December 31, 1915.

THE COLLIERY GUARDIAN.

1343

The Lord Chief Justice has been asked to nominate
a successor to Lord St. Aldwyn as independent
chairman of the South Wales Coal Conciliation
Board.

There are two miners’ candidates in the field for
the Parliamentary seat in North-West Staffordshire,
which was held by the late Mr. Albert Stanley.

The Government is to be asked in the House of
Commons to appoint a committee of enquiry into the
situation created by the inadequate facilities afforded
by the railway companies for the handling and
carriage of goods, especially as to the injurious effect
on export trade.

Northumberland miners’ wages are to be reduced
by 5 per cent, next month, in accordance with the
sliding-scale arrangement in the county.

Four men were killed and another was seriously
injured yesterday by a heavy fall of roof at East
Elliot Colliery, New Tredegar, belonging to the
Powell Duffryn Company.

We publish in this issue as a supple-
ment our annual magnetic declina-
Magnetic tion map, to which we desire to draw
Declination particular attention, because indica-
Map. tions are there shown of a somewhat
remarkable change in the trend of
the isogonal lines in the north of England and
Scotland. In order to understand the full meaning
of the change it is necessary to recall the fact that
these maps are based upon the magnetic survey of
the British Isles, carried out by the late Sir A. W.
Pucker in conjunction with Sir Edward Thorpe,
extending over the 10 years or so preceding 1894.
The results were published in the Philosophical
Transactions of the Royal Society, dated 1896. The
isogonal lines shown on the map in that memoir are
curves generalised from rather complex calculations.
The true isogonals are the very irregular lines
obtained by joining up the readings obtained at about
450 stations. The trend of the isogonal lines as
determined by Messrs. Pucker and Thorpe has up
to the present been assumed to have been main-
tained, but we are informed by those responsible for
the annual revision of our map that this direction of
the isogonals will no longer agree with observed
data obtained by magnetic measurements in Scotland.
It appears that recent measurements at Eskdalemuir
Observatory, as well as near Edinburgh and else-
where in the west of Scotland, necessitate the very
marked westerly deflection of the isogonals now for
the first time shown on the map.

It is distinctly unfortunate that so few stations
exist at which the rate of change in magnetic
declination can be systematically measured. At
present there is no magnetic observatory work north of
Eskdalemuir in Dumfriesshire, and in the south
observations are recorded only at Greenwich, Kew,
Falmouth, Stony hurst and Valencia. It is true that
the late Commander Chetwynd, P.N., has published
the results of observations made by Admiralty
observers in 1907 at 12 different stations, and he
concluded that the mean annual change since about
1891 was about 0’3 min. to 0’4 min. greater at Loch
Melfort, and at Kirkwall 1’4 min. greater annually
than at Kew. The isogonals are, of course, moved
each year through a distance corresponding with the
annual rate of change in the declination values. If
it is assumed that this rate of change is uniform over
the whole area the isogonals will move parallel to
themselves, and the general trend will remain the
same. If, however, the annual rate of change is
greater in the north than in the south, the isogonals
will become bent towards the west in the northern
portion of the map, and this is apparently what has
taken place.

It should be stated that Messrs. Rucker and
Thorpe also found indications of a divergence of the
curves in the north of Scotland. They state that the
district curves bend suddenly to the west in the north-
west of Scotland; but these deflections seem to have
been obscured by the straightening out of the calcu-
lated isogonals drawn upon their map. The district
curves are, of course, the result of direct observation,
and the actual curves shown on the map have been
derived from them by using a mathematical formula,

which although in general giving concordant results,
shows considerable want of agreement in the north
of Scotland. In our map, as now drawn, the Scottish
area shows a tendency to revert to the trend of
Messrs. Rucker and Thorpe’s district curves.

It will be remembered that about 1905 it was
discovered that the rate of change in declination,
which had previously been about 7 min. annually,
had diminished to about 4 min., and an accumulated
error in the position of the isogonals had, therefore,
taken place. It seems as if this decrease in the rate
of change may have been more marked in England
than in Scotland, which would help to account for the
alteration in the trend of the isogonals in the north.

The practical point is the fact that surveys based
upon false declination data will not be accurate, and
it seems to be time that a new magnetic survey of
the British Isles were undertaken. The difference
between the isogonals shown on this year’s map and
those which would have been drawn to follow the
trend hitherto assumed, would easily lead to an error
exceeding 1 deg. in magnetic bearing. It is to be
hoped, therefore, that so important a matter will
not be allowed to rest in its present somewhat
indefinite position.

A question of considerable impor-
Colliery tance to colliery owners has arisen
11 Dead Work” in connection with Part III. of the
and Excess Finance (No. 2) Act 1915, dealing
Profits. with Excess Profits Duty. By
the Fourth Schedule to the Act
it is laid down that the principle of the Income
Tax Acts shall not be followed in respect of certain
deductions on which income tax is collected at the
source, but that such deductions as the Income
Tax Act allows for renewals and repairs, &c., as can
be properly attributable to the accounting period,
may be allowed in the computation of excess profits.
This provision is further modified by Clause 40, sub-
section 3, in cases where as a consequence of the
present war, renewals or repairs have been postponed
or where exceptional depreciation can be ascribed to
the’ war. The question has arisen whether such
renewals or repairs include what is usually described
as “dead work” in mines, comprising recovery of
a seam which has been lost by a fault, or driving
new roads to open up a fresh district. Such work
would not in the ordinary way be described as in the
nature of renewals or repairs, but being customarily
charged to revenue ought obviously to be allowed in
the computation of excess profits.

