White Pine news weekly mining review. [volume] (East Ely, Nev.) 1910-1920, 1913-03-02
SUIT TO
CONTRACT
MINORITY STOCKHOLDERS AL
LEGE GUGGENHEIMs ARE ACT
ING UNFAIRLY IN LOW-RATE
SHIPPING OF LEAD ORE.

and the so-ealled Smelling Trust
and involving millions of dollars,
has been filed in the supreme court
of New York. The contestants are
minority stockholders, mostly resi-
dents of the northwest. of the Fed
eral Mining & Smelling Co. Through
their attorneys they ask for the an
nulment of an alleged unfair contract
under which the ores of the corpora
ton are now being shipped to the
shelters of the American Smelling &
Refining Co. on a basis much below
the present price of lead.
The action is n of the most i'm
portant and far-reaehing that has af-
feeted the mining industry for many
years. and is the most important in
its bearing upon the lead industry
since ii passed under the domination
of the smelling rust The Occur
d'Alene district of Idaho, where all
the mines of the Federal Co. are To-
Gated, produces about q per IN of
the total domestic lead supply of the
United States. and about As per cent
of the desilverized output. The Fed
eral Co, accounts for 43 per cent of
the Occur d'Alene output, and no
less than IL per cent of domestic
lead derived from all sources.
The action is also of extreme i'm
portanoe in that it involves men OF
great prominence in the financial
world. About the time the contract
complained OF was entered into in
1905. the Federal directorate in
cluded John D. Rockefeller. Jr.. E.
Parmalee Prentice. George J. Gould,
Frederick T. Gates, George W.
Young. Peter b. Bradley, and sew
eral other ~finaneiers of importance.
Upon the day the contract was
signed the old directors resigned and
were succeeded by alleged dun
mics" in the employ of the smelling
interests. 1t is pointed out the evi-
denee of the old directors will ex-
plain whether they aided the trust to
enter into an unfair contract run
ming q years, after selling control
TO the Guggenheims. or whether the
contract was entered into upon the
Authority of the alleged dummies"
The family row brings back to
memory one of the most spectacular
mining promotions of recent years.
Federal was promoted in 1903, by
Charles Sweeney. one of the most
foreeful and interesting of western
mining men. to take over the hold
ings of the Empire State Idaho Min
ing Co, which for some years pre-
viously had successfully operated
properties at Wardner. Burke and
Mace, in the Occur d'Alenes, Idaho.
F~oreseeing that the association of
such a commanding ffnancier as
John d. Rockefeller would aid in the
exploitation of the new company and
open wide the public purse. Sweeney
approached the STANDARD Oil inter
ests with the proposal that they turn
over the old Everett smelter and
Monte Cristo mines, in the state of
Washington, to the new company
and take the price agreed upon in
stock.
The ep,altar uaa auffnuatad AT that
time and the Monte Cristo mines
had failed to respond to expenditure
of large sums of Standard Oil money,
but the Rockefeller interests accept
ed Sweeney's proposition. and the
property was duly turned oyer early
in 1903. At the same time the
Rockefeller interests took control OF
the company's directorate. Suisse
~quently the Guggenheims sought a
contract for treatment of the com
pany's ores and, as consideration for
a favorable agreement, is said to
have paid $500. 900 for the old smelt-
err at Everett and the Monte Cristo
mines.
Under the direction of STANDARD
interests production from the Fed
eral mines was maintained for two
years at high pressure and. finally
in 1905, the Guggenheims secured
control by purchasing something
over 5000 shares of common stock
from the Standard Oil at a reported
consideration of $40 per share. al
though the common stock was orig
inally dealt out as a bonus with the
I per cent cumulative preferred. The
quotations on common Immediately
commenced sensational flights and
in 1906 reached a high level of s19e
on the New York Stock Exchange
while the preferred ran up to
s112.50.