Rocky Ford enterprise., 1898-08-04

Inefc IL n court III MOntann tnut ms
an excellent idea of propriety In deal
ing with mining corporations that have
been foated for many times the actual
value of the property represented by
the stock. The story is interesting and
instructive. A miner was injured while
working In the Fourth Of July mine,
owned in the main by Joseph Clark,
brother of the Butte millionaire. AS
his injuries We're the results of care
lessness In the management, he
brought suit for $4,000 damages. Tile
jury found that the value of the prop
erty was $125.OO0 while 1t was stocked
for. 81, SOC, 900, ard in rendering II YER
diet declared that the stockholders
should be held individually liable to
the extent of the difference between
the actual value of the property and Its
stock valuation. In other words, the
jury said to the owners: IF you are
willing to have word so out to the
world that your mine Is worth seven
and u half millions, you cannot com.
plain II you are held responsible for
Judgments up to that sum-"
We in Colorado are not specially In
terested In the Individual liability
phase Of the Judgment, but In SO far
rs the decision of the State Supreme
Court, which sustained the lower court.
has opened up the entire question of
over-capitalization, there Is no state
In the Union that has n keener interest
in the issue presented than Colorado.
1t must be admitted that there is one
weak spot In the judgment-the accep-
tation of the verdict fixing the value
of the mine. The value of the best of
mines. after an estimate of the ore in
sight has been made. is so exceedingly
intangible and elusive that the most
experienced engineers hesitate to eS-
press n positive opinion. But, after all,
this is unimportant. The gist Of the
decision is Its treatment of the matter
of over-capitaliZation. 1t Is perfectly
clear that the Fourth of July mine had
not one chance In n hundred of ever
becoming worth seven and n half mill
lions, and that this is the case with
nine out OF ten mines capitalized on q
million-dollar basis Will hardly oe dis.
puted.
The question Mt once arises, How
much of such excessive capitalization
Is due to n desire to misrcpresent the
facts? and what should be done to pro-
tect innocent purchasers from the eff
fects of such Misrepresentation? Con-
cedins that every man has the right
to place his own valuation on his own
property, and that the law was not
made for tie protection of fools, there
still remains the matter of misrepre-
scntation to be guarded agninst-a
matter that may well interest such OF
our law makers as are not more inter-
csted In personal ACKNOWLEDGMENT han
in the public good.
1t Is n broad question, covering many
complicated contingencies, and yet 1t
may be dealt with in such manner rs
to lift the mining industry from the
slough in which 1t has been cast by
dishonest promoters, and place 1t upon
n solid foundation of legitimate enter
prise. 1t IL not necessary in the ac-
complishmcnt OF this purpose to cramp
development. though doubtless this ar
gument would be used against any
method proposed TO correct existing
evils In mining stock transactions.
Neither Is II necessary TO entirely elm
mate the speculative element. All that
need be done Is to so frame the law
that any purchaser may ascertain the
eNnct legal status of property. with
out depending upon the statements of
Interested parties.
There are many ways in which this
may be done, and one has been sug-
Gcstcd In published interview. Let
the promoter of n property file with the
secretary of state n sworn statement,
the same TO be published. giving all the
information concerning the property
and what Is TO be done with the pro-
cecds of the sale of treasury stock-tlic
acreage: width of the vein so far us de-
vclopcd; value of ore sold. If any; ex-
tent and character of development;
amount paid for the property in cash
or stock. price mt which the treasury
stock Is TO be placed on the market;
the exact amount and character of the
work that is TO be done with the money
secured from the sale of treasury
stock, and the estimated cost of each
branch of development and of salaries
to be paid. The result of such II sys-
ten of organization, followed up by
regular statements of the progress
made and expenditures. would he to
Keep out all properties except such as
have real merit. while trading In stock
after the first purchase from the treas
ury would be stimulated rather than
retarded, the manipulation of the mar
kct by directors of the company would
be checked, II not absolutely prevent.
ed, and such disgraceful episodes MS
Blue Jay and others less notorious but
equally vicious would be impossible.
Organized upon n reasonable basis, n
company would have no difficulty in
securing subscriptions for all of its
treasury stock. and need not trouble
itself about subsequent fluctuations, II
too high valuation should be placed
on Its stock none would be sold. and no
harm would be done except TO the pro.
motors themselves. Above all, there
would be an end to the capitalization
of worthless property, with stock float
ed all over the country and no develop.
mcnt done, unless the promoters were
willing to take the chances of term
in the penitcntiary.
Some such plan as this is in vogue in
some countries of Europe. from which
we hear of no such scandals as have
disgraced the annals of mining in the
United States.