Amador ledger., 1907-01-11
Novel Freeze-0ut

stockholders in dividends. The
Ledger knows as we'll as we do. that
stockholders become disgusted and
sold their Argonaut stock while this
unheard of surplus was being accumu-
lated, because they could get no
dividends. The Record admits the
mine was not closed to force out
small stockholders. nor was assess
ments levied for that purpose, but the
accommodating surplus plan produced
the same result.
The additional definition of
"freeze-o out" given above will strike
the ordinary reader as novelty. 1t
is an invention in mining phraseology
"a definition that Will cause broad
smile to outcrop the features of mine
operators. Instead of ''freeZe-out, "
we should be inclined to designate
the accumulation of Large sur
plus" in the company's treasury, as
a freeze in" game. Why the fact
that a mining company has a big
OA bn0 Sluo VI 1IS
ledger should lead stockholders to
sell their interests at a sacrifice is a
problem in finance that we cannot
fathom. Such a surplus, we would
more reasonably conclude, would
cause them to hold on, because their
shares would be growing in value III
proportion to the accumulation of
money in the company's treasury.
We hardly think that board of
directors would dream of trying to
drive stockholders to sacrifice their
holdings by pillng up money in the
treasury for their benefit. We will
venture to say the experiment has
never been tried in the management
of the Argonaut property, nor in the
management of any other mine in
.Amador county that we have know
ledge of. More than this, to rail at a
mining management for pursuing the
purdent policy of keeping a good
stiff balance in its treasury to meet
any contingency that may arise, is
far from commendabIe. There are
good mines in this county idle for
many years, that would have been
working and producing bullion today
If the conservative management of
keeping good surplus on hand, had
been followed. They are silent be-
cause every dollar was grabbed up by
the stockholders in the shape of divi-
dends, and when money was needed
for development work it could not be
had without assessment, and the mine
closed rather than levy upon the
stock. The keeping of stiff reserve
fund Is regarded as an evidence of
good management, and a protection
to the stockholders, instead of a
cinch game. In condemning this
policy, the most successful and
Judicious mining operators of Amador
county, in the past or present, must
fall within the prescription. No
practical mining man or business
man conversant with the uncertainties
OF mining, Will ever complain on ac-
count of "a surplus In the treasury.
Complaints in plenty have been heard
because of the lack of surplus, when
surplus might easily have been
created.
The surplus in the AIgonaut treas
ury was accumulated pending the
outcome of the litigation with the
Kennedy. 1t was nothing more than
a plain business proposition. The
workings had reached a point where
further prosecution meant an inva-
sion of the territory in dispute
Above that point the ore bodies had
been extracted. The suit itself was a
costly affair, and a round sum in the
treasury was a good thing to have.
Ii the case went against them it
would be needed. Ii the suit was de.
cided in their favor-as it; was-it
would also be needed, for the reason
that before any more pay could be
milled, expensive sinking operations
would be necessary, involving not
only heavy outlay, but extending
over a protracted period. Without a
nest-egg thus provided an assessment
OF freeze out dimensions would doubt
less have become imperative. After
work was resumed, upon the termina
tlon OF the litigation, the treasury
surplus had shrunk to pretty slim
proportions before the company was
placed ol a dividend paying footing
again, thus showing concIusiveIy the
wisdom of the accumulation of re-
serve fund under the peculiar condi-
tlons confronting the management.
The legislature convened last Mon
day. The address of governor Pardee
Is strong and manly statement. 1t
bears all the characteristics of the
ex-governor. Governor GiIiett's
inaugural is mapped on the same
lines as his predecessor, although
much shorter, and less incisive and
emphatic in tone. The lawmakers
have started out to beat all records
for grating, with s25 per day patron
age for each senator, and SI3 for each
assemblyman, including the demo-
Gratis, who we're perfectly willing to
take hand il the footing game.