The market value of coal lands, as shown by actual sales, varies as it may be affected by the various factors previously described, ranging from almost nothing to the full royalty value, or even, as in lands carrying the Connellsville coking coal, to more than its apparent royalty value. Where, as they generally do, the lower prices represent not so much low value as incomplete knowledge or present inaccessibility, they do not show what the land would bring if its coal content were known or if it were accessible. The effect of lack of knowledge on the part of the sellers may be seen in the purchase by one of the large coal companies in the West of its present coal holdings at prices ranging from $80 down to $3 an acre, the price depending hardly, if at all, on the quantity and quality of the coal, but on the seller's knowledge not only of the amount of coal but of its value. The highest prices were paid for lands containing coal of which the seller had some knowledge. Many of the lower prices were the result of mere dickering. "They could get plenty of neighboring coal for so much, and if the seller did not accept their terms they would pass him by," an argument that usually got the land at the buyer's price, especially if the seller had little or no knowledge of the actual coal content of the land and its value. Again, a large share of the sales recorded are on undeveloped property, much of it at some distance from railways, for in the reports of sales of developed property it is not usually stated how much of the price is paid for improvements and how much for the coal and coal land. Some of the data given in the following table were obtained by correspondence with the officers of large operating companies in the districts mentioned, some by personal interviews, and some from records of coal-land sales reported in the mining journals, from advertisements of coal lands for sale, or from other like sources. Sale prices of coal land in the bituminous fields of the United States. Sale prices of coal land in the bituminous fields of the United States-Continued. Some additional facts may be given in extension and explanation of the table. The advance in the price of coal lands is well illustrated by examples from southwestern Pennsylvania. Many examples of this rise are cited in a book recently published, entitled, Coal Fields of Southwestern Pennsylvania." quote from that work (p. 49) : 66 To "In 1885 large areas of Connellsville district coal lands were available for purchase at prices running up from $50 to $100 per acre. In 1890 to 1895 prices mounted up to $600 and $700 per acre. A belief was current that these prices were too high and would be lowered, but these coal lands at present command $2,000 to $2,500 per acre and will continue to advance beyond these figures, enormous though they appear. "In 1897 the average price of coal lands in southern Washington and eastern Greene counties, Pa., was less than $30 per acre-coal along the Monongahela River $100. "In the Fairmont, W. Va., mining district, Pittsburg seam coal during the same period of time has advanced from $50 and $75 to $300 and $400 per acre. Hon. E. H. Gary, in an interview, stated: 66 "Already we have 60,000 acres of coking-coal land in Pennsylvania, and are paying $2,000 an acre for all that is offered us.' "In 1899 Mr. J. V. Thompson sold John W. Gates for his steel and wire interests 5,000 acres at $170 per acre. In 1907 Mr. Thompson paid $1,700 per acre for adjoining coal. “The Ellsworth Company purchased 7,000 acres of their coal for $37.50 per acre in 1899, and the Lackawanna steel interests paid at least $600 per acre for their proposition (adjoining) in 1907. "In 1898 the Illinois Steel Company secured about 7,000 acres along the eastern outcrop of the new field (Klondike field). Some of the a Boileau, John W., Coal Fields of Southwestern Pennsylvania, Pittsburg, 1907. options were taken as low as $35 per acre-the latest purchases have been near $2,000. 3371 "In the Pleasant Unity district-that is, trom Mount Pleasant to Latrobe the coal was not considered good in early days. Near Hunkers Mr. Thaw purchased some at $180 per acre. To-day the price would not be under $3,000." It is doubtless true that there have been special reasons for the very remarkable advances just described, yet advances appear to be taking place in nearly every coal field. Here and there are districts that, from lack of competition, have long enjoyed a prosperous trade, until the opening of a new railroad has brought new or cheaper coals into their market and has destroyed their trade. In such districts the price of coal lands has declined. In Indiana excessive competition has forced prices down. In the early days of the Block coal field royalties of 20 to 25 cents a ton were often paid, and in Greene and Sullivan counties the royalties used to be about half that amount. The action of other factors in depressing the prices of coal land is seen in the Trinidad field of Colorado, where the coal is mostly sold on large yearly contracts, at a relatively small margin, so that the profits on the coal obtained under any given acre are not so large as they would be in some other field, as in the Walsenburg and Canon City fields, which supply mostly the household trade at a greater profit per ton. A corollary of this small net profit per acre is seen in the lower prices per acre the land commands in that field, as compared with other fields of no more intrinsic value. In the Rocky Mountain fields, especially, dependence has been placed mainly on records of actual sales, which