Wauwatosa news. [volume] (Wauwatosa, Wis.) 1900-1948, 1920-05-14

When It's a swindle. and ! guess you
nave to be a metallurgical shark to
know that anyway. But the way things
nave been going for the last year or
two, with all this speculation in the
metals, and all the fortunes that have
been mate, sort of set me to thinking
that with good advice, you"
beg raur pardon" said billiard
quickly. There's been mighty little
speculation in metals. Mr.. Cullen; but
there's been a 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.
"Dad-Mr. billiard This is awfuly
interesting, but dinners in just few
minutes. and"
Plenty of time" said Cullen. wav-
ing her Off PLENTY of timel Go
ahead, Mr.. billiard. This is TOO good
to miss. Smoke a cigarette for an
appetizer?"
THANK you" billiard, having de-
cided to take complete advantage OF
the present opportunity, marshaled
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 said,
but / was invited a day or two ago
to join a New York syndicate In
financing a 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 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,
| "Thanksl'
simultaneously her father gave her
little frown of affectionate remon-
STRANGE, and Hilllard gave her little
smile of affectionate esteem.
Now, 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 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
| lust yet, because the owners ran out
! of money before they could get that
/ far. ii 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 1t is nUw--
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 a million dollars 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.
Ho,y do you arrive at thatT'
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
4 YOU can Inquire ~ the same way Dc
| cause a factory runs on indefinitely,
and If you simply replace the ma
chinery whenever 1t 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 ont Of a
mine leaves that much less for the
future, and eventually your ores GO
ing to be all gone. And IL 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,
a year. You must take that always
into consideration. And therefore,
every stakeholder is entitled 20 get
back at least Eve per cent Of his
money each year to cover that de-
probation. In addition to whatever he
ought to get for ordinary profits. which
Is another FIVE per cent. Otherwise