MINING BOOMS.

Otago Witness, Issue 1894, 9 March 1888, Page 12

MINING BOOMS.

(Melbourne Age.)

There has frequently been cause for regret that the mining industry in this and the other colonies has languished tor want of capital to develop it, Just now there is a disposition to sink millions in a single field. There is no reason to doubt that some of the silver mines at Broken Hill will turn out splendidly, but this prospective success does not justify the prevailing " boom." Even tho best claims, at the present price of shares, can scarcely be expected to pay dividends representing more than a very modest interest on the capital invested, and there is nothing to justify the rush for shares in the untried claims. The mania which has set in has produced its usual effect. Promoters are ready with an abundance of "valuable properties," and will be able to furnish, more so long as there is a disposition to buy on the part of a credulous public. The letter of "Nemo," which appeared iv our columns a few days ago, raised a note of warning which ought not to be disregarded by the public. Speaking of the outside claims at Broken Hill, he says : — " The ordinary observer, as he stands at the mouth of some of the shafts, from 20ft to 50ft deep, topped up by a windlass and windsail, having had from £50 to £200 spent on them, anc finds their market value to be from £25,000 to £50,000, and in some cases £100,000, if he has an ounce of sense, whatever he may say, must think to himself that there is a heavy day of reckoning not far distant, and that tha discovery of one Broken Hill will be followed by thousands of broken fortunes, if not broken hearts." The whole process of dealing with these claims is unhealthy. At every stage the motives of the dealers is to sell at a large profit, and hardly on any occasion is there a hoaa fide intention to look for a reward to the results of the legitimate working of the ground. Men ou the spot take up a claim and make a show of working it by the sinking of a shaft; but, almost invariably, their object is to sell out at a sum which will make them comparatively rich without the expenditure of much capital or labour. Then comes the agent of the syndicate, who gives £5000 or £10,000 for the claim, not that he believes that the ground has that intrinsic value, but because he sees the boom is coming, and that the syndicate can easily realise three or four times the amount by forming a limited company with a large number of paid-up and contributing shares, and selling these to the public. The people who take up these shares in the first instance, and all their successors, speculate for the rise, and never trouble to inquire what the mine is likely to yield in dividends to the permanent investor. They simply buy in a rising market with the intention of reselling at a profit, and they are able to do so so long as the excitement lasts. But the process of inflation cannot continue indefinitely, and the time comes when, the mania suddenly subsiding, the holders of the shares fiud no purchasers at the prices they have given. A pao'c at once follows, until shares in even bonajide mines fall far below their intrinsic worth, or become unsaleable altogether. Every mining "boom" runs tho same course, and ends in the same disaster to the persons who hold the shares at the tnrning of the tide. So far as these arc people who merely buy to-day to sell at a higher price to-morrow, no great commiseration may be felt, since they have been engagedina merely gambling transaction, and must be content to abide the cast of the die. It usually happens, however, that the excitement is kept up long enough to reach a wide circle, in which are numbers who have speculated their all in what they have been induced to believe was a passport to fortune. To the gambler we need utter no word of warning, but to the investor in good faith we would point out that iv mining a mania is followed by a collapse as surely as day is followed by night. The unhealthy character of the present speculation in silver miues is further displayed in tho preposterously large sums paid for blocks of untried ground. It is quite problematical whether a rich lode in one claim will extend into the next, and it follows that claims on the line miles away have little value in the absence of indications of their own. It may be said that tbe venders at all events exhibit confidence in the ventures by conseutiug to accept a large portion of the purchase money in paid-up shares in the respective miues. The probability is that the amount paid in cash is beyond the real value of the property in its then state of development, and that the exaction of shares in addition is pure extortion. But if the larger value is to be given it would be better for the purchasers in all cases to extinguish the proprietorship of the original holders by a cash payment, and put all shares on an equality in respect to liability to calls. The allotment of paid-up shares simply gives to the holders of such shares a monopoly of the market. The man whose shares have cost him nothing can always afford to undersell the holder who has paid a high price. He has only to instruct his broker to invariably accept a little less than the ruling price to shut out competition. There is, moreover, a natural preference for paid-up shares. The buyer has no further trouble with them if he designs to hold them, and escapes the worry of call notices and the chances of forfeiture ; whereas, if ho desires to sell again, the same considerations influence a would-be purchaser. In our stock and share report ou Saturday an illustration of this preference appears in the figures relating to one of the Broken Hill mines. Paid-up shares had sellers at £8 2s, with transactions ; whilst contributing shares had sellers at £8, with no recorded transactions. We admit that a larger margin appears between the two classes of shares in other claims, but not sufficient to show that the " paid ups " have not the advautago, all things considered. If this be so in a period of excitement and of inflated prices, how would the holder of contributing shares fare in the event of a collapse and a rapid fall in prices? Evidently ho would be nowhere in competition with the original paid-up shareholder who had virtually received his shares as a gratuity, whilst the holder who had paid for his shares in cash would nntnrally lower his demand more slowly when each reduction meant actual cash out of pocket. Some simple souls are apt to suppose 4 that these mining " booms " are good for mining. This may be doubted. The really valuable lodes at Silverton and Broken Hill would have been developed without the mania, whereas a collaoso m&y lead to the abaudomnenfc of many progressive mines in the Barrier Ranges, which fire well worthy of being prospected. Of all the millions invested in silver mines in Melbourne and Sydney comparatively little goes to prospect the country. Promoters and companymongers make a rich harvest, as do the brokers and speculators, by passing ssrip from hand to haud at an advanced price. What has mining gained by the shares of the Broken Hill Proprietary Company being forced up to a price at which the dividends for the last half-year only represented something like 3 per cent. ?