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.  Generally no one troubles much about the matter, though on these rules depends the future efficient working of the Company, and sometimes its very existence.

Then Directors have to be appointed, and these are seldom selected because of any special knowledge of mining they may possess, but as a rule simply because they are large shareholders or prominent men whose names look well in a prospectus.  These gentlemen forthwith engage a Secretary, usually on the grounds that he is the person who has tendered lowest, to provide office accommodation and keep the accounts; and not from any particular knowledge he has of the true requirements of the position.

The way in which some Directors contrive to spend their shareholders’ money is humorously commented on by a Westralian paper which describes a great machinery consignment lately landed in the neighbourhood of the Boulder Kalgoorlie.

“It would seem as if the purchaser had been let loose blindfold in a prehistoric material-founder’s old iron yard, and having bought up the whole stock, had shipped it off.  The feature of the entire antediluvian show is the liberal allowance of material devoted to destruction.  Massive kibbles, such as were used in coal mines half a century ago, are arranged alongside a winding engine, built in the middle