OUTPUT GIVING LEAST PRODUCTION COST.—As one of the most important objectives is to work the ore at the least cost per ton, it is not difficult to demonstrate that the minimum working costs can be obtained only by the most intensive production. To prove this, it need only be remembered that the working expenses of a mine are of two sorts: one is a factor of the tonnage handled, such as stoping and ore-dressing; the other is wholly or partially dependent upon time. A large number of items are of this last order. Pumping and head-office expenses are almost entirely charges independent of the tonnage handled. Superintendence and staff salaries and the like are in a large proportion dependent upon time. Many other elements of expense, such as the number of engine-drivers, etc., do not increase proportionately to increase in tonnage. These charges, or the part of them dependent upon time apart from tonnage, may be termed the "fixed charges."

There is another fixed charge more obscure yet no less certain. Ore standing in a mine is like money in a bank drawing no interest, and this item of interest may be considered a "fixed charge," for if the ore were realized earlier, this loss could be partially saved. This subject is further referred to under "Amortization."

If, therefore, the time required to exhaust the mine be prolonged by the failure to maintain the maximum output, the total cost of working it will be greater by the fixed charges over such an increased period. Conversely, by equipping on a larger scale, the mine will be exhausted more quickly, a saving in total cost can be made, and the ultimate profit can be increased by an amount corresponding to the time saved from the ravages of fixed charges. In fine, the working costs may be reduced by larger operations, and therefore the value of the mine increased.

The problem in practice usually takes the form of the relative superiority of more or of fewer units of plant, and it can be considered in more detail if the production be supposed to consist of units averaging say 100 tons per day each. The advantage of more units over less will be that the extra ones can be produced free of fixed charges, for these are an expense already involved in the lesser units. This extra production will also enjoy the interest which can be earned over the period of its earlier production. Moreover, operations on a larger scale result in various minor economies throughout the whole production, not entirely included in the type of expenditure mentioned as "fixed charges." We may call these various advantages the "saving of fixed charges" due to larger-scale operations. The saving of fixed charges amounts to very considerable sums. In general the items of working cost alone, mentioned above, which do not increase proportionately to the tonnage, aggregate from 10 to 25% of the total costs. Where much pumping is involved, the percentage will become even greater.

The question of the value of the mine as affected by the volume of output becomes very prominent in low-grade mines, where, if equipped for output on too small a scale, no profits at all could be earned, and a sufficient production is absolutely imperative for any gain. There are many mines in every country which with one-third of their present rate of production would lose money. That is, the fixed charges, if spread over small output, would be so great per ton that the profit would be extinguished by them.

In the theoretical view, therefore, it would appear clear that the greatest ultimate profit from a mine can be secured only by ore extraction under the highest pressure. As a corollary to this it follows that development must proceed with the maximum speed. Further, it follows that the present value of a mine is at least partially a factor of the volume of output contemplated.

FACTORS LIMITING THE OUTPUT.

Although the above argument can be academically defended, there are, as said at the start, practical limitations to the maximum intensity of production, arising out of many other considerations to which weight must be given. In the main, there are five principal limitations:—

1. Cost of equipment. 2. Life of the mine. 3. Mechanical inefficiency of patchwork plant. 4. Overproduction of base metal. 5. Security of investment.

COST OF EQUIPMENT.—The "saving of fixed charges" can only be obtained by larger equipment, which represents an investment. Mining works, shafts, machinery, treatment plants, and all the paraphernalia cost large sums of money. They become either worn out or practically valueless through the exhaustion of the mines. Even surface machinery when in good condition will seldom realize more than one-tenth of its expense if useless at its original site. All mines are ephemeral; therefore virtually the entire capital outlay of such works must be redeemed during the life of the mine, and the interest on it must also be recovered.

The certain life, with the exception of banket and a few other types of deposit, is that shown by the ore in sight, plus something for extension of the deposit beyond exposures. So, against the "savings" to be made, must be set the cost of obtaining them, for obviously it is of no use investing a dollar to save a total of ninety cents. The economies by increased production are, however, of such an important character that the cost of almost any number of added units (within the ability of the mine to supply them) can be redeemed from these savings in a few years. For instance, in a Californian gold mine where the working expenses are $3 and the fixed charges are at the low rate of 30 cents per ton, one unit of increased production would show a saving of over $10,000 per annum from the saving of fixed charges. In about three years this sum would repay the cost of the additional treatment equipment. If further shaft capacity were required, the period would be much extended. On a Western copper mine, where the costs are $8 and the fixed charges are 80 cents per ton, one unit of increased production would effect a saving of the fixed charges equal to the cost of the extra unit in about three years. That is, the total sum would amount to $80,000, or enough to provide almost any type of mechanical equipment for such additional tonnage.

The first result of vigorous development is to increase the ore in sight,—the visible life of the mine. When such visible life has been so lengthened that the period in which the "saving of fixed charges" will equal the amount involved in expansion of equipment, then from the standpoint of this limitation only is the added installation justified. The equipment if expanded on this practice will grow upon the heels of rapid development until the maximum production from the mine is reached, and a kind of equilibrium establishes itself.

Conversely, this argument leads to the conclusion that, regardless of other considerations, an equipment, and therefore output, should not be expanded beyond the redemption by way of "saving from fixed charges" of the visible or certain life of the mine. In those mines, such as at the Witwatersrand, where there is a fairly sound assurance of definite life, it is possible to calculate at once the size of plant which by saving of "fixed charges" will be eventually the most economical, but even here the other limitations step in to vitiate such policy of management,—chiefly the limitation through security of investment.

LIFE OF THE MINE.—If carried to its logical extreme, the above program means a most rapid exhaustion of the mine. The maximum output will depend eventually upon the rapidity with which development work may be extended. As levels and other subsidiary development openings can be prepared in inclined deposits much more quickly than the shaft can be sunk, the critical point is the shaft-sinking. As a shaft may by exertion be deepened at least 400 feet a year on a going mine, the provision of an equipment to eat up the ore-body at this rate of sinking means very early exhaustion indeed. In fact, had such a theory of production been put into practice by our forefathers, the mining profession might find difficulty in obtaining employment to-day. Such rapid exhaustion would mean a depletion of the mineral resources of the state at a pace which would be alarming.

MECHANICAL INEFFICIENCY OF PATCHWORK PLANT.—Mine equipments on speculative mines (the vast majority) are often enough patchwork, for they usually grow from small beginnings; but any scheme of expansion based upon the above doctrine would need to be modified to the extent that additions could be in units large in ratio to previous installations, or their patchwork character would be still further accentuated. It would be impossible to maintain mechanical efficiency under detail expansion.

OVERPRODUCTION OF BASE METAL.—Were this intensity of production of general application to base metal mines it would flood the markets, and, by an overproduction of metal depress prices to a point where the advantages of such large-scale operations would quickly vanish. The theoretical solution in this situation would be, if metals fell below normal prices, let the output be reduced, or let the products be stored until the price recovers. From a practical point of view either alternative is a policy difficult to face.

In the first case, reduction of output means an increase of working expenses by the spread of fixed charges over less tonnage, and this in the face of reduced metal prices. It may be contended, however, that a falling metal market is usually the accompaniment of a drop in all commodities, wherefore working costs can be reduced somewhat in such times of depression, thereby partially compensating the other elements making for increased costs. Falls in commodities are also the accompaniment of hard times. Consideration of one's workpeople and the wholesale slaughter of dividends to the then needy stockholders, resulting from a policy of reduced production, are usually sufficient deterrents to diminished output.

The second alternative, that of storing metal, means equally a loss of dividends by the investment of a large sum in unrealized products, and the interest on this sum. The detriment to the market of large amounts of unsold metal renders such a course not without further disadvantages.

SECURITY OF INVESTMENT.—Another point of view antagonistic to such wholesale intensity of production, and one worthy of careful consideration, is that of the investor in mines. The root-value of mining stocks is, or should be, the profit in sight. If the policy of greatest economy in production costs be followed as outlined above, the economic limit of ore-reserves gives an apparently very short life, for the ore in sight will never represent a life beyond the time required to justify more plant. Thus the "economic limit of ore in reserve" will be a store equivalencing a period during which additional equipment can be redeemed from the "saving of fixed charges," or three or four years, usually.

