The Washington herald., 1913-03-22
THE WAY OF A
GOLD MINE

Copyright 1913 b. O. NJ. Ke,s New York;
There is an ancient gold mine down in
the Southwest, the history of which is
illuminating to those who put their
faith in mining securities Call 1t the
Peacock Mine, for that is not its name.
Up to about thirty years ago il was a
splendid producer and paid big divi-
dends. Altogether. more than $4,000. 900
of gold has come out of it during its
lifetime.
Many years ago its owners became
involved in litigation and the mine it,
self got into trouble The vein which
had been SO rich ran into a fault" and
was lost. For more than a quarter Of
century the property lay there un-
touched. while men fought in the courts
about IL. The equipment. of course, fell
into ruin and the whole proposition SEEM
ed to be one Of those tragedies that are
81 characteristic of the mining field.
A little while ago, some ambitious
young men with plenty of capital be-
hind them, were looking around for
something to do. when they heard about
this old mine. They proceeded to trace
its ownership, finally found the people
who had the power to transfer il. made
cash bid for IL and got ii, overnight
The alacrity with which the old owners
sold was somewhat of shock to the
ment of their engineers and went ahead
with il.
They employed the very best eEgi-
neering talent they could get. The es-
innate upon which they proceeded was
that II would take about. a years time,
and about sl00.Oho to reopen the mine,
locate the faulted vein, and put the
property again in a position to produce
big dividends. They went down and went
N h.N lint
but they watched very carefully where
every dollar went. wasted nothing at all
in unproductive measures and carried on
the business purely as business. They
borrowed no money. sold no securities,
and asked for no help from the outside.
Instead of working year. they work
ed four years. Instead of spending
100000. Instead of receiving big divi-
dends. they are today just about paying
expenses with small margin over.
They have used the best of skill, spent
the money wisely, and worked much
harder than any of them ever worked
before. Yet they have barely arrived
at the point when they can say that
things look fairly promising
Compare this actual experience with
the prospects that are usually set
forth in the prospectus of a gold claim
or mine. In ninety-nine cases out of
hundred the gold mining stocks that
are offered the public represent only
undeveloped or partially developed
claims. The amount of the capital
represents what the promoters figure
will be needed to open up these claims
and make them productive. Frequent
ly. of course. the capital also repre-
sents a substantial profit which the
promoters expect to make out of SELL
ing the stocks.
moments study will reveal how
fiimsy and uncertain such figures must
necessarily be. When one reflects that
In the case of mine, which because
of previous development was known
to contain gold in quantities. which
was largely developed ant fully tried
out, the amount of money actually re-
quired to redevelop the mine was ten
times the amount estimated by some
of the ablest engineers in the country.
and the amount of these four times
their estimate. il ought to be fairly
obvious that the offhand estimates of
a promoter and engineer with respect
to an undeveloped claim can be moth
ing but the widest kind of a guess.
Often the guesses are honest, par
ticularly on the part of the engineers.
Mining engineering. however, is one
of the most ineXact scientific pursuits.
II is perhaps for that reason more
than another that the mining expert
is so often described as an extra
superlative liar. Whatever the reason,
the fact seems to be that he who
risks his money on the opinion of a
mining expert is very apt to purchase
substantial block of experience and
not much else.
This must not be taken TO mean
that there is no legitimate money to
be made in gold mines. There is. A
good many big fortunes. and a great
many little ones, have been made out
of that pursuit. and always will be
made out of IT. The ri-ht way to go
into II, however, is to go in with your
eyes open. fully realizing that it has
extraordinary risks, and should never
he undertaken without a full knowl-
edge of these risks, and a full under
standing that the money involved in it
is money in business and not money
invested.