Mining Investments and How to Judge Them By Francis C. Nicholas, Ph. D. Published by The Moody Corporation 35 Nassau Street, New York 1907 Copyright, 1907. by THE MOODY CORPORATION All rights reserved THE MOODY-BARTON PRESS Vrircf. U3. CONTENTS Chapter Page i I. The Organization and Financial De- velopment of a Mining Company . . 7 II. The Organization and Physical De- velopment of a Mining Company.. 17 III. Why Mining Companies Fail .......... 27 IV. Success in Mining .................... . 35 V. The Relation of Mining Stocks to the Properties Back of Them .......... 41 VI. Speculative and Investment Value of Mining Stocks ..................... 51 VII. The Geology of a Successful Mine ..... 59 VIII. Physical Conditions Which Should Sur- round a Successful Equipment for a Mine ............................ 69 IX. Personal and Business Organization Re- quired to Attain Success in Mining. 79 X. Inquiries Which Should be Made Before Accepting a Mining Venture ....... 89 XI. Conditions Under Which a Mining Proposition May be Accepted ...... 101 XII. Conditions Under Which a Mining Proposition Should be Rejected.... 109 XIII. Investments in Dividend Paying Mining Stocks ............................ 117 XIV. The Spirit of Adventure and Specula- tion, What Some Have Gained; What Others Have Lost ...... .... 125 XV. The Mining Regions of the World and the Opportunities They Offer ...... 133 XVI. The Mining Regions of the United States ............................ 153 XVII. On the Trail With an Honest, Com- pared With the Work of a Dis- honest Prospector .... ............. 165 XVIII. The Prospector and His Agent, Hon- est and Dishonest Work Compared. 173 XIX. The Prospector, the Promoter, the Banker and the Investor .......... 181 XX. The Trials of a Mining Engineer ...... 189 XXI. The Gist of the Whole Matter ......... 199 Appendix. How to Calculate the Values of Min- ing Stocks ........... ............. 203 \ PREFACE A book on mining stock valuations may not be scientific, yet it can fill a useful place. Science should, and does have for its principal object the attainment of information and data leading to utilities; and while this little book cannot claim the distinction which would be accorded to a learned treatise on the scientific aspect of mining, yet it does contain, the author hopes, worthy information which will be of practical use, resulting, perhaps, in a better understanding of what mining stocks really represent and the explanations which may be entertained in regard to them. The Author The Organization and Financial Develop- ment of a Mining Company If one who casually buys a mining stock, be- lieving, so he says, that he is "stuck," yet hoping that the reports may prove true, could know all the struggle, pathos, hopes, despair and moments of triumph attending the effort for the financial development of a mining en- terprise; one would sympathize with the pro- moter, and wonder at the determination, which, if success is to be obtained, must meet and overcome prejudices, must encounter doubts, and incredulous disbelief during years of effort to find success in beating down all barriers, and obtaining the necessary capital to operate the mine. One who is strong enough to obtain his end against such opposition is calculated to succeed, and usually does make a success of his mine after obtaining the money to operate it. There is pathos and sorrow in the effort because all do not succeed, even though a life time is dedicated to the effort. One instance comes to my memory. A miner prospecting 7 8 MINING INVESTMENTS some years ago discovered a mine, and thought it a good one; obtained the title and set to work to raise the money for its equipment, but without success. The mine was in Central America, a place not too well esteemed, and few would listen to his story. Yet he labored on, he and his wife together. Sometimes they made a little money at one work or another, and then would spend it looking for someone who would hear their story, and advance the capital required to work the mine. Time went by, they grew old together and died in want, and the mine was never worked. What pathos of hopes and disappointments were hidden in these wasted lives none knew, nor is this an isolated example. Many are waiting, working and hoping today; some will succeed, others are doomed to disappointment; but they will struggle on, for the mining spirit, like the gambling fever, is hard to subdue; and it is all so plain to those who own the mines, and feel sure as to their worth, that it seems im- possible that someone will not harken, and take a venture with them, where they them- selves have risked their all; and yet how little encouragement is found. If this were different, and if people who had money to in- vest gave better heed to those who actually own a mine., and sought for capital to estab- AND HOW TO JUDGE THEM 9 lish works which they would themselves oper- ate, the story of mining would be very differ- ent and many permanent successes would be chronicled each year; but people doubt the miner, who with blunt story and rough ways seeks for financial help, and asks for partners to share in his venture. So the mining company and its financial development conies on the scene. The mine owner, weary in his search, receives offers that a promoter, banker, broker, or other personage will take up his proposition, provided suitable terms are arranged. I re- member well how one old prospector replied to such a proposition. "She's a good prospect, but she ain't worth no million dollars; may be when she's opened up, but that's not now." "Precisely," the promoter said; "we capitalize the prospective, not the present worth and then sell shares based on the pres- ent worth at low prices which advance as values are developed; those who put their money out for development thus reap the bene- fit, and this is what I propose." "Each person who invests at prospect prices in a capitaliza- tion for prospective worth knows that if our expectations are brought to realization his profit will be in holding a great number of our shares." So the prospect was capitalized for $1,000,000. 18 MINING INVESTMENTS This was the first step in the financial de- velopment of the mine. When a proposition is put forward on this basis and is honestly managed, the proposition is fair, but unfortu- nately the offering is not always justly man- aged and a greater value is placed on the pres- ent worth than conditions warrant; and here is the first influence which makes for loss in mining stocks. Capitalization for prospective worth, but the price representing the present worth, the money asked for the shares, is often more than actual present worth will warrant. If a prospect is worth $10,000 and the com- pany owning the prospect is capitalized for $1,000,000 then the present actual worth of shares is 1 % ; and if, as usual, the par value of the shares is $1.00 then the actual worth is just one cent a share, and on such a basis, and at such a price would be well worth buying; but this investment would be in nothing more than a prospect, and except the shareholders or partners, for such they really are, spend some- thing on the mine to open it for operation ; and then provide machinery to treat the ore, it will remain a prospect worth just one cent a share and nothing more. This is not good business, and one goes at hazard in a mine to make a profit, not to hoard money, so funds must be provided to operate and work ; and this brings AND HOW TO JUDGE THEM 11 forward the next step in the financial develop- ment of a mining company. The miner being asked as to the division of the shares naturally replies that being partners he and the promoter should divide, but this is not a satisfactory basis for those proposing to promote the scheme: explanation is made that in order to raise money shares must be sold, and that some must be donated to the treasury for purposes of development; so after much discussion it is generally agreed that of the shares, one-third shall go to the owner, the promoters take a third, and one-third is placed in the treasury; the old miner, doubtful as to what he had done takes his paper, yields his titles to the company, and goes back to the mine; the promoters under- taking to produce funds by selling treasury stock to keep him at work. This is now the situation, a prospect worth in cash $10,000 has been capitalized at $1,000,- 000, and one-third of the shares must provide all the money for operation and development. In ordinary business a person contributing the total capital might be contented with one-third the profits, but would probably ask more and would control whatever property the business owned. In mining similar arrangements should be made, and they who contribute capi- 12 MINING INVESTMENTS tal should not only be preferred in shares and dividends, but should be given actual liens upon the property to make their preferences secure. This is not often done because it is of little ad- vantage to promoters, and the offerings are of shares alone, usually appearing with glowing prospects, and the statement that so many shares are in the treasury to be sold at a low price, probably twenty-five cents a share. Frequently the announcement is made with great show of virtue that no officer receives compensation for his work, a suspicious cir- cumstance, because men cannot afford to work for nothing, and do not work for nothing even in a mine. It is a better proposition when those who promote state exactly what they have as profit, and better yet when a mining company pays its officials and obtains men competent to do successfully the work required of them. There seems a tendency among mining pro- moters to pose as philanthropists, who work for nothing, and with the mining proposition under discussion the usual offerings appear; the miner has gone back to his mine now in- corporated, and obedient to instructions writes glowing letters, his own enthusiasm develop- ing more and more. What he writes is quoted, and the shares begin to sell, not very freely, because they never do; and the pro- AND HOW TO JUDGE THEM 13 moters, in order that sales might be made in greater volume, offer large commissions, incur expenses and offer special terms, so that in the end often not more than one-third of the money realized for shares goes to operate the mine; and this small proportion has to do the work in which all the great number of shares have equal participation. If of the treasury shares one-third are sold at twenty-five cents each, and one-third the money realized is put to actual work in mine, then the money so placed would represent about two and eight-tenths per cent, of the capitalization; this, with the one per cent, which the prospect was actually worth at the beginning makes an aggregate of three and eight-tenths per cent, actual value, real money, in the proposition, and this small per- centage must earn dividends for the total capi- talization. So if the old miner is not mistaken in his mine, and it does yield shipping ore from which a profit can be made, the mine must re- turn in profits nearly 200 % each year on the money actually in the proposition in order to pay 6% on the capitalization. There are many propositions which do as well as this, but the rocks of disaster are never very far away; funds are apt to run low, leaving the enterprise not wrecked but stranded; and another is 14 MINING INVESTMENTS added to the long list of mines owned by corpo- rations, but not in operation. The promoters were eager for very great profits, if the mine had paid, as they anticipated from the very start, all would have been well; but the financial development of the propo- sition not being on a secure foundation, nothing was provided for contingencies, and troubles appearing, the burden of the capitalization was too great. This is the history of most mining enterprises, though some succeed, even at this great disadvantage, and if better provision were made, the number of successes would be in favorable comparison. These are the usual conditions of most min- ing propositions though not all ; many are well organized, and the investor should learn to select those which are organized on proper lines, and to show what these lines of proper organization may be is the object of the fol- lowing chapters. It does not cost much to put forward a min- ing proposition, and where expenses of pro- motion are deducted from the treasury stock the promoters take but little risk ; a risk which may not exceed the figures in the following calculation of expenses for bringing out a min- ing proposition at one million dollars capitali- zation. AND HOW TO JUDGE THEM IS Calculation of minimum expenses in bring- ing out a mining stock. Charter, in one of the cheaper states. . $25.00 Stock book, ledger and seal 10.00 Printing the prospectus, 1,000 copies. . 25.00 Advertising at $25.00 per week for one month 100.00 Postage and office rent (frequently desk room) 25.00 Total $200.00 One month's expenses, after which it is ex- pected that money will be coming in. If the stock sells the promoters make a big profit, and the mine is operated; if the stock does not sell the loss to the promoters is not great and they can try again with some new propo- sition. With such excellent prospects for a profit, with mine owners grown weary looking for partners to do actual mining, with mines and prospects to be had for shares in the companies incorporated to take them over, it is little won- der that mining promoters are many ; yet min- ing pays such splendid returns that even with the great disadvantages attending the Ameri- can system of company promotions, among the many who buy mining stocks thousands 16 MINING INVESTMENTS make handsome returns, and win fortunes out of such investments ; and the desirable position for an investor is to learn how to discrimin- ate and select the good from the bad; because there are desirable mining propositions brought forward constantly, and money is to be made if only one uses good judgment in selecting. These statements are not idle words. It is a too frequent occurrence in the financial de- velopment of a mining company that of the money subscribed an adequate proportion does not go into the property, and the shares sold for cash are far in the minority, a basis not calculated to be of advantage to those who in- vest; and one should look well to this point before purchasing. It is like having too many partners who have not contributed any cash to the business, and if such a proposition is offered the investor should demand that the mine be pledged as security for the money actually contributed. When it is found that a proposition is not over-burdened with promoters' shares in its financial development, or that those who are promoting the enterprise are giving full value for what they reserve for themselves in shares, then the financial proposition is on a fair basis and can so far be considered favorably. II The Organization and Physical Develop- ment of a Mine It takes money to work a mine, it takes money for the equipment; but those who manage a mine, and yet are not accustomed to the business think that no impediment stands against the easy money they expect to win. Take out the ore and remit the proceeds, write the directors; this is the sense of the meeting, and the puzzled miner looks at his instructions and sends some practical suggestions as to the best methods for opening up the mine, and the machinery which will probably be required. The directors hold a meeting and generally re- solve with great show of wisdom to send ma- chinery without delay, effort is made to raise more money through the sale of stock, or if money is in the treasury it is at once appropri- ated; people who have machinery to sell are called in consultation; and the next thing an equipment is sent out to the puzzled miner, and word goes too that it must be placed in po- sition, without delay, and returns sent in. It 17 18 is returns, money coming in, that the directors want to see ; the stockholders expect dividends, hurried calls are sent to the manager ; but all in vain, such is not the way to operate a mine, failure almost certainly comes to oppress, and once a mining company has failed there is poor chance of re-establishing the enterprise. That disaster follows too hasty effort at results is because, before the character of the ore is known, before its proper treatment has been ascertained, and often times before the mine is even opened, machinery has been bought and shipped; the directors expecting it will fit re- quirements, and hazarding the money on a guess are generally obliged to meet, and to ex- plain the disappointments; because machinery bought in this haphazard way can hardly be expected to give good results. An incident of such work as this can be found in numerous mines. One which has for some years past been prominently before the public is a good example. It was a prospect, and as such had merit, but neither the charac- ter of the ore, the amounts to be obtained or the physical requirements had been well es- tablished ; yet beneath the magic touch of capi- tal great undertakings were commenced, men swarmed about the property, shafts were sunk, electric plants gave light in all the galleries AND HOW TO JUDGE THEM 19 under ground, mills were in process of erec- tion, houses, railway sidings, everything which engineering, directed by those who had ma- chinery to sell, could devise was being done; and after thousands had been spent it de- veloped that the machinery was not suited to the ore, then other plans were tried; new equipment recommended by those who had machinery to sell was purchased. Three times were failures the sole reward for thousands spent, and the mine was brought to such an ill repute that where a good result might easily have been attained, were debts, a property in- volved, machinery of little use; and all just struggling to be maintained. Then one of the directors, prominent in business life, admitted that he was a fool, that is, when it came to min- ing propositions; and so he was, and so are most men who, as directors of mining enter- prises, force the issue, seek quick returns and vote to build and establish equipment before the mine is opened. Luck may be with them, and by chance the equipment may be suited to the requirements of the ore, but usually luck leads a man astray, and when an investor hears of rapid work of equipment and development going hand in hand, it will be safe to let such propositions go to others ; for where good min- ing practice is not well maintained the chances 20 MINING INVESTMENTS of success are very poor. Naturally one may inquire, what is good mining practice? This question does not admit of easy answer, for no two mines are found the same, and what is good practice in one would probably lead to disaster in another. Yet certain general principles can be considered as bearing on the question, and these being understood the en- quirer can form an opinion as to whether the organization and physical development of the mine is proceeding as it should. Mines may be divided into three classes. First, those which produce ores very high in value, with every ounce of ore worth care- ful handling. Second, those yielding rich ores and by their indications promising supplies of mineral which can be milled to certain profit. Third, mines which yield a low grade of ore from which a profit can be had, if the product can be treated to advantage. Then there is another class of mining propo- sitions, prospects, indicating that by opening up the ground mineral-bearing deposits will be found. Each class of mines requires different treat- ment. Those which yield such rich ores that every ounce is worth careful handling are rare and the best practice is to take the AND HOW TO JUDGE THEM 21 course usually recommended by boards of di- rectors not skilled in mining and get ore, not with such eagerness, however, that mining operations are so conducted that future work must be more and more expensive ; but get ore without too much regard for future operations, because such mines usually do not last long; and though some do continue to great depth it may be taken as a rule, to which there are some exceptions, that very rich mines do not last so long as others, and the best practice is to make a drive for all that can be had in values with- out great equipment. When such a proposition is presented it is fair to take a chance on it, if the capitalization is not high ; but where a rich ore is reported running into the hundreds or even thousands to the ton and a great equip- ment is proposed, that proposition is safe to let alone, because the chances are that the ore obtained will not be worth the cost of the equipment. Of course, there are exceptions, but chance rules in mines and the chances are that a very rich mine cannot be a big mine and therefore a big equipment will be out of place. The second class, those mines which yield good ores, require very different treatment, and from the viewpoint of a stockholder, the following steps should be taken as good min- ing practice. 22 MINING INVESTMENTS At the beginning of the proposition, while the mine is still an undeveloped prospect, the shares should be sold at a low rate, and the money obtained applied to work of develop- ment; not to the purchase of machinery or to arrangements for selling ore, but to develop- ment work and nothing else. The shares should advance in price as this work progresses, and the presence of ore bodies is established and ore reserves are blocked out; that is, opened by first sinking down a shaft near the vein, and at a certain depth cross-cutting by digging a tunnel from the bottom of the shaft to where the vein should be; and then finding the vein as expected, drifting, that is, tunneling along it; then an assured expectation can be enter- tained that the vein found on the surface and encountered again by tunneling from the bot- tom of the shaft extends from the surface down to where it has been encountered, all ore, a body opened up and ready to be taken out. This practice may be varied, but the principle is the same, the operations should be to prove up a large body of ore before going to the ex- pense of erecting machinery. Sometimes the mine is so formed that the shaft can be run directly on the vein itself, a very satisfactory method of proving ore when it can be done to advantage ; but usually the shaft is placed near AND HOW TO JUDGE THEM 23 the vein and no attempt is made at burrowing, that is, following the irregularities of a mineral formation for the sake of always working in the ore. This is not now well regarded, al- though it was the ancient practice. In other mines, where the mineral deposits are found high among the mountains, the situ- ation admits of tunneling to reach the vein, rather than sinking down a shaft beside it, but the principle is the same, the object being to open up and prove the presence of the ore from the top, or outcropping of the mine, to the Jjlace at depth where the vein is cut; and having established that an abundance of the ore is there, the next step is to equip the mine with machinery to treat the ore. Good prac- tice is to make careful test, and when a plan for treatment has been satisfactorily proven the plant can be purchased with assurance that the mine will be successfu 1 Where a proposition is presented under con- ditions of operation as here outlined, it is a fair risk to take a chance, provided that the price is right. At first, before the mine is opened, the share should be very cheap because everything is risk, and if enough shares are not sold the mine may never be opened up at all. Then, as the work proceeds, there should naturally be a gradual advance 'm the price asked for the 24 MINING INVESTMENTS shares, particularly so if proofs of mineral to be found at depth are brought to light; until, when the ore is found at depth there should be a material advance; and when the ore bodies have been drifted on, and proven as to ex- tent a good price should be asked for the shares. Finally when the equipment has been put in place and the mine is set to earn- ing dividends a high price should be asked and will be had, because then everybody wants the investment; and those who took the risk at first, and would have met a total loss if ore had not been found at depth now have their reward. Sometimes long periods pass in development work; often it is carried on too far, and when once a paying ore deposit is encountered, it should be operated, because the object of mining is not to develop a fine engineering plant, but to get ore and get it with the least possible expense. This being held in mind, it is fair to take a chance in mining where good prospects are reported on the authority of one who knows what indications really promise good prospects, and those in charge of the proposition propose good mining practice. In the third group or class of mines, where lower grade ores are found, good practice is the same as has been stated, but it must be car- AND HOW TO JUDGE THEM 25 ried out with greater care, because the equip- ment required to make money out of low grade ores is very costly. Much money must be raised, and before such large amounts are risked the presence of a very great deposit of the ore must be established; and the mine opened up, and proved at several different points and places, to establish beyond perad- venture that great bodies of ore are at hand to supply the extensive plant which must be oper- ated to make money out of low grade ores. With mines in prospect, that is, mineral ground where ore deposits are expected, but are not certainly known to exist, all is specu- lation, and usually the chance is poor and safe to let alone. However, as sometimes strikes are made, and prospects worth but a few cents a share advance to dollar values over night, some people will be willing to accept the risk, and if the shares are cheap enough it is a fair gamble, nothing more; yet if the management is honest and their plans for exploration vigor- ously prosecuted, the risk can be taken, but only at such prices that if the mine wins out the profit will be manyfold the money put at risk. These general statements give but an outline of the different questions involved in the physi- cal development of a mine. Incomplete cer- 26 MINING INVESTMENTS tainly, but if the proposition is looked at with critical analysis along the line of inquiry here suggested an accurate opinion can be formed as to whether the physical development of the mine is proceeding along lines which indicate success. Ill Why Mining Companies Fail The admission must be made with regret that most mining companies are failures, but while this is true of mining it is also true of all companies; for the records show that some ninety per cent, of corporations are failures, and go out of existence, many of them after only a year's existence. This being the fact it must be admitted that failures in mining are not more frequent than among ordinary corpo- rations; still the fact remains that most min- ing companies are failures, a large majority of them; which in the aggregate represent the hopes of thousands come to naught. Why this should be when mining is such a profitable business seems strange, for one would think that records of successes would be more pro- nounced, and must look with interested con- cern at the causes which produce such bad re- sults. The reasons why are many, and those who hold mining stocks should take heed of these reasons, and perhaps discern approaching failure in time to protect their holdings. Of 27 28 MINING INVESTMENTS the reasons why mining companies fail, one, a potent reason, is scarcely known. It happens many times that the stockholders bring about the ruin of their own interests, and put bur- dens on the efforts of those who have the en- terprise in charge which doom the company to certain failure. Rarely it happens that the progress of a mine is up to expecta- tions, delays and difficulties are almost sure to be encountered; and then comes criti- cism, and they who own the shares bewail their disappointment, and declare they have been cheated, denouncing often that the undertaking is a fraud, and, bringing it in ill repute, make further progress well nigh an impossibility; and the enterprise discredited becomes a dis- mal failure, where a good word in support of those who had the enterprise in charge might have brought about a great success. If a man- agement is found to be dishonest, those who have bought the stock should lose no time in taking legal action, and not be content with idle words of disapproval. Where a manage- ment is found to be just, and making due effort to attain success, even though disappointments are encountered, that management should have a good word now and then to help their efforts, and it is a poor man who speaks badly of that which he owns himself; if he does AND HOW TO JUDGE THEM 29 so, he should not expect anything but deterior- ation in the values of his property. Here are some of the reasons why stock- holders become dissatisfied and criticise. Re- sults may not be quick enough to suit them for which the management is frequently de- nounced. It may be that some who have taken a chance on an unestablished mine at a low rate wish to sell out their holdings, and in place of looking for a purchaser go to the manage- ment demanding that the stock be immediately repurchased from them; forgetting that those who have gone in together to prove up an un- tried mine are in fact, if not in law, partners, the money which has been subscribed must be applied for work on the mines to benefit them all, and that managers who are so en- gaged have not the time to leave their work and hunt up a purchaser; then it may be that the mine requires all the money which the managers can raise, and to divert some of this money to repurchasing shares which holders may wish to sell might work serious injury to those who are not seeking to dispose of what they hold. For these reasons, while a mine is going through its stages of development those who buy should do so with the full un- derstanding that such shares bought at low prices must be held and put away till the mine 30 MINING INVESTMENTS has been developed, then, of course, shares can be freely sold. This cause of failure, the denouncements of those who have purchased stock, is one far reaching cause why mining enterprises fre- quently end in disaster, because when once adverse criticism is in circulation the manage- ment can no longer sell shares to keep up the work, and then the enterprise becomes a fail- ure. Another among other many causes leading on to failure is that competent engineers are not employed. Probably no cause is more pro- lific in unfortunate results. A miner once said to me that when a man had made a failure at everything else he took up mining, and soon considered himself an expert. This is a good criticism, but the man who made it was him- self a most outrageous failure, and well illus- trates the criticism. He was pleasant, aggres- sive, a talker, knew it all and more ; persuaded people to place money with him and then ob- tained for them no results of any kind, not even a property held under title. Here we have a frequent cause for failure, and if those who thought of buying mining stocks would assure themselves that those who were to have the management were competent there would be few bad investments made in mining. AND HOW TO JUDGE THEM 31 As stated in a previous chapter on over capi- talization where less than a due proportion of the stock is represented by cash, or real prop- erty, tends to make mining unprofitable for those who have invested. Frequently we hear that such or such a mine is making money, but the capitalization is so high that nothing can be paid in dividends; a condition which may continue during many years, and such a mine cannot be spoken of as a success. This adverse condition of over capitalization should be counterbalanced by security on the property itself with preferences for interest for the bene- fit of those who may invest money in the enter- prise. Among the causes which lead on to failure a form of dishonesty called "graft" in current slang is very potent, and hard for stockholders to control; perhaps it never will be held in check, and it is mingled with all the forms of dishonesty which may be practiced in a busi- ness such as mining while the enterprise is being organized where at the start untried men and unestablished usages are brought together, new equipment, new accounts, everything un- tried; it is small wonder that efficiency of re- sults are often low and that at a time when mistakes are apt to bring on a disaster money misapplied means ruin. Dishonesty is very 32 MINING INVESTMENTS prone to visit all human affairs, and as yet no really well established form of checking up against it has been developed; yet in mining it could be done if the stockholders gave more attention to their own interests, and had in- dependent auditing committees which might call for reports at any time, and make actual physical inspections, employing competent engineers to give them information as to what the true conditions might be on a mine, then there would be very few losses from misappli- cation of the funds. Unfortunately stock- holders are so indifferent that there is small chance that auditing at sudden, and unexpected times will become the custom; and inefficient application or perhaps misappropriation of funds will always be a potent factor among the causes why a mine is not brought to success. To watch this condition is not easy, but where it is found that promised results are not ob- tained, and the management cannot give a good reason why this is so, the stockholders should take steps to have committees formed to make investigations, and if necessary place a new management in charge. Another very frequent cause for disappoint- ment of results is that machinery set up to do the work of winning values from the ore will not give such returns as were expected, and AND HOW TO JUDGE THEM 33 frequently the enterprise must then be aban- doned or closed out to other people because lack of funds will not permit the management to purchase and set up other kinds of ma- chinery. Against this difficulty a prospective stockholder has poor opportunity for