I had never visited San Francisco. Being close to the city of the Golden Gate—within fifty miles—I decided to "take a look." So one evening, in the late Fall of 1904, I packed my grip and within two hours was comfortably housed in the old Palace Hotel.

The first man I met on entering the lobby was W. J. Arkell, formerly one of the owners of Frank Leslie's Weekly and of Judge.

"Hello, Bill!" I exclaimed. "What are you doing here?"

"Same as you," he answered. "Morse trimmed me in American Ice, and I'm broke. I am in hock to the hotel. They think I am worth $2,000,000. I haven't 20 cents."

During the evening we consoled each other over a series of silver gin fizzes, several of which Arkell paid for with the stub of a pencil. My companion promulgated a scheme for the quick putting on their feet of two Eastern rovers adrift in the big Coast city, and that night there was formed the W. J. Arkell Advertising Agency. Then the horse-tipping firm of "Jack Hornaday" was established. I declared that I preferred to have little to do with it except to show "Willie" how it had been done in New York by Maxim & Gay.

"I will do it for you, Bill," I said; "but no more for me—I've had enough."

"Jack Hornaday" advertisements appeared daily in all the San Francisco papers. Capable clockers and handicappers were hired and some excellent information was obtained. Race-goers got a run for their money.

But something happened. The race-track trust, which enjoyed a big pull in the San Francisco Examiner office, soon realized that somebody outside of the inner circle was getting the public's money, and every day that "Jack Hornaday" tipped a loser the Examiner carried on its sporting page a notice to the effect that "Jack Hornaday's" tip had resulted very disastrously to his clients.

A PARTNERSHIP OF PURE NERVE

"Jack Hornaday" discontinued business.

I began to like San Francisco and the Coast. Being thrown among Arkell's associates in the Palace Hotel lobby, from time to time I naturally heard a great deal of talk about the new Nevada mining camp of Tonopah.

"Rice," said Arkell one evening, "come with me up to Tonopah and be my press agent. We will get hold of a mining property up there, promote a company and make a barrel of money."

"What do you know about mines?" I asked.

"Well, I've lost enough in 'em to know a great deal," he answered.

"I don't know a mine from a hole in the ground, and I know nothing about the stock-brokerage business; so I don't see how I can be of any assistance," I said.

"Don't let that bother you," he replied. "I'll show you how. You come with me."

"I will go on one condition," I said. "I am in for half on anything you do."

We shook hands and it was a bargain.

We went to the depot. I had a trifle less than $150 in my pocket. Arkell had $75.

"Suppose we get stranded out there, what will happen?" I propounded.

"Oh, forget it!" he answered. "How can a couple of Easterners like us, wide awake and with phosphorus brains, get stranded in a place where they dig silver and gold out of the ground?"

We journeyed to Tonopah—a thirty-six-hour ride. The altitude is 6,000 feet, and it was cold, nasty, penetrating Winter weather. During the last hundred miles of our journey across the mountainous desert we looked out of the car window and saw trainload after trainload of what was said to be ore coming from the opposite direction, and we decided that Tonopah was a sure-enough mining camp and that some of the sensational stories about bonanza mines that we had heard were really true.

BUCKING THE TIGER ON THE DESERT

Arriving In Tonopah after dusk, we sought hotel accommodations. The best we could get was a bed in a forbidding looking one-story annex, walled with undressed pine and roofed with tarpaulin. It was located 100 feet to the rear of the hotel, which was already crowded with miners and soldiers of fortune drawn from all quarters of the world by the mining excitement. Its aspect was so inhospitable that Arkell and I decided not to retire for a little while. We gravitated out toward the barroom, where the click of the roulette wheel caught our ears.

We sat down to watch the game. Soon we were buying stacks of checks and ourselves bucking the tiger excitedly. In an hour the remnants of my $150 passed to the ownership of the man behind the game, and Arkell had put his last two-bit piece on the black and lost.

I looked at him. He looked at me.

"Umph!" he grunted. "Better hit the feathers!"

Meekly I followed him to the annex. When we got under the soiled gray woolen blankets, I remarked: "I've got a cane and an umbrella and three suits of clothes. Do you think we can sell them in the morning for enough to provide breakfast money?"

"Oh, come off!" exclaimed my partner. "Wait till I present my card around this burg in the morning; then we will get all the breakfast we want."

We awoke hungry, as all men have a habit of doing when they are broke.

"I am going over to the Montana-Tonopah Mining Company's office," said Arkell. "A mining engineer by the name of Malcolm Macdonald makes his headquarters over there and he wants to sell some mining properties at Goldfield and in other parts of the State for about three million dollars."

