viz., gold. The precious metals, gold, silver, and platinum, are sold by
the Troy ounce: the base metals are all handled and dealt with on
avoirdupois weights. Copper, lead, zinc, tin, and nickel are quoted in
cents per pound avoirdupois. Iron and manganese are curiously sold by
mines to smelting companies on the ton of ore basis.
Since gold has been found in every known rock of every geologic age and
is of world-wide distribution; since it possesses physical properties
that long ago placed it at the head of the list of desirable metals; and
further, since it does not occur in very condensed amounts, generally;
this metal was selected as the standard of value by which the worth of
every other commodity in the world is fixed. It must therefore be
possessed of a fixed market value, and one never looks for quotations
on pure gold. The price of pure gold is set at $20.6718. This very
peculiar value is known as the "mint value," and is the price which the
Government of the United States pays for all of its coinage gold. Among
miners, as a rule, the price is thought of as $20 per ounce, and this is
probably because this is more nearly the actual return the miner has
been accustomed to obtain from companies who have bought and treated his
ores. Most all the gold produced in the world is associated with other
metals, such as silver, copper, or platinum, so that the bullion
recovered in milling or smelting will usually contain the gold alloyed
with such other metals and the gold is said to be not "fine," or pure.
The fineness of gold in the metallic state is expressed in two ways.
Jewelers have the carat system, while mints use the decimal system in
expressing such degrees of purity. Pure gold is 24-carat fine. An alloy
of 3 parts gold and 1 part copper would be considered as 18-carat gold.
In the decimal system, pure gold is called 1,000 fine, and the various
degrees of purity are then expressed in their true proportional amounts.
Thus the same alloy as cited above would be called 750 fine gold.
Silver has a fluctuating market value although attempts have been made,
at times, to establish its value at some fixed ratio to the value of
gold. In fact, a reader may occasionally run across statistics of silver
production in which it appears as though there were a fixed value for
the metal, but this will be found to be due to the use of what is known
as the "coinage value," which is $1.29198. This figure will be
recognized as our old acquaintance, "16 to 1," _i.e._, this price for
silver being one-sixteenth of the fixed price for gold. There is
actually no such fixation, and prices for silver are established every
business day of the year in the great metal markets of the world, London
and New York.
Platinum has been increasing in market value during recent years and the
quotations have ranged up so high that it is now more than twice as
valuable as gold. The reasons for this high price are that the
production of the metal is limited, whereas the uses for the metal have
been increasing. The greatest production of this metal is in the Ural
Mountains of Russia, and the output from this region is handled by a few
concerns who virtually possess a monopoly. These companies are able to
maintain the production practically constant and to cause the market
price to fluctuate.
Tin is found in commercial amounts in but very few regions. There is but
one mineral mined as an ore of tin, viz., cassiterite, the oxide, which
is 78 per cent tin. Tin is found in both veins and placers and the great
bulk of the metal is now being derived from the latter type of bodies in
the Malay Peninsula and the Straits of the East Indies. Formerly,
Cornwall produced the world's supply, from veins. Although the United
States consumes 35 per cent to 40 per cent of the world's production,
the country does not produce 1 per cent of this production. Since the
main source of our tin is British territory, the markets are controlled
by London, and quotations are issued daily from that center. Such
quotations are given in units of English money per long ton (2240
pounds) of metal. However, prices are also quoted at New York, daily, in
cents per pound, and there is a real difference in value between the two
quotations to take care of freights and duty. For instance, on a certain
date, quotations were L190 10s, and 42c. The average price during 1911
in New York was 42.281 cents.
The chief supply of nickel now comes from the Canadian districts of
Cobalt and Sudbury, where this metal occurs accompanying rich silver
deposits. The metal is sold by the pound avoirdupois and prices in
January, 1912, ranged from 40c. to 50c.
