Essex County herald. [volume] (Guildhall, Vt.) 1873-1964, 1920-03-26

as anything else The trouble comes
in knowing when a mines q mine, and
when it's a swindle, and | guess you
have to be a metallurgical shark to
know that anyway. But the way things
have been going for the last year or
two, with all this speculation in the
metals, and all the fortunes that have
been made, sort of set me to thinking
that with good advice, you"
Il beg your pardon" said billiard
quickly. There's been mighty little
speculation in metals, Mr.. Cullen; but
there's been tremendous amount of
speculation in stock. The difference
between West and East; the differ
ence between insider and outsider;
the difference between the capitalist
and the gambler is this-the East,
the outsider and the gambler buy
stock; the West, the insider and the
capitalist buy mines. Buy them out
right and develop them first and eX-
plot them afterward. If they're good,
the West keeps them to itself and
pockets the profits; if they're shaky,
the West sells stocks to the East, and
gets its profit that way, and calmly
steps out from under. The art and
science of underwriting
"Now you just wait a second" in
terrupted Angela, who had been fidget-
ing and playing with her wrist watch.
~ ;e full
interesting, but dinners in just a few
minutes. and"
"Plenty of time" said Cullen, wav-
ing her off. PLENTY of time! Go
ahead, Mr.. Hilliard. This is too good
to miss. Smoke a cigarette for an
appetizer"
"Thank you" Hilliard, having de-
cided to take complete advantage of
salient details as he held match for
his host. well, perhaps l can show
you best by an actual example. I'm
out of the game entirely, as I said,
but I was invited day or two ago
to Join q 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 it themselves, so
they need help, and they've come to
Wall street and whispered their Sc
cret through a megaphOne. Now sup
pose, just to make it clear all around,
that you and / 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 a mOuntebank, there was
nothing dishOnOrable about the wares
he had brought to sell.
"Ooh !" said Angela, joyously,
Thanks! !"
simultaneously her father gave her
a little frown of affectionate remOn-
STRANGE and Hilliard gave her little
smile of affectiOnate esteem.
"Now, the boys who own it," said
billiard, "are in such straits that we
can practically dictate our own terms.
l don't mean to imply that we'd take
too great an advantage of them, but
it's a plain case of supply and de-
mand, and we're naturally interested
in a bargain. We go over the mine
very carefully, and find that although
it 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
a year for twenty years, provided the
necessary equipment Is bought and put
into operation. That tonnage, with the
price Of copper where it is now
around thirty cents-and the cost of
production what it is now, and other
factors what they are now would
eventually mean a net profit of about
quarter of a million dollars a year.
SO first we have these present owners
organize a corporation, capitalized at
two million dollars"
Cullen smoked violently, and looked
puzzled.
you're getting out of my depth.
How do you arrive at that"
"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 factory, and
you can't figure it 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 a 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 If this par
ticular mine is going to be exhausted
In about twenty years, it 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-