Sec. 364. A deed of trust must provide for the various contingencies that may arise while the trust continues, and is of necessity a lengthy instrument. It is customary to print the deed of trust, and sometimes a printed copy is executed and recorded. Where personal property is also conveyed by a deed of trust, the instrument has to be recorded in three books - in the Book of Deeds of Trust, Book of Mortgages, and Book of Chattel Mortgages - in each county where the property is situated. Printed copies of the deed of trust and sample bonds are furnished to brokers and bond buyers. The initial expenses for attorney's fees, lithographing or engraving of bonds, premium on policies of title insurance, printing and recording of deed of trust, etc., are considerable. The bonds become of value only after they have been certified by the Trustee.

Sec. 365. A sinking fund is created in this way: The Heed of trust contains a provision whereby the Trustor, or corporation issuing the bonds, agrees to pay the Trustee, say five years after the date of the deed, a sum which will be equivalent to five per cent., par value, of the amount of the bonds then certified and outstanding. In lieu of cash, payment for the sinking fund may be made to the Trustee by the Trustor delivering its own bonds, or such other securities as may be approved by Trustee, at their face value. The sinking fund is specially applied to the redemption of the bonds secured by the deed of trust, on or before their maturity. In case payment is made in cash, the Trustee must advertise, inviting for bids for the sale to it of a sufficient amount of the bonds as shall be necessary to the investment of the sinking fund money then in its hands, at a price not higher than a four per cent, basis. If no offers are received, the Trustee may buy the bonds in the open market on the same basis; but if no bonds can be obtained, then the sinking fund payment must be invested by the Trustee in securities satisfactory to the Board of Directors of the Trustor, and all income from such securities must also be reinvested as a part of the sinking fund, and such sinking fund must be applied to the purchase of bonds whenever they may be obtained at not exceeding a four per cent, basis. As purchased, the bonds and coupons are cancelled by the Trustee.

Sec. 366. A prospector is an individual of solitary tendencies who roams the hills in search of hidden treasure. When he finds good indications of the metal he is seeking, he stakes out one or more mining claims; and digs holes at several points to discover the width and extent of the ore. This is a prospect; some people call it a mine; but large sums of money must be expended in development work and for machinery before a prospect becomes a remunerative mine.

Sec. 367. A promotor has a sanguine temperament, a Brilliant imagination, a copious flow of language, and no money. He is generally of a portly build, an epicure as to tastes, correct as to attire, and can behold sky-scrapers where others can see only three-story blocks. The rough-and-ready prospector desires to have his prospect developed, and the promotor is always in touch with capital - at least he says he is - and so the prospector and the promotor come to a ready understanding. Wise legislators, knowing the inherent human weakness to overstate things, have passed laws, in some of the States, making it a felony for any director, officer or agent of a corporation to knowingly concur in making, publishing or posting any written report, exhibit or statement, prospectus or account of the operations, values, business, profits, expenditures or prospects containing any material statement which is false or which has a tendency to produce or give to the stock or shares of the corporation a greater or a less apparent or market value than they really possess.

Sec. 368. Nearly every mining corporation created has an authorized capital stock of at least $1,000,000, divided into one million shares of the par value of $1 each, so that the parties who purchase the stock will think they are receiving a good many shares for their money. The prospector generally receives one-fourth of the shares, in consideration of his transferring his prospect or "mine" to the Company; the promoter receives one-half of the shares for his services, and the remaining one-fourth are not issued, and are called "Treasury stock." As the promotor has no money, he gets a few of his friends, who have some money, to advance enough to pay incorporation fees, in consideration whereof they are made directors and are given some of the promoter's stock. The treasury stock is then offered to the public in one of two ways - for cash, or on installments, as per Forms

Nos. 139 and 140. Two hundred and fifty thousand shares at five cents per share amounts to $12,500; whereas, to convert the right kind of a prospect into a paying mine requires sums ranging from $25,000 to $100,000. As a mining expert has said: "It is necessary for one to investigate closely the reliability and competency of the men behind the enterprise when stock is offered for sale, and where and how the stock is distributed, for what consideration issued, how the value is determined, and how much will be required to 'make it pay.' In other words, if it's a $100,000 enterprise, and stock is selling for two cents a share, and provision is made for only $8,000, you might as well throw your money away as to invest in such an enterprise. Under the best of management, all losses cannot be eliminated, for mining is a business requiring the highest degree of technical skill, including a thorough knowledge of metallurgy, chemistry, mechanics, civil engineering, assaying, and executive ability and integrity."

Sec. 369. The promoting of corporations designed to render service to the public, such as telephone, gas, water and electric light companies, is profitable and may sometimes be financed without the investment of much actual money. Such a company issues bonds, and in order to enlist the co-operation of bankers, offers them the bonds at a discount, and gives gratis to the banker a certain number of shares of stock with each bond he purchases. Sometimes the banker does not buy the bonds outright at first, but loans money on them as collateral security, and the company is thus enabled to install its plant. After the company has begun to pay dividends, there is a demand for the stock, and the banker can sell his at so much clear profit. The bonds also advance in value until they reach par or above. Such a corporation, after having obtained valuable franchises from some city or county and installed an expensive plant, holds a virtual monopoly of the particular service it is rendering, as none but a formidable competitor can enter the field against it.