protec- tion, and can only ascertain that the plans for treatment of the ore were drawn up by men who are competent in such work, and who are not themselves interested in selling machinery on which they reap a special profit. To all these causes why a mine may fail there is the ever present possibility that the ore may not hold out, that its character may change and not be suitable for treatment with the machinery which has been established ; but where the mining practice has been good the loss from this contingency should not be so very great, because, before great expense has been incurred for machinery with all the cost of setting it in place, the mine will have been tested, the veins and deposits proved, and then the heavier expenses of equipment are not such a risk. I do not call that mining enterprise a failure which undertakes to see what there may be in a likely prospect and finds inadequate supplies of ore. If honestly put forward to those who may invest, and the plain statement made that 34 MINING INVESTMENTS it is on a prospect oniy that the hopes are based, then if money is properly applied the results for which it was subscribed have been accom- plished, and any enterprise which accomplishes that which it has undertaken cannot be called a failure. In opening up a prospect the object had in view is to ascertain whether or not the indications will lead the operators to paying ore, and money so lost can be considered spent in legitimate enterprise and efforts and stocks in exploration companies have great possibili- ties to win most excellent returns. A disaster is different from a failure in mining. A disaster is loss. A failure in mining can be considered as such only when ore has been found and the management fails to obtain adequate returns. Whatever may be the miscalculation if the mine produces ore and does not make money for its stockholders that mine is a failure. The conditions which have been noted are those which principally cause disasters or fail- ures in a mine, and people who think of making an adventure of capital in a mining proposition should study the conditions, and take the risk only after favorable indications have been proven, or at least strangely indicated from an independent source of information. IV Success in Mining A good old saying often heard is "Nothing succeeds like success;" a better rendering would be, nothing succeeds like mining. Not anywhere are such profits made, nor in any calling are there such sudden tidings of good fortune. A stock selling for a few cents a share develops an unexpected demand, and presently is worth a large amount of money; so much that in many instances a few hundred dollars have returned abundantly and the for- tunate possessor finds sufficient income to live comfortably for a lifetime. Such results are worth a risk, and so many instances have been known that there is always a chance that even in the most discredited stocks a strike may be made and great returns result. It may be so provided that the mine is in operation, for be- tween the stocks of dormant mining enter- prises, and mines which are in operation there is such a difference that the same conditions which would be favorable in one would be ad- verse in the other class, and, when considering 35 36 MINING INVESTMENTS success in mining, the two classes of stocks must be taken as entirely different. A mine in operation has always a chance of an achieve- ment, and a great success. A mine lying dor- mant has no chance at all, till some arrange- ments have been made by which the mine may be put in operation, then it may attain a great success, or like any other mine it may drag on for years and come to nothing in the end. Success in mining for the stockholder is to select and make investments where profits are obtained, and such results develop out of care- ful mining practice, good management and honesty in operating a property of merit. In making his selections the investor is at some disadvantage, for he must take the statements made by others, but in forming an opinion one should know the elements and the conditions which most probably will lead on to success. We would all like to invest a little money, and have it win a competency; and it can be done in mining if one understands the con- ditions of the venture, and waits till the right opportunity arrives. This is an important point to be considered; if one would make a success at mining, one must wait till a real opportunity arrives. An opportunity does not come with such great frequency, and usually a good min- ing proposition does not have to seek very far AND HOW TO JUDGE THEM 37 to obtain backers, for which reason those min- ing propositions seeking capital by much push- ing, advertising and inordinate claims for values must be considered as most doubtful, and safe to let alone. An incident will illus- trate the fact. An advertising writer making a specialty of mining literature said recently: "Well, for the last eight years I have been writing up the dope for mining propositions and have seen sixty or more draw good money from investors." Asked how many of these enterprises had been successful he replied that only one had turned out well, another might have given good results but the superintendent was dishonest to such an extent that a receiver was appointed and the mine closed out to others. In sixty mining propositions one only was successful, and how is the investor to pick the one when all the others, though great promises are made, are unsuccessful. Rules for judging a mining proposition will be attempted in a later chapter, the object had in view at present is to describe successful mining and the differ- ent stages of development which lead up to success. It is a favorable indication when the mine seeks capital from general investors, that those who have the enterprise in charge are not de- 38 MINING INVESTMENTS pendent on the product of the sale of shares for their own livings; and more than this can and do risk some money for their own account, and where such is the case it is a fair propo- sition to join in with them. The first step in the development of a successful mine is that people of some responsibility are interested in it. Such people usually proceed with caution, and inform themselves before they take a risk. A mining proposition brought to good business men has been considered, and they are im- pressed by what is said ; usually their next step is to send for and obtain such local informa- tion touching on the property as may be avail- able; and these reports confirming what they hear, the next step is to call a competent geologist, who is asked to give an opinion on reports and samples; and he, thinking well of what he sees, is sent out to examine, and find- ing that the ore deposits promise well advises that the business men take up the proposition. Probably an agreement is now made with those who own the property, the business men take up the enterprise, and their next step is to send out a mining engineer, who passes on the proposition in its engineering features, and finding that the mine admits of successful oper- ation makes his report and recommends equip- ment. Before this equipment is purchased ar- AND HOW TO JUDGE THEM 39 rangements are made to open up the property, and prove that the ore is there in quantities, which the geologist found indicated; and now a contract to a competent miner is let out. The business men apply business methods, and make contracts for their work, the same as would be done in any work of construction; they do not undertake to forward money for day labor to be performed in a distant place. The miner having the contract sets to work, and after a few days begins to send reports showing that the mine is opening as the geolo- gist expected, and the indications seem most favorable. But about this time the business men find that the money required makes quite an investment and they resolve to seek aid from investors. A plain statement is then drawn up, showing just what the values are, the prospects, the reports which have been made; not "dope" and flamboyant literature, but a plain concise statement of the facts and with it offering stock at a fair valuation. It is natural that an offering such as this would find eager buyers, and usually the acquaintances, associates and friends of the practical business men supply all the money which may be re- quired to meet the payments, on the contract; then when this contract has been carried out, and good bodies of ore have been proven to 40 MINING INVESTMENTS exist, and, usually a mine examined and re- ported on favorably by a competent geologist and a competent mining engineer does turn out well, and the ore having been proved, the next step is to set up the machinery. An- other statement is prepared showing the values which have been proven, and subscriptions are asked at better prices for the stock, but prices based on actual values, and prety certainly the offering is quickly taken. Then a competent mining engineer is put in charge, other con- tracts are let, presently the machinery is all in place and put in operation, and it is but natural that a mine so managed will be suc- cessful and yield full returns for many years. Unfortunately, such good management is rare, and those who know so little about min- ing that they proceed without any caution are frequently in charge, and with flamboyant dopy literature, and glowing advertisements promised the immediate returns they so confi- dently expect, and glorious fortune easily ob- tained. If only such great promises could be fulfilled there would be many rich; most un- fortunately, however, success but rarely follows efforts at hurried, little skilled and speculative mining. The Relation of Mining Stocks to the Properties Back of Them A question which should be among those most carefully considered is, what may be the relation of the stock offered to the property back of it. In other words, what does the stock represent? It may be a share in actual ownership, it may be a share in contingent ownership, it may be a share in prospective ownership, it may be a share subject to previ- ous liens or it may be a share with but limited rights. All these different conditions affect values, and one who buys a mining stock surely ought to know what it is, and what it really represents. Whatever may be the form of ownership the question of share divisions is very important. It is of small consequence what the capitaliza- tion may be, the important matter is how many shares are there? If a mine were capitalized for one million dollars, and there were only one share, that share would be a title to the whole property, and would be worth whatever 41 42 MINING INVESTMENTS the mine, option or contract might be worth. If the par value of the shares were placed at one hundred thousand dollars each, there would be ten shares in the million dollar capi- talization, and each share would be worth one- tenth of the value of the whole property. If, however, the shares were of one dollar each, as is usually the case in mining corporations, there would be one million shares and the value of each share would be one one-millionth of the value of the whole property. This fact must be carefully held in mind when one pro- poses to buy a mining stock. How many shares are there? What the capitalization may be is of not any importance. A mine capitalized with only ten dollars and only ten shares of one dollar each is exactly the same in ratio to value as a mine capitalized for one million dol- lars with ten shares of one hundred thousand dollars each. There would be ten shares in each instance, and whatever the mine might produce would be divided in ten equal parts, and each share would get a tenth. Similarly if a mine were capitalized for one hundred mil- lion dollars with shares of one hundred dollars each, and another mine were capitalized for one million dollars with shares of one dollar each, both mines would have one million shares, the ratios of ownership would be the AND HOW TO JUDGE THEM 43 same and each share would be entitled to one one-millionth of the product of the property. From this it will be seen that the par value of the shares is an idle thing not to be considered. The question is how many shares are there? And it would be better if mining companies were incorporated with no specified par value and were offered to investors as so many shares. A mine divided among a million shares, a mine divided among a hundred thous- and shares, or a mine divided among a thous- and shares. The incorporation laws of the United States require that a par value should be specified, and under these conditions the best an investor can do is to disregard the par value and inquire only as to how valuable the mine may be and how many shares there are among which to divide the products of the property. This being in the mind of an investor, and having inquired as to what the mine may be worth and how many shares there may be; it is next in order that inquiries should be made as to what the shares may represent. If it is actual ownership the conditions are the best, and where a mine is so held it must be shown that the property has been fully transferred to the company, that there are no restrictions in the title and that the company is the owner, 44 MINING INVESTMENTS free and clear, an actual estate in fee. Unless the mine is so held the stocks are risky propo- sitions, and except the prospects are far better than the ordinary, had best be let alone. Where a property is held under contingent ownership, the company will own the property in case it complies with certain conditions which it may or may not be able to carry out. A company incorporated to take a property under bond and lease is one instance. If it has the amount required the company will own the property, and the shares will represent something; but if it does not succeed in pay- ing the amount required, it will forfeit all its rights in the mine, and the shares will repre- sent nothing, and if an investor thinks of buy- ing under such conditions he should weigh well what the chances are that the company can meet the requirements; for if it does not the shares can never have value of any kind at all. Many of the rich mines in Spanish Ameri- can countries are held under concessions, not titles, and a concession is nothing but a con- tingent interest. The company is given the property provided that within a stated term of years it will complete some work of public utility, usually an expensive road to be con- structed from some part of the country to an- AND HOW TO JUDGE THEM 45 other ; or public buildings or other utilities may be specified as the work required, and in every case the title is contingent on the completion of the work. Such properties are nothing but contingent interests, and frequently very doubtful ones at that; for those who grant the concessions are shrewd men, a Yankee isn't in it with a Spanish American when it comes to arranging a contract in which a sharp bargain is concealed, and usually those who hold the concession find that to fulfill the conditions under which the occupancy of the property has been granted requires an amount of money much greater than was expected; and if the conditions are not fulfilled, and the public works are not delivered in the time specified, then the shrewd Spanish American officials simply carry out the terms of the agreement as its specifications require, call on the company to complete its bargain; and if it fails they simply take back the property again with all the improvements which may have been placed upon it, and the shares of that company then represent nothing, not even dormant owner- ship. Thus many dangers are sure to visit the company holding property under a contin- gency, and who buys shares in such an enter- prise should have a care and see just what the 46 MINING INVESTMENTS chances are, and how strong the company may be to give assurance that the title will be suc- cessfully completed. Another form of mining proposition causing frequent loss is one in where the shares offered represent prospective ownership and nothing more. Usually such shares are issued against a contract to acquire a property or an agreement to explore a property, and take it over if found satisfactory. The stocks of the exploration companies generally belong to this class of is- sue. Where property is offered with a clear statement of what the shares really represent this basis of organization is a just, legitimate and often a very profitable form of mining speculation. Frequently the true facts are not stated with clear precision, and the investor subscribing to an exploration company, or to a company organized to test a mine, or one in which there is simply a lease, is given the im- pression that the assets are in a stronger po- sition than really is the fact. As stated, how- ever, this is often a desirable form of mining speculation, but the shares should be either of very low price, or there should be very few of them. Frequently an exploration company is or- ganized with a very few shares. Perhaps ten men may each put a certain amount of money AND HOW TO JUDGE THEM 47 in a pool, and send an expedition to explore for, and acquire mines, and certainly the enterprise is legitimate. Another form of contingent ownership is where indications of mineral have been found, and a company is formed to search the ground, and if found promising to acquire title. This too is a legitimate form of oper- ation, and many successful ventures have been made in such enterprises. Another form of prospective ownership is the lease where the company owns nothing and can only own such ore as it may be able to take from a property in a given time, less the royalties, or payments which must be made to the owner of the prop- erty, so much percentage of the value of every ton of ore the leaser may take out. The own- ership in such an organization is simply the prospective ore the company may succeed in winning from the mine. Such enterprises have been very profitable, but are not permanent except when a long lease has been obtained, in which event a longer life may be expected for the enterprise; but in any event the capitaliza- tion should be low, that is, there should be only a few shares; or if there are many the prices should be very cheap, and an investor should look to it with great attention to ascer- tain that the enterprise is in competent hands. Those companies which are organized sub- 48 MINING INVESTMENTS ject to mortgages or previous liens are rarely to be well considered, and are often very de- ceptive, because a better value can be indicated than the facts will really warrant, and yet those who put the enterprise forward may keep well within this law ; for what importance is it that a mortgage, or a lien for payments, should be on a mine such as the property the promoters are putting forward; a few shipments and all the mortgages and liens will be paid, at least so the promoters think and if the investor thinks so too he should take a chance, but a wise investor would make pretty thorough in- vestigation before placing his money at such a hazard. Companies issuing shares with limited rights are not so many in this country, though pref- erence shares are not uncommon, called usually in this market preferred shares; but in foreign companies obligations to pay out of the earn- ings, large proportions to founders, discoverers and others often burden a mine to such an ex- tent that the shares have very little real value ; especially if the preferences are in the form of obligations to be paid first before the shares have participation. These arrangements give the shareholders but limited rights in earnings, and should be carefully investigated. Other limitations may restrict the value of the shares, AND HOW TO JUDGE THEM 49 and one, which is present in almost every min- ing proposition, is the limited voting power which is granted to the purchased shares, the shares which represent the real money which may have been invested. According to the law each share has equal voting power, but if one man holds the majority of the shares, or if this majority is held by a group of men closely as- sociated, they can vote as they fancy, and do just what they please with any property. Elections of officers under such conditions mean nothing, the promoters appoint them, that is all ; and where it is found that the shares representing actual money invested are in a hopeless minority the investor should look well to the character of the men with whom he is taking the risk, for if they are not competent in the business, results are apt to be very un- favorable, even though the mine they have in charge may be most excellent. VI Speculative and Investment Value of Mining Stocks The question of what value to place on a mining stock is one involving several calcula- tions. A mine is worth the value of the ore it may contain, less the cost of getting the value out, and turning it into money. If the mine being considered is a gold proposition the question of turning the product into money may be disregarded because the product is money. With all other mines the question of converting the product into cash must have serious attention. A mine may be compared to a treasure vault in which there is money, but how much the owners cannot surely tell, nor have the means of ascertaining with great accuracy, and it would be difficult for them to say what they were worth. So with a mine, it is a treasure vault in which the amount to be obtained is hidden, and there is also an added inconveni- ence, that each time the treasure vault is opened, each time values are extracted from it, considerable amounts of money must be spent. To such great extent must money be expended 51 52 MINING INVESTMENTS that frequently it happens that visits to the treasure vault may, and frequently do, result in expenditures greater than the worth of the materials taken out. What then is the value of an opportunity to take values hidden in the treasure vaults of the earth? Value the oppor- tunity must have, else mining stocks could not be sold, nor would large amounts be ex- pended in making an entrance of shafts and galleries; in seeking after these treasures which are unseen, but which indications prom- ise, the influence is largely speculative; and as the ground to be opened, even in the well es- tablished mines, is always an expectation, not a known condition, the element of speculation is present always in a mining enterprise. Even where no ores are known certainly to be pres- ent yet where strong geological indications make expectations reasonable, there must be some value. It is a chance to make some money, a chance difficult to reduce to any basis of firm calculation, for if a man felt sure and considered it a demonstrated certainty that he would make a sum of money in a given tran- saction, a gain of ten per cent, would be suf- ficient to warrant the undertaking. So in a simple calculation we may assume that a chance to make some money which may be considered secure is worth ninety-one per cent. AND HOW TO JUDGE THEM 53 of the amount involved as a first investment. If the risk increases, the amount of worth for the value of the risk falls lower, and a man who 1 would be glad to put out money on good security to gain ten per cent, would hesitate to put out the same money on doubtful security even though the gain, if made, would be twenty- five per cent. Naturally he would ask for special provisions if the risk were taken, and if the profits indicated were very great he might be induced to take a risk to a limited amount of money ; and this is the risk which is taken in the purchase of a mining stock. It is worth something and the rate can to some extent be calculated. If an investor buys a stock on the expectation that it will return him double the money he has risked it is fair to consider that he was willing to put out money on what he thought were good expectations that it would be doubled, and would make for him one hun- dred per cent., as it is commonly called ; that is double his money. If a stock is bought at one- fifth what the investor is led to expect he may obtain, then he takes a risk to recover his money and four times the amount as well, or four hundred per cent, profit, as it is somewhat erroneously called, because a per cent, is a decimal of a hundred and cannot really apply to more than one hundred parts; but it has 54 MINING INVESTMENTS become a common usage to speak of gains be- yond one hundred per cent, and used in this sense one hundred per cent, has come to mean one fold, and five hundred per cent, return is taken at the meaning of five fold return, or five times the amount put out obtained as a profit more than the original investment; and as money has come to be expressed in dollars and hundredths of dollars or per cents., the usage is not inconvenient and as it expresses clearly the meaning one would convey it may be considered a development, not an error, in a language. Using per cent, in this sense we may say that a stock selling at 50% of par is taken for 100% profit if the purchaser expects that it will sell at par. Similarly a stock bought at 20% is taken to obtain a profit of four hundred per cent. A stock bought at 10% of par is taken on the expectation of winning nine hundred per cent, and a stock taken at one per cent, of par is purchased on the expectation of winning ninety-nine hundred, almost ten thousand per cent profit. Such profits are possible in min- ing, and we can speak of the speculation value as a venture for a hundred per cent, winning, or as a venture for winning many thousand per cent. The actual worth of such a risk, and opportunity is of an equation so variable and AND HOW TO JUDGE THEM 55 r fluctuating, that the only calculation which can be made for the speculative value, is to take the actual value of a mining stock, and add to it an allowance for the speculative value, but this allowance will be each man's opinion. The investment value of a stock can be calculated, and this being known, what would one give in addition for the stock be- cause of the speculative value, the chance in every mine that some great body of ore of high worth may be uncovered; and the further chance that a paying mine may continue as it is for many years and so become a source of long continued profits. In the course of mining events, and all the chances of the hazard a mine must some time in its history reach a point where no more min- eral can be had at a profit, so the chance of loss is equal, and perhaps more imminent than the chances of greater gain. In considering an investment value of a mining stock the calculations can be based on something more tangible than the uncertainties of unknown values. Where good mining has been practiced, the mine has been opened up, reserves of ore are established, geological studies and surveys carefully made, and ma- chinery constructed which the mine can keep supplied for many years. Then a calculation 56 MINING INVESTMENTS based on known, or at the worst, probable con- ditions, becomes more of a certainty; and the geologists of a well established company can say ore is in assured supply for such and such a term of years, and that the expectations of increased values, and the continuation of the veins and deposits can be reasonably counted on for such and such a term of years. On this information a value for the shares can be calculated. If the mine is reported on as good for five years with prospects, that the assured values will continue, and further re- serves of ore will be opened up, then the mine is on a five year purchase basis, and if the price of the shares is such that the net divi- dends will be just 20%, then all the speculative values are obtained for nothing, because at 20% the money invested will be returned in five years and the mine has five years supply of ore in sight, then all which remains repre- senting the speculative values will be clear profit. Usually the owners of such a property want something for the speculative values, and what is paid beyond the five dividends or 20% valuation may be considered the price one pays for the speculative value. If a mine is reported to be good for ten years dividends one might consider buying it on a 10% basis, and at that rate one's money AND HOW TO JUDGE THEM 57 will be returned in ten years, and whatever the mine is worth at the end of ten years will be the profit; but if by chance there is a mistake in the estimates of the ore, and not so much is obtained as had been expected then there is a loss on the investment ; on the other hand bet- ter and more extensive ore deposits may be encountered ; though ten years is a long period and the element of chance cannot be eliminated but it may be fortunate, and if the calculations of ore in sight have been made by competent people it should not fall below the estimate. If ten years supply is in sight and one buys at a rate to pay less than IQ% then the difference is what is paid for the speculative chances. Similarly a supply of ore to last for 20 years may be reported, then if this is proven one could buy on a 5% basis, and in twenty years all the capital would have been returned and whatever the mine might be worth at the end of that period would be the profit. From these estimates we may assume that the speculative and investment values of mining stocks go to- gether and cannot be entirely separated; con- sequently one who buys should take both ele- ments into consideration. The proven values should give the money again in a certain term of years which one may calculate from the dividends being paid, and the reserves of ore 58 MINING INVESTMENTS in sight as estimated by competent authority; these are the investment values and one can calculate how much they are worth, and if one pays more than this one should consider the difference between the price paid and the in- vestment or known values, as the price he pays for a chance to make some money and thus consider carefully whether the opportunity and expectation is of that much value, VII The Geology of a Successful Mine In place of this chapter a volume could be written, and then the subject would not be exhausted. The object of the present work is not a scientific treatise, or even a guide for en- gineers. Such ambitions are far beyond our objects which are simply to give the facts which will bear on the advisability of accept- ing a mining proposition, and some little in- formation touching on the relation of mining to geology will be desirable. There are many forms of ore deposits, and of these large de- posits moderately rich are more favorable than small but immensely rich formations. An as- say tells very little of what may be expected from a mine. Suppose a mine ran fifty thous- and dollars to the ton, as sometimes has been found; it sounds attractive, but usually such deposits are so very small that they scarcely pay for working. If this fifty thousand dollar ore were taken from a seam, or pay streak, less than an inch wide, the mine would not amount to much, because great tunnels or expensive shafts would have to be opened to get at the ore; and when one did get at it there would 59 60 MINING INVESTMENTS not be enough to compensate for the expense, and thus we can see that the important ques- tion to consider is not how rich but how abund- ant an ore may be. A mine having hundreds of thousands of tons of ore easily worked, and worth ten dollars per ton would be a mighty fortune, where a mine containing but a few tons of fifty thousand dollar ore might not give any returns beyond the expense of opening the property, and, perhaps, even not so much as this; for the expense of opening tunnels, and sinking shafts might easily amount to more than the value of the ore obtained. The question, therefore, in first considering a mine is not how rich the ore may be but how much there may be of it. A big mine is the best though rarely yielding the richest ore. Of the different forms of ore deposits we have most commonly vein formations, and in almost every prospectus the claim is made that the deposits occupy true fissure veins, and when such claims are presented it would be just that the prospective investor should ask the promoters to prove it. Fissure veins are rare, and in their largest meanings indicate fissure or cracks in the earth's crust caused by some great seismic action, and extending to the depths of the interior earth far beyond the point to which man's efforts can follow them. 61 Cracks in the rocks, though they may be ex- tensive, are not fissures in the earth's crust, and should not be spoken of as fissure veins; yet everywhere we find the claim made, true fissure veins, but of these there are few well defined examples in all the world; and for a long time it was claimed that in America true fissure veins were not to be found at all, but this is not the fact, and several have been re- ported on by eminent authorities. A fissure in the earth's crust, and cracks in the rocks, these two are commonly claimed as fissure veins, and is not a crack a fissure? Certainly it is, yet a fissure vein is not a crack in the rocks, but a former great opening in the earth's crust which has become filled up with mineral bearing ores. A fissure vein must be large, the sides or walls well defined, it will extend for some distance, and pass through two or more different rock formations, but if the ore deposit is found occupying a vein in one rock formation only it is usually a crack or local fissure in that formation. It may be large and of importance, but it can never be so large as a fissure in the crust of the earth passing through all rock formations down to unknown depth and should not be called a fis- sure vein. The formation of ore deposits such as 62 MINING INVESTMENTS are usually worked, may be for ordinary usage divided into but three classes, though scientifically many other classifications are required to accurately describe the different forms of ore accumulations. For ordinary in- vestigations it is sufficient if we consider the three kinds of ore deposits as follows: Those which have been derived from mineral bearing solutions, and crystallized, percipitated or re- placed out of the solution; next those which are simply accumulations of the ore by me- chanical means, and, finally those