Not Your Grandfathers Mining Industry, Nova Scotia, Canada

Neily’s Scandals

So many years later, J. B. Neily might just seem like a charming scoundrel from the Gilded Age, but the impact of his shady behaviour on investors in his mining schemes was serious. Fortunately, modern regulation makes fraud in the mineral sector very rare.

Joel Burpee Neily, born in 1853 in Brooklyn, Queens County, was a Halifax merchant and mine promoter.

One of the earliest mentions of Neily in Nova Scotian newspapers was about allegations he made in October 1892 that Wallace Bremner of Bremner Bros., Halifax merchants, had offered to bribe Halifax aldermen (city councillors) on Neily’s behalf to ensure the city bought a steam fire engine made by the Ronald Fire Engine Company. Neily was a local agent for Ronald and was trying to get the municipality to buy his client’s fire engine. Bremner allegedly told Neily $200 would guarantee the sale.

Neily (spelled Neilly in some records) also claimed that within hours of him refusing to pay the bribe, several aldermen switched their votes to the Amoskeag fire engine, implying that the aldermen may have taken bribes from Amoskeag.

Bremner initially denied that he had had such a conversation with Neilly, but later changed his tune and said he had just been kidding about it.

Under growing public pressure, Halifax mayor Michael Keefe referred the allegations to a committee of aldermen, the laws and privileges committee, for investigation.

The committee met on November 14 but accomplished little. Neily claimed that he had a witness who could corroborate his allegations, but the witness refused to appear unless subpoenaed. The committee did not have the authority to subpoena witnesses, and Neily repeatedly refused to disclose the name of the witness or any further information because, he said, doing so without corroboration would put him in an awkward position.

According to the Herald, Neily said, “It would not be fair to mention the name of the alderman to-night. But I will do so if you will guarantee to compel the attendance of my witness. I will say now that I was approached by an alderman with the view to obtaining money for ensuring the purchase of the engine; and when you compel the attendance of my witness, I will tell the whole story.”

Taking his words at face value, Neily comes off looking pretty good in the affair. After all, he declined to pay a bribe and apparently tried to shine a light on wrongdoing. However, his comments at the committee meeting can also be seen as a clever way of preventing anyone from testing his allegations. He besmirched the reputations of Bremner and unnamed city aldermen, but did not prove them or even give aldermen an opportunity to clear their names.

Whatever the truth of the matter, the committee meeting ended with nothing resolved, but the issue was not quite over. In 1893, Neily sued J. R. Ronald for $200, payment he argued he was owed for his efforts to sell Ronald’s fire engine to the city. Neily also seized the company’s fire engine from the North Street depot as part of his lawsuit.

In 1894, the Canadian Mining Review printed a scathing article about Neily’s Memramcook Gold Mining Company. The article, called The Memramcook Fiasco, detailed how Neily’s prospectus for a gold mine in Memramcook, New Brunswick, “contained most ridiculous estimates of the cost of working the deposit, and of the margin of profit sure to be obtained.”

Inconsistent assay (test) results of the deposit also led many to believe that the company had engaged in “salting,” meaning someone at the Memramcook Gold Mining Company may have put gold from another source into the samples sent out for testing in order to generate positive test results.

The company collapsed and investors lost their money. The Review wrote, “It is surmised that Mr. J. B. Neilly is the only individual who has profited by the deal.” (See the full story at https://notyourgrandfathersmining.ca/memramcook-fiasco).

In 1894, Neily was part of a group that formed the Truro Gold Mines Company and the Caribou Gold Mining Company, both of which were active in the historical Caribou gold district. George W. Stuart, a highly respected gold miner and mayor of Truro, was hired by the Caribou Gold Mining Company that year to run the company’s mines, but he objected in a memo to Neily being “to say the least of it, very unbusinesslike.”

His assessment of Neily’s behaviour was perhaps proven correct since, according to Halifax newspaper The Critic, the Caribou Gold Mining Company put its Caribou properties up for sale in 1895. Stuart had already resigned his role by that time. (See the full story at https://notyourgrandfathersmining.ca/george-w-stuart).

In 1901, Neily founded the Nova Scotian and Mexican Mining Company in Maine. The company offered $2.4 million in stock and Neily was president. The company got involved in a number of mining properties in Nova Scotia, Mexico and the United States, but likely spent more time in court than in any mine.

In 1903, Neily and William Bremner – not Wallace Bremner discussed above – were charged with larceny of $1600 for alleged misrepresentations about the company. The criminal charges were triggered by Dr. Alonzo C. Fales, who was born in Middleton, Annapolis County, and Dr. John A. Bruce, originally from PEI. Both men lived in Everett, Massachusetts, at the time.

