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operators has for some time been towards the elimination of surface discovery as a necessary basis for the initiation of a mining title, while a very respectable number go so far as to advocate the Mexican doctrine of requiring no discovery at all. It is now well recognized that many ore bodies have no surface outcrop. The position of some of these (predicated for geological reasons) may be determinable by the drill, while for others shafts and levels therefrom, or tunnels, or both, are necessary. It is therefore very reasonably argued that if an unoccupied or unused tract is desired for underground exploration purposes by anyone willing and able to push the same vigorously, the right to do so should be given, regardless of whether there are any indications of mineral values on the surface or not.

On the other hand it is not to be forgotten that the extralateral rights doctrine depends entirely on the existence of an apex, not necessarily on the surface, but yet within vertical planes passing through boundary lines; and that this doctrine, though considered by many students of the subject as undesirable and even dangerous, is yet worthy of very careful consideration by broad thinkers, if for no other reason than because of the very successful and profitable industries that have developed under its provisions in each of the two notable mining regions where it is in force (United States and Rhodesia). Collaterally, the Mexican law, which gives no extralateral rights, calls for no discovery, and confers perpetual possession and usage on the sole condition of the payment of an annual ground rental should also be considered. Under its provisions a splendid industry has also arisen, and in the opinion of many mining engineers and operators its law is altogether the best in existence.

But a study of the two industres that have grown up under these opposing and contrasting systems, and side by side in the case of Mexico and the western states of America, reveals some effects that should be noted. To reduce the field under investigation to narrower limits, let us compare conditions in the American states of Arizona and New Mexico with those in the adjoining states of Sonora and Chihuahua in Mexico. In both the

main industry is mining. Topographically, climatologically, and geologically the four cover practically one region. If there is any considerable difference in their mineral potentialities the balance is probably in favor of the Mexican half. Their areas are nearly equal. Historically the southern half is the older, and has been a mineral producing district the longer time. Yet the industry there has produced severe and continuous poverty for the great masses of the people, while across the line to the north it has resulted in widely distributed prosperity. Considerable allowance no doubt should be made on account of the racial differences between the two populations, but this will not account for the fact that while on the American side of the international line the most of the mines have been and are now owned by resident citizens of moderate and even small means, in the Mexican states the ownership has always been among a very few, and is now very largely concentrated in the hands of close corporations the most of whose stockholders are foreigners. Again, in the former, prospecting is active and new discoveries almost a continuous performance, while in the latter exactly contrary conditions in this respect prevail, though for the last half century or more exploration in Mexican mineral districts has been as freely open to aliens as to citizens.

In requiring the discovery of mineral as a prerequisite to a valid location, the framers of the American law (as is well known historically) considered that he who found the outcrop of a new mine was entitled to its ownership, and should not be confined in its development and operation underground within narrow surface limits. They also held the complimentary view to the effect that he who could not produce an outcrop on the claim he had staked off should not be allowed the possession of it, if someone more energetic, more intelligent, or even more lucky did find ore.

To recapitulate: If promising mineral ground can be withdrawn from the public domain and passed into private hands simply at the cost of staking and recording, plus a nominal annual acreage rental, and even plus an annual development expendi

ture, without regard to surface indications or conditions, then the man with money to invest in land and its development has a decided advantage over the man with no capital but his labor, in the normal struggle between the two for possession of the earth. As against this it may be said that the capitalist has a right to such an advantage, and to deny him that right is-to such an extent to discourage investment in underground exploration. Per contra it can be urged that the curtailment under consideration has to do only with the quantity of land withdrawn without apprent cause, and should not affect development; or, to put the matter another way, that some limit should be placed to the area locatable without discovery, or, in lieu thereof, a higher annual rental or assessment requirement be demanded. It is generally recognized in all the existing mining laws that he who explores for low-value substances (coal, oil, gas, etc.) requires a larger field in which to operate if he is to have a fair run for his money, than one who searches for minerals of high commercial value, like one of the metals. Here the heart of the question is reached. The earth's available mineralized surface is of limited extent. The demand for a portion of it is steadily increasing with the advance of knowledge. Is it more conducive to the general good that its possession should be distributed among the many, or among the few? Experience in other classes of real estate indicates clearly that the first alternative produces more general prosperity than the second. It would seem, then, to follow logically that the right to the possession and usage of mineral land should be founded upon something more than the ability to pay normal taxes upon it.

CHAPTER XVI

LEASEHOLD VS. FEE SIMPLE TITLE

The long-term leasehold system for the tenure of mining property, which is in effect in British Columbia, Nova Scotia, the Gold Coast and Ashanti, Egypt, and all the British Australasian states, either alone or in combination with the annual leasehold plan as a preliminary step, provides ample security for capital when the period is sufficiently long or when it carries reasonable renewal privileges, and when the annual rental required is a matter of not over 4% or 5% upon fair valuation. These conditions are complied with in the case of most of the above-mentioned States. The system has the added advantage of allowing the government not only to insist upon terms tending to secure the health and safety of employees, but to enforce the same with comparative ease; also, with great facility to collect periodically the statistics of the industry.

The annual leasehold system, renewable indefinitely, on payment of the annual tax, which is current in all the Latin-American countries, in British Australasia, Rhodesia, and several of the Canadian provinces, appears to work well, as far as it goes, especially where the laws provide for conversion at any time at the option of the claimant into long-term leases. Temporary protection is given to holders of small means at moderate cost, which is yet sufficient to cover the expenses of governmental administration, and to provide the time in which to decide, through preliminary development, whether or not the property can be made profitable, and to find a buyer or a partner if the cost of doing so is beyond the financial ability of the claimant.

The monthly leasehold plan, which is confined exclusively to the four states of the Union of South Africa, is a refinement of

the system which perhaps has not been long enough in operation to be fairly criticisable. On the face of it such a term should not be satisfactory to capital, yet under its provisions the immense gold industry of the Transvaal has been established and is being operated. In that state, and in the adjoining one of Orangia, the holder pays for his possessory title at the rate of about $40 per acre per year, a ground rental which the average claim on the Witwatersrand reefs will perhaps stand so long as native labor is available, though it is a rather heavy tax. For one of the American size (a little over 20 acres) it would amount to over $800 per annum, corresponding to 5% on a valuation of $16,000. This is far above the actual prospective worth of the vast majority of precious metal claims during their development period, and perhaps will explain why, in the two states mentioned, there is so little claim locating outside of the areas already proved to be mineralized. On the other hand, in Natal and the Cape Province, for an equal area, the annual tax is only $60 and $42 per year respectively, the low rate probably having been made to encourage discovery.

The theory of the leasehold system for mining property, as contrasted with the fee simple system for all other forms of real estate, rests upon the evident fact that mines are properties which are steadily decreasing in potential income-producing ability as the extraction of ore proceeds, in consequence of which the time comes for all, either because of the exhaustion of the ore, or the inevitable increase of expenses in depth, when operations must cease. For these reasons it is held that when mines are abandoned, possession should return to the community, so that the surface may be used for any other purpose for which it is suitable.

The case for the fee simple title rests mainly on two arguments. The first, and by far the most important of these, is that the feeling of pride in absolute ownership of land is a sentiment which it is most desirable to cultivate and encourage, because it tends towards the growth and maintenance of individuality and independence, and in its effects upon a people is worth

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