The Business of Mining Part 9

The writer hopes that, even in the short preceding discussions, the reader will have come to agree with him and to understand that safe investments are as possible in mining as in any other business. It would be a great benefit to this great industry of mining were the public taught to take interests--that is, financial interests--in mining concerns with the same precautions and with the same sound business sense that accompany the purchases of interests in other enterprises.

Writing along this line of thought, Mr. P. A. Leonard has this to say in _The Mining World_: "One very general difficulty seems to be that the man unacquainted with mines who is asked to invest either expects an unreasonable return for his money, or he blindly closes his eyes and takes what he calls a 'flyer,' expecting little more from it than he would if he bought margins on 'change or bet on a horse race."

About the first thing that the promoters of a new mining company do is to issue a neat, attractive prospectus. It is a bait, no matter how reliable these men may be nor how worthy the property they desire to work. Many of these doc.u.ments are written in absolutely good faith and every representation is intended to be accurate. There are occasionally offered for sale stocks in mining properties that warrant the fullest confidence of the promoters and the investors. However, careful perusal of a great many of these pamphlets has led the writer to the conclusion that at least 75 per cent. of them are unreliable from the fact that they either wilfully misrepresent or because they grossly exaggerate the probabilities of success beyond all reason. Exaggeration is a habit with some people and it is used many times with no real criminal intent or even consciousness upon the part of the offender. But its effect is just as baneful when innocently inflicted as when it is used in a premeditated manner.

Good, worthy mining property does not need to be hawked, usually. There have been periods of financial unrest when it has seemed quite impossible for honest men to dispose of interests in what were unquestionably reliable mining enterprises. At such times, there has been nothing to gain by any amount of teasing the public, and any attempts at forceful disposal of interests in the concerns have but served to kill any small remnants of confidence that the public may have possessed.

Prospectuses are usually prepared for the reading of small investors who may feel inclined to risk a few dollars or, in other words, to speculate upon the representations contained in the seductive pamphlets. There are a few "Don'ts" which it would be well for any person inclined to invest in mining stocks to read, consider, and follow. For instance, never invest in any new stock whose company _guarantees_ specific dividends.

Profits in mining, except in rare cases, cannot be so accurately foretold as to warrant such a guarantee. We should remember that the success of any mine depends upon many, very many, contingencies and that some of them are invisible and are among Nature's secrets. Again, avoid placing any confidence in those companies that are simultaneously selling treasury stock and declaring dividends. This is a very common practice of the numerous "get-rich-quick" concerns which Uncle Sam has been routing the past few years. Such crooked practice is difficult to eradicate, although severe penalties are awarded the transgressors.

The success which has been met in the operation of the _great_ mining companies of the world can, in the majority of cases, be traced to the common sense which was exercised in the business management. The _business of mining is legitimate_. If mining is one of the basic industries of the world, how could the operation of a real mine be anything but a legitimate business? The mere fact that there have been neat opportunities for, and the practice of, fraud in the growth of this tremendous industry does not by any means, argue that the whole thing is founded upon unstable premises.

What is needed is a presentation of the industry in its legitimate aspect before all kinds of investors and this can be done properly and effectively only by the rank and file of men interested in mining. These men should place themselves boldly on record as combating all sorts of deals that smack of fraud, and they should do their utmost to discourage all delusions that may exist in the mind of the public with reference to the supposed lure offered by mining.

There have been too many causes of failure in mining for even a partial enumeration of them. There have been many errors in getting started, both on the part of the organizers and the investors. There have been many mistakes in management. Many blunders have been evidenced in the operation of mines which made very good starts. All of these failures are attributable to something outside of the mine's intrinsic worth; they are mistakes due to inexperience or misconception. Such shortcomings should not be tolerated in the make-up of a mine's managerial staff.

Perhaps one of the most common mistakes of mine managers is to submit to a condition of nepotism that is often furthered by directors or stockholders. No responsible position around a mine should be filled by a novice. Just because a director has two or three sons needing situations does not make it inc.u.mbent upon a superintendent or a manager to jeopardize his reputation by employing these young men. Percy Williams, a veteran mining man, advised "Don't take your son or nephew or your clerk out of your store or business house and send him to Arizona or Colorado to run things for you at the mine. Sell out first.

If you are a director in a mining company, do not force the manager or superintendent to find a job for all your unsuccessful friends and relatives. Let him hire his own men. Don't convert your mine into an asylum for ne'er-do-wells."

