Product Details
CompanyState Line Gold Mining Company No. 2 Certificate TypeCapital Stock Date IssuedSeptember 14, 1881CanceledNoPrinterAmerican Bank Note CompanySignaturesHand signedApproximate Size11" (w) by 7" (h)ImagesShow the exact certificate you will receiveGuaranteed AuthenticYesAdditional DetailsNA
Historical Context
George D. Roberts sent Asbury Harpending to Nevada in 1879 to evaluate the mining claims of a small and relatively remote mining district in Esmerelda County, Nevada just across the state line from Death Valley, California. Harpending judged the deposits as a good one for a stock promotion. Due to the lack of water, remoteness, poor grades of ore, and small size of the deposits the owner was willing to sell at a low price.
Harpending had suffered tremendous financial loss when he sold all of his property in California at fire sale prices in 1872 in a matter of weeks. Harpending expected to be sued on the diamond company stock float and liquidated all his California property so it could not be attached for damages in a law suite. Having not been indicted on that caper, Harpending was back in the business. Harpending bought the almost worthless and poorly developed claims for $33,333 and a note for $77,777, but reported it as a $100,000 cash purchase. Roberts and Harpending sold stock to other promoters in 1880 to raise the money to pay for the property and develop it. They bought a twenty stamp mill and built twenty miles of water pipeline to the mines. Almost thirty experts were hired to write glowing reports on the potential of the mines during 1880. The four State Line Companies were finally floated on the public in March 1881, with a par value of $20,000,000 or five million per company.
The claims were incorporated as four separate companies, lined up in a row going across the deposit from one end to the other. They were named the State Line Gold Mining Company No. 1, No. 2, No. 3 and No. 4. The capital of each company was put at $5,000,000, in 200,000 shares of the par value of $25. The No. 2 and No. 3 companies were in the middle and had the promising prospects, and the two end companies Nos. 1 and 4 had almost no ore on them.
Roberts also created two packages, consisting of combinations of stock in two of the four companies, which he also sold and which were listed on the exchanges. These two company combinations led some observers to believe there were six State Line Companies.
An article from The Daily Exchange (SFDE) dated 3/24/1882 said that the float of the four companies of the State Lines started with selling stock to professional promoters and cappers, at prices ranging from $1.50 to $2/share, who then promoted them and sold them to the public. Promissory notes for stock, referred to in the 1880s as “calls,” were given to people and could be converted to stock certificates later when the stock was issued by the companies. The “street” meant the stock exchanges which were worked by the original promoters: Roberts, Harpending and one or two others, while the professional cappers laid the rails up-town. The man about town had the hotels allotted to him, the church-going man worked the pious families, and the mercantile man worked his commercial friends throughout the county. The pool had agreed to hold the stock until it reached $25/share, but a member of the pool broke ranks and sold at $14/share while Roberts was out of town and the stock crashed to $6/share before Roberts returned to New York and stopped the decline.
Roberts threatened to get even with the State Line Pool members who sold prematurely as he still had a large stock back up in order to get a better price. Roberts replaced Colonel Taylor, the first superintendent of the mines who had sent many glowing letters and telegrams about the mine, with a new superintendent, Farrish, whose professional reputation helped raise the stock price. He also hired more experts to write glowing reports. The article says Taylor “suddenly resigned his position, having cleared, it is said, some $100,000 on the operation.” Roberts paid his lieutenants well and Daly was rumored to have gotten $60,000 from the Chrysolite promotion. In spite of the mill failing to function and the water line breaking and other problems or excuses for there being no production, Farrish promised that the mill would be running by the end of 1881.
The report of the Roberts experts that the ore was from $4 to $400 per ton was expected to be confirmed by Farrish. William A. Farrish resigned in December and returned East, and he claimed to be too sick to write a report for the company. Mr. Andrew Gill, a reporter for the New York Truth, learned about two meetings between Roberts and Farrish at Farrish’s home in Newark, New Jersey. Reportedly it took two meetings for Roberts to get Farrish to sign a very unfavorable report after which Farrish’s health returned and he went out West again.
The Farrish report caused the stock to fall to 90 cents. One of the directors ofthe State Line was quoted as saying that the company had fallen among thieves. Roberts then sent out a third superintendent, Jim Selover, known as a Roberts’s man, and the stock went back up by 55 cents reaching $1.85 on assurance that Selover would push the work at the mines. The 55 cents a share was a nice little plum to the manipulators, who had bought in at the 90 cents low caused by the negative Farrish report and now sold out on a rising market up to $1.85.
Roberts apparently unloaded the last of his stock at this high as the mines new manager Jim Selover, had sent no reports East during his first three months of 1882 on the mine. The stock continued to limp along and its price on March 23 when the above story appeared had fallen to 67 to 69 cents for No. 2 and 3. The company stocks became worthless as the mill never operated and the operation closed down. Roberts was finished with that promotion and let the entire property be taken over for $17,702 in unpaid debts. Roberts took a gigantic beating compared to what he would have made if the pool had held together and gotten the price up to $25.
Roberts appears to have sold much of his stock for $2 or less per share. However, Roberts probably did very well on his short sales on which he made 50 cents or more per share. Even if Roberts’s cost per share to create the stock was on the high side of 25 cents a share he got back close to eight times his investment in less than two years.
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