in some places are abundant, though in others only one or two have been obtained, and it is not known whether the figures cited are near the top or the bottom of the actual range. In general, the lower prices are for coals off the railroad. In some places the price is scaled down regularly as distance from the railroad increases. BASIS OF THE GOVERNMENT VALUATION OF COAL LANDS. WHAT IS COAL LAND? The first step in any scheme of classification and valuation is to determine what is coal land. Any land underlain by coal that is of workable quality and quantity and exists under workable conditions is classed as coal land. In general, little or no question can arise. If the area is within the coal field as defined by the outcropping of workable beds, it may be presumed to be coal land, unless drilling or other exploration has demonstrated that there is no coal under it. There are large areas, however, where the presence of coal has been demonstrated, but the question arises, Is it workable? To some it may appear too poor, too thin, or too deep. How poor, how thin, and how deep coal can be successfully worked? In general it may be stated that anything that will pass as "coal" is workable so far as quality is concerned. Successful attempts are now being made to utilize peat as fuel, and the Rhode Island "anthracite," which is almost graphite in character and is shot full of quartz stringers and veins, is being exploited with some hope of success. It remains to be seen what percentage of ash or other impurities a coal can contain and yet be successfully marketed. Coals containing 25 to 30 per cent of ash are marketed to-day under exceptionally favorable conditions, and in the laboratory, by the use of the producer-gas generator, coals with as much as 40 per cent of ash have satisfactorily yielded power. At the present time 30 per cent of ash appears to be a practical limit under the most favorable conditions, though in most markets 15 per cent is prohibitive. It may some day be possible to utilize bony coals containing as much as 50 per cent of ash. The minimum thickness and the maximum depth of coal beds that can be profitably mined are discussed by Mr. Fisher in his paper in this bulletin. A somewhat careful study has been made of the conditions under which thin coals and deep coals are being mined in this country and in Europe. As a result of this study all lands containing "coal" are classed as coal lands except as defined in the " Regulations regarding the classification and valuation of coal lands" under the heading "Classification of coal lands," approved The " Classification of coal by the Secretary of the Interior April 10, 1909. lands," sections 1 to 5, inclusive, of the Regulations is as follows: "(1) For the purposes of classification and valuation, coal deposits shall be divided into four classes: "(A) Anthracite, semianthracite, coking, and blacksmithing coals. "(B) High-grade bituminous noncoking coals having a fuel value of not less than 12,000 B. t. u. on an unweathered, air-dried sample. 3372 "(C) Bituminous coals having a fuel value of less than 12,000 B. t. u. on an unweathered, air-dried sample, and high-grade subbituminous coals having a fuel value of more than 9,500 B. t. u. on an unweathered, air-dried sample. "(D) Low-grade subbituminous coals having a fuel value below 9,500 B. t. u. on an unweathered, air-dried sample, and all lignite coals. "(2) Lands underlain by coal beds, none of which contain 14 inches or over of coal, exclusive of partings, of class A, B, or C, or over 36 inches of class D, shall be classified as noncoal land. "(3) Lands containing coals of classes A and B of any thickness at depths greater than 3,000 feet shall be classified as noncoal lands, except where the rocks are practically horizontal and the coal lies within 2 miles of the outcrop or point at which it can be reached by a 3,000-foot shaft. "(4) Lands containing coals of class C of any thickness at a depth greater than 2,000 feet shall be classed as noncoal land, except where the rocks are practically horizontal and the coal lies within 2 miles of the outcrop or point at which it can be reached by a 2,000-foot shaft. "(5) Lands containing coals of class D of any thickness at a depth greater than 500 feet shall be classed as noncoal, except where the rocks are practically horizontal and the coal lies within 1 mile of the outcrop or point at which it can be reached by a 500-foot shaft." VALUES GRADED ACCORDING TO QUALITY AND USE. Other things being equal, high-grade coals, or coals that are especially suited to a particular use, will command a higher price than coals of lower grade. In the public-land States of the West the abundance of coal increases as its grade decreases. Anthracite is limited to a few localities of a few square miles each; high-grade bituminous coals are much more extensive, but as compared with the lower-grade coals are confined to relatively small areas; low-grade bituminous and subbituminous coals cover or underlie thousands of square miles in the West, and lignites are found in even larger areas. The higher-grade coals are therefore separated from those of lower grade by greater demand and smaller supply and, other things being equal, lands containing coal of the higher grade will command higher prices. The Government has therefore divided the coals found in the West into four classes, for the purpose of valuation, as expressed in the first section of the "Regulations regarding the classification and valuation of coal lands," given above. Although the coals have been divided into four classes, these