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Show I The Man holhthy f I Nobody Knew 1 S Doad. Mead & Co., lne. I ft GETTING RICH QUICK. Synopsis. Dick Morgan of Syracuse, Syra-cuse, N. Y., a failure in life, enlisted enlist-ed in the Foreign Legion of the I-Yencli army under the name of Henry Milliard, la disfigured by shrapnel. The French surgeons ask for a photograph to guide them In restoring his fare, in his rage against life he offers In derision a picture postcard bearing the radiant radi-ant face of Christ. The surgeons do a good Job. On his way back to America he meets Martin Harmon, Har-mon, a New York broker. The result 1b that Morgan, -under the name of Milliard and unrecognized as Morgan, goes back to Syracuse to sell a mining stock. Me is determined de-termined to make good. He tells people of the death of Morgan. He finds in Angela Cullen a loyal defender de-fender of Dick Morgan. He meets Carol Durant, who had refused to marry him. She does not hesitate to tell him that she had loved Morgan. Mor-gan. Milliard finds he still loves her and is tempted to confess. Ik! a CHAPTER VI. Continued. 'Til have to admit," said ITilliartl lightly, "Hint the odds nre on the side of the exports. I'.ut as for the romance ro-mance " lie smiled at Angela and wondered if lie dared begin so soon to Imild tip the framework of his mission. "I've lieen telling Angela that It's mostly hard wo.k. Once In a while you do run into something lurid, of course romantic, if you want to call It so. I remember one bit out of my own experience," Angela had dropped the papers, and was listening as closely close-ly as her father. "A few years ago some friends of mine bought up an old abandoned property out in the Butte region; bought it for a song, and It was a very quiet peaceful little song at that, because metals had been dull, and to continue the metaphor my friends weren't in particularly good voice just then. Rut after they'd taken tak-en title, they realized that they'd only sung the first verse of the song, and there were a lot more verses and a pretty strenuous chorus. There was a shaft to be unwatered and a lot of timber-work to be done; they were in for a big expense, and (heir credit had tucks in it, and the outlook wasn't any too rosy. lint thirty yards from the main workings there was a fairish sort of tunnel, with the start of a winze that's a .blind shaft running down obliquely from a horizontal tunnel tun-nel and it pointed straight toward the main shaft, and it occurred to them that they could continue that winze another few feet, strike their main shaft about the hundred and fifty foot level, and save a lot of labor and expense that way by getting a clean approach to the shaft instead of taking a lot of bother with it in Its decrepit condition. Well, they began to go down hat winze, and inside of ten feet they struck a brand new and tmsuspected vein there hadn't been any outcrop showing; it was sheer, Unadulterated luck. Then they had credit they certainly did! To make a long story short, they pawned their futures, and begged and borrowed every ev-ery penny they could lay their hands on, and they developed that property to the last cent, and when they had perhaps two hundred thousand or so tons of four per cent copper in sight, and there were indicated ore reserves of another half a million tons, they sold that property to a group of New Yorkers for an utterly phenomenal price, without ever having so much as touched the original shaft for which they'd bought the property !" "Ouch !" said Cullen, and "Goodness "Good-ness !" said Angela. "And," said Hilliard, smiling reml-tiiscently, reml-tiiscently, "if the original owners had ipushed that winze for a couple of days more than they did, or If my friends hadn't decided to go at the problem in exactly that way . . . well, as I say, what's one man's romance Is another man's tragedy. My friends got their Investment back In something less than four months, and after that it was velvet. vel-vet. And the selling price was in the neighborhood of two hundred times .what they'd paid for it. That's mining min-ing history, Mr. Cullen." And Indeed !lt was and the only fabrication about ;lt was Milliard's claim of friendship jfor the lucky owners. This, as he assured as-sured himself, was salesman's license ' every successful operator Is a '"friend" of any salesman. Cullen nodded thoughtfully ; his eyes were bright. Angela was alternately alter-nately regarding him with indulgent pity, and sending I-told-you-so messages mes-sages to Hilliard. "Where was this in Montana?" "Silverbow county. Near Hutte. Yes, there is romance in