The investor has the right to say that he wants the guarantee of longer life to his investment,—he will in effect pay insurance for it by a loss of some ultimate profit. That this view, contradictory to the economics of the case, is not simply academic, can be observed by any one who studies what mines are in best repute on any stock exchange. All engineers must wish to have the industry under them in high repute. The writer knows of several mines paying 20% on their stocks which yet stand lower in price on account of short ore-reserves than mines paying less annual returns. The speculator, who is an element not to be wholly disregarded, wishes a rise in his mining stock, and if development proceeds at a pace in advance of production, he will gain a legitimate rise through the increase in ore-reserves.

The investor's and speculator's idea of the desirability of a proved long life readily supports the technical policy of high-pressure development work, but not of expansion of production, for they desire an increasing ore-reserve. Even the metal operator who is afraid of overproduction does not object to increased ore-reserves. On the point of maximum intensity of development work in a mine all views coincide. The mining engineer, if he takes a Machiavellian view, must agree with the investor and the metal dealer, for the engineer is a "fixed charge" the continuance of which is important to his daily needs.

The net result of all these limitations is therefore an invariable compromise upon some output below the possible maximum. The initial output to be contemplated is obviously one upon which the working costs will be low enough to show a margin of profit. The medium between these two extremes is determinable by a consideration of the limitations set out,—and the cash available. When the volume of output is once determined, it must be considered as a factor in valuation, as discussed under "Amortization."



CHAPTER XVI.

Administration.

LABOR EFFICIENCY; SKILL; INTELLIGENCE; APPLICATION COORDINATION; CONTRACT WORK; LABOR UNIONS; REAL BASIS OF WAGES.

The realization from a mine of the profits estimated from the other factors in the case is in the end dependent upon the management. Good mine management is based upon three elementals: first, sound engineering; second, proper coordination and efficiency of every human unit; third, economy in the purchase and consumption of supplies.

The previous chapters have been devoted to a more or less extended exposition of economic engineering. While the second and third requirements are equally important, they range in many ways out of the engineering and into the human field. For this latter reason no complete manual will ever be published upon "How to become a Good Mine Manager."

It is purposed, however, to analyze some features of these second and third fundamentals, especially in their interdependent phases, and next to consider the subject of mine statistics, for the latter are truly the microscopes through which the competence of the administration must be examined.

The human units in mine organization can be divided into officers and men. The choice of mine officers is the assembling of specialized brains. Their control, stimulation, and inspiration is the main work of the administrative head. Success in the selection and control of staff is the index of executive ability. There are no mathematical, mechanical, or chemical formulas for dealing with the human mind or human energies.

LABOR.—The whole question of handling labor can be reduced to the one term "efficiency." Not only does the actual labor outlay represent from 60 to 70% of the total underground expenses, but the capacity or incapacity of its units is responsible for wider fluctuations in production costs than the bare predominance in expenditure might indicate. The remaining expense is for supplies, such as dynamite, timber, steel, power, etc., and the economical application of these materials by the workman has the widest bearing upon their consumption.

Efficiency of the mass is the resultant of that of each individual under a direction which coordinates effectively all units. The lack of effectiveness in one individual diminishes the returns not simply from that man alone; it lowers the results from numbers of men associated with the weak member through the delaying and clogging of their work, and of the machines operated by them. Coordination of work is a necessary factor of final efficiency. This is a matter of organization and administration. The most zealous stoping-gang in the world if associated with half the proper number of truckers must fail to get the desired result.

Efficiency in the single man is the product of three factors,—skill, intelligence, and application. A great proportion of underground work in a mine is of a type which can be performed after a fashion by absolutely unskilled and even unintelligent men, as witness the breaking-in of savages of low average mentality, like the South African Kaffirs. Although most duties can be performed by this crudest order of labor, skill and intelligence can be applied to it with such economic results as to compensate for the difference in wage. The reason for this is that the last fifty years have seen a substitution of labor-saving machines for muscle. Such machines displace hundreds of raw laborers. Not only do they initially cost large sums, but they require large expenditure for power and up-keep. These fixed charges against the machine demand that it shall be worked at its maximum. For interest, power, and up-keep go on in any event, and the saving on crude labor displaced is not so great but that it quickly disappears if the machine is run under its capacity. To get its greatest efficiency, a high degree of skill and intelligence is required. Nor are skill and intelligence alone applicable to labor-saving devices themselves, because drilling and blasting rock and executing other works underground are matters in which experience and judgment in the individual workman count to the highest degree.

How far skill affects production costs has had a thorough demonstration in West Australia. For a time after the opening of those mines only a small proportion of experienced men were obtainable. During this period the rock broken per man employed underground did not exceed the rate of 300 tons a year. In the large mines it has now, after some eight years, attained 600 to 700 tons.

How far intelligence is a factor indispensable to skill can be well illustrated by a comparison of the results obtained from working labor of a low mental order, such as Asiatics and negroes, with those achieved by American or Australian miners. In a general way, it may be stated with confidence that the white miners above mentioned can, under the same physical conditions, and with from five to ten times the wage, produce the same economic result,—that is, an equal or lower cost per unit of production. Much observation and experience in working Asiatics and negroes as well as Americans and Australians in mines, leads the writer to the conclusion that, averaging actual results, one white man equals from two to three of the colored races, even in the simplest forms of mine work such as shoveling or tramming. In the most highly skilled branches, such as mechanics, the average ratio is as one to seven, or in extreme cases even eleven. The question is not entirely a comparison of bare efficiency individually; it is one of the sum total of results. In mining work the lower races require a greatly increased amount of direction, and this excess of supervisors consists of men not in themselves directly productive. There is always, too, a waste of supplies, more accidents, and more ground to be kept open for accommodating increased staff, and the maintenance of these openings must be paid for. There is an added expense for handling larger numbers in and out of the mine, and the lower intelligence reacts in many ways in lack of coordination and inability to take initiative. Taking all divisions of labor together, the ratio of efficiency as measured in amount of output works out from four to five colored men as the equivalent of one white man of the class stated. The ratio of costs, for reasons already mentioned, and in other than quantity relation, figures still more in favor of the higher intelligence.

The following comparisons, which like all mine statistics must necessarily be accepted with reservation because of some dissimilarity of economic surroundings, are yet on sufficiently common ground to demonstrate the main issue,—that is, the bearing of inherent intelligence in the workmen and their consequent skill. Four groups of gold mines have been taken, from India, West Australia, South Africa, and Western America. All of those chosen are of the same stoping width, 4 to 5 feet. All are working in depth and with every labor-saving device available. All dip at about the same angle and are therefore in much the same position as to handling rock. The other conditions are against the white-manned mines and in favor of the colored. That is, the Indian mines have water-generated electric power and South Africa has cheaper fuel than either the American or Australian examples. In both the white-manned groups, the stopes are supported, while in the others no support is required.

======================================================================= Tons of Average Tons Material Number of Men per Cost per Group of Mines Excavated Employed Man Ton of over Period - per Material Compiled[5] Colored White Annum Broken - - - - Four Kolar mines[1] 963,950 13,611 302 69.3 $3.85 Six Australian mines[2] 1,027,718 1,534 669.9 2.47 Three Witwatersrand mines[3] 2,962,640 13,560 1,595 195.5 2.68 Five American mines[4] 1,089,500 1,524 713.3 1.92 =======================================================================

[Footnote 1: Indian wages average about 20 cents per day.]

[Footnote 2: White men's wages average about $3 per day.]

[Footnote 3: About two-fifths of the colored workers were negroes, and three-fifths Chinamen. Negroes average about 60 cents, and Chinamen about 45 cents per day, including keep.]

[Footnote 4: Wages about $3.50. Tunnel entry in two mines.]

[Footnote 5: Includes rock broken in development work.

In the case of the specified African mines, the white labor is employed almost wholly in positions of actual or semi-superintendence, such as one white man in charge of two or three drills.

In the Indian case, in addition to the white men who are wholly in superintendence, there were of the natives enumerated some 1000 in positions of semi-superintendence, as contractors or headmen, working-gangers, etc.]

One issue arises out of these facts, and that is that no engineer or investor in valuing mines is justified in anticipating lower costs in regions where cheap labor exists.

