, 1906-02-02
|GOOD AND
BAD STOCK
DIFFERENCE IN MINING SHARES
AS NOTED BY GEoLoGlST OF
STATE UNIVERSITY.
Prof. L. w. TrumbulI Describes Pecul-
lar Situation AS Regards Undevel-
oped Mining Industry of State
Fish For One Buyer May Becom
Flesh for Another.

Any man connected with the mining
business, or supposed to have a knowl
edge of mining affairs, is frequently
asked the question, Would you advise
me to buy shares in the X.Y.Z. miner
And almost always the answer takes
the form of another question, which Is
really, DO you wish to buy as an in
lvestment or as a spe Gulation?" In 9th
Ter words, do you waut to put ycdl
money where it is absolutely safe, and
consequently sure to yield a low inter
est, or are you looking for a chance at
extreme profits with its resulting
risk?"
One or the other of the two condi.
lions is SURF to obtain. Capital always
demands either safety or reward pro
iportional to the risk taken. AS the
safety of a proposition increases, so
will the net return diminish; and in
versely, the greater the expected re-
turns the greater the risk.
So that where one may advise Mr..
Capitalist to speculate in the X. Y. q.
stock he must advise Mrs. Widow to
put her small all into government
bonds. Then, when Mr.. Capitalist re.
allies 25 or 100 per cent on his specu-
I%lation, Mrs. Widow is certain to con.
denim her advisor because she is get
ting only 4 per cent on her investment.
Nevertheless, while it is right for Mr..
Capitalist to risk a little of his plen-
ty, it would have been wrong to advise
Mrs. Widow to assume the same risk
with her little.
We frequently hear mining condemn
ed because of its risks. Truly there are
risks. So also there are risks in the
grocery and meat business. However,
there is a long list of mines whose
stock is as good as United States bonds
but, they can be bought only at a fig.
ure which will give a low net income
on the money invested. Mrs. Widow
can safely invest in such.
These shares, however, are not seek.
ing buyers, for they are an investment,
not a speculation, and the present own.
ers are sure of the income from them,
although it be a low rate of interest
on the present value OF the stock. The
shares which are looking for buyers are
those of, as yet, unproven value. They
may, in the future, prove of marvellous
value, or they may be worthless. If
the buyer buys without investigating
either mine, or the people promoting
the mine, he must be called a gambler,
pure and simple, and a very simple
gambler at that. For one of the east
est ways to make an honest co dollar
is to dig a ten foot hole in the noun
tains, capitalize it at 1000, 900 shares,
par value 81, and then let your friends
have the stock at 10 cents per share.
But that is Simon pure dishonesty.
Let us consider the case of one of our
great mines which are today paying
millions in profits. 1t was probably not
a certainty from the first. Every mine,
with extremely rare exceptions, goes
through the prospective stage. Some
work has been done upon it and indica,
lions point toward its becoming a divi,
dend payer and a valuable property
but no man can say with absolute GER
tainty that it is sure to pay. The pros
pectors have faith in their prospectan
are willing to spend their time and la
Dor upon it. If they had money they
would risk their money also. But they
have no money, and outsiders are Civ
en- a chance to invest their money while
the prospectors invest their time ant
labor.
Here is the opportunity that our av
erage American man, either capitals
or wage Garner, is willing to embrace
There is a risk, but the probability Of
marvellous increase in the value of his
holdings causes him to take the risk
and he buys his thousand dollars OIL
ten dollars worth of stock, rs the case
may be. With time and work the pros
pect becomes a mine and repays its
owners dollars where they invested
cents.
But you say THAT is an imiginar!
case, no such case ever occurred,
There l must contradict you fatty. Elk
actly such cases have occurred b.
thousands and by tens of thousands
and such are occurring all the time
Statistics prove it. Our yearly miner
al mines dividends prove 1t. Any ma
conversant with the mining industr,
knows it.
To be sure there are failures. Their
is a risk. That is the reason why Mrs
Widow is advised not to put her a
l into a mining prospect. But If prope
: precautions are taken the risk is n
greater than in a mercantile bushes
Cf as great); that is why the man VIII
will not be ruined by the loss of hi
5 money is advised to take the risk an
buy stock in the X. Y. u. prospect. TIL