THE NOME NUGGET
V • ••'••I ,' ,.i> «,
Published Monday, Wednesday and Friday by the
NOME PUBLISHING CO.
NOME. ALASKA
Telephone: Main 125 P. O. Box 618
$1.50 PER MONTH $16.00 A YEAR
W. A. Boucher ..Owner-Publisher
Entered as second class matter October 14, 1943, at the postoffice
at Nome, Alaska, under the Act of March 3. 1879.
Nome, Alaska, Wednesday, November 1, 1950
HERBERT HOOVER EXPLAINS THE
STATE OF THE MINING INDUSTRY
(Reprinted from The Daily Alaska Empire)
In a statement prepared for Burt B. Brewster’s Min
ing Review. Herbert Hoover tells the state of the non
ferrous mining industry in the Pacific and Moutain
States.
Because the conditions to which Mr, Hoover points
in his statement pertain pertinently to Alaska’s mining
industry, we reprint it here.
Gold production, at one time one of Alaska’s greatest
resources, has fallen from about 28 million dollars
worth in 1941 to under 8 million dollars in 1949. The
difficulties surrounding gold mining in Alaska are sim
ilar to those outliyed in Mr. Hoover’s statement.
And no town in Alaska is more aware of the injury
resulting from the closing of mines than is Juneau, with
its once great Alaska Juneau mine inoperative since
1944.
Here is Herbert Hoover’s statement from The Min
ing Review:
The number of non-ferrous metal mines in the Moun
tain and Pacific States has decreased from about 11,000
in 1935 to 2,300 in 1949.
This is an appalling degeneration in a vital part of
the national economy.
The reasons for this degeneration are common knowl
edge to the whole industry. In the main they are:
1. A considerable part of this degeneration has been
the result of national expenditure, taxation and controls
which undermine the supply of venture capital and ad
venture enterprise in the nation as a wholh. The effect
of these forces is even more violent to the non-ferrous
mining industry than to any othr.
2. The whole structure of the industry is ignored by
the powers that be. In the long view and. in its totals,
this industry is a losing business. That is, the total costs
of equipment, technical staff, labor and supplies put
into it is more than the total value of the output. It. is
kept going because it is a jackpot industry, where the
occasional winner keeps people working at it It is, j
therefore, an industry of the utmost venture type.
I
3. The structure of the industry is roughly in three
parts.
First is the prospector who makes the original find.
He must spend infinite hardship, time and energy in;
the search. i
Given a find—which is probably a 100-to-l shot to
lose—he is dependent upon the second stage, which we
may call the stag of th “preliminary operator” who puts
in some capital for further development and equipment.
He undertakes a probable 20-to-l shot.
The third stage is where large capital is required for
equipment, especially in large deposits of low grade
ore or of difficult metallurgy. Even this stage is prob
ably a 3-to-l shot to lose.
4. The average profitable life of even successful ven
tures is definitely limited. The average is probably not
more than ten happy days.
5. All along this line, stage by stage, taxation and gov
ernment regulations step in to do violence or to give
discouragement. The “preliminary operator” is throt
tled by the S.E.C. in securing capital which has usually
to be done by selling a stock interest in a corporation.
If the “preliminary operator” develops a successful
mine, then he is confronted with the voracious double
income and corporation tax, which may take from 30
per cent to 80 per cent of his profits. The depletion and
depreciation allowances are, on the average, too little
to allow the getting his money back. Moreover, with his
limited capital, he is not able to undertake more than
one shot at a time. Thus he cannot write off his 19 bad
•
shots against his one success. Some of the larger com
panies do deal with the prospector as they can write
off their bad shots against. their good ones—but the
large companies do not take much initial risk. The sum
total is that the market for the prospector’s finds has so
diminished that he is becoming a scarce person.
6. The answer to all this is that .A, the S.E.C. should
leave the prospector and the “preliminary operator”
wholly alone in their seeking venture capital. When
people buy their mining stocks they know that they are
taking a risk and do not need a guardian. The S.E.C.
does. The S.E.C. does not seem interested in Reno and
Las Vegas which gambles produce no national wealth.
