The weekly Iberian. (New Iberia, La.) 1894-1946, 1920-06-12

~ ~ ~ w w SCSCN>CSCSONCSC NCN
Now you just wait a second" in
terrupted Angela, who had been fdger
ing and playing with her wrist watch
'Dad-Mr. Hilliard This IS awfully
interesting. but dinners In Just few
: minutes, and"
Plenty Of time" said Cullen, wav
ing her off. Plenty Of time. &C
hhead, Mr.. Hilliard. This Is too gooC
10 miss. Smoke cigarette for an
appetIzerY
Thank you" Hilliard, having de-
clded to take complete advantage OF
me present opportunity, marshaled
salient details as he held a match for
MS host We'll. perhaps l can show
you best by an actual example. I'm
out or the game entirely, as I said,
put was invited day or two ago
to Join New York syndicate In
financing property l appraised my
self In 1914. It's owned at present by
-FOUR boys with a shoe-string apiece.
they can't finance 1t themselves. so
they need help, and they've come to
wall street and whispered their Sc
cret through megaphone. Now sup
pose, just to make 1t clear all around
that you and l and Angela are to form
a syndicate to underwrite the com
pany. He was sustained by the re-
Election that even though he came in
the guise of mountebank, there was
nothing dishonorable about the wares
he had brought to sell.
Ooh" said Angela, joyously,
Thanks 7"
simultaneously her father gave her
little frown Of 6fectionate remon-
STRANGE, and Hilliard gave her little
smile Of affectionate esteem.
Nov, the boys who own It," said
Hilliard, "are In such straits that we
can practically dictate our own terms.
| don't mean to imply that we'd take
too great an advantage Of them, but
it's plain case of supply and de-
mand, and we're naturally interested
in a bargain. We 60 over the mine
very carefully, and find that although
1t isn't actually producing any copper
just yet because the owners ran out
of money before they could get that
far, 1t has enough ore reserves to
guarantee at least ten thousand tons
q year for twenty years. provided the
necessary equipment is bought and put
into operation. That tonnage. with the
price Of copper where 1t Is now
around thirty cents-and the cost of
production what 1t Is now. and other
factors what they are now would |
eventually mean net profit Of about |
a quarter OF million dollars a year. |
So first we have these present owners
organize corporation, capitalized at
two million dollars"
Cullen smoked violently, and looked |
puzzled.
you're getting out Of my depth.
How do you arrive at thatY"
"That's SO as to insure ten per cent
dividends. And the mine can pay ten
per cent, provided we can arrange to
get the capital. You see, Mr.. Cullen,
a copper mine isn't like a factory, and
you can't figure 1t the same way, be-
cause a factory runs on indefinitely,
and If you simply replace the ma
chinery whenever It wears out, there's
nothing to prevent the same plant
from keeping on making the same sort
of product for hundred years. But
every pound Of ore you take out of
mine leaves that much less for the
future, and eventually your ores go
ing to be all gone. And II this par
ticular mine is going to be exhausted
In about twenty years, 1t stands to
reason that It's being exhausted at the
rate Of one-twentieth. or five per cent,
n year. You must take that always
into consideration. And therefore,
every stakeholder Is entitled to get
back at least five per cent Of his
money each year to cover that de-
probation, In addition to whatever he
ought to get for ordinary profits which
s another five per cent. Otherwise"
"Oh l see" cried Angela. I
"Prove I'll" commanded billiard in
diligently.
"Why, II the company just paid five
Der cent for twenty years, and at the
md Of 1t, your ore was all gone. the I
people would only Just have got their
money back. and they wouldn't have ,
made any real profit at all y
Exactly" said Hilliard. $50 the I
company must pay at least ten per
ent-half for bona fide dividends and t
lalf for depreciation"
"Ohor said Cullen, opening his s
yes. rs that why the big mining t
pay such big dividends? l I
bought 1t was all clear proft!" s
mo. sir. The dividends Of min |
ng company have to be very high to
e attractive at all; they have to I
make good that depreciation. Well. b
re make the boys incorporate, as l v
aid, for two million dollars, on which Il
re can pay ten per cent. I'll show
GU what the setup looks like" He .
-rote on the back of an old envelope:
100000 - 100000 II
hares at $40 each. |,
snow, the company (and you must d
emember that so far we haven't d
nv official connection with it), agrees
, take over the property, and pay the d
resent owners for 1t with $4,000
hares of stock, and 1t also agrees to r
ell to you and Angela and me the d