28 minute read
The Infamous Emma Mine: A British Interest in the Little Cottonwood District, Utah Territory
Utah Historical Quarterly
Vol. 23, 1955, Nos. 1-4
THE INFAMOUS EMMA MINE: A BRITISH INTEREST IN THE LITTLE COTTONWOOD DISTRICT, UTAH TERRITORY
BY W. TURRENTINE JACKSON
In the 1860's Utah was known to possess many useful and some precious metals. Coal of fair quality had been found in considerable quantities in various parts of the territory, and both lead and iron had been mined by Mormons living in the southern counties. Less was known about the available precious metals. The leaders of the Mormon community had discouraged the search for gold and silver because they realized an inevitable rush of non-Mormons would follow a successful discovery, thereby undermining the isolation and unity within their religious commonwealth. Moreover, the Mormons were preoccupied in building a permanent, stable economy based upon agriculture and, to a lesser extent, upon manufacturing. The initiative in prospecting therefore was left to United States soldiers. While Colonel Albert S. Johnston's army was stationed at Camp Floyd to the south and west of Salt Lake City, silver deposits were found in Cedar Valley. A few years later, Colonel Patrick E. Connor's men began systematic explorations, discovering several deposits including those in the Wasatch Range to the east, at the head of the Little Cottonwood Canyon. An agent of the New York and Utah Prospecting Company opened a road toward the Little Cottonwood mines as far as Central City, a lumber milling center, and in 1866 built a small smelting works at the mouth of the canyon. Inadequate transportation soon forced the smelting operations to shut down. Between 1868 and 1870 the Utah mining picture changed rapidly, due primarily to the completion of the transcontinental railroad. In the earlier year there was not a mining shaft fifty feet deep in the entire territory and not more than a thousand resident non-Mormons. News of rich discoveries were continuous through the spring and summer of 1869, and by the close of 1870 the mining population had increased to four thousand.
The greatest and most notorious discovery along the Little Cottonwood was the Emma Mine, found by two prospectors, Robert B. Chisholm and J. F. Woodman. Chisholm, a Scot born in New York, had his first mining experience in the lead mines near Galena, Illinois, but in 1851 migrated to California. According to his reminiscences, his wanderings led him to Salt Lake City in 1864, where he happened to be in the assayer's office when an old soldier brought in an ore sample from the Little Cottonwood Canyon. Four years later, after the earliest claims in the area had been forfeited for non-development, Chisholm formed a partnership with Woodman, and in the autumn of 1868 they selected their claim. Winter snows forced the prospectors out of the Wasatch Mountains, and Chisholm returned to his family farm near Elgin, Illinois, hoping to liquidate his property. Unable to sell the farm, Chisholm, with his son William, returned to Utah in the spring of 1869, with ten dollars in his pocket. Woodman, whom he met in Brigham City, was penniless. At this time their mine was only "a hole as big as a small bedroom about 18 foot deep and full of mud and water." One account suggests the mine was christened the "Emma" for the daughter of Chisholm, who constantly corresponded with her brother William, urging him to come back to his "dear little Emma" in Illinois. Other stories describe the discoverers as men "rough in manners and appearance" with an imaginative turn of mind, who resolved to name their mine "after a lady with whom one or possibly both of them had been illicitly consorting in San Francisco, and whose Christian name was Emma."
Another mine promoter, James E. Lyon of New York, had appeared on the scene as early as the spring of 1868, and presumably advanced money to Chisholm and Woodman soon thereafter in exchange for a third interest in their claim. During the first year only a hundred tons of ore were taken from the Emma Mine, and Lyon, not pleased with the prospects of his enterprise, returned to New York, having first satisfied himself that the lode ran in a northwesterly direction. In the middle of October, 1869, the prospectors broke through to a chamber of solid ore. The new discovery had been found in a different direction from the original shaft than Lyon had expected. Chisholm and Woodman, unconcerned over the obligation to their partner, relocated their claim, and in February, 1870, had it surveyed and entered on the books of the district. Being without funds to do the necessary work, they borrowed money from two former Army officers to sink a deeper shaft and to procure a supply of flour and meat. Each newcomer received a one-sixth share in the enterprise. Three thousand feet along the ledge were claimed by the Emma Silver Mine of Utah. A month later the partners sold four hundred feet of their claim to the Walker Brothers of Salt Lake for $30,000.00. The Walkers began shipping ore to Great Britain for reduction.