Tungsten is a metal which has been finding more and more uses of late
years, but the production has remained quite limited. Three-quarters of
the world's total production in 1911 came from a small district in
Boulder County. Colorado. The quotations on this metal are given in
dollars per ton of concentrated ore, and the price is for a certain
percentage of WO_{3}, the oxide of wolfram (tungsten). The schedule of
prices announced in April, 1912, for Boulder County ores and
concentrates provides as follows, a unit being understood to mean 1 per
cent or 20 pounds per ton: For material assaying 10 per cent WO_{3},
$3.50 per unit; for 20 per cent WO_{3}, $4.40 per unit; for 40 per cent
and more, $4.90 per unit. Ore containing, say, 50 per cent of the
tungsten radical is thus salable at $245 per ton, the mineral itself
thus bringing a price of 24-1/2 cents per pound.
Although copper is used and sold in very large lots commercially, it
continues to be quoted upon the pound basis. The United States produces
about 60 per cent of the whole amount mined in the world and the prices
are made in New York daily. The amount of copper mined in this country
in 1911 was 1,431,938,338 pounds and the price varied between 11.989
cents and 13.768 cents. There are always at least two quotations every
day on copper, one being on "lake" and another on "electrolytic". By
these terms are meant, respectively, copper produced in the Lake
Superior region and the copper from other mines. The Lake Superior
copper is the purest in the world and it always sells for a fraction of
a cent per pound more than the other coppers which are refined by
electrolysis.
Metallic iron is reduced from a number of different ores, but by far the
bulk of pig-iron is made from the oxides and carbonates of iron. Such
ores, in the United States, are obtained principally in Minnesota,
Michigan, Wisconsin, and Alabama. As already stated, the quotations on
iron are based upon the ores rather than the pig-iron, and there are two
types of such ore recognized. If the ore is suitable for the making of
Bessemer steel, it is given a certain quotation per ton, while if it
cannot be used for such a purpose, it is given a non-Bessemer rating and
is used for casting. The greatest iron-mining region in the world is in
the Lake Superior country. Here are a number of districts that are known
as "ranges." In some of these ranges mining is by underground methods,
while in others the excavation is entirely in the open by the use of
great steam shovels. The outputs of these ranges go by rail and water to
the great smelting points along the Great Lakes and at Pittsburg.
The metallic zinc on the market is known as spelter. All quotations on
this metal are given in two systems, the "pounds Sterling per long ton"
and the "cents per pound." The average prices during 1911 were
respectively, L25.281 and 5.758 c. The American quotations are
frequently given in the unit of dollars per hundredweight. This offers
no confusion, whatever, for under this nomenclature, the average price
for 1911 would be stated as $5.758. In the zinc-mining regions of the
Mississippi Valley, the producers of ore have a practice of putting the
mines' products through their own mills at the mines and making
concentrates of the zinc mineral, which is usually blende or "jack," and
this concentrated stuff is then sold to smelting companies at the daily
quotations per ton of 60 per cent ore. During 1911 the average price
paid in the Joplin District was $41.45. Since this amount bought 1,200
pounds of metallic zinc, it is evident that the miner received only
about 3.45 cents per pound for his metal, the discrepancy between this
sum and the New York quotation being consumed in costs of smelting and
shipment and in profits to the middlemen.
Lead is sold upon a plan exactly similar to zinc. It has the same
various quotations. For example, the 1911 prices in London, New York,
and Joplin averaged, respectively, L13.970, 4.420c., and $56.76.
Quicksilver is sold by the "flask" of 75 pounds. The price ranges in the
neighborhood of $43 to $45.
There are numerous other metals, but the more common ones are given
above. Below is given a graphical exhibit of the course of the prices of
lead, spelter, standard (electrolytic) and lake copper, pig-iron, and
tin for a number of years. A study of this chart is interesting in
noting the waves or fluctuations that have covered periods of years.
This chart is reproduced from _The Engineering and Mining Journal_.
[Illustration: DIAGRAM OF METAL MARKET FOR ONE-THIRD OF A CENTURY]
XX
MINE ACCOUNTING.
While there has been a great deal of attention given to the matter of
keeping systematic mine accounts, both in the main offices and those at
the works, there still is a lack of uniformity in practice. In the
bookkeeping of manufacturing and mercantile institutions, uniform
practices or systems have become a feature. But there have been good
reasons for the absence of similar methods in mine offices.
There will be found to exist some uniformity in the accounting as
practised by the mines of a particular district which are operating
under similar conditions; but when one considers that the mines of
various districts have quite dissimilar conditions throughout almost
every phase of the business, it is not surprising that different methods
must be employed in the keeping of their accounts. It is unavoidable.
