January 31, 1913.

THE COLLIERY GUARDIAN.

231

great in practical effect, the fundamental character of
the tax, its type, remains the same.

The system of imposing duties on the gross produce,
and more especially in its particular form of application
to the ton, either at a fixed rate, or varying by agree-
ment according to the sale price, is essentially the
method practised between private individuals when
there is no question of works created by the public
authorities, but consented to by them. This is parti-
cularly the basis of our royalty system, as also in the
case of the proportional subsoil duties in the Loire.

A last form and a more special and exceptional one, is
met with, particularly in new countries, when, for the
sake of facility in collection, the tax is not collected at
the mine, but on exportation from the country.* These
export duties, so far as they are mineral taxes, may be
either specific, as in New Caledonia, Chili, Algeria-
Tunisia, or ad valorem as in Indo-China.

The rates of each of the two types of proportional
duties do not vary less among the various countries
than do their forms ; and the differences between the
latter may sometimes partially explain the variations
of the former. Thus, as regards the gross produce,
rates of taxation are to be found varying from J per
cent, up to 20 and 30 per cent., these extreme figures
naturally resulting only from special circumstances. As
regards the net produce, setting aside exceptional
forms, which aim rather at the sharing of extra profit,
the tax varies from 2*5 per cent, to 10 or 12 per cent.,
and in the Belgian Katanga is as much as 33 per cent.
—a quite exceptional amount. Moreover, in Rhodesia,
the chartered company upon which the colony is
dependent takes half the profits of the persons
authorised to establish works there.

In any consideration of the enormous differences in
the rates of these duties, especially on the gross produce,
it must be remembered that the higher figures refer
generally to deposits from which the net produce is
large in proportion to the gross produce, which illustrates
the well-known economic influence of “ natural condi-
tions ” on mineral deposits.

It is particularly interesting to enquire whether there
is any connection, and if so, what, between the rates of
one and the other of these two types of proportional
duties. To what does a certain percentage of the gross
produce correspond on the net produce, or inversely ?
This question must perforce lead to the recognition of
one of the most salient features of the mining industry,
which is distinct in a way, and which merits attention.
In all other industries which are not monopolised in
deed or by law, in which competition is free and open,
there is established in each of them, owing to the fact of
such competition, for a time, a certain average relation
between the net produce and the gross prodce, the
value of which will depend more particularly on the
capital required to be sunk in order to obtain a definite
gross produce, in quantity if not in value. It is quite
different in regard to mines, where the proportion
between the gross produce and the net produce is,
within certain limits, capable of amounting to something
comparatively enormous. This proportion between the
two may, as a matter of fact, in some measure serve to
characterise each mine from the economical and financial
point of view.

It is necessary, no doubt, in considering these
differences of proportion, to ascribe some effect to the
different financial policies of the companies, to their
method of distribution and their use of the gross profit.
The influence of “ natural conditions ” remains never-
theless predominant and of considerable importance.
Competency of management may, no doubt, beneficially
influence the net cost, as errors of management may
diminish, for a time, the effects of natural conditions
and even compel a suspension of dividend for some
time. These are vexations which, however, pass away
with time. The effect of the natural conditions alone
remains.

Again, it should be borne in mind that the propor-
tion between the net produce and the gross produce
must have theoretically a tendency to increase with time
in consequence of the theoretical increase in value of
mineral substances in the future consequent on their
exhaustion, if, as would probably be the case, this
enhancement in sale prices is not compensated by a
corresponding rise in the net cost. The “ privileged
mines would become more privileged.

This economic phenomenon of the “ natural con-
ditions ” of mines, whose consideration is so full of
interest, ensures to certain mines at the present day, and,
in a theoretical sense, perhaps to all mines in the future,
an extra profit or a super-profit. This recalls to ene’s
mind the “ ground tax ” of Ricardo. Although his

* As in the case of the nitrates in Chili, the phosphates
in Algeria and Tunisia, the various mineral substances in
Indo-China.

theory has been strongly criticised, it had something
equitable about it; the same idea recurs to-day in
another form when reference is made to “privileged
sites.” It may be easily seen that a system of taxation
might be applied to mines, with particular reference to
their “ natural conditions,” similar to that under which
taxes on surplus values of real estate are levied in this
country and Germany, and already proposed in France.

