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By S. A. Falconer

Much attention and publicity has been given, during recent years, to grinding, classification, flotation, and thickening. The various technical papers, and symposiums held to discuss these important phases of milling, have contributed to a better under- standing of the fundamental principles and operating variables involved. Another important part of milling- to the flotation operator-is a treatment step to which frequently too little attention is given-" conditioning," or the treatment the ground mineral pulp receives before it enters the flotation machines. Conditioning" is a hackneyed and frequently misused term, commonly employed to describe the pretreatment of surfaces of minerals in ore pulps or mill pr6ducts prior to froth flotation. In general, such pretreatment is for the purpose of changing the flotation characteristics of these mineral surfaces to enable them to respond in some desired predetermined manner when subjected to flotation. Taggartl states that the function of conditioning is "either to insure selective collector coating of one mineral species while another species is not; or to take such steps as will compensate for departure there from."

Jan 1, 1949

By H. S. Fleming

My original intention was to give a full account of Southern furnaces, ores and cokes; but, owing to the difficulty of getting reliable information, I confine this paper to a general description of the ores used in, and immediately around, Chattanooga. Mr. L. S. Colyar, Manager of the Rising Fawn furnace, wrote me in answer to an inquiry as to what ores they were using, " Below I give you analyses of the mixture of ore we have been using for the past seven or eight years. We haven't a complete analysis of any ores, but I will give them to you as I have them. Attalla Soft Rising Fawn Hard Rising Fawn Red Ore. Red Ore. Soft Ore. Iron,.... 50.60 38.48 46.82 Silica,. .. 11.69 7.32 22.69 Phosphorus,. .. 1.06 .319 .350 This is a fair average of all the ores we get in this section." The following analyses of Birmingham soft ore were received from the Morris Mining Co., of that place. No. 1. NO. 2. No. 3. No. 4. Iron.....51.60 54.88 51.04 51.20 Silica,. .. 19.32 10.60 17.32 17.08 Alumina,....19 .88 1.18 Phosphorus,. ..129 .287 .116 .464 Mine No. 1, second vein, shows: iron, 46.40; alumina, 4.92; phosphorus,.212; silica, 19.60. Mine No. 1, by analyses obtained from the Mary Pratt Furnace CO., shows: Iron. Silica. Fine red ore,.49.00 18.38 Lump red ore,...54.42 17.10 Bottom vein,.50.00 21.38 Bottom vein,.41.24 13.52 A lot of this ore delivered in Chattanooga gave : iron, 53.32; alumina, 2.10; phosphorus,.529; silica, 18.03.

Jan 1, 1887

By M. B. Kahle, A. D. Pernichele

Four types of slope failures in waste dumps are recognized debris flow, foundation failure, edge slump, and blowout. The first three types, although at times causing considerable damage to property and interfering with mine operations, are not usually dangerous to personnel because of their slow rate of movement. The fourth type, the blowout, is the most dangerous because of its explosive mode of failure and lack of forewarning. The December 1969 failure at Verona dump is presented as an example of a blowout. Data from piezometer holes indicate that the blowout was due to perched leach solutions near the face of the dump. The level of water in this zone is very closely related to the rate of leach water application on the dump. A detailed analysis of core samples indicates that the impounded water was perched on a zonal accumulation of jarosite which is associated with a buried dump surface. Drain holes proved successful in controlling perched leach solutions in the critical zone near the face of the dump. Monitoring of the water level in the perched zone is considered essential in preventing blowouts. The use of drain and piezometer holes has allowed an increase in the rate of water application on the dump while preventing additional failure.

Jan 1, 1972

By John Hays Hammond

The Transvaal comprises about 120,000 square miles (nearly • the size of the United States Territory of New Mexico). Besides the famous Witwatersrand, which will here be de scribed in detail, there are two quartz-mining districts of some importance, viz., Lydenburg and De Kaap. The Lydenburg district first attracted attention in 1876, when the alluvial deposits of that section began to be exploited. At a later period vein-rnining was started, and at the present time several companies are operating in that district. The product in 1898 of five companies, running 137 stamps, was 154,560 tons of ore, yielding 108,884 crude ounces of gold (an average of 14.09 dwt. crude gold per ton) valued at £392,378. The De Eaap gold-fields were discovered in 1884. In 1898, seven companies, running 200 stamps, produced 89,760 crude ounces of gold, valued at £314,792. I. Mining Titles in the Transvaal. The mining laws of the Tranuvaal are most excellent in char acter, and while the claims cover every square foot of land for an area of nearly 40 miles long by from 2 to 3- miles wide, there have been practically no conflicts over extra-lateral rights. Notwithstanding the change in the political status of the Transvaal likely to follow the present war, it may be coufi dently assumed that the main features of the mining law of the South African Republic will be retained, and certain op pressive featureu of monopolies, etc., bearing with special weight on the mining industry, will be abolished. The dynamite mo nopoly was one that bore most heavily on the mining industry; and, according to the Reports of the State Mining Engineer, explosives, including fuse and detonators, amounted to nearly 10 per cent. of the total working costs of the mines. Further more, it was impossible to obtain the proper quality for the most economical working, and often 80-per-cent. or 40-per-cent. gelatine had to be used- in many instances where 60-per-cent.

