The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1891-02-18
INslDloUs FORM OF GAMBLING.
A Boston Criticism of the Methods OF the
"Bond Investmsnt' CompnnIes

A Boston Critioism OF tho Methods of the
"Bond Investmsnt' Companies.
The Boston Neles Bureau has the follow
ing to say relative to the so-caled "invest-
ment bond" companies:
Everybody knows that an insidous
form of gambling has been creeping into
the wage-earning community the last two
months under the guise OF so-called Sin
vestment bond" companies, based largely
upon the principle OF Mrs. Howe's bank,
which could continue to pay large returns
80 long as deposits increased; in fact
security is exactly as in Mrs. Howe's bank,
and Mrs. Howe went to prison-not the
deposit of the depositor, but the deposit of
the next deposition. But it has not been
generally understood that this form of
enterprise" 10 rapidly increasing and is
beginning to Affect the ordinary channels
OF Investment
While the bankers generally have moro
or less TO say about II, and while the Bos-
ton Neics Bureau has been kept generally
posted upon it since its inception last June
without deeming it worthy OF remark it
has remained for il to make recently n
thorough investigation of the l0l compan-
ies-that is the exact number-operating
in this community and drawing wages
and savings into channels that invite only
disaster.
Our daily study of the money market
keeps the question of the position OF our
savings institutions constantly under re-
view, for savings banks are among the
largest deposltors in our national banks,
and their demands or deposits often have
important bearings upon the circulating
medium for the whole business commu-
nifty.
Our inquiry of three largest savings in
stitutlons in Boston has brought forth
that for the semi-annual period closing at
various dates in January their net gain of
deposits had fallen of as compared with
the year previous by SO per cent. at one
bank, 30 per cent. at another, and 20 per
cent. at the third. There are fifteen saw
ings banks in Boston, but the three whose
results we present are the largest in the
city, and there is no reason TO believe that
they do not represent the condition OF the
whole
While the changes OF investment Incl
dent to a tight money market. the loan
ing of individual funds upon personal
security, and the purchase OF investment
securities at the decline may in part nc
count for this falling off in the savings
banks acCumulations, II Is believed that
these gambling investment schemes are
accountable Tor n measure OF the loss.
The wage fund Of the community is I'M
dimished and the Mckinley bill has
failed TO raise the price of either luxuries
or necessities. At one savings bank the
maximum of daily deposits the last quar-
ter was 40 per cent. less than the cores
pOnding quarter year ago, and their
maximum rates are reached in the month
of January, 80 that the operating causes
| a N a N NnVpfnhQT
and December il not more so.
The schemes of the investment (?) COM
panes vary in details, but all have these
features in common--a promise 10 pay q
round sum of money in return for a small
immediate payment and regular periodi
cal assessments. The bonds or certificates
often in engraved form with gold seals
are 20 be paid in numerical order, be-
ginnins with the first issued, and each
bond is said to mature" and become paw
able when all bearing lower numbers have
! been paid or Cancelled and there is suffi-
! cient money in the treasury" Any failure
on the part of bondbolder to paw the as
! sessment when due forfeits 10 the com
pany all previous payments.
The authorized capital of the eighty
seven companies which have filed copies
of their charters with the commissioner of
| S60,0O0 has been paid in in cash. There
are four concerns doing business without
! filing any statement. The average first
| cost OF every bond is s., all of which goes
| TO the promoters and their agents The
! average monthly installment is 8, Of
which the promoters take about 90 per
| cent Besides the ninety-one companies
above mentioned ten have been organized
in New Hampshire whose charters have
not yet been filed at the state-house.
The amount of business already done by
the investment companies is estimated by
taking the average statement OF twenty OF
them and amounts to alittle over 100000,
/ most OF this since Nov. !.
Thirty-fve of the siXty-fve investment
companies whose prospeetuses we have
obtained issue straight 500 bonds, three
issue 500 pieces. three issue 81 900 pieces,
two issue $50 bonds, three issue $35, SIS
and 5000 respectively, and seventeen give
their customers a variety ranging from $50
to $1,000. The average cost for first pay
| ment, including one months assessment,
Is about 81, and il 100000 is a fair esti-
| mate OF business done 80 far the face Of
the liabilities assumed already is about
| SlS,620,000 That is to say, before the last
man who has invested in these schemes
today shall realize his hopes the class of
people who fancy their "investmerts"
will have to contribute over $4,000, 900
over and above all expenses. Should this
| SlS000,000 ever be contributed the face OF
the liabilities then outstanding will be
s., 26S, 100000. or more money than there
is of all kinds in the United States. Sew
eral OF the companies suggest that there
are over 64,000,0O0 of people to draw from
and the possibilities of extension are,
therefore, unlimited. If 20 per cent. OF
the money, and that is the usually stated
estimate for expenses. sticks TO the fingers
OF the projectors as it passes through their
hands they will be rich beyond the
dreams of avarice.