Returning to Utah, Lyon brought suit to regain his one-third interest. No less than seventeen lawyers participated in the case; among them, as principal attorney, was William M. Stewart, Senator from Nevada. While Lyon's claim was being debated, two more wealthy promoters, Trenor W. Park and General George Baxter, came to Utah in hopes of securing an interest. Chisholm claimed Park and Baxter had learned of the mine's wealth through two other sharks that had hoped, but failed, to sell the Emma in the "East" for a million and a half dollars. Other accounts suggest that Lyon had met Park in New York and urged him to come west. Park, a country lawyer in Vermont, who "came early to the conclusion that the confined life of New England was too narrow for a man of his metal," had moved to San Francisco. As the receiver for the Mariposa Estate, for which the English had paid John C. Fremont heavily, he acquired a basic knowledge of mining law. In March, 1871, Park and Baxter purchased an undivided half interest in the Emma Mine for $375,000.00 in gold, placing an estimated value of three-quarters of a million dollars on the whole property. Lyon secured a temporary compromise settlement for his claim but by this time Park and Baxter insisted they had spent $1,500,000.00 in developing the claim. As the older partners could not provide their percentage of the cost, the newcomers pressed for a sale. Chisholm and Woodman received small payments in cash and the assurance that they would receive a sizeable sum contingent upon the disposal of the mine.
The name of the mine was then changed to the Emma Silver Mining Company of New York. Lyon was assured that he would receive one-sixth of what the mine sold for, less the $1,500,000.00 Park and Baxter had reputedly expended, provided he did not press his claim before November 15, 1871, while a United States patent was being applied for.
London capitalists were concentrating to a large extent on mining ventures between 1870-72. For the first time since the disastrous losses in the gold-quartz mining enterprises of California, the boom in registrations of the English companies was sufficient to constitute a "mining mania." At the beginning of 1870, San Francisco's Scientific Press noted, "Our mines are attracting the attention of European capitalists, and already several have passed into the hands of English companies. This is but the beginning; we have plenty of developed workings, which, if properly managed, would surely yield profits large enough to attract foreign capital." In the summer of 1871, Park, accompanied by Senator Stewart, presumably still guarding Lyon's interests, and armed with a favorable report from the mining engineer. Professor B. Silliman of Yale, crossed the Atlantic in hopes of floating a new mining company. Failing to get the ear of the British investing public, the Americans sought to interest local promoters of speculative schemes and influential politicians in the project. Among those sought out was one Albert Grant, known as Baron Grant, a promoter with an international reputation who, for introductions into British financial circles, was to receive ten per cent of the nominal capital of any company successfully launched. Major General Robert C. Schenck, American Minister to the Court of St. James, was persuaded to buy some of the shares of the proposed company. Whether the purchase was made with his own funds or with those provided by Park and Stewart has never been conclusively proved. Apparently he was guaranteed a satisfactory percentage of return on his investment for his supporting statement in the prospectus.
On November 9, 1871, the prospectus of the Emma Silver Mining Company, Limited, appeared, announcing the formation of a new company with a capital of £1,000,000, in £20 shares, one-half of which were offered for subscription and the other half retained by the vendors. The distinguished board of directors included three members of Parliament, United States Minister Schenck, General Baxter, who was a former president of the New York Central Railroad, Senator Stewart, and Park. According to the prospectus, the estimated net yield of the mine would be £800,000 a year. The profits were to be restricted to eighteen per cent per annum until a resreve fund of £180,000, equal to a year's dividends, had accumulated. The property was taken on the report of Professor Silliman without the expert opinion of any agent hired by the purchasers. Within two days the £20 shares were selling at a premium of £3.10 to £4.
