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Show THE RISING MINING FEVER. Will New York become the great mining center of the country instead of San Francisco? is a question now often asked and generally answered in the affirmative by those who are posted. It is known that for the last two years there has been a steadily increasing interest in gold and silver mines shown by investors and capitalists in the East. A special Mining Board has been established in this city, which now does a very large business, larger, it is claimed, than that transacted in the San Francisco exchanges, while our regular Stock Board, which ignored mining securities for so many years, now actively deals in some ten stocks of large mining companies. It has also been noticed that the dealings on the San Francisco Board have shrunk compared with the old bonanza times, and recently prices have been very low compared with those current two years back. To get at the true inwardness of this matter a reporter called on Mr. D. G. Croly, who was found at the Bullion Club, No. 19 West Twenty-fourth street. "You have given some attention to mining matters, I believe, Mr. Croly?" said the reporter. "Yes; my health and eyesight failed me in journalism, and as I had as an amateur taken a great deal of interest in mining matters, when I had the time to spare, I visited Colorado last fall and California last spring. Being Secretary of the Club I naturally have become very well acquainted with the growth of the interest in mining here at the East. When in California I was interviewed by several of the newspapers, and I then said that I believed New York was destined to become the great mining center of the New World. I saw Mr. John Mackey, and he half admitted to me that he feared such would be the case."How did you happen to come to this conclusion?" asked the reporter. "California seems to be the natural headquarters for mining in view of its nearness to the Comstock lode and the special acquaintance of its people with the business." "Well," answered Mr. Croly, "this very question was put to Mr. Mackey, and he said that England could manage mines in any part of the world. The London capitalists own bullion-producing properties, and some very good ones, in our own country. Probably the best managed mine in the world is one exclusively dealt in in London --the Richmond Consolidated, in the Eureka District. The Terrible Mine, in Georgetown, is also owned in England. None of the shares are on the market. English capitalists successfully manage mines in New Zealand, Australia -- in short, in every part of the world. Mr. Mackey could not see why New York could not do for our own country what London did for the whole world. It was merely a matter of money, organization and proper management." "But, Mr. Croly, what special means have you for believing New York is to become the center of the bullion producing properties?" "I formed that opinion several years ago, and in a paper with which I was then connected I wrote article after article calling the attention of our Stock Board to the importance of securing this business for the metropolis. I reasoned that all enterprises that were speculative in a large and wholesome way would naturally come to that point where money was the most abundant and cheapest. "I doubt if the whole State of California has use for more than twenty millions of dollars in the transaction of its business. It follows that the market there must be very fluctuating. A few thousand shares bought will put up the price of any stock, and a few hundred shares sold will very often knock it down. But with the immense money interests in New York, with capital seeking investment profitably, there are not those wide fluctuations. The number of buyers and sellers is larger, and hence, by a natural law, these industrial interprises [enterprises] which demand large capital naturally center at that point where it can be got the cheapest and the most abundantly." "But," asked the reporter, "is there not a great deal of swindling, of corrupt dealing in mines and with mining shares, and are not the investing public likely to be steadily fleeced?" "It must be admitted," was the answer, "that there is great danger that the "lambs" will be caught out if they buy mining stocks. In some respects it is dangerous business. You see, while a district will produce bullion for many generations, single mines are liable to accidents, and may give out entirely. Under our mining laws a company can be organized upon a claim 1,500 feet by 300 or 600. After a shaft is sunk there is a liability to numerous accidents. The woodwork in the shaft may get on fire; the vein may temporarily or permanently "pinch" out and no ore be produced afterward, or water may get into the mine. Under these circumstances the insiders take advantage of the investors. Dividends stop. The outside public rush in to sell. The insiders may drain the water or rebuild the works, or go through the barren ground and put the price of the stock up again. In an address before the Bullion Club I tried to make the point that mining would never become a legitimate business until there were larger consolidations of interest, that the investor should not have to depend upon any one "hole in the ground;" that groups of mines should be worked instead of single ones; then if there was some accident to the machinery or a pump broke, or fire took place or water poured into the mine, dividends could be continued from the other associated enterprises. And I was quite pleased to notice that the point was so well understood as to be widely copied. I found my remarks quoted in the prospectuses of a number of new Western enterprises where combinations of properties were offered to investors rather than any one mine with its single shaft, &c. I think the day is coming when mining companies will issue bonds as well as common stock, the former representing the plant of the investment, the stock the more speculative element. There is constant difficulty among mining companies due to quarrels as to which one ore bodies belong to. No vein runs down steadily. It will sometimes pitch to the west, but more often to the east. It thus gets into the ground of another mine, and then there is trouble and litigation." "Mr. Croly, in what respect does mine owning here in the East differ from what obtains in the California market?" "Well, Eastern investors insist upon having dividend paying properties; the Californian cares