B. The prospector and the “preliminary operator”
should be allowed to average their losses with their
successes over a long retrospective period—say 10 j
years. C. Thejij should be given not a depletion and de-1
preciation allowance, but a total freedom from taxes
until they get their capital back. After this, they should
join the ranks of taxpayers.
I
7. Even the large companies need more depletion and j
depreciation allowances, as the average life of a given
mine is too short for recovery Of development and
equipment within the present allowances.
I believe if the present level of taxes and controls had
been in operation for the past fifty years, there would
scarcely be two dozen large producers in action today.
This risky business is built of largely out of plowing in
the profits. But the government by double taxation
takes from 30 per cent to 80 per cent from a successful
enterprise.
: 8. There are other by-products of all this lack of in- i
telligence in taxation and regulation. The prospector j
and the “preliminary” production is coming mainly
from the large companies. However, they must con
stantly get new mines to replace the exhausted ones,
an with the crowding out of the prospector and the
“preliminary operator,” the companies are being starv
ed for such new sources of ore.
Today we realize the prophecies which many of the
industry made fifteen years ago. Some 80 per cent of
the number of mines have disappeared in this 15 years.
We are being driven to imports for our metals. And
parallel, our Government is giving subsidies under the
Marshall Plan to develop foreign mines.
The national consequence of all this is the mining in
dustry is seeking government subsidies in some form.
But can government subsidies re-create the prospector
and the “preliminary operator?” His is not the sort of
spirit that can be created by bureaucracy.
A wither of 80 per cent in the number of units in a
vital industry in 15 years should be some shock to the
nation.
_ i
j
A diplomat is no different than any other person ex-1
cept that he has more time to make up his mind to do i
the wrong thing. . . . The dollar being worth so little!
these days it’s a wonder the counterfeiters don’t strike
for a higher priced dollar.
READY TO GO BOOM _
Will Transfer Some
Anti-Trust Cases
To Other Courts
(Continued from Page One)
mutual agreement between the
government’s battery of five attor
neys and seevral defense counsel
for transfer of the Healy River
Coal Corporation case to Fair
banks. The government had op
posed the transfer but came to an
agreement without a court ruling
on the motion. Atcions against
several Fairbanks’ liquor dealers
were transferred to the interior
city without opposition several
weeks ago.
Liquor and meat cases involv
ing Ketchikan dealers had also
been transferred without opposi
tion to the southeastern Alaska
City.
The latest action leaves four of
11 cases in Dimond’s court. They
involve price fixing cha r g e s
against Anchorage taxicab, liquor
and cleaning establishments and
and similar actions against certain
Seward liquor dealers.
Although upholding the valid
ity of the 10 criminal indictments,
Dimond instructed government
attorneys to list the witnesses who
appeared before the grand jury
in each case where an indictment
was returned.
The criminal indictments had
been challenged by defense attor
neys on grounds that the signa
tures of witnesses did not appear
on the indictments as proper en
dorsement.
ANCHORAGE (/P)—After argu
ments in the anti-trust suits here
yesterday, the government an
nounced that federal judge George
W. Folta would come from the
Southeastern Division in mid-No
vember to help Judge Anthony
Dimond with an unprecedented
number of cases here.
In the last fiscal year here the
Third Division court disposed of
607 civil and 133 criminal cases,
almost exceeding the combined
total of 742 cases for the other
three Divisions.
The docket still is growing,
with new cases filed exceeding
the record number in the year
just closed.
As of Sept. 30, the 618 cases
pending exceeded the 348 in all
Alabama Districts and the 309 in
Maryland.
Higher Food Prices
In Prospect
WASHINGTON, (JP) — Higher
food prices—maybe the highest
ever—are in prospect for next
year, the agriculture department
1 said today. /
The department predicted that
food prices, which have risen
through most of 1950 with a fair
ly sharp upturn after the out
break of war in Korea, probably
! will not go up much more before
i late winter.
But in a report on the national
S food situation the department
j foresaw “reinforced pressure” on
| prices in the spring and declared:
“Accelerated consumer demand
i
for food, unless checked by anti
• inflationary measures or other de
velopments, could push food
prices by mid-year up to and even
above the record level of the sum
, mer of 1948.”
While food supplies somewhat
I larger than this year’s are expect
ed, the department said the in
crease likely will be insufficient to
keep pace with greater consumer
demand for food.