"[The court] is not bound, unless it chooses to be, by stipulations as to what the law is, or involving or incorporating a legal conclusion[.] In this category I would put e.g., a stipulation as to the date of a "taking” in eminent domain.”
How later courts described this case
- "[The court] is not bound, unless it chooses to be, by stipulations as to what the law is, or involving or incorporating a legal conclusion[.] In this category I would put e.g., a stipulation as to the date of a "taking” in eminent domain.”
Written by the judges who cited it.
The opinion
Nichols, Judge,
dissenting:
I regret that I feel compelled to dissent in this case, though perhaps not as keenly as if my views commanded majority support, leading to a new trial and further delay in righting the ancient wrongs done the ancestors of these Indians. My minority position, happily, exempts me from feeling any moral scruples against saying what I think. Then too, I am not certain the errors I am concerned about do not to a degree offset each other, so that in the overall, the amount *151 the court awards may be not so far removed from what I would have awarded if I had had sole charge of the litigation from its beginning.
A preliminary question is this: the court lays great stress on the stipulations and concessions of the parties as eliminating inquiry into issues that otherwise it would have to explore, as e.g., the dates of “taking.” I agree that the court is never obliged to inquire into disputes the parties have abandoned, and often it is wiser not to, as in Wagner v. United States, 181 Ct. Cl. 807 , 387 F.2d 966 (1967). It is not deemed to have decided any issue that merely “lurks in the record.” Clearly, however, it is not bound, unless it chooses to be, by stipulations as to what the law is, or involving or incorporating a legal conclusion, Sanford's Estate v. Commissioner, 308 U.S. 39, 51 , reh. denied 308 U.S. 637 (1939); The Sac and Fox Tribe of Indians of Oklahoma v. United States, 161 Ct. Cl. 189, 198 , 315 F.2d 896, 901, cert. denied 375 U.S. 921 (1963). In this category I would put e.g., a stipulation as to the date of a “taking” in eminent domain. At times a judge may consider the parties have boxed him into a position he anticipates he will have to break out of sooner or later. Then he should speak out, if for no other purpose, so he will not be foreover explaining and distinguishing the case in the future. Here we deal with legal doctrines that will remain alive and important as long as there is a Fifth Amendment to the United States Constitution.
I take up now the matter I find troublesome.
FIRST, The Fisheries. It does indeed seem strange that plaintiffs get nothing for the fisheries in view of our recitals in the original opinion at 147 Ct. Cl. 341 , 177 F. Supp. 468 , “The most valuable asset lost to these Indians was their fishing rights * * No doubt, as we now hold, the supposed value of the fish is not an appropriate valuation technique. No doubt too, as the court says, no one owns or can own any exclusive fishing rights in navigable water, other than, perhaps, relating to shellfish. I would have supposed that one who owned as plaintiffs here did, all the fast lands bordering on so many sounds, bays, and coves, teeming with fish, would have enjoyed such enormous advantages over *152 others in exploiting the fisheries thereon that willing buyers would have paid enhanced prices for the land, even if they could obtain therewith no ownership in the fish. A person owning a building on Fifth Avenue might claim it was worth more because of its favorable location without thereby asserting any proprietorship in the vehicular and pedestrian traffic daily passing by his door. The recent case of United States v. Rands, 389 U.S. 121 (1967), raises some doubt in my mind about this, but I would have considered whether I could distinguish it if the record gave support to such a theory. The result of our commissioner’s going off on the wrong tangent here is apparently that plaintiffs get nowhere at all in just the area where we thought originally they had the best case. I hope this decision is not taken as authority that, should 'an island such as Cuftyhunk, Block Island, or Tangier be taken by eminent domain, the court in setting a valuation must utterly ignore the fact that fishing goes on from there.
SECOND, The Gold Mines. The taking dates herein, as stipulated, were dates of Congressional enactments or of patents, in most cases confirming titles of persons the court calls “squatters”, who had been in occupancy long before. Thus it is the awards to the Indians include payment for some fine producing gold mines, in fact discovered and developed by whites. As the commissioner finds, these mines required the developers to make large capital investments. A squatter is, I suppose, a trespasser, and I find it hard to believe the investors would have knowingly invested in a trespass from which they might be legally ousted at any time. As a practical matter they conceived of themselves as owners, with the confident expectation that their de facto ownership would eventually become a good paper title by Governmental act. After entry but before patent no one, I am sure, would have paid 10‡ for the Indians’ underlying title. The Indians’ cause of action as now validated by Congress accrued on the first entry, for the legislation makes the Government liable for “failure to protect” as well as for a taking. The “failure to protect” was complete and utter between entry and patent. I think the enactments and patents, relied on as takings, were not intended to extinguish the Indian title, which was not *153 at that time deemed to exist. They were intended to quiet title as between the miners and the United States. A person could not get a patent if he was not already in possession. A mere trespasser, not in good faith, will possibly lose the value of improvements it has itself placed on the land. American Cement Plaster Co. v. Acme Cement Plaster Co., 181 S.W. 257 (Tex. Civ. App., 1915); Cf. Christopher v. Garrett, 292 S.W.2d 926 (Tex. Civ. App., 1956); but it is a misconstruction of the enabling legislation here to put the Government in the position of such a trespasser. So far as I know it has occurred but is contrary to most precedent to make a lawful taker pay for an improvement it has itself installed in good faith. See discussions of the problem of valuing land taken by eminent domain when the taker has in good faith improved the land prior to the taking. Orgel, Valuation Under Eminent Domain (1936) 310 and ff.; 5 Nichols, Eminent Domain (3d Ed. 1952) 224 and ff.
However, if the Indians must be treated as owning the gold mines, still it is wrong to base the award on estimates of the unmined gold in place. Such an award is condemned as speculative. United States v. Sowards, 370 F.2d 87 (10th Cir. 1966) and cases cited at p. 90. Likewise it is wrong to use the estimate of gold in place as a starting point to estimate further profits. United States v. Meyer, 113 F.2d 387 (7th Cir.), cert. denied 311 U.S. 706 (1940). 5 Nichols, Eminent Domain, supra, 230, and cases cited. This is an estimate on an estimate.
In my opinion the Indian Claims Commission handled the problem of valuing Indian 'lands containing minerals with perfect correctness in The Winnebago Tribe and Nation of Indians, Et Al. v. United States, 16 Ind. Cl. Comm. 81 (1965), which we are affirming without opinion, 181 Ct. Cl. 1202 . The Commission refused to make a fact finding speculating on possible profits after the taking date from the minerals involved. For consistency with the proceedings in Tlingit and Haida, we should be reversing the Commission, but rightly we are not.
As a practical matter, the original proprietors of the soil, however well protected by 'law and skillfully represented, could not have expected to pocket all or most of the profits *154 from mining on their lands. It is common knowledge that the -party who has the capital, the equipment, the know-how, and the access to markets, will always take the lion’s share. The commissioner’s method of valuation here donates these things to the Indians.
I think a proper award for the property, such of it as had its highest and best use for mining, would be made by postulating a willing buyer and a willing seller negotiating for the fee simple title on the date of first entry, both skillful of course, both knowing whatever was ascertainable about the geology of the area, and both protected by law. United States v. Emigrant New York Indians, 177 Ct. Cl. 263, 289 (1966). From this viewpoint, I would not be too much influenced by the history of the mines that were successful, nor would I deem plaintiffs necessarily out of court as to mineral properties we know by hindsight were never successful. Prices between willing buyers and willing sellers are always influenced by the known presence of minerals, to some extent, however slight.
I am sure if the commissioner had adhered to proper valuation methods his awards for mineral properties would have been much less over all.
THIRD, The Town Sites. I believe these too are grossly overvalued. Again this results from the stipulated taking dates. The Capital of Alaska, Juneau, was not patented until it had been a going concern for many years. Hence the Indians are being paid for a white man’s town. If the State House had been built on the taking date, no doubt there would be an award for that -also.
FOURTH, The Timber Land. As to this, I merely note that there is no indication that the possession of the Indians was disturbed before the stipulated taking dates, so the problems do not arise.
In short, the Indians are being denied payment for the most valuable de facto asset of which they were deprived and instead are being compensated for de jure assets they never could have reasonably supposed belonged to them. I am sure they will be greatly impressed with the wonders of the white man’s justice. We may hold that events prior to the case’s coming back before us limit our power to influence the course *155 of events at this point, bnt I think it appropriate for one of ns to register lack of complacency, at least.
FINDINGS OF FACT
The court, having considered the evidence, the report of Trial Commissioner Saul E. Gamer, and the briefs and argument of counsel, makes findings of fact as follows:
1. The court has already concluded that as a matter of law plaintiffs are entitled to recover, the amount of such recovery to be determined in further proceedings ( 147 Ct. Cl. 315 ). Such proceedings have now been had and this report is limited thereto.
The Issue of Abandonment
2. (a) One of the issues that was reserved for further proceedings was whether there had 'been, prior to any pertinent taking date, any voluntary abandonment or relinquishment by plaintiffs of any of the lands included in the area found to have been aboriginally used and occupied by plaintiffs in 1867 (when Alaska was purchased from Eussia).
In the proceedings relating to plaintiffs’ right to recover, plaintiffs contended that the findings then made were sufficient to establish that they had not abandoned any part of the claimed area. However, inasmuch as, under a prior order of the court (set forth in finding 3, 147 Ct. Cl. at 348 ), this issue was included in those to be reserved for further proceedings, and since defendant had indicated that it intended to offer proof thereon ( 147 Ct. Cl. at 342 ), the court did not then pass on plaintiffs’ contentions.
(b) In the further proceedings, defendant offered no proof on this issue.
The Issue of Offsets
3. (a) Another issue reserved for the further proceedings was the amount of offsets, if any, which should be credited against any recovery by plaintiffs.
(b) The record does not indicate the making of any expenditures by defendant for or on behalf of plaintiffs which would constitute the basis for any offset against plaintiffs’ recovery.
*156 The Issue of the Amount of Recovery
4. Plaintiffs contend that, under a proper construction of the special jurisdictional act herein involved ( 147 Ct. Cl. 315, 343-348 ), the measure of their recovery should be, in the words of the act, “The equitable and just value” of their claims “for lands or other tribal or community property rights taken from them”, and “the loss” to plaintiffs “of their right, title, or interest, arising from occupancy and use, in lands or other tribal or community property, without just compensation therefor”, with the court to grant a judgment “for such sum as” it “shall find to be equitable 'and just for the reasonable value of” such property “taken” by defendant. Although plaintiffs do not claim “just compensation” in the technical constitutional sense, and therefore do not claim interest as for a constitutional “taking”, they nevertheless contend that the act’s requirements would be fulfilled by a recovery which would reflect the principles conventionally applied in determining “just compensation” as for an eminent domain “taking”. Accordingly, plaintiffs’ evidence is directed to the “fair market value” of the property “taken”, i.e., the price that a willing buyer would pay a willing seller on the basis of the highest and best, or most advantageous and valuable, use of the property at the several dates of taking (and not the special value which the property may have had to the owner or the purchaser). On this basis, plaintiffs claim the value of the lands and waters and their resources taken by defendant was $77,543,000. Plaintiffs also claim additional damages, based upon both the language of the act and of the court’s opinion, for defendant’s “failure or refusal * * * to protect their interests in lands or other tribal or community property in Alaska, and for loss of use of the same” ( 147 Ct. Cl. 343 ). On this basis, plaintiffs seek compensation in the sum of $2,635,000 for the exploitation and use of their lands, waters and resources prior to the various taking dates. Thus, plaintiffs’ total claim is $80,178,000.
Defendant’s responsive evidence is also addressed to the “fair market value” of the property involved on the various *157 dates described in the court’s decision upon which the areas involved were acquired or taken by defendant, but not conceding that there was any “taking” in the constitutional sense. On this basis, defendant says the full, fair market value was $3,250,000.
In addition, defendant presents an alternative theory of compensation, i.e., a “Value to the Indians” bams. This approach is based on certain language in the court’s opinion, 1 as well as on defendant’s contention concerning the proper interpretation of the jurisdictional act. On this basis, defendant claims that the loss suffered by plaintiffs as a result of being deprived of their full and complete “ownership” rights in their lands and waters was $1,287,200.
Fair Market Value
General
5. The area of southeast Alaska herein involved is generally described in the previous proceedings and the outer boundaries thereof are set forth on the map included in the court’s opinion. There were several events which constituted the takings of certain parts of the area. The parties have stipulated the dates of taking of certain parts and the land acreages thereof. Each area will be separately considered and evaluated. The boundaries of each of such areas are shown on plaintiffs’ exhibit No. 190, which is incorporated herein by reference, the areas being designated by the parties as Areas 1, 2 (2a and 2b), 3, 4 (4a and 4b), 5, and 6 (6a, 6b, 6c, 6d and 6e), in accordance with the sequence of their having been taken, except that defendant contends that Area 6 is not within any area for which the court has held defendant to be liable. On this area, therefore, the parties have not stipulated concerning any general taking date.
*158 ÁREA 1 (Annette Islands)—
Valuation as oe Makoh 3,1891
General
6. (a) By the act of March 3, 1891 ( 26 Stat. 1095 , 1101), the Annette Islands were set apart as a reservation for use of the Metlakahtla or Tsimshian Indians who emigrated from British Columbia ( 147 Ct. Cl. at 418-420 , findings 88-89), and were thus removed from their former status as Tlingit and Haida Territory. The parties have stipulated that the area involved in such body of lands comprises 86,730 acres, and that the entire area should be valued as of March 3,1891.
(b) Plaintiffs contend that the fair market value of this area as of such date was, including the resources therein and the appurtenant fisheries, $284,000. The area’s resources relied upon as contributing to this value are principally its timberlands; its mineralization; its townsite and settlement lands; and the appurtenant fisheries. These varied resources are relied on as supporting plaintiffs’ contention that the area was adaptable to multiple uses, although the valuation contended for does not, plaintiffs assert, represent any duplications arising out of the several uses.
Defendant contends here (as it does also on the other areas) that plaintiffs have failed to demonstrate that this area as such had any separate value as of the taking date (although, as hereinafter set forth, it does propose certain findings as to a total value of all of the parts taken, without a breakdown of the particular areas).
7. The Annette Islands, consisting of Annette Island and several small islands adjoining, are located on the north side of Dixon’s Entrance, approximately 30 miles north of the United States-Canada border. Of the total area, almost 99 percent is in the main island, Annette Island. The balance is made up of several small, forested islands lying close to the shores of the largest.
*159
Forest Lands
8. Of the 86,730 acres in Area 1,81,179 acres consist of forest lands. 2 Plaintiffs claim such forest lands had a fair market value as of March 3, 1891, of $46,824. 3 Defendant contends these forest lands would not have contributed anything to the value of the area as of such date (which is the same basic position defendant takes as to the forest lands in the other areas involved in this case). 4
9. The topography varies from flat lowland at the southwest end of Annette Island to steep, rocky, low-lying mountain tops, all less than 4,000 feet elevation, that form a ridge dividing the east and west sides of the main island. Of the total land area, 98 percent lies under 2,000 feet elevation. No part is more than 3 miles from tidewater.
10. Although somewhat exposed to prevailing winds from the south, Annette Island has several protected bays and harbors with deep enough water for use in conjunction with sawmill development. Port Chester, which is an indentation midway on the west side of Annette Island, provides a safe harbor for such use. The Tsimshian Indians erected a sawmill at this location in 1887.
Other protected bays and harbors, located around the entire perimeter of Annette Island, are suitable for booming and rafting of logs or location of sawmills. For the most part the shoreline is gentle, sloping gradually back from the beach for varying distances before meeting the steeper slopes of the upland.
*160 11» In 1891, Port Chester provided safe anchorage for ocean-going vessels. It was the location of Metlakahtla, an Indian town on the shore of its south entrance.
12. On the basis of substantially current Forest Service figures, of the 81,179 acres of forest land, 22,162 acres are commercial and 59,017 acres noncommercial forest land. The commercial forest land comprises 8,280 acres of accessible and 13,882 acres of inaccessible timberland. 5
13. The forest is composed of spruce, hemlock and cedar, with a small volume of hardwoods. The commercial stands of timber are located in.a narrow band at lower elevations around the perimeter of the island. Most of the timber is within 2 miles of tidewater but practically all commercial accessible timber is less than 1 mile from tidewater.
