The Psychology of Speculation by Henry Howard Harper

Of course the speculator who buys stock in a new copper mine is simply / taking a gambler's chance that ore will be found in paying quantities. / Most of those who have submitted to this enticement in the past thirty / years do not need to be reminded of the hazards attending such risks. / I recall that about twenty-five years ago, when the "copper fever" / was raging throughout the country -- and in Boston especially it was / highly infectious -- a half-page advertisement appeared in one of the / leading Boston newspapers, relating in graphic terms the discovery / of the most remarkable copper mining prospect that had ever come to / light. The chief mining engineer of one of the largest and best known / copper mines in the United States -- a man of wide experience and vast / knowledge in the mining business -- while prospecting somewhere in the / West came upon what seemed to him the richest deposits of copper ore / he had ever seen. These ore bodies were said to be located in a large / mountain, conveniently near a railroad, and by tunneling into the / side of the mountain the ore could be trammed out, dumped onto the / cars and hauled to a smelter a few miles away. The mining engineer / (whose full name was given) had immediately resigned his position, / organized a stock company, known as the Occidental Copper Mining / Company -- into which he admitted a number of personal friends -- bought / the property, and began tunneling operations on his own capital and / what he had raised among his friends through the sale of stock in the / new corporation. Having exhausted their funds and desiring to continue / exploration work -- which became more and more promising -- the directors / had sold a block of treasury stock, the par value of which was one / dollar a share.

The latest reports showed that the work was progressing / satisfactorily under the personal direction of the engineer who had / discovered the mine, and that stockholders might expect dividend / returns inside of a year or so. The advertisement was inserted, not / by a stock-jobbing firm or underwriting syndicate, but by a well / known wholesale and retail grocery and provision company, who claimed / that after fully investigating matters they had bought a large block / of the stock, twenty thousand shares of which they would distribute / among their customers at the par value of one dollar per share. I / called on the president of the grocery company, who said his firm / thought so well of the prospect that they had bought twenty thousand / shares as a speculative investment, and a like amount to distribute / among their customers. He represented that although the shares were / easily worth $5 each he considered it good advertising for his company / to sell them at par, $1; and with a view to extending the benefits / as widely as possible he preferred to dispose of the stock in small / lots. He cheerfully gave me the names and addresses of the directors / of the new mining company and suggested that, if interested, I might / write to them.