In 1898 77 companies operating stamp-bat teries produced 4,295,609 crude ounces of gold bullion of the value of #15,141,376, and of these companies 41 distributed in dividends for that year #4,847,505, or about 15.6 per cent o‘ii their nominal capital of £31,018,000. The market cap italization of the same companies, ho'ever, was £82,555,000; and the dividends returned on this capitalization were about 5.9 per cents.
The majority of the "outcrop companies"— indeed, nearly all of those situated in the cen tral section (extending from the Langlaagte Estate to Knights, on the Witwatersrand) —axe free of indebtedness and will not require fur ther capital, unless for future increase of plant, especially for enlarging their milling capacity. Any additional capital required for such pur poses could be provided either from the profits already earned, or by the issue of debentures. to be ultimately likewise redeemed from profits.
For the "deep-level" properties, on the other hand, and especially for those covering the deeper levels, that is, those situated on the second and third lines of claims parallel to the outcrop, a large amount of money must be ex pended before the mines can become productive. Instead of increasing the capital stock for this purpose it is generally the practice of the Rand companies to raise the money by the issue of debentures. There has been no difficulty in ob taining working capital by this means, often to the extent of f400,000 or f500,000. About f5,000,000 of such debentures were issued up to 1903.
Houses of high standing have been able to loans of working capital upon deben tures bearing interest at 5 to 6 per cent per annum, giving as an inducement to the pur chaser the right to exchange the debentures for fully paid-up shares, at a certain price, within a given period from the date of issue, during which period the shares are likely to command a good premium.
Nearly all the Rand companies in 1903 were controlled large financial concerns, such as Wernher, Best and Company, who control the Rand Mines group and some other properties; the Consolidated Gold Fields Company, which controls the Simmer and Jack (one of the largest mines on the Rand), the Robinson Deep, the Nigel Deep and some of the first, as well as many of the second, row of the Messrs. Farrar, who control the East Rand Proprietary and its subsidiaries, the An gelo, Dreifontein, New Comet, etc.; Barnato
Brothers, who control the Primrose, Glencairn, Ginsberg, Roodepoort, etc., and A. Goerz and Company, who control the Geldenhuis Estate, the May Consolidated, the Lancaster and the Geduld Princess Estate, etc.; Mr. Neumann and associates, controlling the Consolidated Main Reef, Treasury and Wolhuter; Messrs. Alba, controlling the Aurora West, Meyer and Charl ton, George Goch, Van Ryn, etc., and J. B. Robinson, who controls the Robinson group, comprising the Langlaagte and Randfontein Estates and their several subsidiaries. These parties had the entire financial and technical direction of the companies in which they possess a major voting interest. All the important companies are listed on the stock exchanges of Johannesburg and London.
The financial administration of the Wit watersrand mines is, as a rule, able and honest. The Transvaal law requires a monthly state ment of the amount of ore crushed, gold pro duced, etc. Such reports are published monthly by the companies in great detail.
As a rule, the Johannesburg local directors and mine managers are exceptionally trust worthy and full reliance can be had on the accuracy of their reports. Sometimes, how ever, attempts are made, for market purposes, to underestimate the working costs, by charging to capital expenditure money which should strictly be reckoned as working expenses. In this way fictitious profits may be shown; but the practice is not usual, and latterly has been seldom adopted.
In the formation of a new company the owner or owners of the mining claims (and often the financial promoting syndicates) usu receive a certain number of vendors' shares of the company to be formed by an amalgama tion of claims. Moreover, a certain number of shares are sold (usually at par) for working capital; and a certain number of shares are re tained as a treasury reserve, which frequently are sold, some time afterward, at a consider able advance. The majority of the companies have greatly increased their capital since their formation; but, notwithstanding this fact, their new shares are in many cases several' hundred per cent above par.
Economic Conditions.— The methods of mining in the Witwatersrand district present no features specially different from those followed in the exploitation of similar deposits elsewhere.