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A mortiser looks like a drill press, but it's not the same. A mortiser cuts square holes for use in joinery. The handle needs to be pulled only once, unlike when drilling a hole with a drill press. The bit for a mortiser is an auger bit running through the center of a square metal chisel. The two pieces work in tandem to remove the material and make the hole square.
The auger bit locks into the chuck and the chisel goes into the front mounting point. Mount the two pieces with a bit of space between them. Set the chisel bit in first then back the auger away a little so the chips can come out when the hole is drilled.
Bring the bit down to the final depth of the mortise. Then, adjust the depth rod by loosening it with an Allen wrench and pulling it all the way down to the base of the machine. Lock it into place. The next time the head is brought down, the depth rod will stop the bit at the proper depth.
The hold down keeps the material in place. The bit will try to pull the material up when it lifts out of the hole. Set the hold down to keep the material in position, but not so tight that the material can't be removed after the cut. Also, make sure the mortiser is clamped down tightly to the worktable.
Tip: Rub some paraffin on the bit to grease the metal and keep it from heating up.