more for the "gamble." He will pay fifty cents or seventy-five cents a share for a "prospect," but with the hope that when ore is struck or the mine developed, he will get a very large advance upon his investment. The fifty-cent share may be worth $20 in time, but the moment it becomes dividend paying his interest ceases and he sells out. Hence, it is ???? not more than three mines on the San Francisco boards which pay dividends. All the rest are mere prospects. Here, on the New York Board, the great bulk of the properties are either dividend-paying or expect to become so shortly. Hence there is less fluctuation in the price of mining securities dealt in on the New York market." "As the dividends are quite large, compared with railway investments, is it not attracting people who have surplus wealth to invest, and is there not likely to be quite a furore [furor] in mining?" "Certainly there is," answered Mr. Croly. "Why, I was looking over the list the other day and I find that there are some thirty-five mining stocks paying dividends which are actively dealt in in our market. These disburse from five cents to $1 a month, and I happen to know there are a quite a number of properties about to be put? on." (Here Mr. Croly showed the reporter a list of the mines, but said he did not care to give their names, as it would look like advertising them, and, besides, he was afraid that some of the properties were mere blinds on which dividends were paid simply to sell the stock and cheat the public. So any list that he might give would contain some such wildcats.) "Now," continued Mr. Croly, "I think this will tell on the public; indeed, I know it is telling. They see and hear month after month of a stock which sells anywhere from $10 to $30, which pays from fifty cents to $1 a month. Some of these mines have done this for two, three and four years. Then the returns of some of the Leadville mines, for instance, are really extraordinary. How long they will last no one can tell, but the figures for many of them are ridiculously low even if they can continue those dividends for two years. The speculative feeling is rising in this country. Railway stocks have had a great "boom," and people who have made money in them are very doubtful about continuing to put up margins for a further rise. I believe myself that railway property is low to what it will be. I think almost any of the leading stocks dealt in are a purchase at to-day's [today's] prices; but then everybody doesn't think so. But they will see that a mining stock which sells at $25 and pays fifty cents a month, ought to be a very good investment, and hence we are looking for a great speculative "boom" in mining stocks before many months are over." "What is the matter with the San Francisco Stock Exchange?" asked the reporter. "Prices seem absurdly low compared with what they were two years since." "Well, you see it is nearly two years since any bonanzas have been struck. The Comstock lode from its very nature is the greatest gambling property in the world. It has thousands of feet of quartz entirely barren of pay ore. Then suddenly it developed what are called bonanzas, which are enormously large, thick and rich deposits of gold and silver. Stock which have sold for $1 have run up to over $900?. This has happened several times, a fact which appeals strongly to the cupidity, of men who like to take chances. The same impulse which makes a man take a share in a lottery, where he has one chance in ten thousand, induces the people of California to deal heavily in stocks on the Comstock lode. But it is a serious matter to hold stocks on the Pacific Coast, for they are assessable, and if bonanzas are not found the shareholder is treated to what are known as "Irish dividends" --those on which he pays an assessment instead of receiving a bonus. The people of California have been paying over $12,000,000 per annum to companies on this Comstock lode, and so far they have developed no new bonanzas. I have an abiding faith they will strike one some time, but "hope deterred makes the heart sick," and then the active competition of New York taking away so many dividend paying mines is injuring California. Another "setback" is the development of other districts. For instance, the Bodie? region, which is on the borders of Nevada. It has suddenly loomed up as a great gold-producing territory, and it is as yet in its infancy, and will give a great account of itself before the close of the year 1880. Then there are the gold mines of the Black Hills, in Dakota. They are attracting deserved attention on account of their mines, which are of an enormous extent, though the grade of ore is very low; so much so that people are beginning to be afraid to handle new properties in that region, as the machinery required is very expensive and the profits very small. Ex-Senator Spencer told me that he did not believe that the ore in the Black Hills would average more than $7 a ton, and this fact is telling against the market value of the mines." "How about Colorado?" asked the reporter. "Well, that is now the favorite region for New Yorkers. Indeed, one distinguished Senator from the Pacific Coast told me the other day that he believed the greatest mines of the country would yet be discovered in Colorado and that it would entirely outstrip the mines of the Pacific coast. The mountains are higher there, volcanic action has evidently been more intense, and there seems to be a greater variety of deposits of the precious metals than in any other place on earth. Then there is a new region in Arkansas which is very promising. I hear the most glowing accounts from there, and yet that field is entirely virgin. The new mines are located near the Hot Springs, and, by the way, all the great mineral fields are near hot springs. But this new region, is to-day [today] in the situation that Leadville was two years agofull of promise, but undeveloped, and prices as yet very low." "How about Arizona?" "A wonderful region, but as yet too far off. When the Southern Pacific road is built, and when the Atchison and Sante Fe runs to the Pacific on the lines of the ???? then see Arizona, Southern Utah, New Mexico and the regions adjacent developed. Undoubtedly the mineral wealth of the country these roads will traverse is something enormous. There has been in times past a great deal of prejudice against mining enterprises. People regarded them as dangerous and uncertain, but really it is as legitimate a business as any