The doctors had previously brought a civil lawsuit against Neily and Bremner because, they claimed, they had invested in the Nova Scotian and Mexican Mining Company after being told that it had sold $100,000 worth of stock, when in fact only $60 worth had been sold.

The doctors also said Neily and Bremner had misrepresented the company’s progress at its mines by, for example, claiming that they were in the process of building a 100-stamp mill to process ore in Goldenville, Nova Scotia. (In fact, the mill construction had been started several years earlier by another company run by Neily, the Union Development Company, whose work in Goldenville ground to a halt due to legal problems.)

The doctors lost their civil case on a technicality – the suit was filed in Massachusetts, but the company was incorporated in Maine and its head office was in Rhode Island. The judge agreed with Neily and Bremner that the company could therefore not be sued in Massachusetts. However, the company also had an office in Boston and had conducted business such as shareholder meetings there, so the company was breaking Massachusetts law by illegally conducting business in the state. A Boston district attorney warned Neily to immediately register the company in Massachusetts to avoid being charged for this crime.

After their civil case was tossed out, the doctors pushed for criminal charges to be laid. Other investors in the company also testified against Neily and Bremner, saying, for example, that the men claimed the company owned all its properties free and clear. However, the company only actually owned a few properties and had options on, and agreements to purchase, many others.

George W. Stuart was one of several Nova Scotians who travelled to Massachusetts to testify in the case.

Neily and Bremner were found guilty and the judge lectured them sternly, according to the Halifax Herald. For example: “Judge Libby was quite emphatic in his declaration that ‘a hole in the ground’ dug several years ago, and abandoned, did not in any respect justify the declaration in the prospectus that a hundred stamp mill was in course of construction on this property.”

Several other lawsuits were filed against Neily and the Nova Scotian and Mexican Mining Company in the early 1900s.

In 1901, Neily’s bad reputation prompted Wilbur Libbey, who ran the Libbey gold mine in Brookfield, Queens County, to use his role as president of the Mining Society of Nova Scotia to call out Neily’s unscrupulous behaviour.

According to the Canadian Mining Review, Libbey criticized the circular for the Union Development Company, of which Neily was president: “Note this man is exceedingly well known in his native Province so you will not be surprised to learn that the attempts to float this scheme were in Worcester, Lawrence and other Massachusetts Towns and in Montreal.” In other words, Neily’s reputation in Nova Scotia was too poor to attract investors, so he had to seek them in the United States.

Libbey said Neily’s circular cited statistics about gold produced by past operators at the East Mine in Brookfield, which Neily controlled. However, it did not mention that Neily himself had failed to produce any gold in two years and that Neily had lost money while operating the mine - “a heavy loss, incurred, in my opinion, by ignorance.”

Libbey said the circular suggested the mine would generate unrealistic profits, but Libbey said that “All his Nova Scotia mines have since been closed and bills for labor and supplies are unpaid.” (The June 1900 edition of the Engineering and Mining Journal contained this snippet about the Union Development Company: “This company has stopped work for the present owing, it is said, to internal troubles. There was left considerable indebtedness, which is being now paid off. This company controls a valuable property waiting development.”)

Libbey concluded, “The fact that the public has been often victimized in the past and is being victimized today is the reason why I have written so strongly on a subject on which I feel strongly.”

Libbey’s comments were also presumably heartfelt because the province’s gold mines had a negative reputation among many, and this often made it difficult for legitimate operators to attract investment. In some cases, dishonest promoters had enriched themselves by cheating their investors. In many cases, mines simply failed as a result of problems caused by poor decisions, having too little money to buy needed equipment and to get through tough periods, inefficient historical mining and milling techniques, lack of access to inexpensive electricity, challenges associated with transporting equipment and supplies through the wilderness, and lack of labour.

There were also many examples of successful, prudently-run gold mines in Nova Scotia. Indeed, Libbey, Stuart and a number of other operators in the 1800s and early 1900s had sophisticated, prudent, science-based approaches to gold mining. They were forerunners of the modern mining industry, which is a science- and technology-based business that takes excellent care of the environment.

While fraud can occur in any industry, and the historical mining industry certainly had its share, modern regulation makes fraud in the mineral sector very rare. For example, regulators require that companies adhere to “National Instrument 43-101 Standards of Disclosure for Mineral Projects” rules that govern disclosure of scientific and technical information.

The intended audience of NI 43-101 reports is the investing public and their advisors who, in most cases, are not mining experts. The NI 43-101 system was adopted in 2001.

According to the Boston Evening Transcript, J. B. Neily passed away in Peabody, Massachusetts, on February 2, 1915, “as he was about to take a train for Boston. With James E. Greenaway, who had gone to Peabody with him on a business visit, he had run for the train. Mr. Neily, who was president of the Goldenville Mining Company, leaves a wife in Halifax. He was about sixty years old.”