The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1920-08-05

transaction is reasonably safe within
itself, for even though the first inves-
I tors may not be able TO raise the pur-
chase price, there is always a market
for developed and proved mining prop
critics.
Usually, in a prospect mining prop
osition the owner takes a part of the
stock Of the company in exchange for
his property. the remaining stock go
ing mostly into the treasury of the
company. to be sold for development
purposes. and thus make all the stock
Valuable. The prospective investor
should inquire as to the proportion of
the issued stock which the owner re-
ceives. and also what part certain in
termedaries. called promoters or
stock agents acquire as their profit.
There is no set rule or guide as to
how much stock should be issued for
the property, but the amount and all
conditions should always be critic
ally considered.
Other primary points In prospect
mining investment relate TO capitali-
zation of the company and the amount
OF stock in the treasury. If an inves-
tor purchases mining stock which is
not from the treasury Of the company
he is simply making a trade. If he
purchases stock from the companys
treasury his money goes to his COM
pany and is. or should be- used in max
ing his property more valuable. Con-
sequently other things being equal, it
is more advantageous to buy treasury
stock than individual stock a matter
often overlooked The number of
shares in the treasury is vitality i'm
portant for if there is only small
amount of treasury stock the company
may have difficulty in raising the
money needed for the development and
purchase of the property and to Dor
row on company notes or bonds is
ordinarily, for evident business reas-
ons. not practicable in the develop
ment or management of prospect COM
panies.
Avoiding the "High Commission"
Stock.
Extravagant impositions in the form
and guise of commissions to the stock
salesman. brokers. and Intermediates
for raising the funds often accompany
mining rotations, and this point should
be scrutnized carefully. Often the in
weston considers the stock on its own
merits without inquiring as to what
part of the dollar which he pays is to
go into his property. In some motor
ious instances the cost of raising
money for mining enterprises has
been from so to 30 per cent of the
sum obtained-a condition obviously
and glaringly wrong from a business
standpoint and a forerunner of failure
of the enterprise saddled with such
ircompetency or dishonesty
In financing a prospect mining COM
pany it is customary to pool the own
er's and the promoters stock. The
stock investor should usually insist on
such an arrangement. and should know
of the details of the pool agreement.
II the owner and the promoter cannot
sell any of their stock until the mine
is profitable they are likely to have
a lively and continued interest in the
success of the undertaking. and such
a plan makes them carry the full risk
along with the man who furnishes the
money The pooled stock too, is TAX
EN- off the market, and thus the financ-
ing is easier and surer.
Carrying a padded" Directors List.
The mining stock investor is often
influenced by the eminent respectable
ify and high financial standing of the
board of directors, but he should bear
i'm mind that sometimes bankers. law
yers, and others lend their names to
mining corporations without first hav-
ing thorough knowledge of the under
taking. and that they sometimes do
which is morally. at least incumbent
upon company officers. Not infre-
quently fne-feathered directors have
been given their stock free for the use
of their names.
A mining stock offering should al
ways he accompanied by a report from
a disinterested mining engineer or
other competent expert. Statements
by the owner or the agents should be
designated as 'venders reports" as is
the British practice Mining reports
are not infallible, either as to COM
potency or integrity. The reputation
and experience of the man making the
report is always a wise and proper
subject for inquiry. Most reports on
prospects are opinions only, and should
be taken as such The prospective
stock buyer should study the reports
and weigh the facts and conclusions in
an their bearings. for manipulation of
reports by over jealous vendors is
one of the tricks of the business If
the technical parts of the report are
beyond the knowledge or experience of
The investor. he should consult some
one with mining experience. or, better,
seek directly the advice of a mining
in good standing. as he would
consult a lawyer in any other business
transaction.
Inscriptions Promoters Prone to
Exaggeration.
Outward evidences generally indi-