflicting upon the mining industry of the country, it
is highly probable that metalliferous mining in this
country would not be at its present low ebb.

The principal taxes laid upon mining and minerals
are income tax, local rates, mineral increment value
and mineral rights duties, and additional mineral
rights duties.

Whilst nominally some of these bear only upon the
royalty owner, in reality they nevertheless affect the
mining industry as a whole. Mineral landlords appear
always to have been considered fair game by Chan-
cellors of the Exchequer; any real or even apparent
attack upon their royalties has always pleased the
popular party, and as the landlords are few in number,
and even the whole of their collective votes would exert
not the slightest influence upon the balance of poli-
tical power, it has always been easy for politicians to
attack them. It is, however, obvious enough that any
taxation upon mineral royalties will be borne ulti-
mately not by the royalty owner, but by the miner,
until the latter can in his turn transfer it again to
the general public; the hand that pays the tax may
be that of the royalty owner, but in the long run the
money will come not out of his pocket, but out of some-
one else’s.

Income Tax.

Income tax has always been charged upon mining
undertakings, just as it has been upon all others, with-
out the least regard to the essential differences between
them. A mine, however, is a wasting asset, and on
this account ought to receive treatment entirely
different from that meted out to assets of a perma-
nent character. This fact that we are dealing with a
different type of asset is to some extent obscured by
the accepted conventional term that mineral property
is held under a mining lease, thus in the popular mind
ranking it on the same footing as any other lease-
hold : other leasehold property, however, is held undei’
an occupation lease, the “ lessee having only the
usufruct, so that the property is returned intact to the
lessor at the expiration of the lease ’ ’; quite opposite
conditions prevail in the case of a mineral property,
where the essential condition of the lease is that the
corpus of the asset shall be destroyed or diminished.

A mining lease is in its essence an agreement for the
sale of mineral in the ground, and a royalty is not a
true rental, but is in fact payment for unsevered
mineral, and it is an essential condition of a mineral
lease that the property must necessarily be returned
to the owner in a depreciated condition, diminished in
value by the amount of mineral that has been extracted
during the period of the lease. Hence it follows that
a profit derived from working minerals is not a mere
dividend upon the capital invested, but consists of
dividend plus an actual portion of the capital, and it
is manifestly inequitable to tax such profits on the
same footing as profits derived from an enterprise in
which the capital is not a diminishing one. Failure to
recognise this essential fact lies at the root of most of
the fiscal injustice under which mining is suffering.

As long as the income tax was quite small, the effect
was, no doubt, not very noticeable, but now that
income tax has risen to formidable dimensions, and
that there is every probability that it will remain high
for a considerable time to come, the effect is very
serious, and naturally deters capital from seeking
investment in enterprises thus heavily handicapped.
The demand of the mining industry for relief from
taxation for such part of its so-called profits as really
represents a diminution of assets is surely an equitable
one, and one that ought to receive immediate con-
sideration from the fiscal authorities.

Another serious drawback is to be found in the
totally inadequate allowance made for the depreciation
of mining machinery. Under the Customs and Inland
Revenue Act of 1878, section 12, provision is made for
the allowance of depreciation upon plant, machinery,
etc., the rate of depreciation to be fixed by the Income
Tax Commissioners, and this is still the basis upon
which this portion of the assessment is dealt with.
The rates allowed are wholly inadequate; they are
mostly 2| per cent., sometimes 5 per cent., and, excep-
tionally, 7| per cent, has b6en allowed. It is obvious
enough to any mining engineer that 40 years’ purchase
is wholly inadequate for the redemption of modern
mining machinery. A mine attempting to work with
plant 40 years old is assuredly foredoomed to failure;
new inventions and improvements in mining plant are
fortunately fairly rapid, and such plant becomes anti-
quated and hopelessly out of date in a very few years;
moreover, it wears out rapidly.

To take a somewhat extreme case, just consider
winding ropes, which in some instances have to be
renewed every six months. Most mining engineers
will agree that at least 10 per cent, should, as a general
rule, be allowed for depreciation of mining machinery
and plant, and that some more satisfactory method
than the present one should be devised for adjusting
depreciation equitably in special cases. By the above
rate is meant a rate on the original value of the plant,
and not, as is usual in income tax assessment, a rate
on its diminishing value; if the latter method of rating
be adopted, the rate should be proportionately higher.
Furthermore, this rate is intended to include deterior-
ation and obsolescence only.

