Compare these conditions with those existing in the steel industry. Therein unlawful combinations and unnatural restrictions are essential if those engaged would show a gross profit of even fifteen per cent. on their gross output. If more than fair or going returns are earned, then new capital flows into competition and the surplus again shrinks to an uninviting point. The same is true in wheat, corn, and cotton—big prices invite fresh investments and the planting of broader acreage. Hence the sorry spectacle of the cotton planter who, in 1905, will receive no more for his twenty per cent. increased crop, coming from over two millions increased acreage planted last year, than for his smaller one of the year before.
That my readers may quickly, and once for all, grasp the point I wish to make, I will illustrate:
The Steel trust in 1904 did a gross business of $432,000,000, upon which they made a profit of $71,400,000, and yet this vast amount was only five per cent. upon the trust's inflated capital of $1,400,000,000 odd; and as the "System," in regulating the capitalization, arranged that the preferred stock (and bonds), which represented the "System's" profit, should receive seven per cent., there was not a dollar in dividends for the $520,000,000 of common stock which had been sold to the people for, in round figures, $300,000,000.
At the same time the Calumet & Hecla Copper Company produced and sold over $10,000,000 worth of copper, upon which it earned, net, over $5,000,000, which enabled it to pay to the people who had invested in its 100,000 shares of stock (par value, $25), 160 per cent., or a total of $4,000,000, and, at the same time, carry an enormous amount to its surplus.
In the commercial world copper occupies an impregnable position. To compete, it is first necessary to find a copper deposit; then to lock up a vast sum of money for a long term of years before returns begin to accrue. And new copper deposits are as rare and few and far between as Lincolns and Roosevelts in politics or Grants and Lees in war. In the last eight years, or since the metal has been prominently before the world of capital, but two great producers of copper have been created—the Copper Range at Lake Superior, Michigan, and the Greene Consolidated in Mexico—and these two mines have only, at the end of six years, after an immense expenditure of millions (Copper Range, with a capital of $38,500,000, 385,000 shares, par $100, which sold in the open market a few years ago at $6, now selling at $75, and Greene Consolidated, with a capital of $8,650,000, 865,000 shares, par $10, now selling in the open market at $25), reached the point of profitable production. Their combined output, while reaching the (for young mines) unprecedented amount of one hundred and odd million pounds of metal per annum, constitutes but a fraction of that which Mother Earth has given up during the period of their development, namely, 2,500,000,000 pounds, all of which has been disposed of and cannot again be used to satisfy a ravenous consumption.
It seemed to me, then, a curious anomaly that, while capital was chasing investments which promised but four per cent., it eschewed copper which yielded from sixteen to twenty-five per cent., and my investigations told me that a producing copper-mine is the surest business venture a man engages in, for, by the time it begins to produce profitably, it must be so far developed that its owners are certain of ore to work on for decades ahead. A good copper-mine is really a safe-deposit vault of stored-up dividends, which cannot be stolen nor destroyed by fire, flood, or famine. Calumet & Hecla, for instance, though it cost its first owners but a dollar a share, has paid out $87,000,000, or $870 per share, or 3,480 per cent. on its par value of $25, and while it has been paying dividends over thirty-five years, it paid last year $40 per share, and has more in sight than it has yet paid. And Copper Range, though but six years old, will be producing soon as much as Calumet & Hecla, and has now in sight ore to keep it going fifty or sixty years.
Having pieced together all the facts and circumstances in this connection, I was sure that I had grasped a principle of great commercial value, and I set about finding a cause why the world of capital should for so long have overlooked the tremendous potentialities of this industry. I found the cause in Boston herself, in the characteristics of the city, which was head-quarters for copper, and which had grown in financial power with the revenues her mines earned for her investors. Boston controlled and managed the copper industry, and had since the days when copper-mining was a hazardous pursuit, in which only bold and speculative souls dared engage. In the early days the canny Bostonian demanded for the honorable dollar his parent had earned—exchanging five-cent rum for human beings worth $1,000 apiece—at least twenty per cent. interest, and having acquired this habit, it became a principle, and such principles as these are clung to in Boston with the zeal of a miser for his hoard or of a martyr to his faith. Looking back over the years, I still recall with chagrin the quiescent hilarity of the scion of a Back Bay family whose good father had been one of the most successful and most brutal of all the "East India traders," when I suggested to him that he was fortunate in obtaining twenty per cent. on some copper ventures about which he was grumbling. (My readers must not confuse a Boston grumble with the ordinary ejaculations of discontent indulged in by the inhabitants of other portions of the world remote from the Hub of the Universe. A Boston grumble consists of an upward movement of the eyebrow, a slight twitch of the mustache and a murmur cross-bred from "Deuce take it!" and "Scoundrelly!") "Young man," he said, "my father said that such a hazardous venture as copper should return at least thirty per cent. to be safe, and I feel if I receive but twenty per cent. that something is radically and unpardonably wrong with the management of the mine." I did not pursue the argument, for I knew he inherited with his fortune a line of Boston reasoning, and I remembered once having watched a country boy put his tongue on a frosty iron door-knob. I knew better than to invoke again that wintry Boston smile, which in a Western or Southern community would be used to frappé mint-juleps or cold-storage hogs with.
No better illustration of the attitude of the shrewd New York investor to "Copper" can possibly be given than to detail my first interview with H. H. Rogers and William Rockefeller on the subject. To-day Mr. Rogers is known throughout the world as the leading figure of the copper world—the copper Czar, so to speak; yet it was only nine years ago when I said to him at the end of a gas-talk:
"Mr. Rogers, would Mr. Rockefeller and yourself look into Copper?"
"Copper?" said he in an amused way, "copper? What kind of copper?"