become a plateau, and these waters, together with those of the American, having no natural channel to follow, will spread out over the entire valley of the Sacramento, and thus form a shifting sea of desolation along its entire course to the sea.

Another consideration, and one which demands serious attention from us all, meets us at the threshhold of the inquiry as to the ultimate result of a filling up of our navigable water-courses will have upon the State. If not one of the indefeasible, it is yet, under our system of government, one of the natural rights of the citizen that he shall have secured to him the free use and unobstructed benefit of the navigable waters of the commonwealth; and it is possibly an open question as to whether or not the State can permit the highways of commerce within her borders to become obliterated. Navigable rivers are the common property of the entire people-they are, so to speak, a part of the domain of the United States; and if a citizen of the State will be prohibited from building bridges over, or erecting hindrances to the free navigation of a stream, certainly no number of citizens can be permitted to perform acts that will forever destroy the stream itself.

D. A. OSTROM, Chairman, REUBEN KERCHEVAL, BYRON WATERS.

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MAJORITY REPORT

of their capital. The laws should compel directors to operate mines in the interest of all stockholders, and not in the interest of an "inside ring."

I venture to suggest, also, that the purchase and sale of mining stocks should be made a source of revenue to the State. The purchase and sale of mining stocks may be as legitimate business transactions as any other transactions which take place in the business community. When the purchases are made for the purpose of investment, and with the expectation of receiving a return on the investment from the yield of the mines, they are of that character. But the great bulk of the transactions in mining stocks is quite independent of the character of the mines, or of any expectations of a return on the capital invested from the yield of the mines. They are transactions wholly for purposes of speculation, and are totally disconnected with the mining industry of the country. Without assuming to deny that these transactions have been productive of some good to the community, it is safe to assert on the other hand that no other occupation, not even that of gambling, has been productive of such terrible and widespread evils. A tax on the sales of mining stocks would be a legitimate source of public revenue, and its imposition might be productive, also, of incidental benefits.

EVILS OF THE EXISTING SYSTEM.

This bill is designed to encourage legitimate investments in the mines, by affording to stockholders an equal opportunity to obtain reliable information concerning developments made from time to time in the mines, and also full information as to the financial transactions of the corporations. The reports of prospecting operations are to be made weekly, under oath, and the financial reports are to be made monthly. There is also an estimate to be made quarterly in advance, showing the probable expenses for the quarter. Heretofore it has been the custom for the officers of the corporations to keep secret important developments at the mines, and also the financial transactions of the corporations, in order that they might carry out operations in the stock market profitable to themselves, but often disastrous to small stockholders. It has been thus within their power to exaggerate the value of developments when they wished to sell stocks, and to undervalue them, or levy assessments, when they wish to buy; thus raising or depressing the market price of shares without regard to the merits of the property they represent, and inaugurating a process popularly known as milking the street." Large capitalists, few in number, are thus led to prey upon the thousands of small capitalists, making money, not out of the mines, but out of the people, by a process worse than ordinary gambling with cards, because it involves all manner of fraud and deception, besides .being more widespread in its consequences, and much more demoralizing to society. So many of these transactions have occurred that they have cast a cloud upon the reputation of our people abroad, and brought our mining corporations into disrepute at home. The hazards of mining investments, always great, are thus much increased, and the mining industry thereby seriously injured. It is, therefore, the duty of the Legislature, both upon the grounds of public morality and policy, to apply a remedy.

RECKLESS ASSESSMENTS.

