The Savannah morning news., 1901-02-26

The shady Methods of UnscrupuIous
SpecuIatora

The shady Methods of UnscrupuIous
Spectators.
Salt Lake Letter In New York Evening
Post,
When the mining industry hourishes,
mining schemes multiply. Some of these
are meritorious more OF them are purely
speculative and many are merely swim
dies. Gold caps of the Western States,
where ore production is steadily inereas-
ing, furnish numerous examples OF the In
genuity of the promoter and the crafti-
ness of the wildcat operator. The day
OF the Sailing" method of deceiving in
vestors is practically over Even though
dazzled by the splendor OF large fortunes
suddenly acquired by fortunate mining
men, would-be buyers OF niinesoare too
wary now to be led by ASSAYS offSmaiI
samples OF ore into taking properties at
big prices. Such purchases are made
only on reports OF experts who have thor
oughly explored the workings and sam
Piled the exposed ore bodies.
II Is the stock method that Is most pop
ular in the business of victimizing. A
"prospect'-that is, a piece of ground In
which no ore of Consequence has yet been
found-is sufficient on which to form
corporation. The property OF the com
pany may consist OF one mining claim,
or the concern may have group of
claims with which to impress buyers of
shares. When 1t is duly Incorporated, and
has laid in supply OF handsomely en-
graved blank stock certificates, Il is ready
for business. When a rich vein is struck
in what has hitherto been a prospect"
and the stock of its company shoots up,
there is feverish demand for low-priced
shares of other prospects in which ii
is now easy to imagine golden POSSIBLE
ties.
Treasury shares.
When a company Is organized with only
undeveioped ground as a basis, the plan
is often followed of setting aside a por-
ton of the stock as treasury shares. The
company. Tor instance. may be formed
with a capital stock of 100000 shares. The
incorporators retain, say 10000 shares,
and the remainder is put in the treasury.
The object of this plan is to derive
enough money from sales OF treausry
stock to develop the property without
expense to the incorporators. That hon
est enterprises of this character are num-
erous is proved by the experiences of the
camps, in all of which money has been
made by purchasers of treasury stock.
But the wise man is on his guard against
deception in projects OF this kind. II ore
of good value is encountered in the prop
erty before the treasury stock revenue
is exhausted, the operation of the prop
erty is easy thereafter. But IL an as
sessment becomes necessary, the stock
is apt to become much deprecated unless
the buyers of the treasury stock are en-
couraged to retain their holdings and pay
the assessment.
The prospect" Is Showing UP we'll"
and the promoters desire to buy In the
stock at low figures. report may pres.
emily be in circulation that the property
is worthless. This may appear TO come
from some workman In the mine who is
said to be revealing a secret or from
some person who is said to have made
surreptitious inspection of the work
ings. The report seldom fails to depress
the stock. On the other hand, the devel-
opment work may have convinced the
men behind the scheme that good ore
Is not obtainable in the property, and
then If they are tricky they will proceed
to boom" the prospect, in order that
they may create demand for it's stock
and sell out under cover. Stories of the
good character of the rock disclosed in
the tunnel or the shaft are put out, and
soon hints are given that the promoters
are keeping 1t quiet" so as to buy more
stock before it advances. AT length
some paper will print something like the
following: --.---s
News of a strike in the Sure Thing,
which Is little less than sensational, was
brought IN yesterday. The management
refuses TO give out details-or to either
affirm or deny the good news. But 1t
is understood that In drifting from the
1O0-foot level a strong vein was encouut-
cred. An asasy of the ore is said TO
show ten ounces of gold, sixty-nine
ounces of silver, and thirty per cent OF
copper. This was not an assay of a
picked sample, but of ore taken just as
1t comes. The vein is reported to be
widening out with each blast and now
ten feet of solid ore is exposed. It is ex-
pected that a shipment will be made be-
fore long, and II is reasonable to predict
that it will not be many months until
the Sure Thing has been added to the
dividend-payers OF the camp.
Such reports seldom fail to tighten the
grasp of innocent shareholders on their
stock and as the men In control of the
property can usually prevent for a time
the exposure of it's true condition they
can frequently dispose Of q good portion
of their holdings before the imitation sub
sides
Various devices are employed to push
the sale of stock. A favorite one Is the
open purchase of shares of a company
by it's promoter. while he is secretly SELL
ing the stock through an agent. If the
promoter has not yet established repu-
tation for crookedness, the price OF the
stock is prevented from falling until the
insder has unloaded.
The belief may be spread that a poor
mine is becoming productive through the
payment by the company OF a few divi-
dends. Those who own a majority of the
stock which they wish to sell may well
pay out of their own pockets few
dividends on the minority stock, II there
by they are able to advance the price of
their own stock