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Within Ihe last fow days thera. has been
exposed a case thoroughly representative
of 'the extent to which mining mismanage
ment may bo carried without any attempt
at interference on the part of the share
holders. As a commentary upon tho very
worst features of the misconduct of the
representatives and servants of tho pro
prietary, the confessions of the manager
of the Webster- street Freehold Company
in liquidation are really valuable. The
most useful piece of vrork ever done by
the chairman and manager iu con
nection with this company, was
the extorted admission of acts
which even the witnesses . themselves
must have blushed to acknowledge. To
fully appreciate tho extraordinary facts
which came out in evidence taken before
his Honor Judge Roget.s in the matter
of tho winding up of Hie company, it is
desirable to go back a little. Not many
mouths have elapsed siuca groat excite
ment was caused at Ballarat. by the dis
covery of a rich reef-wash at a compara
tively shallow depth, by the Great
Northern Freehold Co. Numbers of
associations were formed to woi'k. out
the presumed riches of tho locality. Tho
general result was complete and utter
failure. There wero but two companies
which obtained an appreciable amount of
gold, viz., the company we have just
named end tho Webster-street Freehold.
The earlier days of the company, now in
the hands of the official agent, were chiefly
marked by a skilful manipulation of the
price of shares. . From a few shillings
each they advanced to £10 or £12, tho
operators for the rise being evidently in
league with those who wero concerned hi
the management. There were covert
hints of forthcoming groat results, and
suddenly tho undertaking burst upon the
market with a sonsational washing of a
thousand ounces of gold. From that
day to this hour thero was never such
another washing from the claim ; and
judged by the light of present disclo
sures,' it seems probable that the
richest washdirt had been picked
out and accumulated in order to
produco a startling result. .Tho main
object was, however, attained. Shares
were forced up to £M or so, and have
over since persistently declined, until
they were at length sold at 2s Gd, and
they are now worth less than nothing.
The only interest felt in tho matter is
that of duped and dofrauded oreditora.
Shareholders would oooner forget their
ownership in their dread of possible de
mands for contribution. Like a brief and
brilliant meteor, the Wobster-street Com
pany flashed across the mining horizon.
Its entire career, from birth to death,
occupied much loss than a twelvemonth.
It must not be supposed that there
was no gold in the ground. There
was abundanco of that, and a large
surplus beyond the paid-up capital
was obtained. And here may bo pointed
out the kind of laxity in which a
Ballarat manager considers himself en
titled to indulge. Examiued by counsel
on behalf of a creditor, this is the nearest
approximation the company's manager
can make to the company's gold produce.
' The mine,' swears Mr Fenton,
' yielded altogether £80,000 or £40,000
' worth of gold, and all in about three
' months.' Here is the one porson who
of all others ought to know to penny
weights and grains tho product of the
mine he managed, who actually requires
£10,000 margin to cover the wide
ness of his estimate ! For reasons
which are now sufficiently obvious, the
share register and other important
books of the company have bean
opportunely 'lost.' The cash-book
by some singular oversight of the
management, was not 'lost' with the
other books, and its pages contain some
interesting information. Just upon the
eve of winding-up of the company — in
fact, whilst it was in extremis — the board
of directers became affected with an in
creased access of generosity towards
themsolves and others — but chiefly to
wards themselves. That unfortunately
surviving cash-book contains a page
entitled ' donation' account. And it
appears that within a fow days of tho
final collapse Mr R. Ditchburn came in
for a ' donation' of £50 ; and a Mrs
Parker (probably a Ballarat Mrs Har
ms) had a similar donation presented her.
There were donations to the charities, and
there were other death-bed benevolences.
But the cash-book told more. It showed
that sums ranging from £800 to £1000
were entered simply as ' wages' witLoat
date, voucher, or particulars. Such is
tho beautiful simplicity of these children
of nature that they regard vouchers as
a slur upon the purity of their actions
and motives. There were so many
statements of a peculiar character made
by the manager, Mr J. L. Fenton, when
examined, that we cannot afford space for
them all. Here, however, are a few
selected at random from the report of a
lengthy examination : —
Mr Walsh : Whoro is tho dividend book ?
Witness : Somebody toro out tho leaves of
entries, but the bank book will show the divi
dends but not tho names of the persons who
received them. Mr Walsh: Ah, that is
what wo want to get at. Hero's a
whole £14,000 without a date. Wit
ness : Those aro the condensed accounts. Of
course they aro different from journalising. I
think the dividend book wns taken from my
house, but I don't know. I don't know where
tho transfer book is. I haven't seen it since I
left our office. I don't kuow what was brought
over to my house. I can't find the cheque
books. Can't find the blocks. Haven't seen
them since we were turned out of the office.
Mr Walsh : On the 21th May you know you
swore the company was prosperous, and
would pay £1400 a week, and did you
not take steps to tnko care of the com
pany's books and that 1 Witness : I loft my
clerk to look after that. Tho company did
not provide mo with an effico nor pay mo any
salary, and I didn't see why I should lumber
up my own house. I believe the clerk burnt up
a lot of old letters and that, rather than let
them gat into the hands of strangers. I don't
know that the returned eorip were burnt. His
Honor : In fact anything that could asbiat the
creditors of tho company wbb taken no care of.