The bill under consideration attempts to do this by requiring the utmost good faith on the part of directors of mining corporations towards all the stockholders. There is no relation between man and man which can be more sacred than that of the trustee to his beneficiary. He is bound in law and morals to deal fairly, and upon no account to take any advantage of him. Yet these corporations have become so powerful that they have disregarded their obligations, and seem to act upon the theory that they have gained a right by pre

scription to do wrong. Almost every mining corporation has a credit mobilier for milling ores or furnishing supplies at prices fixed with little regard to the interests of stockholders. It is within the experience of almost every citizen of this State, that in the purchase of mining shares he takes a greater risk upon the honesty and efficiency of the management of the corporations than he does upon the product and profit of the mines. Indeed, it is notorious that most of them are manipulated more with a view to making money out of the public than out of the mines. Mines that were reasonably worth a few hundred thousand dollars, have been sold out at the stock boards for millions. After the stock has been thus floated, assessments have been levied, month after month, and year after year, ostensibly to develop the mines. In this way the mining corporations formed under the laws of this State have collected, within the last three years, assessments as follows:

Average per annum, eleven million six hundred and ninety-five thousand three hundred and thirty-three dollars, or nearly one million per month-a sum greater than all the taxes raised in this State during the same time for the State, county, and city governments. During the month of February last the assessment roll footed up one million eight hundred and eighteen thousand dollars, showing that, instead of decreasing, this enormous drain upon other industries of the State is increasing. It is believed that one-half of this sum, judiciously and honestly expended, would accomplish better results than have been attained in the mines, and that, by making the corporations account frequently for all expenditures, and by subjecting them to State supervision, several millions of dollars a year can be saved to stockholders. This, of course, would increase confidence in corporate management, and would make investments in stocks less hazardous, thereby greatly encouraging the mining industry.

NATURAL DESIRE TO INVEST IN MINES.

Our people, many of whom have been miners at some time in their lives, and all of whom are more or less under the influence of the excitements that frequently occur upon the making of important discoveries in the mines, naturally desire to invest in mines, and the shares of corporations afford a convenient medium for making such investments. It is certainly good policy to encourage such investments if, at the same time, proper safeguards are thrown around them. Our laws authorize the formation of corporations for that purpose, and they are a necessity. Deep mining, where heavy expenditures are necessary, could not be carried out so extensively as the mining interests of the country require without such aids. The stocks of mining corporations ought to be made a legitimate and not an extra hazardous source of investment, as they now are. This cannot be accomplished so long as the corporations are left without responsibility to some authority competent to correct abuses and expose mismanagement.

REVENUE FROM THE STOCK MARKET.

The bill under consideration provides for a dealer's license upon purchases and sales of mining shares. This is designed for the purpose of raising revenue and to check one of the most mischievious abuses of the stock market-fictitious purchases and sales. The license is fixed at one-half of one percentum, to be collected as the transactions occur, by the brokers, who are to be responsible in bonds. therefor. The amount of revenue to be raised will depend upon the volume of business, and this will follow the developments in the mines. If the mines should be prosperous, the stock market will be active and the revenue correspondingly large; otherwise the revenue will be smaller. Thus the license will adjust itself equitably to the condition of the mines. There are three stock boards in this State; one of which does most of the business. The statistics compiled since the organization of the principal board, in 1862, show the volume of business in that board to have been as follows:

To this should be added about forty per centum for transactions on the street, and in other boards, making the total volume of business average about one hundred and fifty million dollars. It was about that much last year. The amount of money invested in stocks in this State has varied greatly, at one time being less than ten million dollars, and at another exceeding three hundred million dollars, taking the market quotations. It has averaged, during the last three years, about one hundred million dollars, and is now about sixty million dollars. This money or property almost entirely escapes taxation. All the principal corporations have their headquarters in San Francisco, and are assessed there upon their cash on hand, and office furniture. The total tax paid by all of them is less than one thousand six hundred dollars. The amount of taxable property in this State, as shown by the Controller's report was, in eighteen hundred and seventy-seven, five hundred and ninety-five million seventy-three thousand one hundred and seventy-seven dollars, and the amount of taxes collected for State and county purposes was eleven million seven hundred and forty-nine thousand nine hundred and seventy dollars and fifty-two cents. There were city taxes, licenses, and fees collected, which, if added, would swell the amount to about thirteen million dollars, which is more than two per centum upon all the property on the assessment rolls. Had the money invested in mining stocks been taxed in the same proportion, it would have yielded a revenue of at least one million of dollars instead of a few hundred. It is the theory of this bill that the stock dealer's license will reduce the volume of business nearly onehalf by restricting fictitious transactions. Should it do so, the amount of revenue would amount to about seven hundred and fifty thousand dollars per annum. Should the business remain as large as at

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present, the revenue would equal one million five hundred thousand dollars.