which are eroded out of the surrounding rocks, and have collected in gravel, or sand beds, called placer deposits. All these forms present numerous modifications; the mines formed from mineral bearing solutions generally belong to periods of heated activities during which fissures were developed in the earth's crust, and cracks, and gaping rents were formed among the rocks; and heated waters, rising vapors and chemi- cal changes exerted their influences to form ore deposits. Subsequently waters proceeding from the depths of the earth forced upward, or perco- lating downward from the surface, or following drainage zones among the rocks dissolved out minerals, on their way encountered sulphides, and first rusting and then dissolving them be- came acid, thus increasing their activities in AND HOW TO JUDGE THEM 63 dissolving minerals, till they became over- charged; and as a result threw down some of the burden in cracks, rents and cavities or fis- sures; continuing the action for a long, long period of geological formation; continually .de- positing a little and a little, till at last the veins were filled, and the mineral bearing solutions were forced, perhaps, among all the surround- ing rocks forming outlying trailers as it were to the main deposits. Sometimes a mineral bear- ing acid solution will have encountered a for- mation of alkaline rocks, limestone, etc., the alkalie will be easier to carry than the other minerals so the solution takes up or dissolves alkalies and deposits minerals in their places; and similarly lime waters which are alkaline, and may be mineral bearing, will, on coming in contact with acid rocks, take up the acid ele- ment to neutralize the alkalies and deposit min- eral in the place. Under some one, or another of these forms the ore deposits found in veins, seams, cavities, cracks, contacts, replacements or fissures will have been formed ; but the only questions which interest the investor are how big is the deposit in which I am asked to take a share? How rich is the ore? And will the mine continue production long enough to re- turn a profit on the money which I may invest? To answer these questions one must be in- 64 MINING INVESTMENTS formed of all the intricate science of economic geology, but a few indications can be given. A mine found among the rock formations should occupy a well defined space, the larger the better; and the ore should be fairly even in appearance, texture and assay valuation. The ore should show values in a reasonable distance from the surface, two to fifty feet; there have been notable exceptions, but as a usual condition a mine does not grow richer at s greater depth. For a time values increase, then deeper still decrease, and when the water level has been reached the permanent values are developed and usually these are not so great by far, and sometimes the mine becomes so lean that further work must be abandoned because it will not pay. Other forms of ore deposits are developed by mechanical accumulations; these are iron de- posits, coal beds, zinc or lead accumulations as residuals from rocks which have been wasted away ; and less abundant chrome or manganese deposits residuals from rocks which have con- tained these elements. Here a mechanical ac- tion takes place, the material is accumulated through the influence of erosion or the decay of rocks ; or, in the case of coal deposits, the ac- cumulation of vegetable material with such rapidity that, continually piling up, it is pro- AND HOW TO JUDGE THEM 65 tected from the air and cannot oxidize or decay, and so carbonizes to form coal. The petroleum deposits are taken to have originated from fats of animals, and the oils of plants, collected where it would be protected from the oxida- tion of the air, and gradually the change has taken place too for petroleum. Thus by me- chanical means we find that many mineral de- posits have been accumulated. In some, both mechanical and chemical influences work one with the other, as in the precipitated salt beds, gypsum beds, iron ores of some regions and other minerals; but the mechanical predomi- nates and in relation to all these deposits the questions which the investor will ask are in regard to size and purity; for deposits of less valuable ores and minerals must be large and very pure; and also so situated that they can be transported at low rates, if the proposition is to yield a profit. If deposits of this class are found to be large, to yield pure materials and to be so situated that the product can be car- ried to a market at a good profit it is fair to take a portion of the proposition, provided that the price is reasonable. Those ore deposits called placers in which the material sought is found mingled with sand, gravel or other products of erosion are usually productive of the precious metals, gold, 66 MINING INVESTMENTS platinum, and to its allied minerals and also precious stones, and certain of the rare ele- ments used in the arts. The development of such deposits is of great interest, and usually the various stages of formation can be traced in sequence; the washing down, and breaking away of rocks among the mountains, and the hills ; the grinding, crushing and gradual wear- ing down of this material in the streams and water courses and finally the collection of the precious metals, rare elements, or rich gem stones at convenient places. With these for- mations the questions which should be asked by an investor relate more particularly to the facilities for working the deposit; for if these are good, a deposit which is large though really lean in mineralization may be worked to very great advantage, and substantial profit. If it is big enough that is the great and all im- portant question and should be considered with special care when investigating any ore deposit. Bigness, however, is but a relative con- dition, for in a gold mine a vein two feet wide and well defined would, if it carried good values, be of great importance; but as an iron or coal mine would probably be considered not worth operating unless the mineral were very pure, the conditions for mining unusually fa- vorable and a market just at hand. Size is AND HOW TO JUDGE THEM 67 therefore relative and it may be considered favorable when it is large for the kind of min- eral which the deposit may yield. Another condition of geological formation which should be considered in relation to a mining proposition is the structural formation of the surrounding rocks. If these are very hard the cost of tunneling and sinking shafts will be great, perhaps so great that a loss may result where a profit had been anticipated. On the other hand, if the rocks or surrounding formations are too soft the cost of supporting the tunnels, and openings, so that they will not cave in may be very great, and a heavy charge on the operations; then, as sometimes happens, the insecure formations may collapse causing loss and often death. The proper con- dition is one where the rocks are firm enough to hold in place with reasonable supports, and yet are not so hard that mining will be at- tended by more than ordinary expense. Still another condition must be considered, as it may be very adverse to profitable oper- ations, and this is faulting. The earth's crust is frequently in destructive movement and sometimes it happens that a mineral deposit apparently good at one place may be found shattered and destroyed at another, so that profitable working is not possible. To inquire 68 MINING INVESTMENTS whether faults may be expected and give an intelligent report requires skill and long prac- tice, and even then no one who understands the science of economic geology will speak with great assurance. In a general way it may be said that if a mine is located in a country where seismic activities have been in evidence, and the rocks are found broken and distorted, then faults may be expected and the investor should proceed with caution. The presence of water may seem to some scarcely a geological condition surrounding a mine, yet it is a most important condition and one which must be reckoned with and watched. The water which accumulates in a mine must be pumped out; pumping is expensive work, and may eat continually at the profits to such an extent as to sometimes make a mine un- profitable. This chapter is but an outline, yet the prin- cipal conditions have been noted, and an in- vestor who informs himself in regard to these and finds the conditions to be favorable, will be justified in taking a venture in the property offered to him, but if the conditions do not seem favorable then it would not be well to take the venture, but look for something in which favoring geological surroundings can be found. VIII Physical Conditions Which Should Surround a Successful Equipment for a Mine A mine may be equipped with the best ma- chinery and materials for its operation, but this is not sufficient to insure favorable results. The equipment is necessary, but if the physical surroundings are such that the machinery can- not be operated to advantage the equipment may be a total loss. It seems strange that such a question should be considered, and that those who have an enterprise in charge do not for- see the difficulties ; but frequently they do not, and one abundant cause contributing to lack of foresight, is the hope which all possess, the eager expectation, the belief that conditions will turn out to advantage. These feelings with statements from mining engineers, es- pecially engineers who have machinery to sell, that they can design and set up a successful plant, lead on to expenditures which a study of the physical conditions would have deterred. An incident in explanation. One of the most 69 70 MINING INVESTMENTS successful mining engineers and promoters spent many thousands of dollars, it is stated, on a mine where there was an abundance of good ore situated on a certain coast. The ore was to have been shipped by steamers, but when preparations had been made it was found that neither steamers or any kind of vessel could approach the coast, and that the ore could not be shipped; a detail of physical sur- roundings, which, in the eagerness to win the great supplies of ore, had been entirely over- looked. To the powerful mining interest back- ing the venture the loss, though considerable was not disastrous, and the proposition was abandoned. If it had been a mining company raising money from the sale of stock, another would have been added to the long list of min- ing ventures resulting in a total loss. When, in the history of a mine, the period comes in which machinery is to be ordered, dependence must be placed on the skill of min- ing engineers ; and while they may make griev- ous mistakes at times, usually the equipment they recommend after due examination of the property will do the work; but too frequently incompetent men are employed, or, worse yet, a so-called practical miner is put in charge and then disaster will be almost certain. The science and practice of mining is divided AND HOW TO JUDGE THEM 71 into three distinct branches in the hands of the geologist, the metallurgist and the mining engineer. The geologist reports, or should re- port, first giving a clear otatement of the ore formations, the probable extent of the ore bodies and the physical conditions which sur- round the mine to facilitate or retard its oper- ations. The metallurgist should then study and report on the treatment which the ore may require in order to extract the metals success- fully. The mining engineer should then take these reports and design his machinery to meet the conditions which may have been found, provided, of course, that physical con- ditions have not been encountered which indi- cate that no profit can be had in operating the mine. The work of the geologist and metallur- gist can be, and frequently are, undertaken by one man ; but the preparation and designing of machinery requires such a different train of thoughts and education that the mechanical and scientific parts of mining do not combine to advantage in the hands of one person; and this is a frequent cause of loss through errors when geologists and metallurgists attempt to design machinery, or when engineers attempt to make the geological reports. One not being trained in the specialty of the other overlooks some details resulting often in disaster for the 72 MINING INVESTMENTS enterprise. When an investor is asked to take a venture in a mining proposition he should in- quire whether the reports have been made by competent and qualified men, and that an engi- neer has designed the machinery who is not only qualified and competent but is also dis- interested, and is not to profit by the sale of certain machinery which he may recommend. If the question of designing the machinery is in competent hands, of an engineer who has re- ceived reports from competent people so that he is well informed as to the conditions with which his equipment must contend, the investor can ask no more; and expectations for success are on a strong foundation. If, on the other hand, the investor learns that the different ex- aminations and surveys have not been carefully made by competent men, and that the mine is taking a long chance on expectations, then in- quiries should be in order and certain con- ditions looked up with care. Those conditions which may prevent the successful consumma- tion of plans in mining ventures are, some of them, as follows : Often a mine may be abund- antly rich but inaccessible to an extent that the cost of setting up machinery would be so great that profits could not be made. The recent de- velopments of mining interests in the State of Nevada are to some extent an illustration. AND HOW TO JUDGE THEM 73 Years ago these mines, which with better trans- portations are now in eager demand, were known and some of them even located, and in places attempts at working them were made, but almost all gave no results; the costs were everywhere too excessive, and for years Ne- vada lay a great abandoned camp. Tales of riches came from time to time but always little heed was given, conditions for maintenance were too unfavorable, machinery would then have been too costly in such remote places; and even now mining must struggle with ad- verse conditions of transportation in Nevada, and some must wait till better facilities can be provided. In former years I frequently had offers from prospectors with requests that I would introduce them to men of capital who might be induced to provide money for making and maintaining mineral locations in Nevada. But in those days mining propositions had but little favor, and no one cared to risk money against the then adverse conditions in the deserts of that state. Probably this was an error of judgment, because to acquire a prom- ising mineral deposit and hold it till conditions for its operations become more favorable is al- ways good business, yet to attempt operations on the same mine while the conditions are still adverse may be the height of folly. 74 MINING INVESTMENTS This question of accessibility is one of the most potent physical conditions which may retard successful mining, and millions of dol- lars have been lost in attempting to set up machinery in distant places, usually because the plans are too ambitious, and the machinery too heavy for the difficulties which must be overcome during the transportation. This, however, is not the only adverse physical con- dition. Sometimes machinery requiring an abund- ant supply of water is sent where water is not under good control, or perhaps cannot be had at all. Particularly is this true of hydraulic mining propositions, where a heavy head, or fall of water is required to be conducted through iron pipes and then directed with great force against the gravel beds, with which the precious metals are found mingled ; and, wash- ing down the gravel cause it to be carried by the water through long sluice ways where the gravel is washed off, and the gold dust being of greater specific gravity settles down and when the water has been turned aside, can be collected. A very simple process and if mis- takes have not been made in calculating the supply, the fall and the means of controlling the water, profits are almost certain to be ob- tained. When such a proposition is presented, AND HOW TO JUDGE THEM 75 the investor should make sure that the sup- plies of water have been surveyed by com- petent men and if not, then special inquiries should be made before accepting the venture. Another physical condition working on ad- verse influence in hydraulic mining is that the beds may be so situated that there is no con- venient place to dispose of the gravel after it has been washed through the sluce boxes. It is a common practice to wash this gravel into water courses, but at some places this is not permitted, at others it cannot be done, and the gravel piling up may soon put an end to mining operations. In some cases the gravel can be elevated and carried off by a heavy head of water which will rise to a level higher than that of the gravel bed; but such, however, is not always available and an investor should see to it that means and places are at hand where, in gravel mining, the accumulations of washed out material can be conveniently dis- posed of. In treating ores which must be crushed and ground it happens sometimes that the ma- chinery is not strong enough to reduce the ore to a sufficiently fine powder in order to extract the minerals, a matter which should never be an impediment, but which frequently works great disadvantage in a mining proposition; 76 MINING INVESTMENTS and even well known mining engineers have been at fault by not providing machinery of strength sufficient to withstand the strain. Where ores are to be smelted it often hap- pens that fluxes, that is, material which will help melt the ore, are not at hand, or being at hand the cost and difficulties attending their delivery at the works are such that operations show a loss. A simple matter such as this has many times caused ruin in an enterprise where more careful investigations would have saved the loss of time and money. Always in every mining proposition there are difficulties which must be overcome before the machinery can be operated with success, and often physical conditions which are of themselves but simple matters have been over- looked. Those which principally work to im- pede the successful development of a mining proposition have been noted, and an investor of discernment can by making inquiries ascer- tain whether the physical surroundings are favorable or are adverse, and whether all have been studied and reported on by competent men of good reputation. To pass on the physical surroundings of a mine does not re- quire great skill, the questions are largely prac- tical, relating to means of transportation, easy access for shipment, facilities for maintenance, AND HOW TO JUDGE THEM 77 supplies of water, abundance of timber, sup- plies of materials for smelting, the relative po- sition of the ore bodies to the fall of water, where such is required, and the strength of ma- chinery which may be required in treating the ore ; and where a competent man has passed on these an investor may be warranted in placing some money in the venture, provided other conditions, the supply of satisfactory ore and the general prospects promise well. IX Personnel and Business Organization Required to Attain Success in Mining Probably the claim that mining is a difficult business will not be disputed. The technicali- ties where trained skill is required are many, yet though the fact is well-known, men who have no adequate information in regard to the science and profession of mining engineering, are so frequently in charge of mining enter- prises that it is well said that any one thinks he can run a mine successfully; a mistake at- tested by the numerous disasters which fol- lowing mining ventures. I have been called on to examine many un- successful mining enterprises where I have found doctors of medicine, doctors of di- vinity, lawyers, journalists, brokers, farmers, army officers, sea captains, in fact men of al- most every calling in charge of the enterprises, and it is scarcely worth while to add that the mines were unsuccessful. One would think that a doctor of medicine 79 80 MINING INVESTMENTS would hardly be calculated to make a success of mining, yet there are many who make the attempt, and I cannot recall one who has been successful. Of the doctors of divinity and plain ordinary ministers there are some, but the "golden rule" does not seem to fit well; perhaps the ministers are too confiding, at any rate they are usually most woefully "stuck," and come out of it with anything but credit. When lawyers leave the work of corporate organization, and financing the enterprise, to take up the physical management of a mining property they are about the easiest proposition a designing operator or mining engineer with machinery to sell can encounter, and the list of failures in mining enterprises managed by lawyers is very long and painful. A young lawyer was sent to Alaska during the former days of excitement and speculation. He had a good trip, superintended the invest- ment of a million or so of dollars on behalf of a company of such prominence that its name was known throughout the country. The whole scheme was unfortunate, results were not adequate; the man was honest, brilliant, trained in legal technicalities, a splendid lawyer, but the relationship between the expenditures and the compensating results which must be looked for he did not understand. Why should AND HOW TO JUDGE THEM 81 any one expect that he would obtain results? And as was natural, the enterprise was a fail- ure absolute in total, and the stock is worth not one cent a share today. To multiply illus- trations would serve little purpose; one more, however, will be instructive. A young lawyer was sent west during the rougher days of de- velopment in that section of the country. He undertook to manage a mine where a tunnel was to open up a large ore deposit. Work was ordered, the young man was made much of, progress was rapid and reports satisfactory. A long tunnel was in construction, nicely but not heavily timbered, paid for at contract prices ; and the snow deep on the mountain did not impede the work. But when the spring- time came melting snows revealed a lot of col- lapsing timbers on the mountainside; the miners had simply tunnelled through the snow. Dishonest? Of course it was, but the young lawyer had been stuck, and the money was lost just the same. Dishonesty is so com- mon in mining that only those who have been trained to know when work is proceeding properly can expect to contend successfully against it. Of all the people who without the necessary training attempt to manage mining enterprises lawyers make the most failures, though some 82 MINING INVESTMENTS lawyers do make great successes; but usually they have surrounded themselves with com- petent, trustworthy engineers, geologists and mine operators. To enumerate instances would be of little value. The history of enterprises managed by people who do not understand the require- ments of the work they have undertaken ; who do not know good work, and cannot distin- guish it from bad, have but one ending fail- ure, and so probably it will always be. Of more use and interest is it to inquire of the successes in mining operation, in order that an investor may seek for similar organizations. One would not care to invest in a bake shop which a shoemaker proposed to set up, and operate; nor in any business which a man without the necessary training was proposing to establish; a carpenter could not operate a tailoring shop, nor could a cook be expected to make successful work of house painting; yet not more out of place than these are some who undertake to manage mining operations. Surely it is a simple matter of inquiry to as- certain whether those who ask for money with which to operate a mine understand the work which they propose, and common sense should prompt one to seek participation in mining operations with mining men; competent men AND HOW TO JUDGE THEM 83 trained to the work, and better yet, with those who have made records for success. There are mining engineers who, in a few hours, can obtain almost any sum of money for mining operations, because many people know that they have been successful, and are eager to participate in enterprises which they recom- mend. This is good practice, and right pro- cedure on the part of an investor; not only to seek investments with those who understand what they are undertaking, but to seek also practical mine operators, for there are many who understand the business, and have fol- lowed it as a business, not a technical pro- fession. I refer to people who actually oper- ate mines, not brokers in mining shares, for they rarely know much of actual mining and where they attempt to manage operations in place of speculations, usually make disastrous failures. One can buy stocks through brokers and one should look to his broker for accurate information in regard to the properties whose stocks they handle. Where a broker is a care- ful student of values, and conditions, his guidance is most valuable, and through deal- ing with competent, trustworthy brokers many investors have made comfortable fortunes through investments in mining shares. There are, unfortunately, many brokers and agents 84 MINING INVESTMENTS handling mining stocks who are not worthy of confidence; so many such, in fact, that mining stocks have become discredited to an ex- tent that they are frequently spoken of as a reproach, when in reality they are the most profitable ventures which one can undertake; the only investments where a small amount of money can make profits which are sometimes a competency for the fortunate possessors. To be successful requires many precautions, not the least of which is to know the people, the reliability of the man who recommends, the capability of the men who propose to operate and something of the business organization. In all walks of life there are dishonest men, hosts of men are incompetent, the vast ma- jority of all men are failures ; why then should mining come in for such severe treatment of public criticism, when there are, perhaps, more successes and greater returns in legitimate mining than in any other enterprise? Plain business methods should apply, and this introduces the subject of the business or- ganization. It may consist of a well fur- nished office, a big safe, a stock book and a talkative promoter. Probably there will be prospectuses, maps and numerous samples. An outfit such as this should make one cautious 1 iand whenever the flag is put out, AND HOW TO JUDGE THEM 85 as it were, to catch the eye, the investor should beware. What he should look for is an organi- zation which will be useful to the work pro- posed, not attractive furnishing to catch the eye; and not to place too much reliance on specimens shown by people on whose state- ments one cannot thoroughly rely. A story is told of how it happened once in London that a broker in mines had sold a property, and among the samples he had shown was one of great beauty, white quartz studded with gold, a specimen to be desired. The mine had been disposed of, and a friend who had helped in the transaction said to the broker : "Now the mine is sold you do not need the specimen, let me have it for my collection." The broker hesi- tated, took up the pretty piece of ore, stroked it and then said : "No, you can't have it ; this is the third mine I have sold with that sample and I think I need it in my business." Here is a criterion on business organization: bright specimens and show; if it is to sell the stock it will be in this form ; if it is to work the mine it will be in another form; one will be arranged to attract the eye, the other to facili- tate work for the mines. Where the object in view is simply to sell the stock, the attract- ive will predominate; where facilities to work for the mining operations are considered, prac- 86 MINING INVESTMENTS tical and often inexpensive equipment will be found. The atmosphere of a place to catch the fancy is so different from that of a place organized to accomplish some practical work that one should not be deceived. If doubt is caused by the surroundings one should in- quire what the plans might be for business organization, and should be shown plans such as practical business men would approve. The office, at the financial center, where the mine is being offered, should be good enough to enable those who have the work in charge to exhibit successfully the maps, reports and specimens, and to show the special advantages of the property seeking capital for its oper- ation. They should show what it is costing to raise the money through sale of shares ; they should show what work is being done on the property they represent, or what money is be- ing accumulated to provide for work; they should show the names of men on the board of directors who are competent to pass on propo- sitions relating to the practical operation of a mine ; they should show suitable arrangements for obtaining their machinery, and competent reports of the requirements which it must fill in order to win money from the ore; they should show their system of accounts, and how they propose to check up the expenditures AND HOW TO JUDGE THEM 87 with the results obtained; they should show what arrangements are in progress for the organization of the working force at the mines, and the system proposed for checking up the daily expenditures, and accounts; they should show what systems they propose, or have es- tablished, for taking care of the mineral which may be obtained; if the proposition is one handling products which must be marketed they should show what arrangements are being made for handling the sales department and finally they should show that they have the services of a competent mining man, or better yet, mining engineer to have charge of the operations at the mine. If on investigation it is found that these particulars of organization are not receiving much attention, then it is pretty evident that they are not thinking of mining, but only of selling stock; and on gen- eral principles their proposition is safe to let alone. Inquiries Which Should be Made Before Accepting a Mining Venture; How to Make Them There is scarcely a limit to the inquiries which one could make in regard to a mining proposition; a few, however, are essential, and from these one can form a clear idea of what the opportunities may be. Of one thing a per- son may be absolutely sure, no mining propo- sition can be offered which is not worth in- vestigating; and if one but investigates wisely, and selects desirable propositions one will be- come rich through successful mining invest- ments. Many a proposition will be found lack- ing in merit and not worthy of an investment, but all are worth investigating, because only by investigation can one find the desirable propo- sitions. In making the inquiries one should first ascertain what the proposition really is in regard to its present status, that is, at the time when one is asked to embark on the venture. The prospectus will tell of shafts and gal- 89 90 MINING INVESTMENTS leries to be opened, mills which are to be erected, estimates of earnings will be quoted, and dividends to be paid will be mentioned. As a matter of fact the mine may have none of these things, and whether it gets them or not will depend on whether the promoters suc- ceed in selling the shares to provide money to pay for the proposed improvements; and hav- ing secured the money there is still a question as to whether the results cited in the pros- pectus will be attained even after the money has been raised, for all managements are not successful. The first inquiries therefore should relate to what the mine really is at the time of investment. Let the prospective investor make the following inquiries: He should ask to see the original reports which the engineers or geologists have made. In these reports he should find an accurate description of the property, as the geologist found it. If such description is not in the report, then the in- vestor may well decide that the promoters are proceeding without definite information, and are therefore showing indications either of in- capability or dishonesty, and the investor can let the proposition alone. He should next inquire what actual money has been expended, first in the acquisition of the property, and after that in the improve- AND HOW TO JUDGE THEM 91 ments which have been made. His next step should be to compare the reported cost of, and the improvements on the property under his consideration with the cost of similar proper- ties and improvements which have been made on successful mines. Usually the figures can be had by getting the annual reports from several different mining companies which are successful, and comparing the costs and re- sults at these properties with the costs and re- sults at the mine in which he is asked to in- vest. If it is seen that the proposition he is considering is being operated at a much greater cost than were the successful mines, then it is evident that mismanagement is in- dicated, and he should not invest, because no matter how good a mine may be, if it is mis- managed it will not be profitable for the stock- holders. In making investigation for efficiency the investigator must remember that a new proposition can never be on as good a work- ing basis as a well organized and established property, but if there is a very great discrep- ancy then the new proposition is not being operated to reasonable efficiency and should be let alone. Having found what the actual state of the property is, the next inquiry should be what is the property actually worth in money, not 92 MINING INVESTMENTS prospects. This actual worth is often difficult to ascertain, but in every mining country there are bankers, brokers and dealers in mining property; and one can write to some person situated near the mine in question to ascertain at what rates mining property can be pur- chased. If one is considering a mining invest- ment, it is worth while to write such letters, because by this means one may very often hear of really desirable propositions to be had at low