14. Plaintiffs base a substantial portion of their forest land claims in all of the areas involved in this case on a “stumpage” price or value, i.e., the value of the standing timber on the land (although the term is also used in the industry as referring to 'a quantity of timber that has been cut). This value of the timber is calculated by estimating the amount of board feet of timber in the particular area, measured in the usual lumber industry terms of thousand board feet (MBF or MBM). At least during the 1891-1925 period involved in Areas 1-5, the stumpage prices upon which plaintiffs rely, although related to the value of the standing timber on the land, also, in the great majority of cases, included the land. Generally forest land as such was not, during such period, considered as having any value separate and apart from the standing timber on it. However, the basic element making *161 up the value of stumpage as standing timber is its value for the production of commercial forest products. 6
15. (a) In 1891 tbe commercial forest land in Area 1 contained 310,296 MBM of accessible, and 448,304 MBM of inaccessible, timber. This consisted of 58.12 percent hemlock, 33.72 percent Sitka spruce, 7.14 percent cedar (Alaska and red), and 1.02 percent other species.
(b) These figures are based principally on a 1957 Forest Service survey of the Tongass National Forest. However, some timber in 1891 (as well as in each area involved in this case) which was standing on the valuation date was cut subsequent to that time but before the recent Forest Service surveys. Therefore, a determination of the timber which was commercial accessible on the valuation date requires the addition of the volume of this cut timber to the volume of commercial accessible timber standing when the survey was made. No cutting adjustment would appear to be necessary with respect to the inaccessible area, since presumably there was no cutting there.
(c) The volume of the timber which was cut must be estimated because in the main actual cutting records do not exist. Plaintiffs’ timberland appraiser, William A. Eastman, Jr., has estimated the volume cut of each species for all the areas involved in this case (basing his estimate, however, upon an acreage for each area which differs somewhat from the stipulated acreage in the cases of Areas 2,3, and 4). These estimates of the proportion of presently commercial accessible timber which was cut after the valuation date are reasonably accurate.
(d) Decreases in timber volume 'as of the recent Forest Service survey date due to forest fires, insect infestations, *162 disease and decay, mortality, etc. (i.e., due to all causes except cutting), are approximately offset by growth.
(e) On the above basis, 42,900 MBF have been added to the Forest Service 1957 survey for timber which was cut from the commercial accessible portions of Area 1 between 1891, the valuation date, and 1957, the date of the Forest Service survey, based on an estimated cut of 6,435 MBF of hemlock, 34,320 of Sitka spruce, and 2,145 of red cedar. Thus, the adjusted volume for hemlock standing as of 1891 is 168,771 MBM, for Sitka spruce, 117,079, and for red cedar, 13,242, a total of 299,092. The balance, making up the total of 310,296, is composed of Alaska cedar and other species.
16. The $46,824 which plaintiffs claim for the forest land in Area 1 is computed as follows:
(a) The 310,296 MBM of commercial accessible timber of all species (standing on 8,280 acres, and composed of 168,771 MBM of hemlock, 117,079 of Sitka spruce, 8,316 of Alaska cedar, 13,242 of red cedar, and 2,888 other) is valued at 10 cents per MBM, totaling $31,030 (or approximately $3.75 per acre.
(b) There were 13,882 acres of forest land which contained timber of commercial quality but which were inaccessible. Although this acreage contained 448,304 MBM of Sitka spruce, hemlock and other species, plaintiffs do not seek a valuation therefor on an MBM basis (as they do for the commercial accessible), but only on a basis of 50 cents per acre, for a total for such acreage of $6,941.
(c) There were 59,017 acres of forest land, both accessible and inaccessible, supporting noncommercial timber of unesti-mated volume, for which plaintiffs seek 15 cents per acre. This value is predicated on such lands being intermingled with and contributing to the makeup of the whole tract of timber, as well as the value of the acreage for hunting, recreational and other uses.
17. In 1891, the average quality of spruce was higher than today because the best trees of this species have been removed from shoreside stands. The protected bays and harbors suitable for booming and rafting of logs, the gradually sloping shoreline, and the location of virtually all the accessible tim- *163 bar at lower elevations within a mile of tidewater generally render the topography favorable for logging.
Here, however (as well as in the other areas), proximity to tidewater, while in itself a factor favorable to logging, was no guarantee of trouble-free logging. The costs of transporting logs overland, either directly to the mill or first to the waterways and then to the mill, are frequently quite high even today because of muskeg and rugged terrain. Moreover, the trucks and the access roads necessary for their use which are now being employed in overland transit were unavailable during the period 1891-1925.
There were many fine locations accessible by waterways which were suitable for the construction of mills and where ocean-going vessels could have found safe deepwater anchorage while being loaded with the products of the mills for shipment to market. Rafting of logs to the millsites, however, would not have been without difficulty, and especially so during the fall and winter storm seasons.
18. The timberlands in Area 1 (and in the other areas herein involved) were within the extensive “Coast Forest” which ranges northward for approximately 2,000 miles along the coastal sections of Oregon, Washington, British Columbia, and into southeastern Alaska and as far north and west as Afognak Island. The forests of southeastern Alaska are predominantly a mixed stand of western hemlock and Sitka spruce, with the two less prevalent species of Alaska cedar and western red cedar associated in many places with the mixed stands. In addition, any one of the four species may be found occasionally in a pure stand of small extent.
19. The Japanese Current provides southeastern Alaska with a temperate climate which permits logging approximately 10 months of the year and milling practically all year round. The deep-water harbors at the potential millsites would in this climate have been open year-round.
20. The dominant specie in the forests of Area 1 (and in all the other areas involved in this case) was western hemlock. As of 1891, except for some local use, there was virtually no demand for this specie. It was and is used primarily for pulpwood. The pulpwood industry was only in its infancy at that time. There were huge supplies of hemlock available *164 in the United States for which, there was no demand. There was no significant demand for this specie for purposes other than pulpwood, although it was in fact suitable for certain limited purposes. A prospective purchaser of Area 1 in 1891 would not have considered even the commercially accessible hemlock portion of the area as contributing any significant amount of value to the area. He would not have envisioned any significant demand for such specie for the foreseeable future. No substantial investment in large areas of western hemlock forest lands would have been justified.
21. There was some significant demand in the United States for Sitka spruce and cedar in 1891. In 1869, the production of Sitka spruce lumber amounted to about 17 million board feet and the production increased steadily in ensuing years, reaching over 100 million board feet by 1891. No production figures are available as of this period in respect to western red cedar and Alaska cedar separate from other cedars. The cedar of Alaska, although not as good quality as western Washington cedar, could be used for a variety of uses, principally shingles, lumber, poles, posts and piling in the case of western red cedar, and interior finish, furniture and cabinet work in the case of Alaska cedar. However, a purchaser would not have envisioned in the foreseeable future any great demand for these Alaska species. There were, similarly, huge supplies of spruce and cedar in more favorable locations in the United States which were more than capable of filling the demand for the foreseeable future. However, a prospective purchaser would have been justified in purchasing pure stands of commercial accessible spruce and cedar, or mixed stands of spruce-hemlock containing significant proportions of spruce, for holding for possible future use or cuttings. Accordingly, as of 1891, the value of all of the forest land within Area 1 would not have significantly exceeded the value of that part thereof on which stood, in substantial quantities, Sitka spruce and cedar which were accessible and of commercial grade.
22. The Tsimshian Indians constructed a sawmill at Port Chester in 1887 and by 1891, the taking date, it was running quite continuously, producing lumber for the buildings there *165 and supplying the canneries in the area with, boxes for shipping salmon.
23. There were no comparable sales of timberlands within the Territory of Alaska at or near 1891, or any of the valuation dates involved in this case.
In contrast with the States, the laws and policies made applicable to Alaska from the time of its purchase by the United States in 1867 through the various dates involved in this case effectively prevented the acquisition of Alaskan timberlands by private owners.
Up to 1884 the land laws of the United States had not been extended to Alaska and it was not possible to obtain private ownership of any land. Between 1884 and 1891, patents and legal title could only be obtained for mineral claims. The act of March 3,1891 ( 26 Stat. 1095 ) authorized patents for townsites not in excess of 640 acres and for industrial sites not in excess of 160 acres. The homestead laws were not extended to Alaska until the act of May 14, 1898 ( 30 Stat. 409 ), which limited homesteads to 80 acres. This was increased to 320 acres by the act of March 3,1903 ( 32 Stat. 1028 ) and later reduced, by the act of July 8,1916 ( 39 Stat. 352 ), to 160 acres. The “Timber and Stone Act,” enacted on June 3, 1898, entitled “An Act for the sale of timberlands in the States of California, Oregon, Nevada, and in Washington Territory” and later extended to all public land States, was never made applicable to Alaska.
The act of May 14, 1898, did permit the Secretary of the Interior to sell Alaskan timber at not less than his appraised value for use in Alaska, but not for export. However, no applications to purchase timber were made for 5 years thereafter. This may have been due not only to the lack of demand for Alaskan timber but to the restrictive nature of the regulations issued by the Secretary.
24. (a) The forest lands of neighboring British Columbia, which are most closely comparable to the stands of southeast Alaska, are found in the coastal region of the Province, particularly the northern coastal belt designated as the Prince Bupert District, including the Queen Charlotte Islands. The composition of the stands on the Queen *166 Charlotte Islands and the northern coast was 35.5 percent hemlock, 24.04 percent spruce, 23.81 percent cedar, and 11.03 percent balsam. Thus, the total percent of hemlock to other desirable species was much less than in southeastern Alaska.
(b) The British Columbia Land Act of 1888 regulated the sale, leasing and licensing of Crown Lands in British Columbia. Sales and leases were made under this act until 1906 when timberlands were withdrawn from sale and the granting of leases of timberlands discontinued. The act provided for a rather complicated system designed to promote forest exploitation. Land suitable for lumbering was offered for sale at $2.50 per acre, plus a royalty of 50 cents per MBF. Each purchaser was limited to one lot from 160 acres to 640 acres. In 1891, the sale price was increased to $5 per acre. In 1906, timberlands wei^e withdrawn from sale.
The act also authorized the granting of leases for a term not in excess of 30 years for the purpose of cutting timber. The fixed annual rental was 10 cents per acre plus a royalty of 50 cents per MBF. Leases were conditioned on the operation of a sawmill with a capacity of 1,000 board feet per 12-hour day for each 400 acres held under lease. In 1895, the term for which leases could be granted was reduced to 21 years and the annual rental was increased to 15 cents per acre. In later years other changes were made in the law regulating timber leases. In 1906, the granting of further leases was discontinued.
Due to the different composition of the forest, which was more suitable for saw log lumbering, and the nature of the complex provisions of the 1888 Land Act for exploitation by the devices of lease and license, which bore slight resemblance to a free market, the situation was not comparable.
25. Absent any reliable pattern of comparable sales either in Alaska or British Columbia, sales of comparable forest lands in the nearest locality within the United States would be relevant. These would be the coastal forests of Washington and Oregon. The average stumpage price for Sitka spruce in western Washington in 1891 was 48 cents per MBF. For western red cedar it was 60 cents per MBF.
However, the forest lands of the Pacific Northwest were in the Douglas Fir Belt. The Douglas fir was a valued tree. *167 Douglas fir forests which also contained stands of Sitka spruce and cedar would be much more valuable than the forest lands of southeastern Alaska during the periods involved in this case because of the predominance of hemlock in the southeastern Alaska forests, a specie for which there was no significant demand. There is no Douglas fir in Alaska.
26. The market value of timberlands in southeastern Alaska supporting stands of Sitka spruce and western red cedar would have been greatly less than that of similar land in western Washington. This was principally due to the greater cost of transporting the timber after cutting and milling, a factor which the prospective purchaser of the land would have had very much in mind. Transportation at the times involved in this case would have been by ship, with 660 nautical miles separating Ketchikan (in the most southerly portion of southeastern Alaska) from Seattle (and with the most northerly portion containing forest land approximately 450-500 miles farther distant).
27. The importance of the lumber industry in the United States h'ad become established long before 1891. As a result of the growth of demand, the dissipation of eastern and mid-western forest reserves, and the impending depletion in the south, businessmen had become aware of the value of standing timber as a good investment and the policy was adopted of purchasing large blocks of timberlands not operable at the time of purchase but to be held in reserve for future cutting. By 1891, the rush of entrymen to the public timberlands in the west to acquire salable claims was underway and many timber companies and investors were actively engaged in buying claims and “blocking up” holdings.
There are data which establish that over the span of 20 years prior to 1907-1909, there were large acquisitions by private owners of the virgin timberlands of the Pacific Northwest States. These were principally Douglas fir timberlands. The lands did include, however, some 79.3 billion board feet of standing timber of the hemlock and spruce species and some 56.7 billion board feet of the cedar species. There are no data 'as to the extent of such Pacific Northwest timberland acquisitions as of 1891. In any event, these Pacific North *168 west timberlands were primarily suitable for the production of saw lumber. As stated, the southeastern Alaskan timber-lands were not, for the most part, suitable for this purpose, and there was no significant demand for such timber as pulpwood in 1801 (or at any of the taking dates involved in this case). What demand there was for hemlock for pulpwood purposes was insignificant compared to the enormous supply that was already available in the United States. Such demand would not have had any appreciable affect upon the forests of southeastern Alaska insofar as creating any significant value for them is concerned.
28. Calculating the value of the forest lands in Area 1 (as well as the other areas involved in this case), or 'any part thereof, on a stumpage MBF ¡basis, as plaintiffs have done, would not be proper. No purchaser, as of the dates involved in this case, would, considering the then lack of demand for the species of these forests, have purchased the timberlands as timber stumpage. The conversion of the forests into a number of thousands of board feet, and then multiplying such number by a current market price per MBF, would presuppose something in the nature of a current demand for the stumpage which the particular locality could reasonably service. It would, therefore, be more appropriate to a situation where there was some current ready market for the species involved, or where there was an established 'industry demand which would, in the foreseeable future, enable the forest to be converted into such stumpage values, or possibly higher ones. Here this was not the situation. So far as cutting these forests is concerned, and selling the timber for the production of manufactured products, the prospective purchaser could not have reasonably hoped to realize on his investment in the foreseeable future.
As stated, the primary interest an investor would possibly have had in 1891 (and the other taking dates involved in this case) in the forest lands involved would have been in the spruce and cedar portions, for those were the only species which could be considered the basis for a lumber product operation (as distinguished from a pulpwood operation), and 'his interest in even such spruce and cedar portions would be for holding as a reserve and for possible relatively short- *169 term increase in value as timberland acreage. For this purpose, a price per acre 'for the spruce and cedar acreage, which was located in the commercial accessible areas, would have been paid, 'and not, as plaintiffs claim, a stumpage MBF price for all the species, including hemlock, in such areas.
29. Under the Timber and Stone Act of June 3,1878 ( 27 Stat. 348 ), as amended, parcels of public-domain timberland in the Pacific Northwest were being purchased by entrymen, during the last two decades of the 19th century, at $2.50 per acre and then resold to timberland investors at higher prices. As has been noted, in British Columbia, under the Land Act passed in 1888, timberlands were sold at $2.50 per acre, and a royalty of 50 cents per MBF was also charged. In 1891, the sale price was increased to $5 per acre along with the royalty of 50 cents per MBF.
30. Based on all of the considerations set forth in the record, including the opinions of the experts, it is concluded that the fair market value of the forest lands situated in Area 1 was, as of March 3,1891, $2,956, computed as follows:
(a) There were 588 acres of essentially pure Sitka spruce stands of commercial quality within the accessible forest area. These lands would have had a value of $1 per acre, totaling $588.
(b) There were 1,184 acres of essentially pure cedar stands (containing 19,413 MBM) of commercial quality within the accessible part of the forest. These too would have had a value of $1 per acre, totaling $1,184.
(c) There were 2,368 acres of mixed spruce-hemlock of commercial quality within the accessible area in which approximately one-half of the stand was spruce. This acreage would have had a value of 50 cents per acre, totaling $1,184. (The spruce in the above acreage totaled 82,759 MBM.)
(d) There were 4,140 acres of predominantly hemlock timberlands of commercial quality in the accessible area. These would have made no significant contribution at that time to the overall value of the timberlands.
The above comprises the 8,280 acres making up the commercial accessible part of the forest lands.
The balance of the forest lands, consisting of 13,882 acres of commercial, but inaccessible timberlands, containing *170 448,304 MBM Sitka spruce, hemlock and other species (for which plaintiffs claim 50 cents per acre), as well as 59,017 acres, both accessible and inaccessible, of noncommercial timber of unestimated volume (for which plaintiffs claim 15 cents per acre), would not, as timberlands, have made any contribution to the value of the total tract.