"Three millions!" I exclaimed.

"Yes," said Arkell. "I'll get the facts and wire them to my friend Joe Hoadley in New York."

"Say, Bill," I remonstrated, "they have a privately-owned jerkline telegraph in this town, and if you send any 'phony' telegrams over the wire, they'll be on to you. So don't do any of that kind of business."

"Nothing of the kind!" replied he promptly. "Any message I send to Hoadley he'll answer."

"I guess you have it fixed on the other end," I remarked. He laughed.

We strolled over to the State Bank and Trust Company building, across the street, and there met Malcolm Macdonald, a mining engineer from Butte, Montana, and his friend, Mr. Dunlap, who was at the time secretary of the Montana-Tonopah Mining Company. The conversation was not more than five minutes old when Arkell suggested that he would like to eat breakfast, but "didn't want any restaurants in his," intimating that he would like to have some good, old-fashioned home cooking. Mr. Dunlap remarked modestly that the camp was too young to boast of much home cooking, but that if we would be his guests he would guarantee to make arrangements for some special cooking at the Palace restaurant.

BIDDING $3,000,000 WHEN BROKE

After breakfast, which consisted of mountain trout, the flavor of which was more delicious than anything I had tasted in many years—probably because of the artificial hunger which an empty purse had created—we returned to the office of the bank. There Arkell explained to Mr. Macdonald that he wanted "a big mining proposition or nothing." He said he represented big Eastern capital and that he was prepared to pay from one to three millions for the right kind of property. Mr. Macdonald named some mines and prospects which he said he was willing to sacrifice for $3,000,000.

One of them was the Simmerone, of Goldfield, which Mr. Macdonald offered for $1,000,000. We afterward learned that he had paid $32,000 for it. At that time there was a six-foot hole in the ground, and the whole property contained less than five acres. A stockade had been built around the workings on account of the extreme richness of the ore that had been opened at grass-roots.

Mr. Macdonald also offered for sale a lead property at Reveille and a lead-silver property at Tybo, both situated about 70 to 100 miles from a railroad. (Later these properties, along with some others, were promoted by Charles Minzesheimer & Company, a New York Stock Exchange house, as the Nevada Smelters & Mines Company and passed on to the public at a valuation of $5,000,000. The market value of the entire capitalization of this company is now less than $10,000.) These "mines" were to be put into the deal at $1,000,000 each.

MILLIONS IN THE VISTA HELD NO CHARMS

Arkell wrote a dispatch to the East in the presence of our newly-made friends, describing the offering. Then he and I held a consultation, and he vouchsafed the information that we would certainly get a free automobile ride to Goldfield and have a chance to see there the new boom mining camp.

I got "cold feet." Arkell's talk of visionary millions in that bleak environment of snow-clad desert and wind-swept mountain didn't enthuse me at all. I protested against the proposed trip to Goldfield, and insisted that I should be allowed to telegraph to relatives for money with which to return to the Coast.

But Arkell persisted. He declared that the expense of the trip to Goldfield and back to Tonopah would be borne by the vendors of the mines and that our return trip to San Francisco would be delayed only one day. I left my grip, umbrella and cane in Tonopah, intending to return the same evening, and boarded the automobile for Goldfield.

Arrived in Goldfield, we were escorted to the Simmerone. Arkell appeared to be very much impressed, although he remarked to me a few minutes later that he would not give $34 for the whole layout. And therein he was wise. The Simmerone was later capitalized for 1,000,000 shares, each share of a par value of $1, ballooned on the San Francisco and Goldfield stock exchanges to $1.65 a share, and then allowed to recede to nothing bid, one cent per share asked. The rich ore "petered out."

There was an indefinable something in the atmosphere of Goldfield—a new, budding mining camp, at an altitude of 5,000 feet and on the frontier—that stirred me, and I decided to stay awhile.

Arkell determined that he would go back to Tonopah and get an option on the control of a mining company known as the Tonopah Home, which Mr. Dunlap had mentioned to him in the automobile en route to Goldfield. He said he would then go to San Francisco to promote it. The reason why he decided to handle the Tonopah Home, I afterward discovered, was that it was already incorporated and stock certificates had been printed, thereby eliminating the delay and expense incident to preparing something for the immediate consumption of the San Francisco public.

"How am I going to subsist here for a few days until I can begin to make a living?" I asked Arkell.

"How am I going to get back to Tonopah and from there to San Francisco?" Arkell asked me.

At that moment we stood in front of the Goldfield Bank and Trust Company's building—a tin bank literally as well as figuratively. It was constructed of corrugated iron and tin. A few months later, when the bank went up the flume, the cash balance found in the safe aggregated 80 cents.

