The herald., 1897-07-01
THURSDAY JULY !, 1887
PERILs OF STOCK SPECULATION

The remarkable revival of public in
terest in mines and mining appears to be
fast bringing about another old-fash-
noted that assayers were rushed with
work, and that manufacturers of all de-
scriptions of mining machinery were
getting orders from a wide extent of
territory between Arizona on the south
and Fresno on the north. This activity
has been we'll sustained, and the fruits
of the new developments are now being
heard from in the shape of many fine
paying properties.
There has also been wonderful num-
ber Of new holes made in the ground,
and new corporations have been organ
lied to work these different prospects,
and to develop the riches they are ard
entity believed to contain. The public
curiosity has been excited, its cupidity
has been aroused and the mighty effort
to get something for nothing is threat
ening to supersede legitimate mining
enterprise.
tention can be diverted from other
matters and made to concentrate for
ever so brief period upon ii,
offers attractions that are we'll nigh ir-
resistible to the average mind. Men
are by nature gamblers. The instinct
may have been suppressed by local en-
vironment and teaching, but the his
tory Of every mining craze proves that
there is no class, no profession, exempt
from the influence of the speculative
fever.
Mining presents itself therefore under
two aspects; one as legitimate busi-
/ ness industry in which money is invest
ed FOR the purpose of extracting from
the soil, those minerals that will return
profit over and above the cost of their
extraction; and, second, as a game of
lottery in( which the public buys and
sells the stock of certain corporations
organized 1stensibly to carry on a legit-
innate mining business. These shares of
stock are bought and sold on the
strength of statements, reports and ru-
mors that gain credence with the pub
lie, and which have the effect sometimes
of sending a. stock up in price and some
times causing it to fall. Those on the
inside of every "deal' are always handy
10 buy or sell as their interests dictate
Thus an immense business is sometimes
done without any actual delivery of the
stock dealt in, and mostly with little or
no knowledge on the part of the public
Of the actual condition of the mine or
even of the people who control it.
1t has been found that these stock
transactions may be more easily worked
when the stock is issued at trifing par
value, and 1t is therefore the custom TO
Issue shares of stock at par value of
!. each. This apparent modesty is
atoned for by making the capitalization
sufficiently high, seldom less than mil
lion dollars, and sometimes soaring into
the empyrean of finance The Mining
News of the 2Sth instant contains COM
panies with capitalizations ranging
from $500, 900 to $500, ,00O, 900. Stock in
many of these mines is trafficked in a a
few cents share. The owner of thou
sand shares bought at two cents share
has not invested much money, but yet
he Is the owner of "a thousand shares.''
and, supposing the mine is capitalized
at $4,000, 900, no uncommon figure, it will
be seen that a price of two cents as
eumes cash value to the whole prop
erty of 100000, and every single cent of
advance represents $4,000 increase in
the valuation of the mine, which, after
all, may be quite undeveloped.
The ease with which the market may
be worked when shares are placed at
such small unit ofvalue ought to serve
az warning to investors, but it seldom
does. If people would but stop to think
before making mining stock invest.
p1ents they would lose less money. and
--ae gains Of the sharpers and cormor-
EozaRas{jQpakel kely dimin-
Nas added to the ffee list