EQUITY OF THE LICENSE.

It has been objected that this provision will so injure the stock business as to hinder the development of the mines. We do not think so. At present the brokers charge a commission of one-half of one per centum to small dealers those who usually buy as an investment. These people are settled all over the State; in almost every neighborhood. They send their orders sometimes by telegraph, paying extra charges. They frequently hold their stocks for years, paying assessments, and in that way consuming all their earnings. People who will do that will certainly not be kept from buying stocks because of a license to the State, that does not make the cost of an investment in stocks any greater than an investment in real estate now is. There is another class of dealers, however, who are favored by the brokers with lighter commissions. They pay but one-fourth of one per centum. They deal largely, watch the daily fluctuations of the market, and try to make money out of them. Not more than one in a thousand succeeds. They try to "beat the game," until they lose all they have, and all they can borrow; then they disappear, to give place to others equally unfortunate. The license will tend to restrict this gambling propensity. The losses of this class, and a large part of the heavy assessments collected from the first class, are the profits of a third class, who are the largest operators-the manipulators of the market. They control the trustees, through them the profits from furnishing supplies, keep secret the operations in the mines, and are thus enabled to know when to buy and when to sell. They are omnipotent in the stock market, and they get their business done for a commission of one-eighth of one per centum. The license will compel them to pay five-eighths of one per centum. In other words, while it will increase the cost of making a transfer five hundred per centum for the third class, it will increase it only three hundred per centum for the second, and but one hundred for the first. Thus it will put all more on an equality, and fall heaviest on those who do the most mischief, and who can best afford to pay it. Besides, it should be borne in mind, that those who now have mining shares, and continue to hold them, will have nothing to pay, while they will get the benefit of State supervision of the corporations.

IT WILL RESTRICT WASH SALES.

A very important effect of this license will be its tendency to check the wash sales and purchases by which, mainly, the deals in stocks are carried out. For instance: A is a manipulator, holding eighty thousand shares out of one hundred thousand shares, in, say. the Alta Mining Company. He has bought his stock at an average cost of five dollars per share and gradually advanced the price to ten dollars. He sends orders to broker B to buy ten thousand shares of the stock, raising the price rapidly to twenty dollars, and at the same time sends orders to several other brokers to sell all the shares they can. His object is to make a market for his stock, and these large transactions excite people into the belief that an important discovery has been made, the actual facts being concealed, or perhaps misrepresented, and they come into the market and buy, while A, during the

excitement, sells out his shares, making a million of dollars by the operaton. Then, of course, the price of the stock declines to a nominal sum, and the victims, hoping it will advance again, so that they may get their money back, hold on, while A, still keeping the control by proxies and dummy directors, bleeds them year after year, by heavy assessments, until they lose faith in the mine or expend all their money in assessments, when they sell for a trifle, and A buys in the stock to repeat the operation on a new set of victims. This kind of "mining" is very profitable, of course, to a select few, but it is ruinous to the multitude, and injurious both to the mining industry and to the State. It is the fault of a system which is convenient and useful when performing its proper functions, but which has been badly abused. Heretofore the Legislature has ignored the evil, and the result is that, while our mines have yielded for several years one-half the bullion product of the world, the great majority of those who have invested in them through the stock market have lost heavily, and very many of them have been utterly wrecked in fortune and health.

CAPITAL OMNIPOTENT IN THE STOCK MARKET.

