The herald., 1897-08-26
OFFICE OF THE HERALD.
Los Angeles, Aug. 25, 1897.

Los Angeles, Aug. 70, le9t
The change that has taken place in pro-
motion methods in London is described in
recent letter to the Denver Mining Rec
ord and quoted by the Mining and Scientific
Press. 1t will be read with interest by those
concerned in the sale of mines. The COM
munication says: First of all, the craze for
limited liability companies seems to be at
its height, and almost everything that can
be so transformed is being made into
limited liability company. The consequence
is that the day of the small syndicate OIL
wealthy men who took up mines as an in
vestment is going and instead Thereon
these folks distributing their money
over a number of limited liability COM
panies, and not in the large sums they did
formerly. That is one change that have
noticed. This will make difference in the
sales of mines. for formerly one could al"
most put a mine in ones pocket, or rather
the reports etc. run over to London and
go home again with the money in
satchel. That cannot be done nowadays
except in the very rarest cases. Other
changes are in the methods of promotion.
The method of promotion that existed and
f1ourished here last year and for some
years De1Ore was on tHlS Wis., IOu Ietu d
claim to sell which worth we shall
say. 100000. Well, you went to a promoter,
and he had the matter looked over, and.
If all was satisfactory to him, he agreed
to float your company on this basis; One
third of the capital to go to him for his
trouble, one-third to you and your friends
as vendors, and one-third for working cap
ital Out of the one-third which the pro-
moter received he paid all expenses of pro-
motion. which are quite heavy in Lon
don, and would easily run into 900 or $780,
600, besides paying you a certain sum in
cash for your mine, for it is only in rare
instances that he paid all in cash, the
usual method being part cash and part
shares. The promoter therefore, took the
risk of the money he expended for promo
tion expenses plus the amount he paid
you in cash for your mine, and for this
he received one-third of the stock. In
order to decrease the risk, which would be
large if the public did not come in, there
arose the system of underwriting in which
certain firms and individuals made con-
tract with the promoter to take SO many
shares, the price to them being really less
than to the public, though, the law
does not allow shares to be sold in such
cases below par, the method adopted was
to give a bonus. OF course, in the case
of a company of say e10O,0O0 that was sub
scribed for entirely, the promoter made
fat thing of it, for he received eSS, 600 in
return for an expenditure of say 910OO0
But the public? Well. they paid about three
times the real value of the mine, for the
vendor was willing to sell at e2OO 900, and
poto oft hat
for less than say $4,000, and in such cases,
as some of the Anglo-Cripple Creek COM
panies claims were bought at S14O 900 and
hoated at the nice figure of e12O OO0-about
four times the price paid for the property.
OF course, this style of business could not
last forever The public had to catch on
some time, and they have done so, largely
because the companies overcapitallzed
and tloated have not returned any divi-
dends or been much of success, so that
it is not easy to float a company and
the promoters do not find the public so
quick to bite as they were in the days gone
by. The consequence has been that ad-
vertising and other such expenses have in
creased, it needs more pushing nova
days to get a company floated, and the
promoters do not. generally speaking, take
kindly TO the idea of shoulderng all the
risks, SO that in the case of nearly all the
companies that have come out of late, in
Guiding the Caledonia of Cripple Creek, all
the promotion expenses have been paid by
the vendor, and that fact is so stated on The
prospectus. The public seems to be COM
forted by this announcement, for it sug-
gests to them that the vendor belives in the
property he sells, and also that the huge
expenses of promotion and the large fees
have not been paid, all of which supposi-
ton may may not be true, by the way.
However, the point is that If you have a
mine or claim to SELL you will not find
your pathway easy as it was one year
ago and before that date and if you really
want it floated here, and the capital so
raised, you may find it necessary to put
up all, if not part, of the promotion ex-
penses.
There was STAG, sos collected by the
Internal Revenue taxes for the fiscal wear
1861 This is the amount given in the
preliminary report of the Commissioner,
which may be somewhat modified by later
returns. Last December, from figures al
ready at hand, the Secretary of the Treas
ury estimated the revenue from this source
for the above fiscal year at $3.50 0OO OcO
which was apparently an over-estimate by
about So, 100000 The sources of the re-
ceipts are as follows:
Spirits sS2 OOS 55S
Beer .......................... 32 Az, 1862
Tobacco S0 no. 297
Oleomargarine ...................... 1034,129
Miscellaneous Observation-Disclosures. S94, 1862
Total 1S96-97.. ..s146 GIG, sos
Total 1S95-96. ...................... 46, S30 GIG
---
Decrease Observation-Disclosures. S211 10S
The estimate for the last fiscal year was
much closer than that for the previous
fiscal year which was Sl65, 100000. During
the past decade the annual revenue from
this source has been as follows:
June 30