In December, 1871, the Emma Silver Mining Company, Limited, declared its first interim dividend at the rate of eighteen per cent per annum. The public had immediately subscribed for 25,000 shares, and these were allotted to two thousand shareholders. Park took the £500,000 paid for the shares and settled with Albert Grant for £170,000. Meanwhile Senator Stewart, who continued to act as attorney for James Lyon for a contingent fee, aligned himself with Park and the other adversaries of his client. Lyon was awarded £30,000 for his interest but was then informed that all the 25,000 vendors' shares were locked up and inaccessible for nine months, and no cash could be paid until the shareholders released them. When Lyon learned of the situation, he told Stewart, "You say you have consented to such a sale, tied up the stock for nine months, consumed all the proceeds of the half that has been sold, in charges for expenses, and have called me from America to London to tell me this." To alleviate Lyon's disappointment, Senator Stewart personally paid him $200,000.00 for his shares, less $50,000.00 for legal services. Stewart soon secured the release of the shares he had purchased from Lyon and sold them in New York for $150.00 a share. Lyon later accumulated documentary evidence to support his assertion that Senator Stewart cheated him out of nearly a million dollars. With Lyon thus disposed of, the other old claimants, Chisholm and Woodman, relinquished all their rights for the payment of £10 a share, less than half the market value, leaving Park, Baxter, and Stewart in control of all the vendors' shares.
Reporting the sale of the Emma Mine and the exchange of shares at a premium, the Engineering and Mining Journal of New York commented:
The editor was particularly disturbed because the United States Minister had lent his official dignity to the promotion. "... the course of the official representative of the United States in endorsing a scheme which puts such a value on the mine in its present condition, is doubly blameworthy. It will not help the moral aspect of the matter much, if the mine turns out to be worth all that it is said to be worth; but in the other not impossible event, Mr. Schenck's conscience will be quickened by a decided disgrace." The promoters had foreseen the probable condemnation of the Ambassador's action and within a month of the circulation of the prospectus he was prepared to withdraw his name. The editor of the mining magazine concluded, "The plan does honor to the shrewdness of the promoters, but not to the judgment of the English public, nor the good taste and delicacy (to use no stronger term) of the American minister."
Meanwhile, the Utah enterprise prospered beyond expectation. The production at the mine was reported increasing, three monthly dividends were paid, and at a company meeting on March 7, 1872, the chairman told the shareholders silver was coming out of the mine so fast that it seemed very likely they would get thirty to forty per cent rather than eighteen. Schenck's resignation was described as "diplomatic etiquette," with no reflection upon the value and prospects of the mining property. To check the ugly rumors in circulation, Park offered to pay the expenses of the entire board of directors to go to the Little Cottonwood Canyon and examine the property for themselves. Instead they chose Brydges Willyams, a director, as their representative. Willyams was granted £5,000 for his trip. He was accompanied by G. A. Lawrence, a writer of fiction, who was so impressed by what he saw in Utah that upon his return he wrote a book entitled Silverland, containing a chapter on die Emma Mine. From his publishers he received a thousand guineas, and his friend Willyams paid his expenses.
Although the directors were unable to get a quotation on the Stock Exchange, newspapers stated that the company shortly would be in possession of the £180,000 reserve and would then start paying a thirty-six per cent dividend. A pamphlet was published and sent free to every shareholder entitled "Mining Enterprise in America, as Illustrated by the History of a Great Investment." Extracts were printed in the London Mining World and the Stock Exchange Review. In spite of reassurances of the directors, London financial circles still had some reservations. Two respectable New York journals, the Evening Post and the Nation, seized upon a circular printed in London and used it as a text to brand the Emma Silver Mining Company, Limited, a swindle. The Engineering and Mining Journal took exception to their attack upon a mining enterprise, but reiterated its position about the Ambassador's indiscretion and the overcapitalization of the company.