31. The above valuation is based on 8,280 acres of commercial accessible timberlands. This is probably a somewhat high figure. It is based on comparatively recent Forest Service surveys. Some trees which are now considered of commercial quality were not so considered in 1891. With advanced techniques, trees may presently be classified as “merchantable” which, because of such factors as size and state of decay, would not have been so considered in 1891. In addition, general improvements in logging methods have rendered “accessible” forest land which would not have been so classified on the several valuation dates involved in this case. (The degree to which it was less is not uniform, but varies as conditions varied from valuation date to valuation date.)
However, no value is being placed on the inaccessible acreage, even though commercial. A prospective purchaser acquiring the entire tract as a reserve for possible future cutting might, nevertheless, well have included some portion thereof in his value calculations, since he could reasonably conclude that technology improvements might in the future make portions of the tract accessible.
It is concluded that one factor would approximately balance out the other, so that no adjustments to the value figures found would be necessary to account for these considerations.
Mineral Lands
32. Plaintiffs claim the mineral potential of Area 1, contained in approximately 1,000 acres, would have added $50,000 to the value of the area as of March 3,1891. 7
*171 Defendant contends that, as of the taking date, no increase in the value of the tract is warranted by reason of any mineralization.
33. (a) The record does not indicate that, as of the taking date, there was any production, in paying quantities, of any minerals from Area 1. Actually, there has never been any exploitation of the mineral resources of Annette Island. Plaintiffs’ claim of value is based on the following: (1) between 1887 and 1891, seven mineral claims had been recorded on the west side of Annette Island; (2) a 1908 Geological Survey Report refers to claims in existence on the east side of the island at the time the act of March 3, 1891 was passed; (3) the report refers to “abundant evidence of mineralization and small deposits of high-grade ore” being “observed on the island by the writers” (which plaintiffs say would also have been apparent in 1891), and concluded that these deposits and the island’s mineral prospects were “worthy of further investigation”; (4) an 1887 newspaper account (The Alaskan) referring to the arrival of parties on the island to open an iron mine, “some very valuable ore having been discovered by them on the island” and also stating that “a large deposit of lead has been ascertained to exist”; (5) a June 5, 1890 statement in a trade paper (The Juneau City Mining Record) that “some very good quartz locations are reported on Annette Island” and that “there evidently is a rich mineral belt in that section” which “is deserving of the attention of prospectors”; (6) a September 7,1901 statement in another trade paper (The Mining and Scientific Press), concerning the Ketchikan Mining District, referring to the discovery of a mineralized zone running from the eastern to the western shores of Annette Island, stating that “Assays showing silver values from 600 ounces to 2,000 ounces to the ton are common with ore from this locality”, and also that “Gold values also rmi into the hundreds of dollars to the ton, though not in ore with the high silver values.” This account further stated that “Several prospecting shafts were sunk on different veins and shipments of ore made before the mining was stopped” (as a result of the establishment of the reservation) and the prospectors were evicted from the island; (7) a July 8,1895 description in a trade paper (The Alaska Mining Record), *172 in. an article entitled “Mining on Annette Island”, of mineral deposits on the island, tbe account stating that there were “three distinct ledges”, that “some very fine specimens of gold quartz have been taken out”, and that the “Average yield in gold” was “$32 to the ton”; and (8) a report to the Secretary of the Interior in 1927 stating that a sample shipment in 1920 of ore discovered on both the eastern and western side of the island assayed $60 in copper and $4 in gold per ton from the eastern side and $70 per ton in silver and lead from the western side.
(b) Plaintiffs contend that, from the above, the conclusion is warranted that mineral zones had been established by the taking date, with locations having been made; that newspaper accounts, based on the reports of the prospectors, indicated the area was worth further investigation; and that a test shipment showed that ore of commercial grade was present. This justifies, plaintiffs contend, the opinion of their expert that the mining potential of Annette Island would have enhanced the value of Area 1 as of March 8,1891, by $50,000.
34. It is concluded that the evidence relied on is insufficient to establish that such mineralization as there was of Area 1 would, as of the taking date, have added anything of significance to the value of the area. The staking of claims, newspapers accounts based largely on statements of the prospectors themselves, and promising specimens, are in themselves insufficient bases for the establishment of mineral values.
A 1908 U.S. Geological Survey Bulletin, No. 317, “The Ketchikan and Wrangell Mining Districts, Alaska”, states that “little was known of the mineral resources of this country [Annette Island]” on or before the valuation date (p. 179).
Townsite and Settlement Land
8
35, Plaintiffs claim that an estimated 50 acres comprising the town of Metlakahtla had, as of March 3,1891, a fair mar *173 ket value of $20,000 ($400 per acre) and that an additional 300 acres in the vicinity of the town had a value of $10,000 (approximately $33 per acre), making a total of $30,000 claimed for such land.
Defendant contends plaintiffs are not entitled to any increased compensation by reason of such townsite and adjoining acreage. Defendant’s contentions are based principally on legal considerations, i.e., plaintiffs lost nothing by reason of the creation of the town, nor did plaintiffs contribute in any way to the creation of the value of the townsite.
36. The town of Metlakahtla was located within a level shore area approximately 5 to 6 miles in length. In planning the town, 66 squares were platted on the best building portion, each square being divided into four lots, each lot being 80 feet wide and 90 feet long. By laying out the town in this way each lot was a corner lot. By 1890, between 150 to 200 houses had been built in the town, about 75 of them being frame houses and the others being substantial log houses. Its population was approximately 823 in 1891.
37. In 1891 the town had thriving sawmill and cannery establishments and an active building business. In addition to the dwelling houses other buildings had been constructed, including a store building (60 feet front, by 120 feet deep, and 30 feet high); a salmon canning plant; a steam sawmill; an industrial home building; and a school building. Other buildings were in the process of construction. In the winter of 1891-1892, 95 new, permanent buildings were erected.
The natives of the town supplied the logs for, and operated, the sawmill. They constructed the buildings of the town with the lumber produced by the sawmill. The mill also supplied lumber for the boxes used by the town’s cannery and the other nearby canneries.
38. A report prepared by a clerk of the General Land Office of the Department of the Interior based on an official inspection of the town made in 1903 indicated the prosperous nature of the town and its excellent financial condition. These circumstances had also been noted in official reports in 1893 and 1896. The 1903 report stated that the cannery had a floor space of 42,294 square feet, cost $15,000 for *174 buildings and wharves, and had equipment and steamers costing, in total, $16,000; that the sawmill (covering 8,000 square feet and having buildings costing $3,000 and machinery and equipment costing $3,000) had produced 190,000 feet of lumber in 1902; that the company (Metlakahtla Industrial Company) which conducted the sawmill and cannery had paid wages amounting to $413,811.38; that there were eight stores in the town; that about 3 miles of well-constructed board sidewalks, 8 feet wide, had been installed; that a system of waterworks costing $10,000 had been constructed, bringing water both for power and domestic uses to the town from a mountain lake situated 2% miles distant; that a well-built church costing over $10,000 had been completed; and that other buildings had also been constructed, including a school house, a doctor’s residence, a home for girls, and two guest houses. The total value of the enumerated structures and equipment amounted to $69,000.
It is not clear, however, how much of this development occurred between the taking date and the subsequent date of the report.
39. The municipality of Metlakahtla was surveyed and platted in 1918 under U.S. Survey No. 1807. The area included in the municipality, as shown on the plat of survey, was 339.8 acres, of which 265.6 acres was a large unsub-divided tract located to the southwest of the subdivided area. The subdivided area contained 74.2 acres. The 1918 plat of survey shows 83 blocks, four lots to each block. The 66 blocks in the original town, each 160 X 180 feet, and the streets, would have occupied approximately 53 acres.
40. There were no comparable sales to provide a basis for valuation. In view of the location of Annette Island in relation to ocean transport routes; its access to superior fishing grounds; its terrain; the area included in the initial town settlement; the development of the town by 1891; the rising trends in population; the output of canned salmon in southeast Alaska; and considering also the value of town-site lots in Juneau (as will hereinafter appear), taking into account, however, the differences in location, economic base and social structure of Juneau and Metlakahtla, it is concluded that an estimated 50 acres of the Metlakahtla town- *175 site, as of March 3,1891, would have bad a value of at least $10,000, or $200 per acre, and that an additional 300 acres in the vicinity of the town of Metlakahtla would have had a value of $4,500, or $15 per acre, making a total of $14,500.
Other Lands
41. The remaining land in Area 1 comprises 4,201 acres, for which plaintiffs claim $800, or approximately 14 cents an acre. The bulk of this remaining acreage is comprised of either muskeg, scrub, brush or mountainous land with elevations rising above 2,000 and as high as 3,600 feet, including barren areas. However, a part of this area is a stretch of level land in the vicinity of the town of Metla-kahtla. As stated in the 1890 Census, Metlakahtla “is situated on the west side of Annette Island, which is comparatively level for 5 or 6 miles in the vicinity of the village. It has the longest beach of any settlement, native or otherwise, in this part of the territory.” Annette Island also has many lakes, including mountain lakes, which could constitute a source of water power. Plaintiffs also claim the land would have some value as contributing to the area’s fur industry.
42. The record is not sufficient to support plaintiffs’ valuation for such remaining acreage. There is no indication as to what part, if 'any, such acreage played in the total area’s fur industry. No separate claim is made for compensation due to the loss of fur resources. Insofar as the beach area contributed to the value of the salmon fishing rights, such rights are separately valued. The bulk of the land would not have had any foreseeable economic significance or potential. Its fair market value as of March 3, 1891 would not have exceeded $100.
Fisheries 9
43. Plaintiffs claim a fair market value of $157,000 as of the taking date for the salmon fishery resource of Area 1.
Defendant claims that the fishery resource, or the exclusive right to fish in the waters surrounding Area 1, was valueless *176 on the ground, principally, that no one would pay anything to fish in the waters of Area 1 when other salmon waters in Alaska and elsewhere were open for such fishing as a common right.
44. In the decade ending in 1890, the annual output of Alaskan canned salmon had increased from, less than 8,000 cases to approximately 683,000 cases. Alaska’s share of the total Pacific Coast canned salmon pack, including that of British Columbia, had grown from less than 1 percent in 1881 to 43 percent in 1890. This period of rapid expansion was followed in 1890 by a decline in production and prices. Alaskan production had decreased about 5 percent to 683,000 cases in 1890 after having produced 719,000 cases in 1889. The average market value per case of all species of canned salmon had decreased in Alaska from $5 in 1889 to $4.10 in 1890. The gain in production of the Pacific canned salmon output in the decade 1881-1890 was about 130 percent, compared to the infant growth rate of 360 percent in the preceding decade. Output appeared to be leveling off at a relatively stable range of 900,000 to 1 million cases per year. Although total production rose to 1,218,000 cases in 1888 and 1,614,000 cases in 1889, as a result of expansion principally in Alaska and British Columbia, the decline in prices in 1890 suggested that the industry’s capacity had for the time being exceeded its markets and that a period of consolidation might be necessary to restore the balance and stabilize prices at levels that would yield satisfactory profits.
45'. The history of the Pacific salmon industry also suggested the possibility of serious depletion of the fishery resources as a consequence of unrestricted or poorly regulated fishing, inadequate escapement of salmon, and other adverse factors. The Columbia River, the greatest ringle river salmon source in the world, had shown serious depletion since 1883-1884. The Columbia River canned salmon pack had fallen from a volume ranging between 500,000 and 600,000 cases per year during 1880-1885 to 300,000 — 450,000 cases during 1886-1890. The pack of the Sacramento River, which reached 200,000 cases in 1882, had declined to 25,000 cases by 1890.
*177 46. A prospective southeast Alaska investor could foresee that if the trends of depletion of the salmon runs in the Columbia Eiver continued, the rising demand for canned salmon would assure a market for an accessible resource like the Annette Island fishery and, at the same time, strengthen the price. He could reasonably count on maintaining the supply of the Metlakahtla cannery by the observance of prudent conservation practices in fishing Annette Island waters.
47. Southeast Alaska had 12 operating canning plants and produced around 143,000 cases in 1890, a fifth of the territory’s output. The Metlakahtla cannery on Annette Island attempted a first experimental pack of 500 cases in that year. Father William Duncan and the Tsimshian Indians, who had established “New Metlakahtla” (Port Chester) in 1887, had erected a $10,000 canning plant having a capacity of about 8,000 cases. The waters embracing the Annette Islands teemed with millions of salmon, and it was reasonable to expect that, within a year or two, additional facilities would easily permit a pack of at least 10,000 cases, an output level surpassed by 9 of the 12 canneries in the region. It was further reasonable to conclude that, with traps, the salmon catch could be readily multiplied, at this most favorable location, to a pack of 20,000 cases, and that at an early date the prolific salmon runs in the surrounding waters could produce 40,000 cases.
48. (a) The value of the fishery resource of Area 1, which would be the value of the exclusive right to fish in the waters appurtenant to the area, would depend only on the ability to earn profits therefrom. An estimate of prospective profits must, of course, necessarily be based in part on some speculation, for the future of a business venture of this kind cannot be foretold with accuracy and assurance. Nevertheless, profitable enterprises are commonly bought and sold, with, the purchase prices thereof calculated on the basis of reasonable formulae, theories, and economic forecasts.
(b) In arriving at a value for the fisheries of Area 1, a prospective investor would have reasonably calculated as follows:
Estimating an average annual output of 20,000 cases and a market price of $4 as the average price per case of all species *178 of canned salmon (as compared with an overall Alaskan average of $5 in 1889 and $4.10 in 1890), be would reasonably have estimated average gross sales of $80,000 per year, costs of not to exceed an average of $3.25 per case, and profits of 75 cents per case, or $15,000 per year. He would have computed his capital investment requirements at $700 per $1,000 of output, or $56,000 for a pack of 20,000 cases. The estimated profit of $15,000 would thus represent a return of 27 percent on this investment.
In light of the return available on investment in other industries of comparable risk and uncertainty, a return of at least 10 percent would have been necessary to attract capital to the cannery as against the other industries. 10 Thus, prospective profits per year on the investment in the Metlakah-tlan cannery would have had to have been at least $5,600 based on a total investment of $56,000. This is the normal profit the investor could make on $56,000 without investing in the cannery. If this is all the profit he could make, there would be no reason to be attracted to this particular venture. The difference of $9,400 between projected profits of $15,000 and normal return on cannery investment of $5,600 is, therefore, the excess annual income attributable to free access to the Metlakahtlan salmon fishery. It would be the opportunity to earn this excess annual income from his investment that world attract an investor to the purchase of this resource.
(c) Plaintiffs claim a value based upon capitalization of such estimated annual income of $9,400 at 6 percent, which, as allowing for the then foreseeable elements of risk and uncertainty, plaintiffs’ claim would be the proper rate. Plaintiffs treat the industry as a relatively low risk one. Capitalization at such rate yields a value of $157,000 for the salmon fishery resource of Annette Island as of March 3,1891. Thus, by purchasing the fishery resource for $157,000, the purchaser would, by realizing an estimated (excess) annual income of $9,400, earn a return of 6 percent on the purchase price.
*179 (d) However, the valuation figure would be 'based on long-range estimates. The salmon cannery business was not free of risk. The prospective purchaser, in calculating future profits, would necessarily contemplate, for instance, the risks involved in a continued salmon supply (it was subject to fluctuation), future labor and other costs, a continued public demand for salmon, public tastes, possible substitutes, the problems involved in a seasonal operation, including seasonal labor, the fish for the most part being caught in a 2-3 month season, and a host of other contingencies. For these reasons, a capitalization rate of 10 percent would be more realistic.
Accordingly, it is concluded that the fair market value of the exclusive right to fish in the waters of Area 1 was $94,000 as of March 3,1891. 11
49- The payment of the sum of $94,000 for the exclusive right to exploit the fishery resources of Area 1 would presuppose the seller’s (in this case, the plaintiffs) exercising such control over the similar resources of the other areas of southeastern Alaska which he owned as would protect the purchaser’s rights. The purchaser would reasonably expect, and naturally make it a condition of the purchase, that those who had previously exploited the fishery resources of Area 1 would not be permitted to move on to the other areas owned by the seller and so continue to enjoy the unrestricted right to fish.
50. A prospective purchaser would not have placed anything more than a nominal value on the right to catch fish in the area for processing in other than canned form.
