Business & Finance: Flin Flon

Last week the directors of Hudson Bay Mining & Smelting Co. declared their initial dividend, a 50¢ payment that marked the first return on a classic promotion. Just 20 years ago a Canadian prospector stumbled on a rusty streak of sulphide ore in the ancient rocks of northern Manitoba. Having grub-staked the prospector and his five partners, John E. (“Jack”) Hammell made them a proposition: $100,000 for each prospector, $1,000,000 for himself if he could get it. Laughing uproariously, the prospectors agreed.

As a practical mine the Flin Flon claims looked hopeless. They were 87 miles from the nearest railroad in the depth of Manitoba’s bush. Nevertheless Jack Hammell sold the idea to a Manhattan financier without benefit of facts, figures or engineering reports. An investment of $150,000 cash did not even pay the costs of a thorough survey. Another man sank $400,000 in the Flin Flon, then he too gave up. But Jack Hammell still had the Flin Flon options.

Early in the 1920’s he got the ear of Harry Payne Whitney through his playboy son, Cornelius Vanderbilt (“Sonny”) Whitney, who knew something about mining as well as water travel (see cut), canoed through Manitoba lakes and rivers to inspect the claims in person. Upshot was organization of Hudson Bay Mining & Smelting in 1927 with the Flin Flon claims and $17,500,000 in cash. Jack Hammell and his hungry prospectors had already been paid off on substantially their own terms.

Hudson Bay’s claims were not on Hudson Bay but they were not far from it. Temperatures ranged from 87° to —51°. Major hurdle was a railroad, which the Government-owned Canadian National eventually built. A 44,550 h.p. power plant was installed on the Churchill River 59 miles farther on in the wilds. Turbines, generators and thousands of tons of supplies were dragged in by horse, barge, tractor and sledge. But by 1930 Flin Flon was nearing its present population of 5,000, and the mine was ready for operation. In that year another $5,000,000 was raised by a bond issue underwritten by J. P. Morgan & Co. Last week as a preliminary to the payment of dividends, the last of that bond issue was paid off 100¢ on the dollar. No sooner had ore shipments started in 1930 than the prices of copper and zinc, Hudson Bay’s principal products, began to crash to historic lows. In 1932 Hudson Bay Mining stock could have been bought for 75¢ per share. Last week it was selling at $15 per share. Profits before depletion in 1934 were $1,500,000. Including a small amount of ore handled for other nearby mines, Hudson Bay’s production last year was 99,000 oz. of gold, 1,300,000 oz. of silver, 37,000,000 Ib. of copper, 49,000,000 Ib. of zinc. Today with copper in world markets about 7¢ per Ib. and hard to sell at that, the great Whitney promotion market-wise has a somewhat golden appeal. With gold at $35 per oz. nearly one half of its revenues last year were in the yellow metal.

Hudson Bay’s board chairman is Cornelius Vanderbilt Whitney, eleven years older and a good deal wiser than the young man of 24 who first paddled and portaged to Flin Flon. He has done his part to uphold the Whitney tradition as the first sporting family of the land, but, like his first cousin John Hay (“Jock”) Whitney, he has managed to mix with considerable grace business, horses and the conspicuous restlessness of the very rich. He helped found and finance Pan American Airways, is now its board-chairman. He has large holdings of irrigated land in the State of Sonora, Mexico, where he persuaded truculent Yaqui Indians to raise fresh vegetables for midwinter Manhattan tables. He even has the distinction of having been defeated for Congress, as Representative from Long Island’s Suffolk & Nassau Counties, on a Democratic ticket in the 1932 landslide.