As already stated, there is protection obtainable by every investor in mining. One may always secure, at reasonable cost, the services of competent engineers whose business consists in sizing up the worth of mining property. If the services of these men were more generally appreciated and secured, there would be a great diminution in the number of disappointments following investments in mining. An eastern man of means complained to the writer about the way in which he had been "stung" in various mining investments. A little catechizing brought forth the facts that he knew absolutely nothing about mining in general and that, worse still, he had never investigated--that is, in a business-like manner--any of the propositions which had absorbed his ready money. Receiving no sympathy during the recital of his troubles but, instead, the a.s.surance that he "got what was coming to him," he was prepared to sit up, take notice, and listen to a severe roasting which opened his eyes about mining matters. Now, this man has proved successful in other lines of business. He is a prominent lawyer and banker in his own city and has numerous, scattered, money-making interests. But he was content to go into mining without the investigation which it is certain he would have given to any other sort of an investment.

The time should come when there would not be such a prevalent "slaughter of the innocents" in mining investments. People must learn to curb their gullibility in such affairs. But this has proved almost impossible. Just as it is in the nature of some persons to gamble, and it takes something more than misfortune at gaming to wean them from the vice, so it is with a certain cla.s.s of men who can not overcome the temptations of dabbling in mining. Such men will not desist even when they have suffered several delusions, and will continue to "send their good money after their bad," absolutely defiant of the well-meant advice of friends who are often in position to judge of the merits of any contemplated investment. Probably every mining engineer of any extended experience can tell of instances in which he has endeavored to discourage clients from investment in unworthy mining enterprises but in which the gambling instinct of the clients has overridden the sound advice.

During the early days of the wonderful Cripple Creek District, all sorts of wildcat tricks were successfully practiced upon the "tenderfeet" and the "down-east suckers." In one case, stock was readily unloaded upon the representation that a person could stand in the door of the cabin on the property and "look right into the shaft-house of the Independence mine." This statement was not untrue, although grossly misleading; for while it was actually quite possible by the use of a telescope to span the intervening three or four miles, visually, the prospect lacked the propinquity to the famous mine that was the bait implied by the statement in the prospectus. This is but one of many ingenious tricks that were played. Did the outcome of this one fraud cure the victims of irrational mining investment?

Railroads, too, have, in the past, added their troubles to the mining men. Recent laws have, however, to a great extent, mitigated the annoyances and unjust practices that the common carrying companies have been in the habit of committing. It is now obligatory upon a railroad company to treat all shippers without favor or discrimination, so that the difficulties formerly experienced by one mining company in getting enough ore cars to transport its shipments while its rival company could have cars in abundance, is now almost a thing of the past. It takes time to right all wrongs of this sort. It is a slow matter to get laws framed, pa.s.sed through the necessary legislation, and made effective.

But the outlook is favorable, along this line.

The leasing system has exercised an influence upon the mining activity of many districts. By this system is meant the custom of renting or letting the whole, or fractional parts, of a mining property to miners who enter upon and work the premises, extract the ores, and pay to the owners a specified percentage of the receipts from the marketing of the ore. This practice has frequently been the only successful way of operating some mines. It has, at times, been the manner of operating practically every mine in certain districts.

In districts carrying pockets of very rich ore, "high grading" has been discouraged in this way, for the "leasers" (incorrect, though common, word for lessees) do their own mining and there is much less object in stealing.

In other instances of mines which have been operated by the owning companies until they were past a profitable stage, it has been proved possible to prolong the life of operations very materially by leasing the property to miners, who always work with more diligence and economy for themselves than they ever do when working under "day's pay." This feature of leasing has been quite a factor in the lives of some of the mines of the Cripple Creek District. Until the recent drainage of the district through the Roosevelt Tunnel, there were numerous small--and even some large--properties that had worked all the ore bodies previously known to exist above the water level of the district, and had been obliged to shut down because of the heavy pumping expenses. Company operation did not longer pay. But the plain "leaser" and his partner could go into such old workings and they could prospect and find ore bodies that had escaped the observation of the superintendents. The expenses incurred in leasing are low. It is true that lessees will not probably take as good care of mine workings and equipment as will "company men," and often a property may be seriously crippled through the lack of sufficient timbering after having been in the hands of a set of lessees for some time. But, on the whole, there has probably been more benefit than loss through the letting of leases.

When, a few years ago, the plans of the National Forestry Service were put into effect, there was great complaint recorded concerning the rulings that were made against various miners. Some very well authenticated cases of wrongs were cited. However, it is now believed by all fair-minded men that there has been no intention, on the part of the officials of the Forest Service, to interfere with any legitimate mining enterprise. There was a well-founded object, viz., to put a stop to dishonest practices in obtaining t.i.tle to timber lands by the misrepresentation of mineral finds.