Valuation Summary
51. The fair market value as of March 3, 1891, of the 86,730 acres of Area 1 as a whole was, taking mto consideration the contribution thereto made by its forest lands ($2,956 (finding 30)), its townsite and settlement lands ($14,500 (finding 40)), its remaining acreage ($100 (finding 42)), and *180 its fisheries resources in its surrounding and appurtenant waters ($94,000 (finding 48)), $111,556. This value is based on the finding that Area 1, considering its resources, particularly its timberlands, its townsite and settlement lands, and its appurtenant fisheries, was adaptable to multiple uses, due weight being given to the extent to which each such use contributed to the overall value of the area as a unit without any duplication of value arising out of the several uses.
Abba 2 — Valuation as on August 20, 1902
General
52. This area is composed of two separate areas (designated by the parties as 2a and 2b) which the parties have stipulated comprise a total of 4,911,568 acres. The entire area was reserved as the Alexander Archipelago Forest Reserve by Proclamation issued August 20, 1902. Plaintiffs claim that the fair market value for the area as a whole, taking into consideration the contributions thereto of standing timber, its minerals, the appurtenant fisheries, and the other resources, was $20,772,000 as of such date.
53. Area 2 is made up of two groups of islands facing the Pacific Ocean at the southern and middle portions of southeastern Alaska. The northern group (2a) has its principal area in Chichagof Island, with Yakobi Island and others completing the group. It is bounded by Icy Strait on the north, Chatham Strait on the east, Baranof Island on the south and the Pacific Ocean on the west. The southern group (2b) is made up of a number of islands of which Prince of Wales is the largest, followed by Kupreanof, Kuiu, Dali, Zarembo, ’and Koscuisko Islands. The islands in this group are bounded by Frederick Sound on the north, Dixon Entrance on the south, Clarence Strait on the east, and the Pacific Ocean on the west. The south end of Prince of Wales Island is about 60 miles northwesterly of Prince Rupert, B.C.
54. Of the gross area of almost 5 million acres in Area 2, 70 percent is in the Prince of Wales-Kupreanof-Kuiu group (2b) and the balance is in the Chichagof group (2a). *181 Although not continuous land, comprising, as they do, many channels, bays and inlets, Area 2b is roughly 168 miles long and 56 miles wide, and Area 2a is about 56 miles long and 49 miles wide.
55. The topography of this area is typical of the coastal islands in southeast Alaska. The land slopes upward from tidewater over flats, rises and benches for short distances, becoming steeper toward the inland and terminating in bare, rocky, precipitous mountains along the backbone ranges. Prince of Wales Island, the largest in the area, has many protected, sheltered bays, coves and inlets. The many frontal islands in this group provide a considerable measure of protection for the waterways. In the Chichagof Island area, protected waterways lead from the south end of this island to Sitka, which was a local market for logs on the date of valuation. Except for its rugged Pacific Ocean western exposure, Chichagof Island has many protected bays, inlets and waterways suitable for the movement of ships or logs.
Forest Lands
56. As of the valuation date, of the total acreage in Areas 2a and 2b, 90.75 percent was forest land, consisting of 49.89 percent noncommercial and 40.86 percent commercial. Of the commercial forest land, 69.12 percent was accessible and 30.88 percent inaccessible.
57. Area 2, particularly the Area 2b portion, contains almost continuous forests. Only the highest points are bare. Heavy stands of Sitka spruce and hemlock are found on the lower slopes, near tidewater and in short valleys throughout the area. Dense stands are found, for example, close to tidewater on Koscuisko, Prince of Wales, Kupreanof, and Chichagof Islands. In all of these areas large old stumps, resulting from logging operations in past decades, are found among standing trees generally close to tidewater.
58. The forest land is hemlock-spruce, essentially the same as found in all southeastern Alaska. Stands in which hemlock predominates account for 60 percent of the commercial forest area; hemlock-spruce, 20 percent; and spruce, 10 percent. Cedar types take up 9 percent and hardwoods the balance. Hemlock and spruce stands are evenly distributed *182 over the accessible and inaccessible land area. More cedar occurs in the lowland accessible areas while hardwoods predominate in the upland inaccessible areas.
59. In 1902 the commercial forest land in Area 2 comprised 1,040,761 acres supporting 36,725,546 MBM of accessible timber and 966,106 acres supporting 32,712,052 MBM of inaccessible timber. There were also 2,450,381 acres of forest land supporting uninventoried amounts of noncommercial timber. The commercial timber consisted of 62.9 percent hemlock, 30.5 percent Sitka spruce, 6.0 percent cedar (Alaska and red), and 0.5 percent other species.
60. A favorable feature of the timber was its tidewater location. The best timber was located close to tidewater where the cheapest methods of logging could be used to move the logs to tidewater where good towable waters provided a ready-made route to millsites. With the best spruce stands occupying the most accessible sites along the shore, the timber was adapted to economic operation by having a good volume of cheaply produced logs available immediately to convert into lumber and other products.
61. In 1902, this area had more good quality spruce than found anywhere else in southeast Alaska. The cut of Sitka spruce for lumber production in the United States had reached 165 million board feet in 1899 and then declined to a small extent by 1902. Western hemlock lumber production was still very limited as of 1902. However, lumber production of eastern hemlock in that year exceeded 3 billion board feet.
62. In 1902, the Pacific Northwest was in the midst of a timberland boom with vast acreages of the public timberlands being 'acquired and active trading in the timberlands taking place at rising levels of prices. Small tracts comprising in the aggregate millions of acres were being acquired by entry-men as salable claims which were avidly purchased by timber companies and investors who were engaged in assembling large holdings of timberland. Also large tracts of timber-lands which had been included in State grants and in railroad grants were being transferred to lumber companies and timberland investors. Even lands eliminated from national forests as valuable for agriculture and' needed for settlement *183 were being acquired by entrymen and sold to timberland investors. As noted, however, these thnberlands were in the Douglas Fir Belt.
63. Many of the timber tracts being purchased in the Pacific Northwest ait this time consisted, in whole or in part, of inaccessible timber because of the anticipation that it would become accessible with changes in logging technology, transportation facilities, and economic conditions. The Forest Service has classified as accessible as of its 1957 inventory one-third more timber than that set forth above to be accessible as of 1902 in Area 2.
64. The average price in western Washington, in 1902, for standing timber of the Sitka spruce species was $1.04 per thousand board feet, and for western red cedar, $1.24. Western hemlock thnberlands were selling at an average price of 37 cents per thousand board feet. According to the Census Bulletin for 1900, the stumpage value for all species cut in Alaska was 97 cents per thousand, as against an average stumpage valúe in the United States of $2.26 for spruce, $2.56 for hemlock, and $1.32 for cedar. In British Columbia, in 1902, the price for Provincial thnberlands was $5 per acre plus a royalty of 50 cents per thousand board feet of timber cut. Also in British Columbia during the same year, Government-owned thnberlands were being leased for the purpose of cutting timber at an annual rental of 15 cents an acre plus a royalty of 50 cents per MBM, and for pulp at an annual rental of 2 cents per acre and a royalty not exceeding 25 cents per cord of pulpwood. The pulp leases were issued only for the period 1901-1903 for the purpose of encouraging the establishment of a paper-making industry in the Province. After 354,399 'acres were taken up under pulp leases, the law authorizing them was repealed. In 1900, the Northern Pacific Bailroad sold to the Weyerhauser Timber Company 900,000 acres in southwestern Washington for $6 per acre which, although predominantly Douglas fir, also contained stands of spruce and hemlock.
65. Plaintiffs claim $12,596,365 as the fair market value, as of the taking date, of the forest lands of Area 2, computed as follows:
*184 (a) There were 36,725,'546 MBM of live commercial accessible timber of all species, principally hemlock and Sitka spruce (i.e., 23,107,714 MBM of hemlock, 11,208,637 of Sitka spruce, 1,079,731 of Alaska cedar, 1,134,819 of red cedar, and 194,645 other) standing on 1,040,761 acres. Such timber is valued at 30 cents per MBM, totaling $11,017,664.
(b) There were 966,106 acres of forest land which contained timber of commercial quality but which were inaccessible. Tliis acreage contained 32,712,052 MBM of Sitka spruce, hemlock and other species. Plaintiffs claim $1 per acre therefor, or $966,106.
(c) There were 2,450,381 acres, both accessible and inaccessible, of noncommercial timber of unestimated volume, for which plaintiffs claim 25 cents per acre, totaling $612,595. Plaintiffs contend that such forest land would be essential ‘as an adjunct to the efficient operability of the timber stands on the commercial forest land.
66. The fair market value of the forest lands situated in Area 2 was, as of August 20, 1902, $504,481.30, computed as follows:
(a) There were 97,828 acres of essentially pure Sitka spruce stands within the commercial accessible forest area. These lands would have had a value of $1.50 per acre, totaling $146,742.
(b) There were 110,721 acres of essentially pure cedar stands which were commercial accessible. These too would have had a value of $1.50 per acre, totaling $166,081.50.
(c) There were 214,469 acres of mixed spruce-hemlock of commercial quality within the accessible area in which approximately one-half the stand was spruce. This acreage would have had a value of 75 cents per acre, totaling $160,851.75.
(d) There were 616,121 acres of predominantly hemlock timberlands of commercial quality within the accessible area. This acreage would have had a nominal value of 5 cents per acre, totaling $30,806.05. Between the date of faking of Area 1 (1891), for which no value was ascribed to the hemlock acreage, even though commercial accessible, and the date of taking of Area 2 (approximately 11 years) stumpage prices were being quoted for the first time in *185 western Washington for western hemlock (5 cents in 1900, the first year of quotation, and 21 cents in 1901). The pulpwood industry was growing. However, considering the huge supplies elsewhere more favorably located, and the still almost nonexistent demand for this specie as compared with such supply, no more than a nominal value would be warranted, despite the tremendous activity of the times with respect to the Douglas fir timberlands of the Pacific Northwest.
(e) There were 1,622 acres of other species of commercial quality in accessible areas. The record does not substantiate any value therefor.
The above comprises the 1,040,761 acres making up the commercial accessible part of the forest lands.
The balance of the forest lands, consisting of 966,106 acres of commercial but inaccessible timberlands, as well as 2,450,-381 acres, both accessible and inaccessible, of noncommercial timber would not, as timberlands, have made any contribution to the value of the total tract.
Mineral Lands Area 8a
67. There were three distinct types of mineralization in Area 2a. Gypsum deposits were discovered on the east coast of Chichagof Island near Iyoukeen Cove, lode gold discoveries were made on the west coast of Chichagof Island at Klag Bay and Kimshan Cove, and nickel-copper bearing deposits were located near Fleming Island on the west coast of Chichagof Island and at Bohemia Basin on Yakobi Island.
68. Gypsum (a) There was a gypsum deposit located near Iyoukeen Cove on the eastern side of Chichagof Island about 1 mile from tidewater which (together with the adjoining land required for development of the property, comprising, in all, 200 acres), plaintiffs contend had a fair market value on August 20, 1902 of $100,000.
(b) The location of this deposit was first made in 1901. Tests proved the deposit to be composed of an exceptionally pure gypsum and further investigation and development of the property soon followed. However, as of the taking date, no actual mining had taken place and in fact did not com- *186 menee until 1906. By 1905, the Pacific Coast Gypsum Company bad sunk two tunnels, in eacb of which shafts 65 and 85 feet deep were sunk, practically all in gypsum. However, the extent of the deposit was still being investigated. The prospects of a profitable operation were, however, evidently sufficient by 1905 to warrant large-scale development. At that time the company was constructing a railroad, 1 mile long, to transport the gypsum from the mine to bunkers of 1,000 tons capacity which were to be built on a wharf for loading into barges and shipment to Puget Sound, where the company then contemplated the building of a plaster mill.
(c) It turned out that operations at this mine continued, with only brief interruptions, for almost 20 years after active mining commenced in 1906, and until the deposit was exhausted. Throughout the production period, the quality of the product was excellent. The Puget Sound mill built by the company supplied the market for many years with a large percentage of the plaster products consumed on the Pacific Coast. The mine had a productive capacity of over 100 tons of gypsum a day. In 1929, a Geological Survey Bulletin estimated the total output to have been approximately 500,000 tons.
(d) A prospective purchaser of this property on the valuation date could have reasonably anticipated a good possibility of a profitable return on this exceptionally pure gypsum deposit, provided it were large enough. As of such date, it is reasonable to assume from the large development expenditures they were making, that the developers of the claims concluded that the deposit was of commercial grade and size. At such date, gypsum as mined was classified into four grades of quality — Crude, Land, Plaster of Paris, and Wall Plaster.
The figures for the valuation year on the average United States yield per ton for each grade are not in the record, but such figures for 1904 are available and are sufficiently close in time (2 years) to be useful. They indicate the following yield per ton for each of the four grades:
Crude_$1.09
Land_ 2.03
Plaster of Paris_ 3.21
Wall Plaster_ 4.35
*187 The exceptionally pure quality of the deposit indicates that most of it was at least of the highest two grades. Accordingly, an estimate of $3 yield per ton at the mine would be reasonable, from which, in order to calculate the prospective operating profit, would have to be deducted, of course, the operating costs.
On the basis of the knowledge then existent, the operating costs for open-pit extraction of gypsum would not have been expected to exceed $1 per ton. (The actual production figures on yield and operating costs and profits for this mine are not in the record, and apparently were never published.) Thus, on a 500,000 ton yield over the years, the operating profit at the mine would total approximately $1 million. Cost of investment would, of course, have to be deducted therefrom.
(e) However, a conservative investor would, as of the taking date, have recognized the great risks involved in the undertaking. The development and maintenance costs would be high. Since the deposit was about a mile from Gypsum Creek, where the wharf would have to be built, a 1-mile railroad had to be erected and maintained, plus a wharf and storage bunkers. In addition, there would be transportation costs to Puget Sound. And there would, of course, be the usual considerable hazards incident to any mining operation. Actually, since the mine was worked below the level of Gypsum Creek, it was flooded twice during its life. In addition, an underground watercourse was encountered. Heavy pumping expense was incurred. And, although at that time there was an increasing use of gypsum as a building material, for wall plaster, and for fertilizer, so that it was having increased commercial importance, nevertheless, on a long-range basis, there would necessarily be unknown economic risks.
(f) Considering all the above factors, it is concluded that the fair market value of this excellent, large, gypsum deposit on Chichagof Island, which, together with the necessary adjoining land, in all involving 200 acres, was, on the taking date, at least $50,000 and that such 200 acres would, therefore, have enhanced the value of the entire tract by such amount.
69. Lode Gold and Niclcel-Copper Deposits. Plaintiffs *188 claim $1 million as the fair market value of gold and nickel-copper deposits which were located on the west (Pacific Ocean) coast of Chichagof Island, comprising, together with the adjoining lands necessary for development, 2,800 acres.
70. Lode Gold Deposits. Gold was first discovered at Klag Bay in 1905 by chance by an Indian engaged in salmon fishing. There were numerous fragments of quartz in the bed of a small stream. The float ore was rich enough to yield between $15,000 and $20,000. A small stampede from Sitka followed and a large number of claims were staked in September 1905. Three maj or mines subsequently developed from these locations, the Chichagof, the Golden Gate and the Hirst-Chichagof. The Chichagof mine became highly productive almost immediately after discovery. The Golden Gate began producing in 1910. Subsequently, both mines combined as the Chichagof. This mine, by 1941, produced gold valued at almost $14 million (and silver valued at approximately $158,000).
The Hirst-Chichagof mine at Kimshan Cove developed more slowly, and was not brought into production until 1922. By 1988, it had produced almost $2,500,000 worth of gold.
71. NicTcel-Copper Deposits. Nickel-copper-bearing deposits were located on Chichagof Island in 1911 and on Ya-kobi Island in 1921, although it is possible that discoveries were made in these areas as early as the 1890’s, since two locations were recorded in June 1891, 4 miles northwest of Port-lock Harbor. In addition, a quartz claim was recorded on Yakobi Island in 1894. Several other locations were made in 1900 on Lemisurier Island. Only limited development work was performed until the late 1930’s.
72. (a) Although the gold deposits were not discovered until 1905, 3 years after the 'taking date, plaintiffs rest their claim on the theory that (a) as of the taking date, a prospective buyer (or seller) of the area would have caused a thorough examination to be made by a competent mineral evaluator and that this examination would have included a reconnaissance of the west coast of Chichagof Island where the float rock present at the site of the original discovery surely would have been discovered (as it was by the discovering Indian), and (b) that this discovery would have been fol *189 lowed by a discovery of the lodes of the highly productive Chichagof and Hirst-Chichagof properties.