"You take me into this bank and introduce me and I will cash a check," he said.

"A check on what?" I asked.

"On my bank in Canajoharie, New York," he said. "I was born and brought up there, and they wouldn't let one of my checks go to protest. Besides, I can get back to 'Frisco and protect it by telegraph, if necessary, before it reaches Canajoharie."

We entered the bank. I introduced myself to the cashier as an Eastern newspaper man, and then introduced W. J. Arkell as the former publisher of Leslie's Weekly, Judge, and so on.

After a brief parley, Arkell exchanged his paper for real money to the amount of $50. On leaving the bank, I said:

"Now, Bill, come across! I'm flat broke, on the desert."

He handed me $15. I was satisfied, because he needed all of the $35 to get back to civilization.

"HUMAN INTEREST" VERSUS TECHNICAL MINING

After Arkell's departure for Tonopah I went to the office of the Goldfield News and asked for a job. I got it, at $10 a day. My first assignment was to interview an old miner named Tom Jaggers. I wrote what I considered a first-class human-interest story, and handed it to the owner and editor, "Jimmy" O'Brien. He thought it was fair writing, but not the sort of matter the Goldfield News wanted. It wanted technical mining stuff. Of course I didn't know a winze from a windlass, nor a shaft from a stope, and some of the weird yarns I handed in about mine developments certainly did make Mr. O'Brien jump sideways at times.

Within a week I was discharged for incompetency.

I was not at all appalled at losing my job on the Goldfield News. I had begun to like the life and was convinced there were some real gold mines in the camp. I was a tenderfoot and knew little or nothing about the mining business, but the visible aspect of shipment upon shipment of high-grade ore leaving the camp by mule-team was convincing. What probably impressed me most was the evident sincerity of the trail-blazers who had been on the ground since the day the camp was born. These men had suffered all kinds of hardships to hold their ground and make a go of the camp which, when discovered, was situated 100 miles from a railroad station and at least 25 miles from a known water-supply. Tradition said that men had died of thirst on the very spot where Goldfield was now adding daily to the world's wealth.

My environment became an inspiration.

There were a few penny-mining-stock brokerage firms doing business with the outside world, and the idea of starting an advertising agency appealed to me strongly. Here was an opportunity for the great American speculating public to take "a flyer" on something much more tangible and lasting than a horse-race, I determined.

Failing to locate a furniture store I ordered a long, rough, pine board table made by a carpenter, rented desk-room from the Goldfield Bank and Trust Company right in front of the cashier's counter, and secured the services of an expert male stenographer from Cripple Creek. The Goldfield-Tonopah Advertising Agency was born.

BEGINNING THE ADVERTISING BUSINESS

The idea of applying to the American Newspaper Publishers' Association for recognition did not occur to me. I did not know that such was the practise of agents. I did believe, however, from my ad-writing experience with the Maxim & Gay Company, in New York, that I could write money-getting advertising copy. Further, my experience in making contracts with advertising agents for the publication of Maxim & Gay's advertising in the newspapers throughout the land had, it seemed, conveyed to me sufficient information regarding that end of the business to fortify me in my new field.

Next morning I entered the office of the Mims-Sutro Company, a newly established brokerage firm, and urged advertising.

"We are already spending about $100 a month," said the manager.

"One hundred dollars a month!" I exclaimed. "Why, you ought to be spending that much every hour!"

At first they thought me a fanatic on the subject, but within a fortnight I succeeded in inducing them to spend $1,000 in a single day for advertising. It was not, however, until after I had shown them how to follow up their correspondence successfully that they began to believe in me. I wired to nearly all of the important city newspapers throughout the country for rates. After obtaining their replies I decided to spend $500 in the Chicago Sunday American, and $500 in the San Francisco Examiner in one issue. I forwarded the copy with the money, and it appeared promptly. The results were good—so good, indeed, that within two months the Mims-Sutro Company was spending at the rate of from $5,000 to $10,000 a week for advertising, and my commissions amounted to thousands.

My contracts with the advertisers required them to pay me one-time rates, and my contracts with the publishers permitted me to send in copy at long-time rates, and the profit was about 45 per cent. And inasmuch as I always sent cash with the order, my copy was in great demand. Indeed, my agency was fairly inundated day after day with blank contracts from newspapers all over the country, the managers of which were clamoring for the Goldfield business. In addition to the Mims-Sutro account, I soon had many others; in fact, I had all the others. Within six months after my arrival in Goldfield my agency netted me $65,000.

