mate 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