In supplement to sheer skill and intelligence, efficiency can be gained only by the application of the man himself. A few months ago a mine in California changed managers. The new head reduced the number employed one-third without impairing the amount of work accomplished. This was not the result of higher skill or intelligence in the men, but in the manager. Better application and coordination were secured from the working force. Inspiration to increase of exertion is created less by "driving" than by recognition of individual effort, in larger pay, and by extending justifiable hope of promotion. A great factor in the proficiency of the mine manager is his ability to create an esprit-de-corps through the whole staff, down to the last tool boy. Friendly interest in the welfare of the men and stimulation by competitions between various works and groups all contribute to this end.

CONTRACT WORK.—The advantage both to employer and employed of piece work over wage needs no argument. In a general way, contract work honorably carried out puts a premium upon individual effort, and thus makes for efficiency. There are some portions of mine work which cannot be contracted, but the development, stoping, and trucking can be largely managed in this way, and these items cover 65 to 75% of the total labor expenditure underground.

In development there are two ways of basing contracts,—the first on the footage of holes drilled, and the second on the footage of heading advanced. In contract-stoping there are four methods depending on the feet of hole drilled, on tonnage, on cubic space, and on square area broken.

All these systems have their rightful application, conditioned upon the class of labor and character of the deposit.

In the "hole" system, the holes are "pointed" by some mine official and are blasted by a special crew. The miner therefore has little interest in the result of the breaking. If he is a skilled white man, the hours which he has wherein to contemplate the face usually enable him to place holes to better advantage than the occasional visiting foreman. With colored labor, the lack of intelligence in placing holes and blasting usually justifies contracts per "foot drilled." Then the holes are pointed and blasted by superintending men.

On development work with the foot-hole system, unless two working faces can be provided for each contracting party, they are likely to lose time through having finished their round of holes before the end of the shift. As blasting must be done outside the contractor's shifts, it means that one shift per day must be set aside for the purpose. Therefore not nearly such progress can be made as where working the face with three shifts. For these reasons, the "hole" system is not so advantageous in development as the "foot of advance" basis.

In stoping, the "hole" system has not only a wider, but a sounder application. In large ore-bodies where there are waste inclusions, it has one superiority over any system of excavation measurement, namely, that the miner has no interest in breaking waste into the ore.

The plan of contracting stopes by the ton has the disadvantage that either the ore produced by each contractor must be weighed separately, or truckers must be trusted to count correctly, and to see that the cars are full. Moreover, trucks must be inspected for waste,—a thing hard to do underground. So great are these detailed difficulties that many mines are sending cars to the surface in cages when they should be equipped for bin-loading and self-dumping skips.

The method of contracting by the cubic foot of excavation saves all necessity for determining the weight of the output of each contractor. Moreover, he has no object in mixing waste with the ore, barring the breaking of the walls. This system therefore requires the least superintendence, permits the modern type of hoisting, and therefore leaves little justification for the survival of the tonnage basis.

Where veins are narrow, stoping under contract by the square foot or fathom measured parallel to the walls has an advantage. The miner has no object then in breaking wall-rock, and the thoroughness of the ore-extraction is easily determined by inspection.

BONUS SYSTEMS.—By giving cash bonuses for special accomplishment, much the same results can be obtained in some departments as by contracting. A bonus per foot of heading gained above a minimum, or an excess of trucks trammed beyond a minimum, or prizes for the largest amount done during the week or month in special works or in different shifts,—all these have a useful application in creating efficiency. A high level of results once established is easily maintained.

LABOR UNIONS.—There is another phase of the labor question which must be considered and that is the general relations of employer and employed. In these days of largely corporate proprietorship, the owners of mines are guided in their relations with labor by engineers occupying executive positions. On them falls the responsibility in such matters, and the engineer becomes thus a buffer between labor and capital. As corporations have grown, so likewise have the labor unions. In general, they are normal and proper antidotes for unlimited capitalistic organization.

Labor unions usually pass through two phases. First, the inertia of the unorganized labor is too often stirred only by demagogic means. After organization through these and other agencies, the lack of balance in the leaders often makes for injustice in demands, and for violence to obtain them and disregard of agreements entered upon. As time goes on, men become educated in regard to the rights of their employers, and to the reflection of these rights in ultimate benefit to labor itself. Then the men, as well as the intelligent employer, endeavor to safeguard both interests. When this stage arrives, violence disappears in favor of negotiation on economic principles, and the unions achieve their greatest real gains. Given a union with leaders who can control the members, and who are disposed to approach differences in a business spirit, there are few sounder positions for the employer, for agreements honorably carried out dismiss the constant harassments of possible strikes. Such unions exist in dozens of trades in this country, and they are entitled to greater recognition. The time when the employer could ride roughshod over his labor is disappearing with the doctrine of "laissez faire," on which it was founded. The sooner the fact is recognized, the better for the employer. The sooner some miners' unions develop from the first into the second stage, the more speedily will their organizations secure general respect and influence.[*]

[Footnote *: Some years of experience with compulsory arbitration in Australia and New Zealand are convincing that although the law there has many defects, still it is a step in the right direction, and the result has been of almost unmixed good to both sides. One of its minor, yet really great, benefits has been a considerable extinction of the parasite who lives by creating violence.]

The crying need of labor unions, and of some employers as well, is education on a fundamental of economics too long disregarded by all classes and especially by the academic economist. When the latter abandon the theory that wages are the result of supply and demand, and recognize that in these days of international flow of labor, commodities and capital, the real controlling factor in wages is efficiency, then such an educational campaign may become possible. Then will the employer and employee find a common ground on which each can benefit. There lives no engineer who has not seen insensate dispute as to wages where the real difficulty was inefficiency. No administrator begrudges a division with his men of the increased profit arising from increased efficiency. But every administrator begrudges the wage level demanded by labor unions whose policy is decreased efficiency in the false belief that they are providing for more labor.



CHAPTER XVII.

Administration (Continued).

ACCOUNTS AND TECHNICAL DATA AND REPORTS; WORKING COSTS; DIVISION OF EXPENDITURE; INHERENT LIMITATIONS IN ACCURACY OF WORKING COSTS; WORKING COST SHEETS. GENERAL TECHNICAL DATA; LABOR, SUPPLIES, POWER, SURVEYS, SAMPLING, AND ASSAYING.

First and foremost, mine accounts are for guidance in the distribution of expenditure and in the collection of revenue; secondly, they are to determine the financial progress of the enterprise, its profit or loss; and thirdly, they are to furnish statistical data to assist the management in its interminable battle to reduce expenses and increase revenue, and to enable the owner to determine the efficiency of his administrators. Bookkeeping per se is no part of this discussion. The fundamental purpose of that art is to cover the first two objects, and, as such, does not differ from its application to other commercial concerns.

In addition to these accounting matters there is a further type of administrative report of equal importance—that is the periodic statements as to the physical condition of the property, the results of exploration in the mine, and the condition of the equipment.

ACCOUNTS.

The special features of mine accounting reports which are a development to meet the needs of this particular business are the determination of working costs, and the final presentation of these data in a form available for comparative purposes.

The subject may be discussed under:—

1. Classes of mine expenditure. 2. Working costs. 3. The dissection of expenditures departmentally. 4. Inherent limitations in the accuracy of working costs. 5. Working cost sheets.

In a wide view, mine expenditures fall into three classes, which maybe termed the "fixed charges," "proportional charges," and "suspense charges" or "capital expenditure." "Fixed charges" are those which, like pumping and superintendence, depend upon time rather than tonnage and material handled. They are expenditures that would not decrease relatively to output. "Proportional charges" are those which, like ore-breaking, stoping, supporting stopes, and tramming, are a direct coefficient of the ore extracted. "Suspense charges" are those which are an indirect factor of the cost of the ore produced, such as equipment and development. These expenditures are preliminary to output, and they thus represent a storage of expense to be charged off when the ore is won. This outlay is often called "capital expenditure." Such a term, though in common use, is not strictly correct, for the capital value vanishes when the ore is extracted, but in conformity with current usage the term "capital expenditure" will be adopted.

Except for the purpose of special inquiry, such as outlined under the chapter on "Ratio of Output," "fixed charges" are not customarily a special division in accounts. In a general way, such expenditures, combined with the "proportional charges," are called "revenue expenditure," as distinguished from the capital, or "suspense," expenditures. In other words, "revenue" expenditures are those involved in the daily turnover of the business and resulting in immediate returns. The inherent difference in character of revenue and capital expenditures is responsible for most of the difficulties in the determination of working costs, and most of the discussion on the subject.

