Scheming brokers, including a famous author’s son, deceived many speculators during the Cobalt, Ontario silver rush
Two years after the 1903 discovery of rich silver deposits in northern Ontario, a Toronto brokerage firm asserted that “when you take into consideration that Cobalt’s mines have produced more in value than the Klondike is producing per annum, or has ever produced, you will have some idea of the great results that will come out of this camp when fully developed.”
Mining companies licensed to work in Ontario grew from 43 in 1903 to 683 four years later. For three consecutive days, mounted police in New York City cleared Broad Street of would-be investors who were obstructing traffic in their efforts to buy Cobalt shares from the curb brokers.
Stories of millions of dollars changing hands overnight were legion. The Canadian Annual Review recounted the tale of a North Bay resident who made $15,000 by merely picking up silver nuggets lying on the ground. Some stories were true, but many more were fabrications dreamed up by scheming brokers to deceive unwary speculators.
Excited by exaggerated tales of sudden wealth, the public readily bought shares in every Cobalt “mine.” Water-filled holes were described in advertisements as “the greatest, the richest, the most wonderful proposition.” Although thousands of shareholders made huge profits and about a dozen owners became millionaires, they were, in fact, the exception.
In the most notorious stock fraud, Julian Hawthorne was convicted in a United States federal court of mail fraud for selling worthless shares of imaginary mines near Cobalt. Hawthorne, the son of The Scarlet Letter novelist Nathaniel Hawthorne, was a well-known American writer and journalist who wrote for Cosmopolitan and the New York Journal. In 1908, Dr. William J. Morton, son of pioneer anesthesiologist William Morton, invited Hawthorne to join him in promoting several Cobalt mining companies.
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