As was very properly pointed out by Sir A.
Markham during the debate in Committee, there
were cases in South Wales where whole districts had
been temporarily closed because the coal could not
be readily won owing to shortage of labour and
other causes incidental to the war. To have adopted
any other course would clearly not be in the national
interest, because it would have resulted in a
diminished output. Similar conditions existed where
faults had been met. In order to maintain the
output it has been necessary to postpone dealing
with such difficulties, and to keep the men employed
where the coal could be most easily won. It is
perfectly clear that, in thus putting off the execution
of such “ dead work,” the collieries are not acting in
their own best interests. It will be necessary
ultimately to reopen these districts, and in doing so
expenses will be incurred which are properly charge-
able to revenue, but, unless some allowance is made,
the money which should be devoted to this purpose
may have been handed over to the Government in
the form of excess profits duty.

The question of development expenses has
frequently been a source of difficulty in income tax
assessments, and there have been several important
decisions in the Courts upon this point. A notable
instance occurred in the case of the Coltness Iron
Company, which was carried to the House of Lords
in 1881, in which it was held that the company was
not entitled to deduct from the assessable profits the
amount expended on sinking pits which had been
exhausted by the year’s working. The proper
discrimination between capital charges and working
expenses cannot be anything but a source of trouble
unless there is a clear understanding as to what is to

be taken as a charge upon revenue. In the case of
the Excess Profits Duty, the matter is all the more
serious because of the high proportion of profits
involved. It wTould mean nothing less than a fine
upon patriotism to appropriate profits which have
been abnormally swollen by the postponement of
necessary development work for the sole purpose of
maintaining the maximum output of coal during the
war.

Mr. Montagu met this difficulty in Committee in
a thoroughly sympathetic spirit, and the Chancellor
of the Exchequer has now offered a solution which,
if not all that could be desired, at least appears to
be reasonable. Mr. McKenna points out that an
allowance for all postponed “dead work” would
involve some complications, because the technical
application of the term is not only a wide one, but
varies in different parts of the country. It is
apparently feared by the Commissioners of Inland
Revenue that if the term “dead work” were intro-
duced into the Act it would open the door to abuse.
A colliery owner might, if he so desired, claim that
if it had not been for the war he would have carried
out such and such development work, which, not
being of immediate necessity, could not properly be
regarded as having been postponed on account of the
war. In other words, there would be considerable
difficulty in ascertaining how far such postponed
“ dead work ” was reasonable and just. Every case
would have to be considered on its merits, involving
an endless amount of trouble, and probably not a
few differences of opinion which could only be settled
by litigation. It is proposed, therefore, to meet the
principle, which is admitted to be an equitable one,
by means of an instruction to the income tax
surveyors rather than by an amendment of the words
of the Act. The words “renewals or repairs ” will
be interpreted as covering such “dead work” as is
usually charged to working expenses. But the
amount of deduction allowed under this head will be,
in general, limited to a sum equal to the average
actual expenditure charged in the three pre-war
trade years as the total allowance to cover both
expenditure actually incurred and expenditure post-
poned in respect of such work during the accounting
period.

It is not contended that this will meet every case
equitably. To do so it would be necessary to assume
that the “ dead work ” in a colliery is fairly constant
from year to year. As a matter of fact, it is
extremely variable. A seam of coal may be worked
for years without encountering any serious trouble.
But there is often no assurance that a fault may not
be encountered at any time. So that a colliery
might find itself in the position of having to post-
pone a considerable amount of “dead work ” in the
accounting period, although on a three years’ average
he could claim no deduction to meet it. Such cases,
however, are recognised by Mr. McKenna as possible,
and he promises that the method proposed shall be
subject to variation in cases where it is manifestly
inapplicable, or where it can be shown in practice to
be inequitable.

The great advantage of this proposal lies in the
fact that it affords a basis of computation, whereby
much of the danger of illegitimate claims is obviated;
because the colliery owner will be compelled not
only to show what his average “dead work ”
expenditure has been, but also to prove that his
claim for postponed expenditure is reasonable. It
does not mean that every colliery owner will be able
to claim a deduction equal to the three years’ average
as a matter of course. He will still be required to
furnish proper evidence of the justice of his claim.

This method of dealing with certain allowances by
means of instructions to surveyors rather than by a
special provision in the Income Tax Act is not new.
A similar case occurred in 1897 with respect to
allowances for obsolete machinery. And there are
other concessions which have been established by
custom without any explicit statutory sanction, some
of which, we think, may only be known to the
initiated. But the excess profits duty is a new tax,
without any precedent, and hence the anxiety of the
tax-payer that it should start, as far as possible, upon
a basis which at least has some appearance of being
equitable.