Conditions Under Which a Mining Proposition Should be Rejected
One can reject a mining proposition in short order, and one short chapter is sufficient to indicate conditions, any of which should be warrant enough for declining to take an interest in such a proposition. The investor would probably find a means for making inquiries through his bank as recommended, and would first learn of the local standing of the proposition, and the men connected with it. If word comes back that the proposition has a bad, or questionable reputation, and the people connected with it are not held in respect among their neighbors, it will be very safe to let the matter entirely alone, and refuse to invest at any price, no matter what inducements may be offered.
Another condition which would be sufficient to warrant one in declining absolutely to have anything to do with an enterprise is, where the prospectus, and published reports, do not agree with other accounts of the property which may be had from parties living near it. Of course no two accounts will agree exactly, but if there is a decided discrepancy, and the reports offered by the parties interested in the promotion are very much better than any one else will be willing to say for the property, exaggerated and misleading statements can be suspected, and the trustworthiness of the whole proposition placed in doubt, and one had better be careful and have nothing to do with it.
If it is found on investigation that the property is not free and clear, but is incumbered with debts, liens and contingent clauses affecting the title; conditions which have not been clearly stated in the prospectus, then fraud may be suspected, and certainly one would not want such an investment.
If it is found on receiving the reports from the mercantile agencies that the people offering the stock have been connected with questionable enterprises, or are not of good business reputation, then the danger flag has been found and should deter any one from making an investment.
The other conditions under which a proposition should be rejected are not so clear and will very much depend on the personal opinion of the investor. He must form his own judgment as to the condition of the property when he is asked to invest, and how it compares with the conditions which were found to have been reported in regard to mines which have turned out well, but which were, of course, once in their prospect stages of development. Here one must exercise judgment, and must read the accounts and reports of mines which have turned out well, and judge what the prospect may be for the mine in which he may be asked to invest. In this the investor must rely very much on others, and must look up the record of the man who makes the reports recommending the property. If it is found that he has reported on properties which have turned out badly, after he had recommended them; if it is found that he is a man of questionable reputation; if it is found that he is not a disinterested party, but owns part or all of the property he recommends, and his recommendation is not confirmed by others ; and if it is found that he had not had the advantages of special training, or wide experience in mining property, it will be safer not to risk money in the venture ; especially if the proposition is one where ore is not much in evidence but it is hoped and expected that min-. ing operations will open up mineral deposits which will be valuable.