There is no use in mincing matters. Witness :
Our company always had an overdraft at the
bank. Mr Walsh : Is this true, ' the direc
tors might have declared and paid a dividend
that week if they had liked, and might thereby
have considerably increased tho value of tho
company's shares.' That is sworn by BI. Bade
and J. L. Pen ton. Witness: The bank allowed
ub to declare dividends out of tho overdraft.
MrFENTCor further deposes that during
the last week of tho company's existence
a lot of gold was brought over from tho
claim to his house iu buckets, by order of
Mr Bade, the chairman of the directors,
but Mr Fenton could not remember how
much. He couldn't-even say who washed
this gold in his own. yard. He could
show no entry nor receipts for that gold,
and by way of crowning all, Mr Fenton
swears that he was instructed by the di
rectors 'not to lot the sluicemen
' see the gold weighed !' After
the 29th May, tho sluicemen wero
not to know anything about the
gold. Another lot of gold was found iu
a tank, and Mr Fento' had ' every
'reason to suppose' it was obtained
from the company's claim. What be
came of the gold is not clearly explained.
In order to defeat one creditor of the
company (Mr Seal), extraordinary exer
tions wero made by tho board. They
ignored minutes as dangerous, and made
away with tho company's property as
nimbly as they possibly could, so as to
leave a bare estate. Here is a specimen
of a Ballarat manager's system of book
keeping : —
About GO boxes of candles were carried over
to my placo tho night beforo the talo. They
wero returned to Mr Pupoahageu, from whom
they vrcro recoived. He gave me a receipt in
full (£122 odd) and took the candles as phrt p.oy
inenc. Tho entry is included in au item of
£C20 1 debited myself with. I ought to havo
kept it separate, I gnppose, lint I wns in a hurry
at the time. Mr Walsh : But it is in the ac
count for moneys received for calls ? Witness :
It should have been in two amounts. His
Honor : You call cauiles ' calls ?' Witness :
I ennuot speak from memory now ; it ought to
bo in two entries. The (jitfererjCB between inu
candles and the full item would bo sails, I sup
pose. I did debit the company with the full
amount of Papenhagen's account. I gave
him ray own cheqno. I dn not remember tho
amount. I got £3 or £4 commission, sonio
thing of that sort. I swear I did not make
£15 or upwards out of it. I do not remem
ber anything about it now. Mr Walsh ; Will
you swear you didn't make '£25 ? Witness : I
won't Bwear.
Following this Mr Fenton diil swear
that ho did not make from £30 to £10
out of this little transaction, so that £25
may be regarded as his modest profit.
Mr Bade, tho chairman of this interest
ing company, swore that in May the
undertaking did not pay expenses, and of
course could not pay dividends. Ho was
then confronted with an affidavit of his
own, daied 20th May, used before the
Supreme Court in order to delay a cre
ditor, to tho effect that tho company's
position was such that tho directors
might at that timo have deelared and
paid a dividend. ' That's quite right,'
adds Mr Bade, ' we could do it as we
' had before, by an overdraft at the
' bank! '
Mr Walsh: Is that what yon meant to con
vey to their Honors the Judges ? Witness :
Well, wo could do it' as wo had beforo. His
Honor : Of course it is a fraud on the whole
community, for which people ought to be sent
on the roads. Witness: Well, it is often1 done
in companies, nnd tho majority decided in this
caso it should bo tloufl,
Is not this a lessan which should be
of permanent use to Melbourne specula
tors ? One extract more, and wo havo
done with this revolting case. Mr Bade,
still under examination, explains the
reasons for not weighing the gold, and
his own position on the shars register : —
Tho board ordered tho gold should be
handed to Mr Fenton without being weighed,
as we wero not getting so much gold as tho
public thought wo wore, and we wanted to
carry en a bit lo.nger.' I have not got any of
the company's books. I had nothing but paid
up shares in my own namo in May. I was
not interested in any other shares than, as I
had sold out when there was a rnBh on tho
shares. Annie Gill was my last nominee ; she
lived in Sturt street. She happened to bo my
wife. It was my wife's maiden name. I be- '
lieve threo are yet in her name. His Honor. :
I asked you distinctly and you said jaat now
that you held none others. Witness : Nor do
I. They ore all sold — the seven, but only four
have been transferred.'
This gentleman, who holds no interest
in the company of which he was chair
man, who desired to carry on a bit
longer iu the practice of a gross decep
tion upon the public, has not, we think,
as yst quite done with this affair. It
has not yet beon probed to tho bottom.
There have been other gross irregu
larities and improprieties for which the
entire board should be held respon
sible. Upon a late occasion . we
ventured the assertion that mining
directors frequently acted against rather
than for the benefit of their constituents.
Of this thero is the clearest evidence in
the case before us. Whether the share
holders and creditors will agree with his
Honor Judge Rogehs, that the payment
of dividends out of bank overdraft is a
fraud ' for which people ought to bo
' sent on the roads,' remains to be seen.
Without some such process of purgation
— some sacrificial devotion of an entire
Ballarat board to the soverest penalties
the law permits — tho district must con
tinue stained with the disrepute brought
upon it by barefaced dishonesty.
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