classes grade into one another; they are not separated by sharp lines; correspondingly the values placed on the coal of the different classes are graded from one class to another, and within each class values are graded by one-tenth of a cent a ton. In determining the values to be given to each class of coal certain facts and factors were considered. (1) It has been deemed necessary to place such a price on coal land as to make it unprofitable for private citizens to take up government coal land simply to hold it for future mining, but at the same time the price should be so low for the man prepared to undertake immediate mining that it should not exceed the estimated royalty value of the coal, account being taken of the cost of carrying the investment at compound interest, with payment of taxes, etc. (2) A royalty value of 10 cents a ton was taken as a fair average of the commercial royalties paid in the public-land States to-day for high-grade noncoking bituminous coals at the time of mining. (3) As under the present laws the maximum units of entry are 160, 320, and 640 acres, it was assumed that twenty years would be ample time to mine out all of one bed under that area if mining were undertaken within a short time after purchasing and continued with reasonable diligence. This gives ten years as the average time that each acre of land will be held from the time of the purchase to the time when the purchaser realizes on his investment. (4) By taking 7 per cent compounded annually as a liberal interest charge, the purchase price should not be more than such sum as, when put at compound interest at 7 per cent for ten years, with ample allowance for taxes, would approximate the royalty price at the time of mining. (5) To make ample allowance for all the contingencies of mining, the purchase price should again be cut in half. 3373 On this basis a purchase price of one-fifth the royalty value was fixed, the royalty value being assumed to be made up as follows: Purchase price--- Interest on $1 at 7 per cent, for ten years, compounded annually. Allowance for taxes and contingencies. Cost at average time of mining- Estimated royalty value. $1.00 .97 .53 2.50 2.50 5.00 On the high-grade bituminous coals, therefore, a value of 2 cents a ton was placed, equal to one-fifth of a 10-cent royalty. This value became a base figure on which the other classes above and below high-grade bituminous were valued. Anthracite, semianthracite, and coking bituminous coals are by common consent placed above the high-grade noncoking bituminous coals. They sell for more on the market, and, as shown by conditions in the East, lands containing such coals sell well above other coal lands. Therefore lands containing such coals were valued at 2 to 3 cents a ton of their estimated coal content. After a careful study of hundreds of analyses of well-known coals the line between high-grade and low-grade bituminous, noncoking coals was drawn at 12,000 British thermal units. Coals above that calorific value in an unweathered, air-dried sample are classed as high-grade bituminous coal and valued at 1 cent to 2 cents a ton; those below that calorific value are classed as low-grade coal and valued at less than 1 cent and down to one-half cent a ton. Between one-half cent and 3 cents a ton, the minimum and maximum values, the valuations grade by one-tenth cent rises. A value of 1 cent given to a certain coal may indicate that it is considered either at the top of the low-class division (class C) or at the bottom of the high-class division (class B). Another coal of just a little poorer grade may be valued at nine-tenths of a cent a ton, and so on. Although the heat-giving value of a coal as expressed by British thermal units is taken as the most important factor in deciding on the value to be assigned to any coal, the physical properties and condition also receive due weight and consideration. All such factors as the shipping quality of the coal, its action on exposure to the atmosphere, the presence of partings or of sulphur or other impurities, the existence of any known conditions that will render mining easy or difficult or that will tend to add to.or detract from its value on the market or to make its preparation for the market difficult are carefully considered. With the low-grade bituminous coals are also placed the high-grade subbituminous coals or “* black lignites," that show more than 9,500 British thermal units on an unweathered, air-dried sample. All coals whose heat value is below that limit, including also brown lignites, are grouped as class D, and are valued only at the legal minimum valuation, whatever their quality or thick ness. The grading of the value with the grade of the coal is theoretically in accord with modern practice, though actually and usually accessibility, nearness to market, and other local factors may so much outweigh differences in quality as to make it seem that quality has not been considered. Thus in Colorado the prices of land in the Boulder field, where the coal is subbituminous or "black lignite." appear to run as high as those for land in Routt County containing high-grade coals. If comparison is made between two fields equally accessible and equally near the same market and otherwise closely comparable, however, the difference is at once apparent. This may be seen by comparing the value of coal lands south of Pittsburg, where the Pittsburg coal is a low-sulphur coking coal, with the value of lands containing the same bed west of Pittsburg, where it is high in sulphur and a noncoking coal. 48412-VOL 1-10-51 |