SOME ADVERTISING THAT PAID

My second best customer was January Jones, the noted Welsh miner, and later, when the corporation of Patrick, Elliott & Camp swung into business as promoter, I placed its advertising. I held it, too, until the death of C. H. Eliott, when the control of that firm fell into other hands and it ultimately went out of business. In the course of three years my advertising agency inserted in the neighborhood of $1,000,000 worth of advertising in the newspapers of the United States, chiefly those of the big cities, and all of the advertising made money. It simply had to make money, because the brokers who did the advertising had little or nothing to begin operations with except the mines, and the mines were not their property.

The most remarkable feature of that advertising campaign to me was that I had never been a stock-broker, had never been a mine-promoter, and had never been in a mining camp before; but still, despite my utter lack of knowledge, to begin with, of the technical end of the business, my advertisements pulled in the dollars.

I was an enthusiast. I believed in the merits of the camp, and my enthusiasm undoubtedly carried itself to the readers of my advertisements. But the quality of the advertising copy did not entirely explain my success in bringing the money into Goldfield. The stock offerings undoubtedly struck a popular chord. Tens of thousands of people who for years had been imbibing the daily financial chronicles of the newspapers, but whose incomes were not sufficient to permit them to indulge in stock-market speculation in rails and industrials, found in cheap mining stocks the thing they were looking for—an opportunity for those with limited capital to give full play to their gambling, or speculative, instinct.

Time and again promotions were almost completely subscribed by telegraph in advance of mail responses reaching Goldfield; and it frequently needed but the publication of a half-page advertisement in 40 or 50 big city newspapers, of a Sunday, to bring to Goldfield by wire before Monday night sufficient reservations to guarantee oversubscription in a few days.

It was easy to give full play to my penchant for experimenting, in the evolution of mining-stock promotion in Goldfield. The old system, and the one which recently has enjoyed much vogue among financial advertisers, was the endeavor first to get names of investors rather than immediate results from the advertisements, and to follow them up by correspondence. In spending the first $1,000 appropriated for advertising from Goldfield, I split the money between two newspapers on one day. I constructed large display advertisements and appealed for direct, quick replies. This succeeded.

BUILDING GOLD MINES WITH PUBLICITY

A little later I organized a news bureau as an adjunct of the advertising agency.

It is acknowledged that this news bureau accomplished much for Nevada. As a matter of fact, it is generally conceded by Goldfield pioneers and by mining-stock brokers throughout the country that the news bureau was directly responsible for bringing into the State of Nevada tens of millions of dollars for investment, and was indirectly responsible for the opening up of the Mohawk and other great gold mines of the Goldfield camp and of the State.

The prospectors who located Goldfield were without means. George Wingfield, the man who is now president of the merged Goldfield Consolidated, came into the mining camps with only $150. No funds of consequence were available from home sources. The money that later made Goldfield the "greatest gold camp on earth" came from the outside, and the news bureau secured it by focusing the attention of the American public on the great speculative possibilities of investments in the mining securities and leases of the camp. One of the leases, known as the Hayes-Monnette, operated with Chicago money, afterward opened up the great Mohawk ore deposit at a period when there was no money in the treasury of the Mohawk Mining Company to do its own development work. And there are scores of other instances which bear me out.

I was head of the news bureau, and the news bureau was Nevada's publicity agent. I have always considered my work in this direction in the light of an achievement. No one contributed a dollar to the news bureau except myself.

HAIR-RAISING STORIES FOR DISTANT READERS

That news bureau, with its headquarters on the desert, at a time when water was commanding $4 a barrel in Goldfield and coal could not be obtained in the camp for love or money, was operated with as much calculating judgment as it could have been were it subsidized by the most powerful interests in America. Human-interest stories that were written around the camp, its mines and its men, were turned out every day by competent newspaper men. These were forwarded to the daily newspapers in the big cities of the East and West for publication in the news columns.

Most of the stories were accepted and published. Whenever hesitancy was observed, publishers were tempted by the news bureau with large advertising copy to continue to give the camp publicity.

Of such great assistance in arousing public interest did I find this work that noted magazinists like James Hopper were imported to camp and pressed into service by the news bureau to write readable stories. At times, when public interest appeared to lag, the wires were used by the camp's newspaper correspondents to obtain publicity for all kinds of sensational happenings that were common on the desert. Reports of gold discoveries, high play at gambling-tables, shooting affrays, gamblers' feuds, stampedes, hold-ups, narrow escapes, murders, and so forth, were used to rouse the public's attention to the fact that a mining camp called Goldfield was on the horizon.