rates, or rather, at fair rates ; because min- ing property if it is good for anything is cost- ly. Having ascertained approximately what the worth of similar property may be, one can make an estimate of the actual worth of the proposition in which he is asked to invest. This actual worth divided by the number of shares in the proposition gives the actual worth per share. This represents the actual present worth, but the shares must be of greater value, the prospect must be good and worth some- thing, else the shares would not be worth buy- ing. To calculate what is being paid for the prospect, the chance of making a big profit, take the actual worth of a share and subtract it from the price at which they are offered. Now we have the question is the prospect worth the amount represented by the differ- ence the most difficult question in mining, AND HOW TO JUDGE THEM 93 for it deals with speculative quantities, and conditions which can be estimated but not surely known. To proceed in estimating what the chances are one must compare the propo- sition offered with the early conditions which were found in successful mines and properties which have turned out winners to the great profit of their owners. To obtain this infor- mation one can visit the public libraries, and look back among the old files of the mining journals of the dates corresponding to the period of the first history of any great mine; and there pretty certainly will be found accu- rate descriptions and published reports, or, if these are inaccessible, one can send a subscrip- tion to one of the better class mining papers, and ask for information as to the early history of some two or three mines which he would like to compare in their earlier or prospective stages with the property in which he is asked to invest. He should seek the technical mining papers for his information; the mining press which deals with questions of investment values has, up to the present time, been of but little service. The technical papers are man- aged by men skilled in the technicalities of mining, and will have the best authorities on mining among their contributors; and any in- formation which may be had from them will 94 MINING INVESTMENTS be worthy of careful thought and consider- ation. They will treat, however, only of tech- nical subjects in their relations to mining; in regard to investment or speculative values they will have very little information. Such points the investor must decide for himself. If he has good judgment ,in selecting mining in- vestments he can make a fortune, but if after four or five trials he finds that his judgment has not been good then he had better seek some other field of industry for his ventures. When one has received the information in re- gard to the early history of great mines it will be found, in the majority of cases, that the properties have been great from the start, that the exposures of ore have been large and have attracted wide attention. One will find, on the other hand, that in only a few instances have inferior showings of mineral led to great mines, though there are some notable exceptions. One may judge and be warranted in the opin- ion that where there are great ore exposures the prospective value is worth a considerable amount of money, and in some instances may warrant a very high price for the shares, much more than the total of actual values existing before development. If it is a medium ex- posure of ore, and expectations are entertained that on opening the property greater values AND HOW TO JUDGE THEM 95 would develop, the prospective value is worth something more than the actual selling values at the time this stock is offered. Especially is this true if the ore exposures are of a quality which will pay for mining, and treatment to extract the metals ; but if the ore exposures are of poor quality, not sufficiently valuable to pay for the working and milling; or if there are only inferior amounts exposed though the quality may be good, and the mine to pay must find larger ore deposits, the stock is worth very little more than the actual selling value for the property, and if there is no selling or actual value then the stock may be considered worthless, though one might give a few cents a share for the chance that something valuable might be found, especially if the speculation is in the hands of capable people. In making these investigations one must trust very much to others. Investing money is intrusting it to others who will use it and pay for the privilege; and as some can be trusted, and some cannot, and as some are suc- cessful and some are not, an investor who would make money on his investments must find men who combine the two qualities ; they must be trustworthy and they must be suc- cessful in the line of enterprise for which they solicit the co-operation of capital. In mining 96 MINING INVESTMENTS one will secure better returns with the right kind of people than in any other line of busi- ness; however, doctors of medicine who have not secured a practice, lawyers without briefs, ministers without charges and business men who have been unsuccessful in other oper- ations are not more apt to be successful at mining than they have been in their previous callings ; and however honest they may be it is not honesty alone, but profits for the use of money which the investor wants. The most important part of the investigation to an in- vestor is the investigation of the people to whom his money is to be intrusted, because if the people are reliable and successful one can be pretty safe in taking a chance with them; and if they are of doubtful record or if they have not been successful one had best let the proposition go and look for something better. In making the investigation of people one can proceed with some assurance that the in- formation can be promptly and accurately ob- tained. If a person has money to invest it is natural that he should have a bank account, and his first step in making an investigation should be a request to his bank to write the bank nearest the place where the mine is situ- ated and ascertain what the local credit and AND HOW TO JUDGE THEM 97 standing may be for the enterprise under con- sideration. This will give him an idea of the credit of the parties, and the property. The opinions which may be given by the bank offi- cers as to the advisability of investing in the mine are of little value, for bank officers know nothing of mining, and have persuaded many people to turn away from mining propositions, which have made fortunes for others who had assumed the risk. Mining is a risk and a speculation, and as such has no part in bank- ing ; the bank officers deal in loans, and credits, and are supposed to know the standing of people and enterprises in the communities about them ; a letter from one bank to another making inquiries is pretty sure to be promptly and accurately answered, and the investor will learn that the proposition he is considering is of good, fair, indifferent or questionable local reputation; and can to that extent ascertain whether the managers are to be trusted with his money. Let him next take the names of all the offi- cers, including the directors of the enterprise, and in the same way have his bank write local banks where these people may reside, and find out what their local reputation may be worth. Next he should ascertain which one, or more, among the officers represent the active pro- 98 MINING INVESTMENTS moting interest in the enterprise. Let him then take these names and the name of the company, and get a commercial credit report on them from some one of the great rating agencies, asking for information in regard to both the people and the enterprise; this will give their general credit and reputation; but the mercantile rating agencies are often mis- taken, most grievously mistaken, and many worthy people suffer because of statements which they make. Two instances will illus- trate. I have certain knowledge of an inquiry which was made of a very prominent mer- cantile rating agency. The report stated that the parties were unknown, had no credit and no commercial standing. The people were not rich but they were prospering in a small way, and were so honest and reliable that one might intrust them with anything he had. In an- other instance the same agency reported forty thousand dollars assets, a flourishing cash business and nothing known against the repu- tation for a man who, at the time the report was made, was a confirmed drunkard, paying no one where he could get out of it and with a personal standing which was almost disrepu- table. These instances show that the mercan- tile rating agencies are not always reliable, but while they make mistakes at times, their in- AND HOW TO JUDGE THEM 99 formation is always to be sought, and in the great majority of cases is accurate and valu- able; but one cannot rely on the rating agencies entirely, because they would probably give a most adverse report against a poor but honest miner, who might have a property in his control out of which he could make a for- tune for himself, and others, if only they would intrust a little money to him. Having obtained all the information possible in regard to the people -who are presenting a mining enterprise, the next line of inquiry should be in regard to the economic geologist, metallurgist or mining engineer who had ex- amined and reported on the property. He recommends it, otherwise the promoters would not publish his report. Probably the com- pany's officers will supply the record from which the investor can make his own inquiries these should be to ascertain what the per- son may know, where he attained the infor- mation, where and to what extent he has studied, what scientific societies have given him recognition and what enterprises he has served in a capacity similar to the capacity in which he is serving the enterprise which seeks the investor's money. Inquiries to the scien- tific and technical societies with which he may be connected, his former employers, and the 100 MINING INVESTMENTS people with whom the gentleman may have had relations will show his character, stand- ing and abilities ; and give the investor an idea as to what his recommendations, and opinions may be worth. Here certainly is a lot of work recommended to the investor who may think of taking a ven- ture in a mine, but nothing of success can be had without work. One can make a fortune through successful mining investments, but if one simply wants to take a chance, and will invest haphazard through reading an adver- tisement, or an unconfirmed prospectus, re- turns can be expected only if one is lucky ; and when it comes to playing on one's luck it is just as well to visit the gambling table and have some fun at the game, for money is just about as sure to be lost at haphazard mining investments as it is at gambling. XI Conditions Under Which a Mining Proposition May be Accepted Let us suppose that an investor has decided that it is worth while to undertake operations in mining stocks, and has made a series of in- vestigations, and has the facts from which to decide for or against a proposition; and has now to debate the situation, to decide whether or not he shall risk the money. Naturally the conclusion has been reached that there is noth- ing in mining which can be considered sure, yet the chances of gain are frequently such that one should intelligently place a certain amount of one's savings, or property, at hazard. It is not an investment, it is simply placing some money for a great winning in a propo- sition where one's intelligence is able to indi- cate what the chances of a favorable result may be ; and the better chances predominating, one is justified in accepting the risk. Where conditions are favorable one should have found that the investigations confirm the claims made in the prospectus; that is, disinterested 101 102 MINING INVESTMENTS people have written him of the property, par- ticularly people living near it, in a great meas- ure confirming what has been claimed in the prospectus. Probably the reports will not co- incide exactly, two different statements never are exactly alike, but if the principal features have general similarity this is a very strong condition in favor of the proposition. Through his bank the investor will have heard that the general standing of the people connected with the enterprise is good, and that many people think well of the proposition, par- ticularly among those who are in a position to come in direct touch with it. The report may be that the people are of good local standing, but that the bank officers know nothing about the mining proposition; such a report can be considered as favorable, as the bank can at best only tell of local credit, and may be greatly misinformed in matters of technical valuations. The reports on the property under advise- ment will be shown on inquiry to have been prepared by a man who bears a good reputa- tion, and who has the technical skill, and the information gained from a good source which enables him to write with the authority of one who knows his subject. A report from a man who has had the technical and scientific train- AND HOW TO JUDGE THEM 103 ing, and who had later had actual and varied experience, so that he can speak from technical knowledge, and practical experience, is the most valuable. When this favorable con- dition has been found one can take the report and believe it; and if the mine promises well the report should be considered to be sufficient warrant for an investment. Those who place money at hazard pay too little attention to the report of a competent engineer and should in- sist that such a report be submitted for con- sideration before taking any risk in the propo- sition. If this were done and the records of those who make reports more carefully looked up, there would be very little money lost in mining. I do not wish to say that a man who has not been through a university, but has at- tained his knowledge in the School of Hard Experience, cannot make a report on a mining proposition; frequently the reports from such men are the most valuable ; I do say, however, that if a man of experience has the ability to pass judgment on a mining property, and make a report on it which may be accepted with con- fidence, that man will have a record to which he can refer, and many people will speak well of his ability ; and if his record does not attest the value of his work, then his report should not be accepted; and it is my opinion that a 104 MINING INVESTMENTS man who has simply been at mining for a con- siderable period is not competent to make a report on a mining proposition. It is requisite that a man should have been a careful student, and should have had opportunities to examine many different mining propositions before he can report successfully. We are considering favorable conditions, and the reports coming to the investor will be that the examination of the property has been made by a person worthy of confidence, both as to his integrity and his skill; and this being the case it is fair to put the proposition down as a good thing. Then the final matter of investigation, the questions as to whether the people offering the property, or rather who are asking for the use of money, are reliable and have the ability to obtain results. There is many a good mine gone wrong because the management was in- capable or dishonest, and the investor should here exercise great care in his investigations. If the personal credit and standing of the peo- ple with whom he is to intrust his money is good locally, in the places where they live, and if they have a good financial standing, are considered good business men and have placed some of their own money in the enterprise in which he is asked to take a risk ; then, if it is shown by the investigations, ANIT HOW TO JUDGE THEM 105 that these people know what they are talking about, and have been in mining as a business; or, at least, that some of those who are man- aging the proposition do know mining and have made money at it, then the supposition is fair that they will be able to make still more money, and they being found both honest and capable one may expect to make money with them. All these considerations being favorable one is ready to take the investment, and it is only a question of the price which he should pay for the stock. It is supposed that the property is free from debt and the title held clear for the stockholders, unencumbered by liens, con- ditions, mortgages or obligations to be per- formed; because where these are found a strong element exists against the chances for success, and if the proposition is accepted with such incumbrances the price paid for the stock must be much lower than would be paid in a free and clear proposition. Still if the other conditions are favorable, a good local credit, a good report on the property made by a com- petent man; and the proposition being in the hands of honest, capable and experienced peo- ple, it certainly is favorable to take a chance with them, and the only question to consider is that of price. The investor will have made 106 MINING INVESTMENTS a calculation of the present worth, that is the actual value of the property for cash, and will have compared it with the prices asked for similar property. He will have seen how the present condition of the proposition compares with the former conditions of other com- panies when they were being promoted, and he will have decided whether the price asked for the shares beyond the actual cash, or pres- ent worth value of the property, is too much to pay for the prospective values, and the ex- pectations. This difference is to be put into work in the property, and will improve its value, naturally so; and the proposition being in honest, capable hands, with experienced peo- ple as managers, the expectation is reasonable that it will be well expended, and that the in- vestor will obtain the benefit. But how much is he to make? That the money he is placing will benefit the property is plain enough, but if it benefits it only to such an extent that the investor simply has the value of his money, then there is no profit, and one goes into min- ing for profits. To double one's money should be very ordinary, to make five hundred or even a thousand per cent, on mining risks carefully considered should not be rare. If it is found by the investor that the expenditure of his money on the property is probably to im- AND HOW TO JUDGE THEM 10? prove it so that he will obtain at least an indi- cate profit of one hundred per cent, with proba- bilities that it will be even more, then the proposition is a fair one, and he can put his money in against the work which has been done in acquiring the property, and the chances are decidedly in his favor. Naturally it is so, for if the proposition is found to have a good local credit; to have been reported on favor- ably by a competent, experienced man; to be in the hands of honorable, capable, experi- enced and trustworthy people, who under- stand the business; and if the price asked is one which admits of large profits then, where is the risk? In truth there isn't any, but the price of selecting such a good investment is that one should take the time and trouble to make the investigations. The reward will be a share of the great wealth made in mining, because the investor will, if he exercises cau- tion and good judgment, be certain to obtain a share in good propositions. One must do the work of making the investigations, however, and accept only facts, not hearsay evidence, in coming to a decision. XII Conditions Under Which a Mining Proposition Should be Rejected One can reject a mining proposition in short order, and one short chapter is sufficient to in- dicate conditions, any of which should be war- rant enough for declining to take an interest in such a proposition. The investor would prob- ably find a means for making inquiries through his bank as recommended, and would first learn of the local standing of the proposition, and the men connected with it. If word comes back that the proposition has a bad, or ques- tionable reputation, and the people connected with it are not held in respect among their neighbors, it will be very safe to let the mat- ter entirely alone, and refuse to invest at any price, no matter what inducements may be offered. Another condition which would be sufficient to warrant one in declining absolutely to have anything to do with an enterprise is, where the prospectus, and published reports, do not agree with other accounts of the property which may 109 110 MINING INVESTMENTS be had from parties living near it. Of course no two accounts will agree exactly, but if there is a decided discrepancy, and the reports offered by the parties interested in the pro- motion are very much better than any one else will be willing to say for the property, ex- aggerated and misleading statements can be suspected, and the trustworthiness of the whole proposition placed in doubt, and one had better be careful and have nothing to do with it. If it is found on investigation that the prop- erty is not free and clear, but is incumbered with debts, liens and contingent clauses affect- ing the title; conditions which have not been clearly stated in the prospectus, then fraud may be suspected, and certainly one would not want such an investment. If it is found on receiving the reports from the mercantile agencies that the people offer- ing the stock have been connected with ques- tionable enterprises, or are not of good busi- ness reputation, then the danger flag has been found and should deter any one from making an investment. The other conditions under which a propo- sition should be rejected are not so clear and will very much depend on the personal opin- ion of the investor. He must form his own judgment as to the condition of the property AND HOW TO JUDGE THEM 111 when he is asked to invest, and how it com- pares with the conditions which were found to have been reported in regard to mines which have turned out well, but which were, of course, once in their prospect stages of de- velopment. Here one must exercise judgment, and must read the accounts and reports of mines which have turned out well, and judge what the prospect may be for the mine in which he may be asked to invest. In this the investor must rely very much on others, and must look up the record of the man who makes the reports recommending the property. If it is found that he has reported on properties which have turned out badly, after he had recommended them; if it is found that he is a man of questionable reputation; if it is found that he is not a disinterested party, but owns part or all of the property he recommends, and his recommendation is not confirmed by others ; and if it is found that he had not had the ad- vantages of special training, or wide experi- ence in mining property, it will be safer not to risk money in the venture ; especially if the proposition is one where ore is not much in evidence but it is hoped and expected that min-. ing operations will open up mineral deposits which will be valuable. Most mines are failures because a mistake 112 MINING INVESTMENTS has been made, or expectations have not been realized in regard to the supplies of ore; and unless the proposition makes a very good showing and has been reported on favorably by qualified men the chances of losing are much greater than are the chances of making a profit. All mines go through a struggle to find ma- chinery which will treat the ores successfully, and often years are occupied and hundreds of thousands of dollars expended before a suit- able plant can be constructed, and profits made; this period of disappointment during the development must be expected and is not a reason for turning away from the enterprise. If, however, the investor finds that tendency of the management is to hurry the equipment before they have opened the property, and know how much ore they have available, it is well to remember that undue haste leads to disaster in mining. As most mining propo- sitions are failures, one must remember and study the circumstances which have brought about these failures, and form his judgment as to whether the risk shall be accepted or re- jected. Of the propositions offered, certainly the great majority are to be rejected. Of course one wants nothing to do with enterprises which are simply to sell stock and one can detect AND HOW TO JUDGE THEM 113 these as noted in a previous chapter, and natu- rally will let them alone; still this may not be an important part of the investigation, because a scheme to sell stock in a property not worthy of the investment will only be proposed by dishonest people, and the bank reports, with commercial agency statements, will give the necessary information and enable one to avoid dishonest propositions. Then, finally, the question as to the price asked for the shares must be considered. The best mine in the world might be undesirable if the price placed on the shares were one which would not give a fair mining profit to the investor, and a mining profit is a very large profit; such shares should not be purchased. These are usually put in the public markets, and the prices advanced up, and up, to attract buyers; but the investor should consider only values and multiply the number of shares in the whole mining company by the price quoted per share, and then consider whether the mine is worth that much, and if the price seems ex- cessive let the proposition alone. Similarly, having deducted the estimated present worth, or real salable values from the shares, as per the formula previously stated, and found the difference which is the price asked for the prospective values ; and if this is 114 MINING INVESTMENTS found to be more than the situation warrants, or is greater than the rate generally quoted for other mining properties, it is better not to take the proposition, because where one pays too much one is not likely to obtain a due profit. As to investing in companies managed by doctors of medicine, ministers and others, usually it is best not to do so, but there are often exceptions, especially where the manager has been shrewd enough to surround himself with competent, reliable men. Finally, where anything looks doubtful and the statements are not clear, and businesslike, and the managers take offense and object to a careful investigation when it is proposed; it is better not to go into the deal with them, because most mines are failures anyway and it is only by selecting the very best that one can expect to make money. In these chapters nothing is said about divi- dend paying mines, because one is not solicited to invest in such property. Established com- panies rarely issue a prospectus, and the specu- lation and big profits in mining are made by getting in on the new propositions which are desirable but cheap because in their initial stages of development. The two propositions investment in estab- AND HOW TO JUDGE THEM 115 lished mines and investment in new specula- tions are so different that they must be treated separately. XIII Investments in Dividend Paying Mining Stocks When one considers an investment in divi- dend-paying mining stocks it is usually all a question of price ; not entirely so, however, be- cause it sometimes happens that wideiy adver- tised offerings of dividend-paying mining stocks turn out to be the worst kind of swindles; the dividend, so called, being simply repayments of a small proportion of the money received from the sale of stock. This is a thor- oughly dishonest practice and one distinctly forbidden by the law; it is done, however, and there are many subterfuges to hide the real character of the payment. A common form is for the promoters to make transactions among themselves which will show a paper profit and then declare a dividend, but in reality pay it only to a portion of the stock, that is to a few shares which they may have sold; the amount required is not large, because only a few shares have been disposed of and the stock which they hold really receives no dividend, the promoters 117 118 MINING INVESTMENTS sign a receipt for it, and to all appearance it has been paid. On the strength of this dividend the stock becomes salable, and presently when the promoters have sold what they consider sufficient, the stock is left to shift for itself and no more dividends are paid. Under one form or another, with better or more crude conceal- ment and manipulation, this game is being fre- quently worked, and many are defrauded by it. The means by which an investor can protect himself are very simple. If a property is really earning dividends active operations must be in progress at the mines, and accounts of sales of ore will be in evidence ; or returns from bullion, metal or mineral sales will be at hand and there will be some system of bookkeeping. A com- pany honestly managed should make no ob- jection to submitting proofs that its dividends are really earned, and where objection is made one can refrain from investing. The same care should be taken in looking up the standing of officers and of the enterprise itself, as would be taken if it were an untried speculative venture ; and where it is found that the enterprise is in the hands of questionable people it should be let alone, no matter how much may be paid in dividends, no matter how active the stock may be in the public markets; such activity is no criterion of real conditions, and may be entirely AND HOW TO JUDGE THEM 119 the outcome of clever manipulations on the part of the promoters. There is just one thing for an investor to do in relation to a propo- sition found in the hands of people of question- able reputation, and that is, let it alone. When it is found, however, that a property is really in operation, and is earning dividends, then it may be a very attractive proposition for an investment, but it is all in the price. A mining stock should pay a high rate of dividend, because if an investor does not get his money back, and a profit out of the dividends, the in- vestment is a loss to him. The reason is that all mines must come to an end some time, even the greatest, and when the end has been reached, and all the j>re taken out, the mine is worthless. The question is, how long can the mine keep on paying dividends, and how far away is the period when it will be worked out and worthless? The world is full of worked out mines, and as all must come to an end the investor should consider the end, not the pres- ent of a mining investment. If a stock is bought at a price which will net the investor twenty per cent, a year in divi- dends, the rate would certainly look attractive. But the rate of dividend alone is not sufficient to warrant an investment, one must be reason- ably sure that the mine contains mineral 120 MINING INVESTMENTS enough to keep the dividend payments going for a period sufficiently long to return the money invested and yield a profit. At twenty per cent, per annum one's money will be re- turned in five years, at ten per cent, per an- num one's money will be returned in ten years, and at five per cent, per annum the money will have to remain out. for twenty years before there is any profit, and only a few mines have paid for so long a period. It seems reasonable that a stock in an ordi- nary mine paying a net return of only five per cent, is selling too high, but that when the rate is between ten per cent, and twenty per cent, the proposition is more attractive, and more nearly on a normal basis of compensation for the risk involved. Dividend-paying stocks are usually not offered for public subscription, and most of them have regular quotations in the .stock markets at which an investor can either buy or sell, and with such stocks the opportunities for speculation are very attractive. The mar.