The practice of the Income Tax Commissioners to
decline to allow depreciation where renewals are
allowed is wrong, as also is their practice of regarding
all renewals as an increase of capital. Where an old
machine is replaced by a new and more powerful one—
thus definitely increasing the producing capacity of the
mine — the difference between the values of the two
machines when new may equitably be charged to
capital; but renewals and repairs in the ordinary sense,
attended by no increase in producing capacity, ought,
properly speaking, to be allowed annually, in addition
to depreciation as defined above.

British mining engineers are often accused of con-
servatism, and of clinging obstinately to old-fashioned
methods; but it is usually forgotten how important a
part the national fiscal policy plays in their attitude,
and how difficult it is to move a board of directors to
expenditure on new plant, when they not only have
to find the money to pay for it, but have to pay income
tax upon the money in addition. The real wonder is
not that we move so slowly, but rather that we make
any advance at all in the face of a fiscal policy that
deliberately discourages all improvements.

Even worse, perhaps, is the position as regards mine
development. The Income Tax Commissioners refuse
to allow mine development as a portion of working
costs, there being, in fact, no legislation authorising
such allowance; accordingly, mine development is
treated for income tax purposes as an addition to
capital. There is no need to point out how essential
a factor in the life of a metalliferous mine is a liberal
expenditure upon development. Unless development
be kept some years ahead of exploitation, the very
existence of a mine is imperilled, and no doubt there
are plenty of British mines now derelict which might
be producers to-day if a proper system of development
had been instituted and maintained.

This, however, involves the difficulty already
referred to. A mining engineer finds it difficult
enough to get a board of directors to consent to unpro-
ductive expenditure under the best of circumstances,
but when the directors are asked not only to spend
large sums of their shareholders’ money, but to pay
income tax upon them in addition, their reluctance can
be quite well understood. If Legislature had been
anxious to devise a means for crushing out metalli-
ferous mining in this country, it could hardly have hit
upon a more effective device than this of discouraging
development by in effect taxing it; and this system has
very directly contributed to the decadence of British
metalliferous mining.

The proper method is that adopted extensively in
South Africa and elsewhere, namely—of opening a
separate development account, debiting it with the
actual cost of all development, and of crediting it with
an amount determined, at an agreed rate, by the
tonnage of mineral opened up by such work, as and
when the mineral is extracted ; necessarily, the mineral
wrought must bear the cost of unproductive develop-
ment work, as well as that of development, which does,
in fact, open up new reserves.

The sum thus credited to the development account
should be looked upon as an item in working costs, and
go in diminution of assessable profits, and therefore
be free from income tax. The equity of this suggestion
is quite obvious, and need not be laboured, whilst the
prejudicial effect of the present method upon the
development of our national mineral resources is no
doubt equally evident.

The proper remedy for all these evils would probably
be to charge income tax, not upon the gross profits as
is now done, but upon the dividends or the portion of
the profits actually distributed, as and when so paid
out. This method, which seems a perfectly equitable
one, would allow mining enterprises to put aside such
portion of their profits as they see fit for renewals, etc.,
of plant and for development work.

The Exchequer would, in the long i-un, be the gainer,
because it would in due course collect income tax upon
the profits resulting from improved plant, and from
the additional ore reserves thus developed. If it were
further enacted that a sum equal to the original capital
could be reimbursed to the shareholders in the mine
free of income tax when the mine is exhausted, or the
mining company wound up, thus placing investors in
mines in the same position as other investors, an incen-
tive would be given to mining enterprises to set aside
a proper redemption fund for the ultimate repayment
of the capital sunk—a practice which, in spite of its
soundness, is unfortunately to-day the exception and
not the rule among British mining enterprises.

Local Rates.

On the question of local rates, it is interesting to
remember that the original law that imposed such
rates, namely, the Poor Law Act (43 Elizabeth),
although it made coal mines ratable, did not extend to
metalliferous mines; the circumstance is noteworthy,
especially when we remember that Queen Elizabeth has
been practically the only English Sovereign that ever
evinced any real interest in metalliferous mining.
Metalliferous mines are, of course, now subject to rates
under the Rating Act of 1874. The general principle
is that the ratable annual value of a mine is taken to
be the annual rental at which the mine might reason-
ably be supposed to let; in other words, here again
legislation fails to recognise the essential difference
already pointed out between an occupation lease and a
mineral lease, between payment for the usufruct of a
property and payment in purchase of the corpus of the
property itself, so that here again the mineral industry
suffers from the same unfair treatment as it does under
Imperial taxation. The difficulty of getting an equit-
able assessment even under existing law is a further
grievance with which mine owners in this country are
only too familiar.

Again, it very often happens that, since mines are
usually situated in otherwise unproductive land,
remote from any other industrial centre, they
frequently constitute the principal ratable asset in a
parish, and have to bear by far the greatest share of
the rates, but have nevertheless practically no control