I felt confident that the speculating public was going to make a great big "killing" in Goldfield. Tonopah, twenty-six miles to the north, was making good in a wonderful way. It had already enriched Philadelphia investors to the extent of millions. I could see no reason why Goldfield should not at least duplicate the history of Tonopah. Never in my life had I lived in an environment that inspirited me as this one. The visages of those around me were, as a rule, roughly hewn; the features of many were marked with all the blemishes that had been put upon them by time, by sleepless nights, by anxiety and by contact with the elements; but courage, sincerity and honesty of purpose were written in every line of their faces.

I became imbued with the idea that investors who put their money into Goldfield stocks were not only going to get an honest run for their money, in that the mines were going to be developed and many would make good, but that the opportunity for money-making, if embraced by the public at that time, would earn a great reputation for the man who educated the public to a full understanding of the situation.

THE MERCURY OF SPECULATION

Mining-stock speculators and investors at a distance who responded to the red-hot publicity campaign which marked those early days of Goldfield rolled up enormous profits, and I made no mistake. Terrific losses came eighteen months later, as a result of a madness of mining-stock speculation which followed on the heels of the great Mohawk boom and the merger of various Goldfield producers into a $36,000,000 corporation. This was taken advantage of by "wild-catters" in every big city of the country, and the public was fleeced to a finish. But of this more and a plenty later.

In those early days my agency advertised Goldfield Laguna at 15 cents per share in order to finance the company for mine operations. Within a year thereafter Goldfield Laguna sold at $2 a share on the San Francisco Stock Exchange, and was absorbed by the Goldfield Consolidated at that figure. And there were many others which duplicated or exceeded the performance of Laguna.

At the time of which I tell, when Laguna was promoted at 15 cents, Goldfield was about a year old. A population of about 1,500 had gathered there from all sections of the country. There were mining experts from Salt Lake, San Francisco and Colorado, and miners from every part of the Western mining empire; saloon-keepers from Alaska and Mexico; real-estate brokers from practically every Western State and a scattering of "tin-horns." It was about as motley a gathering as one could find anywhere in the world, but compositely they were a sturdy lot.

The camp was enjoying its maiden boom. In sixty days real-estate values had jumped from $25 for a lot on Main Street to $5,500. Roughly constructed business houses banked the main thoroughfare for two or three blocks. The heavy traffic incident to hauling in supplies from Tonopah had ground the dirt of the street into an impalpable mass of dust to the depth of fifteen inches, and the unchecked winds of the desert, sweeping from the Sierra Nevadas to the high uplifts east of Goldfield, whipped the dust into blinding clouds that daily made life almost unendurable.

Practically the entire population was housed in tents that dotted the foothills. At night-time these presented the appearance of an army encampment. Provisions were scarce and barely met the requirements. The principal eating-place was the Mocha CafÉ, which consisted of a 14 by 18 tent with an earthen floor and a roughly constructed lunch-counter. Here men stood in line for hours, waiting to pay a dollar for a dirty cup of coffee, a small piece of salty ham and two eggs that had long survived the hens that laid them.

The popular rendezvous was the Northern saloon and gambling house, owned and managed by "Tex" Rickard and associates. Here fully seventy-five per cent. of the camp's male population gathered nightly and played faro, roulette and stud-poker, talked mines and mining, sold properties, and shielded themselves from the blasts that came with piercing intensity from the snow-capped peaks of the Sierras. The brokers of the camp gathered every night in the Northern and held informal sessions, frequently trading to the extent of 30,000 or 40,000 shares of the more active stocks.

The mining stocks which were advertised through my agency in those early Goldfield days were generally of the 10, 20 and 30-cent per share variety. The incorporators of the companies were enthusiastic on the point of their "prospect" making good, but I argued to myself that if the chances of any mining prospect of this character proving to be a mine were only about one in 25 or one in 50, and my agency advertised 25 or 50 companies of the average quality, and one of them made good in a handsome way, he who purchased an equal number of shares in each would at least "break even" with the profits from the one winner.

Later this principle was "knocked into a cocked hat" for conservatism by Mohawk of Goldfield advancing from 10 cents to $20 a share, proving that if Mohawk had been one among 50 companies, the shares of which were purchased by an investor at 10 cents, he would have gained handsomely. Early purchasers of Mohawk gathered 200 to 1 for their money, many times more than could usually be won on a long shot at the horse-races, and not so very much less than was formerly won by lucky prize-winners in the Louisiana Lottery. And Mohawk was only one of a dozen of the early ones which advanced in price on the exchanges and curb markets more than 1,000 per cent.