The General Land Office pa.s.sed a rule authorizing Foresters and a.s.sistant Foresters to make inspections of all mining claims within their reserves and to report to the Secretary of the Interior. The idea embodied in this rule was that these men, being agents of the Government and upon the ground, are able to investigate the facts concerning every mining claim and its claimant and so to run across any evidences of fraud that might be attempted in the securing of t.i.tle. Trouble immediately arose because the Foresters were not all experienced miners and prospectors and so were not thoroughly qualified to pa.s.s judgment upon the merits of mineral lands. This weakness has been admitted by the officers of the Service but the excuse has been offered that there was an immediate need for a great many Foresters and it was not possible to secure men trained in both forestry and mining at such short notice.

"Just as soon as conditions became better understood, and money was available to allow the Service to hire men whose judgment in mining matters could not be gainsaid, such men were employed," says Paul G.

Reddington, recently Forester for the Rocky Mountain Regions. It is true that much fraud has been prevented in the practice of taking up Government lands and it is also quite true that the Forest Service is endeavoring to uplift the mining industry in the western portions of the United States.

Mining is bound to become a still stronger factor in civilization as metallurgical processes multiply and there are discovered means of more economically extracting the valuable contents of ores. Minerals which are not now ores--according to the accepted, scientific definition, because the values cannot be recovered at a profit--will, at some future period, become ores. It is not safe to make any close predictions along this line, for such marked reductions in treatment costs have been going on during the last few years that mining men are entertaining great expectations. Inventions for improvement in metallurgical lines are being placed upon the market so frequently that it is difficult for even the professional metallurgist to keep posted. This being true, it is clear that the layman cannot expect to keep abreast of the metallurgical advance. At the same time, it is well for everybody to be slightly conversant with the wonderful advances being made in the reduction and dressing of ores. Conspicuous in this field are the improvements that have been effected in cyanidation, electrolytic amalgamation and extraction, and flotation. These processes are applicable to the lower grades of ore. Among the very recent successes in the treatment of very low-grade gold ores are the operations conducted in the new mills of the Portland Gold Mining Company, Stratton's Independence, and the Ajax Gold Mining Company, all in the Cripple Creek District. All of these mills are now treating old mine dumps, the contents of which were considered as absolutely waste matter at the time it was excavated. This stuff is now ore and its treatment is making fine profits. There is still a demand for cheaper methods of reducing ores of zinc. There are vast quant.i.ties of stuff that contains very good percentages of zinc, but the material cannot be mined and treated at a profit under existing conditions. With the invention of something radically new in the metallurgy of this metal, there will be opened an entirely different aspect in the zinc-mining regions. The Leadville District possesses great reserves of this material that is being held until it may become "ore."

[Ill.u.s.tration: FLORENCE MINE AND MILL, GOLDFIELD, NEVADA.]

XXII

THE MEN OF THE FUTURE IN MINING.

The mining of the future will probably be largely in the hands of young men. To arrive at any conclusions concerning the probabilities of success, therefore, we are obliged to recognize the dual conditions. In other words, there is to be an interdependence between men and mining.

Up to this point in our discussion, we have dwelt upon the probabilities as viewed from the standpoints of natural resources and of human capability. In a certain degree, we have already covered the ground of this present chapter; and yet there are some points that must be given special consideration.

What is the true status of metal mining? Alarmists would have us believe that civilization is rapidly exhausting the world's reserves of available metals. Conservative investigation, however, repudiates such notions. The best that can be claimed for the reliability of such disconcerting statements is that they may apply in _some_ districts, to _some_ grades of _some_ kinds of desirable mineral matter.

It may be true that the early miners have removed the "cream" from Nature's deposits in some districts, in the sense that they have skimmed off, as it were, the rich surface portions. But this does not signify the exhaustion of deeper ore bodies, nor does it mean that the pioneers were the only capable prospectors.

Why should we have any reason to deny the ability of present or future generations to find just as good mineral deposits as did our predecessors? Persons in some of the older of the western mining states--as for instance, Colorado or California--are apt to carry a misconception along this line. They can see a number of idle "camps"

that are mere relics of former thriving mining communities and they are liable to jump to the conclusion that the day of mining at such places is past, forever. However, as we look at the subject in a more rational light, we shall see that there is no more authority for such an a.s.sumption than there is for one to the effect that a farm in the wintertime is a worthless proposition simply because, temporarily, it is not producing its customary summer yield. Just as Nature brings about changing conditions for the farmer, so will economic forces establish varying degrees of attractiveness to the miner.