(b) The basis for ascribing value to the nickel-copper deposits is less clear. If it rests on the same theory as the gold lode deposits, the record is no't developed as to what would have been obvious 'to a competent mineral evaluator had a reconnaissance discovered the deposits as of the taking date, buttressed by any actual production figures or possible profitability.
73, (a) Since the gold lode deposits were not even known to exist as of the taking date, it is concluded that, for the purposes herein involved, no market value should be ascribed to them. Furthermore, even if plaintiffs’ speculative theory of what a reconnaissance as of the taking date would have discovered is accepted, it is not satisfactorily explained 'how that part (which is not shown) of the claimed figure of $1 million ascribable to the gold deposits is arrived at. There is no evidence of production costs or profits.
(b) Even if the nickel-copper deposits are deemed to have been known as of the taking date, it is not satisfactorily explained how they would be considered to have had any recognizable market value. The mere fact that locations were made is not a satisfactory basis for .'ascribing value. Since mining is such a speculative venture, where there is no active, going, operation, some reasonable basis of prospective profitability must be shown.
(c) Plaintiffs’ contention that the 2,800 acres covering the lode gold and nickel-copper-bearing deposits of Area 2a would, as of the taking date, have enhanced the value of the area to the extent of $1 million (or to any extent) is not supported by the record.
Area 2b—
Prince of Wales Island,
74. Hetta Inlet. The Ketchikan Mining District was the southernmost of the several recording districts into Which southeastern Alaska was divided. Prince of Wales Island, consisting of 2,800 square miles, constitutes the 'largest island in the district. The turn of the century was a period of great prospecting and mining activity in the district, throughout *190 which several hundred claims were staked. Hetta Inlet is a deep embayment in the southwest coast of Prince of Wales Island. For the potential mineral land in the region of this inlet, comprising 2,000 acres, plaintiffs claim a fair market value as of the tailing date of $500,000.
75. There were large copper deposits in this section and starting in 1897 many lode claims were located. In 1898 claims were located on Copper Mountain. In 1899 development work was actively commenced by the Alaska Copper Company. Many other claims were located in the vicinity of Copper Mountain between 1900 and 1908. The copper deposits of the inlet attracted wide attention, and were the subject of investigation by the Geological Survey in 1901. There were certain favorable indications. The deposits were located near deep-water harbors, and the availability of cheap coal and coke, as well as the physical development of the mines, indicated low operating costs. Assays indicated rich ore.
76. (a) There were seven main groups of claims in the Hetta Inlet section. However, although production records for the mines on Hetta Inlet are incomplete, insofar as the evidence indicates, only one was ever significantly productive. The remaining groups produced either no or relatively little commercial ore.
There is no indication of any production for the Green Monster, Houghton, and Sultana groups. The claims comprising the Green Monster group, belonging to the Alaska Industrial Company, were, although located in 1900, developed to only a meager extent. Mining conditions were less f avoralble at this location than at many other points along the coast. The Geological Survey reported in 1905 that these claims were “not accessible for mining,” and that “even to prospect them is costly and can be done only during the summer months.” The Houghton group, located in 1901, was likewise developed to only a meager extent between 1901 and 1905, although more active exploration was undertaken during at least the following 3 years. The development of the Sultana group too amounted to little more than the requisite assessment work.
*191 The Corbin group of claims did produce some shipments of ore of un'aseerbainaible quantity to the Copper Mountain smelter during 1905. The mine was sold to the Alaska Metals Mining Company in 1906, which, ¡after commencing ¡active development, including the building of a steampower plant, a wharf and various buildings, suspended operations early in 1907. These -claims were not located until February 1905, 2Yz years after the valuation date.
Both the Copper Mountain and Copper City groups did produce some ore of small quantity. The only reported figure for production from the former, where prospecting had begun in 1897, was an $18,000 yield in 1902. The following 2 years saw no production while smelter construction and other development work was underway, with production apparently resumed with the opening of the smelter in June 1905 until shut down early in 1907. The Copper City mine or Bed Whig group shipped small quantities of ore to Puget Sound between 1903, when operations first commenced, and 1908. A 1905 IJ.S. Geological Survey Beport on Alaskan mineral resources noted that shipments to that time had amounted to 1,600 tons, yielding $60,000 in copper and gold values. In 1911 it was still under development.
(b) Only the Jumbo mine exploiting the deposits of Jumbo Basin, belonging to the Alaska Industrial Company, and situated on the northwest side of Copper Mountain, proved to be productive, yielding $1,768,342 on 122,037 tons of copper, gold and silver ore between 1907, when it first started to produce, and 1923, when production apparently ceased, equivalent to $14.50 per ton (there was no production between 1919 and 1922 and only approximately $56,500 worth in 1923). It is difficult to determine the degree to which a prospective purchaser on the valuation date would have envisioned the full potential of these claims, for although the deposits were discovered in 1897, it was not until 1902 that active development was begun, with prospect tunnels being driven in the succeeding years. The first ore was not shipped for smelting until 1907. There is no record of operating costs or profits, if any, of this mine.
(c) No evidence was introduced concerning operating costs, preproduction development and construction expenses, *192 or profits, of the Hetta Inlet mines. The only relevant figures, which are incomplete, indicate an ultimate yield of approximately $1,850,000 from the mines.
(d) Although the copper deposits of Hetta Inlet did excite interest and investigation, and some favorable assays were produced, at least partly on the basis of which some development work proceeded prior to the taking date, as of such date there had 'been no significant production and it was not possible to tell, with any reasonable degree of certainty, whether the deposits could be profitably worked. As a pure speculation, someone might have paid something for the copper deposits of the inlet as of the taking date. However, the evidence does not indicate any rational basis for calculating prospective profitability, which would be translatable into a then current market value. Accordingly, no market value can be prescribed for these deposits.
77. Kasacm Bay. (a) Plaintiffs claim that, as of the taking date, 1,500 acres of potential mineral land in the Kasaan Peninsula section of Prince of Wales Island, containing iron, copper, gold, silver and platinum deposits, had a fair market value of $600,000.
(b) The Russians discovered copper ore on the Kasaan Peninsula, a promontory on the east side of Prince of Wales Island, as early as 1865. However, no attempts at development were made then or for many years thereafter.
Numerous lode claims were, however, made by American prospectors in the Kasaan Bay section between 1898 and 1902 and some mines ultimately developed. The most prominent mines in the section were the Mount Andrew, Mamie, Stevenstown, It, Rush and Brown, and Salt Chuck. Here, too, some ore tests were favorable and trade journal reports indicated interest in the area. However, none of these mines became productive until after the date of taking. A 1902 Geological Survey Report (Professional Paper No. 1, “Preliminary Report on the Ketchikan Mining District, Alaska”) stated that mining operations had been limited to shallow open cuts which had not extended beyond 50 feet below the surface, so that there was “but little to guide the investigator besides the surface exposures” (p. 97). Mount Andrew became productive in 1906, the Mamie and Stevenstown in *193 1905, the It in 1909, the Rush and Brown in 1906, and the Salt Chuck in 1907.
(c) Production of the Mount Andrew-Mamie area, which includes the Mount Andrew, Mamie, and Stevenstown mines, amounted to more than 270,000 tons of copper ore between 1905 and 1918. This ore produced 12,800,000 pounds of copper having a value of $2,415,000, 7,000 fine ounces of gold having a value of $143,000, and 56,000 fine ounces of silver having a value of $35,000, a total yield of approximately $2,600,000. The Salt Chuck mine was the only one to continue producing copper ore after World War I. In 1916, platinum deposits were discovered there and production continued until 1926. Total production of all the Kasaan Bay mines amount to approximately 670,000 tons of ore valued at more than $6,200,000, with copper accounting for most of the value.
(d) There is, considering the then state of the development, insufficient evidence to support the assignment of any value to the claimed 1,500 acres of mineral land of the Kasaan Bay section as of the date of taking.
78. Moira Sound, (a) Plaintiffs claim that 700 acres of mineral land, consisting of copper, gold, lead and marble deposits, in the Moira Sound section located on the east side of Prince of Wales Island had a fair market value of $125,000 as of the taking date.
(b) Numerous claims were located in this section in 1898 and 1899 and some mines subsequently developed, principally in three localities, i.e., Dolomi, North Arm and Niblack Anchorage. Optimistic accounts of the area’s potential appeared in trade journals, based largely upon statements of the mines’ owners or operators. However, no significant production from any of the mines occurred prior to the taking and most were not even developed as of such date. None of the mines ever became large producers. Both the Golden Fleece and the Valparaiso mines of Dolomi Region were still being developed as of 1902, neither having had any substantial gold production prior thereto. Active development of the Cymru mine in the North Arm section did not begin until 1906. In addition, the marble deposits in this section, which were of varying quality, were not actively *194 worked until 1904 (by 1906, work ceased and in 1907 all machinery was removed). None of the claims or deposits (gold and copper) in the Niblack Anchorage area had been developed prior to' the taking date. Development of the Dana group of claims (the Copper Cliff mine) did not commence until 1903.
(c) The evidence does not indicate how, on the basis of prospective profitability (profits minus operating costs and costs of development and plant), the claimed value of $125,000, or any value, is justified. Accordingly, no allowance is made for the mineral lands of Moira Sound.
79. 8'howl Arm. ,(a) Plaintiffs claim that 500 acres of mineral land containing gold, silver and copper deposits in the Skowl Arm section of Prince of Wales Island had a fair market value of $50,000 as of the taking date.
(b) The major mining property in this region, the Khayyam mine or McKenzie claims, was located in 1898. Its surface showing of pyrite ore was good enough to generate optimism, but the depth of the vein was unknown as of 1902. Deported sales of a two-thirds interest in 1899 for $40,000 and in 1930 of the entire group of claims for $1 million were not regarded by plaintiffs’ expert as being indicative of true value. The Mammoth group of claims were only being developed in 1902. A1906 Geological Survey Deport indicated unsatisfactory smelter returns from the Khayyam. After 1908 there were no further reports on the mines of this region. There are no production figures or proof of profitable workings.
(c) The evidence, consisting principally of then current optimism, and the development work undertaken both prior to and after the taking, is insufficient to support plaintiffs’ claims.
80. Twelve Mile Arm. (a) Plaintiffs claim that 600 acres of mineral land, containing deposits of gold, silver, lead and copper, in the Twelve Mile Arm section of Prince of Wales Island had a fair market value of $75,000.
(b) There was much prospecting in the Twelve Mile Arm section prior to the date of taking. Mineral discoveries were made in 1899 and the following year the town of Hollis was established, becoming a center of activity. From the *195 period 1901 to 1903, a trade paper, the Mining Journal, contained optimistic accounts of allegedly valuable ore deposits in the section, especially the Crackerjack and Puyallup properties (a 14-ton shipment from the latter allegedly returning an average of $159 per ton). However, there was no significant production of ore prior to the taking date, and even subsequent thereto production in the area did not turn out to be large. Work on the Puyallup was discontinued in 1906. A 1907 Geological Survey Report of the area stated that mining activity had been slight in recent years. Actual evidence of production is absent. Several option agreements, ranging from $10,000 to $100,000, recorded between April 1901 and November 1902, partially relied upon by plaintiffs, are inconclusive as to valuation. (Plaintiffs’ expert admitted these agreements, under which only nominal amounts of cash passed, were not indicative of the extent of any true value.) Since sound production or profit figures or other reliable evidence is not available, no valuation of these mineral deposits can be formulated.
(c) The evidence is insufficient to support plaintiffs’ claim (based largely on early reports of ore grades) that Area 2b was enhanced in value by the mineral deposits in the Twelve Mile Arm section.
81. Shalcan Bay. (a) Plaintiffs claim that 1,200 acres of mineral land, consisting of marble deposits, in the Shakan Bay section on the northwest side of Prince of Wales Island had a value of $100,000.
(b) Reliable evidence of value as of the date of the taking is not contained in the record. Development of the deposits of the Alaska Marble Company, operating on Marble Creek, which were first discovered in 1896, was not commenced until 1904. 'Similarly, operations on the claims of the El Oapitan Marble Company (located in 1901) did not commence until 1904. The Vermont Marble Company’s development, also on Marble Island, although first discovered in 1899, was also based on claims that were not located until 1903. A sale of three marble claims on Klawack Passage (later Dry Bay) to El Oapitan Marble Company for $50,000 was recorded on August 29,1902 (9 days after the taking date), but evidence *196 as to the reliability or soundness of the recorded figure is lacking.
The only evidence as to production of marble or its value are figures relating to total value of all producers in Alaska from 1901 to 1925. (This amounted to $2,629,214. As of 1925 the Alaska Marble Company, which did not commence operations until 1904, was still producing marble from Marble Island. Most of the Alaska marble came from its quarries.) No 1902 value can be ascertained from these figures.
(c) As of the taking date, the evidence is not sufficient to warrant the addition of any value to Area 2b by reason of the marble deposits of the Shakan Bay section.
82. Cholmondeley 8ownd and McLecm Arm. (a) Plaintiffs claim that 500 acres of mineral land in the Cholmondeley Sound section on the east side of Prince of Wales Island had a value of $25,000 and that 100 acres of such lands in the McLean Arm section on the southern tip of the island had a value of $15,000.
(b) No satisfactory evidence supports such valuations. In the Cholmondeley Sound section, there were some 200 claims located, and some development work, prior to the taking date. In themselves, this is hot evidence of value. There is no evidence that any of these claims ever produced minerals. In the McLean Arm section too, substantially all that occurred was the location of claims. General optimistic reports in newspapers and trade journals, based principally on statements of mine owners or superintendents, also cannot be the basis for any assignment of actual value. Despite early optimism concerning the Croesus claims in Cholmondeley Sound, the ore body was found to be of only limited extent and operations were suspended at the end of 1902.
O oronaUon Island
83. (a) Plaintiffs claim that 400 acres of mineral land on Coronation Island had a value of $25,000.
(b) The claim is based on the Volunteer group of 20 claims located in 1900 at Egg Harbor. Allegedly on the basis of a reported sample shipment of 16 tons of ore in August 1901 netting $88 per ton in silver and lead, a lease for 99 years was granted on this property in November 1901 for an alleged *197 rental value of $1,300,000. Plaintiffs’ expert doubted this amount was paid in cash or was valid evidence of value in such amount. Prior to the taking date, the evidence is based only on the claims’ locations, newspaper optimistic reports, and the alleged lease.
(c) The evidence is insufficient to support the claimed value for the Coronation Island mineral lands.
Dali Island,
84. (a) Plaintiffs claim that 250 acres of mineral land on Dali Island had a value of $25,000.
(b) The evidence of value consists of the existence of 106 lode claims prior to the taking, plus an optimistic newspaper report of the gold and silver ore values of the Mt. Vesta group. These are insufficient bases for the assignment of the claimed value.
Kupreanof Island
85. (a) Plaintiffs claim that 250 acres of mineral land on Kupreanof Island had a value of $10,000. The island is the second largest land mass in Area 2b.
(b) The claim is based on the alleged mineral potential of two groups of claims, the Kupreanof and the Portage Mountain, which were located prior to the taking date. As to the former, after prospect work was done from 1900 to 1902, followed by a relocation of the claims in 1902, only the annual assessment work was performed. A 1908 Geological Survey Report stated the position of the deposit was not favorable for economical mining. As to the latter the same report stated that, despite the exposure of mineral-bearing veins in several places, no large ore body had been developed. Value is claimed on the theory that expenditures were made to develop the properties. There was no production of any substance prior to such date.
(c) The evidence is insufficient to sustain plaintiffs’ claim concerning Kupreanof Island.
Summary
86. (a) The mineral resources of Area 2b, for which plaintiffs claim $1,550,000, did not enhance the fair market value of such area in any ascertainable amount.
*198 (b) The fair market value of the mineral lands, ing 11,000 acres, of Areas 2a and 2b combined, for which plaintiffs claim $2,650,000, enhanced their fair market value by the amount of $50,000, i.e., the 200 acres of gypsum deposits.