The Emma Silver Mining Company, Limited, became involved in litigation with the Illinois Tunnel Company, a rival neighbor, over conflicting claims. In April, 1872, workmen for die latter company broke into the Emma works and the manager was forced to block the opening they had made. Shortly thereafter a cave-in cut the Emma workmen off from that section where their rivals had entered, and when the debris was cleared away the Illinois men were in possession. The Illinois Tunnel Company claimed that the disputed area was not a part of the original vein of the Emma and presented the testimony of numerous workmen and "experts" to prove their point in court. The Supreme Court of Utah Territory granted a temporary injunction to the Emma Company, claiming the rival organization did not prove its case; the owners of the Emma were awarded the right to follow their ore vein outside the surface limits of the patent into neighboring ground. The editor of the Engineering and Mining Journal reported in New York: "We submit that this is the clear meaning of the law. The United States issues its patent as a final decision upon the ownership of the mines which the patent covers. The holder of the instrument is the master of his vein, no matter what its windings may be. And this is the best condition of mining rights." In London, The Mining Journal also praised the decision by saying, "The terms in which that decision was pronounced do honour to the high-minded sagacity of the American Bench, and afford a telling refutation to those charges of partiality and prejudice which have in some quarters been brought so unjustly against American jurists generally. . . ," The Illinois Tunnel Company announced it would appeal the case to the United States Supreme Court.
During the first year of its existence, the Emma Company disbursed $195,000.00 to the shareholders, paying thirteen monthly dividends, the last of which, six shillings a share, was distributed December 2, 1872. Presumably these dividends were paid from the earnings of the mines, although there was a suspicion on the part of some that Park, desirous of sustaining the market until he could dispose of the vendors' shares, had advanced the money on ore in transit to pay the last two.
At the end of 1872, the company directors made the astounding discovery that their stock of available ore was exhausted, everything in sight worth taking had been extracted without any new ore bodies having been discovered. Dividends for January and February, 1873, were passed while they attempted to appraise the situation. Shareholders, publishing embarrassing questions addressed to the board, brought the deplorable situation to light and precipitated a crisis. Glasgow shareholders held a "private indignation meeting" to complain that nearly one-half of the stock of the company was held in Glasgow and the west of Scotland, yet, with the exception of the company chairman, tbere was no one on the board to represent the Scots. The assembled agreed to "approach the directors in a friendly manner, and in a businesslike way, but have everything investigated into, even from the purchase of the mine down to the very latest transaction." A committee was elected to travel to London for the annual meeting to speak for the Scottish shareholders and urge the election of two Scots to the board.
On March 1, the directors released the annual report expressing their "regret and disappointment" that the balance sheet was so much less favorable than they, until very recently, had anticipated. The information received by the directors was described as "tardy and insufficient," but some allowances were thought justifiable because the mine was situated in a "sterile region of difficult access and 5,000 miles away." Neverthless, it was obvious that outside parties had more correct and earlier information than the directors. Professor Silliman's predictions as to the amount and value of the ore had proved fallacious. The resident manager had expressed a desire to resign, and the directors, convinced that he was an agent of the Stewart-Park interests, replaced him with George Attwood, who was to go to Utah with instructions to report on the condition and prospects of the mine and push exploration vigorously. When this annual report reached the United States, a San Francisco mining journal printed the entire text remarking, "The Emma mine, in Utah, is probably the best known mine abroad. . . . On the success of this mine depends in a great measure, the future of Anglo- American mining, for such is its position, should failure ensue, small support will again be extended to American mines on the London market."
The atmosphere was tense as the shareholders assembled for the second annual meeting. The Glasgow representatives lambasted the directors but expressed faith in the mine itself. The directors announced a willingness, individually and collectively, to place their resignations in the hands of the shareholders, or to remain and accept any new men who might be suggested. The two Scottish directors proposed at the Glasgow meeting were elected to replace the Americans, Stewart and Park. One shareholder, who thought the board had been misled by erroneous information, demanded a committee of investigation. The board admitted it had been deceived. Archibald Orr Ewing, Member of Parliament and newly-elected company director, suggested a committee of conference in lieu of a committee of investigation, to advise with the directors relative to future policy. Ewing personally had no confidence whatever in any single American employed in the mine. The new director was bitter about Park's financial manipulations and the fact that he had been permitted to remain on the board, when a year before he held 25,000 shares and now retained only the twenty-five essential to maintain his seat on the directorate.
