Principles of Mining Part 15

[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 antic.i.p.ating 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 compet.i.tions 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 s.p.a.ce, and on square area broken.

All these systems have their rightful application, conditioned upon the cla.s.s 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 pa.s.s 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 hara.s.sments of possible strikes. Such unions exist in dozens of trades in this country, and they are ent.i.tled 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 cla.s.ses 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 a.s.sAYING.

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 a.s.sist 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. Cla.s.ses 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 cla.s.ses, 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.="" |="">

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 a.s.saying." 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 a.s.saying over the actual points to which they relate at the average cost per sample or a.s.say.

"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.