Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-12-09
Financial News Letter
BY ". g. NICHOLAS.

| scicSt AZ w al street the past week uoS
| been not In the stock exchange. but In
! the curb market. The big slump In the
shares of the Nipissing Mines Company.
| the star Cobalt property. as. result OF
the refusal Of the Guggenheims to take up
their option on a block Of 100000 shares
OF the company's stock has been topic
| OF greater interest than the Presidents
message or the renewed tightness Of money.
The chief mining expert OF the Guggen-
| helms is John Hays Hammond, who rose
| to fame In South Africa and whose name
was on everybody's tongue at the time OF
| the Jameson raid. Hammond's salary as
expert for the Guggenheims considerably
| exceeds that paid by the nation 10 the
President Hammonds opinion OF the value
of a mining property has been valued more
| highly than that of any other engineer in
| this country or Europe. Many critics nave
said that Hammond has been Overrated.
! Be that as it may. when the Cobalt boom
started and the reports Of rich strikes or
native silver began to come to Wall street
the Nipissing property was offered here
| for $3.50, 900. That was only few months
ago. Hammond did not think the property
| was worth $250,OO0, and his principals, the
| Guggenheims. did not buy 1t. Capt. de la
| Mar and his associates opened up one
crevice on the property that proved enor-
mously rich in silver. The ore could be
I
property was again offered to the Gug-
genheims. and they sent Hammond up In
October to look it over. He made rapid
| examination of the workings and reported
that 1t was the greatest silver mine that
| he had ever seen. Capt. de la Mar and
his associates offered the Guggenheims
| third Of the capital stock. or 100000 shares
par value $2,O00,OOO for $1O,OUO,OO-that
| is, at S25 a share. Hammond strongly
urged his people to accept the offer, and
so the bargain was made: The Guggen-
helms agreed to take the 100000 shares in
four blocks Of 100000 shares each, paying
four installments of $25O0O0O. The first
! installment paid. and the Guggen-
| helms left 10000 shares with Capt de la
! they should not make further payment.
The 10000 shares they received. therefore.
represented payment of $625o share.
Hammond said that the single vein from
| which ore was being shipped at the rate
| of $4,000 q month had $5O.0OO.0OO worth
of ore In it. All Of Hammond's friends
and the Guggenheims' friends were told
that the Nipissing was a wonderful prop
| erty and that it was really q bargain at
$25 share. The Guggenheims invited their
| banking friends to come in on the option,
and they parceled out blocks OF the stock
| at the option price. The stock rose vio-
| lently in the curb market selling as high
as $685. Immediately after the news Of the
Guggenheim deal came out. Those who
| were not fortunate enough to share with
| the GuRgenheims in their block OF stock
rushed into the market to buy 1t at any
| price that sellers were willing to make
but from the time that the Guggenheilns
made their first payment of $2,500,O00 on
| their option the stock sagged In the mar
ket. 1t fell back to $50 and then to $25
| the option price. and then broke through
| that.
| week ago today the stock broke through
$40 on heavy selling, and the attorneys
| for the Guggenheims made the statement
| that John Hammond n
| thusiastic about the property than he ever
| had been before and that the Guggenheims
would make their second payment Of
81, 100000 due that day. In the after
noon the attorneys for the Guggenheims
sent statement to the newspapers, say
| ing that because they had not been given
opportunity of Investigating rumors re-
garding the validity of the company's title
| that they had refused to pay the second
| installment their option and that they
withdrew entirely from the Nipissing prop
| erty. A further precipitous slump In the
price Of the shares this week was the re-
| suit. The Guggenheims, through their at
| torneys, made 1t plain that they shouldered
all losses taken by those who had par
| ticipated with them In the option.
The Guggenheims have always been very
proud Of their family name and their bust
| ness record. but the malodorous Nipissing
| incident has naturally stirred up great
| deal of adverse criticism. and the Guggen-
| helms will have to come out In the open
| ana prove their case DeIOre w all street Will
| concede that they have acted entirely hon
| orable in this affair. One of the rumors
| that Wall street has and that many I'M
prejudiced persons are inclined to believe,
| Is that the Guggenheims sold very large
| block of Nipissing stock when 1t was
quoted in the netghborhood Of $50. The
supposition Is that they had no sooner paid
the first $2,500.0O0 than they got cold feet
| and made haste to get out of their hold
| ings. AS one Of the Toronto newspapers
| says. 1t was a case Of buck fever" Sew
eral hours before the Guggenheims an
nounced that they had thrown up the deal,
| and at q time when their attorneys were
| telling the public what q wonderful mine
the Nipissing was. the Guggenheims were
telephoning around to their intimate friends
advising them to get out Of their stock.
About this there is no question. They
acknowledged that they had made q mis-
| take and told their friends that they did
not want them to suffer. The original
owners Of the property. who made the deal
the entire incident They have unbounded
faith in the future Of the property, and
believe that all that John Hays Hammond
said about Its enormous wealth Of silver Is
true wall street is inclined to believe that
| the Guggenheims would not have with
drawn from an enormously rich property
solely on account Of very shadowy dis
pute over a title. The question as to the
title, Wall street thinks. was merely a
! subterfuge. The commonly accepted opin-
| ion is that the Guggenheims decided they
had made a mistake in putting a $50, 600. 600
valuation on a mining property that had
scarcely been opened up. Mining men
who have been long in the game say that
| in the days Of the Floods and Fairs and
Mackays in Nevada and California it was
not the usual course for the big men to
| buy mines at 100000 valuations that
had previously been offered at few hun
dred thousand dollars. The old buyers
bought the mines the five and six-f1gure
valuations and then sold them to the public
| for millions The Nipissing may be the
great property that Capt. de la Mar and
| his friends think 1t to be. and the stock
may sell again at $50 share. Some mining
| men will predict that 1t will sell at $40 and
$50 a share. and maybe more. They say
nobody has any idea of the enormous
amount of silver that will be exposed up
In Ontario with the development Of these
mines.
The sudden collapse In the Nipissing
speculation has made SPECTATORS little
| more cautious about putting their money
into all these new mining properties that
are now being foated. Attention has been
directed IN this correspondence for sew
eral weeks to the gaseous character of
much Of this mining speculation, and the