No part of the globe, within the same area, possesses such extensive and rich deposits of the precious metals. During the past thirty years California has yielded nearly one billion two hundred million dollars, and Nevada about four hundred million dollars. Nearly all of this is the result of the capital and the enterprise of the people of this State. At no time have the mines been so productive as during the last three years; and yet, though all our other industries have been as prosperous as usual, with a single season of drouth, we find that to-day there is great destitution among the people of the State. Where there should be universal prosperity and happiness, there is widespread poverty and suffering. Thousands of comfortable homes, and many millions of dollars, earned by the patient toil of the industrious masses, have been swept away by disastrous investments in mining shares. Undoubtedly the stock market has been a chief factor in producing the present destitution of the people. Its baneful effects have been felt in every neighborhood and almost every family in the State. Capital, which is aggressive in all enterprises, is omnipotent in this. Controlling the avenues of information from the mines, and having power to levy assessments without responsibility to any competent authority, the only limit to the amount of money which may be extorted from its victims is their ability to pay. As fast as they accumulate, it absorbs. It is a perfect machine for concentrating wealth. It has made a few millionaires and a host of paupers. There is no remedy for its rapacious and unscrupulous operations but the strong hand of the law, by which its further ravages may be checked, and the rights of the public may be protected. This much, so far as it is within the power of the Legislature to do it, should certainly be done. It is in the unhealthy concentration of wealth that the greatest danger to our institutions lies. Andrew Jackson, a generation ago, clearly perceived this danger, and lifted his voice against it. The sooner the task is begun in this State, the more easily it will be accomplished.

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THE STOCK BOARDS SHOULD BE HONEST MEDIUMS OF EXCHANGE.

It has been objected that this bill will so injure the stock business as to hinder the development of the mines. We do not think so. We think the bill will largely tend to reduce the stock boards to honest mediums of exchange, freeing them from the worst features of stock jobbing, and thereby making the business more reputable than it has been. Any temporary loss will ultimately be more than made up by the increase of business consequent upon increased faith in mine management and the stock market. While we fully realize the importance of the boards as a convenient place for making investments in the mines, we are aware that a very small part of the bullion product of the world, or even of this country, has been aided by stock operations. The discovery of gold and silver, and the development of the mines in Mexico, Spain, South America, Australia, and for the most part in this State, also, have been accomplished without such aid, and at great risk and cost of life and capital. Deep mining in this State, as in the property owned by Hon. William M. Gwin, of Calaveras County, in the Idaho Mine, and in many others, has been successfully carried on by individual enterprise without the stock market. Even in Nevada, one of the deepest mines-the Richmond-has been explored without such aid. The Sutro Tunnel Company has expended an average of three hundred thousand dollars per annum for ten years, and excavated a tunnel nearly four miles in length, without any immediate prospect of reward. The deepest explorations on the Comstock are only about two thousand two hundred feet below the surface-one-eighth as deep as the tunnel is long. The Tunnel Company has been entirely dependent upon private capital. No doubt, if our corporations would deal justly with stockholders, there would be an unlimited amount of money at their command without any stock boards. Still, we think an honestly conducted medium of exchange for mining stocks would be a great convenience in aid of the corporations, and by which deep mining may be greatly assisted and facilitated.

STATISTICS-GENERAL CONSIDERATIONS.

There are many other considerations entering into this important subject to which we cannot even refer without making this report too long. We must, however, call attention to the fact that there has never, heretofore, been any means provided in this State for obtaining accurate statistical information relative to the mines. Though this has been the chief mining State of the Union, and will probably always be so, we have taken no care to set forth the real merits of this industry, as a means of conveying reliable information to foreign capitalists, or to our own people, by which to govern their investments. The bill under consideration attempts to supply this want, and in this respect alone is of great value. The mining industry is a permanent one, and those of our people who wish to invest in the business, through the stock market or otherwise, should be enabled to do so with all possible safety. It is said by intelligent observers that the number of people here who invest in stocks is five times as great in proportion to the population as the number