Other Lards
87. The remaining land in Areas 2a and 2b comprises 448,320 acres. The bulk of this acreage comprises lands with elevations above 2,000 feet, including barren and exposed rocky areas with some peaks rising to 4,000 feet, or muskeg, scrub or shrub areas. However, there are small areas of grassy and arable lands. The 1890 Census refers to “many places along the Chichagof shores where level and even grassy lands invite cultivation.” A 1906 Forest Inspector’s official report on the Archipelago Forest Keserve (Area 2) refers to the arable character of the alluvial deposits at the head of Port Frederick, and to the alluvial flats at the heads of Duncan Canal, Hamilton Bay and Sam’s Bay on Kupreanof Island. Also, there are many grass-covered tide flats which are used for the production of hay for forage for livestock. There is no evidence, however, that there was any significant demand for such lands for such purpose as of the taking date.
88. There are numerous rivers, waterfalls and lakes which combine beauty with excellent opportunties for camping and recreation. The largest and best known lakes are in the mountains along the southern coast. This area affords excellent hunting and sport fishing. However, there is no evidence that there was any recognizable demand of these lands for any such purposes as of the taking date.
89. In 1902 there were nine sites occupied by operating canneries within Areas 2a and 2b, five located on Prince of Wales Island, two on Kuiu Island, and one each on Ku-preanof and Chichagof Islands. In addition, there were numerous salteries, sawmills and mining camps. There were no permanent white settlements in Area 2 in 1902. (However, 5 years later the town of Craig was founded on the west coast of Prince of Wales Island.)
9.0. Plaintiffs claim $66,000 as the fair market value of said *199 143,320 acres, which, is approximately 15 cents per acre ($66,498). The great bulk of this land, admittedly barren, rocky and mountainous, had no economic significance or foreseeable potential, and had no value. The evidence is insufficient to support a fair market value amount for the entire acreage involved in excess of the sum of $10,000.
Fisheries
91. (a) Plaintiffs claim the fair market value of their exclusive right to exploit the fisheries resources of Area 2 was $5,460,000 as of the taking date, of which $5,200,000 is based on the salmon resource as represented by canned salmon, and $260,000 on such resource as represented by salmon products industries other than salmon canning. Since fishing rights of this kind are normally treated as common property, there are no comparable sales which may be used for “market value” purposes. There was a market, however, for fish processing, principally canned salmon, which was necessarily based on the right to fish, so that the value of the fisheries, or the exclusive right to fish, may fairly be measured by the profitability of the fish processing industry. Insofar as this industry would be more profitable than alternative employment of capital at substantially comparable risks, the “excess profit” would fairly be attributable to the income-producing capacity of the fisheries. As in Area 1, plaintiffs have, to arrive at such value, adopted the reasonable method described below.
(b) In 1902, the great bulk of the value of southeast Alaska’s fishery production was represented by canned salmon. In that year, of the 26 canneries operating in all southeast Alaska, nine were located within Area 2. During the 1902 season, these nine canneries had a combined catch of 4,615,000 salmon, which accounted for over 44 percent of the total for southeast Alaska. Their pack of about 303,000 cases of canned salmon was 33.1 percent of the total southeast Alaska output. The ratio of the southeast Alaska pack produced in this area did not differ greatly in the later years in which successive additions to the National Forest were made.
(c) The assumption is reasonable that the fishery resource *200 associated with, an individual area was represented by pi’oportion the area’s pack bore to the total southeast Alaska pack. While in some cases the fish were caught at some distance from the cannery and therefore outside of the boundaries of an area as delineated by the parties, over 90 percent of the fish was caught within the inland waters of the area’s bays, rivers and harbors, rather than in the open waters of the ocean, where principally halibut fishing took place.
92. The value of the output of the nine canneries of Area 2 in 1902 was approximately $845,000. The total canned salmon output of southeast Alaska in 1902 was approximately $2,650,000. The ratio of the value of the pack of the nine canneries to the region as a whole was 31.9 percent. This ratio approximates that of the number of cases of 33.1 percent.
93. The 3-year weighted average price of all species of canned salmon from 1900 to 1902 in southeast Alaska was approximately $3.20 per case. Investment averaged approximately $2.75 per case, and the return on investment was approximately 21 percent, yielding profits of 59 cents per case. Allowing for a 10 percent return on investment, or 28 cents per case, as the return necessary to attract capital, which, on the basis of returns on alternative investments at that time, would be reasonable, the “excess profit” of the canneries attributable to the fishery resource would be 31 cents per case.
94. (a) In calculating the total “excess profit” of the entire fishery operation which a prospective purchaser could reasonably expect to realize, the operation of the independent fishermen, which a purchaser would also have the right to take over, and from whom the canneries were purchasing around two-thirds of their fish, would also have to be taken into consideration. This excess profit is difficult to calculate, but it can reasonably be assumed to have existed to some extent, for the independent fishermen chose to make an investment in equipment (boats, net, gear) to indulge in this activity instead of becoming a cannery worker or other wage earner, and presumably they did so at least in part because of the excess profit accruing to this form of activity. Thus, not all of the *201 profit return attributable to the fishery resource accrued to the canneries or were reflected in their profits.
(b) Plaintiffs claim such excess profit may fairly he calculated as amounting to 3 cents per case, calculated 'as follows:
In 1900 and 1902, the estimated value of the raw fish catch was about 10 percent of the value of the final salmon products, mostly canned. The cost of raw fish per case of canned salmon may therefore be estimated at 10 percent of the price of canned salmon per case ($3.20), or 32 cents per case. On this basis it would be estimated that the fishermen earned an “excess profit” of approximately 10 percent of the value of the raw fish sold, or about 3 cents per case of canned salmon. However, one questionable factor entering the calculation would be the recognized fact that, in dealing with the canners, the independent fisherman could not realize the full value incident to bargaining on equal terms. Yet, fishermen continued to engage in such business in increasing numbers, from which it is reasonable to conclude that the returns justified such activity as against alternative employment.
(c) It -is concluded that the addition of 2 cents per case as representing the excess profit of the fisherman would be reasonable and that such profit, also attributable to the free access to the fishery resource, should be added to the prospective excess profit the exclusive owner of the resource would reasonably expect to realize.
95. A single owner controlling the entire fishery resource could reasonably expect to increase the efficiency of the overall fish-catch operation as against the then existing methods of obtaining the total catch, and thus increase his prospective profits. Estimating the increased profits that would result from anticipated increased efficiency is, however, difficult. A reasonable method of measuring this factor is as follows:
During the early part of the first decade of the century, about one-third of the salmon catch in Alaska was taken by canneries. The unit costs of cannery fishing operations are reasonably estimated to have been approximately one-third less than that of the independent fishermen, principally due to the control by the canneries of most of the traps. Thus, *202 the canneries required a lower investment per Were the canneries to take over the control of the entire fishing operation, it is therefore reasonable to assume that additional income would result from their more efficient methods of operation, and that such income would apply to two-thirds of the catch. Thus the cost of two-thirds of the catch, representing that part taken by the independent fishermen, could be reduced by one-third. This would reduce the cost of the total catch by 25 percent (i.e., the two-thirds of the total catch taken by the independent fishermen accounted for 75 percent of the cost of the total catch. Reducing three-fourths of the total cost by one-third reduces the cost of the total catch by 25 percent.) A savings of 25 percent on the total cost of the raw fish of 32 cents per case produces an 8-cent per case cost reduction as a result of reasonably anticipated improved efficiency in fishing operations relating to the total fish catch. Thus, on this basis the owner of the fishery resource might well earn 8 cents per case in addition to the profits being earned during the period prior to 1902. However, this additional 8-cent profit figure resulting from expected increased efficiency is necessarily based on so many estimates that, although each is apparently reasonable, a conservative investor would be justified in calculating the total additional expected profit due to this factor on a 5-cent basis.
96. A further addition to prospective profits which could reasonably be expected by the purchaser would result from the additional increment to be derived from the economies of private ownership as compared with the earnings that had been realized under a common property exploitation. The exploitation of the fisheries resources as a common, rather than as a private, property obviously reduced their capacity to yield the full return possible under a sole, integrated, private property operation. The wasteful interference of competing fishermen would be eliminated. Transportation and packing facilities would be integrated. Labor and material would be more efficiently employed and duplications eliminated.
While it is not possible to translate accurately into an exact amount the increase in profits that would result from transferring a common property right to a private property right, *203 one reasonable method would 'be to calculate it on the 'basis of approximately 10 percent of the expected reduced costs of fishing under the improved efficiency hereinabove set forth, i.e., 27 cents per case (32 cents as cost of raw fish (finding 94(b) less 5 cents due to increased fish-catching efficiency (finding 95)). Ten percent of 27 cents per case, the expected costs of fishing mider improved efficiency, would thus yield approximately 2 cents additional per case.
97» An estimated excess income of approximately 40 cents on every case of canned salmon sold would thus be reasonably anticipated by the sole owner of the fishery resource, computed as follows:
Cents
Cannery excess profits_ 31
Fishermen's excess profits_ 02
Improved fisfr-eatefi efficiency (traps, etc.)_ 05
Private fishery exploitation_ 02
Total_ 40
98. (a) With respect to the size of the pack against which the excess profit 40-cent figure should be applied, it would be reasonable to conclude that a buyer would have anticipated in 1902 that the salmon pack would increase at the rate of 10 percent a year in response to rising demand, and that returns from the fisheries would rise correspondingly. The salmon industry being still in a stage of extremely rapid growth, he would 'assume, however, that the high rates of increase would not continue indefinitely. On a 10-year forecast, a pack reaching approximately-790,000 oases in 1912 could be anticipated, a level that appeared to be maintainable from then on. Although the perpetuation of a salmon supply could not be guaranteed, there appeared at that time to be no substantial problem, at least for some time, of a supply of fish sufficient to meet such an overall demand, although from year to year there might be variations in the salmon rims. As noted (finding 45), the supply in some streams and rivers (principally due to destructive methods of exploitation) had already been sharply reduced. Nevertheless, the catch of salmon in southeast Alaska had been increasing at the rate of 15 to 20 percent a year, and a prospective purchaser, were he to have control of the entire resource in the area, could anticipate the *204 establishment of more controlled and efficient methods of exploitation.
Similarly, a constantly rising demand could not be guaranteed. The 1902 pack was more than the market could absorb at that time, but generally, the sahnon canning industry was already a well-established one and, on the basis of recent results, the long-range prospect, based both on prospective domestic and foreign demand, was promising. (The Metlakahtla cannery’s pack reached 28,000 cases in 1901, compared with less than 18,000 in 1900.)
On the above bases, and using the production figures from 1896 on as a guide, a prospective buyer in 1902 could reasonably have projected a demand for canned salmon in southeast Alaska based on a 10 percent increase per year for approximately 10 years. The 1902 Area 2 pack of approximately 803,000 cases would thus increase to approximately 791,000 in 1912. Conservatively, the annual increase would not be calculated beyond, and the estimate would be based on a leveling off thereafter, with such amount being maintained up to 1922 (i.e., 20 years from the taking date).
The prospect of the industry’s maintaining its unusual profitability would appear to be reasonably good. This was well recognized as early as 1900. Despite temporary periods of overexpansion and elimination of some marginal canneries (sometimes due to salmon runs in some waters being depleted), the industry was expanding rapidly in southeast Alaska and more capital was constantly being attracted to it. The Alaska Packers Association, operating throughout Alaska, and then packing over half of the total Alaska output, had gross profits of 68 cents per case in 1901 and 61 cents per case in 1902.
A 10 percent annual increase on the 1902 pack of approximately 303,000 cases for 10 years, which would produce 791,000 cases in 1912, and the maintenance of that level for the next 10 years, would result in a 20-year average of approximately 662,000 cases per year.
Conservatively, it would thus be reasonable to project a 20-year estimate on an average annual basis of approximately 650,000 cases.
*205 (b)A prospective purchaser of the fishery resources of Area 2 would thus reasonably estimate that, in his exclusive ownership, annual excess profits would, on a 20-year average basis, equal approximately $260,000, i.e., 650,000 cases X 40 cents per case (and about $316,000 thereafter, although such expectation would be so far in the future, and therefore so speculative, that its use for capitalization purposes would not appear to be warranted).
99. A 10 percent capitalization rate would appear appropriate for 1902 (as it was for 1891). Thus, the value of this aspect of the fishery resources of Area 2, i.e., expressed in terms of the profits reasonably to be expected from operating salmon canneries, would be $2,600,000.
100. (a) There were in Area 2 salmon products industries other than salmon canning. There was some demand for salmon in other than canned form. In 1902, salted, pickled and smoked salmon products represented approximately 3 percent of the total value of the salmon fisheries.
(b) Three percent of $2,600,000, the value of the canned salmon resource, would reasonably represent the value of the salmon fisheries used in salmon products other than salmon canning. This would amount to $78,000.
(c) No significant value would have been attributed to the halibut, herring, or other minor fisheries resources of Area 2.
(d) On the above bases, the fair market value of the fisheries resources of Area 2 on August 20, 1902, was $2,678,000.
Valuation Summary
1Q1. The fair market value of Area 2 as a whole, taking into consideration the contribution thereto made by its forest lands ($504,481.30 (finding 66)), its mineral lands ($50,000 (finding 86)), its other lands ($10,000 (finding 90)), and its fisheries resources in its surrounding and appurtenant waters ($2,678,000 (finding 100)) was $3,242,481.30 as of the date of taking. Each separate classification of land and resources could be exploited in accordance with its highest and best use without significant interference with or reduction of the value of any other.
*206 Aeea 3 — Valuation as OF SEPTEMBER 10, 1907
General
102. (a) Area 3 consists of 1,687,572 acres, almost entirely mainland, in the southeast comer of southeast Alaska. It is a relatively narrow area, measuring approximately 25 miles wide and 95 miles long. It consists of part of the area reserved as the Tongass National Forest by Proclamation issued September 10, 1907. It is bounded on the west by Revillagigedo Channel, Behrn Canal and Unuk River; on the south by Main Passage; and on the east and north by a section of the Portland Canal and a mountain range. Ketchikan is about 25 miles west and Prince Rupert about 30 miles southeast. Many canals, bays and inlets indent at least 125 miles of its borders. The main inlet, Boca de Quadra, extends 80 percent of the distance across the area. The topography is generally rough, steep and broken. The areas bordering tidewater are more moderate in character with lands sloping gradually back from the beach for short distances and then ascending rapidly beyond. Mountainous areas lie along the east and north boundaries but are generally under 7,500 feet elevation. The average elevation for the area is about 2,500-3,000 feet above sea level. All of the forested area is under this average elevation and forms a narrow band along tidewater and in short valleys.
There are several deep-water harbors in the area which would be suitable for industrial plant sites and permit excellent safe anchorage for ocean-going vessels. The Portland and Behm Canals provide protected waterways for such operations.
(b) Plaintiffs claim that the fair market value of this area as a whole, including the resources thereof and the appurtenant fisheries, was as of the taking date $3,151,000.
Forest Lands
103. Of the 1,687,572 acres in Area 3, 63.48 percent or 1,071,271 acres, is forest land, and 36.52 percent is non-forest land. As of the taking date, it may reasonably be estimated that the forest land consisted of 67.25 percent non *207 commercial and 32.75 percent commercial. Of tbe commercial, 22 percent of tbe acreage supported stands of timber considered, in 1907, accessible, and 78 percent inaccessible. Tbe small area of commercial accessible forest land in relation to the total occurs as a very narrow band bordering tidewater in tbe many coves, canals and inlets.
For 'the 1,071,271 acres of forest land, plaintiffs claim $2,389,875.
104. Tbe logging conditions in Area 3 were very favorable. Good stands of timber stood a short distance from tidewater, generally on steep ground. Tbe largest and best quality timber occupied low elevation sites near tidewater. As the heaviest stands occurred near the beach at low elevations, logs cut from nearby trees could easily be pulled into the water and logging costs would be held to a minimum. The downhill pull on logs over favorable grades would be more advantageous to southeast Alaska loggers than would be the case in western Washington about 1907 where loggers were cutting timber at various distances from tidewater, necessitating construction of logging railroads and negotiation of adverse grades in logging and hauling. There was a concentration of old growth timber in several areas along the Behm Canal, with protected harbors, suitable for millsites. Logs cut from nearby shoreside areas could be cheaply towed to these conversion sites.
105. In 1906 and 1907, lumber production in the United States of hemlock, eastern and western, was at a level in excess of 3 billion board feet. However, this was still only a tiny fraction of the available supply in localities more accessible than Alaska. There was still no significant demand, as compared with the total supply, for hemlock. During these years, lumber production of Sitka spruce was at a level in excess of 200 million feet. Also, by this time spruce and hemlock had become established as leading species for pulpwood. Of 3,962,000 cords of pulpwood consumed in the United States in 1907, spruce accounted for over 2,700,000 cords and hemlock accounted for 575,000 cords. However, the demand for these species for pulpwood was still, on an overall supply basis, insignificant.
