The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1919-05-01
Mining: an Invest.
ment, Speculation
or a Gamble?
CONTINUED from page A.

lost of other bonanzas during the
last twenty years
One does not need to be venerable
in order to recall great changes in the
philosophy of mining economics In
1905 / published book on this sub
sion upon various aspects >of mining
finance Among those contributing,
besides myself, were H. c. Hoover, J.
II Curle and w. r. Ingalls,. Mr.. Curle,
at that time the leading London au-
thority on such matters, a man
wide travel and stalwart independence
of mind, advised his countrymen to
stick to gold mining as being the SAT-
est, because gold had a fixed value
We know today, by unpleasant exper-
fence, how gold cam so depreciate ~
terms of other commodities that the
gold miner is placed at a decided dis.
advantage. Mr.. Curle insisted that
the only correct kind of gold mining
was based upon a careful estimate Of
the ore in reserve, and that at least
so per cent of the price of the mine
ought to be represented by net profit
from the developed ore. He even went
so far as to lay down the rule that
gold mines should yield 10 per cent Of
their market valuation. Later he put
the interest at Is per cent. We have
Travelled far since then. Most of the
y Vii ar 1jpta cnrva6 y, hot
day, fifteen years ago, as a means of
educating the British shareholder,
who is a simple minded person, be-
cause Mr.. Curle accompanied them
with much straight information and
trenchant criticism, but all such at
tempts to compress mining into Cor
a:lla are a failure. They were based
largely on the experimentation in
complete-of the Rand in South At
RIGA, where continuous beds of gold
bearing conglomerate were being ex-
plotted on the largest scale known to
the modern world These beds of
blanket" as they were called, after
the Boer name for almond cake were
StlIipdIutlNCiy ulIiIOl III lHciI Solu
contents and were mined and milled
SO cheaply as to yield handsome pro-
fits. Their uniformity of grade and
persistence in depth caused them to
be regarded as the basis for invest
nents of the safest kind. Suitable for
willows and orphans. Later expert
cree has shown that they were
neither so uniformly nor so persist
ertly rich as had been expected. the
result being to turn the investments
into speculations out of which a COM
paratively few made great deal of
money and comparatively many lost
mere than they could afford. The
Rand proved to be the greatest gold
field in the world, in extent and IN
yield, but I am making the point that
it did not escape the vicissitudes lat
ent in mining, and the successful eff
fort to persuade the public that 1t
would escape those vicissitudes led, in
the end, to a tremendous and wide
spread loss of money, which passed
from the pockets of the public to
those of the promoters. Money was
made honestly on the Rand during the
development stage, when adventurous
spirits risked a total loss of their
stake in order to make big gain;
but when the operators and promoters
turned to the man of small means and
persuaded him that the latent risks
were eliminated and that gilt-edge
investment was available to him in
the stock of over capitalized mines,
they deceived him. Some of the OPP
orators and promoters knew no bet
glneers, and simply victimized the un-
suspecting by unloading their holdings
upon them at a handsome premium.
To illustrate how the public was vic
timized, I can state that the market
value of the shares in the three prin-
eipaI companies representing consol-
idations of groups Of mines declined
$203,931, $40 between 1911 and 1918.
That huge loss was due to ignoring
the common experience that mines
eventually DecOWe IMPOVERISHED LII
depth, just as surely as men grow old
and also to the assumption that so
per cent ore reserve that is, having
60 were cent of the market value in
sight, furnished ample security. In
the attempt to introduce one or two
academic factors of safety the public
was led to ignore the very essentials
OF the business, namely, that 1t in
volved no small risk, under the best
conditions, and that the risk must be
compensated by large dividends. In
stead, the public accepted 6 or per
cent as an adequate return and failed
to recognize that they held a wasting
asset During the speculative--the
frankly observation-disclosures of Rand
mining it made money for nearly
everybody engaged in 1t, but when the
chicanery of the few was combined
with the ignorance Of the many into
creating false notion that the spec
ulative phase had been transformed
into one of secure investment, then 1t
was that share dealing on the Rand
became cause of great loss to the