Unable to weather the crisis, the mine in Utah had to be shut down and most of the working force dismissed. The shares of the company speedily dropped from £23 to one-tenth that amount and finally were unsalable at any price. American mining journals expressed grave concern. San Francisco's Mining and Scientific Press remarked: "It is with sincere regret that we note the tone of many shareholders in this and other mines in England, which evinces a distrust of all Americans on general principles. But they should recollect that they seldom buy a mine without the advice of English engineers, and there are dishonest men on one side of the Atlantic as well as the other." The leading mining journal in New York noted that the decline in Emma shares represented a depreciation of two and a half million dollars from par and more than five million dollars from the highest prices. The editor insisted all members of the syndicate, both English and American, had conspired to make it appear that the mine could pay eighteen per cent annually so they could sell their shares at a premium. Yet the dazed and bewildered shareholders could think of no other explanation of their losses than to charge everyone but the English managers with swindling. Commenting later on the plans of the new directorate and resident manager to dismiss all American employees, the journal suggested, "The sooner the Englishmen turn their vast intellects from the consideration of knavery, that is at the best very doubtful, to thinking of the best means of treating $80 ore, the sooner they wdl get in the path that leads to a moderate success."
All the shareholders were disappointed and disgusted. Many made their views public by addressing inquiries or comments to English mining and financial magazines. Some urged a special company meeting to adopt procedures for forcing restitution from the vendors. Others attacked the English financial agents, particularly Baron Grant, for overcapitalizing and overpromoting the company and speculating on its shares. Park, forcibly removed from the board, announced he had remitted £33,000 more to the London headquarters of the company than the ore sales had earned. Moreover, he revealed that the Emma lode had run northwest by southeast, but other companies had patents in that direction, so to avoid difficulty the Emma Company had taken a patent running northeast by southwest. Moreover, the company had moved onto the lands owned by the Illinois Tunnel Company and taken £29,000 of its ore. The American directors of this company and Park both threatened to seize the Emma Mine to secure payment of their claims. One shareholder addressed an open letter to United States Minister Schenck.
An American investor who had been bilked summarized die views of many of his countrymen when he stated "the Emma bubble is a national disaster."
An extraordinary meeting of the company was called at the end of May, 1873, to replace the recently elected Scottish directors. The chairman's proposal that the financial position of the company should not be discussed in a public meeting but at a private conference between the larger shareholders and directors precipitated a bitter denunciation of the original directors and libelous accusations flew thick and fast. The chairman, under repeated questioning, refused to reveal why the newer directors had resigned. The small shareholders forced through a resolution providing that all original shareholders and those of six months' standing should participate in the conference. The larger shareholders, many of whom were recent purchasers, were branded as speculators.
While discouraging reports came from the Utah manager to those in London trying to reappraise the company situation, western American publications instituted a campaign to restore confidence in all the mines of the Little Cottonwood District. 38 The greatest support came from such Utah newspapers as the Salt Lake Journal:
These reports of new ore bodies did not go unnoticed by the London shareholders, who sought in vain for months to gain a confirmation from George Anderson, chairman of the board, or from George Attwood in Utah. The mining press reported every rumor and opened its correspondence columns for public debate. Some claimed the mine was in a very bad state and the periodic reports of fresh discoveries were quite untrue; others insisted the Emma Mine was never so productive. Finally, the London board had to refuse to grant shareholders inspecting orders whereby their personal agents could go underground and venture an opinion. When factual information from the superintendent's reports was made public, the disappointed countered with quotations from the Salt Lake Daily Herald and the Utah Mining Gazette. This war of words was reflected in the market for company shares, which fluctuated in value from £2 to £8 according to the nature of the latest report. The directors finally issued the annual report in May, 1874, stating that there were no new discoveries, mining costs had reached an all-time high, and the annual profits were only £14,000. The chairman announced that he had been to New York in an attempt to adjust the claims of Park and the Illinois Tunnel Company. Arrangements were made to liquidate the latter by periodic payments to January, 1875. Park had agreed to await settlement of his claim until this was completed and the mine was in a better condition. Shareholders were once more cautioned against placing any confidence in outside reports. Manager Attwood's appended report stated "the future prospects of the mine are most gloomy, and until the explorations are carried much further ahead, [I] cannot conscientiously give any encouragement." Supporting testimony was given from Clarence King, director of the United States Geological Survey, and the manager of the Ophir Mining and Smelting Company of Utah, Limited.
