The Montana post. [volume] (Virginia City, Montana Territory [i.e. Mont.]) 1864-1869, 1864-12-24


We recently published statement that o
large sale Of mining interests known a.
the Pine Mountain Consolidated Company,
had lately been made in New York by tho
well-known Sheba Hurst and associates,
for $3,000,000. This statement being
doubted by some, we will explain it SO far
as we ave able by giving some account Of
how these sales are effected at.he East
The statement published is correct, we be-
lieye, as it was furnished by one of the
parties interested: but the explanation we
give of the mode of effecting sales will en-
tighten us as to the character of this par
ticular sale. A number Of capitalists bar
gain with the owner of the mine to give
thsm certain sum Of money and GER
tain portion of stock for it. They then
form joint stock Incorporation; issue, say
one-half of the stock and sell it in the
market for cash, which constitutes ths
"working fund.-" The stock, it must ba
borne in mind, is made unassessable, and
therefore sells for fifty to seyenty-hvs cents
on the dollar of its par value, according to
the success of the operators. Let US sup
pose a case like the one mentioned, where
| there are four ledges of l 500 feet each,
making 5000 feet as the basis Of the incor-
| poration. The claims are valued at $500
| per foot, making the So, ,ea0, ,060- The cash
or working capital is to be 81 ,000, 900.
Suppose the stock is divided into 10000
shares of $l00 each, and one-half is sold
at about sixty-seven cents on the dollar
thus the sum Of 81, ,O00, 900 il realized ms a
working fund, and half of the stock is still
held by the originators Of the scheme and
| the owners of the mine. The stock not sf-
fered in market to realize the working fund
is withheld by the trustees from issue, 40
that it shall not come into competition. To
arrive at an idea of what the owners Of
the claims realize from the transaction, let
US suppose that each of the three locators
in this Pinewood mine which was sold, re-
ceives 100000 in cash and the Same
amount in stock, which would leave $700,
600 of the fund and 81 200, 600 cf the
stock remaining. Suppose that to make
the scheme more attractive they set aside
the 00,000 of stock to be sold in future if
needed, to increase the fund. That would
leave 81 ,000, 900 of stock for the corpora
tors whe got up the incorporation. As thesa
men must realize some money in hand from
the transaction, the purchase of the mine
is supposed to have cost three-quarters of
a million instead of $500, 900, which leaves
S250,000 actually. in the treasury to work
the mine with, and 100000 in stock to be
sold to increase the fund. As work is done
and machinery erected the mine becomes
valuable and the stock saleable, enabling
the originators who hold the balance Of the
stock tc sell, and thus realize more money.
If based upon really good claims as thoes
N question are believed to be, the transac.
ton is legitimate aud honorable; if upon
claims known to be worthless, it is like other
wild cat operltions> and is unjustifable.
We think the system upon which claims are
incorporated at the East much better than
our own. IF a number of nen are con-
yinced that ledge or several together are
valuable and worth developing, let them
associate for the purpose, take a portion Of
the stock themselves and pay the cash for it
and offer the stock in market also, so as TO
realize the amount thought necessary to de-
velope the mine, and then expend il in doing
SO. II Successful the stock will become
valuable, If not, only certain sGm has been
risked, and there are no assessments to paw.
, We believe it would do more to kill Wild.
cat stocks aud bring our mining operations
into alegitimate channel than anything
else that can be done. Under such a sys-
tenn, a man risks certain sum in one
mine and certain sum in another. lie
pays it out on the start and knows tho ex-
act extent it costs him. He dses not get \
lot of stocks on hand that he must paw as
sessnaents On or lose, fer the stock il unas-
sessablc, therefore the assessments cannot
embarrass him. as they now do. 1t would
very materially reduce the risk and also
simplify our mining operations. We hope
to see this system inangurated here. Ffr-
! ginid Gniori.l ssencA .iii,b sdI fls. a70 al