At this early stage in Goldfield, "wild-catting" was not indulged in from the camp, unless this long-shot gambling in shares of "prospects" can by a grave stretch of imagination be termed such, the promoter-brokers being able to offer stocks of close-in properties. Among the prizes were Red Top, which advanced within two years thereafter from 8 cents to $5.50 per share; Daisy, which sky-rocketed from 10 cents to $6; Goldfield Mining, which soared from 10 cents to $2; Jumbo, which improved from 50 cents to $5; Jumbo Extension, which rose from 15 cents to above $3; Great Bend, which jumped from 20 cents to around $2.50; Silver Pick, which moved up from 10 cents to $2.65; Atlanta, which was promoted at 10 and 15 cents and sold up to $1.25; Kewanas, which was lifted from 25 cents to $2.25, and others. "Wild-catting" in a small way was prosecuted in Goldfield's fair name even in those days, with Denver as the headquarters of the swindlers.

Eighteen months later, when the Mohawk mine of Goldfield was in the midst of its greatest half-year of production, at the rate of $1,000,000 a month, and the consolidation of the important mining companies of the camp was in progress, "wild-catting" became general from office buildings in the large cities. There were more than 2000 companies incorporated during this last period, not one of which made good, and the public lost from $150,000,000 to $200,000,000 as the result of this operation alone. Fully $150,000,000 more was lost by the ballooning to levels unwarranted by mine showings of listed Goldfield stocks on the New York Curb and the San Francisco Stock Exchange, at the same time.

But I am ahead of my story.

It was late in the Spring of 1905. I had been at work in Goldfield more than six months, and my campaign of publicity was beginning to gather momentum. The mines, however, were not at the moment keeping lively pace. The Mohawk was yet undiscovered.

THE BIRTH OF BULLFROG

At this juncture the new mining camp of Bullfrog, 65 miles south of Goldfield, was born. My publicity facilities were sought by owners of properties in Bullfrog "to put the camp on the map."

C. H. Elliott, a Goldfield pioneer, put an automobile at the disposal of myself and my stenographer, and we departed for Bullfrog. Elliott and his associates had staked out a townsite which they called Rhyolite. I was presented with seven corner lots on my arrival, to help along my enthusiasm.

There, on the saloon floor of a gambling house, which was the chief place of resort in the camp, I met for the first time George Wingfield, then the principal owner of the Tonopah Club at Tonopah, a gambling house which had lifted him from the impecunious tin-horn gambler class to the millionaire division; United States Senator George S. Nixon,[1] his partner; T. L. Oddie, later elected Governor of Nevada; Sherwood Aldrich, now one of the principal owners of the Chino and Ray Consolidated mines, and worth millions, and others who have since accumulated great riches.

They were on the ground and buying properties. Mr. Aldrich purchased the controlling interest in the Tramps Consolidated for about $150,000. It was incorporated for 2,000,000 shares of a par value of $1 each, a year later boomed to $3 a share on the New York Curb, and is now selling at 3 cents, without ever having paid a dividend.

Mr. Elliott had a large stock interest in the Amethyst mine and the National Bank mine, which were capitalized for 1,000,000 shares respectively, and he presented me with 10,000 shares of stock in each. He and his partner sold the control of the Amethyst to Malcolm Macdonald of Tonopah. Later, when Amethyst's neighbor, Montgomery-Shoshone, was selling at $20 per share, the market price of Amethyst was pushed up to above $1 a share on the San Francisco Stock Exchange, and I took my profit. The Amethyst has since turned out to be a rank mining failure, as has practically every other property in the camp, not one ever having earned a dividend.

The Bullfrog National Bank stock, representing another property that looked for a while as if it would make good, I disposed of on the San Francisco Stock Exchange at 40 cents a share, and I sold the town lots at figures which netted me, in all, in excess of $20,000 for my one day's trip to Bullfrog.

During my stay in Bullfrog I became very much impressed with the Montgomery-Shoshone mine. This property, in fact, was the powerful magnet which attracted everybody to the camp.

I was escorted through a tunnel seventy feet long. On each side as I walked were walls of talc. I was told these assayed in places anywhere from $200 to $2,000 a ton. Information was also forthcoming that the width of the ore-body was more than seventy feet. (It afterward turned out that the tunnel had been run along the ore-body and not across it, and that the ore-body was about 10 feet wide.) Some specimen ore was given me to assay, and the returns were staggering, running all the way from $500 to $2,500 a ton.

In my enthusiasm I wrote stories about the property for publication which must have induced the reader to believe that when all the riches of that great treasure-house were mined, gold would be demonetized. As a matter of fact, the stories from my news bureau, picturing the riches of that Golconda, are said to have been indirectly responsible for the purchase of control of the property by Charles M. Schwab and his associates.

