in the process of development to replace profitable enterprises that sooner or later will become exhausted. I am not, however, very firmly committed to this theory.
At all events, it may be assumed reasonably, I think, that the average annual net earnings of the mines and metallurgical works of the United States in 1911–1913 was about $330,000,000, without allowance for depletion or amortization, which will be reckoned in the method of capitalization. With the assumption of this figure we may proceed further.
It is well recognized among engineers that mining investments should yield at least 7 per cent net return. It may be argued that mining investments should be expected to make a much larger net return than 7 per cent, and that is perfectly true with respect to individual enterprises. In the present computation it is assumed, however, that production for 30 years by the miming industry as a whole is assured, and that there are no extraordinary hazards. Under these conditions, which perhaps may be compared with those of some of the porphyry copper mines, the assumption of 7 per cent net return is reasonable. In order to replace the capital at the end of the selected period, in this case 30 years, a certain proportion of the net earnings must be set aside and reinvested in the sinking fund. The replacement of $1 in 30 years requires the setting aside of 1.505 c. per annum, if reinvested so as to yield 5 per cent. Consequently in order to get a net yield of 7 per cent there must be a gross yield of 8.505 per cent. Upon that basis, the capitalization of $300,000,000 per annum is $3,880,070,546, and that may be assumed as being
