Tonopah bonanza. [volume] (Butler City [i.e. Butler], Nev.) 1901-1909, 1908-03-21
vALuE OF MINING STOCK As coLLArEpaL

Mark Lawrence Requa, the man who developed the Nevada Con-
soidated mine at Ely and who disposed of it to the present owners.
lays down the following rules in the Mining and Scientific Press:
Ask any of the leading bankers of San Francisco the question as to
VIVA aiue mining stock has IS collateral and you would probably re-
'eeive a prompt and pithy answer that can be condensed into me word
zone MOI oecaus ONT mining stocks do not possess within them
selves the qualifications necessary to pass the, test Of valuable eollatera
'p' Oeeaus 0 tn unfortunate and unnecessary fact that IS a rule
many mining operations ar lacking in systematic reports compiled by
dians of the interests of the general investing public. which itself i,
entirely ignorant of even the fundamental prineinIes nvolved in min
valuation. Without the application OF these principles by men whose
ability is generally known and whose integrity is SO well established as
- oe eson me nee OF Investigation it is quite useless to attempt to
place a vaine as collateral upon any mining stock.
Beyond this. however, is the lack of a ready market for tbe couat
Sefal NO bank win knowingly lock up it's funds in collateral that a
% command a stable and reasonably prompt market should liquidation
OF tn loan become desirable or necessary; in fact in order to render
sucn material susceptible of use in the form of collateral it must of ne
eeessil be of the same character as to valueb both from an intrinsic and
market STANDPOINT IS warehouse receipts. or stock of certain corporations
'a' are hNed o tn New York stock exchange. Is it possible for min
m5 soeAS 70 pass uch a test? The answer to this may, and probably
Will sound heretical to my banking friends, but nevertheless. / answer
p"a''" res, IL land 1t is a large iD the reports o n the property
"" WA suhceat frequency by engineers of the requisite ability
N integrity and the loan value of the stock is based ON:
The stability Of the metal produced viewed from a market stand
point from which necessarily follows:
2 Net dividend earning power Of % prooerty ,uu oo,o.
actually in reserve, aud
. The power of the stock market promptly to absorb the collateral
If offered for sale. "ei"'
81 these N second must be taken on faith a to the engineers
o"se'NatisH IN estimating values and costs. Thus far the banker is in
the hands of the engineer. As to the first and third. the bankor nnst
puso i' "mSehi IN problem Is one of finance, not engineering. | am
n no sense attempting to point out tie that under proper managemen the
'""'o oe conducted It 10 the banker the lines on which his
urge upon him the desirabiiy of los not the province q this article 70
"'nNs eo"aelal ot to demonstrataning the funds of his institution on
49,. =" mining mpah is safe collateral. venture to say
ta a bank is justified in loanng on mining stock provided II i shown
@antn ae oa ,%ae oenna ma stock is equal, if not superior. to other mer-
anWe collateral and ca be az quickly realized upon.
TO provide this value will necessitate a revolution in certain mtrtno
"e'noo as practiced in this country. 1t must be drastic nnalatahle
70 many without fear or favor impartial and severely onsarvatiyo Il
means the INA OF many ambitions mining schemes oblivion ,or
."ns promoters, seltstyled mining engineers. and a ruthless
separation of the chan from the wheat ""'S