An eternal lesson for investors from a ill-fated silver mine
While on holiday in Sark this week, I stumbled across a book in the local post office: “Silver Mining On Sark” by David Synnott, which describes an ill-fated mining operation on the island between 1836 and 1847.
Books are distilled knowledge, and I love the stuff you can find in them. Often stuff you don’t find online.
“Plus ça change, plus c’est la même chose”, runs the old French saying. It applies to mining, it seems, as much as anything.
We don’t use canaries any more; mines are powered by diesel and electricity, not horse-, donkey- or and manpower; helmets have torches instead of candles and there is underground lighting; and a higher premium is placed on human life than in the early 1800s, when workers were much more disposable.
But the game is exactly the same: you’re trying to extract metal from rock and sell it at a higher price than you mine it for.
The tricks of the trade, aka scams, are the same too.
So let me tell you the story of Sark’s silver mine.
How a silver mine brought the boom times to a tiny island
Sark, by the way, is a tiny island about two miles square, located between Guernsey and Jersey in the English Channel – much closer to France (25 miles) than England, which is over 200 miles away.
Remains show the island was inhabited in Neolithic times, but for many periods in the island’s history there was nobody here at all. Today it has around 500 residents. There are famously no cars on the islands – only tractors, horses, bikes and mobility scooters – and no street lights, giving you probably the best view of the night sky in Europe.
It’s famous for its harsh, windswept landscape with sheer cliffs and jagged rocks. It still has a feudal lord – who, by the way I beat at table tennis – and its own parliament.
In the early 1800s the language spoken here – the patois – was similar to Old Frankish. Very different from the Cornish spoken by the miners who would soon settle there.
If you take a boat trip round the island, there are visible copper salts leaching in the cliffs – which no doubt explains its appeal during the Bronze Age – and it was these visible salts that attracted prospectors to the island in the early part of the 19th century.
The Cornish at the time had one of the most evolved mining cultures in the world (also dating back to the Bronze Age), and they were operating mines as far afield as Argentina, North America (especially California, Wisconsin, Pennsylvania, Michigan and Virginia – in Chesapeake they even have a Cornish accent) and South Africa, where they operated the world’s largest copper mine at Okiep, 300 miles north of Cape Town. They were in Australia and New Zealand as well.
Even the great Mark Twain – he of “a mine is a hole in the ground with a liar standing next to it” fame – was of Cornish descent.
In 1835, funded by an English mining adventurer called John Hunt – adventurer is a far better term than entrepreneur, is it not? – a team of Cornish miners arrived on the island to mine the copper. They soon found lead and silver nearby, and began mining that too. And so was Sark’s Hope Mine built.
They should have called it the No Hope Mine – what was prospering in 1839 went badly wrong. How?
Profits erased by extravagant dinners and lax accounting
In the age old tradition of mining, management misled the shareholders. When the ore body was clearly not enough to support the mine, the mine captain deceived where possible to keep the game going.
Management had a vested interest in doing so, even if it was no longer profitable. Their salaries depended on it. There were also some two hundred Cornish workers were employed by the mine, together with their wives (who may also have been employees – “bal maidens”, they were known as) and their families. Sark’s population soared to 790, the highest ever recorded. Management no doubt felt loyalty to its people, as well as their own salaries.
As they chased ore, expanding the mine with the promise of finding more silver, the mine extended some 800 yards and with tunnels 300 feet out to sea where they were mining 20 fathoms – 120 feet – below sea level. You can imagine the noise in those tunnels when there’s a storm blowing overhead, waves crashing and all the rest of it. They actually had quite an ingenious device in play should the mine ever flood that would save the mine and some of its occupants.
General equipment could be brought in from Guernsey, but the speciality stuff had to be acquired from Cornish suppliers, with the effect that Guernsey and London shareholders capital went to the “picks and shovels” suppliers in Cornwall.
Management would go on jollies to Guernsey for their count house dinners, a tradition they had brought over from Cornwall – dinners which acquired legendary status for their extravagance – where news of the mine would be delivered to shareholders. (The count house is the mine office, where the managers worked and where the miners were paid. You’ll still find pubs or estuarants in Cornwall called the Count House.)
Mining has a long and rich history of this. I remember the boom of the 00s and you would see management of non-producing exploration companies living it up at the Savoy, driving Ferraris to expensive lunches and dinners. Who’s paying for it all?
The cost of dinners would be buried in the company accounts. On another venture one outadventurer - an investor or shareholder - is said to have asked why he couldn’t see the spirits from a recent count house dinner in the accounts. The bursar, or what we might today call the CFO, declared that the spirits are there, you just can’t see them.
There was a long Cornish habit of swindling “outadventurers” – investors – from London. It seems they took the habit with them to Sark. Of course, sometimes mines work - and everybody makes a lot of money. That’s the same lure that draws people in and will always draw people in. It’s only when the mine doesn’t work that things go belly up.
That’s not to say working mines was easy. Many lost their lives to it – 20% of Cornish miners were killed or incapacitated before they reached 40, so Cornwall became known as the county of widows. If you saw someone’s window open in Cornwall in winter, it’s likely that the occupier was a former miner gasping for air as his lungs were so damaged from breathing in the dust of thousands of gunpowder explosions.
As things went wrong in the early 1840s, the Seigneur of Sark – the feudal lord – borrowed money to try and keep the business going. But in 1847 the business finally collapsed. The Seigneur lost a lot more than his shirt. He died a year later, crushed with debt. His creditor, one Marie Collins, foreclosed on the debts and his son lost the fiefdom to her.
The son, Peter Carey, would become “a low life scamp”, to quote the (probably biased) archive of the Seigneurie. Sark got a new Seigneur - a Dame actually - and that same family retains the fiefdom to this day. The mine has never been reworked or re-explored. Now it’s all grown over.
Irony of ironies, in Guernsey there is still a record of all the money paid out to shareholders, but those that recorded the company’s income have been “lost”.
Still, the episode had some long-term effects on the island
For a period there was an influx of capital. Prosperity then depression. It brought Methodism to the island from Corn wall, a school for girls and a doctor. It kick-started the tourist industry. The area around the mine – previously just heath – began to be farmed. The English language came to the island.
The houses that were built for the mine workers housed the Sarkese for many decades to come. Apparently because they weren’t built by the Cornish, but by the locals – so they were built with more longevity in mind
“In this spot,” said local historian Edgar Barnes in 1890, “centred anticipations never to be fulfilled, and hopes doomed to dire disappointment. At the bottom of the mine lie buried the fortunes of an ancient family, the hard earned savings of people who had little to spare, and the wasted energies of hundreds of stalwart men who had hoped to share in the wealth which their efforts were to have won. And now all has vanished, as if it had never been, save that there still remain – ghostly monuments of failure – the shafts and the chimneys and the ruins of the various offices.”
This is a story that has played out many times through the history of mining, and still plays out today. Investors – caveat emptor.
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If you are in or close to London towards the end of the month, I will be performing my lecture with funny bits, How Heavy?, about the history of weights and measures at the Museum of Comedy in London on September 28 and 29. You can buy tickets here.
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This article first appeared at Moneyweek.