WORKING COSTS.—"Working costs" are a division of expenditure for some unit,—the foot of opening, ton of ore, a pound of metal, cubic yard or fathom of material excavated, or some other measure. The costs per unit are usually deduced for each month and each year. They are generally determined for each of the different departments of the mine or special works separately. Further, the various sorts of expenditure in these departments are likewise segregated.

In metal mining the ton is the universal unit of distribution for administrative purpose, although the pound of metal is often used to indicate final financial results. The object of determination of "working costs" is fundamentally for comparative purposes. Together with other technical data, they are the nerves of the administration, for by comparison of detailed and aggregate results with other mines and internally in the same mine, over various periods and between different works, a most valuable check on efficiency is possible. Further, there is one collateral value in all statistical data not to be overlooked, which is that the knowledge of its existence induces in the subordinate staff both solicitude and emulation.

The fact must not be lost sight of, however, that the wide variations in physical and economic environment are so likely to vitiate conclusions from comparisons of statistics from two mines or from two detailed works on the same mine, or even from two different months on the same work, that the greatest care and discrimination are demanded in their application. Moreover, the inherent difficulties in segregating and dividing the accounts which underlie such data, render it most desirable to offer some warning regarding the limits to which segregation and division may be carried to advantage.

As working costs are primarily for comparisons, in order that they may have value for this purpose they must include only such items of expenditure as will regularly recur. If this limitation were more generally recognized, a good deal of dispute and polemics on the subject might be saved. For this reason it is quite impossible that all the expenditure on the mine should be charged into working costs, particularly some items that arise through "capital expenditure."

THE DISSECTION OF EXPENDITURES DEPARTMENTALLY.—The final division in the dissection of the mine expenditure is in the main:—

/(1) General Expenses. / Ore-breaking. Supporting Stopes. Various Revenue.< (2) Ore Extraction. < Trucking Ore. expenditures Hoisting. for labor, (3) Pumping. supplies, power, / Shaft-sinking. repairs, etc., Station-cutting. > worked out per Crosscutting. ton or foot /(4) Development. < Driving. advanced Capital Rising. over each or < Winzes. department. Suspense. Diamond Drilling. / (5) Construction and Various Works. Equipment. /

The detailed dissection of expenditures in these various departments with view to determine amount of various sorts of expenditure over the department, or over some special work in that department, is full of unsolvable complications. The allocation of the direct expenditure of labor and supplies applied to the above divisions or special departments in them, is easily accomplished, but beyond this point two sorts of difficulties immediately arise and offer infinite field for opinion and method. The first of these difficulties arises from supplementary departments on the mine, such as "power," "repairs and maintenance," "sampling and assaying." These departments must be "spread" over the divisions outlined above, for such charges are in part or whole a portion of the expense of these divisions. Further, all of these "spread" departments are applied to surface as well as to underground works, and must be divided not only over the above departments but also over the surface departments,—not under discussion here. The common method is to distribute "power" on a basis of an approximation of the amount used in each department; to distribute "repairs and maintenance," either on a basis of shop returns, or a distribution over all departments on the basis of the labor employed in those departments, on the theory that such repairs arise in this proportion; to distribute sampling and assaying over the actual points to which they relate at the average cost per sample or assay.

"General expenses," that is, superintendence, etc., are often not included in the final departments as above, but are sometimes "spread" in an attempt to charge a proportion of superintendence to each particular work. As, however, such "spreading" must take place on the basis of the relative expenditure in each department, the result is of little value, for such a basis does not truly represent the proportion of general superintendence, etc., devoted to each department. If they are distributed over all departments, capital as well as revenue, on the basis of total expenditure, they inflate the "capital expenditure" departments against a day of reckoning when these charges come to be distributed over working costs. Although it may be contended that the capital departments also require supervision, such a practice is a favorite device for showing apparently low working costs in the revenue departments. The most courageous way is not to distribute general expenses at all, but to charge them separately and directly to revenue accounts and thus wholly into working costs.

The second problem is to reduce the "suspense" or capital charges to a final cost per ton, and this is no simple matter. Development expenditures bear a relation to the tonnage developed and not to that extracted in any particular period. If it is desired to preserve any value for comparative purposes in the mining costs, such outlay must be charged out on the basis of the tonnage developed, and such portion of the ore as is extracted must be written off at this rate; otherwise one month may see double the amount of development in progress which another records, and the underground costs would be swelled or diminished thereby in a way to ruin their comparative value from month to month. The ore developed cannot be satisfactorily determined at short intervals, but it can be known at least annually, and a price may be deduced as to its cost per ton. In many mines a figure is arrived at by estimating ore-reserves at the end of the year, and this figure is used during the succeeding year as a "redemption of development" and as such charged to working costs, and thus into revenue account in proportion to the tonnage extracted. This matter is further elaborated in some mines, in that winzes and rises are written off at one rate, levels and crosscuts at another, and shafts at one still lower, on the theory that they lost their usefulness in this progression as the ore is extracted. This course, however, is a refinement hardly warranted.

Plant and equipment constitute another "suspense" account even harder to charge up logically to tonnage costs, for it is in many items dependent upon the life of the mine, which is an unknown factor. Most managers debit repairs and maintenance directly to the revenue account and leave the reduction of the construction outlay to an annual depreciation on the final balance sheet, on the theory that the plant is maintained out of costs to its original value. This subject will be discussed further on.

INHERENT LIMITATIONS IN ACCURACY OF WORKING COSTS.—There are three types of such limitations which arise in the determination of costs and render too detailed dissection of such costs hopeless of accuracy and of little value for comparative purposes. They are, first, the difficulty of determining all of even direct expenditure on any particular crosscut, stope, haulage, etc.; second, the leveling effect of distributing the "spread" expenditures, such as power, repairs, etc.; and third, the difficulties arising out of the borderland of various departments.

Of the first of these limitations the instance may be cited that foremen and timekeepers can indicate very closely the destination of labor expense, and also that of some of the large items of supply, such as timber and explosives, but the distribution of minor supplies, such as candles, drills, picks, and shovels, is impossible of accurate knowledge without an expense wholly unwarranted by the information gained. To determine at a particular crosscut the exact amount of steel, and of tools consumed, and the cost of sharpening them, would entail their separate and special delivery to the same place of attack and a final weighing-up to learn the consumption.

Of the second sort of limitations, the effect of "spread" expenditure, the instance may be given that the repairs and maintenance are done by many men at work on timbers, tracks, machinery, etc. It is hopeless to try and tell how much of their work should be charged specifically to detailed points. In the distribution of power may be taken the instance of air-drills. Although the work upon which the drill is employed can be known, the power required for compression usually comes from a common power-plant, so that the portion of power debited to the air compressor is an approximation. The assumption of an equal consumption of air by all drills is a further approximation. In practice, therefore, many expenses are distributed on the theory that they arise in proportion to the labor employed, or the machines used in the various departments. The net result is to level down expensive points and level up inexpensive ones.

The third sort of limitation of accounting difficulty referred to, arises in determining into which department are actually to be allocated the charges which lie in the borderland between various primary classes of expenditure. For instance, in ore won from development,—in some months three times as much development may be in ore as in other months. If the total expense of development work which yields ore be charged to stoping account, and if cost be worked out on the total tonnage of ore hoisted, then the stoping cost deduced will be erratic, and the true figures will be obscured. On the other hand, if all development is charged to 'capital account' and the stoping cost worked out on all ore hoisted, it will include a fluctuating amount of ore not actually paid for by the revenue departments or charged into costs. This fluctuation either way vitiates the whole comparative value of the stoping costs. In the following system a compromise is reached by crediting "development" with an amount representing the ore won from development at the average cost of stoping, and by charging this amount into "stoping." A number of such questions arise where the proper division is simply a matter of opinion.

The result of all these limitations is that a point in detail is quickly reached where no further dissection of expenditure is justified, since it becomes merely an approximation. The writer's own impression is that without an unwarrantable number of accountants, no manager can tell with any accuracy the cost of any particular stope, or of any particular development heading. Therefore, aside from some large items, such detailed statistics, if given, are to be taken with great reserve.

