AMONG THE "BIG FELLOWS"
If you don't think the character of the press-agent's work during the Rawhide boom was comparatively high class and harmless, dear reader, you really have another "think" coming. At a time when Goldfield Consolidated was wobbling in price on the New York Curb and the market needed support, just prior to the smash in the market price of the stock from $7 to around $3.50, the New York Times printed in a conspicuous position on its financial page a news story to the effect that J. P. Morgan & Company were about to take over the control of that company. That's an example of a harmful "fake," the coarse kind that Wall Street occasionally uses to catch suckers.
Here is another:
Thompson, Towle & Company, members of the New York Stock Exchange, issue a weekly newspaper called the News Letter. Much of its space is given over to a review of the copper situation, at the mines and in the share markets. W. B. Thompson, head of the firm, he of Nipissing market manipulation fame, is interested to the extent of millions in Inspiration, Utah Copper, Nevada Consolidated, Mason Valley and other copper-mining companies. On January 25, 1911, when both the copper metal and copper share markets were sick, and both the price of the metal and the shares were on the eve of a decline, which temporarily ensued, the News Letter, in an article headed "Copper," said:
Every outcrop in the country has been examined and it is not known where one can look for new properties.
The readers of the News Letter were asked to believe that no more copper mines would be discovered in this country and that, because of this and other conditions which it mentioned, the supply of the metal must soon be exhausted and the price of the metal and of copper securities must advance.
The statement in the News Letter that every outcrop in the country has been examined and that it is not known where one can look for new properties—well, if the whole population of North America agreed in a body to accept the job of prospecting the Rocky Mountains and Sierra Nevada Mountains alone they could hardly perform the job in a lifetime.
The use of the automobile has undoubtedly been responsible in the past few years for an impetus to the discovery of mines which is calculated to double the mineral product of this country in the next two decades, and who shall say what the flying-machine will accomplish in this regard? Further, new smelting processes and improved reduction facilities generally are daily reducing the cost of treatment of ores and are making commercially valuable low-grade ore-bodies heretofore passed up as worthless.
The best opinion of mining men in this country is that our mineral resources have not yet been "skimmed" and that the mining ground of the Western country has not yet been well "scratched."
Therefore, the statement made in a newspaper which is supposedly devoted to the interests of investors, that it need not be expected that more copper mines are going to be discovered, is a snare calculated to trap the unwary.
The foregoing is an example of a very harmful but comparatively crude fake, employed by some promoters in Wall Street of the multimillionaire class when their stocks need market support.
Here is a specimen of the insidious brand of get-rich-quick fake. On March 7, 1911, the New York Sun printed in the second column of its front page the following dispatch:
Tacoma, Wash., March 6.—F. Augustus Heinze has struck it rich again; this time it's a fortune in the Porcupine gold fields in Canada.
Charles E. Herron, a Nome mining man, who has just returned from the new gold fields, is authority for the statement that Heinze is "inside the big money." He has bought the Foster group of claims, adjoining the celebrated Dome mine, from which it is estimated that $25,000,000 will be gleaned this year and for the development of which a railroad is now under construction.
The Porcupine gold field, according to Herron, is one of the wonders of the age. One prospector has stripped the vein for a distance of fifty feet and polished it in places, so that gold is visible all along. His trench is three feet deep and he asks $200,000 cash for it as it stands.
A party of Alaskans offered the owner of this claim $50,000 a shot for all the ore that could be blown out with two sticks of dynamite, but he refused.
Press-work like the foregoing is more than likely to separate the public wrongfully from its money.
The item serves as an excellent example of one of "the impalpable and cunningly devised tricks that fool the wisest and which landed you" that I promised, at the beginning of "My Adventures with Your Money," to lay bare. I said in my foreword:
Are you aware that in catering to your instinct to gamble, methods to get you to part with your money are so artfully and deftly applied by the highest powers that they deceive you completely? Could you imagine it to be a fact that in nearly all cases where you find you are ready to embark on a given speculation, ways and means that are almost scientific in their insidiousness have been used upon you?
The New York Sun article says it is estimated that $25,000,000 will be gleaned this year from the Dome mine in Porcupine. The truth is, no engineer has ever appraised the ore in sight in the entire mine, according to any statements yet issued, at anything like half of that amount gross, and the mine itself can not possibly produce so much as $100,000 this year.
A mill of 240 tons per diem capacity has been ordered by the management and it is expected will be in operation by October first, but no sooner.[2] The ore, according to H. P. Davis's Porcupine Hand Book, an accepted authority, "has been stated to average from $10 to $12 a ton." The lowest estimated cost of mining and milling is $6. A fair estimate of profits would, therefore, be $5 per ton, not allowing for any expenses of mine-exploration in other directions on the property or other incidental outlay, which will undoubtedly amount to $1 per ton on the production. The production of 240 tons of ore per day at $4 per ton net profit would mean net returns of $28,800 per month. If the mill runs throughout October, November and December of this the company will "glean" $86,400 during 1911, and not $25,000,000, as the New York Sun article suggests.[3]
How great an exaggeration the New York Sun's $25,000,000 estimate is may be gathered from the statement that to glean $25,000,000 in one year from any mine where the ore assays $11 on an average, and the cost of mining, milling and new development is $7, the gross value of the tonnage in the mine that is milled during the one year must be at least $53,571,000. Further, to reduce such a quantity of that quality of ore to bullion in a single year would require the erection of mills of 17,260 tons per day capacity. As mentioned, the actual per diem capacity of the mill now under construction is 240 tons.[4]
Undoubtedly the Dome mining company flotation will soon be made and the public will be "allowed" to subscribe for the shares or buy them on the New York Curb at a figure agreeable to the promoters. This seems certain, for otherwise why this raw press-work?[5]
The article says that a number of Alaskans offered money at the rate of $50,000 a shot for all the ore that could be blown out with two sticks of dynamite, but were refused. There never was a statement made by any wild-catter now behind prison bars in any literature I ever saw that could approach this one in flagrant misrepresentation of facts. All the ore that could be displaced in one shot with two sticks of dynamite would not exceed four tons. In order to repay the investor it would be necessary, therefore, that this ore average better than $12,500 per ton. The New York Sun's story says that notwithstanding this offer the owner was willing to sell the whole property for $200,000. Imagine this: There are four tons of rock on the property worth $12,500 per ton, for a distance of 50 feet the gold shimmers on the surface, and there are hundreds of thousands of tons of rock in the same kind of formation on the same property, but still the owner is willing to dispose of all of it for $200,000! The statement is preposterous and outrageous. It is the kind described by De Quincey as "all carved from the carver's brain."