The Goldfield news and weekly tribune. [volume] (Goldfield, Nev.) 1911-1947, 1915-09-11
Stock Without Par Value

In order 10 develop a mining prospect it is neces-l
sary to raise capital. The most convenient method OF get
ting this capital is By forming a stock company and sell.
ing its shares, says Mining and Scientific Press. Local
mining men are usually the first buyers OF such shares
and when buying them know perfectly well that they FISK
losing their money. Hundreds, if not thousands, OF such
companies have been formed within the last few years and
their shares sold to the o~pen-eyed buyers. This perfectly
above-board legitimate mining business sets the wheels OF
mining industry spinning and often results IN developing
mines that paw taxes, dividends, wages to workmen, sal
aries to engineers and furnish a market for supplies and
machinery, besides producing the metals needed by q ma
ierial civilization.
The Incorporation of a mining company, such as is
required for financing a prospect is a simple matter;
the total exp:rse OF the incorporation in many OF the west
ern states need not exceed $Ioo; this sum will cover the
state fee FIR Incorporation, the cost OF a seal, a sheat OF
stock certificates and an account book for the secretary.
No lawyer is needed for these small companies. In con-
sequence, in the boom days companies were formed on
small, or no. provocation and their name was legion. Al
though not difficult to form a company, yet before
any shares could be sold a serious difficulty had to be over
come. The trouble was that the shares could not be sold
unless the company owned property the value OF which
was equal t. It's capitalization. For example, take the
case where the property cost only $1,000, while the COM
pany, as is usual in the west, had a capital of 100000
in 100000 shares, each with a par value of 81. Before
any shares could be sold the secretary or some other Off
cial of the company had to certify that the property was
worth 100000 This certification of a fictitious value
was a stumbling block to a Conscientious secretary, but
his worry was relieved by rejecting that the performance
was a mere matter OF form and that "everybodys doing
it," Such pertunctory certification was required in Ne
vada in 1907 and in other states, and it was probably to
avoid a similar condition that the railway commission oil
California recently suggested that mining shares should
have no par value. Remembering that the last California
legislature passed 10 new laws, it is too much to expect
that anyone can be sure of the present legal requirements.
The issuance ct mining shares without par value has
often been advocated by mining engineers, but the Ken
necott Copper corporation seems to be the first important
company to have been formed on this basis. The shares of
that company are now selling for S44 on the New York
curb. The only novelty about these "no-value' shares is
their adoption by a modern mining company. Cornish
mines have been run for several hundred years on the cost
book system, in winch the "adventurers' paid losses or di-
vded profits according to the results of the mining oper-
ations during monthly periods. No shares were sold.
Similar methods have been employed in other industries.