It is unfair to judge one of the pioneer mining districts by its activity at the present time, if the productiveness happens to be small.

Let us look for the reasons of the apparent decline. The chances are that the inactivity will be shown to be due, not to an exhaustion of ore bodies, but to some needed changes in mining or metallurgical methods.

Very likely, under a readjustment of our notions about that particular district there will appear to be as great latent possibilities as ever cheered the earlier operators. The prospects may appear to be even better than this, and the future may appear to extend greater opportunities than were ever manifested in the past. Investigation may disclose great bodies of ore that could not be seriously considered in the earlier working of the region. In fact, speaking technically, the stuff in question was not ore at the time of previous operations, for it could not then be made to yield a profit. And yet, by introducing some changes in equipment or methods of working or treatment, there may be possibilities of making a great deal of money from an abandoned property; and the chances are good that this same profit may be won at a much more rapid rate than was ever before possible and that therefore the economic conditions are enhanced. For we must not lose sight of the fact that the greatest profits in mining usually accrue from the most rapid exhaustion of the ore bodies.

A mine, or even a whole district, may have been deserted because of failure on the part of original miners to recognize the value of certain minerals. The recent revival of activity that has been noted in Leadville mining circles is but an instance in point. In this district, miners have given a delayed recognition to some important minerals of zinc, and the indications are that Leadville has entered upon another of its eras of mining activity.

But, it is not necessary to restrict our thoughts to the old mining regions, for if we can observe how easy it has been to overlook valuable deposits in a country that has been subjected to severe mining work, for years and years, what must we conclude concerning the possibilities of the many and vast undeveloped areas in remote portions of the globe? It would seem that there is indeed very small cause for alarm about the exhaustion of the earth's metals.

No, it can be shown that mining, which is one of the very fundamental industries of the world and the one upon which every other form of commercialism rests, will be carried on with a continual increase in magnitude just as long as man exists. As the richer and more easily mined ore reserves of Nature are exhausted, improved and cheaper methods of mining, transportation, and treatment will be introduced and at a pace that will equalize this exhaustion. We, of the present generation, see the eminently successful handling of copper ores of grades so low that they were not given pa.s.sing consideration ten years ago. The outlook would appear to be that the improvements in methods and costs will not only keep abreast of needs in such matters, but the probabilities are that they will take a very marked lead, with the result of a continually increasing scope to the mining industry. Let us then entertain optimistic views about the _future of mining_.

Now, as to the future of the young man who engages in mining there is just as much to be said as there is concerning the career of a young man in any other line of business. This word "business" is used advisedly, for the day is past when any person has a right to say that mining is anything but strictly legitimate business.

We look to the young men of the present and future to correct all of the shortcomings that have hindered the establishment of mining upon its deserved plane of stability in the minds of the general public. Young blood will take a lead in the dissemination of the correct thoughts about mining.

The successful man in mining will be, as heretofore, the one with the right qualifications in his make-up. Is a college education an essential prerequisite to success in mining? No, the writer is not one to declare that young men cannot succeed in the business without college training.

However, there can be no avoidance of the proposition that the chances of the college-trained man are better than are those of the man who has not had the benefits of such a career.

A man may be said to engage in mining in three different ways. Thus, he may operate mining property; or he may perform any of the manifold lines of mining engineering; or he may be an investor in mining property or mining stocks.

To prove a success when enrolled in either of the first two cla.s.ses, there is no denying the advantages of technical, mining education. The successful investor likewise will do well to make a consistent study of mining economics, and the more attention he gives to the many phases of approved modern mining, the greater will be his ultimate achievement, financially. Just as education along usual school branches is of immeasurable benefit to any man of business, so is it to the mining man.

And in just as great ratio is the possession of innate business ability.

Education and natural ability are the two elements that will count in the future of any young man in mining.

s.p.a.ce might be devoted to the discussion of the possibilities of young men in the field of research work along scientific lines that would add materially to the economy and scope of mining. Such a career offers inducements looking to the achievement of honor as well as fortune. The field for such service is ready.

XXIII

MISCELLANEOUS CONSIDERATIONS.

There are regions producing ores that are too refractory for the simple treatments that might be given by company plants located at the mines.

There are districts that have many small gold and silver mines with ores that do not yield to simple milling processes and which must therefore be shipped to custom smelteries. Even were the ores amenable to milling of some sort, it is often the case that the mines are not of sufficient magnitude to warrant the maintenance of their own treatment plants.