nt industry.

This chapter will be devoted to Company formation and working, in which
mistakes leading to very serious consequences daily occur.

It is not necessary to go deeply into the question why, in the mining
industry more than any other, it should be deemed desirable as a general
rule to carry on operations by means of public Companies, but, as a
matter of fact, few names can be mentioned of men who mine extensively
single handed. Yet, risky as it is, mining can hardly be said to be more
subject to unpreventable vicissitudes than, say, pastoral pursuits, in
which private individuals risk, and often lose or make, enormous sums of
money.

However, it is with Mining Companies we are now dealing, and with the
errors made in the formation and after conduct of these Associations.

The initial mistake most often made is that sufficient working capital
is not called up or provided in the floating of the Company. Promoters
trust to get sufficient from the ground forthwith to ensure further
development; the consequence being that, as nearly 99 per cent of mining
properties require a very considerable expenditure of capital before
permanent profits can be relied on, the inexperienced shareholders who
started with inflated hopes of enormous returns and immediate dividends
become disheartened and forfeit their shares by refusing to pay calls,
and thus many good properties are sacrificed. In England, the companies
are often floated fully paid-up, but the same initial error of providing
too little money for the equipment and effective working of the mine is
usually fallen into.

Again, far too many Companies are floated on the report of some
self-styled mining expert, often a man, who, like the schoolmaster of
the last century, has qualified for the position by failing in every
other business he has attempted. These men acquire a few geological and
mining phrases, and by more or less skilfully interlarding these with
statements of large lodes and big returns they supply reports seductive
enough to float the most worthless properties and cause the waste of
thousands of pounds. But the trouble does not end here.

When the Company is to be formed, some lawyer, competent or otherwise,
is instructed to prepare articles of association, rules, etc.; which,
three times out of four, is accomplished by a liberal employment
of scissors and paste. Such rules may, or may not, be suited to the
requirements of the organisation. General