THE TRIBUTE SYSTEM IN" VICTORIA. TORIA.

Otago Daily Times, Issue 2680, 8 September 1870, Page 3

THE TRIBUTE SYSTEM IN" VICTORIA.

TORIA.

(The Argus )

There are breakers ahead in the mining market, and the sooner the ship is put about the better. The rocks are some of them profitable gold-bearing rooks, yet; upon similar reefs there has ere now been woeful shipwreck. To drop metaphor, there are signs of over speculation in the Bendigo district. The minea of Sandhurst have gained for themselves a welldeserved reputation. They have beeir worked with perseverance and with suck financial economy that, without bearing heavily upon shareholders by making large calls, patience has been usually rewarded. For years Bendigo hung in the background whilst districts temporarily more favoured attracted almost exclusive attention, and absorbed large amounts of metropolitan money. It is to the credit of the Bendigo district that it is up to this point but slightly indebted to the assistance of extraneous capital. The Sandhurst bankers have been less liberal in their aid to new mining undertakings than in some other districts, and thi3 ha*resulted fortunately rather than others wise, as it has compelled the mining com-' munity to be self-reliant and independent. When a company's financial position becomes embarrassed, when call contributions come in reluctantly, or sometimes when the calling power h&f£ been exhausted, there has been an alternative resource. The tribute system has cariied through to a successful issue many a venture which must otherwise have suffered an inglorious collapse. The bringing in of a new band of adventurers, sharing with the mine proprietors the chance of ultimate gain, is as sound in

principle as it is advantageous in practiceThe tributors are, in fact, paid by results^ and by results only. If they are successful in striking pold, or recovering a lost lode, they reap a well-earned reward ; if, on the other hand, they fail, they simply lose the time and labour they have coiktributed. Excellent as ia the tribute syatern when carried out in its integrity by working men who give their own labour,, there is danger when tribute companies are formed for no more obvious purpose than to create marketable scrip. In fact, in many instances, the same hundred yards on a line of reef is represented in the market by two distinct companies* There is the original proprietary companj and the tribute company. Naturally,, confusion as to relative value is felt, and! as in most cases the public are entirely ignorant of the terms or length of tribute* the advantage is all against the investor. It has occurred that a purchases ha 3 discovered, when too late, that he has paid his money for a share in. an ex~ piring tribute.

Our view is that the tribute system Iff being distorted from its original useful intention to a method of creating dual companies upon the basis of a single claim, and merely for the purpose of stimulating share speculation. As investments, proprietary companies possessing leases and machinery are preferable to interests unrepresented by anything but* the labour of the tributer, or the wages which pay for a working substitute. Now,, the people of Bendigo having discovered that the public are not unwilling to buy tribute shares, have gone busily to work in order that the supply shall be quite equal to the demand. And really their industry is amazing. Proprietary and tribute companies they are now registering by the score. There is no limit to the multiplication of companies. Already the thing is overdone, and yet there are no symytoms of cessation. Of course in a great many instances no public mischief is done by the mere registration of a company. The method is for half a dozen owners of a mining claim to hold a formal meeting, fix the number o£ shares say at 24,000, with 103 considered to be paid up, and to register their undertaking. Now, so long as the shares remain distributed amongst the first allottees no harm can accrue. The danger is that when some company a claim or two off on the line of reef strikes, the gold, the opportunity will be seized by the holders of these paper interests tosend them rapidly into circulation. Even, now there are strenuous efforts being made to accomplish a broad sweep of the speculative net; and there is imminent danger that the crowding of the market with new ventures will produce the inevitable result of glut, with its surely following ruinous reaction. There ia no need to point out previous examples of what is now threatened. Instances are within the memory of the youngest dealer in share securities. The stampede «£ Bendigo speculations will, unless arrested, obliterate much of the solid benefit which has arisen from an intrinsically rick, district, hitherto cautiously and prudently managed. Although, in the sarcastic language of the organ of a rival district, it may a take a long time to gat ruined by twopenny calls," the large number of shares into which Bendigo companies are usually divided renders the holder of a thousand or two liable to a serious drain upon his resouices, especially if he holds a variety of interests.

Unless the company promoters stay their hands, they will give a serious blow to Victorian mining at a most critical period. It will be admitted by the most enthusiastic adherent of the Ballarat district that there has been a check to the returns of gold, and that something very like a general reverse has befallen that gold field. There are, of course, promising ventures which mayyet restore Ballarat to much of its former distinction. But in the meantime mining investors lo©k favourably upoa the quartz lodes of Bendigo. The overloading of the market with scores of newcompanies is simply suicidal, and, as &-, matter of bare expediency, should not ta, attempted. If the creation of new undertakings were kept down to a ratio in some degree commensurate with increaa^ ing results in gold, there would be some show of reason in the present reckless rate of registration. As a matter of prudence, the investing public will do well to be wary, especially in buying into tribute companies, without informing themselves accurately of the length of unexpired term and other important particulars.

In these tribute companies there is one especial risk. According to a decision o£ Judge Macoboy, which has not, we-think,, been overruled, calls in tribute: companies* cannot be recovered from shareholders. Where payment of calls is at the option a£ each individual holder, ar company's; finance must be in constant peril, and there is always the risk of one or two solvent shareholders being made responsible for the entire liabilities, if the peopleof; Sandhurst, who are in a position to inform themselves fully as to the exact condition and prospects of these tribute companies, deal in such shares amongst themselves, no serious catastrophe can arise* Metropolitan investors should, however, feel assured that they possess full information before risking much money. Th© danger is that not only will individual in.* rerests suffer, laut mining generally will acquire a fresh load of discredit, owing to the recklessness of a few ardent traders upon the easily-aroused enthusiasm of the public.

orders.