WORKING COST SHEETS.—There are an infinite number of forms of working cost sheets, practically every manager having a system of his own. To be of greatest value, such sheets should show on their face the method by which the "spread" departments are handled, and how revenue and suspense departments are segregated. When too much detail is presented, it is but a waste of accounting and consequent expense. Where to draw the line in this regard is, however, a matter of great difficulty. No cost sheet is entirely satisfactory. The appended sheet is in use at a number of mines. It is no more perfect than many others. It will be noticed that the effect of this system is to throw the general expenses into the revenue expenditures, and as little as possible into the "suspense" account.

GENERAL TECHNICAL DATA.

For the purposes of efficient management, the information gathered under this head is of equal, if not superior, importance to that under "working costs." Such data fall generally under the following heads:—

LABOR.—Returns of the shifts worked in the various departments for each day and for the month; worked out on a monthly basis of footage progress, tonnage produced or tons handled per man; also where possible the footage of holes drilled, worked out per man and per machine.

SUPPLIES.—Daily returns of supplies used; the principal items worked out monthly in quantity per foot of progress, or per ton of ore produced.

POWER.—Fuel, lubricant, etc., consumed in steam production, worked out into units of steam produced, and this production allocated to the various engines. Where electrical power is used, the consumption of the various motors is set out.

SURVEYS.—The need of accurate plans requires no discussion. Aside from these, the survey-office furnishes the returns of development footage, measurements under contracts, and the like.

SAMPLING AND ASSAYING.—Mine sampling and assaying fall under two heads,—the determination of the value of standing ore, and of products from the mine. The sampling and assaying on a going mine call for the same care and method as in cases of valuation of the mine for purchase,—the details of which have been presented under "Mine Valuation,"—for through it, guidance must not only be had to the value of the mine and for reports to owners, but the detailed development and ore extraction depend on an absolute knowledge of where the values lie.



CHAPTER XVIII.

ADMINISTRATION (Concluded).

ADMINISTRATIVE REPORTS.

In addition to financial returns showing the monthly receipts, expenditures, and working costs, there must be in proper administration periodic reports from the officers of the mine to the owners or directors as to the physical progress of the enterprise. Such reports must embrace details of ore extraction, metal contents, treatment recoveries, construction of equipment, and the results of underground development. The value of mines is so much affected by the monthly or even daily result of exploration that reports of such work are needed very frequently,—weekly or even daily if critical work is in progress. These reports must show the width, length, and value of the ore disclosed.

The tangible result of development work is the tonnage and grade of ore opened up. How often this stock-taking should take place is much dependent upon the character of the ore. The result of exploration in irregular ore-bodies often does not, over short periods, show anything tangible in definite measurable tonnage, but at least annually the ore reserve can be estimated.

In mines owned by companies, the question arises almost daily as to how much of and how often the above information should be placed before stockholders (and therefore the public) by the directors. In a general way, any company whose shares are offered on the stock exchange is indirectly inviting the public to become partners in the business, and these partners are entitled to all the information which affects the value of their property and are entitled to it promptly. Moreover, mining is a business where competition is so obscure and so much a matter of indifference, that suppression of important facts in documents for public circulation has no justification. On the other hand, both the technical progress of the industry and its position in public esteem demand the fullest disclosure and greatest care in preparation of reports. Most stockholders' ignorance of mining technology and of details of their particular mine demands a great deal of care and discretion in the preparation of these public reports that they may not be misled. Development results may mean little or much, depending upon the location of the work done in relation to the ore-bodies, etc., and this should be clearly set forth.

The best opportunity of clear, well-balanced statements lies in the preparation of the annual report and accounts. Such reports are of three parts:—

1. The "profit and loss" account, or the "revenue account." 2. The balance sheet; that is, the assets and liabilities statement. 3. The reports of the directors, manager, and consulting engineer.

The first two items are largely matters of bookkeeping. They or the report should show the working costs per ton for the year. What must be here included in costs is easier of determination than in the detailed monthly cost sheets of the administration; for at the annual review, it is not difficult to assess the amount chargeable to development. Equipment expenditure, however, presents an annual difficulty, for, as said, the distribution of this item is a factor of the life of the mine, and that is unknown. If such a plant has been paid for out of the earnings, there is no object in carrying it on the company's books as an asset, and most well-conducted companies write it off at once. On the other hand, where the plant is paid for out of capital provided for the purpose, even to write off depreciation means that a corresponding sum of cash must be held in the company's treasury in order to balance the accounts,—in other words, depreciation in such an instance becomes a return of capital. The question then is one of policy in the company's finance, and in neither case is it a matter which can be brought into working costs and leave them any value for comparative purposes. Indeed, the true cost of working the ore from any mine can only be told when the mine is exhausted; then the dividends can be subtracted from the capital sunk and metal sold, and the difference divided over the total tonnage produced.

The third section of the report affords wide scope for the best efforts of the administration. This portion of the report falls into three divisions: (a) the construction and equipment work of the year, (b) the ore extraction and treatment, and (c) the results of development work.

The first requires a statement of the plant constructed, its object and accomplishment; the second a disclosure of tonnage produced, values, metallurgical and mechanical efficiency. The third is of the utmost importance to the stockholder, and is the one most often disregarded and obscured. Upon this hinges the value of the property. There is no reason why, with plans and simplicity of terms, such reports cannot be presented in a manner from which the novice can judge of the intrinsic position of the property. A statement of the tonnage of ore-reserves and their value, or of the number of years' supply of the current output, together with details of ore disclosed in development work, and the working costs, give the ground data upon which any stockholder who takes interest in his investment may judge for himself. Failure to provide such data will some day be understood by the investing public as a prima facie index of either incapacity or villainy. By the insistence of the many engineers in administration of mines upon the publication of such data, and by the insistence of other engineers upon such data for their clients before investment, and by the exposure of the delinquents in the press, a more practicable "protection of investors" can be reached than by years of academic discussion.



CHAPTER XIX.

The Amount of Risk in Mining Investments.

RISK IN VALUATION OF MINES; IN MINES AS COMPARED WITH OTHER COMMERCIAL ENTERPRISES.

From the constant reiteration of the risks and difficulties involved in every step of mining enterprise from the valuation of the mine to its administration as a going concern, the impression may be gained that the whole business is one great gamble; in other words, that the point whereat certainties stop and conjecture steps in is so vital as to render the whole highly speculative.

Far from denying that mining is, in comparison with better-class government bonds, a speculative type of investment, it is desirable to avow and emphasize the fact. But it is none the less well to inquire what degree of hazard enters in and how it compares with that in other forms of industrial enterprise.

Mining business, from an investment view, is of two sorts,—prospecting ventures and developed mines; that is, mines where little or no ore is exposed, and mines where a definite quantity of ore is measurable or can be reasonably anticipated. The great hazards and likewise the Aladdin caves of mining are mainly confined to the first class. Although all mines must pass through the prospecting stage, the great industry of metal production is based on developed mines, and it is these which should come into the purview of the non-professional investor. The first class should be reserved invariably for speculators, and a speculator may be defined as one who hazards all to gain much. It is with mining as an investment, however, that this discussion is concerned.

RISK IN VALUATION OF MINES.—Assuming a competent collection of data and efficient management of the property, the risks in valuing are from step to step:—

1. The risk of continuity in metal contents beyond sample faces. 2. The risk of continuity in volume through the blocks estimated. 3. The risk of successful metallurgical treatment. 4. The risk of metal prices, in all but gold. 5. The risk of properly estimating costs. 6. The risk of extension of the ore beyond exposures. 7. The risk of management.

As to the continuity of values and volumes through the estimated area, the experience of hundreds of engineers in hundreds of mines has shown that when the estimates are based on properly secured data for "proved ore," here at least there is absolutely no hazard. Metallurgical treatment, if determined by past experience on the ore itself, carries no chance; and where determined by experiment, the risk is eliminated if the work be sufficiently exhaustive. The risk of metal price is simply a question of how conservative a figure is used in estimating. It can be eliminated if a price low enough be taken. Risk of extension in depth or beyond exposures cannot be avoided. It can be reduced in proportion to the distance assumed. Obviously, if no extension is counted, there is nothing chanced. The risk of proper appreciation of costs is negligible where experience in the district exists. Otherwise, it can be eliminated if a sufficiently large allowance is taken. The risk of failure to secure good management can be eliminated if proved men are chosen.

