Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-09-11
CROOKED MINE SCHEMES
MORE PROFITABLE
THAN sALTING EVER WAS.
Cheapest Form of Stock Gambling and
Draws the Good
Things.

| Denver Correspondence New York Sun.
| Sailing mine and unloading 1t upon
| some tenderfoot is regarded as very bad
! form In the west now. The modern method
| Is to incorporate 1t and scatter the beauti-
| fully engraved certificates widely as pos
| sible. The new way is much easier, more
profitable and less dangerous.
| The insidiousness of the mining stock
/ gamble lies in the cheapness with which
| one can get In. In hundreds of cities in the
| west are located one or more mining COM
| panies with inflated capital-anything less
than million is looked upon with derision
| and shares are offered all the way from
| one cent to twenty apiece The most allur-
| Ing literature Is scattered broadcast and
| many agents are employed on commission
| to sell the stock. For $25 or $50 enough
| engraved stock certificates to paper re-
| ception room may be secured. and there are
| few men who are not willing to risk that
| sum upon the turn of fortunes card. Ii
| they win they believe that they will make
| killing. If they lose. well, no matter-ft
/ was a good bet anyway
! Immediately after the discovery of new
! gold camp the mining stock Swindlers get
| the busiest. For 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
as mines. A mining corporation. with an
| attractive name and a million or two or
| capitalization, Is formed. A few friends are
called in and set of officers and directors
| ~ 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 1t. Then whatever stock of
1 the company has been issued Is owned by
/ the promoters, while the company has the
claim. If the latter cost $1,000 and the
| steel: issued, 20O0OO0 shares, is sold al an
| average of five cents, the cleanup is close
| to 100000
I Expenses of Promotion.
All of this, however. is not velvet. There
| must be extensively fitted up offices, a
corps or clerks and stenographers. adver
Using 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 1t is difficult. save through experience
or previous careful inquiries, to distinguish
| tho real mining broker from the sham. The
! latter is a close imitator 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 group of these sharks Will
| organize half dozen companies. One is
| thus able to guarantee to inquirers the
| solvency or the legitimacy of another. and
! by freely commencing one another's prop
| ositions help to swell the number of
| suckers.
| Many of these mines are located in terri
| tory that has been prospected and found
| to be practically worthless. Any one can
| ride out, put up notice saying that he has
| discovered the Little Monarch that he
| claims $50 by 500 feet in northerly di
| rection, 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 a few hours he can stake
off half dozen claims, and within sixty
days he can get hole put in each one for
S25
If he Is impecunous ne may go to a
friend and tell him that if he will put UP
enough money for the floating of the cor
| poration he will make him president and
| give him half of the promotion stock Half
| of the capitalization will be taken as paw
| for the promotion and the remainder is sold
| as the treasury stock.
Work of the Shark.
Another plan of operation displays re-
markable financial ingenuity. A shark will
go into district and get option on a
piece of worthless ground for a few hun
dred dollars. He organizes company, hut
as guarantee of solidity announces that
it will be Incorporated only when the sale
of stock has been assured. AS the head
| of the proposed mining company he makes
a contract with the brokerage company, In
which he is also interested by which the
| latter gets 60 or 10 per cent commission for
selling the treasury stock. After the work
| ceases on the unpatented ground the claim
| reverts to the government and Is open for
relocation by the first conner after January
| 1 following. If it should happen that one
/ of the claims located by these sharks shows
| indication of giving good returns In ore,
assessment work will be abandoned and the
| claim quietly relocated by the shark him
self 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 proves good
investment for the promoter. since the re-
ceipt of a dividend IS likely to cause a
good demand.
Promoters always strive to retain for a
dime controlling interest in their corpora
tons This Is done through the retention
of the promotion stock. usually half OF the
amount issued. If the prospect Is devel-
oped and proves paying one II Is done
upon the money furnished by the purchaS-
ers of the treasury stock, but the promot-
ers get an equal dividend upon stock that
cost them only the preliminary expense. If
II proves IA failure. the promoter. the man
on the inside. has the chance to unload his
stock before the public hears of the fizzing
out
The story Is told of a Cripple Creek pro-
moter who was thus called down by dis
corning gentleman to whom he had sent
some literature:
what about your watered stock? Your
method is the tunnel one, but l 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
ciety n man Is compelled to water his
stock" And most of them act as though
| they believed this law to govern.