Mines extracting different metals or different kinds of coal will find
it necessary to keep quite unlike records. Mines with their own mills
will likewise require a different system of accounting from those that
ship their products to custom works. Open and underground mines will
need quite different styles of accounts.
So, it is not possible to recommend any one method of mine accounting.
The best way to become posted upon this subject is to investigate the
schemes, the blank forms and the books of some of the established,
successful companies here and there about the world. In this way, ideas
will be collected, and it will be possible for the investigator to
evolve his own schemes for recording the accounts of his company.
It has come to be recognized as contributing to economy to maintain
systems of accounts that will enter into minutiae concerning every branch
of the business. Just how far this can be carried without creating
office expenses that will exceed the benefits to be derived from the
detailed information remains a question to be decided by each manager.
There are companies with accounts so perfected that it is possible to
quickly ascertain, to a fraction of a cent, what the expenditures of any
day have been for any particular part of the operations, as for
instance, the haulage per ton underground, or the fuse employed in the
blasting of a particular stope. Such details are highly useful since
they prevent leaks in the costs; but it is a problem to decide to what
extent it is economy to carry them. These data also furnish the
superintendent information concerning the efficiency of his many
laborers and the machinery. Labor-saving inventions, such as the printed
blank form, and the loose leaf, are put to excellent use in mining
offices.
There are strong companies operating great mining plants whose records
are open to the perusal of any individual, be he stockholder or not. In
the office of such a company, a person may turn to the accounts and see
for himself how much it costs to maintain each and all of the operations
and he can learn the size and the value of all shipments of products of
any sort--ore, concentrates, coal, matte, or bullion. Again, there are
those companies that are so secretive about everything connected with
their work that even the Government is unable to learn any particulars,
except at very great trouble.
The Portland Gold Mining Company, operating a great property at Victor,
in the Cripple Creek District, is an instance of the first sort, while
the United Verde mine, at Jerome, Arizona, may be taken to represent the
second sort. Both of these mines have made splendid records. It cannot
be seen wherein the second mine is required to maintain secrecy, for
there is no danger of litigation from neighboring property holders, the
one company controlling, practically, the mining in its neighborhood.
The presumption is that the owners hold their business to be nobody's
else and they have a right to keep their affairs secret if they desire.
On the other hand, the Portland is surrounded by good mines which profit
by knowing the details of operating costs and incomes of their
neighbor; but it is found to cost no more to be open and above board
than to keep things under guard. The Colorado Fuel and Iron Company will
not divulge any particulars concerning its mining movements; but there
are other just as great mining companies that will explain every detail.
The Clark copper companies, of Butte, Montana, did not permit much
information to escape their offices, while the neighboring Amalgamated
companies gave particulars freely.
The question of secrecy should be considered, and if there is no very
good excuse for maintaining a privacy it should not be instituted. The
trend of all modern thought is along the line of publicity in all our
dealings. The only persons who have a reasonable right to be secretive
are those who have something they do not care to share or divulge to
their fellow-men. Law breakers, tax dodgers, and trespassers, could be
put into one class; persons doing research work which it is premature to
publish are a more respectable class; manufacturers with strong
competition in the sales markets are in a measure excusable; even a mine
which is producing some material in the sale of which it attempts to
maintain a monopoly might be excusable. But it is hard to see what
excuse or benefit there is for a coal or a copper mining company to
prevent a knowledge of its affairs, if the business is being conducted
along strictly legitimate lines.
XXI
INVESTMENT IN MINING STOCKS.
As a feature of investment in mining stocks, there has always been a
more or less open lure. Generally much larger returns are promised or
are expected than in other kinds of investments. There may be absolutely
no intention on the part of the seller to create this impression; but
there does, somehow, exist in the memories of people accounts of
wonderful fortunes that have been made in mining.
There is an amount of uncertainty about any mine or prospect that
appeals to the speculative proclivities in humans and it is hard for
most persons to resist the notion that greater or richer bodies of ore
may, at any time, be discovered in their particular mining properties.
Concerning the average stock purchaser, then, we may conclude that it is
speculation rather than true investment that he is seeking.
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 documents 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 incumbent 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 assurance 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 class 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.