The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1915-09-09

The most convenient method of get
ting this capital is by forming a stock
company and selling its shares. Lo-
cal mining men are usually the first
buyers of such shares and when buy
ing them know perfectly well that they
risk losing their money. Hundreds. II
not thousands, of such companies have
been formed within the last few years
and their shares sold to such open
eyed buyers This perfectly above
board legitimate mining business sets
the wheels of mining industry spin
ming and often results in developing
mines that pay taxes, dividends, wages
TO workmen, salaries TO engineers, and
furnish a market for supplies and ma
chinery. besides producing the metals
needed by a material civilization. The
Incorporation Of mining company
such as Is required for financing
prospect is simple matter; the to-
tai expense Of the corporation In many
OF the western states need not exceed
300: this sum Will cover the state fee
for Incorporation, the cost Of seal,
sheaf of stock certificates, and an ac-
count book for the secretary. No
lawyer is needed for these small COM
panies. In consequence, in the boom
. days companies were formed on small
or no provocation and their name was
legion Although there was no dim
Guilty In forming company yet be-
fore any shares could be sold seri-
Gus difficulty had to be overcome. The
trouble was that the shares could not
be sold unless the company owned
property the value Of which was equal
to It's capitalization. For example;
take the case where the property cost
only $4,000, while the company, as is
uensl In the west had capital of ST.
900. 900 in 100000 shares, each with
par value Of 81 Before any shares
could be sold, the secretary or some
other official Of the company had to
certify that the property was worth
s1.OOO.O00. This certification Of fic-
titious value was a stumbling block to
conscientious secretary but his
worry was relieved by rejecting that
the performance was a mere matter
of form and that "everybody's doing
n" Such perfunctory Qualifications
we're required in Nevada in 1907 and
IN other states, and II was probably
10 avoid a similar condition that the
railway commission of California re-
Gently suggested that mining shares
should have no par value. Remem-
herring that the last California legis-
lature passed TO new laws, II Is too
much to expect that anyone can be
sure of the present legal requirements.
The issuance Of mining shares with
out par value has been often advocat-
ed 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
s34 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 which the ad-
venturers paid losses or divided pro-
fits according to the results Of the
mining operations during monthly
periods. No shares were used. Sim
liar methods have been employed In
other Industries, notably by whalers
in which all worked for share of the
profits the so-called lay" which
might vary from the captains quar-
ter to the 1-1SOth part for the green
horn before the mast
This idea of not fixing the par value
is sound because at best the price or
the shares as named at the start of
mining enterprise represents only
nominal valuation Of the mine itself,
Indeed, the share valuation of a min
ing company bears only an Indirect
relation to the appraisement of the
mine. The quotation for shares de-
ponds upon the excess of buyers over
sellers, or the reverse; 1t may repre-
sent a sum much above or far below
the actual wealth realizable from the
ore in the mine. Therefore It would
be well to express the assured profit
by one kind of capitalization and the
possibilities of further profit by an
other kind of capitalization. For ex-
ample, we understand that Mr., A. c.
Beatty suggested to Mr. Daniel Gug-
genheim that the assured profit In the
Yukon Gold alluvlal properties should
be capitalized in the form of bonds,
while the probabilities and possibili-
ties OF future development should be
expressed by an Issue of shares of no
par value If that had been done the
Yukon Gold would have issued bonds
for an amount equal to the profit to
be won from the known gold resources
OF the property as ascertalned by the
examination made by Messrs. Beatty
and o. b. Perry and the water"
would have been kept clearly separ-
ate by an issue OF shares the value OF
which would be left to the vagaries
OF speculation as affected by future
production, seasonal vicissitudes, and |
the temper of the public. The idea, |
we think, was good. except as to the |
re- No RrcF aacnxatxy