Jan 1, 1902

By E. H. Rose

From the more distant members and some not so distant, the plaint is often heard that they cannot justify the expense and time required to attend the AIME Annual Meeting. Almost invariably, the reason given takes this form: "I just don't see that I would get enough out of it." Often the would-be clincher is added: "Besides, the meat of it all comes out in print anyway." Not long ago, a group of us who have seldom missed a meeting in recent years fell to discussing this phenomenon, and found ourselves in emphatic agreement that anyone holding such a belief indicates by his first remark that he does not know how to attend a convention, and by his second, proves it. He is, by and large, the man who has never been there, and of him, there are many.

Jan 1, 1949

(Members are urged to send in for this column any notes of interest concerning themselves or their fellow-members.) Members and guests who called at Institute headquarters during the period Jan. 10, 1916 to Feb. 10, 1916: William Rettie, Yonkers, N. Y. Wallace E. Pratt, Manila, P. I. R. V. Norris, Wilkesbarre, Pa. T. Skewes Saunders, El Oro, Mex. Fred MacCoy, El Oro, Mex. M. L. Requa, San Francisco, Cal. Reno H. Sales, Butte, Mont. R. W. Schultz, Ravenna, O. R. T. White, Batourn, Russia. H. J. Brown, Chester, Pa. David T. Day, Washington, D: C. A. M. Van Rensselaer, New Rochelle, N. Y. H. M. LaFollette, LaFollette, Tenn. Norman C. Stines, Russia. F. N. Speller, Pittsburgh, Pa. Howard R. Hughes, Houston, Tex. Robert W. Hunt, Chicago, Ill. C. F. Schnepp, Ridgefield Park, N. J. B. E. Fernow, Toronto, Ont., Can. George L. A. Thomson, Elizabeth, N. J. A. F. Bennett, New York City. Jasper T. Robertson, Chicago, Ill. J. C. Ralston, Spokane, Wash. J. B. Tyrrell, Toronto, Ont., Can. George J. Lyon, Schenectady, N. Y. H. G. Officer, New York Cty. Jesse C. Porter is now superintendent of the San Fernando Mine, Hoyo de Manicaragua, Santa Clara Province, Cuba.

Jan 3, 1916

By Wallace Ralston

The East Texas area includes the northeast 38 counties of the state of Texas. It covers all, and extends beyond, the borders of what is commonly described as the East Texas Basin. It is one of the most important oil and gas-producing areas of the Mid-Continent Province. It includes four important oil fields—Van, East Texas, Cayuga and Long Lake— and the recent extension of Rodessa field into Cass County, Texas, may prove to be of major size. Four commercial gas fields are in this area— Bethany, Waskom, Cayuga and Long Lake. Up to January, 1936, all of the oil has been produced from the Upper Cretaceous formations, and most of that from the basal member, the Woodbine sand. Gas is produced from both the Upper and Lower Cretaceous formations. Development in Fields East Texas Field.—This field continued to dominate the drilling and production situation throughout the United States. There were 4036 wells completed in this field during 1935; that is, 365 more wells than were completed during 1934. Drilling activity was due to close spacing of wells and the addition of 10,000 acres to the field. The field is now drilled to a density of one well to 6½ acres, which is certainly more wells than necessary for economic production of the field. The close spacing of wells is due mostly to the type of proration, which is per well allowable based on a potential test, and does not take acreage into consideration, and also to the numerous small acreage tracts such as town lots and excess strips. The field now has 19,519 producing wells. The allowable production for the field during 1935 was 161,118,659 bbl.; estimated production, including illegal or "hot oil," was 174,200,150. The illegal production of oil gradually decreased throughout the year, until an estimated low was reached of 20,500 bbl. daily during the months of November and December. The price of oil remained at $1.00 per barrel throughout the year. As stated, about 10,000 acres were added to the field during the year, making a total of 128,000 productive acres. There is a possibility that