- kets for such shares are rarely very broad, and they are for this reason extremely sensitive to changes of market conditions, and their fluctu- ations are frequently in a wide range. In making speculative purchases of mining stocks in the open markets one should be governed, AND HOW TO JUDGE THEM 121 not by the fluctuations, so much as by the esti- mate he may have placed on the actual worth of the property. If one will do the work, and make the investigations which will give the true conditions at the properties he may think worthy of attention, and then having obtained the facts compare the prices for the shares with the average prices of similar propositions, and having determined the worth, the investor is in a position to buy whenever the prices are below the worth which he may have estimated, and sell when the price is greater than the worth, but always it must be remembered that to put money in any mining proposition where the management is not thoroughly reliable and capable is to place it at a double risk, where the odds are too much against the investor. Where a speculation develops in a mining stock, and it begins to assume activity, and move up to better levels day by day, one can suspect manipulation; such has been seen re- cently in several stocks, and one should pay no attention to it. By all the signs some one is out to unload stock on careless investors, and presently those who have engineered the manipulation will withdraw from the market, and go about with a broad smile, and sneer for the credulous, telling how they have made a killing. It is the same old story of the faker 122 MINING INVESTMENTS at a country fair selling watches, only in a dif- ferent form. The faker offered watches at 50 cents each, saying that the next day he would sell the same watches for a dollar and take back any he had sold for fifty cents at the price of the day, one dollar. The next day the watches were offered for a dollar, and anyone who had bought at fifty cents could get a dollar for his watch. The business being completed the faker then offered watches, as many as people wanted, at one dollar each, saying that next day he would sell at two dollars and take back watches at the same rate. This he did and then announced that next day he would sell at four dollars and pay four dollars for any watches he had sold, and people bought freely at two dollars. When the next day came the faker kept his word, took back the watches at four dollars, and then announced that he would sell as many as people wanted to buy at four dollars, and if they were not satisfied, take them back at his selling price for the next day, which would be eight dollars. He as- sured the people that his only object was to advertise the watches, the manufacturers knowing that on account of the superior qual- ity of the watches they would by this simple means of making the people handle them, and see their merits, secure the good will of the AND HOW TO JUDGE THEM 123 neighborhood and a permanent trade. It was a plausible story and the people bought in great numbers at four dollars each. That night the faker packed his grip and went away, leaving the people stacked up with dollar watches for which they had paid four dollars. The sup- port had been withdrawn from the market, just as it is in fact, though in a different form, withdrawn from the stock market when the manipulator has sold out at a price satisfactory to himself, after spreading the report that he would presently be selling at a higher price, and would take back any stock which might be offered at the higher figure. In one form or an- other this game is constantly being played in the open stock market, often so cleverly ad- justed and concealed that the manipulation looks even to the best informed like a real de- velopment of values, but the result is always the same, the manipulators finally obtain a kill- ing, and having secured a large price leave the purchasers to their fate, and the market be- comes unsteady, flounders to lower quotations, in some cases goes out of sight altogether, and the stocks become unsalable. In mining stock operations there is just one thing to study and that is actual values ; on any other basis than buying when the prices are depressed below actual values, and selling 124 MINING INVESTMENTS ' when they advance above them, one will cer- tainly be left in the lurch. The skill is in de- termining what the actual values are, and to do this one must make a careful study of all the information available. XIV The Spirit of Adventure and Specula- tion. What Some Have Gained and What Others Have Lost Luxurious in the metropolis lives a man with everything his whim or fancy can desire, if only the purchasing power of money can ob- tain it. Riches are his, gained from the mines, and fair fortune smiles upon his happy life. On the western plains is a human skull, bleached, and white in the sun; ghastly in the pale light of the moon; a toad has made his refuge in it secure in the silence of the desert, and it is nothing; the man lost his all, and his life was a sacrifice to fortune, he sought for mines and had no reward. These are the ex- tremes, the prize to one, the penalty to the other. Who goes a searching after mines? The spirit of adventure and speculation stirs always in the human soul, desire, triumph and achievement ; or desire, hardships and failure perhaps death ; one is the penalty, the other the reward. Is it worth while? Perhaps, at any 125 126 MINING INVESTMENTS rate men will always take the risk, that is some men; and when an excited prospector presents himself before those who might take a chance with him in the property he has found, or thinks he has found, is it a great thing that one should risk a little money to test a prop- erty, which may have been obtained after years of hardship, exposure and danger. My belief is that where a miner who has done honest work, has really searched and prospected, and can show a record which would entitle him to confidence, and presents himself to people with capital, saying that at last he has found a prize, then his story should have ready listen- ers, and it ought not to be so hard for him to secure the money to prove up what he has found. To take a chance at first hands with those who prospect for mines is a most at- tractive form of speculation, that is, where the prospector has succeeded in finding something which promises to develop values. To grub stake a prospector, meaning to give him the supplies which will permit of explorations to find mineral deposits, is playing simply on a chance, and may or may not be good business ; but where the prospector has found a mine it is a very different proposition, and one might well take the risk. To tell of great individual fortunes which AND HOW TO JUDGE THEM 127 have been made at mining is not of interest to our subject, we are treating of that which an investor could do and what he should do in the spirit of adventure and speculation, to risk a little for gains in volume. Only one must risk with judgment, but a risk one must take if one would share in the hidden wealth of mining regions. In considering what some have gained, the copper deposits of Michigan may have a promi- nent place in one's thoughts, for there are the accounts of how hunters and adventurers, years ago, brought back stories of great ex- posure of pure copper; some said mountains of pure metal exposed in the forest lands of the little known northern peninsula of Michi- gan. Occasionally people gave heed to these stories, most held them in derision, but those who gave heed sent and secured the' properties. Then came the struggle to obtain funds and it is said that stock in the great Calumet and Hecla mine went begging for purchasers at but a fraction of its par. It was a struggle of some years, but in the end those who had ventured were triumphant ; and rumor, on well founded information, has it, that some of those who were first to take the risk have had a compe- tence for themselves and for their children out of small amounts invested in Michigan. Surely 128 MINING INVESTMENTS a good compensation for the risk. Not only the Calumet and Hecla but other great mines were developed. Then when some had secured the prizes a speculation developed; great was Michigan, copper was reported to be every- where, and copper companies, exploration syndicates and mining enterprises sprang up in numbers; people bought, and speculation ran a turbulent course ; but the cream had been secured, most of the latter propositions had no value and they who went a trailing after where others had been first, lost money, and some were ruined. This is a condition which should be empha- sized in one's thoughts; the money is in the new discoveries, the big money; the rare re- turns which give a competency for a small in- vestment put at risk. Always it has transpired that where a great discovery is made a swarm of speculative enterprises follow after, the pro- moters stating that their mines are just adjoin- ing, or just in line with, some well known im- portant proposition and mining discovery. Wherever there is a great mine the country all about it will show indications of mineral; these in most instances do not lead to new mines, but simply point to the great mine which has been discovered. The district natu- rally has fame because some two or three, per- AND HOW TO JUDGE THEM 129 haps more, mining companies have occupied it and are making great strides at uncovering rich ores; the press is filled with accounts of their great doings, the well advertised situation is such that any property in the famous dis- trict can find purchasers for shares ; the mines offered are just next to, or near the great dis- coveries, what an opportunity! Thousands of late comers purchase, and lose their money. There is little use in trailing after a great dis- covery, better get in on the great discovery it- self, even at an excessive price, than to risk money on cheap trailers; but the conservative thing to do is to recognize that the discovery has been made and that others have it; then keep on the watch for announcements of new fields, and when such are first brought forward be quick to investigate, and if the outlook promises well, and is in honest hands, be among those who get in first. This condition of profit to the first comers and losses for all who follow after is illustrated in so many places that one can consider it a fact almost beyond dispute that profits are only for the early comers, generally speaking, of course, but in most cases it is a fact; and, naturally, those who get in first obtain the pick of anything the district may afford. In this there are many illustrations. A great excite- 130 MINING INVESTMENTS ment was developed when gold was given prominence in California, and millions upon millions were made by those who had the first propositions in the different mining districts; and since then millions upon millions have been lost by others following where the first suc- cesses had been made. California is a great state and new mining districts will probably be discovered and then the history will be re- peated; good luck to those who get in first. Later came the discoveries of oil in Pennsyl- vania with millions made, and then millions lost by late investors. Then came the southern coal and iron lands with the same results, the iron discoveries in Michigan, the mining regions of Colorado, the copper zone in Montana, the great copper belt in Arizona and New Mexico, the excitement following the discovery of gold in Alaska, and the lives of thousands lost in trailing after those who had the prizes. Today we are having the splendid developments in Nevada, where some few great mines have made, and are making fortunes for the possessors, while hun- dreds of trailers are yapping out their wares and millions are being lost in expectations based on a supposition that mineral forma- tions are of such great extent that all the nu- merous companies must have valuable propo- AND HOW TO JUDGE THEM 131 sitions. The same situation has developed in Canada, and will probably develop in re- lation to Mexican mines where some remark- able developments are taking place. History will repeat itself, a few great mines will be found to have enormous value, and those who have invested in the second rate propositions will find their ventures resulting in a series of grievous losses. Whatever the spirit of adventure and specu- lation may move one to attempt, one should re- member that those who have made money in any district have been in on the main ledge, the principal deposits, and that is the place where one should have investments if one ex- pects to make money in mining. XV The Mining Regions of the World and the Opportunities They Offer Having considered that in recently discov- ered mining regions the speculative opportuni- ties are greatest, the thought naturally presents itself as to where such locations may be, hence a chapter written on a great subject; which could occupy a volume, but seeks only to give an outline which may be of some service in that a little data, an outline of the geology of the world, a few statements in regard to its universal wealth, and of the places where mines are worked may give some idea of ex- pectations in regard to future developments. Certainly many changes have taken place in this earth during the passing of the ages of its development, and in spite of the many dis- putes among scientists and theologians, the brief account in the Book of Genesis must be considered the most logical. In the six days, or six periods of time, is given an outline of genetic development which is confirmed by the 133 134 MINING INVESTMENTS geological formations in some measure; and this confirmation logically connects itself with, and supports, that which is more obscure in the biblical narrative. We have only to deal with the days or periods since dry land ap- peared, for, with the appearance of land began the formation of mineral deposits as we know them. It may be that remnants of the first continents still exist among the Archean rocks, which are those of oldest formation, though it is more probable that all the exposure of Archean rocks now on the surface were at the first appearance of the land far below the original exposures ; which must have long since been eroded away, and it is scarcely probable that a single bit of the first exposure remains as it was when land first appeared, for all has changed; and during this process of alteration mineral deposits have been formed, and great stratifications of rocks to make earth's conti- nents have been developed. The oldest or Archean rocks occupy princi- pally the north, a great stretch of country from northeastern United States over into Canada, to Labrador and to the arctic regions. East- ward Archean formations occupy the northern part of Great Britain, Scandanavia, Northern Russia, the Ural mountain regions ; further east- ward into Siberia, among the Altai mountains AND HOW TO JUDGE THEM 135 and probably portions of Alaska. A series of Archean formations circling the northern por- tions of the globe. In southern regions por- tions of the mountains surrounding Africa, and portions of the mountains in the north of South America are of Archean formation. Associated with the Archean formations are the stretches of pre- Cambrian developments occupying the same general range, and formed in ancient sediments and crystalline rocks developed from the sediments of the archean erosions. These are frequently found as crystalline schists of which the rocks in New York City may be taken as a good example. Associated with the pre-Cambrian are many ancient mountains and a great portion of the uplifted ranges of eastern United States, and some portions of the Rocky and Andes mountains which were then prob- ably a series of islands. Portions of the moun- tains of Central Europe are probably pre- Cambrian, and a large part of the mountains surrounding Africa may be referred to this period, and probably a series of islands were then developing along regions' now occupied by the great mountain ranges of Central Asia. The sea was retreating then as it is retreating now, but in pre-Cambrian ages there were only a series of islands appearing above the waters. Following the pre-Cambrian came the Cam- 136 . MINING INVESTMENTS brian, and all the periods of the Paleozoic Age, during which the first forms of life were de- veloped and land in greater extent appeared above the waters. The great regions of north- ern United States and lower Canada, the Lake regions, great portions of the Andes and Rocky mountains, portions of the mountains of Brazil, great stretches of Asia, and large areas of Cen- tral Europe and nearly all of Africa may be referred to this age. In similar formations came the Mesozoic, during which there were mountains intrusions and the building up of landed areas around those all ready formed; largest development taking place in Europe with perhaps the completion of the continent of Africa to very much its present dimensions, for Africa is an old country, the oldest con- figuration and the least altered surface which the earth has developed. After this in the later ages of the Mesozoic came the beginning of the vast plain and table land formations of America and Asia, and its termination in a great series of terrestrial con- vulsions, and the 'breaking through of all the great ranges of the Andes and Rocky moun- tains forming the table lands of America, the mountains of Europe and probably of south- western Asia, with Africa remaining tranquil and undisturbed. Following this came the AND HOW TO JUDGE THEM 137 Cenozoic development of the basins of Europe between the mountain systems and the plains of America, Australia and Asia adjacent to the lands, which had appeared in the section of the north. Great convulsions were developed dur- ing this era and many volcanoes appeared, some of them continuing even to our day. To this era belong the uplift of the Pacific coast ranges of the United States, the islands of the far Pacific, the volcanic formations of the East Indies and Japan; with the mightiest move- ment in the uplift of Central Asia and the Hymalaya mountains where the greatest and perhaps the most recent mountain systems of the world lie little known, and as yet scarcely explored; and Africa still undisturbed calm in its development, the surface then as we know it now, except that probably the great desert wastes were fertile lands, for at that time the continent had perhaps only begun to show signs of drying up because of its great age. Then in the Quarternary, the last age of the Cenozoic era brought the formation of coastal plains, the savanna lands, the selvas of the Amazon, volcanic islands in the Pacific, the European low coasted regions, the pushing out of the delta of the Ganges, and all the borders of the open lands of China; and with the cul- minating age of the Cenozoic came the era of 138 MINING INVESTMENTS man, and soon began his delving after minerals in the earth. In the older countries of Caucasian domina- tion the mineral deposits are well explored, some of them, notably, the tin mines of Corn- wall, and the copper mines at Rio Tinto, Spain, having been occupied since Roman days; and there are many, such as the coal and iron mines of England, Germany and France; as well as many other properties, which have been oper- ated for long periods, and are monuments of splendid engineering and metallurgical prac- tice. It is hardly expected that in Europe discov- eries of new mineral deposits will be made, for those regions have been very completely exam- ined; always something new may be looked for, but the speculative possibilities are cer- tainly not very great. A short time ago, how- ever, important iron and coal seams, hereto- fore unknown, were discovered in England, and promise to be of unusual importance. Among the formations as developed in Europe we find the Archean mostly unproduc- tive, excepting only in Sweden and Norway, where there are important iron deposits; but many of these are re-deposited formations, found in the bottoms of the lakes where iron has collected from the surounding country. In AND HOW TO JUDGE THEM 139 the Urals there are mines, of which the plati- num deposits are famous, and various gem stones, with some gold deposits which attract attention. Probably in the Ural regions min- ing discoveries may result in the development of important enterprises, for the country has been little developed. In the pre-Cambrian regions arid among the intrusive older mountains of Central Europe, both pre-Cambrian and Paleozoic, there are found silver and rare minerals with some gem stones; and then the Mesozoic with the coal and iron mines of England; and the Cenozoic with the coal and iron mines of Germany and France, and the great basin formations contain- ing the clays and earths on which so many European industries are founded. These basins have been pretty thoroughly explored, ex- cepting only the great Russian basin be- tween the mountains of Central Europe and the Ural regions; and under this basin expec- tations are entertained, by some, that great deposits of coal, iron and petroleum will be found. In Spain there is the fragment of the Archean and eastward along southern Europe is the Mediterranean basin with its volcanic formations and few mineral deposits. Europe is not a place of great mineral enrichment ; and perhaps the great mysterious continent of Asia 140 MINING INVESTMENTS may also be found but poorly endowed com- pared to other regions of the earth. Yet the wealth of Asia is proverbial, the splendors of her rulers, the crushing poverty of her hoards of population; but recent investigation has advanced the theory that the accumulated wealth is not so much that the mines are very rich, but that many hands are available to gather what there is. However this may be, Asia presents a field for mining enterprise and speculation to which eager eyes are turned. Attention has been attracted to the gold mines of Siberia among the Altai mountains; mines worked by bleeding convict hands, and with such cheap labor, yielding returns which are notable ; yet perhaps, worked under another system the Siberian gold mines would not yield so great a profit. Of the Paleozoic and Meso- zoic regions of Asia little is known, and among these formations where the intrusive moun- tains have broken in their gradual uplift, es- pecially along the Hymalayan regions where both Paleozoic and Mesozoic formations are found, precious stones, and precious metals may be had; and rumor has it that in the lands over toward Thibet there are many gold de- posits, and in these regions, and in the moun- tains to the westward through Persia, enter- prises and speculations may develop, and the AND HOW TO JUDGE THEM 141 regions are worth watching. Among the Ceno- zoic plains and lands and the rolling hills of China, coal and iron deposits are reported, copper is had, and here elements for great speculations are at hand, and the opportunities for entering upon them are often discussed. Among the Cenozoic mountains, the great uplift of the Hymalayan, which have in com- paratively recent times broken through during a steady upheaval among the older formations, there are reports of mineral deposits, but little is known, though, as previously stated, in the Paleozoic and Mesozoic regions of northern India and Indo China, over toward the base of the Hymalayan, mines of gold and precious stones exist, and developments may follow which will result in a wide speculation. Of the older continents none are, perhaps, better endowed with minerals than Africa, ancient regions where the surface has been so little disturbed that it may be considered the oldest in all the earth. Here perhaps the great- est developments are to be made, greater, it may be, than those which have been in oper- ation in these latter years; for the vast in- terior of Africa is scarcely known, and reports come that every mineral is there to be found. From among the outer mountains of the north reports of rich deposits come at times, 142 MINING INVESTMENTS and also from the great interior desert; so ancient that it has dried to an appalling deso- lation. In the broken country further south, after passing the great interior jungled plains are other regions whence come the stories of mineral wealth, and further south the Rand, with all its celebrated mines, commands atten- tion; surely Africa presents a place for mining possibilities, and one should watch for oppor- tunities. Easterly from this ancient continent, across the Indian Ocean, are all the island regions, and Australia; recent formations in most in- stances, among which, at places, important mineral interests have developed, and others are expected. Australia has her outer fringe of mountains and great interior plains like Africa, but not of such antiquity, though Paleozoic forms are found and crystalline rocks attest older places of formation. In the south and west are the gold mines which have attracted the attention of the civilized world, and have made some magnificent fortunes. Coal and iron deposits are known, the coal being in abundance suf- ficient to be of economic importance, and the copper mines are worthy of consideration; the precious stones also are important, and have afforded a considerable revenue.; Here, a min- AND HOW TO JUDGE THEM 143 ing speculation has been long in active oper- ation, and further favorable discoveries may still be expected. North and eastward from Australia are all the many islands of the Pacific. In most in- stances the formation is volcanic and the islands may be generally considered of recent origin, that is recent compared to Africa and certain portions of America. Among these islands it is said that every known mineral is to be found, but beyond the reports we have little of information, and the places are so afflicted with savage people, and the dangers are so great, that probably mineral explora- tions will be much retarded. In the Philippine Islands are found great stretches of stratified conglomerates, gravel beds turned to stone; extensive lime stone formations; lava flows; older crystalline, and schistose rocks; the con- figuration indicating places of recent geological origin. Reports of mineral deposits have been circulated, but though a speculation started up at one time not long ago, apparently it has died away and the mineral deposits of the Philip- pines are perhaps not so important as had been anticipated. Further north are the Islands of Japan, vol- canic, mountainous and of a teeming popula- tion. Here there are minerals, coal, iron and 144 MINING INVESTMENTS copper, the later being of such great import- ance as to be a factor in the world's economy. Then eastward, and to the north, is that great mining region Alaska, whence for years came reports, and stories of golden treasure accumulations, which scarcely were believed; till suddenly a blaze of enthusiasm followed a greater discovery, and to that far country in the north went thousands, and money poured in and gold came out. A region of ancient for- mations and volcanic intrusions, plains well worn down, scoured out valleys and denuded hills; with gold and copper, coal, iron and all minerals calling for exploitation; and probably in Alaska there will be developments to en- rich, as great as any which ever have been iri all the world. Following down to the south, a great range of mountains stretches along the coast where explorations have as yet not been of great ex- tent, and where mineral deposits may be found, which will be of great importance ; and it seems a country certainly worth watching, for here some great discoveries are anticipated. The whole Pacific system of mountains from the northern Arctic to the Antarctic regions in the south is mineral bearing so far as it has been explored, and there is reason to believe that this but little explored portion of the range 145 will be mineralized the same as all the other and better known sections. Eastward of these little explored portions of the great Pacific ranges are all the Mesozoic and Cenozoic plains of Canada, where coal, iron and petroleum deposits are expected; and then we come to the older metamorphic re- gions of middle Canada, where among pre- Cambrian rocks, intrusive gabbros and tric- linic feldspar formations are the seams of silver bearing ores, copper impregnations, and great accumulations of pyrite ores which are now attracting a wide public interest. North and westward from these are the little known Archean regions of Labrador. There mineral discoveries may be expected, and this is a region well worth watching. Southward along the coast and its adjacent country we have the schistose, the mica bearing, the gran- ite and intrusive rocks of ancient periods; ex- tending down into the United States a great reach of country mineralized, irregularly how- ever, so far as gold and precious metals com- mand attention; but the iron, coal and pe- troleum deposits of the Paleozoic are perhaps here the greatest in the world. Southward are other coal and iron regions and then westward across the middle country with its hills and prairies are regions underlaid with coal and 146 MINING INVESTMENTS petroleum and with lead and zinc; and then come Cenozoic plains, and after that the Rocky Mountain regions ; place of activity and mighty enterprises. The great semi-desert country with its intrusions bearing gold formation, the copper mines extending in a great range along the inner mountains, mineralized at intervals well up into Canada and far away to the South into Mexico. Then the coast mountains and the great gold and mineral bearing regions among the slaty schists from Washington down through Oregon and California to Mex- ico. Here is a vast mining region, and in all the country of the western lands new discov- eries may be expected ; and all that vast region is worthy of careful and intelligent watching. In Mexico where the mountain ranges comes together there is a veritable treasure land, and here mineral developments are such that the country is worth the most careful and serious attention; in fact the prospects are so great that no mining proposition should be presented from that country but it should have the most careful and serious attention. All through the mountains of Mexico there are deposits of gold, silver, copper, lead and every kind of min- eral; the great plain of the central uplands, and the mountain ranges on either side, in fact wherever a broken country is found in AND HOW TO JUDGE THEM 147 Mexico there mineral is to be expected. The great rock formations of that country are of the Mesozoic era and through these rocks intrusive uplifts have taken place in Cenozoic times and in these broken regions there is mineral, equal to the mineralization of any other portion of the earth. Southward volcanic regions are reached, principally noted for gold deposits, and farther south are all the volcanic develop- ments of Central America, a place where min- eral deposits are so rich that the attention of the civilized world has been attracted. Here is a great mining country, where difficulties al- most unsurmounted beset the miner, where, however, some notable successes have been made, but it is in many instances a waiting game, one which in the end will give sure win- nings; waiting now for those who take inter- ests in cheap stocks of companies owning great and valuable mines, but situated where con- ditions are adverse for operations, and develop- ment must be slow, and patience is required. South of Central America and the Isthmus the great, little explored continent of South Amer- ica is filled with mineral regions. Conditions are similar to those in Central America; mines rich in such wealth as is hidden in but few por- tions of the earth. All the great ranges of the Andes are mineralized from the gold fields of 148 MINING INVESTMENTS northern Colombia, where, in the low laying placer deposits in the rivers and in the veins among the mountains there are such great ac- cumulations of gold that it is difficult to de- scribe the treasure. An old miner visiting those regions said on returning, "The whole country is just louzy with gold." And this well describes the accumulations. Southward along the Andes are the gold, silver and copper mines of Peru, the vast mineral deposit of Chili, where copper is in almost every mountain ; and east of Chili the fabulous wealth of Bolivia, where among the older Paleozoic formations and the adjacent regions every known mineral may apparently be had, and gold, silver, tin and copper are of such abundance that almost the whole country lives from the product of the mines. Along the eastern exposure of the Andes, occupying Mesozoic bordering on Cenozoic re- gions from Colombia southward, there is a little known, scarcely explored territory of vast extent where rumors of mineral wealth un- known reaches from time to time the outer world ; but on one side deep forests, and on the other towering mountains block the way to a country where there are indications that ore deposits as rich as any in the more accessible portions of this great range of mountains will AND HOW TO JUDGE THEM 149 be discovered. This range of lofty mountains with its intrusive masses, towering volcanoes and exposures of older sedimentary rocks, both the eastern and western slopes, and in fact all the Andean ranges occupy a country which should be watched and mining propositions from those regions should receive careful con- sideration; even the little known territory of Patagonia is worthy of attention, and some re- ports of truly remarkable mineral deposits have come from that far off and litte explored country. The plains of Argentine, and of the selvas of the Amazon offer little prospect for mineral, though coal and petroleum may be im- portant, for there are indications worth ex- ploring which are frequently reported, especi- p'oring which are frequently reported, especi- ally in those portions of the plains and selvas nearer the Andean ranges. In the great uplands of Brazil, of ancient formation, are the well-known diamond de- posits with gold and rare minerals, offering an attractive field for exploration, and ac- quisition. These mountains are broken by in- trusions of more recent development and often mineral bearing, but are most celebrated for their diamond deposits. North of these mountains come all the swamps of the Amazon, a vast stretch of country where no mining interests can be expected, but further 150 MINING INVESTMENTS north and bordering, one side on the swamp country and the other side on the Caribbean Sea, is a vast region of ancient mountains, in the Guiana, Venezuela and eastern Colombia; here among the ancient schists there are gold deposits, and in the gravels accumulated from them are placer mines, which have become celebrated. In these regions every mineral may be expected and there is good reason why one should keep watch of discoveries and offer- ings made from this section. Accessible it is, but there are many difficulties and slow de- velopment must be expected, especially in Venezuela where till the political conditions improve it is hardly safe even to own property. In Colombia the conditions are very different, and the universal testimony of those who own property in that country is that titles are safe, and property is protected even during revo- lutions; hence from Colombia one can watch with special interest for reports of mineral dis- coveries, and anything from that country in the form of mining propositions deserves care- ful consideration. The Caribbean regions, the West India Islands, north of South America are mostly but poor in mineral deposits, though in Cuba there are some great mines; but also many smaller deposits which may be the cause of AND HOW TO JUDGE THEM 151 serious loss; yet Cuba presents some very at- tractive propositions, and offerings from that country should be investigated. Reports say that Hayti and the Dominican Republic are rich in minerals; these Republics are of appar- ently of the same formation as Cuba, intrusion hills, limestone accumulations and clay plains, with, it is reported, mineral developments among the mountains. In this chapter the principal mining regions of the world have been given in brief outline, and among some of them indications are such that reports of mineral discoveries should be watched; but a' wise investor, knowing how great an opportunity may be had through in- vesting in a mine, will investigate every propo- sition which may be presented to him from whatever region; and if he investigates with proper care he will in time obtain some ac- quisitions which will compensate for all the labor expended on the many propositions from all parts of the world which he must study