*208 106. The 1907 date of valuation occurs at a acquisitions 'by private owners of the publicly owned timber-lands of the Pacific Northwest and British Columbia had reached a peak. By this time, nearly two-thirds of the standing timber of the Pacific Northwest had passed into private ownership. The remaining standing timber in this region was for the most part not available for sale, having been reserved by the Government for conservation and other public purposes. In British Columbia, about three-fourths of the standing timber was by this date held under various forms of private tenure, the bulk under licenses renewable for 21 years, with most of the rest under leases or owned outright. The remaining one-fourth was Government-owned timber-lands which, in December 1907 were, as a conservation measure, withdrawn from all forms of alienation.
107. In the Pacific Northwest, the intensive demand for timberlands and the resulting active trading produced peak prices in 1907 for some species of standing timber which were not exceeded until World War I. The increase in 10 years ending about 1907 generally averaged more than threefold. Average per thousand stumpage prices in 1907 of the four leading species of western Washington were reported as follows : for Douglas fir, $2.50; for Sitka spruce, $2.80; for western red cedar, $2.40,* for western hemlock, 90 cents. The 1907 price for each of these species was more than double the price reported for the same species 5 years earlier.
108. Plaintiffs’ claim of $2,389,875 is computed as follows:
(a)’ There were 2,765,623 MBM of live commercial accessible timber of all species, principally hemlock and Sitka spruce (i.e., 1,653,289 hemlock, 922,335 Sitka spruce, 54,484 Alaska cedar, 131,367 red cedar, and 4,148 other) standing on 77,010 acres. Such timber is valued at 70 cents per MBM, totaling $1,935,936.
(b) There were 273,831 acres of forest land which contained timber of commercial quality but which were inaccessible. This acreage contained 8,777,045 MBM 'of hemlock, Sitka spruce and other species. Plaintiffs claim $1 per acre therefor, or $273,831.
(c) There were 720,430 acres, both accessible and inacces *209 sible, of noncommercial timber of unestimated volume, for which, plaintiffs claim, for reasons similar to those already indicated, 25 cents per acre, or $180,108.
109. The fair market value of the forest lands situated in Area 3 was, as of September 10, 1907, $56,266.50, computed as follows:
(a) There were 8,440 acres of essentially pure Sitka spruce stands of commercial grade within the accessible forest area. The active trading 'in the forest lands of the Pacific Northwest, with the resultant sharp increase in price in such lands, including stumpage prices in western Washington, justifies a somewhat higher price than the $1.50 per acre value for southeast Alaska spruce lands found as of 1902 for Area 2. Accordingly, it is concluded that these spruce lands would have had a value of $2 per acre, totaling $16,880.
(b) There were 10,073 acres of essentially pure cedar stands of commercial grade within the accessible area. These too would have had a value of $2 per acre, totaling $20,146.
(c) There were 14,901 acres of mixed spruce-hemlock of commercial quality within the accessible area in which approximately one-half the stand was spruce. This acreage would have had a value of $1 an acre, totaling $14,901.
(d) There were 43,395 acres of predominantly hemlock timberlands of commercial grade within the accessible area. This acreage would have the nominal value of 10 cents per acre (representing a slight ’increase over the 5-cent 1902 price and reflecting the higher stumpage prices for western hemlock being quoted in western Washington), totaling $4,339.50.
(e) There were 201 acres of other species of commercial quality in the accessible area. The record does not substantiate any value therefor.
The above comprises the 77,010 acres making up the commercial accessible part of the forest lands.
The balance of the forest lands, consisting of 273,831 acres of commercial but 'inaccessible timberlands, as well as 720,430 acres, both accessible and inaccessible, of noncommercial timber, would not, 'as timberlands, have made any contribution to the value of the total tract.
*210
Mineral Lands
110. Boca de Quadra Section, (a) Plaintiffs claim that 200 acres of mineral land containing copper and gold deposits in the Boca de Quadra section on the southwestern coast of Area 3 had a fair market value of $5,000.
(b) A number of locations were made in 1907 in this section, some prior to the taking date. Although there was some evidence of mineralization in this region (a 1902 U.S. Geological Survey Report stated that sulphide deposits and workable gold placers “have been reported”, and a trade paper reported that a group of copper claims had been bonded and were to undergo exploration), there is no evidence of any sound basis upon which a prospective purchaser could reasonably estimate the possibility of profitable mining. Accordingly, it cannot be found that this section enhanced the value of Area 3 in any amount.
111. Unule Bwer Section, (a) Plaintiffs claim that 300 acres of mineral land in the Unuk River section containing gold, silver and copper deposits had a fair market value of $5,000.
(b) Placer gold was reported in this section in the early 1870’s, but little attention was paid to the area at that time. References to gold, silver and copper deposits, with some development work being done, were made in a trade paper (The Mining Journal) in 1901. Development work was still proceeding in 1906, according to another trade paper (Mining and Scientific Press). There is no information as to the extent of development or production, if any. Again there is, therefore, no acceptable evidence which would indicate how a prospective purchaser could rationally estimate the possibility of profitable mining as of the taking date. It cannot, consequently, be found that this section enhanced the value of Area 3 in any amount. 12
*211 112. The evidence does not establish that the mineralized sections of Area 3 would have enhanced the fair market value of the area in any amount. 13
Other Lands
113. (a) The remaining lands in Area 3 consist of'615,801 acres of nonforest land, for which plaintiffs claim the sum of $92,000, or approximately 15 cents per acre (14.9 cents).
(ib) Approximately 10 percent of the nonforest land of Area 3 is covered by glacier, or permanent snowfields. Most of the rest is covered with scrub or mountains having an elevation in excess of 2,000 feet, including regions in the Peabody Mountains, the Rosseau Range and the Halleck Range, with the backbone of this last range exceeding 5,000 feet in elevation. Lakes abound in this area and there are a number of favorable waterpower stations (although there is no showing that there would be any demand for such power in this area in the foreseeable future). There are shore afeas and delta lands at the mouths of rivers and glacial moraines and tills, some of which are suitable for limited agriculture or as site's for communities and industrial establishments. Game is plentiful.
(c) The greater part of this acreage, 'having no economic significance or foreseeable potential, had no value. The evidence is not sufficient to support a fair market value amount for the entire acreage in excess of the sum of $15,000.
Fisheries
114. The only salmon cannery operating in Area 3 in 1907, located at Mink Arm in Boca de Quadra, was built by the Quadra Packing Company in 1896. It had operated in 1901, 1902, and 1903, but was closed in 1904, 1905, and 1906. It reopened in 1907, and operated intermittently thereafter.
*212 115. The salmon catch totaled 631,000 in 1901 and 34,141 cases were packed, valued at $105,000. The following year the catch reached 741,500 and 39,000 cases of canned salmon were packed, valued at $97,500. However, 5 years later, in 1907, the year of taking, the company reported a pack of only 25,155 cases, valued at $88,449. (The following year, the pack totaled 35,208 cases, valued at $102,387.)
116. The 1907 pack of this cannery represented 2.8 percent of the number of cases produced in southeast Alaska. (In 1908, the proportion was about 3.5 percent.) In earlier years the ratio of the pack in this area to that in the entire region was somewhat higher, amounting to 4.8 percent in 1901 and 4.3 percent in 1902. The value of the pack in 1901 represented 4.7 percent of the total value of the pack in the region. It accounted for a similar proportion in 1902, but only 2.8 percent in 1907 (and 3.3 in 1908).
117. (a) Plaintiffs compute their claim of $660,000 for the value of the fisheries resources of Area 3 as follows:
The canneries of Area 4, which area was taken in 1909, accounted for 364,000 cases in that year. As shown (finding 115), in 1907 the one cannery of Area 3 packed around 25,000 cases, or approximately 7 percent of Area 4’s 1909 pack. Plaintiffs contend that the circumstances and considerations involved in Area 3 as of 1907 were essentially similar to those of Area 4 in 1909. Since, as will be hereinafter shown, plaintiffs value the canned salmon aspect of the Area 4 fisheries at over $9 million, they estimate 7 percent thereof, or $660,000, as the value of the Area 3 fisheries resource.
(b) If the record of the one cannery in Area 3 reflects the value of the fisheries resource in such area, expressed in terms of canned salmon, it seems plain that the value of the resource in this area was not, on a proportionate basis, as great as the other areas. The record of this one cannery was extremely spotty. For 3 years prior to the taking year it was not even operating. (And even after the taking date, it operated only intermittently.) It would seem that, compared with the other areas, there was something wrong with this particular area. Accordingly, to value this area on a strictly proportionate basis to another excellent area is not *213 proper. Further, to base a 1907 valuation on 1909 results, which would not be known in 1907, is again improper.
118. (a) Since the fishery resource of Area 3 clearly had some value, it would seem fair (lacking any better evidence concerning this particular area at the time of taking) to conclude, in view of the inconsistent record of the one cannery in the area, that the profit per case to which a prospective purchaser would look as producing value would be approximately one-half of the 40 cents enjoyed by the canneries of Area 2 as of 1902.
The 1907 pack was 25,000 cases, and a prospective purchaser, in view of the cannery’s past history, would in all probability not have envisaged, for long-term computation purposes, a pack greatly in excess thereof for this particular area. Accordingly, an average of 30,000 cases would appear appropriate against which to apply said profit of 20 cents, making an annual average profit of $6,000. Capitalized at 10 percent gives a value of $60,000 to this aspect of the area’s fishery resource.
(b) There is little information available on the halibut, herring, or minor fisheries catch in this region. The commercial value of the catch does not appear to have been important. Accordingly, no value is assigned to any of the fisheries other than salmon.
Valuation Summary
119. The fair market value of Area 3 as a whole, consisting of 1,687,572 acres, taking into consideration the contribution thereto made by its forest lands ($56,226.50), its other lands ($15,000) and its appurtenant fisheries resources ($60,000), was, as of the date of taking, $131,226.50.
AReas 4a and 4b — Valuation as of February 16, 1909 (Except as to Parcels Patented Prior)
General
120. Area 4 consists of two separate areas which the parties have designated as 4a and 4b, the entire area comprising, as stipulated, 8,457,172 acres. Both parts were 'added to the Tongass National Forest by Proclamation of February 16, *214 1909. Plaintiffs claim that the fair market value of the entire area, including its resources and appurtenant fisheries, was $46,350,000, it being agreed by the parties that the valuation should be as of such date, except as to parcels of land which were patented prior to the taking date, which parcels are to he valued as of the date of the issuance of the patent. Area 4a extends north from Duke Island at the southern end of southeast Alaska to its apex near Skagway. Area 4b is on the North Pacific Ocean at the northwest extremity of southeast Alaska and extends from Yakutat Bay to Dry Bay. Area 4a, approximately 360 miles north and south and varying between 18 and 120 miles in width, consists of a large area of mainland west of the United States-Oanada border, three large islands, namely, Admiralty, Baranof and Revillagigedo, and a number of smaller islands, such as GraVina, Etolin, Wrangell, Mitkof and Kruzof Islands. It is bounded by the Behm Canal, Unuk River and the United States-Canada border on the east, and Clarence Strait, Wrangell Narrows, Frederick Sound, Pacific Ocean, Chatham Strait and Lynn Canal on the west. Area 4b is about 72 miles long, varies in width from 8 to 40 miles, and averages about 25 miles in width. Of the total area of 8,457,172 acres, 53.66 percent is forest land and 46.34 percent nonforest land.
121. The topography of Areas 4a and 4b varies with a wide range of elevations, slopes and Characteristics of relief. Many parts of the area are extremely rough, rugged and broken. There is, however, a large area of forest land with gentle-to-moderate topography. Some forest areas are level or gently sloping, such as on Kuiu and Kupreanof Islands, around Thomas Bay, and at Yakutat. Although elevations vary from sea level to almost 9,000 feet for the area as a whole, the commercial forest timberline is less than 2,000 feet throughout the area.
122. Seven principal towns are established in Area 4a. Ketchikan, at the southeastern end of Area 4a, is the location of Ketchikan Spruce Mills established in 1903 (and, since the taking date, the Ketchikan Pulp Company, which commenced producing dissolving-type pulp in 1954). Wrangell, 85 miles north of Ketchikan, is the site of another operating sawmill, the Wrangell Lumber Company. Petersburg, 35 *215 miles northwest of WrangeE, is also the site of current and past sawmill operations. Juneau, the capital of Alaska, 125 nadies northwesterly of Petersburg in the northerly part of Arpa. 4a, is the location of the Columbia Lumber Company sawmill. Douglas, across Casbineau Channel from Juneau, is adjacent to the famous Treadwell mining area. Skagway, near the northern tip of the area, is a terminus of the White Pass and Yukon Bailroad. Sitka, the first territorial capital of Alaska, situated near the westerly margin of Area 4a, on Baranof Island, is the site of a pulpmill and sawmills.
123. This area has many good harbors, protected waterways, and excellent tidewater locations for logging and milling operations. It also 'has many large Streams, which would be of considerable importance in the event of waterpower development, and which flow westward from extensive glacial systems along the United 'States-Oanada border toward the sea.
Forest Lands
124. There were 4,538,118 acres of forest land in Areas 4a and 4b of which 47.4 percent was commercial and 52.6 noncommercial as of February 16,1909. The commercial forest area was 49.73 percent accessible and 50.27 percent inaccessible. There were 1,069,726 acres of commercial forest land containing 32,305,725 MBM of accessible timber, 1,081,342 acres of commercial forest land containing 32,011,208 MBM of inaccessible timber, and 2,387,050 acres of noncommercial forest land.
Sitka spruce was the dominant type in 19.60 percent of the commercial, accessible forest land, hemlock-spruce stands in 36.33 percent, and hemlock in 55.50 percent. Cedar and hardwood types predominated in the balance in about even amounts. Hemlock made up 61 percent of the total net volume of timber on commercial forest land, Sitka spruce 34 percent, cedar 4 percent, and other species 1 percent.
125. Were there sufficient demand therefor, the stands of timber, located in narrow bands with 75 percent within 2 mEes of tidewater on ground adapted to logging machinery and methods and equipment of the day, could be easily converted into logs, puEed short distances into tidewater and *216 either be stored in one of the many bays, coves or inlets, or transported in rafts by towing to one of many suitable mill-sites close by, where the logs could be converted into lumber or pulp products. The area had a number of natural advantages for such purposes, including many excellent harbors and a wholly interconnecting system of waterways, a favorable climate (comparable to Olympic Peninsula of western Washington or British Columbia) which permitted a long (10-12 months) operating season, more than adequate sources of hydroelectric power, and large supplies of fresh water.
126. (a) The situation with respect to southeast Alaska’s timberlands was substantially the same in 1909 as it was in 1907 (the date of the Area 3 taking). As previously noted, large bodies of timberland in the west were acquired by lumber companies and investors during the 20-year period 1889-1908. By 1909, under the Timber and Stone Act alone, over 12 million acres of publicly owned timberlands had been acquired, of which approximately 10 million were transferred to timberland investors by the entrymen.
(b) In the Pacific Northwest and British Columbia, there were approximately 260 billion board feet of mixed hemlock-spruce. In southeast Alaska at that time there were approximately 151 billion board feet, of which hemlock constituted about 75 percent of the total and spruce 20 percent. The speculation in the western timberlands was for holding purposes only. The actual cut of timber at about this time was only five-tenths of 1 percent of the total timber stand in private hands. Therefore, the great bulk of the lands passing into private hands during this speculative period was sold on an acreage basis, and not on a stumpage basis, which is the basis upon which plaintiffs claim the commercial accessible timber involved in this case. (And even on such stumpage basis, plaintiffs claim the southeast Alaska timber, on the basis of quoted stumpage prices for 1909 in western Washington, would have been worth only approximately one-fourth as much.) And, as noted, while there was, in the Pacific Northwest, a certain amount of hemlock and spruce in the Douglas fir stands, the lands were considered as Douglas fir timberlands. Even as to the pulp industry, of which, by 1909, hemlock was becoming the principal *217 specie used (originally only a small amount was used for pulp, spruce being largely used), the amount cut for this purpose was still only a tiny fraction of tlie total. In forests that were almost entirely hemlock, there was practically no logging. And the hemlock forests of southeast Alaska, because of their distance from such places in the United States as might constitute a source of demand, and the consequent transportation cost problem, would be even less attractive as an investment. In British Columbia, despite the active efforts of the Government to encourage such industry, pulp and paper manufacture had not yet been established on a commercial basis. In 1909, there was only one active mill there that produced only approximately 1,316 cords (although four companies had taken out pulp licenses in 1901).
