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144 GEOLOGY AND GOLD DEPOSITS OF THE CRIPPLE CREEK DISTRICT. 
for what it may bring in case more money for development is needed. Another 
motive for overcapitalization is that every prospecting company feels that it may 
some day by rich discoveries attain the dignity of a mine, and that it will then be 
ready to do business on a great scale without reorganization. A further advantage 
from the stock-market point of view is likewise apparent; but when all is said the 
fact remains that this mode of financiering is objectionable, chiefly because of the 
false impressions created. A worthless prospect may easily be given, in the eyes of 
persons not familiar with such devices, a semblance of importance which it is far 
from possessing. 
The official manual of the Cripple Creek district, published by-Mr. Fred Hills in 
1900, contains a very complete record of the mining companies organized to work 
properties in the district. It describes the properties of 500 companies, about 100 
of which have a production of over $2,000 to their credit. Among the few companies 
with a reasonable capitalization is the Strong, with 500,000 shares at $1 and a heavy 
production, while the highest capitalization is that of the Colamokas Gold Mining 
Company, with 5,000,000 shares at $1, the production apparently being nil; also the 
Greater Gold Belt Mining Company, with the same capitalization and a very small 
output, and the Stratton’s Independence (Limited) with the same capitalization, a 
production of $7,500,000, and dividends of $4,000,000. The average capitalization is 
$1,250,000, most companies being organized with at least $1,000,000. Very few 
mines have yielded the amount of their capitalization in dividends. It is readily 
seen that few mines will be able to pay adequate dividends on this excessive capi¬ 
talization. Fortunately the capitalization is imaginary, not real, and thus it hap¬ 
pens that many of the gold mines of Cripple Creek are in a healthy condition and 
decidedly remunerative. 
The value of a mine is measured by the price of the stock. Here again the 
tendency to booming and exaggeration incidental to excessive capitalization has 
made itself felt in higher prices for stock than were warranted. Since 1900, how¬ 
ever, the prices have receded and now probably more nearly approach the true 
value, based on ore in sight plus an amount varying with the probable prospects of 
the mine. From the present share prices ($1.70) the Portland mine is now worth 
$5,000,000, whereas a few years ago the valuation reached $9,000,000. Stratton’s 
Independence at present prices (1905) is valued at $620,000, whereas in 1899 it sold 
for about $11,000,000. The Elkton at present prices would be worth $1,250,000. 
It might seem that a high production would justify a very large valuation. 
Many people, however, lose sight of the fact that the majority of gold mines have a 
limited life and that a large interest is necessary to recover the capital, together with 
an adequate return from the venture. 
To illustrate the manner in which many of the mines have grown, the Portland 
may again serve as an example, though few properties have been as successful as 
this. The Portland was located as a small claim in 1892 by three prospectors. 
A year later some rich ore was stoped. The development continued on a small scale, 
and in 1894 the present company was organized with a capital of $3,000,000. Rich 
ore was found, and in the next few years the proceeds were diverted to the purchase of 
adjoining claims, until in 1899 the whole present area of 200 acres had been acquired. 
Meanwhile the mine also paid for the erection of plants and all other necessary 