Jan 1, 1936

By Donald W. Barnett

U.S. environmentalists have tended to oppose all new energy developments. Their efforts may be counterproductive because opposition to, say, offshore oil directly leads to the continued use of other energy sources that may have a higher social cost. Rather than attempting to eliminate all pollution from energy production, which would be prohibitively expensive, one should minimize the social cost of energy production for the given demand. Linear programming is used to rank various oils (California State and O.C.S., Gulf of Alaska, Prudhoe Bay, Athabasca tar sands, oil shale and certain foreign crudes) in terms of their social desirability. The objective is to minimize the cost of supplying the California market, subject to resource, sulphur and oil spill constraints. Social desirability is indicated by the inclusion of the oil in the optimal solution and the size of the associated shadow price. the larger the shadow price, the greater the benefits of increased production. The more negative, the greater the cost associated with forcing consumption of that fuel. The environmental shadow prices indicate the size of the trade-off between a particular environmental standard and minimum cost. The trade-offs can be surprisingly large. any reasonable spill standard can be achieved by changing the development pattern. Generally, the further offshore, the smaller is the environmental degradation, but the more expensive is the oil. Foreign oils can be economically and environmentally inferior to domestic oils. Crude from the California O.C.S., San Joaquin Valley end Prudhoe Bay appears a valuable resource, while the Gulf of Alaska, synthetic and foreign crudes appear marginal to submarginal.

Jan 1, 1977

By T. Egleston

I HAVE to announce with great regret that our distinguished honorary member, Louis Gruner, died in Paris in March last. The Institute, in his death, has lost one of the first as well as one of the greatest of its honorary members. I speak with great feeling, as he was both my instructor and my friend ; and I am sure that if he could hear what I am about to say of him, lie would object to it. Mr. Gruner's modesty was such as even to prevent, except in his own Corps, the thorough appreciation of his work in his own country. I think be mas better appreciated by those who are familiar with his labor in almost any other country than his own. A just man, a thorough scholar, a great investigator, he was so unselfish that almost the last act of his life, and the last letter he signed, only a few hours before his death, had for its ohject to render a service to one of his former pupils. I think no one who mas ever associated with him could forget, in the greatness of his learning, the sincere and earnest friend, mho was always ready to render a service, where such service could be rendered even at great inconvenience to limself. His own motto, "Sein, nieht schein;" that is, "Be, not appear to be," was singularly descriptive of his character; and, what is more than all, he was one of the most earnest Christian men with whom it has ever been mv. good fortune to be thrown in contact. There are few such men. He was one of the greatest metallurgists that Europe has ever produced; a man the more remarkable because, though known to most of us as a metallnrgist, some of the best work of his life was in the domain of geology to which he contributed very important researches and memoirs, which will remain permanently among the valuable additions to the geology of his own country. He was, at the same time that he was the greatest metallurgist in Europe, a brilliant chemist, a thorough geologist, a distinguished professor, and an expert, practical miner, whose advice and methods had only only to be known to be followed. Mr. Gruner was born in Smitzerland in 1809, and graduated from the Polytechnic School of Paris in 1530 and entered the School of Mines, from which he graduated with distinction in the Corps of Government Engineers of Mines at an early age, and was immedi-

Jan 1, 1884

By Francois E. Heuze

The Crestmore Mine of the American Cement Company lies at the eastern end of the Jurupa Mountains, 50 miles east of Los Angeles. Originally, a quarry was opened in 1908 for "limestone" used in the manufacture of cement. The mining operations eventually went underground employing first a modified system of block caving and later the "room and pillar" scheme. The limestones are relatively small roof pendants preserved in an enveloping and intrusive quartz diorite. They occur as two irregular lenticular bodies roughly parallel at the top and tending towards convergence at depth. Their dip varies between 25 and 30 degrees E. The presently mined lower bed, Chino limestone, is typically composed of alternating bands a few inches to a few feet thick of medium to coarsely granular white crystalline limestone and somewhat yellowish limestone (brucite marble). A "room and pillar" scheme of mining is currently employed in the lower body of the Crestmore Mine. The levels are horizontal and access is provided by a spiraling road starting in the old quarry. The present depth of operations is an average 750 ft below the surface. Fig. 1 gives a three-dimensional general sketch of the mine. The long axis of the rooms is in an E-W direction, normal to the strike of the beds. Fig. 2 is a horizontal map of the 130 level, the deepest level mined presently. It is in this level that most of the in-situ investigations have been conducted. The present investigation was made possible by a non-restrictive grant of the American Cement Company to the University of California. The program included a series of in-situ tests using flat-jacks, plate bearing,

