some cases the expenditure of money for development of excessive
reserves to be used far in the future, and has tended to prevent
over-production.

Where mineral reserves are developed too far ahead of demand, the
interest on the investment piles up an economic loss to be charged
against the industry. It may be assumed that the urge for exploration
will continue as long as there is demand for mineral resources; and
that, to keep the industry on a sound basis, a certain amount should be
set aside and charged to cost for the purpose of keeping up reserves in
a proper ratio to production. Much remains to be learned about the most
desirable ratio between reserves and production. In many camps, before
the incidence of high taxes, this ratio was not properly determined; and
there was a tendency, due to natural acquisitiveness and in the absence
of anything to hinder it, to build up reserves indefinitely. The first
effect of high taxes in such camps has frequently been the curtailment
of exploration and development. Later, as production has begun to
approach the end of the reserves, exploration has been resumed, but only
on a scale necessary to insure production for a limited period in
advance.

The argument that high taxes inhibit exploration is good only beyond the
point where the industry itself becomes no longer profitable. If there
is sufficient demand for the resource, it is obvious that such a
condition cannot long continue; for, as production and the development
of reserves fall off, the resulting increase in the price received for
the product is likely to offset any effect of taxes, and to restimulate
production and exploration.

Nevertheless, in this period of high taxes following the war, there is
much discouragement in the matter of exploration, suggesting that the
danger point is being approached. Some relief has been afforded by
recent special provisions of the federal income tax law, recognizing
mineral resources as wasting assets, allowing recent discoveries to be
included with total assets for depletion purposes, and recognizing
special and peculiar circumstances with reference to each mine. Also a
certain amount of exploration goes on through the momentum gained from
past conditions, without sufficiently full recognition of the effect of
present high taxes. This is not surprising when it is remembered that
the people actively engaged in field exploration often do not think
sufficiently fully of the tax si