of risk. In a free market the law of supply and demand governs
the value of metals as it does that of all other commodities. So
far, except for tariff walls and smelting rings, there is a free
market in the metals under discussion.

The demand for metals varies with the unequal fluctuations of the
industrial tides. The sea of commercial activity is subject to
heavy storms, and the mine valuer is compelled to serve as weather
prophet on this ocean of trouble. High prices, which are the result
of industrial booms, bring about overproduction, and the collapse of
these begets a shrinkage of demand, wherein consequently the tide
of price turns back. In mining for metals each pound is produced
actually at a different cost. In case of an oversupply of base metals
the price will fall until it has reached a point where a portion of
the production is no longer profitable, and the equilibrium is
established through decline in output. However, in the backward
swing, due to lingering overproduction, prices usually fall lower
than the cost of producing even a much-diminished supply. There is
at this point what we may call the "basic" price, that at which
production is insufficient and the price rises again. The basic
price which is due to this undue backward swing is no more the
real price of the metal to be contemplated over so long a term
of years than is the highest price. At how much above the basic
price of depressed times the product can be safely expected to
find a market is the real question. Few mines can be bought or
valued at this basic price. An indication of what this is can be
gained from a study of fluctuations over a long term of years.

It is common to hear the average price over an extended period
considered the "normal" price, but this basis for value is one which
must be used with discretion, for it is not the whole question when
mining. The "normal" price is the average price over a long term.
The lives of mines, and especially ore in sight, may not necessarily
enjoy the period of this "normal" price. The engineer must balance
his judgments by the immediate outlook of the industrial weather.
When lead was falling steadily in December, 1907, no engineer would
accept the price of that date, although it was then below "normal";
his product might go to market even lower yet.

It is desirable to ascertain what the basic and normal prices are,
for between them lies safety. Since 1884 there have been three cycles
o