The Emma Company shareholders assembled again on May 15, 1874, for a stormy meeting lasting four and one-half hours. One shareholder inquired whether or not Mr. Park and the Illinois Tunnel Company were one and the same person. Under repeated questioning, Attwood admitted that he labored under that impression; it was common report, but he could not get proof. One director stated that if such proof came into their possession, legal action would follow. In a scene of great confusion and disorder, a motion was made that the entire board be called upon to resign at once. To avoid dismissal, chairman Anderson and one other director submitted resignations, the annual report was then accepted, and the meeting adjourned until June 9. The Utah press renewed its criticism of manager Attwood, who had attended the London meeting, for undermining the mining industry of the territory. Recent purchasers of the depreciated shares were particularly bitter that their campaign to restore confidence in the enterprise had failed.
By the time the shareholders reassembled, director Brydges Willyams had announced he would not stand for re-election. A contest for the vacant seat ensued between the long-time shareholders and the members of the Stock Exchange who had only recently acquired their interest in the company. The former supported C. W. C. Hutton, ex-sheriff of London, for the place. Upon his apparent victory, the new shareholders demanded an official poll, to be taken a fortnight later, on his election and on the question of increasing the directorate from five to seven. Two additional company meetings were called before the vote could be tabulated, and the final count was 20,498 shares for the old shareholders, and 20,100 shares for the newer group with sufficient objections on the part of the losers, if allowed, to reverse the decision. The new chairman, Commissary-General R. M. Gardiner, overruled the objections, declaring Hutton elected, with the board membership remaining at five. The defeated candidate, Alexander William McDougall, published a pamphlet criticizing the methods used by the chairman in conducting the election and accusing him of general dishonesty. The upshot of this was a suit for libel. Following preliminary hearings the defendant agreed to apologize. It was understood that the more objectionable paragraphs of his publication were withdrawn, and the prosecution withdrew the summons.
McDougall now announced that holders of 10,000 shares had decided to call a meeting, at which all power and authority in the company would be transferred to him. The directors notified the shareholders that no such meeting could hand over control to one man, and, even if possible, it was highly inopportune, for the directors had instituted legal proceedings in the United States against all parties who were in any way liable to the company for their dealings in connection with the purchase of the mine or subsequent stock transactions. The directors also had voted to make no more payments on Park's claims. The Mining and Scientific Press thought "The famous Emma mine seems destined to become still more famous before the English shareholders get through with it." The editor remarked further: "So many prominent men were mixed up in the business at the beginning, that the general public will be pleased to learn exactly how much each of these gentlemen made out of the sale. . . . Not only the English but the American public are interested in the result of the forthcoming trial, for there is little doubt that if the Americans perpetrated any fraud, they had English associates to assist them."
In England a petition was filed for the purpose of winding up the company. The New York suit against Park, General Baxter, and Senator Stewart for $5,000,000.00 charged fraud and conspiracy. The company's law firm, learning that Park (who was now president of the Panama Railroad and the promoter and owner of a new group of California mines) was about to leave for the Pacific Coast, served a summons before he left the city. When Park finally went west to Utah he initiated proceedings to foreclose on the Emma mining property. The mine was seized by a sheriff's officer and the company notified that it had six weeks to file a defense or the property would be attached.
The New York Nation found itself involved in a libel suit with one Silas Williams, whom it accused in its columns of "salting" the mine by plastering and engrafting silver ore into the limestone prior to the London sale. No support came from the New York mining journals which had always considered this accusation preposterous. The Nation was criticized, in particular, by the Engineering and Mining Journal for accusing one and all of participating in an international swindle "without the slightest endeavor to ascertain the real facts, or to distinguish between sanguine over-estimates and deliberate falsehoods, between disappointment and deceit." The court declared the Nation's statements were defamatory and injurious to the reputation of Williams, and the journal was forced to "face the music." The editor of the mining journal observed:
Periodically during 1875, the board of directors of the Emma Mining Company issued "private" circulars to the shareholders revealing information that provided the basis of the company's suit against the vendors. Although Professor Silliman denied he was bribed by being offered a higher fee for a favorable report than an unfavorable one, he had been permitted to fix his own fees on the basis of services rendered and he had named $25,000.00. More important, Professor W. J. Blake, noted American geologist, claimed the promoters had misused his letters of July, 1871, by including a paragraph about the former production of the mine in the prospectus and made it appear to apply to the future. Also the following statement had been deleted: "It [the mine] is practically worked out. The ore has been taken out, leaving nothing in the cavity or the chamber from which it was extracted but falling rocks and crushed timbers, a wreck dangerous to approach. . . . The boundaries of limestone have been reached on all sides." On November 9, 1875, the London Hour published another "private" circular, calling a meeting of shareholders to listen to testimony that Park had made payments in shares to others for their influence and services, particularly to Grant Brothers and Company for their promotional activities. At this company meeting the directorate was once again revised, and the lawyer-secretary, appointed by Albert Grant, was dismissed.