The history of the Montgomery-Shoshone is mournful but highly instructive. For purposes of exposition of pitfalls in mining-stock speculation it possesses striking qualifications. Here are the facts:

Malcolm Macdonald, mining engineer, acquired a half interest in the mine from Tom Edwards, a Tonopah merchant, for $100,000, on time payments. On the strength of the showing in the 70-foot tunnel an effort was made to sell the control to the Tonopah Mining Company at a profit. It did not succeed. Oscar Adams Turner, of New York and Baltimore, the promoter of the highly successful Tonopah Mining Company, which to date has paid back to the original stockholders $16 for every $1 invested, examined the Montgomery-Shoshone, and turned it down because the property did not show him any well-defined veins or other marks of permanency, and the ore-body appeared to him to be only a superficial deposit of no great extent.

Many a good "prospect" has been condemned by mining men of the highest standing, and has afterwards made good, particularly in Nevada. Mr. Turner's turn-down did not daunt the owners.

ENTER, CHARLES M. SCHWAB

Engineer Macdonald incorporated a company for 1,250,000 shares of the par value of $1 each, to own and operate the mine. Investors were permitted by him to subscribe for small blocks of treasury stock at $2 per share. Shortly afterward Mr. Macdonald and the owner of the other half interest, Bob Montgomery, sold a controlling interest to Mr. Schwab and associates for a sum which has never been made public. Mr. Schwab at once reorganized the company, took in two adjoining properties that were undeveloped, and changed the capitalization to 500,000 shares of the par value of $5 each. He, in turn, permitted his friends and the public to subscribe for the new stock at $15 per share. Later the shares advanced to $22 on the New York Curb.

Undoubtedly Mr. Schwab thought well of the proposition, for he loaned the company $500,000 to build a reduction works on the ground.

To date the mine has failed to pay for its equipment. Work on the property has been abandoned and the mill has been advertised for sale.

The company still owes Mr. Schwab about $225,000, the net profits on the ore in six years being insufficient to repay his loan to the company. In fact, the enterprise has proved to be one of the sorriest failures in Nevada. The mine in six years produced $2,000,000 GROSS, and although mine and mill were operated in an economical way, the net proceeds from the ores were insufficient to pay off the Schwab debt. Recently the shares have been nominally quoted at from 2 to 5 cents on the New York Curb. The public's loss mounts into millions.

Investigation proves to me that Mr. Schwab was merely a mining "come-on" and allowed his enthusiasm to run away with him, but the public suffered just as much as if Mr. Schwab had perpetrated a cold-blooded swindle.

I have heard the question propounded by a stockholder, "What possible excuse could a man, with a good business head like that of Mr. Schwab, have for promoting the Montgomery-Shoshone at a valuation of $15 a share, or $7,500,000 for the property, afterward allowing the stock to be quoted up to $22 a share on the New York Curb, or at a valuation of $11,000,000 for the property, when, as a result of six years of mine operations, the company is practically insolvent?"

An excuse acceptable to mining men might be offered were the Montgomery-Shoshone property situated in a nest of other great mines, intrinsically worth many times the valuation placed on the Montgomery-Shoshone at the time of its promotion. "Prospects" of this variety, according to approved mining experience, are sometimes entitled to appraisement of great prospective value when neighboring mines have demonstrated deep-seated enrichment. But there was no such excuse in this case, because the deepest hole in the ground in the entire camp was less than 200 feet at the time the Montgomery-Shoshone was promoted by Mr. Schwab, and there was not a proved mine in or near the camp.

I was present in Reno about three years ago when Mr. Schwab passed through the divorce city en route to California. At that time Montgomery-Shoshone had already cracked in price to around $3 a share, and stories were being published in Nevada that Mr. Schwab had been snubbed by members of an exclusive Pittsburg club for recommending Montgomery-Shoshone for investment. Mr. Schwab, in hurriedly discussing the matter at the railroad station, was quoted to the effect that the property had been grossly misrepresented to him. This statement was widely published in Nevada. Thereupon, Don Gillies, Mr. Schwab's engineer in Nevada, who, with Malcolm Macdonald, was believed to be Mr. Schwab's mining adviser, telegraphed Mr. Schwab and asked point-blank whether he referred to him. Mr. Schwab answered that he did not. This denial was also given wide publicity. There was only one reasonable corollary, then, and that was that Mr. Schwab referred to Mr. Macdonald.

In fine, it appears that Mr. Schwab may have actually purchased the Montgomery-Shoshone on the sole representations of the vendor, the interested party, and may have actually promoted the property on the strength of the unverified representations of the vendor. It might be that the vendor did not misrepresent at all; he may have been too enthusiastic only, and communicated his enthusiasm to Mr. Schwab.

Possibly Mr. Schwab relied on newspaper accounts, and promoted the property on the strength of them. A letter from Mr. Schwab, which appears farther on, lends some color to this idea.