Jan 1, 1968

By Edward A. Vitunac

The emerging importance of pneumatic conveying systems for bulk materials is largely due to the economic advantages such systems frequently exhibit when compared to alternate methods. Included in these advantages are relative simplicity, ease of installation, flexibility, ease of maintenance, cleanliness, safety and ease of automation to the degree desired. In general, installed costs favor a pneumatic system when compared to competing mechanical systems if the transporting distances are long or to and from many points. In addition, supplemental use such as cooling, heating, or drying may supply the incremental value required to justify its selection.1 The main disadvantages of a pneumatic system are the greater horsepower required per unit weight of material conveyed, material limits in abrasiveness, and density. In addition, material breakage tends to increase at changes of direction and at any obstruction such as that caused by the imperfect butting of two pipe sections in the conveying line. Classification of the material at the discharge may also cause problems in dusting and segregation. Materials weighing less than 4 lb per cu ft tend to cause feeding and collecting problems although they can be conveyed easily. Material between 4 lb and 20 lb per cu ft can be handled with fewer problems, but flow rate is hard to predict. The 20-60 lb per cu ft range offers best results, whereas materials of over 60 Ib per cu ft tend to drop out of the air stream and settle in the pipeline unless careful pro- visions are made to prevent this.2

Jan 5, 1968

By H. J. Wasson

WITH the close of 1932 and the third year of the depression, the activity of oil production presents, amidst the general wreckage and chaos of industrial society, a somewhat unique picture of rationalized economic effort. East Texas still dominates the contemporary horizon, but it has become, at least for the time being, a definitely known factor. With its 9500 wells it is approximately 90 per cent drilled up. So long as production control obtains, it is merely one important factor of the national oil reserve. Each succeeding month of stabilized production tends to lull the industry's fears and the menace, both actual and psychological, of this giant field becomes ever more remote.

Jan 1, 1933

By Ralph H. Sweetser

OF SPECIAL importance in the design and construction of an iron blast-furnace plant are tile raw materials to be employed. Obviously the iron must come from some ore of that metal, but the many kinds available lead to important differences in plant arrangement, and in the design of furnaces and accessory equipment. For instance, the bulk of the gangue in the ore is subject to wide variation as is that of the ash in the fuel. A gradual increase in the bulk of raw material necessary to produce a ton of pig iron has been noted, but this has been more than offset, so far as costs of operation are concerned, by improvements in the machinery used for handling large quantities of ore. coal limestone, and slag. The mechanization of coal and iron-ore mining. the building of big ore boats and limestone carriers, of ore docks for fast loading and unloading, and the general use of heavy railroad equipment have all contributed to greatly reducing the number of man- hours required to mine, transport, and manufacture the raw materials into a ton of pig iron. This looks like a big saving and it is. If it were not for these big labor saving machines it would be impossible to produce the tonnage of iron and steel that is made each year in this country. On the other hand, the total capital investment necessary to bring down the man-hours per ton of pig iron to a 2.3 hours average at the blast furnace and to a total of only 12 man-hours from ore to metal (see Table 1) is so great that even the present high price of pig iron is probably not far above the true cost of manufacture when all the fixed charges are properly included.

Jan 1, 1939

By Clyde E. Williams, JAMES L. GREGG

THIS review of the past year's progress in iron and steel metallurgy presents examples of only a few of the interesting or important accomplishments made in the United States. In the field of iron ore concentration increased attention was given to the study of the more difficultly separated wash ores and some progress was made in tabling. One difficulty with the table, in concentrating iron ore where the percentage of concentrate in the feed is large, has been the removal of fine silica from the thick layer .of concentrates in the cleaning zone. One company has -Made an important contribution toward the solution of this problem by an extension of the well-known plateau principle. By a special riffling of the plateau section of the table, the concentrates are crowded together. This action forces the fine silica to the top of the bed in the cleaning zone, whence the cross-flowing currents of water -can wash it into the middling product. Some work has been done on the application of froth flotation to the concentration of iron ores. Laboratory experiments were made at the Colorado School of Mines in which hematite was, successfully floated. Using oleic acid as a frothing and collecting agent and sodium carbonate as the conditioning agent, a high recovery of rich ,concentrate was obtained. A laboratory flotation unit is in use at Taconite, on the Mesabi range, and a commer-

