The Raymer enterprise., 1920-09-16

~Eractly,- said billiard. so the
company mus. pay At least ten per
eeut-half for bona fde dividends and
half for depreciation"
'Ohor- said Cullen. opening bis
eyes. rs that why the big mining
companies pay such big dividends? ]
thought It was all clear profit"
"No. sir. The dividends Of q min
Ing company have 10 be very high to
be attractive at all: they have TO
make good that depreciation. Well,
We make the boys incorporate. as ]
said. for two million dollars, on which
we can pay ten per cent. I'll show
you what the seiup looks like" He
wrote on the back Of IN old envelope:
Capitalization 100000 - 10000
shares at $40 each.
Nov. the company land you must
remember that 50 far We haven't
any official connection with It). agrees
to take over the property. and pay the
present owners for 1t with 5000
shares Of stock. and II also agrees to
sell to you and Angela and me the
other 10000 shares at dollar apiece.
or $4,000. Of which we agree to pay
half In cash. and the balance In about
ninety days.
wow then. we own 10000 shares
for which we've paid. and agreed to
pay $4,000. That Is, we've under
written these shares for dollar
apiece. and paid down half the amount.
Now let's begin TO look at II from the
public's standpoint. Here's a mine
with plenty Of ore: and a company
With cash enough on hand to begin
producing ut . profit very soon-aL
though nobody pretends that it's &C.
fually producing now. II has 10000
In the bank. and another $4,000 due
10 ninety days. II can 20 ahead and
contract for machinery and workmen.
and II does. and you and Angela and
l are still letting the former owners
manage II. but since we'r. In control
OF the stock. We either elect ourselves
as directors. or elect other people
whose names carry weight with tho
public. 20 that we can always direct
the general policy. and see that It's
careful and conservative. From every
angle. then. financial and moral. the
venture looks like big success. SO
you md Angela and 60 to a good
broker. or to a group Of brokers, and
make them proposition. We con-
vince them Of the value we have; we
let them send their own engineers out
to make report. and a. evidence Of
good faith. We pay all their expenses;
we let them go over our books. Every
things fair and square and above
board. And we agree that these bro
kers will take some Of this stock Of
our hands TO sell to the public (be-
cause they've got selling organiza.
ton already established. and plenty Of
customers who look TO them for nd
vice) and it's agreed that they'll ray
four dollars a share for what
they think they Gun sell The brokers
then do some advertising. send out
their circulars and bulletins and
pamphlets TO their customers, and sell
that stock to the public for anywhere
from SIX to eight dollars a share. That
In. the public Is glad enough. when the
prospects n good one, to pay seven or
eight dollars because every share'a
going to be worth ten) for what cost
the broker four dollars, and cost us
pne dollar-which we've already got
back from the brokers, and we've still
got the half Of those 10000 shares Of |
ours left besides! So here's the final
balance Sheet" He hastily totaled
he list. and handed 1t over to Cullen.
Capitalization 1900 ooo-sooooo shares At
So
Stock paid to individual
owners Observation-Disclosures. 5000 shares
Stock sold to syndicate for
SlN.VW ........................1J 900 shares |
Total ..".............-.......90 . 900 shares
.,.. OF our 10000 shares
We sell to brokers'. .... 5000 shares