$100,000,000 EACH YEAR LOST BY INVESTMENTS IN FAKE MINING SCHEMES.
To what extent investment swindlers have operated in Illinois will
never be known, for some of them have so thoroughly covered up their
transactions that it will be impossible to disclose them. This is
especially true of a class of mining companies, the promoters of
which remained in the background while their dupes were gathered
in by seemingly respectable residents. These concerns operated by
giving blocks of stock into the hands of unscrupulous men with good
or fairly good reputations, and the latter disposed of it to such
unsophisticated acquaintances as could be easily gulled.
Gold and silver mines in Colorado, Nevada, and Utah furnished the
basis for most of these swindles. Sometimes the company really had an
old mine or claim that had been abandoned, sometimes it had a lease
on some worthless piece of property that was "about to be developed,"
but frequently it had nothing more than its gaudy prospects and its
highly decorated shares of stock to give in return for the money it
received. Money-grasping church deacons were the favorite agents for
these swindles and widowed women without business judgment their most
common victims.
It is estimated that in this country every year nearly $100,000,000
are taken out of the savings of people of limited means by financial
fakers, especially mining and oil fakers. During the last five years
Detective Wooldridge has observed the "financiering" of several
thousand fake companies, each of which secured a great deal of money
from ignorant people.
Bands of swindlers repair to mining camps and establish branches
there. They expend a few hundred dollars for shreds and patches of
ground void of present or prospective value.
They then form a mining corporation, place its capital stock at some
enormous figure--a million, two or three million dollars--appoint
themselves or some of their confederates, or even their dupes,
directors, and sell the worthless claims to the company for a large
proportion, or perhaps, all of the capital stock of the company.
The stock must be disposed of with a rush. It must all go within a
year or shorter time. When it is gone the suckers who get the stock
for good money may take the property of the company. They always find
an empty treasury, worthless claims, and the rosy pictures that led
them astray, smothered in the fog.
During the last five years the advertising columns of leading
newspapers have been full of offers of mining stocks as "sure roads to
fortune." Nearly all of these mining companies, into whose treasuries
the public has paid millions, have either been abandoned or the
properties have been sold for debts, and invariably they bring very
little. The major portion of receipts of these companies from the
sales of stock is stolen by their promoters.
Official statistics of the mining industry show that out of each one
hundred mines, only one has become a success from a dividend-paying
point of view. About five earn a bare existence, while the balance
turn out utter failures.