Jan 1, 1932

ABERDEEN, ESTHER, U. S. Geological Survey, Washington, D. C. ALLEN, VICTOR T., Director Geology Department, Institute of Technology, St. Louis University, St. Louis, Missouri. BATES, THOMAS F., Associate Professor of Mineralogy, Department of Earth Sciences, School of Mineral Industries, The Pennsylvania State College, State College, Pennsylvania. BOLGER, ROBERT C., Geologist, Pennsylvania Topographic and Geologic Survey, Harrisburg, Pennsylvania. BRIDGE, JOSIAH, U. S. Geological Survey, Washington, D. C. BURST, JOHN F., Geologist, Exploration and Production Research Division, Shell Oil Company, Houston, Texas. CAMPBELL, IAN, Executive Officer, Division of Geological Sciences, California Institute of Technology, Pasadena, California. FLINT, DELOS E., U. S. Geological Survey, Washington, D. C. FREDERICKSON, A. F., Associate Professor of Geology (Geochemistry), Washington University, St. Louis, Missouri. GLASS, HERBERT, Illinois State Geological Survey, Urbana, Illinois. GORDON, MACKENZIE JR., Geologist, U. S. Geological Survey, Washington, D. C. GRIM, RALPH E., Research Professor, Department of Geology, University of Illinois, Urbana, Illinois. HARDER, E. C., Aluminium Secretariat Limited, Montreal, Que., Canada.

Jan 1, 1952

By C. E. Melbye

A serious problem confronted the city of Gunnison early in 1958 in that, for a few months during each spring runoff, the water supply derived from the Gunnison River became polluted to an unsafe point. The city management had the choice of building a new filter plant to replace the old unworkable one or drilling wells to develop a ground water supply. The cost of a new filter plant was estimated at $180,000 compared to $50,000 for 6 wells, pumps, and additional water lines, hence their decision to attempt the development of sufficient ground water. Six wells at 300 gpm per well were estimated as necessary to handle the peak usage of 1800 gpm, compared to only 600 gpm winter usage. Although the water table is only about 7 feet below the surface, existing private wells drilled at random locations were producing much less than 300 gpm. The problem was to find sufficient quantities from about 6 wells. Since the presence of an ancient bedrock channel was suspected, which would be expected to localize greater quantities of water, the city of Gunnison authorized a resistivity survey to investigate bedrock topography below unconsolidated gravels. Survey results were highly satisfactory and led to the preparation of a fairly detailed bedrock contour map, Fig. 1. This map was used in selection of all well sites. The city of Gunnison is situated in a flat, broad, Quaternary gravel-filled valley (terrain dips south at 20 feet per mile) at the junction of the Gunnison River and Tomichi Creek. The valley, about 2-4 miles wide, is bordered by hills of Tertiary volcanics to the northwest, Cretaceous and Jurassic sediments to the north and northeast, and pre-Cambrian granite and gneiss to the south. One previous deep test well at the west end of the city hit pre-Cambrian granite at 496 feet, which, allowing for 40 feet of surface gravels, makes the older sedimentary section 456 feet thick. This section is probably all Jurassic Morrison formation, consisting of the Saltwash sandstone overlain by the much thicker section of Brushy Basin shales and mudstones. According to the driller's logs, each well was bottomed in what is believed to be Brushy Basin shale. FIELD PROCEDURE A standard Gish-Rooney type of resistivity apparatus was employed, which used 45-volt dry batteries as a direct-current power source. Applied voltages could be selected from 45 volts to a 270-volt maximum. Copper-coated steel stakes were employed as current electrodes and porous porcelain pots as potential electrodes to avoid possible polarization effects with direct current. The expanding Wenner electrode configuration was utilized for this investigation and measurements were made at 20 40, 60, 80, and 100-foot spacings,

Jan 1, 1961

By AIME AIME

WITHOUT frills, but with an admirable program of technical papers and discussion, many opportunities for social contact, and all New York for a playground, the 142d Meeting of the Institute will make the Engineering Societies Building a lively place from Feb. 20 to 23. Prices are down, even in New York. Come and forget the depression listening to the stories of old friends. Hear at first hand what is going on in your professional world. The fare is varied, of wide appeal. The program on the opposite page has been arranged carefully to minimize conflicts between the subjects in which you are interested. If it is not possible to come for all four days, check over the sessions that are most important to you. No changes in the scheduling are likely.