Should the State desire to obtain increased financial
returns from its mines, one apparently simple mode of
doing this is to increase the rating assessment of the
mining taxes, as was done in France in 1910. On the
other hand, the mining industry would not be likely to
tolerate, more than any other industry, certain added
burdens in taxes, and there might possibly be the fear
that, with an industry possessing really a monopoly,
the exploiting companies, being strong enough to resist
the tax, might pass the new charge on to the consumers,
which probably has been the case more than once.

The position is quite different in the case of a tax
established in such a manner that it touches only the
super-profit referred to above. In all probability the
tax would remain in such a case on the owner of the
“ privileged ” mine, as generally such a producer has no
interest in raising the sale prices, which theoretically
depend rather on producers placed in ordinary circum-
stances. It would be rather to the producer’s interest
to lower his sale prices in order to further extend the
field of his supplies.

This principle has been applied—so far as the author
is aware—only in South Africa, and even there only on
a moderate scale, under the Taxation Act of 1910. The
eventual necessity of keeping in view the question of
sinking funds—which will be obvious to everyone—has
been applied here, although it appears to entail very
serious difficulties.

The same idea, in another form, inspired the scheme
of the Bill brought forward in the Belgian Parliament
in 1905, which, however, came to no result. In this case
the mines were differentiated according to the value of
the specific net profit per ton—a principle which could
only be adopted in a country that has collieries only.
The Belgian Bill only sought to impose this supple-
mentary tax on future mines, which would not be a
rational basis for any tax.

The same principle in a third form is also found in
the “ supplementary tax ” of the Mines Bill of Messrs.
Barthou and Millerand and the Budget of 1910 of
M. Cochery; but the scheme came to no more result in
France than in Belgium. In this case, however, the
differentiation of the mines was arrived at by taking
the proportion of the net product to the amount of
capital sunk in the undertaking. But, in contra-
distinction to the Belgian scheme, this tax was to have
been applied simultaneously to all the mines, on those
already instituted as well as on those to be opened up.
The increment tax of the Finance Act of 1910, in this
country, emanates from the same fundamental idea, but
it is of a different nature and has a different end in view.
It is directed to the property of the mine, taken by
itself, as landed estate, and not to its exploitation as a
commercial undertaking.

Local or Communal] Taxes.

So far only those duties and taxes collected by the
State for its own direct benefit have been considered;
but in several countries the mines are subject to special
taxes in favour of the different members of the State,
such as its provinces, communes, &c.

These local taxes constitute in certain countries, with
reference to Prussia especially, really formidable charges
when considered in relation to the State charges. They
have, moreover, the vexatious peculiarity—whose incon-
venience increases with their burden—that they may
vary to a considerable extent in one district, or between
one locality and another. When these local taxes are
the result of the application of general industrial taxes,
the blame can only be laid upon the burden of genera}
taxation. But the same regime, in view of the peculiar
character of the mining industry, may lead, as in
Russia, for example, to a considerable surcharge on the
mining industry in comparison with other industries.

Compulsory Insurance.

In addition to the real taxes in favour of the State or
its members, there exist in various countries obligatory
insurances in favour of the miners, which may be of a
special nature, if not as to the kind of insurance, at
least as to the rate ; the result of this is that there are
prior deductions to be made by the mining undertakings
which, owing to their being obligatory, resemble a tax
the returns from which are applied in one special
direction only. This is the case especially in Belgium
and France.

