My Adventures with Your Money

by George Graham Rice

THE SHAME AND THE BLAME

I CITE the instance of the Sullivan Trust Company "falling" for Greenwater, after hesitating about embarking on the enterprise for weeks, and I am convinced that others fell the same way. The Sullivan Trust Company did not touch a Greenwater property until its clients and its clientele among the brokers throughout the Union had burned up the wires with requests for a Greenwater promotion, and when it did finally "fall" it lost its own money, the only other sufferers being a handful of investors who at the tail-end of the boom subscribed for a comparatively small block of treasury stock.

Not all of the promoters "fell" innocently, however. There were half-baked promoters and mining-stock brokers in almost every city in the Union who had witnessed the enhancement in values during the Goldfield boom, and whose palms had itched for the "long green" that for so long came the way of men on the ground. These, at the first signal that the Greenwater boom was on, with Charles M. Schwab in the saddle, lost no time in annexing ground in the district with the single view of incorporating companies and retailing the stock to the public at thousands of per cent. profit.

The Greenwater mining-boom fiasco stands in a class by itself as an example of mining-stock pitfalls. The only Greenwater stock which at this time has a market quotation is Greenwater Mines & Smelters, which reflects the true state of the public mind regarding all Greenwaters by actually selling at a valuation of less than the amount of money in the company's treasury—6 cents per share on an outstanding issue of 3,000,000 shares—there being $189,000 in the treasury along with an I.O.U. of C. S. Minzesheimer & Company, the "busted" New York Stock Exchange house, for $71,000, of which the company will realize 27 cents on the dollar through the receiver.

CHAPTER V
On the Eve of the Great Goldfield Smash

It was early in November, 1906. Indian Summer held Goldfield in its soft embrace. Nature wore that golden livery which one always associates with the idea of abundance. The mines of the district were being gutted of their treasures at the rate of $1,000,000 a month. Under the high pressure of the short-term leasing system new high records of production were being made. The population was 15,000. Bank deposits totaled $15,000,000. Real estate on Main Street commanded $1,000 a front foot. The streets were full of people. Every one had money.

In years gone by men had died of thirst on that very spot. Three years before there were no mines and the population numbered only a corporal's guard. The transformation was complete. Within three years the dreams of the lusty trail-blazers, who had braved the perils of the desert to locate the district, had become a towering reality. The camp, which two years before was dubbed by financial writers of the press as a "raw prospect" and a "haven for wildcatters and gamblers," had developed bonanza proportions. The early boast of Goldfield's press bureau, that Goldfield would prove to be the greatest gold camp in the United States, was an accomplished fact.

Listed Goldfield mining issues showed an enhancement in the markets of nearly $150,000,000. Stocks of neighboring camps had increased in market value $50,000,000 more. The camp rode complacently on the crest of the big boom, than which history chronicles no greater since the famous old days of Mackay, Fair, Flood and O'Brien on the Comstock.

There was no premonition that a climax must be reached in climbing values at some period, and that a collapse might be near.

Goldfield Consolidated shares were selling on the exchanges at above par, $10, or at a market valuation of more than $36,000,000 for the issued capitalization of the company. You could have bought all of the properties of this company for less than $150,000 when the camp was first located. A score of leases were operating the Consolidated's properties. The leases were soon to expire. Much market capital was made of the fact that the company would presently "come into its own."

More than 175 stocks of Goldfield and near-by camps were listed on the exchanges and curbs. All of these were selling at sensational prices and enjoyed a swimming market. The successful merging by Wingfield and Nixon of the principal producing properties of Goldfield at a $36,000,000 valuation, more than four times the value of the known ore-reserves, stimulated the whole list.

Columbia Mountain, promoted by the mergerers of Goldfield Consolidated, but excluded from the merger because not contiguous to the other integrals and because it had no ore, had been ballooned to $1.35 per share on a million-share capitalization, and stood firm in the market regardless of the fact that it was still only an unpromising "prospect." The issued stock of a dozen other companies in control of the promoters of the merger was selling at an aggregate value of many millions more. The most despised "pup" in this particular group was Milltown, of not even prospective value; yet it easily commanded a per-share price that gave the "property" a market valuation of $400,000.

Silver Pick, capitalized for 1,000,000 shares of the par value of $1 each, had scored an uninterrupted advance from 15 to $2.65 a share without a pound of ore being found on the property. The market price did not waver.

Kewanas, another million-share company, was in big demand at $2.25 per share, a valuation of $2,250,000 for the property and an advance of 2,250 per cent. over the promotion price. Kewanas's gain was also made despite the fact that mine developments had failed to open up pay ore in commercial quantities. Eight months earlier the entire acreage had been offered to me for $35,000 and I had refused to buy.

Goldfield Daisy, promoted by Frank Horton, a faro dealer in George Wingfield's Tonopah gambling joint, had been ballooned from 15 cents to $6 a share on a capitalization of 1,500,000 shares. It had never earned a dollar for stockholders, but was actually selling in the open market at a valuation of $9,000,000. The price showed no sign of weakening.

Combination Fraction, owning a few acres of ground, which was promoted at 20 cents a share on a capitalization of 1,000,000 shares, had risen rapidly, because of ore discoveries and contiguity to the Mohawk, to $8.50 a share. Stockholders gave no sign of a tendency to unload.

Great Bend, situated in the Diamondfield section of the Goldfield district, four miles from the productive zone, had been carried up from 10 cents a share to $2.50 without a mine being opened up, establishing a market valuation for the property of $2,500,000.

These are but a few of the more striking instances of price appreciations. All of these stocks, excepting Goldfield Consolidated, are now selling for a few pennies per share each, the average not being so much as ten cents. There were over a hundred other Goldfield stocks that also enjoyed spectacular market careers, on which it is now impossible to get any quotation at all.