The history of a mining camp usually consists of one or more rich strikes, the rapid acquisition of the best locations by local interests, or well organized mining capital guided by expert talent, and then the inrush of hundreds or thousands of persons, who take up unpromising or barren ground on the outskirts and set up an active traffic in selling these properties, which are often not even prospects, to the excited public, thru the old but never-failing device of selling stock in a company. For a time, the entire camp is judged by the reputation of the few rich early strikes. It is only much later, when the disastrous history of the later promotions can be comprehensively sum marized, that the slight relation which the majority of the ventures had to true mining can be seen clearly.
The Rawhide, Nevada, camp had, in 1908, three proved properties, with no stock for sale, and about 25 companies advertising stock on the basis of un proved claims. The Oatman camp in Arizona has its values largely concentrated in the possession of four mines. A dozen others have opened ore of milling grade, 28 have begun work, and some 140 others are merely selling stock. The Tonopah boom of the camp of the same name in Ney County, Nevada, resulted in about 120 different companies of which in November, 1908, approximately a dozen stocks re mained with a market. Of the others nothing was known. Most of them no longer had even a post office address. Spindle Top, Texas, which came into public notice with a magnificent oil gusher, and which produced some very prosperous companies, served very soon as the basis for about 1,000 corporate or ganizations. It is now the graveyard of 900 of them. At Cobalt, Ontario, silver was discovered in 1905. In the next few years, the provincial government of Ontario had records of 491 companies with a total capitalization of $472,326,000. In four years, how ever, only fifteen dividend payers were left and their total dividends for the year 1908 were $3,646,027.
3. History of a promotion.—The beginning of the history of a typical mine promotion, therefore, is a state of public confidence produced by the rumor of rich fields. This mental state the promoter is not slow to utilize. The physical basis of promotion is a claim. A claim is not necessarily a promising out crop, altho it may be that. Its speculative signifi cance may lie solely in its proximity to other valuable properties. There are few markets for economic goods so irregular and blind and unreliable as the western market for mining claims. The promising locations are usually discovered by wandering pros pectors. These prospectors are practically never able to finance any work of development, and so a sale of all or a portion of a prospect takes place very quickly after discovery, provided there are any signs of value in it. The buyers may be divided into three classes: local men of means, who are more or less closely identified with the mining industry; the great de velopment companies ; and the class of promot ers who organize stock-selling campaigns. This
third class is the least expert of the three, and it has the least money. It gets the culls.
The conservative purchaser of a prospect enters into a working bond with the owner, under the terms of which he is permitted to do a reasonable amount of development work before exercising his option to buy. The stock-selling promoter purchases outright, makes a point of his ownership of the claim, and admits no possibility of the prospect proving a disappointment. When such a promoter acquires a property, he or ganizes a company and sells the prospect to the com pany for a large block of stock. Evidence that pro moters charge their companies a round price for the prospects sold to them is furnished by the optimistic manner in which they talk of them in their prospec tuses. The promoter also enters into a contract with his company by which he is to market the remainder of its stock. His price for doing so usually absorbs the major part of the investor's money. How much of the stock sold represents real cash coming into the company's treasury, and property or services con servatively valued, the stockholder is not informed. Most mining companies do not publish reports. The application for the appointment of a receiver seems to be the stockholder's favorite way of finding out what is going on in his company. The western states, with the exception of a few which are now exper imenting with "Blue Sky Laws," do not care to invite outside capital in by making their corporation laws protect investors.
When experienced capitalists undertake the de velopment of a prospect they do so with real money, good credit and expert talent. The average mining promoter has none of these things. From an en gineering point of view his operations in development are a match for the geology of his prospectus. He receives his money only thru the expensive process of advertising and personal salesmanship. The investor who buys stock in such an enterprise undertakes to help pay for a prospect at an unknown price. He is helping to furnish all the real cash going into actual development, to underwrite other expenses charged to operation, the nature of which he does not know and the amount of which he is not told. He is pay ing all the expenses of the stock-selling campaign by which he is caught, and by which the whole enterprise is kept moving. Among the risks of such an invest ment are, that the prospect contains ore in paying quantity, that the operative force of the company has the skill to develop it so as to create a margin of profit above operating expenses, that the promoters are honest, and that no legal complication or business de pression will halt the stock-selling campaign before enough shares are sold to develop the property into a mine. The prospect of success is very small. It is this type of project presented to the public as "mining," which gives a bad name to a great and legitimate in dustry.