Although the effect of such deductions in Prussia and
the other German States is to place a very heavy burden

upon the mining industry—and a similar scheme of
compulsory insurance has now been introduced into this
country—no special remarks are made with regard to them
here, owing to the fact that they are not really charges
peculiar to the mining industry in such countries, but
are rather general charges on the industries of these
States.

Final Remarks.

The work involved in a minute study of the taxation
of any one country is so great that a comparative study
of the taxation of various countries can only be of a
general and superficial character.

The literature on this subject is extremely meagre,
and the author, after consulting the Report of the
Royal Commission on Mining Royalties, the papers in
the Transactions of the Institution of Mining Engineers,
by A. Hassam,* G. Humphreys-Davies,t and E. J.
Castle, Q.C.,£ was obliged to communicate, in the
majority of cases, with the various governments,
through the usual channels.

The paper concludes with a statement as to the
taxation in the various countries considered, arranged
according to the alphabetical order of the countries.

* Trans. Inet.M.E., vol. xxix., page 90 et seq.

t Trans. Inst.M.E., vol. iii., page 773 et seq.

j Trans. Inst.M.E., vol. vii., page 428 et seq.

NORTH STAFFORDSHIRE INSTITUTE OF
MINING AND MECHANICAL ENGINEERS.

A general meeting of the members of this institute
was held at the North Stafford Hotel, Stoke-on-Trent,
on Monday evening, Mr. Hugh Johnstone (president)
in the chair.

Mr. R. C. Wain, Whitfield Colliery, Stoke-on-Trent,
was elected a student member.

Electricity for Colliery Managers.

A paper was read by Mr. R. Nelson, H.M. Electrical
Inspector of Mines on “ Electricity: a Short Paper
addressed to Colliery Managers.” Mr. Nelson said the
suggestion he had to make as the primary object of his
paper was that those colliery managers who experience
difficulty in dealing with electrical matters should be
content, at any rate to begin with, to know that if
certain things are done with electrical apparatus certain
results will follow, without being too curious to know
what happens, according to the theorists, inside the
apparatus. He would advise any manager to leave those
things which involve what may appear to be complex
points of theory until he has a firm grasp of what is
meant by certain terms which the writer subsequently
defined, and until he is able to weigh in his mind the
meaning of other expressions in common use, such as
“high” and “low” pressure, “high” insulation and
“ low ” insulation, “ insulation resistance,” &c. It might
also be useful to be familiar with the conditions which
must be fulfilled before an electric shock can be
received. The author then gave the following defini-
tions :—

1.	A good conductor offers very little resistance to the
flow of electricity. A bad conductor offers a great deal of
resistance.

2.	A good insulator stops the flow of electricity just as
effectively as a blank flange stops the flow of steam in a
steam pipe. A bad insulator is less effective.

3.	A “live" conductor is a conductor charged with
electricity. Such a conductor requires to be surrounded
by some insulating material.

4.	A “ system " of conductors consists of two or more
conductors maintained at different pressures by some
source of electromotive force—a dynamo, or a battery of
primary or secondary cells. A direct-current system has
two such conductors. A three-phase alternating-current
system has three.

5.	“ Earthed” means effectively connected to the
general mass of earth by means of a good conductor*
For practical purposes the earth may be considered a
conductor of negligible resistance, so large in volume
that it is impossible to charge it above zero pressure with
electricity.

Electrical apparatus, for example a lamp or a motor,
connected across the conductors of a system allows a
current of electricity to flow through it, there being
broadly speaking, a gradient of electrical pressure within
the apparatus, that is to say in the conductors that go to
form the apparatus, from one terminal to the other, or, if
there be three terminals, from any one terminal to each of
the other two. In flowing through the apparatus, the
current is made to give, in the case of a lamp, light, in the
case of a motor, mechanical power. Or it may be made
merely to change its character; for example, a rotary
converter changes alternating current into direct current
and a transformer changes pressure; in both cases just as a
reducing-valve changes steam pressure (that is to say,
without any great loss of energy). In general, the electro-
motive force is derived from mechanical power. The