The Mine That Wasn’t? A Captain Denies a Half-Million-Dollar Gold Swindle

PORT TOWNSEND, July 22.—(Special.)—The suit commenced in San Francisco yesterday by A. G. Renshaw, an English capitalist, against James Treadwell, John Treadwell, Capt. James Carroll, M. W. Murray, N. A. Fuller and George J. Smith—all reckoned Alaska millionaires—to recover $24,000 alleged to have been obtained by fraud in the sale of the Bear’s Nest mine. The case is the biggest mining sensation the Pacific coast has experienced for several years. Aboard the steamship Queen, which sailed for Alaska today, were several prominent capitalists and mining men of Alaska, who were much interested in the case.

It was alleged that the English syndicate had agreed to pay $700,000 for the mine, and that about $700,000 in cash was expended, including part payment and the expenses of examining and partly developing the ledge. The Englishmen, believing they were being bunkoed, turned their bonds over to a German syndicate represented by Meyer A. Bernhardt, of the Hamburg banking firm of Meyer, Bernhardt & Co. The Germans were too shrewd and pulled out after expending $50,000.

One account alleged that an expert was shown ore from a rich streak in the Treadwell property, and that the samples were later swapped: ore in the warehouse was removed and ore from a known rich streak substituted. It was also charged that a diamond-drill core had been soaked in chloride of gold so that assays grew richer with depth. The property was sold on the strength of those samples and assays.

Capt. James Carroll, of the steamship Queen, was shown a copy of today’s Post-Intelligencer containing the San Francisco dispatch alluding to the suit for $24,000 against himself and several other Alaska capitalists, just before he sailed North. He read the article carefully and made this statement:

“This man Renshaw, the plaintiff, is a foreign promoter. He went to Alaska some years ago looking for an opportunity to place some English capital. He had no difficulty in finding the opportunity. We had located and partly prospected the Bear’s Nest mines. He wanted and we gave him an option on the property. Returning to England, Mr. Renshaw and his backers sent out three mining experts, claimed to have been the best in the world, who at different times thoroughly investigated the property and sent their reports to England. The mine embraced an area of about 1,500 feet, and it would have taken more than a ton of gold to have salted the mine, had we been so disposed. Subsequently the English syndicate began negotiating for the property, and we agreed to sell the mine for $700,000. They paid $100,000 in cash, issued stock to us for something over $100,000, and were to pay the remainder when the property was more fully developed. They had every opportunity for examining the mine, sinking shafts and testing the ores. No false representations were made or held out to them to effect a purchase. They seemed satisfied and anxious to buy the property. We were not particular about the deal, as other parties were anxious to get the property.

“They erected a 120-stamp mill and started to work the ore, but suddenly ceased operating without fully developing the ledge. From their actions we concluded they were trying to job some of the London capitalists who had become interested. Mr. Murray, one of the defendants in this case, negotiated the sale. Further than this I know nothing about the deal, and I most emphatically deny any connection or knowledge of any scheme on the part of James Treadwell, John Treadwell, M. W. Murray, N. A. Fuller, or J. G. Smith or myself, to swindle or defraud the syndicate represented by Renshaw out of a dollar, as they allege in their complaint. The fact of the matter is this: They purchased the property upon the recommendation of English theoretical mining experts, and not knowing the practical manner of developing Alaska mines have become frightened at their speculation and are trying to evade the responsibility. The mine is good property and some not far distant day will be paying handsome dividends.”

TACOMA, July 27.—(Special.)—The group of alleged gold mines adjoining the Treadwell mine, on Douglas Island, Alaska, rendered famous in this country, England and Germany by being valued at over $100,000,000 by experts and subsequently declared worthless and “salted” in order to get English and German capitalists to put up over half a million dollars, are now declared of about equal value with the Treadwell mines by William M. Ebner, an Alaska mining man who has just arrived from Juneau. Mr. Ebner says the buttes containing gold, of which the Treadwell mine is an example, do not rise to the surface, and that the tunnel run by the capitalists to test the ore happened to penetrate between the Treadwell butte and the butte containing the Bear’s Nest group. The famous drill hole from which the ore was taken, on which one of the multimillion-dollar assays was made, Mr. Ebner says, is in fact not a part of the Treadwell butte, but has been taken in as part of the Treadwell property by a slight move of the line between the two properties. The fact that the drill hole has been taken in as part of the Treadwell property strengthens the belief among prominent local mining men that Ebner’s statement is correct.