income-producing capacity. This method recognizes the fact that the
value of the mineral deposit depends, not only on its physical
constitution, but also on what performance can be expected from it.

Stock quotations on mineral properties in the standard markets are based
substantially on estimates of income capacity, more or less on the _ad
valorem_ basis. However, the quotations also reflect the hopes and fears
of the public, often resulting in valuations quite different from those
based on studies of the objective conditions.

The war introduced new considerations into the problems of _ad valorem_
valuation. Under peace conditions there is a tendency toward the
establishment of normal costs, selling prices, and markets, which can be
taken more or less for granted by anyone attempting to value mineral
deposits. Under war and post-war conditions, few of these elements can
be taken for granted; it becomes necessary to consider the entire world
situation in regard to a mineral commodity, the effects of the Peace
Treaty (which greatly concerns minerals), future international
relations, tariffs, and other matters of a similar sort. If a person
were today valuing a manganese deposit according to the method above
outlined, and were to confine himself solely to a narrow consideration
of past markets and profits on individual properties, he would be very
likely to go wrong,--for the world manganese situation has an immediate
and practical bearing on each local problem (see pp. 173-176).

OTHER METHODS OF MINERAL VALUATION AND TAXATION

We have discussed the _ad valorem_ method of valuation at some length
because it is the one in widest commercial use, and also because the
principles involved underlie practically all other methods of mineral
valuation. The _ad valorem_ method is used in appraisals for taxation in
some districts and for some commodities, as, for instance, the iron
mines of Michigan and Wisconsin. Its application, however, requires
skill and judgment if equitable results are to be secured. For taxation
purposes, therefore, it is not uncommon to adopt purely arbitrary or
empirical methods which eliminate the element of judgment, and which
often result in valuations quite different from those used commercially.

The state of Minnesota divides its iron ore deposits into a series of
classes, on each of which a more or less arbitrary flat value per ton is
placed, based on the spread between cost and selling pric