Jan 1, 1933

By AIME AIME

MINING geology was granted two sessions, Wednesday morning and afternoon, Feb. 17. The morning session, at which H. Foster Bain presided. first considered Paul M. Tyler's paper, "Economic Notes on Steel-making Alloys." The elements used in these important alloys are chromium, manganese, molybdenum, nickel, phosphorus, silicon, titanium, tungsten and vanadium. Edward Sarnpson and C. K. Leith asked whether chromite concentrates could be used, Mr. Tyler replying that they could if not too high in iron. G. W. Pawel said that they were used at Niagara Falls, nlixecl with coarse ore. In reply to a question asked by A. O. Hayes, Mr. Tyler said that molybdenum had not affected the price of tungsten. After this discussion, E. S. Moore's paper on nickel was considered. H. Foster Bain thought that nickel is well controlled and in good hands, technically and politically. The popular stainless steel in America is the 18:8 Cr-Ni metal. In Germany a Cr-Mn steel has possibilities. It is easy to make, cheaper. has better workability, will stand 85 per cent reduction between heats.

Jan 1, 1932

By Ralph Wilcox

The diamond drilling of certain characters of unstable rock formation, as, for example, the copper-bearing schists of the Miami district in Arizona, is rendered most difficult by what is known as a caving " of the sides of the drill holes. As this caving is very greatly increased by the action of flowing water, it occurred to me, after experiencing a great deal of difficulty with caving in diamond-drill holes which I was drilling for the Miami Copper Co., that if I could substitute air for water, much of the caving—with resultant difficulties, such as decreased speed of sinking and increased consumption of diamonds—would be overcome. After some experimenting, I found that it was perfectly practicable to substitute air for the water; forcing the air down the hollow rotating rods in the same manner as is done with water, the air passing out around the bit, which is thus cooled, and ascending on the out~ide of the rods to the collar of the hole, carrying the borings in just as satisfactory a manner as had been done by the water, but without the accompanying destruction or caving of the sides of the drill holes such as had been so generally experienced with the water. When water was encountered in the drilling this water was forced up to the collar just as it would have been had water been used in the drilling, but with the correspondingly decreased flow there was relatively less washing or caving of the sides of the drill holes. The only change necessary in the arrangement of the drill is that a cross instead of a tee is used at the collar of the hole. A tightly woven jute bag is attached to one arm of the cross, for collecting and filtering the sample; and when drilling in dry ground a jet of water is attached to the opposite arm of the cross, to collect the dust and wash down the sample into the bag. The rods rotate through a stuffing box attached to the upper opening of the cross. The distention of the jute bag by the issuing air indicates the operating conditions as sufficiently as did the flow of water when using water in the drill hole. The small percentage of core recovery rendered it necessary to

Jan 1, 1914

Discussion of the paper of PHILIP W. HENRY, presented at the New York meeting, February, 1915, and printed in Bulletin No. 97, January, 1915, pp. 23 to 30. C. ,E. GRUNSKY, JR., San Francisco, Cal. (communication to the Secret ary*).-The difference of opinion of engineers on the subject of depreciation is justified, to some, extent, by the many viewpoints from which such a subject can be considered when applied to properties of widely differing physical characteristics. Mr. Henry takes up the subject of depreciation as applied alone to oil properties, and in doing so makes a clear distinction between amortization and the repair or renewal requirement. After carefully reading the paper the purpose of its author in suggesting a "depreciation" reserve or fund to keep the property at a constant value does not seem clear. As shown by Mr. Henry, the depreciation element as compared with the operating expense per gallon of oil is very large because of the comparatively short life of the oil properties, and it is also evident that such a "depreciation" fund would in a short time contain a very large amount of money. It seems desirable and permissible in income-tax matters to take into account the depreciation of property and to separate from the income such money as is necessary to amortize the invested capital to an extent warranted by the depreciation. However, it does not seem either necessary or desirable to create a large fund which will in time approximate the entire invested capital and which may he invested by the directors, as Mr. Henry suggests, "in the property itself or in outside securities." This method seems cumberome and liable to offer in the reinvestment of such a fund temptations to a directorate that might show more devotion to its own interests than that of the stockholders. A reserve fund is very frequently desirable in mining and oil operations, but to keep up a fund of this magnitude or to reinvest it in outside securities does not seem desirable from a stockholders' standpoint. The. money withdrawn from the receipts to be placed in the depreciation fund (not including replacements and the drilling of new wells necessary to keep up the productiveness) should he returned to the stockholders of the company, not as dividends, but as an amortization of the invested capital.

Jan 5, 1915