There is, therefore, a basic value to every mine. The "proved" ore taken on known metallurgical grounds, under known conditions of costs on minimum prices of metals, has a value as certain as that of money in one's own vault. This is the value previously referred to as the "A" value. If the price (and interest on it pending recovery) falls within this amount, there is no question that the mine is worth the price. What the risk is in mining is simply what amount the price of the investment demands shall be won from extension of the deposit beyond known exposures, or what higher price of metal must be realized than that calculated in the "A" value. The demands on this X, Y portion of the mine can be converted into tons of ore, life of production, or higher prices, and these can be weighed with the geological weights and the industrial outlook.

MINES COMPARED TO OTHER COMMERCIAL ENTERPRISES.—The profits from a mining venture over and above the bed-rock value A, that is, the return to be derived from more extensive ore-recovery and a higher price of metal, may be compared to the value included in other forms of commercial enterprise for "good-will." Such forms of enterprise are valued on a basis of the amount which will replace the net assets plus (or minus) an amount for "good-will," that is, the earning capacity. This good-will is a speculation of varying risk depending on the character of the enterprise. For natural monopolies, like some railways and waterworks, the risk is less and for shoe factories more. Even natural monopolies are subject to the risks of antagonistic legislation and industrial storms. But, eliminating this class of enterprise, the speculative value of a good-will involves a greater risk than prospective value in mines, if properly measured; because the dangers of competition and industrial storms do not enter to such a degree, nor is the future so dependent upon the human genius of the founder or manager. Mining has reached such a stage of development as a science that management proceeds upon comparatively well-known lines. It is subject to known checks through the opportunity of comparisons by which efficiency can be determined in a manner more open for the investor to learn than in any other form of industry. While in mining an estimate of a certain minimum of extension in depth, as indicated by collateral factors, may occasionally fall short, it will, in nine cases out of ten, be exceeded. If investment in mines be spread over ten cases, similarly valued as to minimum of extension, the risk has been virtually eliminated. The industry, if reduced to the above basis for financial guidance, is a more profitable business and is one of less hazards than competitive forms of commercial enterprises.

In view of what has been said before, it may be unnecessary to refer again to the subject, but the constant reiteration by wiseacres that the weak point in mining investments lies in their short life and possible loss of capital, warrants a repetition that the A, B, C of proper investment in mines is to be assured, by the "A" value, of a return of the whole or major portion of the capital. The risk of interest and profit may be deferred to the X, Y value, and in such case it is on a plane with "good-will." It should be said at once to that class who want large returns on investment without investigation as to merits, or assurance as to the management of the business, that there is no field in this world for the employment of their money at over 4%.

Unfortunately for the reputation of the mining industry, and metal mines especially, the business is often not conducted or valued on lines which have been outlined in these chapters. There is often the desire to sell stocks beyond their value. There is always the possibility that extension in depth will reveal a glorious Eldorado. It occasionally does, and the report echoes round the world for years, together with tributes to the great judgment of the exploiters. The volume of sound allures undue numbers of the venturesome, untrained, and ill-advised public to the business, together with a mob of camp-followers whose objective is to exploit the ignorant by preying on their gambling instincts. Thus a considerable section of metal mining industry is in the hands of these classes, and a cloud of disrepute hangs ever in the horizon.

There has been a great educational campaign in progress during the past few years through the technical training of men for conduct of the industry, by the example of reputable companies in regularly publishing the essential facts upon which the value of their mines is based, and through understandable nontechnical discussion in and by some sections of the financial and general press. The real investor is being educated to distinguish between reputable concerns and the counters of gamesters. Moreover, yearly, men of technical knowledge are taking a stronger and more influential part in mining finance and in the direction of mining and exploration companies. The net result of these forces will be to put mining on a better plane.



CHAPTER XX.

The Character, Training, and Obligations of the Mining Engineering Profession.

In a discussion of some problems of metal mining from the point of view of the direction of mining operations it may not be amiss to discuss the character of the mining engineering profession in its bearings on training and practice, and its relations to the public.

The most dominant characteristic of the mining engineering profession is the vast preponderance of the commercial over the technical in the daily work of the engineer. For years a gradual evolution has been in progress altering the larger demands on this branch of the engineering profession from advisory to executive work. The mining engineer is no longer the technician who concocts reports and blue prints. It is demanded of him that he devise the finance, construct and manage the works which he advises. The demands of such executive work are largely commercial; although the commercial experience and executive ability thus become one pier in the foundation of training, the bridge no less requires two piers, and the second is based on technical knowledge. Far from being deprecated, these commercial phases cannot be too strongly emphasized. On the other hand, I am far from contending that our vocation is a business rather than a profession.

For many years after the dawn of modern engineering, the members of our profession were men who rose through the ranks of workmen, and as a result, we are to this day in the public mind a sort of superior artisan, for to many the engine-driver is equally an engineer with the designer of the engine, yet their real relation is but as the hand to the brain. At a later period the recruits entered by apprenticeship to those men who had established their intellectual superiority to their fellow-workers. These men were nearly always employed in an advisory way—subjective to the executive head.

During the last few decades, the advance of science and the complication of industry have demanded a wholly broader basis of scientific and general training for its leaders. Executive heads are demanded who have technical training. This has resulted in the establishment of special technical colleges, and compelled a place for engineering in the great universities. The high intelligence demanded by the vocation itself, and the revolution in training caused by the strengthening of its foundations in general education, has finally, beyond all question, raised the work of application of science to industry to the dignity of a profession on a par with the law, medicine, and science. It demands of its members equally high mental attainments,—and a more rigorous training and experience. Despite all this, industry is conducted for commercial purposes, and leaves no room for the haughty intellectual superiority assumed by some professions over business callings.

There is now demanded of the mining specialist a wide knowledge of certain branches of civil, mechanical, electrical, and chemical engineering, geology, economics, the humanities, and what not; and in addition to all this, engineering sense, executive ability, business experience, and financial insight. Engineering sense is that fine blend of honesty, ingenuity, and intuition which is a mental endowment apart from knowledge and experience. Its possession is the test of the real engineer. It distinguishes engineering as a profession from engineering as a trade. It is this sense that elevates the possessor to the profession which is, of all others, the most difficult and the most comprehensive. Financial insight can only come by experience in the commercial world. Likewise must come the experience in technical work which gives balance to theoretical training. Executive ability is that capacity to coordinate and command the best results from other men,—it is a natural endowment. which can be cultivated only in actual use.

The practice of mine engineering being so large a mixture of business, it follows that the whole of the training of this profession cannot be had in schools and universities. The commercial and executive side of the work cannot be taught; it must be absorbed by actual participation in the industry. Nor is it impossible to rise to great eminence in the profession without university training, as witness some of our greatest engineers. The university can do much; it can give a broad basis of knowledge and mental training, and can inculcate moral feeling, which entitles men to lead their fellows. It can teach the technical fundamentals of the multifold sciences which the engineer should know and must apply. But after the university must come a schooling in men and things equally thorough and more arduous.

In this predominating demand for commercial qualifications over the technical ones, the mining profession has differentiated to a great degree from its brother engineering branches. That this is true will be most apparent if we examine the course through which engineering projects march, and the demands of each stage on their road to completion.

The life of all engineering projects in a general way may be divided into five phases:[*]—

[Footnote *: These phases do not necessarily proceed step by step. For an expanding works especially, all of them may be in process at the same time, but if each item be considered to itself, this is the usual progress, or should be when properly engineered.]

1. Determination of the value of the project. 2. Determination of the method of attack. 3. The detailed delineation of method, means, and tools. 4. The execution of the works. 5. The operation of the completed works.

These various stages of the resolution of an engineering project require in each more or less of every quality of intellect, training, and character. At the different stages, certain of these qualities are in predominant demand: in the first stage, financial insight; in the second, "engineering sense"; in the third, training and experience; in the fourth and fifth, executive ability.

A certain amount of compass over the project during the whole five stages is required by all branches of the engineering profession,—harbor, canal, railway, waterworks, bridge, mechanical, electrical, etc.; but in none of them so completely and in such constant combination is this demanded as in mining.

