The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1897-08-12
LONDON PROMOTION METHODS.
Not So Easy to Sell Mine = Du
Putron Gliddon's Views.

L v lEMS.
De Putron Gliddon, writing from
London TO the Denver Times. says:
Quite a change has occurred in the
promotion methods in this city, and it
is one that will nave a considerable
effect on those who are interested in
the sale of mines. First of all, the
craze for limited liability companies
seems 10 be at its height, and almost
everything that can be SO transformed
IS being made into a limited liability
company. The consequence is that the
day ef the small syndicate of wealthy
men who took up mines as an invest
ment is going, and instead thereof,
these folks are distributing their money
over number of limited liability COM
paries. and not in the large sums they
did formerly. That is one change l have
noticed. And this will make z differ
ence il the sales of mines, for formerly
one could almost put a mine in ones
pocket, or rather the reports, etc, run
ever TO London, and go home again
with the money in satchei. That
cannot be done nowadays, except in the
very rarest cases. The other change
is in the method Of promotion, and
this I shall put into another para
graph.
The method of promotion that existed
and fOurished here last year, and for
some years before, was on this wise.
You had a claim to sell which was
orth, we shall say, 100000. Well, you
went to promoter and he had the
matter looked over, and if all was
satisfactory 10 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 oEe-third for
Iii. III
which the promoter received he paid
all expenses of promotion, which are
quite heavy in London, and would
easily run into $25, 900 or $50 0G0, besides
paying you a certain sum n cash for
your mine, for il was only in rare in
stances that he paid all cash, the usual
method being part cash and part
shares. The promoter, therefore, took
the risk of the money he expended for
promotion expenses, plus the amount
he paid you in cash for your mine. and
for this ne received onethird of the
stock. In order to decrease the risk,
which would be large if the public did
not come in, there arose a system of
underwriting, in which certain firms
and individuals made a contract with
the promoter 20 take so many of the
shares, the price to them being really
less than TO the public though as the
law does not allow shares TO be sold in
such cases below par, the method
adopted was TO give bonBs OF course,
in the case of q company Of say &100,
600 that was subscribed for entirely,
the promoter made a fat thing of it;
for he received e33, 900 in return for an
expenditure of, say. 10000. But the
public? Well they paid about three
times the real value of the mine, for
the vender was willing to sell at e20,-
000 and it was not often that COM
pany came out for less than, say, e75,-
co., and in such cases as some of the |
Arglo-Cripple Creek companies, claims |
were bought at 1000 and floated at |
the nice figure of 100000, 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 sometimes, and they have !
done SO, largely because the companies |
so over-capitalized and fioated have not |
any dividends or been much /
of a success. So that nowadays it is |
not so easy to float a company and the |
promoters do not find the public so |
quick to bite as they were in days gone !
by. The consequence has been that |
the advertising and other such eX- |
penses have increased. as it needs more /
pushing, nowadays, TO get a company I
hoated. and the promoters do not gen.
orally speaking, take kindly to the idea /
Of shouldering all the risks, so that, in |
the case of nearly all the companies |
that have come out of late, including |
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 comforted by this announcement, !
for il suggests to them that the /
vendor believes in the property he
sells, and also that the huge expenses
Of promotion and the large fees have
not been paid all Of which supposition
may or may not be true, by the way.
However, the point is that if you have
4 mine or claim to sell you will not /
ind your pathway so easy as it was
1ne year ago. and before that date. and
f you really want it flOated here, and
the capital so raised, you may find il
necessary to put up all, if not part of
he promotion expenses. There is a
good deal more that could be written
IN this subject, which is so important
% all interested in any way in mining.
)ut I shall have TO leave it to another
etter.