I have attempted to show in the previous chapter under what great disadvantages the ordinary man labours to estimate the value of a mining share, whether he wishes to speculate in that share or invest in it. His first business should be, of course, to get information, to get as much as he can, and to make sure that it is authentic and reliable. But we find that the information that is given to him is, with a few exceptions, meagre, and much even of that is no information at all, but mere generality of statement. This scarcity of information, therefore, adds greatly to the pre-cariousness and riskiness of mining speculation and investment, and the less experience one has the greater risk one runs. Experience, even if it were of no other value, undoubtedly gives us an intuition in these matters, and it is upon such intuition that we have in many cases to rely. But it doesn't follow that even such intuition is infallible. It may be deceived, especially in a mine, which lends itself to so many possibilities of deception, and therefore, if experience and intuition can be deceived, so much the more easily may inexperience and ignorance be.
The extracts from the directors' reports which are published in the financial press are thus of no great help to the ordinary man, though, of course, it is far better that he should have them than nothing at all. They would be of more use to him still if they were published with their balance-sheets, but we cannot expect the press to fill up their pages with these alone. An ordinary newspaper, in that case, would be filled with nothing else but mining news, and as it must give other news as well, relating to other phases of finance, I don't see very well how the thing can be done. It could be done by enlargement, of course, but that enlargement would mean great additional expense, and possibly ruin. One remedy would be a daily mining paper, to be published exclusively in the interests of mining speculators and investors, and I don't see why such a paper could not be a great success. It needn't be a large one, and needn't be run at a great expense, whereas such a paper, if conducted with scrupulous honesty, would be a great help and boon to mining investors. I should certainly like to see a paper of that kind established.
We see also that the reports of meetings, whilst of greater help to him than directors' reports, do not, in the majority of cases, give him the full, clear and disinterested information that he needs. A chairman of an unsuccessful company will talk at considerable length, upon the success of other companies, and subtly leave the shareholders to conclude that that success will be shared by their company. They will attend a meeting to learn all they can about their company, and will be surprised to find, when the meeting is over, that though they have listened to a pleasing speech of half an hour or an hour's duration, they know no more about their own mine than before the chairman spoke. Some chairmen are very clever indeed, for by the mere force of manner and phrase they can raise the hopes of the most despondent shareholders, put a roseate complexion upon the dis-malest prospects, reconcile the shareholders to failure after failure, and encourage them to look forward to brilliant success and prosperity. There are dozens of companies at this very day which have been in existence for fifteen and twenty years, which have never yet paid a dividend, and which are never likely to, which have been reconstructed time after time, and yet the chairmen still hold out to the shareholders the same hopes as they did in the early days of the companies, still talk about getting 'the company off the rocks into smooth waters, and then sailing calmly to the port of success,' when they know that the companies were doomed years ago. But to wind up the companies would be to wind up their fees as directors, and that would be suicidal so long as they can persuade the shareholders to keep putting more money into the concerns. These, of course, are pure swindles, and yet the shareholders cannot see it. And if the shareholders cannot, still less is the stranger likely to, the man who knows nothing of their past, and judges of their present only from these annual speeches of the chairmen. An ordinary man may, therefore, read these speeches and be so charmed by them, may so exaggerate the prospects of the companies as foreshadowed by the chairmen, that he would buy the shares thinking they would be good bargains.
The ordinary, ignorant, inexperienced man, therefore- - and even the shareholder himself - has to rely to a very great extent upon the advice he gets from others, and that very advice may frequently lead him to his ruin. And he relies upon the advice of the financial press more than upon the advice of friend or broker, because he puts great faith in the press, editors being to him the embodiments of knowledge, honesty, and uprightness. But we know that the financial press is tainted through and through with dishonesty, that there is nothing more dishonourable and unscrupulous under the sun. Therefore, he flies from one rogue to a greater, from one thief to another. That there are honourable exceptions I admit; but in his ignorance he cannot distinguish between them, and by the time he has distinguished he may be ruined. There are dozens of so-called newspapers that exist upon nothing else but blackmail, there are others that never express one word of opinion unless they are paid for it, there are others that will praise up any company, any swindle, for a £5 note. They have no reputation to lose, and therefore it is all gain to them. But the ordinary man does not know whether the advice is genuine or not. He often believes in it and acts upon it, and yet, though he may be deceived, he will again act upon the advice of that same paper. I know how it is done, because I have been behind the scenes, and it isn't as though I was speaking from hearsay. Secretaries are in the habit of calling upon the editors of these papers, or editors are in the habit of calling upon the secretaries. In the first place the secretary suggests that an editorial should be written upon his company, for which, of course, he offers to pay the usual fee, or a call upon the shares; and in the second place the editor tells the secretary that he intends to write a laudatory article upon his company, and would the secretary pay, etc. In some cases the secretary will refuse point-blank. He, doesn't care a fig for the editor or his rag, and tells him that his company is good enough to stand on its own merits, and that such a paper couldn't do it an atom of harm or good. Very well, the editor will go back and write a slashing article upon that company. He will have his revenge upon that secretary, will bring him to his knees, and make him think twice the next time he is approached in a friendly manner. But the secretary only smiles. If the shareholders are fools enough to believe the 'rag,' then they must take the consequences. If they sell their shares, then it will be all the better for those who buy them. The mine will go on just the same, and the secretary and directors are sure of their salary and fees. It will survive the article, and the only loser in the end will be the rogue of an editor; for though he will not have lost a reputation he didn't possess, he will have spent his energy in vain, and will have paid the compositor's fee for the article that he wrote, when he might have filled up the space with a puffing article that would have paid him better.