The Engineering and Mining Journal republished the story and suggested that
Meanwhile, the Vice-Chancellor of England had decided against the petition to wind up the Emma Company unless it was "compulsory" and "under the supervision of the Court." The jurist did not doubt that the concern was originated in fraud, that the shareholders had been cheated, that the mine was not worth working, and that an official liquidation commission, appointed by a British court, could best conduct the suit against the vendors in the United States. However, a minority of the shareholders held out against liquidation.
At the annual meeting of 1875, shareholders learned that the only information on events in Utah came from outside sources, but the directors were advised that Park had sold the property of the company, including the machinery, plant, and office furniture. Instructions had been sent to shut down the Salt Lake offices of the company. The discouraged directors all tendered their resignations.
Affairs had now reached such a state that the United States House of Representatives passed a resolution establishing a special committee to investigate General Schenck's connection with the Emma Mine promotion. Months were consumed in parading all the principal participants before the Congressmen for interrogation; 879 pages of testimony were recorded and printed, but little new information came to light. Evidence presented to the committee was disseminated piecemeal to the newspapers by telegraph and published throughout the nation. In its final report, the committee announced that "this is the first occasion in which a diplomatic representative of the government of the United States has allowed himself to become associated, while acting as minister, in a private enterprise, carried on in his own country, but offered for sale in the country to which he is accredited." After insisting that the real value of the Emma Mine had no bearing on their conclusions, the committee found it was not proper for the American minister to connect himself with the Emma Mining Company. Moreover, his relations with the vendors had been of such a character as to cast suspicion upon his motives, but the committee did not believe he was guilty of fraud or fraudulent intention. Finally, his subsequent speculative dealing in the shares of the company had not been compatible with his diplomatic station and the maintenance of a position of usefulness and honor. The committee submitted a resolution to the House of Representatives condemning the action of the United States Minister as "illadvised, unfortunate, and incompatible with the duties of his official position." The Engineering and Mining Journal noted the unanimity of the committee, both Republicans and Democrats, in the verdict, and expressed hope that in the House debate the declaration of principles involved would be lifted above the level of partisan politics. In a characteristically terse and caustic speech at the time the report was presented, Abram S. Hewitt heaped scathing denunciation upon several of the parties to the Emma negotiations, and the editor remarked: "We fancy that a good many American and English operators have reason to rejoice that it has not been their fate to fall into the hands of Mr. Hewitt."
The suit of the English company against the vendors of the Emma resulted, after a long and exhaustive trial, in a verdict for the defendants in May, 1877. The New York mining journal announced that the decision was in accordance with the views it had steadily held and repeatedly expressed.
That the mine did not prove as productive as was expected; that the ore body under extraction at the time of the sale was exhausted; that the reserves of ore then visible yielded less than had been estimated; that the English promoters inflated the capitalized value of the mine beyond reasonable limits, with the consent of the vendors; that the warnings of more cautious observers were disregarded; that the diplomatic representative of the United States improperly lent to the enterprise the right of his name—all that does not amount to the proof of fraud; nor have we ever doubted that all parties concerned really considered the mine to be capable of paying handsome dividends upon its extravagant cost. To sell a mine when it is "looking its best" is ordinary shrewdness, and, unless the facts are falsified by the vendor, it is a legitimate business operation. It appears also—and this doubtless had much effect on the jury—that other mines in the same belt, and very near the Emma, are prosperously worked at thrice the depth to which the Emma was ever opened; and that the English plaintiffs have preferred sueing the vendors to exploring the property.