The determination of the commercial value of projects is a greater section of the mining engineer's occupation than of the other engineering branches. Mines are operated only to earn immediate profits. No question of public utility enters, so that all mining projects have by this necessity to be from the first weighed from a profit point of view alone. The determination of this question is one which demands such an amount of technical knowledge and experience that those who are not experts cannot enter the field,—therefore the service of the engineer is always demanded in their satisfactory solution. Moreover, unlike most other engineering projects, mines have a faculty of changing owners several times during their career, so that every one has to survive a periodic revaluation. From the other branches of engineering, the electrical engineer is the most often called upon to weigh the probabilities of financial success of the enterprise, but usually his presence in this capacity is called upon only at the initial stage, for electrical enterprises seldom change hands. The mechanical and chemical branches are usually called upon for purely technical service on the demand of the operator, who decides the financial problems for himself, or upon works forming but units in undertakings where the opinion on the financial advisability is compassed by some other branch of the engineering profession. The other engineering branches, even less often, are called in for financial advice, and in those branches involving works of public utility the profit-and-loss phase scarcely enters at all.

Given that the project has been determined upon, and that the enterprise has entered upon the second stage, that of determination of method of attack, the immediate commercial result limits the mining engineer's every plan and design to a greater degree than it does the other engineering specialists. The question of capital and profit dogs his every footstep, for all mines are ephemeral; the life of any given mine is short. Metal mines have indeed the shortest lives of any. While some exceptional ones may produce through one generation, under the stress of modern methods a much larger proportion extend only over a decade or two. But of more pertinent force is the fact that as the certain life of a metal mine can be positively known in most cases but a short period beyond the actual time required to exhaust the ore in sight, not even a decade of life to the enterprise is available for the estimates of the mining engineer. Mining works are of no value when the mine is exhausted; the capital invested must be recovered in very short periods, and therefore all mining works must be of the most temporary character that will answer. The mining engineer cannot erect a works that will last as long as possible; it is to last as long as the mine only, and, in laying it out, forefront in his mind must be the question, Can its cost be redeemed in the period of use of which I am certain it will find employment? If not, will some cheaper device, which gives less efficiency, do? The harbor engineer, the railway engineer, the mechanical engineer, build as solidly as they can, for the demand for the work will exist till after their materials are worn out, however soundly they construct.

Our engineer cousins can, in a greater degree by study and investigation, marshal in advance the factors with which they have to deal. The mining engineer's works, on the other hand, depend at all times on many elements which, from the nature of things, must remain unknown. No mine is laid bare to study and resolve in advance. We have to deal with conditions buried in the earth. Especially in metal mines we cannot know, when our works are initiated, what the size, mineralization, or surroundings of the ore-bodies will be. We must plunge into them and learn,—and repent. Not only is the useful life of our mining works indeterminate, but the very character of them is uncertain in advance. All our works must be in a way doubly tentative, for they are subject to constant alterations as they proceed.

Not only does this apply to our initial plans, but to our daily amendment of them as we proceed into the unknown. Mining engineering is, therefore, never ended with the initial determination of a method. It is called upon daily to replan and reconceive, coincidentally with the daily progress of the constructions and operation. Weary with disappointment in his wisest conception, many a mining engineer looks jealously upon his happier engineering cousin, who, when he designs a bridge, can know its size, its strains, and its cost, and can wash his hands of it finally when the contractor steps in to its construction. And, above all, it is no concern of his whether it will pay. Did he start to build a bridge over a water, the width or depth or bottom of which he could not know in advance, and require to get its cost back in ten years, with a profit, his would be a task of similar harassments.

As said before, it is becoming more general every year to employ the mining engineer as the executive head in the operation of mining engineering projects, that is, in the fourth and fifth stages of the enterprise. He is becoming the foreman, manager, and president of the company, or as it may be contended by some, the executive head is coming to have technical qualifications. Either way, in no branch of enterprise founded on engineering is the operative head of necessity so much a technical director. Not only is this caused by the necessity of executive knowledge before valuations can be properly done, but the incorporation of the executive work with the technical has been brought about by several other forces. We have a type of works which, by reason of the new conditions and constant revisions which arise from pushing into the unknown coincidentally with operating, demands an intimate continuous daily employment of engineering sense and design through the whole history of the enterprise. These works are of themselves of a character which requires a constant vigilant eye on financial outcome. The advances in metallurgy, and the decreased cost of production by larger capacities, require yearly larger, more complicated, and more costly plants. Thus, larger and larger capitals are required, and enterprise is passing from the hands of the individual to the financially stronger corporation. This altered position as to the works and finance has made keener demands, both technically and in an administrative way, for the highly trained man. In the early stages of American mining, with the moderate demand on capital and the simpler forms of engineering involved, mining was largely a matter of individual enterprise and ownership. These owners were men to whom experience had brought some of the needful technical qualifications. They usually held the reins of business management in their own hands and employed the engineer subjectively, when they employed him at all. They were also, as a rule, distinguished by their contempt for university-trained engineers.

The gradually increasing employment of the engineer as combined executive and technical head, was largely of American development. Many English and European mines still maintain the two separate bureaus, the technical and the financial. Such organization is open to much objection from the point of view of the owner's interests, and still more from that of the engineer. In such an organization the latter is always subordinate to the financial control,—hence the least paid and least respected. When two bureaus exist, the technical lacks that balance of commercial purpose which it should have. The ambition of the theoretical engineer, divorced from commercial result, is complete technical nicety of works and low production costs without the regard for capital outlay which the commercial experience and temporary character of mining constructions demand. On the other hand, the purely financial bureau usually begrudges the capital outlay which sound engineering may warrant. The result is an administration that is not comparable to the single head with both qualifications and an even balance in both spheres. In America, we still have a relic of this form of administration in the consulting mining engineer, but barring his functions as a valuer of mines, he is disappearing in connection with the industry, in favor of the manager, or the president of the company, who has administrative control. The mining engineer's field of employment is therefore not only wider by this general inclusion of administrative work, but one of more responsibility. While he must conduct all five phases of engineering projects coincidentally, the other branches of the profession are more or less confined to one phase or another. They can draw sharper limitations of their engagements or specialization and confine themselves to more purely technical work. The civil engineer may construct railway or harbor works; the mechanical engineer may design and build engines; the naval architect may build ships; but given that he designed to do the work in the most effectual manner, it is no concern of his whether they subsequently earn dividends. He does not have to operate them, to find the income, to feed the mill, or sell the product. The profit and loss does not hound his footsteps after his construction is complete.

Although it is desirable to emphasize the commercial side of the practice of the mining engineer's profession, there are other sides of no less moment. There is the right of every red-blooded man to be assured that his work will be a daily satisfaction to himself; that it is a work which is contributing to the welfare and advance of his country; and that it will build for him a position of dignity and consequence among his fellows.

There are the moral and public obligations upon the profession. There are to-day the demands upon the engineers which are the demands upon their positions as leaders of a great industry. In an industry that lends itself so much to speculation and chicanery, there is the duty of every engineer to diminish the opportunity of the vulture so far as is possible. Where he can enter these lists has been suggested in the previous pages. Further than to the "investor" in mines, he has a duty to his brothers in the profession. In no profession does competition enter so obscurely, nor in no other are men of a profession thrown into such terms of intimacy in professional work. From these causes there has arisen a freedom of disclosure of technical results and a comradery of members greater than that in any other profession. No profession is so subject to the capriciousness of fortune, and he whose position is assured to-day is not assured to-morrow unless it be coupled with a consideration of those members not so fortunate. Especially is there an obligation to the younger members that they may have opportunity of training and a right start in the work.

The very essence of the profession is that it calls upon its members to direct men. They are the officers in the great industrial army. From the nature of things, metal mines do not, like our cities and settlements, lie in those regions covered deep in rich soils. Our mines must be found in the mountains and deserts where rocks are exposed to search. Thus they lie away from the centers of comfort and culture,—they are the outposts of civilization. The engineer is an officer on outpost duty, and in these places he is the camp leader. By his position as a leader in the community he has a chieftainship that carries a responsibility besides mere mine management. His is the responsibility of example in fair dealing and good government in the community.

In but few of its greatest works does the personality of its real creator reach the ears of the world; the real engineer does not advertise himself. But the engineering profession generally rises yearly in dignity and importance as the rest of the world learns more of where the real brains of industrial progress are. The time will come when people will ask, not who paid for a thing, but who built it.

To the engineer falls the work of creating from the dry bones of scientific fact the living body of industry. It is he whose intellect and direction bring to the world the comforts and necessities of daily need. Unlike the doctor, his is not the constant struggle to save the weak. Unlike the soldier, destruction is not his prime function. Unlike the lawyer, quarrels are not his daily bread. Engineering is the profession of creation and of construction, of stimulation of human effort and accomplishment.