that country, Mr. Cullen. It's in every tree and every ev-ery rock, and in every hill and valley and under the ground. And I'm afraid I'm just enough of a realist to find most of my own under the surface." "To save my life," said Cullen, "I can't help thinking of that region as a Mark Twain sort of country sombreros som-breros and six-shooters and Vigilantes and stage coach hold-ups and gold dust .as a medium of exchange. I know it's childish, but I've never been out there, 'and it's hard to get over what we ?arnod at school." He surveyed his daunted garden less arrogantly; the fountain, which in his moments of complacence had all the attributes of a geyser for him, was suddenly a feeble faucet, and the tidy lawn was no more seductive than a window-box. "The up-to-date schoolbooks," said Hilliard, laughing, "have a good many changes in them. The West of the early eighties is all gone, the atmosphere atmos-phere is all gone, the old-style miners are all gone; you used to see some picturesque pic-turesque sights even ten years ago, but nowadays you best realize how the industry in-dustry has changed when you see a couple of pals hunting for work In an auto drive up to a camp, ask for a job, get It, park the auto, take the tools out of the delivery body on behind, be-hind, and pitch in. And you can imagine im-agine the other changes that accompany accom-pany that one. Of course, that's especially es-pecially typical of Arizona, but we get It In Montana, too. I'm not saying that the color has gone out entirely, because be-cause It hasn't, but In the old days the West was the West, and now it's moving mov-ing East as fast as it conveniently can, so that if you want to get the pure spirit of It, as it is today, you'll have to go down to Wall street. That's where it lives." "Mining mining!" mused Mr. Cullen. Cul-len. "Sounds adventurous just to say it." He gazed at the fountain. "And no industry Is less understood even by intelligent men, Mr. Cullen. As a matter of fact, the public doesn't even understand most of the commonest common-est terms. The buying public doesn't even know what it is buying. That's why it's so easy to sell worthless stock." . "Oh, Mr. Hilliard !" "For instance," he said. "I spoke of a certain number of tons in sight, and that's one of the very commonest expressions ex-pressions in a fake prospectus. I suppose sup-pose you know you couldn't see it, don't you?" "Why, no !" said Mr. Cullen, blankly. blank-ly. "Couldn't I?" "You might actually see a few thousand thou-sand dollars' worth." "Why," said Angela, surpr'sedly. "I thought it stuck right out on the walls 1 In gobs! And you knocked it off with a pickax! And shoveled It up!" "Not, exactly that," said Hilliard kindly. "Sometimes you go at an ore body with steam shovels, and other times you don't. But when you remem-l.e.- that three or four pounds of copper cop-per to every hundred pounds of rock means a very handsome profit, if your costs aren't excessive, you have some idea of how little you could knock olf a wall. No yoj tear down the whole mass. Y'ou go at it wholesale." "What I meant by romance," said Mr. Cullen, "wasn't necessarily luck. And besides, this yarn you've just told us doesn't illustrate what I call a business proposition. What I'm trying try-ing to get at Is that you've got an occupation oc-cupation that isn't a cut-and-dried one like the average. There's breadth to it vision. There's drama. There's the outdoor side to It. There's " "Don't forget," Hilliard warned him, "that I purposely gave you that illustrating, illus-trating, and I think you've missed the moral. It was a business proposition. My friends bought the mine for the values they knew were there. They'd have made money if they'd gone ahead "Now You Just Wait a Second." unwatering and timbering and developing develop-ing the old shaft so that it wasn't all bull luck, not by any means. And I claim that the romance and the drama and the excitement is In the combination of business sense with that wonderful possibility of accident. You don't go in at random ; you use your best judgment, and expect about ten per cent on your money amt It's the chance of getting a thousand per cent that keeps the game alive. Some men don't even get the ten . . . mighty few ever get the thousand. I'm satisfied, and more than satisfied, that the gods have been good to me, and put me somewhere in between." "I suppose for the people on the Inside," In-side," said Mr. Cullen, "a mining proposition prop-osition Is just as safe .and businesslike as anything else. The trouble conies in knowing when a mine's a mine, and when it's a swindle, and I guess