Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1932-07-23
The WORTH Of a Royalty

In this day OF doubtful values.
when gilt-edge bonds once used in
Hen Of currency arr without
market. and when corporations are
debating their stocks at the ex-
pense Of q defsnseless public. we
Of as who have chosen royalties as
our medium Of investment are
called upon to measure the true
value Of our investment not only
By comparison with other forms Of
Investment but BY carefully exam
lining our royalty properties to de-
termine what has happened to their
WORTH.
Millions upon millions OF dollars
worth OF foreign bonds were foistsd
upon the American pubgic by sim
cere and honest brokers and in
ternatiOnal bankers. yet those bonds
are today worthless. They are
without hope No miracls Is likely
to revive them.
Select any group o. Industrial
bonds and II is simple to find out
why there Is no market for them:
q corporation that had to expand
to keep pace in the boon" days
issued bonds which taxed the
perhaps phenomenal earnings Of
that time. Then came the slump.
That corporation is now called upon
TO settle down to a basis Of earnings
which may amount to less than
HALF its boom-day earnings. with
a loss Of so per cent in its revenue
and attendant depreciation Of
assets. what is the value OF its
bonds?
We have in mind a very good
friend who rs in the oil business.
he divided 4 tidy fortune with his
wide. He continued working his
half OF the money in the oil
business.
II viii take no chances" she
said, and she put her money In
BONDS which were recommended
by her banker. Over night her
half Of the family fortune was
SWEPT AWAY. for the corporation
went into receivership which VIII
probably be followed by bankruptcy
These bonds can't be sold for ONE
GENT apiece she paid $50 apiece
for them. Furthermore. the bank
in which she had the balance Of her
money has closed It's doors. she
lost every penny. From having
had enough to take care Of the
family for the rest OF their days,
these people are today reduced 20
dependency upon HIS investments.
Under present circumstances, his
income is little but he Is thank
ing his creator that he had HIS
money in the oil industry rather
than in the bank for it means the
difference between having SOME
food or NO food.
Royalty prices have come down,
along with everything else. A
bond price comes down because of
the deflation Of the value Of the
property which backs up the bond.
In other words, the WORTH OF the
bond determines its PRICE. Con-
trast this with royalties:
Royalty WORTH is based on the
price Of oil. In other words. roy
aIties are based on the VALUE OF
OIL IN THE GROUND
A man who buys landowners roy
atty Of good title buys a portion Of
all the recoverable of under q
given tract OF ground. No matter
what the PRICE OF the royalty may
be, the VALUE is still in the ground
until 1t is removed. No oil win be
removed without the royalty owner
getting his rightfuI share
what Is his rightful share7
The State OF Montana complies
the share and value Of every frac-
ton Of producing royalty each year
and sends the royalty owner a state
ment Of the amount he should have
received. The courts provide ade-
quate machinery to insure a royalty
owner of his rightauI share, Just as
a farmer can collect for the wheat
or other products which he sells.
A royalty investor is always guild
ed in his investments BY knowledge
Of the POSSIBILITIES OF his in
vestment- First Of an. be is guided
BY actual facts on what similar roy
alties have earned. There Is no