INDEX.

Accounts. Administration. Administrative reports. Air-compression. -drills. Alteration, secondary. Alternative shafts to inclined deposit. Amortization of capital and interest. Animals for underground transport. Annual demand for base metals. report. Artificial pillars. Assay foot. inch. of samples. plans. Assaying. A value of mine. Averages, calculation.

Bailing. Balance sheet. Basic price. value of mine. Benches. Bend in combined shafts. Bins. Blocked-out ore. Blocks. Bonanzas, origin. Bonus systems, of work. Breaking ore. Broken Hill, levels. ore-pillars. Bumping-trough.

Cable-ways. Cages. Calculation of averages. of quantities of ore. Capital expenditure. Caving systems. Churn-drills. Chutes, loading, in vertical shaft. Classification of ore in sight. Combined shaft. stopes. Commercial value of projects, determination. Compartments for shaft. Compressed-air locomotives. -air pumps. vs. electricity for drills. Content, average metal, determining. metal, differences. Contract work. Copper, annual demand. deposits. ores, enrichment. Cost of entry into mine. of equipment. production. per foot of sinking. working. Cribs. Crosscuts. Cross-section of inclined deposit which must be attacked in depth. showing auxiliary vertical outlet. Crouch, J. J. Cubic feet per ton of ore. foot contents of block.

Deep-level mines. Demand for metals. Departmental dissection of expenditures. Deposits, in situ. ore, classes. regularity. size. structure. Depth of exhaustion. Determination of average metal contents of ore. Development in early prospecting stage. in neighboring mines. of mines. Diamond-drilling. Diluting narrow samples to a stoping width. Dip. Direct-acting steam-pumps. Distribution of values. Dividend, annual, present value. Dommeiler. Down holes. Drainage. comparison of different systems. systems. Drifts. Drill, requirements. Drilling. Drives. Dry walling with timber caps.

Efficiency, factors of. of mass. Electrical haulage. pumps. Electricity for drills. Engine, size for winding appliances. Engineer, mining, as executive. Engineering projects, phases of. Enrichment. at cross-veins. Entry, to mine. to vertical or horizontal deposits. Equipment, cost. improvements. mechanical. Erosion. Error, percentage in estimates from sampling. Escape. Examination of mining property. Excavation, supporting. Exhaustion, depth. Expenditures, departmental dissection. mine. Extension in depth.

Factor of safety in calculating averages of samples. Filling. system combined with square-setting. with broken ore subsequently withdrawn. waste. Fissure veins. Fissuring. depth. Fixed charges. Flat-back stope. Flexibility in drainage system. Floors. Folding. Foot-drilled system of contract work. -hole system of contract work. of advance system of contract work. value. Fraud, precautions against in sampling.

General expenses. Gold deposits. deposits, alteration. enrichment.

Hammer type of drill. Hand-drilling. -trucking. Haulage, electrical. equipment in shaft. mechanical. Hole system of contract work. Horizons of ore-deposits. Horizontal deposits, entry. stope. filled with waste. Hydraulic pumps.

Impregnation deposits. Inch, assay. Inclined deposits to be worked from outcrop or near it. deposits which must be attacked in depth. shaft. Inclines. capacity. Infiltration type of deposits. Intelligence as factor of skill. Interest calculations in mine valuation. Intervals, level. Inwood's tables. Iron hat. leaching. Ivanhoe mine, West Australia.

Kibble.

Labor, general technical data. handling. unions. Lateral underground transport. Le Roi mine. Lead, annual demand. deposits. enriching. prices, 1884-1908. -zinc ores, enrichment. Lenses. Levels. intervals. of Broken Hill. protection. Life, in sight. of mine. Locomotives, compressed-air. Lode mines, valuation. Lodes. Long-wall stope.

Machine-drill, performance. drilling. vs. hand-drilling. Management, mine. Matte. Mechanical efficiency of drainage machinery. equipment. Men for underground transport. Metal content, determining. contents, differences. demand for. mine, value. price. Mines compared to other commercial enterprises. equipment. expenditures. Mines—continued. life of. metal, value of. of moderate depths. to be worked to great depths. valuation. Mining engineering profession. Mt. Cenis tunnel. Morgan gold mine.

Normal price.

Obligations of engineering profession. Openings, position in relation to secondary alteration. Ore, average width in block. blocked-out. -bodies. shapes. -breaking, methods. calculation of quantities of. -chutes in shrinkage-stoping. -deposits, classes. determination of average metal contents. developed. developing. expectant. in sight. sight, classification. -pillars. support in narrow stopes. -shoots. weight of a cubic foot. width for one sample. Origin of deposit. Outcrop mines. Output, factors limiting. giving least production cost. maximum, determination. Overhand stapes. Overproduction of base metal. Oxidation.

Patchwork plant, mechanical inefficiency of. Pay areas, formation. Pillars, artificial. Positive ore. value of metal mine. Possible ore. Power conditions. general technical data. sources. transmission. Preliminary inspection. Previous yield. Price of metals. Probable ore. Producing stage of mine. Production, cost. Profit and loss account. factors determining. in sight. Proportional charges. Prospecting stage of mine. Prospective ore. value. Protection of levels. Proved ore. Pumping systems. Pumps, compressed-air. electrical. hydraulic. rod-driven.

Ratio of output to mine. Recoverable percentage of gross assay value. Recovery of ore. Rectangular shaft. Redemption of capital and interest. Reduction of output. Regularity of deposit. Reliability of drainage system. Replacement. Reports. administrative. Resuing. Revenue account. Rill-cut overhand stope. method of incline cuts. -stopes. filled with waste. -stoping. Rises. Risk in mining investments. in valuation of mines. Roadways, protecting in shrinkage-stoping. Rod-driven pumps. Rotary steam-pumps. Round vertical shafts. Runs of value. test-treatment.

Safety, factor of, in calculating averages of samples. Sample, assay of. average value. narrow, diluting to a stoping width. sections. taking, physical details. manner of taking. Sampling. accuracy. percentage of error in estimates from. precautions against fraud. Saving of fixed charges. Secondary alteration. enrichment. Security of investment. Self-dumping skip. Sets. Shafts. arrangement for very deep inclined shafts. compartments. different depths. haulage. location. number. output capacity. shape. size. Shrinkage-stope. -stoping. advantages. disadvantages. when applicable. Silver deposits. deposits, enrichment. prices. Sinking, speed. Size of deposit. Skill, effect on production cost. Skips. balanced. haulage in vertical shaft. Sollars. Solubility of minerals. Specific volume of ores. Speculative values of metal mine. value of mine. Spelter, annual demand. Square-set. -set timbering. Stations. arrangement for skip haulage in vertical shaft. Steam-pumps, direct. Steepening winzes and ore passes. Stope filled with broken ore. minimum width. Stoping. contract systems. Storing metal. Structural character of deposit. Structure of deposit. Stull and waste pillars. support with waste reenforcement. -supported stope. Stulls. wood. Subheading. Sublevel caving system. Subsidiary development. Superficial enrichment. Supplies, general technical data. Support by pillars of ore. Supporting excavation. Surveys. Suspense charges.

Test parcels. sections. -treatment runs. Timber, cost. Timbered shaft design. Timbering. Tin, annual demand. deposits. ore, migration and enrichment. Tools. Top slicing. Tracks. Transport in stopes. Tunnel entry. feet paid for in 10 years. size.

Underhand stopes. Uppers.

Valuation, mine. of lode mines. mines, risk in. mines with little or no ore in sight. on second-hand data. Value, average, of samples. discrepancy between estimated and actual. distribution. of extension in depth, estimating. positive, of metal mine. present, of an annual dividend. of $1 or L1, payable in — years. runs of. speculative, of metal mine. Valuing ore in course of breaking. Ventilation. Vertical deposits, entry. interval between levels. shafts. capacity. Volume, specific, of ores.

Waste-filled stope. Water-power. Weight per cubic foot of ore. Weindel, Caspar. Whiting hoist. Width of ore for one sample. Winding appliances. Winzes. in shrinkage-stoping. to be used for filling. Working cost. inherent limitations in accuracy of. sheets. Workshops.

Yield, previous. Years of life required to yield —% interest.

Zinc deposits. leaching.

THE END