Early British investments in overseas mining enterprises had proved largely unprofitable. Following initial public offerings between 1824 and 1825, securities of companies operating in South American mines experienced a sharp increase in share prices followed by a collapse in 1825. With few exceptions, South American mines became a “graveyard for British fortunes” (Jenks, Leland H. The Migration of British Capital to 1875, London: Thomas Nelson and Sons Ltd, 1927: p. 58). A few decades later, gold-mining companies operating in California and Australia were listed on the London Stock Exchange, but “their activity was of no consequence either for the gold output or for immediate dividends” (Ibid: p. 161). Not much has been written about the unsuccessful mining companies of the 1850s.

In his new book Money Pits, John Woodland provides a detailed investigation of British-funded companies formed between 1849 and 1853 to exploit gold discoveries in California and Australia. The first four chapters include an overview of these public companies, with particular attention paid to the role played by the promoters, by different company structures, and by relevant government policies. In subsequent chapters, Woodland documents the histories of companies that raised all or a significant portion of their capital through public stock offerings. These narratives highlight nine of the 48 companies proposing to operate in California (Chapter 5) and ten of the 70 companies proposing to operate in Australia (Chapter 6). The Port Phillip and Colonial Gold Mining Company, considered the sole successful company, is featured in Chapter 8. Woodland uses official papers, pamphlets, and periodicals such as the Mining Journal, Railway and Commercial Gazette and The Times to examine why most companies were short-lived and unprofitable.

Woodland concludes that money and distance were the chief contributors to the failure of these companies (p. 239). Although his research shows that most public companies raised little or no capital, the main source of their difficulty is not clearly stated in the text. Woodland claims that distance made communication between British shareholders and operators in the mineral fields slow and unreliable, but acknowledges that the delay and absence of information was also the result of action or inaction by company managers (p. 180). For example, some directors were reluctant to disclose financial information, denied shareholders access to company records, and repeatedly postponed or canceled statutory meetings. In protest, shareholders wrote letters to the board of directors, submitted editorials to newspapers, and convened public meetings (Chapter 7).

Competent management, according to Woodland, was a prerequisite for success. Some company directors adopted a strategy for the development of the mines, conducted shareholder surveys, appointed superintendents with prior mining experience, and sought expert advice from consultants, metallurgists, and assayers. For many companies, management's efforts could not overcome land policies that favored individual miners over larger mining companies, unsuitable machinery for quartz mining, difficult weather, and the substantial risks inherent in mining. However, the Port Phillip and Colonial Gold Mining Company prospered despite these challenges. Woodland attributes this company's success to its board of directors, which had the foresight to appoint mining experts such as Evan Hopkins and Rivett Bland, secure exclusive mining rights over prime land in Victoria, and divert the company's focus from mining to crushing and treating ore.

Despite the thoroughness of the historical overview presented in Money Pits, a more systematic analysis together with additional evidence would strengthen Woodland's conclusions. For example, it is not clear whether distance and money were problems specific to British mining companies, as opposed to other British-funded foreign enterprises or even domestic mining companies. Woodland suggests that locally-formed California companies were more successful due to “much lower costs for labour, supplies and management, but above all for their better, even if lower technology methods, Yankee ingenuity and local knowledge” (p. 240). However, little evidence is presented to support this claim. Also missing from the discussion is a solid comparison between the mining investments of the 1850s and those in other time periods. Although Woodland does point out that company directors ignored important lessons from the South American mining investments of the 1820s, he does not fully explore all of the similarities between the two events (pp. xii, 239).

Overall, Money Pits is a comprehensive account of British-funded mining companies operating in California and Australia in the mid-nineteenth century. The book offers historians extensive narratives of select companies, biographical sketches of key promoters, mining experts, and shareholder activists, as well as satirical illustrations from an anonymous pamphlet titled Mining and Miners and Diggers and Priggers (London: W. Kent and Co., 1854).