is not a large "social surplus,"--that is, a surplus of receipts over
total expenditures. It is difficult to generalize from such studies with
any degree of accuracy; but it seems likely that if we could measure the
vast amount of fruitless effort which has been expended in
non-productive territories, the result would tend to bear out the
general conclusion that the social surplus for the mineral industry as a
whole is a modest one, if it exists at all. Of course, it is to be
remembered that the total benefits from mineral resources are not to be
measured in terms of gain to the producers,--but that their measurement
must take into account the satisfying of all the complex demands of
modern civilization.

VALUES OF MINERAL DEPOSITS NOT OFTEN ESTABLISHED BY MARKET TRANSFERS

While minerals as extracted and used may have standard market values,
mineral deposits in the ground are not bought and sold on the open
market with sufficient frequency to establish standard market values. A
sale may establish a criterion of value for the particular deposit, but
not for the class of deposits,--for no two mineral deposits are exactly
alike. Stock quotations may establish a certain kind of market value,
but these are often vitiated by extraneous considerations. For these
reasons the valuation of a mineral deposit is in each case a special
problem.

THE AD VALOREM METHOD OF VALUATION

The ordinary commercial method of valuing mineral deposits recognizes
the two main elements of value above discussed. This method is sometimes
called the _rational_ or _ad valorem_ method. The profit per ton (or per
other unit) of the product is established, on the basis either of past
performance of the property or of experience with other similar
properties. This profit is multiplied by the total tonnage estimated in
the deposit, the estimate including known reserves, probable reserves,
and in some cases possible and prospective reserves. The product of the
profit per ton and the total tonnage gives the total net amount which
will be received; it does not, however, give the present value, because
the commodity cannot all be taken out and sold at once, but must be
mined and absorbed by the market through a considerable period of years.
The returns receivable some years in the future have obviously a lower
proportionate present worth than amounts to be received at once. The
interest rate comes into play, making it necessary to discount each
annu