(c) The total volume of all species of timber in private ownership in the Pacific Northwest alone in 1909 was 1,013 billion board feet. The actual cut that year was only eight-tenths of 1 percent of such amount. An investor in 1909 could hardly have visualized when in the foreseeable future any significant amount of the almost inexhaustible supply of the hemlock forests of southeast Alaska could have been profitably utilized for pulp purposes, which was their then only foreseeable use. As of approximately that time (1910), only one-tenth of a million cords of softwoods, or 500,000 board feet, was cut in the west for pulpwood (none was recorded for 1905). At this rate, it would take hundreds of years to utilize fully the lumber in Area 4.
(d) An investment in timberlands merely for holding purposes involves costs in addition to acquisition costs, such as taxes, interest, and protection. There was, consequently, substantially no demand at that time for pure hemlock stands. Instead, the problem was what to do about the seemingly almost inexhaustible supply of western hemlock for which there was such an insignificant demand. The small demand in the United States for Sitka spruce could easily be met by the ample supplies of the State of Washington for the foreseeable future. Thus, insofar as immediate conversion into cash is concerned, the Sitka spruce of southeast *218 A In,ska, would at that time have been of interest only for local purposes.
127. The average prices for standing timber of the four leading species of western Washington were reported for the year 1909 as $2.30 per MBM for Douglas fir; $2.22 for Sitka spruce; $2.22 for western red cedar; and 99 cents for western hemlock.
128. Plaintiffs claim $24,292,113 as the fair market value of the 4,538,118 acres of forest land in Area 4 as of the taking date, computed as follows:
(a) There were 32,305,725 MBM of live commercial accessible timber of all species, principally hemlock and Sitka spruce (i.e., 19,286,518 hemlock, 11,662,367 Sitka spruce, 549,197 Alaska cedar, 516,892 red cedar, and 290,751 other) standing on 1,069,726 acres. Such timber is valued at 70 cents per MBM, totaling $22,614,008.
(b) There were 1,081,342 acres of forest land which contained timber of commercial quality but which were inaccessible. This acreage contained 32,011,208 MBM of hemlock, Sitka spruce, and other species (20,011,128 being in hemlock and 10,269,707 being in spruce). Plaintiffs claim $1 per acre therefor, or $1,081,342.
(c) There were 2,387,050 acres, both accessible and inaccessible, of noncommercial timber of unestimated volume for which plaintiffs claim 25 cents per acre, or $596,763.
129. The fair market value of the forest lands situated in Area 4 was, as of February 16, 1909, $747,099.20, computed as follows:
(a) There were 209,787 acres of essentially pure Sitka spruce stands of commercial grade in the accessible forest area. The value per acre would be the same as was found for Area 3, i.e., $2, thus totaling $419,574.
(b) There were 46,760 acres of essentially pure cedar stands of commercial grade within the accessible area. These too would have had a value of $2 per acre, totaling $93,520.
(c) There were 174,637 acres of mixed spruce-hemlock of commercial quality within the accessible area in which approximately one-half the stand was spruce. This acreage would have had a value of $1 an acre, totaling $174,637.
*219 (d) There were 593,682 acres of predominately hemlock timberlands of commercial grade within the accessible area. This acreage would have had a value of 10 cents per acre, totaling $59,388.20.
(e) The record does not substantiate any value for the balance of 44,860 acres of other species of commercial quality in the accessible area.
The above comprises the 1,069,726 acres making up the commercial accessible part of the forest lands in the area.
The balance of the forest lands, consisting of 1,081,342 acres of commercial but inaccessible timberlands, as well as 2,387,050 acres, both accessible and inaccessible, of noncommercial timber, would not, as timberlands, have made any contribution to the value of the total tract.
Mineral Lands
■130. Plaintiffs claim that the mineral resources of Area 4, consisting of 93,800 acres of land, had, as of February 16, 1909, or as of the date the lands were patented, a fair market value of $9,677,898. This total comprises 18,800 acres in Area 4a, valued at $9,302,898, and 75,000 acres in Area 4b, valued at $375,000.
Area J¡.a
131. (a) The most prominent mineralized zone of southeast Alaska was the Juneau Gold Belt, located in this area, and extending a distance of approximately 110 miles from Berner’s Bay on the northwest to Windham Bay on the southeast. Placer discoveries were made in the belt, in the vicinity of Windham Bay and Sumdum, as early as 1869. The next major discovery within the belt was made in 1880 when Joe Juneau and Bichard Harris located placer and lode gold deposits on Gold Creek east of where the city of Juneau is now located. In October of that year, numerous locations, including 21 lode claims and 18 placer claims, were recorded. Two claims were located on Douglas Island, to which the belt extended, all the others being on Gold Creek and tributary streams. In December 1880, nine additional lode and 52 placer claims were located in the Gold Creek area. . Prospectors soon spread over much of the area. Locations were made up to 1885, including the Treadwell group in 1881, *220 which, was the most famous, 'and from then to 1895 most of the area was patented and various mining companies formed.
(b) Within a few years after the discovery of the Juneau and Douglas Island mineral zones, the mines of the area attracted international attention and mining experts from both Europe and the United States made frequent visits to the area starting in the late 1880’s. Numerous examinations were made of individual mines 'and properties, but not until 1903 was an organized eff ort made to study and map the entire Juneau Gold Belt. Under the auspices of the United 'States Geological Survey a detailed geological survey was commenced by Arthur C. Spencer, the results of which were published in 1906 as U.S. Geological Survey Bulletin No. 287. The belt was described as including a complex of discontinuous veins of irregular form and occurrence, as well as impregnated rock masses and mixed vein and impregnation deposits, such mixed deposits constituting the ore bodies of the Treadwell mines, the observed depth of the veins in the vicinity of Juneau 'being 4,000 feet. The ore was mainly gold with some small amounts of silver. The vein ores were described 'as containing the largest values per ton, the combined vein and impregnation deposits being intermediate, and the impregnated masses without veins being of such low grade that they could not be mined with profit. The ores of the Juneau region were described as carrying more than half of their gold in a free milling condition, the ores being treated in stamp mills (the free gold being collected by mercury).
(c) It was recognized that the Juneau region on the whole involved the exploitation of low-grade ores and that, where profitable mining was at all possible, well-financed, large-scale operations were required.
Douglas Island
132. (a) Even though the early discoveries were made on the Juneau side of the Gastineau Channel, the mines on Douglas Island were the first to obtain production of major proportions. A party of five prospectors from Juneau crossed the channel on January 27,1881, and made both placer *221 and lode discoveries in the area where the Treadwell mines were later developed. From 1880 through 1909, 85 placer and 612 locations were made on Douglas Island. Most of the pla'cer mining was completed by 1884 by which time the decomposed outcrop of the Treadwell lode had been worked to a depth of nearly 10 feet. The Eleventh Census reported a yield of $12,000 in 1881 and $3,000 in 1882 from the Ready Bullion outcrop, and an estimated $40,000 to $120,000 from the Paris claim between 1882 and 1884.
(b) Commencing with the transfer of the Paris lode to John Treadwell on September 3, 1881, work progressed continuously in the development of the lodes of the area. By May 1882, Treadwell placed 'a 5-ton mill in operation on his newly acquired property.
13,3. AlasTca-Treadwell Gold Mining Company (Alaska Mill and Mining Company'). In 1884, the Alaska Mill and Mini rig Company, organized by Treadwell, commenced operating Treadwell’s Paris claim and a 120-stamp mill was built that year. The claim was patented on March 3,1888, which thus becomes the valuation date. In that year, the mill was expanded to 240 stamps. Production had shown a steady increase since 1884. The total yield in 1885 was around $250,000 from approximately 35,000 tons of ore crushed, the yield being $7.02 per ton. In 1886, almost 91,000 tons were crushed, yielding over $360,000, or $4.03 per ton. In 1887, the total yield was over $476,000 from over 108,000 tons crushed, or $4.40 per ton. In 1888, the total yield was almost $430,000 from over 121,000 tons crushed, with a yield per ton of $3.55. By the end of 1888, the operating profit totaled $729,000, or $2.05 per ton, with dividends of $350,000 having been paid to the company’s stockholders. The 1888 expansion of the mill to 240 stamps resulted in an increase in production in 1889 to over 214,500 tons crushed.
Thus, by the end of 1888, production totaled 354,800 tons which yielded $1,515,323.47 with an operating profit of $729,000, or $2.05 per ton from a recovered value of $4.27 per ton. The first single year for which detailed production cost data are available is 1889 when 214,544 tons were produced *222 with a total yield of $652,490.78 and an operating profit of $308,000. An average yield of $3.04 per ton resulted in an operating profit of $1.44 per ton with operating costs at $1.60 per ton. (For the period June 1, 1890 to May 31, 1891, the yield per ton was $3.58; the total cost of operation and construction per ton, $1.68; and the net profit per ton, $1.90.)
184. (a) In 1888, the state of the property’s development was substantially as follows:
A 540-foot crosscut tunnel had been driven to expose the vein 250 feet below the surface. Drifting on the vein had been extended for 1,360 feet (the last 60 feet having been driven in ore on the adjoining property of the Alasba-Mexi-can Gold Mining Company). Three open pits were connected by raises and drifts to the main haulageway, which terminated at the head of the 240-stamp mill. (By May 31, 1891, approximately $1 million had been spent in developing the mine, plant, and water supply.)
(b) The dimensions of the three pits were 'as follows :
Using a conventional factor of 13 cubic feet of ore in place per ton, the pit dimensions would indicate 15,769 tons of ore per vertical foot of depth.
135. Mineral resources are worth only what they reasonably can be expected to produce in net profits, i.e., returns over and •above the costs of operation and the necessary investment in plant.
On this basis, the following could have been observed and reasonably expected from the Treadwell mineral property 'as of the date of taking:
*223 (a) The property had been and was currently in production and earning a considerable amount of money. Considering the great mass of ore on the property, of which only a small part had been extracted up to the date of patent, the reasonable expectation was that it would continue to be a profitable producer for many years. As such, the property would be recognized as having great value.
(b) The vein had ¡been developed to a depth of only 250 feet below the outcrop, but the position of the zone was well established for a total distance of 7,450 feet along the strike (or through the Ready Bullion claim to the southeast). The character of the vein and general mineralization of the area was of a type which could be expected to continue to depth. The natural relief of the area was sufficient to expose similar mineralized structures over a vertical range of nearly 3,000 feet. No mineralogical change could be detected over the entire exposed range of mineral structures. This suggested that additional depth on the Treadwell vein could be expected without change in mineral content.
(c) The measurements of the three pits indicated that an average of 15,769 tons had been extracted per vertical foot of depth. Open-pit mining, which had been carried on with a glory-hole (a funnel-shaped excavation) connection to the main haulageway, could not be extended beyond the main level. Underground mining below the main tunnel would permit more selective mining than had been practiced in the open-pit glory-hole operation. A tonnage of 75 percent of that obtained per vertical foot in the pits could be expected from underground mining, or 11,826.75 tons per vertical foot.
(d) Production to the end of 1888 was 354,800 tons with an average yield of $4.27 per ton, although such yield had dropped to $3.55 per ton in 1888. Operating 'costs and profits with the 240-stamp mill would reasonably be calculated, at least for 1889, to approximate what they actually turned out to be for such year, the first year of operation with such min, i.e., $1.60 per ton as costs and $1.44 per ton as profits.
*224 136. Based on the above factors, a reasonably prudent prospective purchaser would have made the following estimates for the Treadwell mine:
Total tons of ore indicated to a depth of 1,000 feet— 11, 826, 760
Tons mined to April 1, 1888- 264, 059
Tons remaining to depth of 1,000 feet- 11,562, 691
Anticipated recovery (80%)- 9,250,153
yield per ton (assuming the mining of generally the same grade of ore as in the past)- 14 $3. 00
Total yield_§27,750,459
Total operating cost per ton (including construction and equipment cost of $0.10 per ton during production)- 15 “$1.75
Operating profit per ton_ 1.25
Total operating profit_$11,562, 691
Estimated optimum period of operations for indicated tonnage_ 20 years
Average annual production_ 16 462,508 tons
Average annual operating profit- $578,135
137. A method commonly used to determine the fair price of mineral property is the application of an appropriate rate of return on investments in mining operations to the anticipated earnings of the mining property. In effect, the investor is thus purchasing the right to receive future income. The rate of return which will be required on the investment is a function of the risk involved in any particular venture. Rates range from as low as 10 percent on deposits where the future is relatively secure to as high as 30 percent on properties of high risk. Here, the extent of the development, the established nature of the operation, and the thus far highly successful financial record, were all favorable factors. On these bases, plaintiffs contend that a return of no more than 15 percent would have been required by a pro *225 spective investor. However, in addition to tbe usual problems of such a hazardous venture as mining, this particular operation presented the challenging problem of mining at a profit of what was generally conceded to be, on an overall basis, a low-grade ore. In addition, there would necessarily be problems and risks involved in stepping up production from the then current annual production schedule of 100,000-120,000 tons to the prospective annual tonnage of approximately 462,500 tons, in order to achieve the proposed average annual operating profit of $578,000. For these reasons, 18 percent would appear to be a more appropriate capitalization rate.
138. Since, on the basis of mining to a depth of 1,000 feet, it is assumed that the mine would be fully depleted in 20 years, the value of the mineral property may be computed on the basis of the present value of an annuity for 20 years using a compound interest rate of 18 percent. At an annual average operating profit of $578,135, the value of the Tread-well mine in March 1888 would thus have been $3,094,583 ($578,135X5.3527). 17 Preproduction capital investment for development (calculated on the reasonable basis of 10 cents per ton) would be approximately $925,015 (9,250,153 tons anticipated to be recovered). Subtracting this sum from the total value of the mine leaves a value for the mineral resources, without improvements, of $2,169,568. 18
*226 139. AlasJea-Mexiccm Gold Mining Company. Omega, Mexican, Oro Fino, and Oro Fino No. 2 claims, which, were patented on September 18,1891 (which becomes the taking date for this property), were located between June 6, 1881 and October 1, 1888. They were situated on the southeast extension of the Treadwell vein. Corresponding millsites for the four claims were located along the Gastineau Channel in 1884. On January 2, 1886, John Treadwell, who had previously acquired title to all of the claims, deeded the Omega and Mexican claims to the Mexican Gold and Silver Mining Company and the Oro Fino and Oro Fino No. 2 claims to the Admiralty Gold and Silver Mining Company. The holdings of the two companies were consolidated on April 24, 1889, and on March 2, 1892, were deeded, for $999,960 in stock of the company, to the Alaska-Mexican Gold Mining Company, a Minnesota corporation under which the mine operated until closed in 1917. In a 500-ton mill test in 1891 the ore was found to contain $7 per ton in gold and to 'be similar to the ore of the Paris.
140. The Mexican mine was recognized in 1890 as being 3,700 feet in length with an average vein width of 45 feet. The vein was opened by an 800-foot crosscut tunnel from which a 900-foot drift ran northwest in the vein. The southeast drift was 500 feet long. The tunnel was connected with the surface by a shaft 140 feet deep. The average elevation of the ledge was approximately 190 feet. These factors, plus the measurement of three surface pits and the tunnel level, indicated the average length of commercial mineralization to be 750 feet, and the average width of the vein to be from 35 to 45 feet. Considering the narrower width and a factor of 13 cubic feet of ore in place per ton, the mine dimensions indicated 2,019 tons per vertical foot of depth. 19
141. By the end of 1891 the Treadwell mine had extended the workings 120 feet 'below the haulage tunnel, exposing the vein to a depth of 370 feet. With this additional information, the ore bodies on the Treadwell structure could be pro-j eoted to depth with more assurance. The grade of ore in the *227 Mexican mine, as based on the 500-ton test made in 1891, indicated gold values higher than at the Treadwell mine. This small tonnage, however, could not be considered to be representative and the assumption of a grade similar to that established by production at the Treadwell would have been more reasonable. Mining costs as established at the Treadwell mine would reasonably have been considered to be applicable to the Mexican mine.
142. From the above information, which was available by September 18,1891, the following estimates could reasonably be projected:
Total tons of ore indicated to a depth of 1,000 feet- 2, 019,000
Anticipated recovery (80%)- 1, 615,200
Yield per ton_ $3. 00
Total yield_§4, 845,600
To
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