The herald., 1897-09-18
OFFICE OF THE HERALD,
LOS ANGELES. Sept. II. 1897.

OFFICE OF THE HERALD,
LOS ANGELES, Sept. H. 1897.
The numerous failures in cases where
foreign capital has been invested in Cal
ifornic mines has been fruitful topic for
comment and the promoters of such en-
terprises have come in for their share of
blame. shifting as they do. the RESPONSE
bility for such failures upon the property
involved, and, in fact, doing anything to
preserve their own regulations.
The Mining Journal Qondon) has just
had occasion to comment on the same
evil and its remarks are worth quoting.
1t says that "the present system of COM
pany promotion is one of the great evils
of the day, and the mining industry suf-
fers from 1t to a greater degree probably
than any other industry. At the very
outset it imposes burden upon mining
company against which 1t Is destined to
battle and struggle throughout its subse-
quent career, and in nine cases out OF ten
the struggle ends in failure. The average
mining company cannot pay dividends
upon huge capital, and yet this is the
invariable disadvantage with which it
commences it's career, hence the few sue
cesses we hear of, and the fact that fire.
quently more money is put into the ground
than Is taken out of it. Instead of being
spent upon the mine, as it should be, the
greater portion of the capital subscribed
by the public goes into the pockets of the
promoters, who, indeed, reap the largest
benefit and run the least risk When
good mine comes to London it has to filter
through several channels before it can be
placed before the principals who ultimately
consider and purchase it. 1t therefore has
to make quite long journey, and the voy-
age is an expensive one, as commissions
have to be paid to every person through
whose hands it has passed. All this COM
mission money has ultimately to be pro-
videG by the public. and it naturally goes to
swell the capital on which the company is
finally fioated. Thus as we have said,
a great burden is placed upon it at the
very outset OF it's career from which it
rarely RECEIVERS, and which is answerabe
for the many failures which make the min
ing industry so risky an Investment.
Again, 'if the papers have to be re-
turned. the venders of the property are
placed absolutely in the dark as to the price
1t has been offered at in the city, thus dis
couraging them from bringing it again in
more respectable channels. For
some time now the company promotion
business has been In bad way, and pro-
moters and their satellites have been
hoping against hope for the advent of bet
ter times. In their characteristic phrase,
the public won't bite and therefore they
must wait patiently until more favorable
lot In
that time in the early autumn, when the
holidays are over and everybody settles
down once more to serious business. =
Taking it for granted, therefore. that the
latter will arrive in the early autumn, the
promoter will then come forward with his
schemes, and will endeavor not only to
make his harvest while the sun shines,
but to make up for the long time he has
lost. He has hundreds of properties ac-
cumulated in his pigeon holes and drawers,
and that he will bring out and cast upon
the market. like fishermen casting their
nets into the sea. Yes, these properties
have been lying by all these months-in
fact, they have become quite high but to
some tastes they will be none the less rel
ishable. In the meantime the mines are
likely to remain in that condition all their
lives Our advice. therefore, is, once more,
beware!"
The San Francisco News Letter, COM
menting upon the foregoing, says: The
Mining Journal strikes the nail on the
head in the last paragraph, where it
speaks of the accumulation of properties
by promoters awaiting a chance to haul
the net. Not few of these are Californian,
"high" in many ways besides price. 1t is
a well known fact in this city, that for
months past presentable looking proper
ties, such as would permit of an elaborate
prospectus. have been tied up by the class
of promoters referred to by our London
contemporary, as high as f1OOO being paid
for extensions of bonds. The only way
for the public to escape losing money on
mining investments during the coming fall
is to avoid all offerings emanating from
any firm of professional brokers. Touch
nothing with which such people are con-
nectcd in any way remembering that out
side of 81 few we'll developed and paying
mines, which are not on the market, and
are not likely to be for some time to come
at least, that G50OO0 is large enough sum
of money to buy and handle the best pros
pect offering In the state of California to-
day. Any property offered on that market
capitalized for more money than this can
be set down as promoters scheme loaded
down to the guards with commissions for
promoters and their satellites. Touch the
shares of these companies at any price,
and do so at your peril.
= +
Most of the colossal fortunes in this
country which have given rise to much of
the current complaint against the concen-
tration of riches in the hands of a COM
paratively small number of persons have
grown out of a most reprehensible abuse
of the privileges of incorporation. Thou
sands of men have been made rich by the
over-capitalization of enterprises con-
trolled by stock companies, and their
riches have been accumulated in such
way as to cause direct losses to many
thousands of confiding investors.
The process is thus described in an arti-
Gle In the Kansas City Star: An enter
prise. such as the construction of a gas
plant, or the consolidation of number of
separate concerns in a trust. is found to