you have to be a metallurgical shark to know that anyway. But the way things have been going for the last year or two, with all this speculation in the metals, and all the fortunes that have been made, sort of set me to thinking that with good advice, you " j "I beg your pardon," said Hilliard quickly. "There's been mighty little j speculation in metals, Mr. Cullen; but there's been a tremendous amount of speculation in stock. The difference between West and East ; the difference differ-ence betweeu insider and outsider; the difference between the capitalist and the gambler Is this the East, the outsider and the gambler buy stock; the West, the insider and the capitalist buy mines. Buy them outright out-right and develop them first and exploit ex-ploit them afterward. If they're good, the West keeps them to Itself and pockets the profits; If they're shaky, the West sells stocks to the East, and gets its profit that way, and calmly steps out from under. The art and science of underwriting . . ." "Now you just wait a second," interrupted in-terrupted Angela, who had been fidgeting fidget-ing and playing with her wrist watch. "Dad Mr. Hilliard!. This is awfully interesting, but dinner's in just a few minutes, and " ""Plenty of time," said Cullen, waving wav-ing her off. "Plenty of time ! Go ahead, Mr. Hilliard. This is too good to miss. Smoke a cigarette for an appetizer?" "Thank you." Hilliard, having decided de-cided to take complete advantage of the present opportunity, marshaled salient details as he held a match for his host. "Well, perhaps I can show you best by an actual example. I'm out of the game entirely, as I said, but I was invited a day or two ago to join a New York syndicate in financing a property I appraised myself my-self in 1914. It's owned at present by four boys with a shoe-string apiece. They can't finance it themselves, so they need help, and they've come to Wall street and whispered their secret se-cret through a megaphone. Now suppose, sup-pose, just to make It clear all around, that you and I and Angela are to form a syndicate to underwrite the company." com-pany." ' He was sustained by the reflection re-flection that even though he came in the guise of a mountebank, there was nothing dishonorable about the wares he had brought to sell. "Ooh !" said Angela, joyously, "Thanks !" Simultaneously her father gave her a little frown of affectionate remonstrance, remon-strance, and Hilliard gave her a little smile of affectionate esteem. "Now,, the boys wdio own it," said Hilliard, "are in such straits that we can practically dictate our own terms. I don't mean to imply that we'd take too great an advantage of them, but it's a plain case of supply and demand, de-mand, and we're naturally interested in a bargain. We go over the mine very carefully, and find that although it isn't actually producing any copper just yet, because the owners ran out of money before they could get that far, it has enough ore reserves to guarantee at least ten thousand tons a year for twenty years, provided the necessary equipment is bought and put into operation. That tonnage, with the price of copper where It is now around thirty cents and the cost of production what it is now, and other factors what they are now would eventually mean a net profit of about a quarter of a million dollars a year. So first we have these present owners organize a corporation, capitalized at two million dollars." Cullen smoked violently, and looked puzzled. "You're getting out of my depth. How do you arrive at that?" "That's so as to insure ten per cent dividends. And the mine can pay ten per cent, provided we enn arrange to get the capital. Y'ou see, Mr. Cullen, a copper mine Isn't like a factory, and you can't figure it the same way, because be-cause a factory runs on indefinitely, and if you simply replace the machinery ma-chinery whenever it wears out, there's nothing to prevent the same plant ' from keeping on making the same sort of product for a hundred years. But every pound of ore you take out of a mine leaves that much less for the future, and eventually your ore's going go-ing to be all gone. And if this particular par-ticular mine is going to be exhausted In about twenty years, It stands to reason that- It's being exhausted at the rate of one-twentieth, or five per cent, a year. You must take that always into consideration. And therefore, every stockholder is entitled to get back at least five per cent of Ins money each year to cover that depreciation, de-preciation, in addition to whatever he ought to get for ordinary profits, which Is another five per cent. Otherwise " "Oh ! I