How Does a Lathe Milling Attachment Work?

A milling attachment is definitely better than no mill at all. If you’re patient and work within its rigidity limitations, they can do some nice work. I made one for my Hardinge DV-59 lathe and used it to make my 2” boring head.

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Of course, a few months after I finished the milling attachment, I bought a full size knee mill.
 
Model Engineers from 60 years ago made good use of these attachments on Myford lathes to build truly remarkable engines. In that era Palmgren made one.

For 7x Mini-Lathes you can buy these:

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They also have versions that swivel, like this one for a Myford 7 (provide your own vise):

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Is it an x-y table that attaches to the bed way, to be used in conjunction with a cutting bit somehow attached to the lathe spindle?

Essentially, yes. Think of it as a clunky vertical milling machine laid on its back. The lathe spindle becomes the mill spindle, the milling attachment, cross slide and saddle provide the X,Y and Z movement of the part.

They are not elegant but will serve for simple milling work. You can get small modern ones fairly cheap, around $100. The older ones for vintage lathes seem to be a bit more functional, but come with a much higher price tag, often $300-500.

As bad as that may sound I think they are probably a better solution than many of the combo machines.

As Chazz said, there was a time that milling attachments were what most hobbyists used to do milling. Small vertical mills were uncommon until the 1960s, so most hobbyists had a choice of a small horizontal mill or a milling attachment.
 
I think the answer may depend on the lathe. A milling attachment on a Hardinge or a 10x22 lathe would likely provide a different experience than I had with a Vevor 7x14 lathe. Milling will expose every bit of 'looseness' in the lathe carriage and cross-slide - the milling attachment is a pretty big lever. I did a bit of milling with the attachment and made a few parts for some simple model engines. Six months later, I had a Sieg mini mill. Even the small SiegX2 with its limitations is a "whole 'nother thing".
 
Yep, as people have said, there has been a lot of very, very fine work done on a lathe using vertical slide attachments (AKA milling attachment).

Certainly over here in the UK in the 50's, 60's, 70's and 80's, the Myford vertical slide attachment would have been considered part of a reasonably well equipped workshop that had a Myford ML7 or Super 7 in it. Same would probably have been true for the Boxford milling attachment in a Boxford lathe equipped workshop.

That said, even with those lathes (which are considerably more rigid than say, a Chinese mini lathe), the moment a model engineer could get their hands on a dedicated mill (the Dore-Westbury was one of the first small benchtop mills available in the UK) or at least a milling head (the Amolco milling head was popular), they'd jump at the chance.

There are things one can do to improve the rigidity of the Chinese mini lathes, which will make a vertical slide attachment more useful, but there limits to the improvements you can make.

Generally speaking, if you can fit a milling machine (even a small Chinese benchtop one) into your shop, and can afford the purchase, your milling capabilities will be orders of magnitude greater, than with a vertical slide attachment for your lathe.
 
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