The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1899-12-09
PRACTICES OF SHARPERS.
Palming OF Big Figures Of Sale
on an Unsuspecting Public.
NEW swlMnLlNc METHOD EAST.
Companies That Capitalize Under nm
Option or Lease, and Deceive the
Purchaser of stock, Who Think
Their Investment II Made I'm
Property Instructive Experi-
ences OF Britain Columbia Men.

ences OF Britiah Columbia Men.
Among other foolish practices which OF
late have become particularly noticeable Is
the reporting Of the sale OF mining property
IN the prospective stage Of development at
large figures. Frequently these sales
pass the million dollar mark. There can be
put ono object In making these false state
ments, and that is to give to the property
an apparent value which IT does not pos
ssss. and Is as bad as representing 1t to
have large and valuable ore bodies which
do not exist These so-called sales are In
most instances merely contracts to sell or
buy. not binding on either side, and the
actual price Is usually one-tenth, one-twen-
tieth or sven one-hundredth Of the price
stated to the public. In most cases It Is
the intention OF the promoter to organize a
corporation and to put the property in at
the price stated, generously not increasing
b.
The investor In such stock must neees-
sarfly buy on an inflated valuation and his
chance Of ever getting even. to say moth
ing OF making anything from his invest
ment, is very small. Since the war tax
has required stamps to be affixed to these
documents some have even resorted to this
cheap method Of deception, putting a great
er number of stamps on the instrument
than the transaction actually demands, car
rying the impression that large sum Of
money was paid for the property. These
small frauds may serve their purpose in
some cases, but careful discriminating per-
sons will IN most cases understand the sit
uatton and not be deceived into believing
either all they hear or see.
80
One of the misfortunes of the mining
business is that It affords many opportuni-
Al Snv A. falrl - rio a.
grees. So-called properties can be picked
up cheap, and the formation of a company
IL not an expensive operation. A few hun
dred dollars serves for the necessary fees
and stationery and to furnish presentable
Offices in the financial district. Then be-
gins the game of working the public, which
does not stop while the stock can be dispos-
ed of at margin of profit.
That kind Of swindle is pretty well under
stood except by the greenest OF tenderfeet
But there are others of a more intricate
fraud even men Of affairs. For instance,
q mining company may be organized under
the laws of several states upon an option,
important fact does not appear in the al
Turing prospectus. The stockholders invest
in the belief that the company owns the
property In its own name After selling
stock and doing enough work to demon
strate the worth of the mine, the promo
tsrs deliberately fail to meet one. of the
time the confding shareholders hear of the
bond and lease. They are informed that
this failure to pay works forfeiture OF all
takes possession, and the mining company
finds that 1t has no property. Whereupon
the cunning promoter gets rid OF the orig
inal investors, whose money has served to
prove up the mine makes a new deal with
the vendor, and is ready for another stock
operation on bigger and perhaps more
profitable scale.
Persons afflicted with moral strabismus
are prone to assert that such game is
strictly legitimate. They argue that as the
and not in the company, the company nat
urally forfeits its rights in the property. II
Is, OF course. difficult to get the heeced
actiNs, and to the outsider the whole oper-
alton 10 nothing more nor less than bare
faced swindle.
Columbia mining companies, the Rossand
Record correctly maintains that the most
encouraging sign Of the times is the gener-
al tendency of those companies whose
stock Is nonassessable to reincorporate or
reorganize with assessable stock. With
rare exceptions, the companies which are
inactivity have recently made their stock
assessable, and thereby have attained the
necessary capital The companies which
continue the old worcestershire system are
doing no development, for the reason that
their stock is unstable, and therefore they
cannot obtain the capital.
A few illustrations will prove the futility
assessable stock, AMI the readiness with
which large amounts of capital can be OBJ
thus disproving the oft-repeated assertions
that people will not buy assessable stock.
The original capital of the Boundary
nx rteen e esms Mas of WHICH Swn
$4,000 81 shares s, we're put IN n the
crown grants. about 5000 was left for
work, and 1880 was realized by small
shipments of ore taken out In develop
that arrangements have been made with
the London and Canada syndicate to take
40o.O goo shares OF the promoters stock and
$4,000 shares of treasury stock at price
which Melted the company $4,000. With
this sum the property has been prospected,
and it is the syndicates intention to reor-
ganize and put $4,000 in the treasury as
working capital. Thus it is considered
that fully $4,000 will be necessary to place
the property on its feet.
Another instance cited by the Record is
that of the Giant, which was capitalized
three years ago at 2,51a,0 600 with about
100000 treasury shares. Work was started
with about $4,000 cash in the treasury,
and when that was exhausted the stock
was nor salable. A new management real
ized about 5000 from the sale of the treas
ury shares. netting the company less than
4 cents per share. The late Capt. Hall esti-
mated that $50 coo would be necessary to
determine the value of the property and
recommended the plan which Is now being
carried out.
The California is yet another instance.
1t started with capital of s2,J00O0o, of
which 10000 shares We're put in the treas
ury. over 100000 was realized from the
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