other. We are to-day [today] the greatest producers of gold and silver of any nation on earth, and I am surprised that the press of New York has not paid more attention to this important matter. An industry has come to us to give employment to our capital and profit to our investors without any active help from our newspapers." "Will the demonetizing of silver hurt the mining interests of the country, Mr. Croly?" "Yes. If it was possible to demonetize silver and use only gold it would put a stop to about two thirds of the silver mines of the United States, but there is no danger of that. The great bulk of mankind use silver and will continue to use it. As Professor Newberry said, in his lecture before the Bullion Club, more than half of the world use silver exclusively, while less than 200,000,000 people on the globe use gold exclusively. Even in gold countries the popular coinage for retail trade is always silver. "But is not the silver dollar too small? Is it an honest dollar?" "Well," said Mr. Croly, "our complaint is that it is too large. The scientific ratio between the two metals is 15% to one, but our American dollar makes it sixteen to one. The Latin Union, which uses more than six hundred million of five-franc pieces, puts three per cent less silver in the five-franc than we do in our dollar. It was a great mistake when we were recoining silver that we did not make it conform to the ratio established by France and the Latin Union, which experience proves is the one which best represents the normal relations of the two metals." "How do you account for the silver dollars not being in circulation?" "For the same reason that the gold dollars are not in circulation. Paper is the most convenient, and if Congress were wise and would do what the English, French and German governments did, withdraw all but small bills, you would then soon see the silver dollars and gold eagles and half eagles in circulation. We ought to have nothing less than twenty-dollar bills either in national or bank notes, and it is too bad that in the greatest bullion-producing country in the world our legislators should be so bewitched that they should discriminate against our own productions and insist upon issuing small bills." "But have we not too many silver dollars?" asked the reporter. "Oh, nonsense! We have only got something like $15,000,000, yet the Bank of France holds over $250,000,000 in five-franc pieces, while among the people at large in the Latin Union there are more than $250,000,000 more, in other words, France and the countries which compose the Latin Union have ten times the quantity of silver dollars that we have, only, as I said before, they are smaller dollars; they contain less silver by three per cent." "How do you account for the opposition of our bankers to the use of silver?" "To me it is unaccountable. I judge, however, you will not find the same active opposition to monetizing silver here East as you did pending the discussion in 1878?. I could name to you twenty bank presidents who signed their names to the gold manifestoes who are to-day [today] largely interested in silver mines. You will be surprised to find how many of the leading people connected with banks are officers in silver-mining corporations." "You admit," asked the reporter, "there are, or will be a great many mining schemes intended to swindle the public?" "Unquestionably," was the reply. "If you go to the leading hotels on Broadway you will notice they are filled with people from the Pacific coast and the Rocky Mountains, and among them are some of the most villainous-looking rascals I ever saw in my life. Unfortunately these fellows have scented the prey afar off and are coming here to try and swindle our Eastern investors. So far I don't think they have had very good luck, but undoubtedly, if there is a furore [furor], if an excitement seizes the public for mining investments, the greenhorns will be pretty certainly taken in. We have altogether too many California operators already at work in placing mines here at the East. People with very unsavory reputations on the Pacific coast are conspicuous in a number of new mining enterprises that are about to be put upon the New York market. I, for one, want it distinctly understood that while I believe this business has got to come to New York and think it ought to be encouraged, I wash my hands in advance of any possible abuse of a legitimate business. Probably one-half of the active operators of California are now in this city, and among them are some very scaly fellows." "Have not our Eastern investors in times past had experience of mining in Colorado and further west?" "That is very true, but you must remember that mining was then a new business and the loss fifteen or twenty years since was the price we had to pay for learning how to mine, mill and market gold and silver ores. During the Pike a Peak? excitement the cost for transportation across the plains was appalling. A box of candles cost $10, and for machinery incalculable sums were spent. But the very mines which failed to pay then, are productive today. Then, during all these years, we have learned how to treat ores, and there has grown up a body of experienced miners and experts whose judgment is generally a very safe guide to those who wish to put their money into mining ventures. We have the advantage, too, of the experience of the Pacific coast mining. We know all about the business and hence there will be fewer losses in the future than there have been in the past." "One other point, Mr. Croly. DO you believe in the extravagant stories which are told about the ore bodies in certain well known mines?" "I do honestly believe that there are certain mines in this country which will more than repeat the history of the famous bonanzas on the Comstock lode. I think I know several such; but, at the same time, it must be remembered that all mines are not bonanzas, and capitalists must bear in mind that mining, like every other legitimate industry, after all only pays a fair interest upon money invested. I doubt if, taking the mining history of this country altogether, it has paid more than four per cent on the money and labor expended; but, then, you see the business is very attractive, for some mines have paid enormously in the past, and other mines will do so in the immediate future. And this is what is creating the furore [furor] at the East. Every one [everyone] expects that his mine is to be the favorite one." -- N. Y. Herald. |