and reject in order to obtain one good mining in- vestment. XVI The Mining Regions of the United States An investor in mining stocks, an intelligent investor who studies a proposition, and has an established system by which he weighs the merits of the opportunities presented to him, may surely consider all the mining regions of the world, for with honest men in the manage- ment one's money can be sent anywhere, pro- vided the inducement is good enough. To the majority of people the propositions offered from one's own country naturally seem the most desirable. To us mining in the United States is the most attractive, and money is sent abroad with some reluctance ; yet we know that our country is well explored, and that great discoveries are more probable in distant places than they are at home. However that may be, our own country is one of those best endowed with minerals, and many important develop- ments are certain to animate our future, in which those who participate will reap a rich reward; that is those who participate intelli- gently, and investigate before they take the 153 154 MINING INVESTMENTS risk; not everybody who chances a venture without investigating may expect a reward. Certainly where such expectations are enter- tained a review of our mineral regions should be of interest. The United States produces every known mineral used in the arts or industries, some in but an inferior volume, yet every known useful mineral is found; and the wealth of our mines runs into the bil- lions, and millions of people are participating in them, some only as wage earners, but all are participating; and so great are our mineral re- sources that it may be said that every life in the United States is to some extent influenced and benefited by, if not directly dependent on, our mining industries. Mineral developments are found from one end of our country to the other. In the Archean formations of New England among the rough hills and ridges of Maine, New Hampshire and Vermont, there are seams among the rocks, at places, carrying lead sul- phides with silver; and iron with sometimes copper sulphides carrying gold. These de- posits have not been prolific, are generally of irregular formation and are probably not per- manent. Some mines may be discovered which will be profitable, but the region is not one to encourage expectations. From this re- AND HOW TO JUDGE THEM 155 gion down through Central New England, through New York and Northern New Jersey, we have a composite country where there are Paleozoic formations; metamorphic or altered rocks, in which the character has become com- pletely changed; intrusive dykes of dark igneous rocks, some of them of great width, others only narrow cracks through which the heated material has come to the surface and cooled to form a narrow dyke of dark colored rock; and there are areas of Archean rocks. Among these formations the characteristic mineral is iron, and some very great mines have been developed. Near some of the igneous intrusions there are copper deposits which have attracted attention. Lead sul- phides are found at places, graphite exists among the metamorphic rocks, but is valuable only at one or two localities in northeastern New York. It is the iron which is of principal importance in this formation. The mines at Sterling Furnace, New Jersey, producing iron, manganese and zinc have had an enviable rec- ord since Revolutionary days. In New York there are some important mines latterly eclipsed to a great extent by the vast deposits of Michi- gan. In the Adirondack mountains there are enormous deposits of iron, but these deposits contain a high percentage of titanium and are 156 MINING INVESTMENTS not available in modern furnace practice. Titaniferous iron ores can be smelted, but it costs too much, hence these enormous iron deposits are not worked; but they present great possibilities, and should be watched by investors in mining stocks, because some day they will be used and perhaps produce great fortunes. In western and central New York the Paleo- zoic formations are extensive and but little dis- turbed. Here minor products, gypsum, talc and salt in great abundance, are produced. The salt mines are of decided importance, but there are small chances for successful specu- lations in new salt mines, the present output being more than adequate. To the south of New York we have all the Paleozoic regions of Pennsylvania containing a wealth of min- eral deposit, the like of which the world has not in any other region. Here the coal and iron deposits represent a wealth equal to that of an empire. Other minerals are found, lead, zinc and copper; but these are overshadowed by the mightiness of the coal and iron. Pe- troleum has been and still is, a product of the highest value in Pennsylvania, and great wealth is annually produced. This is an old mining region, and expectations that* discover- ies will be made, in which one can participate AND HOW TO JUDGE THEM 157 at a low rate during the first stages of develop- ment, are hardly to be encouraged. Mining investments in Pennsylvania are, however, on a sure foundation, and represent stability in which one might well seek to participate. Southward from Pennsylvania extensions of the Appalachian Mountains continue in a splen- did series through Maryland, Virginia, West Virginia, Kentucky, Tennessee, Western North Carolina, Northern Georgia and Northern Ala- bama. A splendid region where at intervals mineral formations of great importance occupy extensive areas. These mineral developments are notably coal and iron, the latter occuring in deposits of great importance in the southern portions of this region, especially in Alabama. Other areas are also of importance, particularly in Tennessee and West Virginia. Coal is abundantly developed adjacent to the iron and the region presents many features which favor industrial development; and coal and iron propositions from the lower Appalachian re- gions deserve careful attention. Other min- erals and products are also important; the pe- troleum wells of West Virginia, the copper mines of eastern Tennessee and over into the adjacent states, the gold mines of Georgia, and the manganese deposits in the southern outer portions of this formation, all present oppor- 158 MINING INVESTMENTS tunities some of which are worthy of atten- tion; but there are many ore developments of these minerals which have been disappointing, and the region is most notable as a place where coal and iron interests command and should receive special attention. Easterly and south of all this region are the coastal plains of the Atlantic and Gulf States, a region favored in agricultural rather than mineralogical advantages; however the clay deposits are of more than passing importance, and the phosphate beds of the southern coast, and in Florida are of great value ; hence propo- sitions from this region offering participation in clay deposits, or phosphate beds may be worth looking after. Westward from the Appalachian, and the Paleozoic formations of western Pennsylvania, the great middle country opens out, Paleozoic and Cenozoic formations predominating, with also regions where the Mesozoic or middle life era, is in strong development. Here we have the great expanse of bituminous coal mines occupying Ohio, Indiana and Illinois; and in the coal country or adjacent to it important petroleum deposits are buried deep below the coal beds. These are propositions worthy of investigation and if a new enterprise is brought forward it should receive consideration. AND HOW TO JUDGE THEM 159 Through the centre of this vast region is the Cenozoic valley of the Mississippi where min- eral developments are not at present known, but on either side of it are the great lead and zinc regions of Wisconsin, Illinois, Iowa, Mis- souri and Arkansas, a great stretch of coun- try where some most excellent results are be- ing obtained. In fact, so satisfactory are the profits from these lead and zinc mines that rarely are general investors asked to participate as subscribers, and when propositions are offered they are worthy of every consideration, and where they are found in honest, capable hands, they should be accepted. Further to the west in this great interior region are the oil fields extending from Kansas south- ward to the plains of Texas; deposits of petroleum which have made some great for- tunes, and many most unfortunate losses, pre- senting conditions which while making them worthy of consideration, should yet be looked upon with caution. North of this great in- terior region are the mineral deposits of that wonderful territory occupying a zone in north- ern Michigan, Wisconsin and Minnesota. Here are iron deposits great in extent and bear- ing accumulations of ore not excelled in all the world; and in one restricted area in Michigan are the most famous copper mines. So cele- 160 MINING INVESTMENTS brated has this region become that many inferior projects have, because of the fame of their surroundings, been given credence and much money has been lost in mining specula- tions; for which reason propositions from this country should be carefully weighed and accepted only on ample proof of merit. Westward of all the great interior country in mighty ranges are the Rocky Mountains re- gions of speculation, resulting in both fortunes and most unhappy losses ; whence always there are propositions sending out appealing calls for help. The capitalization of the Rocky Mountains mines is estimated in the billions, and the region is so rich that the capitalization may not be excessive. Numerous mining camps and even great cities have been built up on the products of these ore deposits, and every mineral of economic importance is to be found among the Rocky Mountains. Of the mining regions there are the Black Hills ad- jacent to the Rockies, where gold deposits are famous, and tin mines have attracted attention ; there are the great copper and silver mines of Montana at Butte and the silver lead ores of Wyoming at Coeur d' Alene, and adjacent re- gions. In Utah and Colorado a great belt of silver lead ores is located in the carboniferous lime stones, and found at intervals forming AND HOW TO JUDGE THEM 161 important mining regions. Occupying the interior of Colorado among intrusive dykes and ledges, are wonderful gold mines in splendid series, from which millions have been and are being taken. In the southern regions there is the great copper belt across Arizona and New Mexico, a splendid mining country rich in gold, silver and numerous minerals as well as in its wealth of copper. Surely a won- derful mining region is presented in the Rocky Mountain ranges, a place where fortunes can be made and lost, and speculation will always be in evidence. So great a region as this should receive a very careful study, but propo- sitions must be accepted with care, the wealth is at hand, but there are many dangers and un- certainties. Westward still further is the basin region of the United States, a series of low plains and mountain ridges where in these days great dis- coveries of mineral bearing ridges have been made, and hundreds of enterprises are offering their attractions, particularly in the Western portion of Nevada over against the Sierra Nevada mountains. Here a great mineralized reach of country has been, and is being opened, and some splendid fortunes have been made. These mines of Nevada are apparently de- veloped through the influence of intrusive 162 MINING INVESTMENTS dykes, and probably a broader influence tend- ing to ore formation will be found to have originated with the uplifting of the great ranges of adjacent mountains. It is probable that the mines of Nevada are deep and promi- nent, and those who have ownership in the greater propositions may consider themselves fortunate, and those who would place money in mining should give careful attention to this great region where gold and copper are in such abundance; but to pick a winner from among all the mass of offerings will require skill, and judgment of no mean order. Beyond this region of Nevada and the great basin lie all the Pacific mountain ranges where gold predominates, a great series of elevated ridges from the northern limits of our country to its southern boundary. There in the slaty metamorphic formation, dark colored rocks extending down into the earth are veins, ledges; and, developed from them gravel beds, rich in gold. Here the greatest mining specula- tion the world has ever known was once in operation, and the millions made and lost in a few years are still remembered; and even now from this region many good propositions are presented worthy of the best acceptance. Many others must be considered worthless, and the Pacific gold mining regions, while offering AND HOW TO JUDGE THEM 163 some most attractive opportunities, is also a place of many speculative ventures; not in gold only, but in many other mining propo- sitions, for this region is well endowed with all minerals, and offerings from here should be carefully scanned and care taken, extra care, to choose the winners. This is but a brief outline of the mineral re- gions of the United States, but enough to show that this land of ours is so abundantly en- dowed with ore deposits that the products of our mines represents one of our principal, and perhaps our most important, national resource ; and in this wealth a careful investor should have participation, and great profit, XVII On the Trail With an Honest, Compared With the Work of a Dishonest Prospector There is something fascinating in the search for mines, all the beautiful open country, the mountains, valleys, splashing streams, the arid lands, even the burning deserts are calling to the stalwart that they come and find the hid- den treasures. No hunter pursues his quest with energy greater than the prospector, no sport is equal to the keen enjoyment of a cam- paign searching through little explored places for mineral treasures. A good prospector is a man not only well informed as to mineral developments, but one who is at home on the mountains, in the for- ests, or on the plains, knowing all the craft of the woodman; and if our sportsmen from the cities wish to see something of what real open air life is they should go for one or two cam- paigns, grub staking a good prospector, and accompanying him to the field look for some- 165 166 MINING INVESTMENTS thing worth while, and give up for a time kill- ing things just for fun. The trail is one which will tax the stoutest, the prospector is eager and the way is in the lonely unfrequented parts. The traveling kit is light for one must go far afield, and while at first discomfort may be felt, it is only for a few days ; and presently the wander lust dominates the soul, strength of freedom has mounted to one's heart, the limbs are supple, the wind blows in one's face and goes romping away among the trees, over the rocks or across the plains; and one is free as the air, and always the wanderer is spurred by expectations, a hope that never fails to excite to energy. With the early morning while the cool is yet in the air, perhaps before the sun has come, the pros- pector is bestirring himself. His simple break- fast is soon prepared, coffee, and pancakes, with probably some game if he is in a fairly fertile country; for in little frequented places there usually is game of some kind. Then if the prospector has a good grub stake, his jacks, as miners call their donkeys, are packed and the day's work has begun; a tramp along the mountain sides usually near the base. While so occupied the prospector keeps watching out for float, that is bits of rock, containing min- eral which may have been carried down the AND HOW TO JUDGE THEM 167 mountain. Frequently he stops to examine the rocks, or scan the outlines of the country. The water courses are examined because the gravel might contain pebbles from an ore deposit, and this would indicate that somewhere up-stream the water had cut through a mineral bearing formation. The prospector has little to say, there is too much for the eyes to consider and the tongue may not be loosed. The companion must learn to observe, commune with the spirit of the wild country and be content. While prospecting one is on the lookout for game, and it will be a poor morning's work in any but the bad lands, or barren countries, which does not give something for one's din- ner. The dependence on game becomes a sort of natural condition, or perhaps the instincts of former lives long dormant become keen again; and, usually when noon comes, and a convenient place is found camp is made, a supply of game is ready to be cooked. Here it is a feast, the searching is forgotten for a time, and stories and good fellowship are com- bined with rest and plenty, and it is good to be alive. Then the long march is resumed, tramping on and poking about, and so all the 'day is probably passed. At night a place to stop is prepared, the jacks are tethered and soon the prospectors are asleep, often with no 168 MINING INVESTMENTS covering but a stout blanket and the distant vault of night. Such sleep comes only in the open after a day of vigorous effort, one will remember always, and long years after will want to go again. And so the wandering on continues; sometimes the way is comforatble, and pleasant, the surroundings a delight, the life a happy exploration ; at others the way be- comes rough and hard, perhaps even perilous; and sometimes wandering in arid countries the way is lost, and suffering, real suffering, beset the way; it may be that after hardships one comes out safely, but perhaps it is not so, and suffering continues into agony, and all is ended in a little while, and presently another human skeleton is bleaching in the sun. Such dis- asters are rare, and fortunately most prospect- ing trips are outings of real pleasure, a life of open air and sunshine, while the travelers search and search and sometimes find a great reward. For days the traveling on continues, and then signs of mineral are encountered and the way becomes exciting, dreams of wealth come unbidden, for the indications are sug- gestive of a treasure located somewhere near. Now a camp is made more carefully, the out- look is sufficiently favorable to warrant that some days should be passed in the vicinity. A careful search is commenced, the prospectors AND HOW TO JUDGE THEM 169 working up the mountain sides, following the streams and hunting about among exposed ridges. An honest prospector does his work thoroughly, and leaves no spot unexamined; but a dishonest man will take some of the float which may carry mineral, stake out some claims and with exaggerated reports seek the cities, or return to those who had sent him with stories of a great discovery; and, obtain- ing money, will live at his ease for a time, and then go back to his "great discovery," collect some float together, open a shaft at some con-, venient point, and then send reports of progress; perhaps even a company may be or- ganized, and presently there is another mining enterprise in which investors who are too lazy to investigate for themselves have lost some money. The honest prospector is not content with signs of mineral, his work is earnest, and in- telligent, and by following up the signs he, after some days of labor, comes on the ore de- posit, the place from which the broken float had been eroded, and, mingling with other ma- terial had washed down the mountain side. Probably it is not important because most ore deposits are not important, but after taking specimens the dishonest prospector would make a location and go back with stories of 170 MINING INVESTMENTS untold wealth; and there are many dishonest prospectors, though perhaps most of them are only foolish. It is evident that a mineral country has been reached, and the permanent camp where the first signs were found being comfortable and convenient, it is made a base of operations. With lighter equipment the prospector now visits in rapid succession the different surrounding points which may prom- ise to hide mineral deposits. It is a game of search, continued search, with always the hope of a great prize which may be waiting, and there is excitement for, as the work continues, other little deposits of ore are found; if it were not a mineralized country these would not be encountered, there must at some adja- cent place be a greater deposit ; and so for days the search may be continued, often disappoint- ment after hardship is the only reward for one's efforts; perhaps the supplies are not suf- ficient and the honest prospector must go back to his principals or partners, and say that he has found only signs, and small deposits of mineral, and urge that more money be given for another grub stake that he may go back again and continue the search. Sometimes the money is given, but more frequently it is re- fused, and the prospector, setting himself to work, probably in the mines and holding his AND HOW TO JUDGE THEM 171 own counsel, will save and save till a stake has been accumulated, and he is ready to go search- ing again after his treasure. Some night he is off secretly that he may not be followed, be- cause some prospectors are always trying to win what another has found; those who are dishonest do this, but among many respect is shown to those who have done the work, and the prospecting ground is left undisturbed be- cause the mountains are very broad, and there is room enough for all to search; and then every prospector has a theory, and fancies that he knows some place where fabulous wealth is just about to be discovered, so each one seeks his favorite haunts, and the chances are that our prospector having held his own coun- sel will find the place where he was working just as he left it. Now the search begins again, old locations are visited, the trend of the min- eral formation is observed and following these signs one day the prospector does come across the outcroppings of a really important ore de- posit, it is to be expected, for where there are numerous small deposits a greater develop- ment is probable. Triumph is in the man's heart, success has crowned an honest effort, there is mineral in broad exposure; and work- ing now with haste and eager breathings he traces out the mine which he has found; his 172 MINING INVESTMENTS mine, it seems almost as if it were his child; henceforth let anyone but whisper aught against it and his enmity must be counted as assured. Yes, the mine is a great one, the lo- cations are carefuly made, one, or even ten or more, as the extent of the discovery may war- rant; then taking samples the prospector goes triumphant to the nearest city. Anxious mo- ments now await while tests and assays are being made. Yes, the results are favorable, the mine is rich, the prospector's fortune has been made. Then the news is published, the prospector goes back to work his claims, prob- ably giving a just share to his former partners with whose money he had half made his rich discovery. While so engaged others come, and soon bands of men are searching all the hills and mountains, perhaps one or two other great mines are discovered; but to a certainty all the little mineral spots and minor veins, which, to the first prospector had indicated the great deposit, are now taken up ; and presently a score or more of mining companies are offer- ing stock in prospects, just near the great dis- covery. Always the claim is made that con- ditions are to improve with depth, .but the knowing one get shares in the main ledges, or stay out of it, if the shares in the main ledges are too high in price. XVIII The Prospector and His Agent. Honest and Dishonest Work Compared Will he secure the benefits of his discovery? So many have located mines and then lost them through dishonest agents, that naturally the prospector is suspicious. Here is a point which one can consider when* a mining venture is under advisement: If the agent in charge of the negotiations is a man who has the confi- dence of the miners and prospectors he is pretty certainly a man who can be trusted by anybody. This chapter is to tell not so much of the relations of investors and agents, as to show how all the losses in mining do not fall on those who supply the money for operations. The mine agent or broker is always scheming, honestly or dishonestly; he has a purpose to accomplish, he seeks to obtain con- trol of a mine which has been discovered, and so manipulates the arrangements for incorpo- ration that he may benefit in a share of the 173 174 MINING INVESTMENTS property, and at the same time put it in a po- sition from which capital can be obtained for its operation. When this is honestly done any profit which the agent or promoter may obtain is well deserved; but where the work is not fairly rendered, where the control of the prop- erty is secured by questionable representation, and promises which the promoter cannot ful- fill, then the shares obtained are illy gotten; but unfortunately the laws are such that it is as difficult to punish such transgressions as it is to obtain judgment against one who has sold and misrepresented shares. In some instances a clear case is shown, but most frequently the undertakings turn out to be only that due effort should be made, and a positive engage- ment is not found; and by due effort anything may be intended; so the case is hard to reach, and the prospector who has found a mine must be careful. Unfortunately, watchfulness, in- telligently exercised, is as rare among those who have found mines, as caution and serious effort at investigation is rare among those who invest in mining shares, and the promoters are the principal causes of all the difficulties. Our prospector having secured his papers, and having finished enough work on his claims to hold them for a year, must look for larger capital to put them on a strong working basis. AND HOW TO JUDGE THEM 175 He does not have to look far to obtain agents ; the fame of his discovery has gone abroad and he is fortunate in being able to pick and choose? Having found a satisfactory man, a clear contract is drawn, the rights of the pros- pector in the share of the mine which he will keep for himself, the share he will allow for the capital, and the percentage he is willing to pay the agent, are all clearly designated ; the titles are then deposited to protect the transac- tion, and after that a company is formed, and generally good results are obtained, not only for the prospector, but for those who purchase shares ; and under careful just management an- other is added to the long list of brilliant and successful mining enterprises. It is very pleasant to find such instances, but unfortunately all are not so, and many a pro- moter is responsible for ruin and loss where better results might have been obtained. Not all prospectors are so successful as to find a mine which is great enough to command at- tention. There are many properties, and min- eral deposits; and oftentimes the owners must make all sacrifices to obtain the necessary funds, but there is such doubt attached to a prospector's story that often years pass before a man who has discovered a mine can obtain a hearing, and naturally the mine agent can 176 MINING INVESTMENTS make his own terms ; if only he will render the services, he can have the mine on deferred payments, that is, stake the mine and control it for purposes of organization and promotion, paying himself after the work is done. Usually a man who has discovered a mine can in a little while find someone to undertake its promotion, and then, if the agent is not strictly honest, the contracts and agreements are so drawn that the owner is completely under the control of his agent. Usually the first step is to make an agreement stating on what terms the agent may control the prop- erty. Frequently the time limit is made as extended as the mine owner will allow, and the promoter goes to work or perhaps only appears to go to work to obtain subscriptions for the proposition. At any rate the expected contributions to the working fund are not ob- tained, but men are introduced who urge that if the mine were put in a company, then stock could be sold and money obtained, so after a time a company is formed and the property is transferred to it for shares, some of the shares are voted to the treasury, and a goodly pro- portion to the promoters, who now take more interest in the property, naturally because they own a large share in it. Some money is ob- tained through the sale of shares, most of it AND HOW TO JUDGE THEM 177 going to the promoters who sell their own stock it is theirs, what law can prevent them from selling it? Some money is used on the property, enough to perhaps demonstrate to the promoters that it is a good thing, and then the whole proposition drags, money cannot be raised; the prospector must live, and presently he wants to sell some shares. Impossible, there is no market, the promoters have been unable to even sell the treasury stock. To re- mind them of their promises is of little use, what they said was what they expected to achieve, but for one reason or another con- ditions have not been favorable; after a time when the situation improves they will be able to carry out the arrangements; but the pros- pector wants money, so he finally sells a large block of his shares for a trifling price, and when he wants more money sells again; and presently all his stock is gone, and the mine he discovered is no longer his. Then he goes back to the mines cursing the promoters, damning corporations and swearing that stock- holders are a set of sharks and thieves; but it is the promoters who have bought his shares for almost nothing, and now that they own all the property, or rather have it all under their control, with the majority 1 owned by them and a good balance of stock in the treasury, they go 178 MINING INVESTMENTS to work and develop the property, obtaining money by selling the shares; and most likely let the property fail two or three times, and by foreclosure or bankruptcy proceedings buy it in, and sell the shares of reorganized com- panies, repeating the operation, till finally the mine is on a working basis ; and they have ob- tained the property from the discoverer, at forced sale, and by manipulation, and who have obtained money from several sets of stock- holders to bring it to development, reap the benefit of their conspiracies, and own a fully developed mine. The question may be asked why does the prospector have to do as the promoters or agents desire? Why does he not sell his shares directly to the investors? He cannot do so investors will rarely listen to the man who owns the property and buy shares of him ; and then he does not know how to organize, and naturally he seeks the promoter; and if pro- moters who may not be honest have obtained a hold on his property he must sell through them or not at all, for who would buy a stock if those who have organized the company ex- press doubts and rather talk against the propo- sition, and criticise the discoverer. Of course, people will not buy, and probably it is well they should "not ; for a set of promoters who AND HOW TO JUDGE THEM 179 scheme to freeze out the discoverer, will later, if the property turns out well, scheme to freeze out the investors, and losses will result to both the discoverer and those who may invest. XIX The Prospector, the Promoter, the Bank- er and the Investor. Correct and Dishonest Work Compared Three against one is not a fair combination, yet the prospector, the promoter and the banker are frequently an adverse combination against the investor in mining stocks; and when the combination is formed for dishonest purposes the investor has a poorer chance be- cause usually he trusts the banker. Probably the bankers are more to blame for losses in mining than are any other people. They are to blame, it is claimed by some people, for two reasons; it occasionally happens that they enter into unlawful combinations with the pro- moters to sell questionable shares to unsus- pecting investors; and the other reason why the bankers frequently cause loss is that they will sneeringly dismiss the subject when a client asks advice in reference to a mining ven- ture. The banker fails to obtain for himself participation in one of the greatest, if not the 181 182 MINING INVESTMENTS greatest of our industries, and leaves his client without means of information, and an easy prey for the unscrupulous promoter. In regard to railway stocks, industrial stocks, municipal and corporate bonds the banker is well in- formed and seeks constantly to obtain infor- mation. In regard to mining he is densely ignorant, nor tries to better his information. The banker occupying as he does a public position neglects his duty when he makes no effort to serve intelligently such of the clients of his house who may become interested in mining propositions. He does them a double wrong by refusing to recognize in mining a great corporate industry because he retards their participation in this great industry, and by intelligent advice he could make advantage- ous investments for the clients of his house, where, by leaving to their own resources those who otherwise would seek his counsels, the way is left open for men who work by methods which at best are questionable. An inquiry as to how bankers frequently take part with promoters will show many inci- dents of interest, and in some respects the bankers in the great financial centers are as gullible as the most innocent small tradesmen of a provincial town. The promoter knows that to succeed he AND HOW TO JUDGE THEM 183 must approach each victim on his most acces- sible side, and usually in dealing with a bank- ing financial house he begins by opening an ac- count for speculation in listed stocks. It may have been decided between the prospectors and promoters, that the property they represent should be offered in the great financial mar- kets; to do this money is required, and fre- quently they have money, and after laying their plans it will happen some morning that a well appearing gentlemanly man calls at a New York banking house to make inquiries in regard to the stock market. The bankers are there for that purpose, and at once become interested in the pleasant stranger, and cor- dially invite him to call again. Of course, he calls again, this time with some