Even before this time Mr. Schwab had been in the mining game at Tonopah. His Tonopah venture was the Tonopah Extension. The control of the Tonopah Extension Mining Company was bought by John McKane, later a member of the English House of Commons, from Thomas Lockhart at 15 cents per share. The capitalization was 1,000,000 shares. John McKane interested Robert C. Hall, a member of the Pittsburg Stock Exchange, in the proposition. He, in turn, made a deal with Mr. Schwab. The stock was then sky-rocketed to above $17 a share on the San Francisco and Pittsburg stock exchanges and the New York Curb. Afterward the price was allowed to recede to around 65 cents per share. During the past half-year it has maintained an average quotation of $2.00 per share.

Although the market price of the shares at the time Mr. Schwab was believed to own the control was allowed to be advanced to a valuation for the mine of $17,000,000, the company has since failed to pay as much as $1,000,000 in dividends, and a quite recent appraisement by Henry Krumb, a noted engineer, of the net value of the ore in sight in the mine did not place it at so much as $1,000,000. The accuracy of this report is disputed, on the ground that the ore-exposures at the time did not permit of fair sampling. This allows for a discrepancy, but hardly of $16,000,000.

After Tonopah Extension declined from around $17 a share to below $1.00 a share, it was alleged by Tonopah stockholders that Mr. Schwab and his associates had unloaded at the top. Mr. Schwab replied that he owned just as much stock after the market collapse as he did when he went into the enterprise. This was met with an allegation by some stockholders that while Mr. Schwab could probably prove that his interest was as large at the later period as it had been at the outset, it did not mean that Mr. Schwab and his confrÈres had not unloaded at the top and bought back at the bottom.

The following letter from Mr. Schwab to Sam C. Dunham, formerly U.S. Census Commissioner to Alaska, afterward editor of the Tonopah Miner, and later mining editor of the Mining Financial News of New York when I was managing editor, denies personal guilt, although it leaves the reader free to believe that if Mr. Schwab personally did not unload his stock at high prices, his associates might have done so.

CHARLES M. SCHWAB
111 BROADWAY
NEW YORK

November 1, 1907.

Mr. Sam C. Dunham,
Editor The Tonopah Miner,
Tonopah, Nevada,

My Dear Mr. Dunham:

My attention has been called to your issue of Saturday, October 26, 1907. To such criticisms as that issue contained of me, I generally do not reply, as it is useless and only leads to further discussion. But your paper heretofore has been so uniformly kind to me, so fair in every respect, and as I have always regarded you as a friend, our relations having been so pleasant, it makes me feel that I would like to make a short reply to the criticisms mentioned, as showing the consistency of my position.

The only thing I criticised about Nevada was the inaccuracy of statements emanating from Nevada. You seem to attack me because of this statement, and the strength of my position is fully confirmed by your article because little, if anything, stated therein is true or accurate.

I will take up your statements one by one. You say I bought from John McKane $25,000 worth of stock of the Tonopah Extension Mining Company at 15 cents per share. This is absolutely untrue.

You say I bought 100,000 shares of Extension stock from Robert C. Hall at $6 per share, and paid for this stock with paper mill stock. No single part of that statement is correct. I never gave Mr. Hall any paper mill stock, nor did I buy 100,000 shares from him. The amount purchased from him was 60,000 shares. The price which you state I paid him for the stock is not correct, and, as I stated, I gave no paper mill stock in exchange.

You say further that at the last annual meeting of Tonopah Extension stockholders, held in Pittsburg last May, it developed that I had disposed of all the stock I purchased from Mr. Hall and over two-thirds of my original holdings of 166,000 shares. This is absolutely untrue. I am holding to-day exactly the amount I held after all purchases were made by me, and from the beginning, aggregating some 285,000 shares, and I think if you take the trouble to look up the records you will find my statement in this connection to be true. When I originally bought Extension there was also some stock in my name belonging to others, which I subsequently transferred to them, leaving my own holdings of 285,000 shares where they now remain, intact, in my personal possession.

Going on down the article, you say that I purchased control of Shoshone and Polaris for less than $2 per share. This statement of yours is inaccurate. You say I sold a large block of Shoshone stock at $20 per share. This is also without any truth whatever. The fact is that 3,000 shares were sold at this figure, $20, and these 3,000 shares came from the treasury of the company, all of which you will find a matter of record.

It is true that I have loaned the company nearly $500,000 to build the new mill, and I shall be glad to have any other stockholder in the company assume his pro rata share of this amount.

You wonder why I criticise statements from Nevada.

Respectfully yours,

(Signed) C. M. Schwab