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TIIE CAPITALIZATION 0F MINING COMPANIES a! owner to the corporation. be ac- t'optinz payment in Mock n! th- corporation. This at first blush hp. pear.» fair enough till we ascertain the CAR“ value of the property. On the open market it may sell for $50JK)0.00. so in actual fact the owners (whivh for the sake of sim- plicity the writer hero assumm are also promoters) receive $100,000.00 IN STOCK for property worth art- ually but $50,000.00. Wc will assume- that the corny-.1â€" titm is capitalized fur $21HUNNHNL When this transfer has boon com- pleted manifestly there wmiltl rv- main $100.(N)0:00 in stock whirl] would lu- [iassml into the treasury for fifllt.‘ to tiw public. If this stock was ofiert-tl and sold at par. manifestly the ut'isrinal uwnor. pru- moters would have acquired TWO shares for what the public pay for ONE. that is. by transferring a pro- Por some reason diflicult to ex- plain, mining corporations. exuvting the large coal companies, are alrnost invariably formed with the entire capitalization vonmosed of comnmn stock. Under this plan. stockholders in theory at least. are equal part‘ ners. As a matter of fact they are not. Usually it will he found that the prunoters hold 51 per cent. of the entire capitalization. thereby absolutely controlling the corpora- tion by their votea. It is come manly found that this .31 percent. stock has. been transferred to the promoters for a consideration in itself much less than is rupired of the cash purchaser. A mine valued for corporate purposes at say 35100.- (llNlAlll is transferred from the origin- petty worth $50,000.00 in actual cash. they have received $100,000.00 in stock, is mid to the public for $100,000.00 cash. It is. of course fair to contend that the owners of a valuable pro- perty. taking payment IN STOCK in lieu of CASH are entitled to receive more because the stock, at time of issuance. has a more or less proble- matical value. This has been re- cognized in legitimate corporate tin- ance and the respective adjustments of value at least approximately squared. by the promoters. i.e. Common and Preferred stock. they retaining the common, and selling the preferred to the public. Why this method, which nearly all industrial corporations adopt in a spirit of common justice. has not The theory of equal partnership thus falls to the ground. If. at the first dividend period $50,000.“) is to be. divided the promoter-own- ers take $25,000.00 and the public take the other $25,000.00, when. as a matter of fact the promoters should only take $12,500.00 and the public $37,000.00. stock comprise a first lien on the assets of the corporation in event of dissolution; let it also 'be entitled to draw at first 7 per cent. divid- end earned and to share equally with the common stock thereafter in all surplus dividends. Let the charter. or by-l‘aws. specify that no mortgage is to be placed on the property. or no bond issue created without. the stockholders. Let the by-laws limit salaries to certain figures till certain dividends are being earned. then au- tomatically increase as the dividends increase. Comply in short with the letter and spirit of “the square deal.” . shares Icreated. .the special permission of the ;ferrcd stockolders, it is evident that lltlhe prefernul stock becomes really a lth'I’l‘El) MORTGAGE BOND. security haning precedence to it, can fibe created to absorb the first 7 per consent of two-thirds of the preferred ioent. of equally with the common all surplus dividends. As a mortgage cannot be or bonds issued, without pre- stock in 'l‘hind : No earnings already provided ffor. and, being a first lien in event got dissolution, all assets secure it, 5in event of that contingency. Fourth: Earnings cannot be ab- sorbed by excessive salary ac- counts. F-ifth ; The owner-promoters MUST Fnr instance: ln forming your company the promoter and associatâ€" es should accept stock entitled to earnings only after the public has been taken (-arv of. A stock issue of, say, $100,000. fur illustration, can be divided equally into common and preferned stock. The promoter and associates take in payment for their services and property the common. and the public are offered