money, and an account is opened. It proves a good ac- count because the new client is there to seek favor and keeps his money active, taking small profits or losses, making several transactions a day and becomes a regular habitue of the place. Naturally the talk drifts to mining, and presently the bankers become interested in his stories; samples are shown, and the next thing a mine is offered through their house backed by one of their best customers, a shrewd suc- cessful man from the west. Then the game begins; the prospector and others who have 184 MINING INVESTMENTS come on from the mining country, and are introduced; more money is put to the stock trading account, and the bankers have three or four active customers, who are in and out of the market, usually in quick turns, making about as much as they lose, or, if losing, the amounts are small, and the accounts can be kept active for a long time. With such reputable backing as the bankers have given, with such shrewd, successful men operating the proposition, with such wonderful stories as are now circulated, the stock of the mining company this group of men represent begins to attract attention. The bankers buy some shares, many of their clients buy, people in the open market buy, the stock goes up, the greatest bonanza ever known has come out of the west, there is a scramble for shares, an ac- tive market for a time; the papers contain re- ports and interviews, all paid for, of course. What reporter ever wrote who would not make comments for a reasonable fee? Then comes a time when the miners must go back to see to the operations of their property. For a while tlje market keeps up, then begins to sag, the bankers send for information, but it is slow in coming; inquiries are sent to them from all about, and the stock goes lower; then comes a day when the bankers must reluctantly admit AND HOW TO JUDGE THEM 185 that where they had taken the word of their pleasant, active customers, they find on in- vestigation that the grossest exaggerations have been practiced on them, and they must confess that they have been taken in. Yet from time to time it is whispered about that not all bankers are taken in, some retain a share of the plunder, and make loud invectives against mining in general and the proposition in particular which lately they were backing; and when the discontent and criticism has sub- sided, they presently, that is some of them, be- come interested in another mine. Not always are the bankers in friendly rela- tion for profit with the mining promoters of questionable propositions; frequently they are genuinely stuck, and some are known to have refunded all the money which had been placed in a worthless enterprise through their mis- guided influence. It has been said that the wealthy brokerage houses doing a banking and stock business are the most easily taken in and caught by an exaggerated mining propo- sition, if only one or two active accounts are first introduced to make easy the presentation of the scheme. What is so respectable as an active account? Of course the mines coming from such a source are good; and the banker densely ignorant of mining, though it is one 186 MINING INVESTMENTS / *>f our greatest industries, makes of himself an easy mark. There are few honest mines offered in the great financial centers, the bankers are too sneeringly supercilious. Min- ing? They could not consider it. It is related that a man with an honest face and a pocket full of specimens stood once on the steps of a banking house and said under his breath: "Well, I'll be damned." He had a good propo- sition, one worthy of investigation, and had come east to find someone who would help him float it. He did not have money to open a fancy account, he was looking for someone who would take an hiterest in his proposition, and had been sneeringly turned down. Such had been his experience in a good many places. Finally he got in with some outside promoters and they floated the proposition. The papers, that is some of them, published attacks, criti- cising those who had taken the matter up, who, according to what the papers said, were fit subjects for criticism. Still the proposition grew, and found favor; and presently a great mining boom had developed. Nevada was brought to life again, treasure had been found ; a real series of great mines had been dis- covered, a business running into hundreds of millions was being transacted; but among the greater bankers and brokers not the percent- AND HOW TO JUDGE THEM 187 age represented by the fraction of a mill was transacted, the whole great business went to others. The bankers had not lived up to their public duty, they had no means and sought no information by which they could intelligently advise in regard to mining propositions; and there being no established places in which one could be advised any proposition could be floated on the tide of excitement, resulting in the sale of questionable shares to the extent of millions of dollars; all, or the greater part of which at least, could probably have been saved had the bankers done the duty which their public positions would seem to require of them, and had taken the same care in regard to min- ing stocks which they take in regard to railway and other propositions. If honest work were done the different trans- actions would be something like the follow- ing. A miner or prospector visiting a promi- nent banking house with a proposition would be heard and his claims given to a suitable per- son, perhaps an employe in charge of the min- ing interests, who would investigate and find- ing the proposition questionable would so re- port to the house, but finding it desirable the business would probably be taken up, a min- ing engineer and an economic geologist would be called; and if they found it favorable, a 188 MINING INVESTMENTS banking house of standing would presently be "offering a desirable mining stock, and a repu- table promoter retained by them would be pushing about and developing a market; then it would be that the prospector, the promoter and the banker would have been brought to- gether on a proper basis to serve the investor. If such ever comes to be an established cus- tom and investors will seek their bankers as the proper medium through which to obtain mining stocks, and if the bankers, not unmind- ful of their public duty have at their command real advice from competent engineers, geolo- gists and local representatives near the mines, a sort of Utopian condition will develop in min- ing; and very few questionable propositions will be able to get through the offices of watchful banking houses, and reach the public to the disadvantage of those who may invest. XX The Trials of a Mining Engineer and the Final Success or Failure of ail Enterprise It is the man behind the gun who wins the battle, and it is the man who overcomes the difficulties of operation who finally makes the mine a success. A great mine owner once said: "It is easier to get a mine than a man. Give me a man and I will get the mine." There is much of truth in this saying, and many a good mine has been spoiled by poor management. There are various kinds and varieties of min- ing engineers ; there is the genuine article with suitable credentials, there is the man who has taken the profession up and sort of just worked into it, and there is the mining engineer who does his mining in barrooms and hotel corri- dors. These latter are the men who mostly get up schemes, and do as they would not be done by, which in modern slang can be ex- .pressed "Do the investors." Loud talking, 189 190 MINING INVESTMENTS bragging, swaggering these are the charac- teristics of the man who does his mining in barrooms and hotel corridors; when such are met avoid them. Those mining engineers who have taken up the business and just sort of worked into it are generally known by their contempt for techni- cal training, and their boasting approbation for practical mining. When dealing with such men be a little careful, they frequently gradu- ate into the class who mine in barrooms; but some of them are eminently practical, well in- formed men, whose advice and guidance are often of the highest merit and value. In min- ing there is no school which can turn out such valuable men as the "School of Hard Experi- ence." Only very few really graduate, because to become a well informed mining engineer, possessed of both knowledge and experience, one must have worked under varying con- ditions, and must have had the energy and strength to have spent long hours at study after an arduous day's work had been done. There are such mining engineers ; usually they are not boastful, but their services are invalu- able. The trouble with most mining engineers who hare not had a regular course of technical training is that they have not done the study- ing to obtain the information which an engi- AND HOW TO JUDGE THEM 191 neer should have, and as a consequence their work is superficial. A man who faithfully studies while working in the mines can, after about twenty years of effort^ observation and study, consider himself a graduate of the "School of Hard Experience," and will have obtained all which the college boy will attain in his four years course, and a great deal more besides which the college graduate will prob- ably never attain; and often the graduate in the school of experience may justly consider his attainments far above those of the ordinary technically trained mining engineer, but in the "School of Hard Experience" there are very few real graduates. Then we have the regular graduated mining engineers, all of them exceptionally well in- formed men, most of them capable of in- telligently applying what they know, and some few of them combining the technical training with real and varied experience; such men are the real leaders of the profession, and if any investor is so fortunate as to know such a man, let him be wise, and keep putting money into the mining propositions his friend may ad- vise, and the chances are he will become rich. Besides these there are the practical miners, men who have devoted lives to work in the mines, many of them with good hard sense, 192 MINING INVESTMENTS but informed in too limited a scale, to be safe guides in relation to mining investments ; often they make the most excellent mining superin- tendants and managers, but just as often they undertake works of development, and follow flights of ambitious fancy into realms which they do not understand ; then they make heavy losses, and bring disaster for the enterprise which has been intrusted to them. When a mine is put in operation some one or the other of these different classes of mining engineers is probably in charge, excepting only the engineers who do their mining in bar- rooms and hotel corridors. Such men usually never seen a mine, or if they do, it is a super- ficial examination only, a visit, an outing, drinking and big talk a grand time; but very little practical consideration of the mine. Let us suppose that a mine is to be put in operation, and that the engineer with a party of men has arrived, and is preparing to do the work. A rough camp has been built by people who had discovered the property ; there are the outcroppings or exposures of the mineral, with some pits dug into them, now partially filled with rubbish and dirt; the surroundings are rough and probably not very attractive. The door of the camp is pushed open and a damp chill, and mouldy odors blow in one's face, a AND HOW TO JUDGE THEM 193 rat or two may go scuttling away, then in a moment or so more the cabin windows are opened to let in some light, after which all is bustle and disorder; equipment for the first operations is arriving, and quite a stirring about takes place in the camp, where, perhaps for some months everything has been aban- doned. The engineer then goes to look at the mine, naturally the mine is first in his thoughts, and goes to have a look at it while the men are unloading the outfit. When he has had more experience he won't do that, the mine will stay where it is, and he had better keep check on his supplies and see that instruments are properly handled. But there is the fore- man. Yes, but as a matter of fact there is no such thing as a foreman; when a man is capable of being a foreman he will soon pro- gress to be a manager. The engineer is well pleased with the appearances of the property, certainly it looks like a good thing, and he spends probably an hour or two in a prelimin- ary examination. Returning to the camp he finds nothing arranged as it should be, the men have stupidly piled goods, boxes and instru- ment cases indiscriminately, and probably a day, perhaps two or more, will be required to put the supplies in order ; then most unreason- ably the mule drivers pack their animals off, 194 MINING INVESTMENTS and will not wait an hour, their contract was to deliver the freight at the camp; there it is, give them their money, that is their demand; and counting it, they are off down the trail. Arranging the supplies will take some time, but the engineer can start the survey of the property, and asks for the case containing his compass and instruments; a man with apologetic consternation in his face brings it with word that some of the things got jolted a little, but he guesses not much hurt. Not much hurt! Only a lens broken, the sights on the compass twisted and the balance thrown out of adjustment. Well, surveying is out of the question for the present, some photographs can be taken. More apologies from the men, it rained one day on the trail, the engineer re- members that, and one of the packs got wet, just a little wet, it isn't much, and the camera outfit happened to be in that pack. The men bring it, but no use talking of pictures, the outfit is done for. Now it is a question of the man behind the guns, how much of a hero com- bined with a genius he may be. Technical in- formation will not help him much, a disorgan- ized, battered outfit is placed at his feet, and there is a mine at hand which he is to examine, survey, draw up the plans for equipment and open to the best advantage. He may sit down AND HOW TO JUDGE THEM 195 and write to his principals that owing to diffi- culties on the trail, carelessness on the part of the freighters and pack drivers, serious dam- age has been done to the supplies, and work must be delayed till fresh material can be sent in. He will have to write of the loss, and I never saw an expedition start out into the field yet which did not meet with some accidents; in my own experience I have learned to pack my instruments on my own back, or make up my mind that I must do without them, and in that case it is just as cheap to leave them at home. Our engineer may sit down and wait for new supplies, or he may get to work as best he can. There is the survey to be made; a great pity it cannot be done better, but the property can be chained off, and a rough survey made which, after all, does fairly well answer the purpose, because there is plenty of room, and if it does not close by several feet the error can be corrected later. The outcroppings can be measured and estimated, levels can be taken with rods, and by hard work and constant ef- fort the enterprise can be driven forward, and presently the surface work is done; a plumb line and rods serving in place of the broken lense ; a hand compass, or perhaps only a north and south line made from the stars, taking the 196 MINING INVESTMENTS place of the surveyor's compass; with this rough equipment and careful attention to de- tails, the engineer has a fairly creditable sur- vey made with tools in place of instrumens, and before new supplies could reach him he is ready to begin work opening the mine. This work begun it seems as though some accident were always happening. In comes a man with a bleeding hand, the engineer must turn physi- cian, and fortunate, indeed, for him, if he has had time to take a course of medicine, if only to attend a few lectures and to have learned to bandage cuts and set bones, because it is as- tonishing the number of accidents which will happen among a company of men at work opening a mine. Day after day the work is pushed on, and it seems as if the mining engineer must be in a dozen places at once; tools getting broken, men getting hurt, men turning sick, the cook threatening to leave, the workmen shirking, and a hundred other things. Nature is jeal- ous of her treasures, and the number of coinci- dences, accidents, and impediments which can beset a new mining enterprise seems beyond calculation. If the engineer in charge is a combination of hero and genius, the work will be pushed steadily on to triumphal success, or if the people putting up the money realize AND HOW TO JUDGE THEM 197 what must be contended with and overcome, and are willing to put up money, and put up money, and then put up more money, the work will be done after a time; but too frequently those who sit at home ask of their engineer more than human heroism, energy and intelli- gence can give; and with all the trials, priva- tions and constantly recurring difficulties to be overcome, unreasonable, criticising letters from home are often the cause of a sort of disorgani- zation in the effort, a demoralizing influence which brings disaster. But where the right kind of man is to the fore the work goes on from day to day, surveys are made, mineral -bodies located, opened and proved up, the machinery does get in place, and is put through its adjustment, till finally a successful result is obtained, the mine shows a profit, ore in abundance is in sight, and the triumph is complete, though sometimes it takes years of effort to attain it. XXI The Gist of the Whole Matter Does one want to become rich one can be- come rich through intelligent investments in mining stocks, but not without working. In- vestigate that is the gist of the whole matter. One may make some money by a lucky stroke in a mining risk, but if one is lucky one does not need to be rich, and then very few people are lucky, most have to work for what they obtain; and to obtain good results in min- ing propositions the work required is that one should investigate, and do it for one's self, not depending on others. We have read of a great many things and conditions relating to mining, from such reading one should know along what lines to investigate; and if one does the work, makes real personal investigations, and puts together the independent testimony re- ceived from different sources, and then uses good judgment; remembering that nothing is sure in mining, that it is a speculation, not an investment ; that even with the best care losses must be expected, and that the money is placed 199 200 MINING INVESTMENTS for a great winning or a total loss, because there is no middle ground, if the mine don't pay it is a total loss, but if it does pay it is a tremendous profit. One can afford to lose something where such great profits are had, but if one just buys mining stocks on the recommendation of others, and takes the chances, the chances are that one will lose with disheartening regularity; but if one will do the work, and really investigate, one will make money a great many times, and this is the gist of the whole matter. A great many minor points must be examined, but principally one must know three things: first, that the parties soliciting the use of his money have got a good thing; second, that they have the ability to obtain good results out of a good thing and third, getting such results that they are honest enough to give him his just proportion of what they obtain. APPENDIX. Tables and estimates for calculating the values of mining stocks. Republished by the kind permission of the Editors of the Mining World, from a series of articles published in that journal during 1905 and subsequently published by them in pam- phlet form in 1906. 201 MINING STOCKS How to Calculate Their Values No investments present such vicissitudes of for- tune as mining ventures. There is scarcely a man in our country who has not at one time or another purchased mining shares in the hope that he might secure an investment comparable to those glittering examples of success so industriously advertised by the promoter. Yet mining is a good business, and it is desirable that investors should purchase min- ing stocks. It is difficult for those not infermed in regard to the technicalities of mining to exercise good judg- ment as to what they should and what they should not purchase, and, unfortunately, very few are suf- ficiently informed to know even what points should be examined, and what questions asked, in order to form an opinion on mining investments. The following statements, calculations and tables represent an effort to bring together material which may be a guide to the proper understanding of the risks and opportunities in mining ventures. Certain facts, given below, should be borne in mind when considering this class of investment. 1. There is no middle ground in a mining invest- ment; it is either a total loss or a profit. In other enterprises a reduced rate of interest or even losses may be recovered later by better business; but if mine does not pay it is a total loss. 203 V 204 MINING INVESTMENTS 2. There is no mine so great it cannot be ex- hausted, consequently, all mines must be worked out in time, and each ton of mineral taken out brings the property one ton nearer to the point where all the mineral will be exhausted, leaving an empty shell of stopes and shafts from which no further returns can be expected. 3. The all important question is not the dividends a mine may be paying, but the quantity of mineral remaining underground from which dividends can be earned. 4. Mining, because of the possibility of rapid changes from nothing to discoveries resulting in enormous wealth, becomes an absorbing passion. Hence the miner frequently loses his judgment in his hopes like the gambler expectant of good for- tune. 5. When enthusiastic statements are made about a property to encourage investments one should not be skeptical of the miner's honesty, but should make careful inquiry and consult the tables herewith pre- sented for estimating the average risk, then, if the results seem favorable, {he investment may be con- sidered. The following inquiries should be made before purchasing any mining stocks, no matter how allur- ing the prospectus. 1. Does the company actually own its property? This can be learned by examining the record of the company's titles. 2. Are there any debts? This can generally be learned from the reports made by the company's officers, because if they make false statements they become criminally liable. AND HOW TO JUDGE THEM 205 3. Has the mine been examined by a competent mining engineer, or economic geologist? Inquiries should be made as to where the person writing the report pursued his studies, what practical experience he has had and what recognition has been given his work by technical institutions. 4. Do the people who are interested in the com- pany understand mining as a business? This can be learned by making inquiries among people asso- ciated with reputable mining companies, and from the references presented by the parties interested. 5. Are the people managing the company worthy of confidence? For this information consult their references, and the mercantile agencies. If, after making the inquiries outlined above, it is found that the company does not actually own but proposes to acquire a property it may have under contract (option); or that debts are accumu- lating, or that the report recommending the prop- erty is made by a person of inferior attainments; or that the people interested in raising the money are simply brokers or promoters and not men of practical experience in mining proper; or if the man- agement of the company is not worthy of confi- dence, then the proposed investment should be most cautiously considered and accepted only on evidence of very strong counterbalancing advantages. If, however, the inquiries made are answered sat- isfactorily, the investment may be considered with favor, but it will always be subject to the chances of fortune common to all mining operations. What the chances of fortune are may be approximately estimated by using the tables herewith. Mining stocks are valued only by the dividends they will pay. These payments can be maintained 206 MINING INVESTMENTS only so long as valuable mineral is mined, after which the stock of the company is worthless. There- fore, the cash value of a mining stock should be the present worth of prospective dividends. The chance of not receiving the dividends is always threatening, but there is also in every mine some opportunity for rich discoveries which will result in a higher rate of dividend; these two elements of risk in some measure balance each other. While the present worth of prospective dividends is a fair basis on which to calculate the value of a mining investment this alone is not sufficient; one must be a keen judge of future prospects, and be well enough informed to know how much valuable mineral may remain in the mine, because from this "reserve" only can dividends be paid. The life of a mine, that is the period during which it can pay dividends, is variable. There are a few famous mines which are apparently inexhaustibly supplied with ore, but such mines are rare. Since the life of most mines is limited a cautious investor in figuring a present worth for prospective dividends should make his calculations on a short dividend paying period, except when considering well estab- lished mines with substantial ore reserves. Following is a table of mining values, without interest, based on 20 per cent, dividends, the amount invested being $100. Year First Dividends received $20 Loss if mine fails 80% Second 40 60% Third 60 40% Fourth 80 20% Fifth... IOO Nil, except interest Should the mine continue to pay after five years the values then remaining are clear profit. In this AND HOW TO JUDGE THEM 207 simple table, however, interest is not taken into account. A comparison may be made between $100 invested at 6 per cent., and $100 invested in mines at 20 per cent., crediting the 6 per cent, each year to the secured investment, and deducting the 6 per cent, each year from the mining investment. Re- member that 20 per cent, return on a dangerous in- vestment is not 20 per cent, net profit, since the money would produce 6 per cent, on a better secur- ity; the real profit is the difference, or 14 per cent, annually. The following table shows the value of mining in- vestments as compared with investments whose principal is secured. Mining investment to pay 20 per cent., secured principal to pay 6 per cent, per annum. Amount invested $100 in each case: Sioo on Good Security Sioo in Mining Stocks Divi- If mine Year Int. 6% Year dend, 20% fails Amt. First $ 6 Second 12 Third 18 Fourth 24 Fifth 30 Sixth 36 Seventh 42 Eighth 48 Ninth 54 Tenth 60 * Equal to ij^% per annum for the eight years, t Equal to 2.88% per annum for the nine years, j Equal to 4% per annum for the ten years. At the end of the tenth year it is apparent that a mine paying 20 per cent, in dividends per annum has returned the principal and 100 per cent., but it is not so readily understood that this 100 per cent, cannot be considered as net profit. The same money on reasonable security would have produced $60, and if at the end of the ten years the mine is exhausted 268 MINING INVESTMENTS the returns will be $100 principal, $60.00 interest and $40.00 profit, the mine produced $200, and the real profit in ten years is $40, equivalent to 4 per cent, net profit per annum after deducting principal and inter- est. If at the end of ten years the mine is exhausted the profit has been only 4 per cent., but should it con- tinue to pay the profit is larger. From the tabu- lated results the conclusion is reached that, after allowing for principal and interest, if the mine pays 20 per cent, for eight years, there is a slight profit; if for ten years, it is a fair profit, and if it pay 20 per cent, more than ten years there is a very good profit. Ten years, however, may be regarded a rather long average for the life of most mines, but with a dividend of 20 per cent, the money invested is re- turned in five years, at the end of which period the loss, if the mine fails, is simply the interest. A fair calculation in determining the value of a mining share is five years' dividends estimated at the rate the mine may be paying. If the mine were well es- tablished the time for calculating the value of its shares might be extended to ten years, but if the shares were purchased on such a valuation the in- vestor would require ten years' continuous dividends before his money could be returned without interest, and this is a rather slow proposition. In some great mines where large ore reserves, sufficient for many years' working, have been proved up, the shares become a business proposition, and their value can be safely estimated according to the worth of the ore in sight and the cost of mining and milling it; but for ordinary mines the tables above will be found serviceable in estimating stock values. AND HOW TO JUDGE THEM 209 If the values of mining shares are calculated at compound interest the results will be much more favorable to the investment, but as there is always a risk that the mine may fail, compound interest valuations cannot be considered equitable, excepting that a deduction is made to allow for this risk, this deduction bringing the computation to about the basis of simple interest; therefore a compound in- terest calculation should be considered only as an interesting tabulation of values to be obtained if the mine continues paying for a long term of years. The table below shows the returns from mining shares paying 20 per cent per annum (dividends re- invested in the same mine at the same rate annually) as compared with money at 6 per cent, compound interest on good security. Amount invested in each case is $100. Year Interest 6% Amount First $6.00 $106.00 Second 12.36 112.36 Third ... 19.10 119.10 Fourth 26.25 126.25 Fifth 33.83 133-83 Sixth 41.86 141.86 Seventh 50.37 150.37 Eighth 39-39 159-39 Ninth 68.95 168.95 Tenth 79-09 179.09 Year Dividend 20%, reinvested First $20.00 **6% principal remaining at risk Second 44.00 69.36% principal remaining at risk Third 72.80 46.30% principal remaining at risk Fourth 107.36 18.89% principal remaining at risk Fifth 148.83 15% Gain, 3% per annum Sixth 198.60 56.74% Gain, 9.46% per annum Seventh 258.32 io?.95%r Gain, 15.42% per annum Eighth 329-98 170.59% Gain, 21.32%, per annum Ninth 415.98 247.03% Gain, 27.44% P" annum Tenth 519.18 340.09% Gain, 34.01% per annum From these tables, calculating the value of mining shares, one at simple, the other at compound, in- terest, it is evident that a mine paying 20 per cent. 210 MINING INVESTMENTS annually for ten years and then failing would have returned at simple interest an amount equal to 4 per cent, per annum profit above the return from a secured investment paying 6 per cent. A simple in- terest investment account is one where the income is used and produces nothing more for the person receiving it. Where the dividends are reinvested (which unfortunately is not frequent), the invest- ment account can be considered on a compound in- terest basis, and at the end of the tenth year will have shown earnings equal to 34.01 per cent, per an- num above the highest ordinary rate of 6 per cent, per annum. This calculation is theoretical, for if at the end of ten years, or at any previous time, the mine became exhausted, all the money invested would be lost, though the investor had received an amount equal to 34 per cent, more than the 6 per cent, rate per annum. Here the act of investment, not the calculation, would be at fault. This condition emphasizes the importance of the question, How far is it safe, or speculatively de- sirable, to invest in the shares of an old mine which has paid dividends for any considerable period? As an average proposition to invest on the basis of a cash price equal to five years' dividends seems reasonable, the probabilities of receiving one's money again are fair and it is also likely that at the end of five years the stock will still be worth something, perhaps nearly as much as the original investment, thus making mining investments attractive to those who understand them. As a matter of fact, how- ever, the mine in which an investment has been made must at some time become exhausted, sug- gesting that mining stocks should never be consid- ered as permanent investments. It is for this reason AND HOW TO JUDGE THEM 211 that conditions relating to the future of a mining property should be carefully studied. An Inquiry in Relation to the Prospective Values in an Old Dividend Paying Mine. It is usual that stocks in old established mines sell above their worth because the claim for almost unlimited mineral deposits is more easily maintained in the case of a large producer than for a property that has yet to make its reputation; though it may be that the large producer is rapidly approaching the time when, its mineral deposits becoming ex- hausted, it will be of no further value. There are, as previously stated, famous mines with apparently an almost unlimited quantity of mineral to draw from, but these properties are few in number, while un- fortunately many mines once famous are now aban- doned, or they are struggling along in hopes of un- covering new mineral bodies. A mine at the height of its greatest prosperity may be in rapid approach to its point of final exhaustion. In view of these conditions the following points should be considered in estimating the value of stocks in an established mine. First Calculate the value of the whole mine as represented by the price of its shares. To ascertain this, multiply the price of one share by the total number of shares. Is the mine worth that much? Second In all established mines a portion of the value, is, or ought to be, secured by mineral in sight. Take the estimated value of the mineral in sight, less mining and milling charges, and divide it by the number of shares in the whole mine; this will 212 MINING INVESTMENTS show what proportion of assured value there is for each share, and this assured value can be compared with the price of the shares to ascertain how much of that price is for assured values, and how much for prospective values. In estimating the ore in sight, and in estimating the assured value of a property's shares an allow- ance should be made for the risks in taking the min- eral out, and the dangers attending mining. In- quiry should also be made as to whether the mineral in sight is blocked out and measured, or whether it is in sight simply by estimates from surround- ing conditions; in the latter case a considerable re- duction should be made to allow for the risk of errors in estimating mineral in sight without actually measuring it. Third Treat the unseen portions of the mine from precisely the same point of view as one would in considering an undeveloped property. In an es- tablished mine great returns are always expected from its undeveloped ground because of its past record, and for this there is frequently good reason, but the undeveloped ground has not been seen, all unseen ground is a risk, and the future of dividend paying mines in relation to their undeveloped ground is a risk, on the same basis that any unseen ground or prospect is a risk. In a dividend paying mine, however, one has more data to estimate what the risk really is. In estimating the chances for a future profit beyond the value of the mineral in sight treat all the unseen ground as a prospect and be guided accordingly. Misapprehension is frequently by reason of the high par value that is often placed on mining shares. In the other extreme the true position of a share- AND HOW TO JUDGE THEM 213 holder is frequently obscured because of the issue of a great number of shares at a low par value. Under the laws of many states mining stock can be issue in excessive amounts full paid in consider- ation of a mine transferred to a company in ex- change for its stock. The way is open for exces- sive capitalization, and this is frequent. In consid- ering the offer of a $1 share for five cents, or a $10 share for 50 cents, or a $50 share for $2.50, the par value should be entirely disregarded. The par value of the shares is not the point an investor should consider; the real question is, How many shares are there? If there are 100,000 shares selling at 50 cents each, the whole mine is selling on the basis of $50,- 000, and the owner of one share holds 1-100,000 of that property. If in the same mine there are 1,000,- 000 shares selling at 5 cents each, the property is marketed on the basis of $50,000; but the holder of one share has only 1-1,000,000 of the whole property; and it matters not whether a share has a par value of $1 or $1,000, the owner will be entitled to his pro rata of the value of the ore taken out of the mine after deducting expenses, and nothing more. Table for Determining Approximately the Propor- tionate Risk in a Mining Investment. Table of assured values for mineral in sight, and the proportionate risk for unseen ground: The mineral in 'sight rep- For the unseen ground, resents of the amount The risk is for the total invested. amount invested. 