Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1938-04-30


Salt Lake City Under the caption
says:
All stocks. bonds and other evil
dences If indebtedness in which
point stock company is subdivided
are assessable. This at first glance
appears to be a Misrepresentation
of facts But it is true. True in
every detail. It does not matter
whether stocks are classed as as
sessable or as worcestershire and
fully paid, the fact remains that
even with the latter class, assess
ments are levied and the stock
holder made to pay when condi-
lions arise where additional IL
nancing is required by the corpo-
ration.
Low COST Method
At the outset of this discussion,
If is well to point out that any
conclusions arrived at are based
on the hypothesis that a company
is honestly managed With this in
view. it may be stated without
fear of contradiction that raising
money through assessable stocks
is the cheapest form of raising
new capital for the company. The
only cost attached to such a pro-
cedure is the cost of postage, print
E ing and advertising which amounts
to a very modest percentage Of the
total amount collected.
other Method
On the other hand, where a cor
poration whose stock is nominal
" full-paid and worcestershire re-
ouires additional financing and
where there is no stock in the
treasury. It becomes necessary to
re-incorporate the company OBJ
tain a new charter, employ law
yers and attorneys. all at very
considerable expense. Furthermore
when this step becomes necessary, /
due to the cost of operation, the
assessment or demand made on the
stockholders must be large to in
sure sufficient funds to carry the
operations to a successful conclu-
sion. without having recourse to a (
further levy.
At times paying the assessment
levied in this way is beyond the
financial ability of the stOckhold-
ers. who might otherwise be will
ing to come along. with the re-
suit that the stakeholder is COM
PEELED to forfeit his interest in the
company. which then passes on to
the underwriters at a considerable
discount.
Time Payments
A definite illustration will en-
able a more comprehensive grasp
of the ADVANTAGES indicated. The
stock OF most mining companies
is assessable, because certainly in
the beginning most of the capital
required is raised locally, that is
to saw in the vicinity Of the min
ing operations 1t is difficult to
forecast the amount of money that
will be required. and If a stock
holder thinks the chances of sue
cess are good and the money is
being honestly expended, there is
no reason why that operation
should not be followed through to
a successful end. and the capital, j
as required. furnished by the
through the payments
OF assessments which are levied
from time to time.
Known Example
For instance the Tintic Stand
ara leVleQ nineteen hSSSSSuS
before the company was on self
sustaining basis. After the last
was levied, the stock
sold around 215 cents a share.
Since then, it has paid more than
$40 a share in dividends and has
sold in the open market as high as
SIS a share, and is now quoted at
around SIS per share. Many illus
trations of this kind could be cit
ed. of course, not all of them or
perhaps any of them show such
financial results.
Lose Holdings
On the other side of the picture.
any man who has a knowledge of
railroads or finance. going back
over a period of only few years
can easily recall instances where
worcestershire stocks have been
assessed. The writer recalls many.
The most fragrant one to come to