the op- portunity to subscribe for the pre- 'I‘here are various plans suitable t. Reid, D. C. L. Barrister of Toronto Outlines a Plan of More Equal Partnership he Second: After this 7 per cent. has been paid. the. preferred stock- holder, when 7 per cent. additional has been paid on the common stock .shares equally with the common stock in all surplus dividends. ; 'l‘hinl: As a mortgage cannot be Icreated. or bonds issued, without the special permission of the pre- i‘ft‘l‘lt‘d stockolders, it is evident. that Who pi‘elermd stmk becomes really a per cent. ol the first profits eamcd. this dividend being paid prior to the common stockholders being entitled to anything. When 7 per cent. has been earned and paid the preferred stockholder-n. then 3' per cent. may be drawn by mmmon stockholders providing earnings permit. It. af- ter paymmt of both these diVidends a surplm still running. a reason- able sum should be carried to a reserve su‘cmmt. and any remainim: balance «wally distributed beth-en the two classes of stockholders. This plan is eminently tair. The public Mm put up the money and assume the risk. are made partners, but are also made PREFERRED partners. In other words the pre- (erred ~tuvkh0ldt’fs tttkt‘ the first 7 per cent earned. This is an in- eentiw to the promoters to use their best (-00:15 on behalf of the rumor- tiun as they must' earn and pay Q I per rent tit-tun! being entitled to a per vent lu'furc' lu-ing entitled to thaw at t'rttt thvnm-lH-m lt wc-m‘ tn he the :tlmust invariable pmvtire ut' mining t-nmpunim tn make that entire isme of capital stock eunr mun. but the writer believes that the plan here illl\'ut'illl‘d could he adopted t0 greater advantage. Salary litmtutinns should also be i'nnnm-d. .-\ stipulated salary should he ”and tn \‘ztriuus ullk‘et's. and no increase allowed till certain mini- mum eatrninu.‘ had been made by the mrpuratiun. the salary increasing in ratio to the earnings till a certain limit had been reached, when further salary increases should then cease unless voluntarily voted by two- Lhinls or one-half of the holders of the PREFERRED stock. for various issues of prehrrul stock. but the most equitable seems to he to allow the preferred to draw 1 a two-thirds affirmative vote or two- thirds of the preferred stockhold- ers. 'Dhese conditions. self-imposed, will indicate the wish of the promoters to give stockholders “a square deal." They give “talking points" of great value, and go far towards inspiring confidence at the hands of a hesitut'ing,r investor. A provision should be made where- by the oflieers or directors are pro- hibited from issuing bonds without .\'o director. ullicer or promoter should be allvwed tu sell his stock- holdi'mrs till the convocation was Clearly upon a dividend paying basis. "his is best accomplished by all parties depositing their stock with a trust company or other depository under an agreement whereby the stock will not be delivered to them till certain dividends have been earn- ed and paid. .\'0 sales, contingent or otherwise. against these stock de- posits should be allowed. The points of advantage offered by such a mining corporation over other corporations of the same (‘haracter will be rapidly grasped by investors. It will gain their support because it will merit it. First; The preferred stockholder becomes literally a preferred part- ner. Before the promoters can draw a cent from dividend earnings 7 per cent. at least must be paid on the preferred stock. Fifth ; The owner-promoters MUST ‘ earn a 7 per cent. dividend for the prefcrmd stockholders BEFOREi THEY CAN HOPE TO GFYI‘ A = DIVIDEND FOR THEMSELVES. Xaturully their own selfish interest il nothing else, will spur them on to make the property income pro- ducing at the earliest possible mom- limited, automatically rising IX PROPORTION TO THE RATIO (1F DIVIDENDS EARNAD it will be evident that it becomes Sixth: As the salary account is is an in- to use the" the www- it will of g import to the amoets to have those dividends not alone earned. but rapidly increased. Seventh : The common stock will be inferior. undpr these conditions. to the pmforrrd. IT WILL THERE- FHRF. GIVE THE PREFERRED STUCK PRECFJH-LV'I-I I.