100% o% 95 S go 10 85 IS So 20 75 25 214 MINING INVESTMENTS The mineral in sight rep- For the unseen ground, resents of tee amount The risk is for the total invested. amount invested. 70 30 65 35 60 40 55 45 50 50 45 55 40 60 35 65 30 70 25 75 20 80 15 85 10 90 5 05 O IOO To ascertain the approximate chance of obtain- ing a profit for the risk taken use the following table as directed. The table is arranged in ten columns, each col- umn representing one of the conditions because of which the vicissitudes of mining investments usually arise. Through the columns ten spaces are ruled, and in each space a grade of condition is noted from the very best conditions that could be found placed at the top of the column and rated as ten; that is, ten chances in ten, of a certainty, of a profitable investment; to the poorest conditions from which any possible returns could be had, placed in the next to the last line of spaces, and rated as 1 and representing only one chance in ten of a profit- able investment. The spaces are rated as 10 down to 1 and a line of spaces rated as is added to the table to represent the conditions under which it is impossible that profits could be made from a mining investment. The cost of mining and delivering the mineral is a risk, and in the maintenance of the engineering on an efficient basis there is a slight risk; these can AND HOW TO JUDGE THEM 215 generally be calculated and are therefore not tabu- lated. There is some risk because of unskilled or dis- honest management, but American laws provide the means by which an investor can protect himself in such matters; and as a general proposition this risk can be allowed for by deducting one-half to one chance in ten from the results found by using the table. Before proceeding to an examination of the table it may be well to consider briefly what an element of chance really represents. Among the tabulated classifications even chances are represented by five. A familiar example of even chances is matching pennies, the chances are exactly equal; and it is a remarkable fact that if some thousands of pennies are matched it will be found that they are almost equally divided. An investor putting money in a mine where the chances are equal has the same opportunity to make a profit as if he were matching pennies. If the chances are as four in ten, or one less than even, he takes the same risk as he would when matching pennies under an obligation to give away one out of every five he secured; if the chances were as three in ten it is as if two out of every five secured were given away, and so on through all the table. Where the rate is better than even chances the relation can be ex- plained by supposing additions to the winnings in the same proportion as stated for reductions from the winnings where the risks are rated below even chances. No man can be infallible in judging and estimating unseen ground, and mines considered absolutely worthless have returned remarkable profits, while 216 MINING INVESTMENTS mines reported on as the best by competent authori- ties have later proved disastrous failures; but such instances are extremely rare, and should not be con- sidered by a careful investor. In writing of mining risks and chances as com- pared with matching pennies a more accurate basis might be the comparison as above stated with the chance added that a great prize might be had with one or more of the pennies secured; such a chance certainly exists in mining, and is the reason why almost every bit of mineral found, even though the surroundings are unfavorable, is prospected and gen- erally opened to a considerable extent under a dead loss because of hopes that it may lead to a valuable deposit. Explanations For Using the Table. First Ascertain the assured value from a cal- culation or estimate of the value of the mineral in sight; deduct from this a reasonable sum for the risk and expense of mining, milling and mainte- nance as the circumstances may require. The re- sult will be an estimate of the assured values which may be credited to the mine, and which divided by the number of shares will give the assured value per share. If the assured values indicate a profit on the amount invested it is a business proposition to which the investor may add the chances for a further profit as may be indicated by an estimate of the value of the unseen ground as shown in the table. If. however, the prorata of assured values per share do not equal the price at which the stock is offered, the difference is at risk. Second After estimating the assured values let AND HOW TO JUDGE THEM 217 all the balance of the proposed investment be for unseen ground and taken as a risk. Estimate the chances in this risk by considering each column of conditions in the larger table and check in each col- umn the division which most nearly represents the conditions at the mine. Add together the values tabulated for each division which may have been checked, and divide by ten, the result will be ap- proximately the average chances in ten for a profit- able investment under the conditions surrounding the property which may be under consideration. To allow for the risk of loss because of unskilled or dishonest management subtract one-half to one or even more from the results obtained as the case may require. Third If the mine is simply a prospect proceed in the same manner, but without allowing for as- sured values because of mineral in sight. Fourth Wherever a zero condition is found indi- cating circumstances under which it would be an impossibility that any returns could be had do not make an average of chances, because one zero con- dition could not be compensated by other conditions, however favorable, and where a zero condition is found for a property which may be under consider- ation that property should be rejected. I. Amount of Ore and Associated Minerals in Sight. 10. Assured. Unusually extensive. 9. Superior. Extensive. 218 MINING INVESTMENTS 8. Very good. Large. 7. Good. Above average. 6. Fair. Rather good. 5. Passable. Fair average. 4. Poor. Rather inferior. 3. Very poor. Inferior. 2. Bad. Small. 1. Very bad. Very small. 0. Outclassed. Tiny bits of no importance. II. Condition and Extent of Walls, Roofs, Floors or Outcropping. 10. Assured. Unusually regular and extensive. Unmistak- able evidence of continuity and permanence. 9. Superior. Regular and extensive, good evidences of con- tinuity and permanence. 8. Very good. Fairly regular, fairly extensive, with some evidences of continuity and permanence. 7. Good. Slightly irregular, fairly extensive, not against probable continuity and permanence. AND HOW TO JUDGE THEM 219 6. Fair. Irregular, fairly extensive, continuity and permanence not indicated, but reasonably in expectation. 5. Passable. Irregular, not extensive. Continuity and permanence somewhat doubtful. 4. Poor. Decidedly irregular, not extensive, continuity and permanence doubtful. 3. Very poor. Broken and irregular, rather small, evidences rather against continuity and permanence. 2. Bad. Broken, very irregular and small. Evidences against continuity and permanence. 1. Very bad. Very irregular and very small. Evidences * decidedly against continuity and perma- nence. 0. Outclassed. Continuity and permanence demonstrably im- possible. III. Chemical and Physical Conditions of Surrounding Formation in Relation to the Mineral Found. 10. Assured. Unusually favorable. Very regular. Broadly continuous, demonstrating depth or extent. 9. Superior. Favorable, regular, continuous. Promising depth or extent. 220 MINING INVESTMENTS 8. Very good. Neither favorable or unfavorable. Regular, continuous promising depth or extent. 7. Good. Favorable but irregular. Possible change to unfavorable. 6. Fair. Favorable but irregular, broken. Might change to unfavorable. Some indications of faults. 5. Passable. Neither favorable nor unfavorable. Irregular broken. May become unfavorable. Some faults indicated. 4. Poor. Chemically unfavorable to mineral found, but very regular promising depth or broad extent of formation. 3. Very poor. Chemically favorable, but very irregular. Badly broken, serious faults indicated. 2. Bad. Neither favorable or unfavorable. Very ir- regular, badly broken. Serious faults indi- cated. 1. Very bad. Unfavorable, very irregular, badly broken. Serious faults clearly indicated. 0. Outclassed. Under which the mineral found could not exist in merchantable quantities. AND HOW TO JUDGE THEM 221 IV. Extent and Distribution of Numeralization Within the Deposit. 10. Assured. Unusually regular, even and continuous; de- monstrating permanent, very extensive nu- meralization. 9. Superior. Regular, continuous, promising permanent ex- tensive mineralization. 8. Very good. Continuous, not entirely regular, slight doubts as to permanent extensive mineralization. 7. Good. Continuous, somewhat irregular, some por- tions might be unprofitable. 6. Fair. Continuous but uneven. Indications that some portions would not be profitable. 5. Passable. Not entirely continuous, uneven. Indications of some unprofitable zones. 4. Poor. Not continuous, decidedly uneven. Indica- tions of unprofitable zones. 3. Very poor. Distribution so irregular, workable only by sorting, unprofitable zones. 2. Bad. Very irregular, spotty. Much dead work to obtain any good material. 222 MINING INVESTMENTS 1. Very bad. Spots only. Doubts of sufficient good ma- terial to compensate working. 0. Outclassed. Mineralization in small isolated spots where demonstrably no profit could be maue. V. Value of Mineral Found. 10. Assured. Better than the highest commercial grades. Profits amply secure beyond possible fluctu- ations. 9. Superior. A high commercial grade, margin of profit commercially sure. 8. Very good. Commercial grade of fine. Profits secure ex- cept during great depression. 7. Good. Commercial grade good, margin of profit se- cure under ordinary conditions. 6. Fair. Commercial grade fair, margin of profit sub- ject to market fluctuations. 5. Passable. Commercial grade salable. With favorable market fair margin of profit. 4. Poor. Sufficient to pay expenses but no profit. 3. Very poor. A loss but not over 33 1-3 per cent. Worked in hopes of better development. AND HOW TO JUDGE THEM 223 2. Bad. A loss but not over 50 per cent Worked in hopes of better development. 1. Very bad. Loss more than 66 2-3 per cent. Worked on speculation for better developments. 0. Outclassed. So low that no profit would be possible. VI. Composition of Mineral and its Facilities for Treat- ment. 10. Assured. Unusually favorable yielding finest results by simplest treatment. 9. Superior. Favorable, yielding satisfactory returns by ordinary treatment. 8. Very good. Generally favorable. Results a little below expectations by ordinary treatment. 7. Good. Slightly complex. Results fairly profitable; not entirely satisfactory by ordinary treat- ment 6. Fair. Complex, some profit by ordinary treatment. 5. Passable. Complex. Irregular. A profit by ordinary treatment after careful sorting. 4. Poor. Complex, undesirable constituents. Requires special treatment before profits can be ex- pected. 224 MINING INVESTMENTS 3. Very poor. Complex, irregular. Undesirable constituents make results somewhat doubtful. 2. Bad. Complex, irregular, undesirable constituents abundant, grave doubt of successful treat- ment. 1. Very bad. Undesirable constituents and conditions very prevalent, profits only by successful treat- ment can be found. 0. Outclassed. Of such character that no profit could be made by any known method. VII. Natural Supplies Water, Timber, Labor, Etc. 10. Assured. Assuredly abundant at all times at a mini- mum cost. 9. Superior. Abundant, easy to obtain, and at a low cost. 8. Very good. Sufficient, not difficult to obtain at ordinary cost. 7. Good. Sufficient for ordinary needs during a reason- able time. Cost rather above average. 6. Fair. Sufficient with careful management. Cost above average. 5. Passable. Rather inferior amounts. Cost decidedly above average. AND HOW TO JUDGE THEM 225 4. Poor. Inferior, and at a cost to rather tax oper- ations. 3. Very poor. Scarce, cost heavy, a serious tax on oper- ations. 2. Bad. Deficient, cost a tax on operations sufficient to jeopardize results. 1. Very bad. Very deficient. Cost very excessive making profits seriously doubtful. 0. Outclassed. So poor and at such cost that no profits would be possible. VIII. Topographical and Physical Conditions. Dangers From Excessive Water, Collapses, Poison- ous Gases, Etc. 10. Assured. Every facility for mining at a minimum cost unusual security against dangers. 9. Superior. Facilities for mining at a low cost. No dan- gerous conditions indicated. 8. Very good. No special difficulty or impediment in mining. The ordinary dangers only. 7. Good. Slight difficulties to overcome and consequent dangers a little above the average. 226 MINING INVESTMENTS 6. Fair. Engineering difficulties and dangers beyond the average, but not at all unsurmountable. 5. Passable. Special engineering to overcome difficulties and danger before deposits are available. 4. Poor. Available if special engineering overcomes difficulties and dangers. Results somewhat doubtful. 3. Very poor. Probably available if special engineering overcomes difficulties and dangers. Re- sults doubtful. 2. Bad. Questionably available provided special en- gineering overcomes difficulties and dangers. Chances against successful engineering. 1. Very bad. Possibly available if special engineering over- comes difficulties and dangers, but these so formidable that results are very doubtful. 0. Outclassed. Engineering dangers, and difficulties which demonstrably could not be overcome. IX. Political Conditions. 10. Assured. Absolute security under good laws and peace- ful tenure of occupancy. AND HOW TO JUDGE THEM 227 9. Superior. Good security, good laws, peaceful occupancy; only the ordinary disturbances of mining camps. 8. Very good. Good laws to back enterprise, but some dan- gerous conditions in local surroundings. 7. Good. Laws, judiciary and public order not entirely secure, nor yet seriously dangerous. 6. Fair. Such that enterprise must depend somewhat on its own strength for security. 5. Passable. Such that enterprise must look well to its own strength for security. 4. Poor. Beyond the protection of law, but dangers not very seriously threatening. 3. Very poor. Beyond the protection of law, threatening dangers require strength to protect interests. 2. Bad. Must expect aggression from surrounding dangers, and dishonest officials. 1. Very bad. Grave dangers causing doubts as to mainte- nance of enterprise under such surround- ings. 0. Outclassed. Dangers and complications so great that no enterprise could be maintained. 228 MINING INVESTMENTS X. Accessibility. 10. Assured. Every advantage, lowest grade mineral salable. General supplies at less than ordi- nary quotations. 9. Superior. Without difficulties, all but lowest grade min- eral salable, supplies at current quotations. 8. Very good. Without difficulties. Distance prevents sale of lower grade minerals. Supplies rather expensive. 7. Good. Requiring expenditure of capital before any but selected grades salable. Supplies ex- pensive. 6. Fair. Requiring expenditures before any but high- est grade ores could be sold. 5. Passable. So situated that no ore could be sold. Works required for milling or smelting. 4. Poor. Requiring works for treatment with some danger that machinery cannot be delivered on the property. 3. Very poor. Danger of non-successful delivery of machin- ery on the property such as require careful consideration. AND HOW TO JUDGE THEM 229 2. Bad. Distances and difficulties are such that suc- cessful establishment of machinery is doubt- ful. 1. Very bad. Such that successful establishment of works to utilize mineral is extremely doubtful. 0. Outclassed. Inaccessible, where mineral found could not possibly compensate for machinery and im- provements. Mining Risks Compared With Gambling Hazards. Having considered the advantages and disadvan- tages of a mining venture, and decided whether one should or not take the risk, the fact that money so used is at hazard, put out for a great winning or a total loss, should be fully realized. Mining risks are to some extent similar to gambling chances, with the difference that the chances of winning from the mines are much more favorable, and furthermore, mining is legitimate and honorable, where one suc- cess brings prosperity and employment to thousands and returns profits sufficient to compensate for nu- merous losses. It must be remembered that great returns in mining result principally from cheap stocks in undeveloped properties or from exploration schemes, provided they are honestly conducted. In such ventures, however, the money is at stake for a great return or a total loss; hence speculative min- ing stocks bear some resemblance to lottery tickets. The chances in mining are good, the chances in a lottery are almost nil; yet it is a remarkable fact 230 MINING INVESTMENTS that were the sale of lottery tickets permitted they would be purchased at par to the value of millions of dollars monthly; while mining stocks offering a better chance for a great winning, as will be shown by the following calculations, are difficult to sell even at a big discount. Chances by Lottery. Scheme of the lottery as usually presented by the Spanish-American lotteries. All others have been suppressed in America. Usually 1,000,000 tickets of $1 each are authorized, although there is little mention of the number of tickets. The prizes are put forward with great prominence. Based on one million tickets a tabu- lation of the chances would give results as follows: Chances of Winning Grand prize 830,000 1 in 1,000,000 in 100,000 in 50,000 in 20,000 in 2,000 in 1,000 in 333% 4,581 prizes. Chances of winning i in 218.2 The chance of winning the capital prize, one in 1,000,000, is so remote that it is practically no chance at all, and the chances of winning $1,000 for $1, one in 100,000, are scarcely worth considering; while the chance of getting your money back with perhaps a prize, one in 218, is so bad that it is not worthy of serious consideration. If mining stocks were offered on a similar basis they would be simply laughed at, yet lottery tickets are eagerly purchased at par, many very intelligent people taking a chance on them. It is quite possible for a mining stock in a 10 prizes of 1,000 20 prizes of 500 50 prizes of 100 500 prizes of 10 1,000 prizes of 2 3,000 prizes of i AND HOW TO JUDGE THEM 231 i legitimate enterprise not overcapitalized to pay $30,- 000 for each $1 invested, and the chances of winning are better than getting the capital price in a lottery: more than this, the chances for substantial returns from a mining venture are much better than a lot- tery. These facts are logically indicated by the fol- lowing statements and estimates: It can be claimed in reason and as self evident that there are not, and have not been, 1,000,000 min- ing enterprises in North and South America com- bined, and if it can be shown that one mine out of them all has returned $30,000 for one, then the chances of receiving such a return are better than one in a million. The Callao mine in Venezuela formerly had a great record, though at one time the stock went down to a few cents a share. The mine was to be abandoned, but one of the men believed in it, bought stock at a few cents a share and worked the prop- erty himself. He subsequently uncovered the fabu- lous gold deposits, since worked out, but which once made the mine so famous that a single share was reported to be valued at $53,000. I knew this gentle- man. Although he lost heavily in following the de- cline of the stock, expecting new deposits to be un- covered, at his death, not long since, his estate was appraised at $15,000,000, all made out of the Callao mine. The Alvorado mine, in Mexico, shows how a poor peon became a multimillionaire in a few months. Comparing the chances for moderate winnings, who is there owing a fortune to luck in lottery tickets, yet how many thousands have made for- tunes in mining! This is demonstration that where legitimately conducted the chances of a winning are 232 MINING INVESTMENTS very favorable to the mining venture and very un- favorable to the lottery ticket. In a lottery the chances of getting you the money back with perhaps a premium are as one in 218; on the same basis, a chance in 218 mines, the average result would be that only one would pay. No one would consider such a risk, yet this is precisely the proportionate average to be expected in purchasing 218 tickets in the lottery schemes used as an illus- tration. It seems strange that the public is so often prejudiced against putting money in mining ven- tures even to a moderate extent. Those who have mining stocks to sell, or seek to organize private mining ventures, are much to blame for the develop- ment of this feeling, because they have invariably compared mining stocks to investments. Mining stocks should not be considered as investments, for when compared they make a poor showing; an in- vestment presupposes security, and a mining stock is a speculation. To interest people in mines explain the element of risk compared with the chances for a profit and let people know what they are buying. A mine can- not be considered on an investment basis till the ore bodies are proven and the profitable treatment of the ore has been accomplished. Stocks in mines rep- resenting these conditions sell so high that the chances for great winnings are very much reduced because the winning has been made, and naturally it accrued to those who bought while the mine was an untried venture, as all mines are at their opening. Proceed with caution in considering mining ven- tures, and try your luck in legitimate enterprises, risking only what can easily be afforded at hazard. Before staking any money, however, investigate, AND HOW TO JUDGE THEM 233 and remember always that an undeveloped mine is not an investment but a hazard for a great winning or a total loss. Mining is a risk, however, in which science, skill and experience can be intelligently ap- plied to great benefit; and under such guidance the chances for a profit are favorable to the speculation. Mining is a speculation, but it is legitimate and honorable, and can result in unusual profits to com- pensate for the risk. Wherever a mine becomes a success it brings prosperity, happiness and steady employment to many people, and one such winning can compensate for many losses. The Art of "Wall Street Investing By JOHN MOODY This is a practical Handbook for investors, treating the subject of Wall Street Investing in a sensible and original manner. It is the first modern attempt to cover the subject in an attractive and popular form, and in such a way as to be of interest to the individual in- vestor as well as the more expert banker and broker. "The book deals in a clear, popular and en- tertaining way in the methods, terms and phases of Wall Street Investing, giving rules for analyzing railroad securities and state- ments, and explaining syndicates and reor- ganizations." The Wall Street Journal. "It is lucid, original and sound. I should think it ought to find use as a text-book in University and College Departments of Eco- nomics." Prof. E. Benjamin Andrews. ."It is a book of great interest to business men and investors in general. Mr. Moody de- votes a chapter to 'get-rich-quick schemes,' which will be an eye-opener to those e^iileless ones who are ready victims of the great army of sharpers that infest the land." Buffalo Courier. SYNOPSIS OF CHAPTERS. I. Safety and Security. II. Bonds and What They Represent. III. Stocks and "What They Are. IV. Ana- lyzing Railroad Securities. V. Industrials and Tractions. VI. Investments vs. Speculation. VII. " Get-Rich-Quick" Schemes. VIII. Reorganizations and Syndicates. IX. The New York Stock Exchange. X. Wall Street Phrases and Methods. The volume is handsomely printed and bound in red doth, being uniform in size vith " The Pitfalls of Speculation." Price per copy, $1.00 net. By mail. $1.10. I The Moody Corporation Publishers 35 Nassau Street New York City The Pitfalls of Speculation By THOMAS GIBSON This book deals exclusively with marginal speculation and analyzes in a clear and simple manner the causes of failure in speculation, with a suggestion as to the remedies. While 80 per cent, of the public speculators fail in their ventures, the writer contends that the errors may be corrected and the pitfalls avoided by careful study and clear understand* ing of the machinery of the exchanges. In the introduction the writer says: " I do not pretend that any 'prescription* can be written to insure success nor that a majority of the public traders will ever succeed, but I do maintain that many individuals capable of clear reasoning and the directed exercise of such reasoning:, are sim- ply moving in the dark thru alack of understanding as to what makes and breaks prices. More fallacies superstitions and distorted logic are connected with speculation than with any other business on earth." Until the late Charles H. Dow, the founder of "The Wall Street Journal," began to write of such matters there was no literature extant on the art of speculation with especial refer- ence to the position of the speculator of mod- erate means. Mr. Dow's efforts were news- paper articles, not intended for book publica- tion. Since Mr. Dow, no writer has appeared to treat of these matters with anything ap- proaching the knowledge of the subject, the breadth of view and the common-sense treat- ment that Mr. Gibson devotes to it. SYNOPSIS OF CHAPTERS. I. Introduction, n. Ignorance, Over Speculation, etc. in. Manipulation, IV. Accidents. V. Business Methods in Speculation. VI. Market Technicalities. VII. Tips. VIII. Mechanical Speculation. IX. Short Selling. X. What 500 Speculative Accounts Showed. XI. Grain Specu- lation. XII. Suggestions as to Intelligent Methods. XIH. Conclusion. The volume Is handsomely printed and bound In green doth, Icing uniform in size itith " The Art of Wall Street Investing." Price, per copy, $1.00 net. Bu mail, $1 .10. The Moody Corporation Publishers 35 Nassau Street New York City Smith's Financial Dictionary BY HOWARD IRVING SMITH Recently Issued Cloth. 543 Pages. Price, $4.50 This work is indispensable to a bank in an- swering questions that daily arise. It is the only Financial Dictionary published. It is more than a Dictionary, however; it is like- wise an Encyclopaedia. It describes in fullest detail, in clear language, Banking, Money, Credit, Securities, Contracts, Commercial Paper and other Negotiable Instruments, Domestic and Foreign Exchange, Speculation in Stocks and Bonds, Grain, Cotton, Coffee, Provisions, etc. It is a complete financial li- brary in itself. Smith's Financial Dictionary is adapted not alone for banks and bankers, but for corpora- tions, brokers, exporters, importers, manu- facturers and merchants, and also for lawyers. It is an entirely new work, consisting of 543 large pages, printed from clear type, on supe- rior paper, and strongly bound. It contains no advertisements. The Moody Corporation 35 Nassau St., New York City NOW READY American Railways as Investments By Carl Snyder Their history, territory, great groups and allies, who own and run them, stability of traffic, earnings and surplus. Their capitalization, condition, recent im- provements, resources, future, range of market prices, yield to the investor, etc. This is a work designed for the Investment Banker and Broker and more especially still, for the general investor himself. It is prac- tical, not theoretical, and presents a compara- tive and historical analysis of nearly 100 of the important railway companies of America. Price, $3.20 net; by mail, $3.52. The Moody Corporation 35 NASSAU STREET NEW YORK Moody's Magazine A Monthly Review for Investors, Bankers and Men of Affairs Edited by Byron W. Holt Moody's Magazine is published for the information of the investor. It circulates among investors in all English-speaking countries. Its edi- torial and contributed pages discuss, authori- tatively and impartially, all topics of finance and economics which have a bearing upon In- vestments. Its Studies in Value are a dis- tinctive feature; its Investment and Corpor- ation News are unequaled for convenience and completeness. It does not suppress or color information; it is the organ of no corporation or interest; it does not publish advertisements as news matter; it does not sell its editorial columns; its editorials are fearless and truthful, but not malicious; it is independent; it is fair and hon- est with its subscribers and advertisers, and it deserves the support of all honest investors. SUBSCRIPTION, $3.00 PER YEAR SAMPLE COPY FREE Moody's Magazine Publishers 35 Nassau St., New York City The Cycles of Speculation By THOMAS GIBSON Author "Pitfalls of Speculation" This work is framed with the intention of entering a little further into the great question of Speculation and Investment than did the "Pitfalls of Speculation," by the same author. The introduction discusses briefly the difference between mechanical gambling and marginal speculation and shows wherein the difference lies. The folly of expecting sudden riches from even successful speculative operations is also dealt with. The second chapter gives a brief history of the great speculative movements of the last century and analyses the causes of such movements. In the third and fourth chapters the important questions of our increasing supply of gold and the influences of money conditions on prices are covered. These two sub- jects are considered particularly for their bearing on price changes in Bonds, Stocks and Commodities. In the fifth chapter such factors as politics, crops, etc., are discussed. In the second part of the work, Mr. Gibson has taken up subjects that are not clearly understood by the laity. The somewhat involved methods of operating on Puts and Calls is explained in a manner which robs the subject of all its complexity. The question of dividends; their in- fluence on prices immediately before or after a disburse- ment, is fully and logically explained. Other subjects briefly treated are: Basing Railroad Values; The Effects of Business Depression; Undigested Securities; The Value of Rights; A Barometer of Aver- ages; The Best Method of Trading; Indications of Crises; The Ordinary Swing of Prices; The Factor of Safety; Borrowing and Lending Stocks; Scalping; Crop Damage; The Selection of Securities; The Bank Statement, etc. The conclusion is particularly interesting to the Specu- lator. In this chapter Mr. Gibson takes up and answers the following questions most frequently asked by specu- lators: 1. What margins are necessary to reasonable safety? 2. Is it better to study the entire list or make a specialty of one stock? 3. What class of securities is the safest? 4. What may be considered a fair rally or reaction in prices? 5. What is the best general method of trading? This volume is uniform with the same author's "Pitfalls of Speculation," and also with the other volumes of "The Investor's Library." Price, per copy, $1.50 net ; by mail, $1.62 Published by THE MOODY CORPORATION 35 NASSAU STREET ... NEW YORK L 005 099 361 7 UC SOUTHERN REGIONAL LIBRARY FACILITY A 001312456 5