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<br />Some light is thrown on this area of concern by the preliminary findings <br />of the Resources for the Future study of the cost of copper since 1870. <br />The specific results apply only to copper, but the general approach of the <br />study should be of interest for the investigation of cost changes of <br />other resource products. <br />The study is essentially historical, and dues not deal directly with the <br />possibility of rising costs in the future. But an assessment of future <br />prospects must rest on understanding of the past. It is to the furthering <br />of this end that the study has heen directed. <br /> <br />How can change in cost be measured? Direct approaches to the measure- <br />ment of changes in the cost of copper-such as studying changes in the <br />grade of ore or calculating costs from data based on the accounting state- <br />ments of copper companies--are beset with serious difficulties. These arc <br />so great that it was felt an indirect approach would be more fruitful, <br />namely, to take the change in the price of copper relative to prices of <br />other goods as an indication of change in the cost of copper relative to the <br />cost of producing other goods. <br />\Vhile this indirect approach eliminates some difficulties, it raises still <br />others, with the result that the indirect approach turns out to be far from <br />simple in application. In the case of copper an investigation of various <br />aspects of the history of the industry is necessary to permit the approach <br />to be used at all. <br />As an example of a simple approach to the problem consider use of the <br />grade of ore as an indicator of cost change. In the United States there <br />has been a comparatively steady decline in the grade of copper ore mined <br />since the Civil \Var. In the 1860's, grade was probably over 8 per cent. <br />Thereafter it moved downward, reaching 2 per cent in the first decade of <br />this century, 1 per cent in the 1940's, and 0.8 per cent in the first seven <br />years of the present decade. <br />Does so large a decline in the grade of ore clearly indicate an increase <br />in the cost of copper? Under certain conditions it could, but these <br />conditions have never been present. Because the grade of ore is only one <br />of many factors that determine the cost of getting copper from a deposit, <br />the cost may rise with no change in grade. It is even possible-and there <br />are many examples-that production from a deposit of high. grade ore is <br />more costly than from a lower grade deposit. Also, an observed decline <br />in grade of ore may be the result of technological progress that makes it <br />possible to produce a grade of ore whose former costs were so high that it <br />was not mined at all. \Ve should not want to say that cost had increased <br />in this case. <br />Another way to measure the cost of producing copper would be to go <br /> <br />33 <br />