The sun., 1905-08-20
WAYS0F CROOKED MINING COS,
PROMOTING MORE PROFITABLE
THAN SALTING. EVER WAS.

THAN SALTING- EVER WAS.
IT'S the Cheapest Form Of Stock Gambling.
ana That Il what Draws the Good
Thlngs-K Property should Provo
Valuable tho Crook RelOoates It.
DENVER, Aug. 1s.-Salting a mine and
unloading 1t upon some tenderfoot Is re-
garded as very bad form in the West now.
The modern method Is to incorporate 1t and
scatter tho beautifully engraved certificates
as widely as possible. Tho new way Is
much easier, moro profitable and less dan
gerous.
Tho insidiousness Of the mining stock
gamble liss In The cheapness with which
one can Ct In. In hundreds OF cities in
tho West ars located one or more mining
companies with inflated oapital-anything
less than . million Ia looked upon with
derision--and shares arc offered all the way
from one cont to twenty apiece. The most
slluring literature Il scattered broadcast
and many agents are employed on COM
mission to sell the stock. For S25 or $50
enough engraved stock certificates to paper
a reception room may be secured, and there
are few men who are not willing to risk that
sum upon tho turn Of fortunes card. II
they win they believe that they will make
. killing. II they lose, well. no matter
1t was good bot, anyway.
Immediately after the discovery OF now
gold camp tho mining stock swindlers get
the busiest. For q few hundred dollars
the shark can buy or locate in the vicinity of
the new camp shreds and patches OF ground
that have no present or prospective value
| IN rripae A s,,iptpo Nth n
attractive name and a million or two Of
capitalization, Is formed. A few friends are
called in and q set Of officers and directors
Is selected. They at once negotiate deal
whereby all or nearly all Of the stock Is
turned over to the owners Of the claim In
payment for it. Then whatever stock Of
tho company has been issued is owned by
the promoters, while the company has the
claims. II the latter cost 81 900 and the
stock issued. 20OO 600 shares, is sold at an
average Of five cents the cleanup is close
to 500 900.
All Of this. however, is not velvet. There
must b expensively fitted up Offices, a corps
Of clerks and stenographers. advertising
expenses and various little details to be
covered. All Of which COST money. The
whole object Of the campaign is to get rid
Of the stock quickly. A year Is the usual
limit.
There are many legitimate mining
brokers but there are harpies in abundance
also. It is difficult, save through expert
ence or previous careful inquiries. to dis
| tinguish the real mining broker from the
sham. The latter is close imtator. He.
too. controls some brokerage or financial
! company, and he, too. advertises his sole
business as the handling Of sound stocks
Of proved value. Oftentimes a group
Of these sharks will organize half dozen
companies. One Is thus able to guarantee
to inouirers the solvenoy or tho legitimacy
Of another. and by freely commencing one
ano ther's propositions help to swell the
number OF suckers.
Many Of these mines are located In terri
tory that has been prospeoted and found
to be practically worthless. Any one can
ride out. put up q notice saying that he has
discovered tho Little Monarch that he
claims $50 by i,500 feet in northery direc-
tion. that he claims sixty days In which to
do the assessment work and thirty days in
which to file notice with the County Clerk
or Recorder. In q few hours he can stake
Oh half dozen claims. and within sixty
days he can get a hole put in each one for
II ne Ia impecunious he may 60 to friend
and toll him that il he will put up enough
money. for the floating. Of the corporation
he viii make him president and give him
capitalization will be taken as pay for the
promotion and the remainder is sold as the
treasury stock.
Another plan Of operation displays re-
go into district and get an option on a
piece Of worthless ground for few hum
dred dollars. He organizes a company.
but a. Q guarantee OF solidtty announces
that it will be incorporated only when the
sale OF the stock has been assured. AS the
head Of the proposed mining company
he makes a contract with the blokerage
company, in which he is also interested,
by which the latter gets 90 or 10 per cent
commission for selling the treasury stock.
ground, the claim reverts to the Govern
nent and is open for relocation by the first
conner after Jan. I following. II 1t should
happen that one OF the claims located by these
sharks shows indication Of giving good re-
doned and the claim quietly relocated by
the shark himself. Instances have been
known also where small dividends have
been declared and paid out OF the money
received for the sale Of stock: This often
moter, since the receipt Of q dividend is
likely to cause a good demand.
Promoters always strive to retain for a
time controlling interest In their corpora
tions. This is done through the retention
Of the promotion stock. usually half Of the
amount issued. II the prospect is devel-
oped and proves paying one it is done
upon the money furnished by the purchasers
OF the treasury stock, but the promoters
get an equal dividend upon stock that cost
them only the preliminary ex pense. II it
proves failure. the promoter. the man on
the inside, has the chance to unload his
stock before the public hears OF the azzling
out.
The story ID told Of Cripple Creek pro-
moter who was thus called down by dis
cerninR gentleman to whom he had sent
some literature:
what about your watered stock? Your
method l. the tunnel one, but prefer the
shaft system. where the water Is in the shaft
rather than in the stock"
The promoter framed this reply: 'Under
the laws Of Colorado. passed at the special
instance and request Of the humane So
cietv, q man is compelled to water his
stock" And most OF them act as though
they believed this law to govern.