My Adventures with Your Money

by George Graham Rice

TRYING IT ON THE STRAY DOG

The Stray Dog Manhattan mine was furnishing daily sensations in the way of frequent strikes of fabulously rich ore. I urged that, no matter how small the profit, the Sullivan Trust Company should begin its corporate career with the promotion of a property as good as the Stray Dog. The Stray Dog was for sale—at a price. One interest, of 350,000 shares, owned by Vermilyea, Edmonds & Stanley, the law firm of highest standing in Goldfield, could be acquired at 45 cents a share, and another interest, of 350,000 shares, owned by prospectors who had located the ground, could be had at 20 cents a share, all or none. The remainder of the stock was in the treasury of the company. The total demanded for 700,000 shares of ownership stock was $227,500, all cash. A likely property adjoining the Stray Dog, known as the Indian Camp, could be purchased for $50,000 in its entirety. We knew that as soon as it should become known that we had bought the Stray Dog, the value of Indian Camp ground would double, and we therefore decided to annex the Indian Camp at the same time we took over the Stray Dog.

The proposed outlay amounted to more money than we had, and I looked about for assistance. Henry Peery, a Salt Lake mining man of substance, had been negotiating for the Stray Dog in the interest of Utah bankers. We agreed that Mr. Peery should be allowed to participate on the basis of a one-third interest for him, and a two-thirds interest for the trust company. Besides supplying his quota of the cash needed to swing the deal, Mr. Peery agreed to furnish a president for the company, who, he said, interested himself very frequently in mining enterprises. This was Henry McCornick, the Salt Lake banker, son of the head of the firm of McCornick & Company, reputed to be the richest private bankers west of the Mississippi River. The deal was made.

We immediately proceeded to promote the Stray Dog Manhattan Mining Company at 45 cents per share, the average cost to us of the stock being 32½ cents. It was impossible for any huge profit to accrue in Stray Dog on any such margin as 12½ cents per share between our cost price and the selling price, because the expense of promotion appeared bound almost to equal this. We figured that any promotion profits must come out of the Indian Camp. The Indian Camp was capitalized for 1,000,000 shares, 650,000 of which were paid over to the trust company and to Mr. Peery for the property. The remaining 350,000 shares were placed in the treasury of the company to be sold for purposes of mine development. The average per share cost to the trust company of its ownership stock was a fraction less than 8 cents. We decided that as soon as the Stray Dog was promoted we would offer Indian Camp shares on a basis of 20 cents per share net to the brokers and 25 cents to the public, and looked forward, if successful, to gaining about $75,000 net on both ventures.

Immediately on taking over the control of Stray Dog and Indian Camp the trust company purchased treasury stock in each of these companies, and put a large force of men to work to open up the properties. Within thirty days of the incorporation of the trust company Gold Hill in Manhattan, on which were located the Stray Dog, Jumping Jack and Indian Camp, swarmed with miners. The orders given to Engineer "Jack" Campbell were to put a man to work wherever he could employ one, and to be unsparing in expense so long as he could obtain results. Towering gallows-frames and 25-horse-power gasoline engines were installed and other necessary mining equipment ordered shipped to the properties. Blacksmith shops, bunk-houses and storehouses were erected on the ground. Day and night shifts of miners were employed. In order to guarantee the constant presence on the properties of the engineer in charge, the Sullivan Trust Company built for the engineer's use a $6,000 dwelling house on Indian Camp ground.

Having convinced the natives that we were in dead earnest about our mine-making intentions, we busied ourselves offering Stray Dog stock for subscription at 45 cents per share. It was well known around the camp that we had paid 45 cents per share for one block of 350,000 shares, and mining-camp followers were among the first to subscribe for the stock. Then an effort was made to dispose of quantities of it to the Eastern public by advertising and through mining-stock brokers.

That advertising campaign was approached with considerable caution. In the first place, the subscription price of Stray Dog, 45 cents, was 80 per cent. higher than that of any other advertised promotion which had yet been made from either the Goldfield or Manhattan camps; and in the second place, the conduct of a mining-stock promotion campaign by a Trust company appeared to me to justify more than ordinary care. There were other factors that entered for the first time in Goldfield, too.

The initial successes of the big display advertising campaigns directed from Goldfield appeared to have been due to the fact that the American public had greeted mining-stock speculation as filling a long-felt want, namely, a channel for speculation in which they could indulge their gambling spirit with comparatively limited resources—resources that were insufficient to give them a "look-in" on the big exchanges where the high-priced rails and industrials are traded in.