THE New Zealand Herald AND DAILY SOUTHERN CROSS. TUESDAY, APRIL 6, 1897.

New Zealand Herald, Volume XXXIV, Issue 10409, 6 April 1897, Page 4

THE New Zealand Herald AND DAILY SOUTHERN CROSS. TUESDAY, APRIL 6, 1897.

The London market has apparently laid down a rule which is to guide it in connection with the taking up oE mininß ventures. It is, on the whole, a good rule, and if carefully adhered to would be beneficial for all parties concerned. That rale is that the .people in London who are the medium of placing mining enterprises on the market will have nothing to do with pieces of ground where all the work that has been done is the putting in of four pegs. During the boom of a year ago, many claims were pegged out on which no reef had been discovered, and the only recommendation of which was that it was a portion of the Bauraki Peninsula, and was more or less near to some claim that had attained a name. But the London people say now that while they are willing to furnish capital for the opening up of a mine, and the erection of machinery,they will have

nothing to do with the flotation of companies whose property consists simply of a piece of untried ground. It would certainly be better for us that nothing but leeitimate enterprises should go home, and that the market should not be loaded with allotments of land figuring as mines, when a beginning has not even been made with any kind of mining work. It is doubtful, however, if all these good resolutions could be maintained if there were an eager appetite on the part of the English public for gold mining investments. The process is too profitable. In the case of a demand arising on the part of the public, operators on the London Stock Exchange would cry out for something to found a company upon ; this cry would soon be responded to by people here; and the game would go on as. briskly as ever. In the formation of companies there is much temptation, and the evil is felt in all the colonies. Complaint on this subject comes from Melbourne, and probably our recent experiences could furnish some parallel cases. A mining property in Victoria, which is said to be of a highly promising character, was lately placed on the market. The vendors asked £5000 and an interest, which, with £20,000 for capital to work the mine, made a total of £30,000. It was also stipulated by the vendors that there should be shares unsold to the value of £25,000, to form a reserve fund for the supply of more working capital if needed. But all that was wanted for the commencement of operations, and possibly all that might ever have been required, was £30,000. When the advertisements appeared in London it was found that the capital was put at £250,000 .in £1 shares. Even if this included the £25,000 first proposed as a reserve, this would be £'55,000 for the mine capital, and £195,000 for the payment of those gentlemen in London who placed the project on the market. The speculation was somewhat late in being launched, and it did not succeed, One Victorian mine, according to the Argus, which is considered to have done well, has been sold for £30,000, and capitalised in London at' £130,000. All experience shows that those who hold the keys to the treasure chest of the British public demand a very high rate of payment for services rendered. This colony has found that out on several occasions, when wo have had to pay large sums in a lump to get a loan underwritten. Our latest experience was the loan for the Bank of New Zealand, when we had to pay a large sum down to avoid the risk of not being able to float the loan at all. Apparently, if we had not paid the proper parties, there would have been a combination against the loan which might have proved fatal. Whether a minin? project is, or is not, " over-capitalised" is a matter of very great importance to us. A mine which is in that position is almost doomed to failure. If on a capital of £30,000, £20,000 is for working purposes, a return may be looked for in most cases, because it is easy, after a certain amount o£ progress has been made, and the ground has been opened up, and its capabilities have been shown, to raise additional capital for machinery or any other purpose. But when £250,000 of capital has been heaped upon it at the start, while only £20,000 has been spent in workiug, it is impossible to do anything further, and the whole enterprise breaks down by sheer weight of dead capital. From London lately we have been hearing of nothing but that those who have mines to offer in the colony must be moderate in their demands. They ought to be moderate no doubt, but we do not think that some people in London should be the first to scold us.