see !" cried Angela. "Prove it!" commanded Hilliard indulgently. in-dulgently. "Why, if the company just paid five per cent for twenty years, and at the end of It, your ore was all gone, the people would only just have got their money back, and they wouldn't have made any real profit at all !" "Exactly!" said Hilliard. "So the company must pay at least ten per cent half for bona fide dividends and half for depreciation." "Oho!" said Cullen. opening his eyes. "Is that why the big mining companies pay such big dividends? I thought it was all clear profit!" "No, .sir. The dividends of a mining min-ing company have to be very high to be attractive at all ; they have to make good that depreciation. Well, we make the boys incorporate, as I said, for two million dollars, on which we can pay ten per cent. I'll show you what the setup looks like." He wrote on the back of an old envelope: Capitalization $2,000,000 200,000 shares at $10 each. "Now, the company (and you must remember that so far we haven't any official connection with it), agrees to take over the property, and pay the present owners for it with 80,000 shares of stock, and it also agrees to sell to you and Angela and me the other 120,000 shares at a dollar apiece, or $120,000, of which we agree to pay half in cash, and the balance In about ninety days. "Now then, we own 120,000 shares for which we've paid, and agreed to pay $120,000. That is, we've underwritten under-written these shares for a dollar apiece, and paid down half the amount. Now let's begin to look at It from the public's standpoint. Here's a mine with plenty of ore ; and a company with cash enough on hand to begin i producing at a profit very soon al- j though nobody pretends that it's ac- tually producing now. It has- $60,000 j In the bank, and another $60,000 due in ninety days. It can go ahead and contract for machinery and workmen, and it does, and you and Angela and I are still letting the former owners manage it, but since we're in control of the stock, we either elect ourselves as directors, or elect other people whose names carry weight with the public, so that we can always direct the general policy, and see that it's -careful and conservative. From every angle, then, financial and moral, the venture looks like a big success. So you and Angela and I go to a good broker, or to a group of brokers, and make them a proposition. We convince con-vince them of the value we have ; we let them send their own engineers out to make a report, and as evidence of good faith, we pay all their expenses; we let them go over our books. Everything's Every-thing's fair and square and above-board. above-board. And we agree that these brokers bro-kers will take some of this stock off our hands to sell to the public (because (be-cause they've got a selling organization organiza-tion already established, and plenty of customers -who look to them for advice) ad-vice) and it's agreed that they'll pay us say, four dollars a share for what they think they can sell. The brokers then do som'e advertising, send out their circulars and bulletins and pamphlets to their customers, and sell that stock to the public for anywhere from six to eight dollars a share. That is, the public is glad enough, when the prospect's a good one, to pay seven or eight dollars (because every share's going to be worth ten) for what cost the broker four dollars, and cost us one dollar whicli we've already got back from the brokers, and we've still got the half of those 120,000 shares of ours left besides! So here's the final balance sheet!" He hastily totaled the list, and handed it over to Cullen. Capitalization $2,000,000200,000 shares at $10. Stock paid to Individual owners SO, 000 shares Stock sold to syndicate for $120,000 r 120,000 shares Total r 200,000 shares Of our 120,000 shares We sell to brokers 30,000 shares Leaving 00,000 shares We give brokers a two year option at $0 apiece on 20,000 shares Leaving 70,000 shares We pay lawyers, experts etc. 10,000 shares Leaving 60,000 shares "And that balance of 60,000 shares," he said, "belongs to us three. The brokers nre making a market and establishing es-tablishing a price; and in order to protect pro-tect themselves, they can't afford to let the stock sell under the price they're charging the public because If they did, the public wouldn't buy up the rest of what the brokers have to sell, but they'd buy It in the open market. mar-ket. So the brokers protect the market, mar-ket, by what's considered perfectly legitimate means, although some folks call It manipulation, and they keep the price up by main strength until the first dividend Is