The London shareholders were now forced to sell the silver mine to a representative of Park in Salt Lake City for $144,194.00, to satisfy the judgment obtained by him and a loaning agency, the New York Loan and Indemnity Company. The mine was henceforth operated by a new company called the America Emma Mining Company.
When shipments of ore were resumed early in 1878, die London Mining Journal editor suggested the time had come for the English shareholders to consider anew the value of the property they so needlessly threw away. "As the London Emma shareholders have now neither the capital invested nor the property, they can dispassionately consider their position, and estimate the advantages of patience and common sense in die conduct of mining operations, as compared with the rashness and the love of litigation. . , ."
Another English mining journal, the London Mining World, elected to attack the integrity of the American courts, asserting it could not recall "a single instance in which an English mining company was successful against an American individual or corporation, either in the character of plaintiff or defendant," and added, "It is a curious fact that whenever English companies have ventured to try to issue with American individuals or companies in the American courts, the result has been always adverse to them." The Engineering and Mining Journal took issue with this assertion, claiming that many victories won by English mining companies could be cited. The editor pointed out that both English and American companies suffered at the hands of juries in the mining districts, particularly in the early days, when miners' laws and customs were less restricted than they were under federal statutes. All miners felt jealousy toward all corporations and non-resident owners. The difficulty was inherent in the jury system, but it could not be proved that a special injustice had been inflicted upon corporations of any particular nationality.
Although the Emma Company had no success in its action against the American vendors, its suit against Albert Grant, the London promoter, ended in a decision of the Master of the Rolls that the company should receive £120,000, the estimated profit Grant had made in the promotion. Moreover, the judgment was not to be affected by the bankruptcy proceedings against Grant because he was guilty of a breach of trust.
In an attempt to protect his colleague Grant, Park approached the London stockholders of the old Emma Silver Mining Company, Limited, in 1880, for a consolidation of the English and American interests. On the strength of rumor that the new company would recognize the validity of the old stock, shares rose in the London market from 10s to £2. The new company also hoped to consolidate with, or purchase, the Illinois Tunnel Company and the patented Cincinnati claims running diagonally across the Emma ground. These negotiations took two years, because all the Emma's neighbors had secured injunctions against that company for working outside its patent lines. Knowing the latest views of the courts on the principles involved, the company could not hope for another victory similar to that won in 1872, and cash settlements were made so that Emma shareholders could have undisputed control. The Salt Lake Daily Tribune thought "The English may look for a big harvest from this property yet, if the present plan for the development of the mine is continued."
The New Emma Silver Mining Company, Limited, was organized in 1882, whereby Park voluntarily restored the mine to the old stockholders and agreed to provide essential capital for development. The nominal company capital was £700,000 in 70,000 shares. Of these, 50,000 shares, theoretically worth the £500,000 originally invested, were to go to the English shareholders, the balance being apportioned among the debenture holders and the vendors. The entire property, with title clear, was conveyed to the new company, the old being liquidated. All legal proceedings were dismissed and mutual releases given to the company, the American defendants, and Albert Grant. Within the year it was agreed to purchase the adjoining Cincinnati property for 8,500 paid-up shares, simultaneously increasing the capital of the company to £785,000. Although periodic discoveries of ore were made, the long-hoped-for bonanza was never found. 68 A reconstruction of the company took place in 1886 to raise fresh capital, but two years later shares were selling at five shillings. Shareholders were saddened by the memory of the day Park stepped forward and offered to buy every £20 share in the original company for £28, and when no one sold, the shares jumped to £32 for a single day before dropping back to £16. Discovery of ore that yielded a small net profit prompted another reorganization in 1890, but soon the management was seeking additional claims in the Little Cottonwood District. In 1892, the Emma Company purchased the Grizzly mines, farther up the gulch, but the property was found not nearly so valuable as the vendors had claimed, so the Grizzly was leased with a royalty of twenty per cent on any ore mined being paid to the Emma Company. The directors were unable to raise additional capital to purchase other properties because of the depression of 1893. The decline in the price of silver meant the end of the Emma enterprise. At the close of 1894, the directors voted to spend their small remaining capital to investigate West Australian gold properties, and, if they should meet with success, to form a new company with expanded capital.
For full citations please view this article on a desktop.