\' THE ‘um-zx MARKET. and thus. in mark- ed measure. stop promoters frum ed measure. stop promoters from selling their individual holdings in competition with tn-asury stock WHILE THE (‘UMI‘ANY IS BE- ING FINANCE”. through their cflurls grew prosper- uus and paid him gent-mus «lind- ends. These are valuable prifilms. They hear also \‘aluahlr "talking points." They nflm’d a stimulus which mining promotion in Ontario badly needs at the present timv. They give mm‘ ParatiVely new methods of finance in mining. protective methods of finance IDEAL methods of finance. Then why are they not adopted by mining companies 7 inspire capital .\'o honest prmuotcr would want to overload a struggling young com- Pany with ou‘cssiw salaries. No upproviatiw investor would want to keep oflicers on the first living salary when the company. through their cflorls grew prosper- (I In addition to that it would give. the mining syndicate a chance to make good and amuah better op- portunity to prove the property than is the case under present con- ditions. ROBERT A. REID. 1'56 Yung‘v Street, Toronto, Cana- da, Oct. 2nd. 1912. The writer believes that if all the mining companies now operating in Northern Ontario were re-organized at once along these lines a new im- petus would be given to every one of the companies and to the Min- ing Industry of that region. Albert Peterson, 221 years Oldâ€"a passenger an the steamer America from Port Arthur to Duluth. lost his life under stranger circumstzmces in Lake Superior last week. Singing of Hymn Leads to Death As is customary while passengers boats are passingthe “Rock of Ages" light, near Isle Roy'ale, the travellers gathered on the after deck, and as the 'neaoon light came into View they sang the old hymn to a. band accompaniment. Peterson, who is a somnam'bulist, was asleep at the time. but the music evidently partially aroused him. With eyes tightly closed he walked straight across the deck, and as the words of the hymn, “Simply to T‘liy Cross 1. cling,” floated over the water's. Peterson was seen to step ofi' into space. The 'body will never be recovered. Lake Superior does not give up its dead. The tender of J. J. McFadden of Renfrew. Ont., for two timber lim- its‘iin the Township of Jocko, New (lntario, has been accepted 'by the Ontario Government. Mr. McFadâ€" den will get the timber rights for practically the entire area of this township. He will pay. the govern- ment $13.26 a thousand for pine and $3.06 for spruce. 'I‘he govern- ment collects $2 a thousand as tim- ber dues. Timber Limits in Jocko Township Sheâ€"41m you believe a man knows when he is in love. Heâ€"Yes; and he doesn't know anything else. ALI. HE KNOWS “*1 ti PURCUPINE ADVANCE Bank of Toronto Loaves Toronta 2.30 pn.‘ daily ex- cept Sunday up to Septzlh‘t and from Sept. 2'3rd to 28t‘ Monday Wednesday and Saturday: Low Round-trip 'Ites in- cluding Meals ad Berth HIM! Islands and Return $15 .110 Montreal “ “ $24.50 Quebec “ “ $55.50 Saguenay River and “ 845.50 Steamer “Bellcflle" Leaves Toronto 2.30 1:). daily ex- Toronto 6.00 p.m. wry Tuesday. Steamer “Dundurn” *8‘783 Hamil- ton 8.00 a.m. and Tonto 5.00 P. ton 8.00 3.115. and Tonto aw P m. every Saturday. Very low rates on H line includ- ing meals and berth. ' For tickets, resentions, etc” write H. Foster Chge G. P. 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Capital - $4,600,0lO Rest - $5,600,00 renders : uluabk service to thou who ”denuded- ly sue money, by invizing depositors to their Swings is a great usistance i1 sav- ing money. it uttractsmany sums that would othxrwise be spent. and it keep: your money safe from times, from fire and other 108. South Porcupine tND “Kigston” STRMERS I‘Toaonto,’ “ADVANCE z A. J. PARK, G. I“. P. A. North Bay 3: +*++++++++++%+*+*++++$+*++ z from Timmins, making coincctions at Iroq_uois Falls + for (3011 ranc. 4- Cafe parlor car service between North Bay and Ii- 1- Englehart. '1' Daily service between North Bay and Cochrane 3: operating through CPR. sleeper from Montreal to q. Cochrane. .3. Local service between Englehart and Cobalt, and Ila between Porcupine and Timmins. For full particulars see current time table or refer to any T. N. 0. Agent. *+++++++4 *3- '1‘ ll“ .1. 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