paid, and after that they don't have to worry, because now everybody sees what a good thing it is, and (locks in to take advantage of it, and the quotations jump up to twelve or fifteen. Everybody's made money ; the brokers have made theirs; the pub. lie's making theirs, and when the price Is right the syndicate sells in open maiket the 00,000 shares it had left, and you and Angela and I have each made a quarter of a million dollars without really risking a single cent! Because, as I said, we got our money back right at the beginning." Angela, who had followed the intricacies in-tricacies of the setup with the liveliest Interest, turned pale; and Cullen's jaw-sagged. jaw-sagged. Hilliard, returning his fountain foun-tain pen to his pocket with the utmost nonchalance, had no more apprehension apprehen-sion left in him, for Cullen' had swallowed swal-lowed the bait whole. Cullen, Average Man that he was a good enough manager of his own small enterprise, but woefully ignorant of the financial world at larger Cullen coughed rasp-Ingly. rasp-Ingly. "It's a very pretty picture, but suppose sup-pose the market never goes up?" "It will as soon as there's a dividend In sight ; that's inevitable. And even I if It stays pegged at seven or eight, there's a huge profit for us, Isn't there?" "But suppose there's never a dividend?" divi-dend?" "Don't we know there will b1 Didn't I say we control the board of directors?" "Hut suppose you cant find brokers to" Hilliard gesticulated broadly. "Why, as a matter of fact, we don't care very much if we don't! That's the commoner method, and that's The way to get our money back almost at once, and then play on velvet. But if instead of working through brokers, we were willing to tie up our capital a little longer, we'd make considerably more money In the long run, as you can plainly see. We'd advance our hundred and twenty thousand dollars, wait until dividends could be declared, and then get the stock listed on the curb and begin to feed It out to the public through a fiscal agency. There'd he twice as much in it for us, but we wouldn't be -in that perfectly delightful delight-ful position of owning a lot of valuable stock which literally hadn't cost us anything. Or, of course, we could offer some of the shares to our personal friends at a fair price, and reimburse ourselves that way. Knowing that It's g ...... .-jfrg-W A .a. - -b Cullen Had Swallowed the Bait Whole. worth ten or fifteen, we wouldn't feel very guilty about selling It to personal acquaintances at eight or nine, would we? Why not when we know for a certainty that it ought to go up to fifteen fif-teen ? They'd bless us for it !" "But the main point ; the staggering thing about it, is " "Is that if the public gets ten or fifteen fif-teen per cent dividends," said Hilliard, "or buys at ten and sells a few dollars higher, it thinks it's lucky; and in the meantime, the underwriters make anything any-thing up to a thousand per cent, and get it in a few months. And I've known some of these syndicates to turn over in a few days." "Oh, I want to do it !" said Angela ecstatically. "I want to do it! Dad! Let's be a syndicate and go out to Montana until it's over ! Come on ! Let's!" Hilliard laughed cheerfully at her. "In this particular case," he said, "the syndicate's about half formed. Nothing final, but it's pending. And it is good so good that I doubt If any layman could break into it with a cold chisel." Again, he excused himself on the ground of salesman's license. "But that's the fundamental, Mr. Cullen that's bow the thing is done, and that's how the public carries the whole burden bur-den of financing, and doesn't know it." He assumed an attitude of easy unconcern. un-concern. Angela, her breath coming rapidly, was regarding him with awestruck awe-struck eyes. Mr. Cullen, his mou'b. drawn to a perfectly straight line, was gazing spellbound at the orderly array of figures on the envelope. "And this Is a genuine mine?" he managed presently. "In my opinion, it's a very wonderful wonder-ful prospect," said Hilliard, and he believed be-lieved every word of that solemn statement. state-ment. Mr. Cullen folded the envelope, and then suddenly, as though too cautious to betray his profound absorption (which he had been betraying frankly for at least twenty minutes), tossed It back to Hilliard. "When you've got a syndicate that'll let nie in for say, thirty cents," he said, with elaborate humor, "just pass along the good word, will you?" "I never try to do business with my friends," said Hilliard, with the most delicate tcveh of reproof. A lonely man in his home town. (TO Bl CONTINUED.) |