Omaha daily bee., 1893-08-20

which can honestly or fairly be compared as
between the business done by these bond
Investment companies aud that transacted
by legitimate life insurance companies. The
former arc unscientifc, depend entirely upon
n continuation of investors for the payment
of previously subscribcd-for bonds, without
any accumulatlve feature to enable all in
vestors TO be le0timately paid, whereas tho
very reverse is true IN regard TO life insur-
ance companies In the bond investment
company the member who pays has no pro-
lection; his money is taken to pay of bonds
of earlier numbers than his own, and he
must trust to chance only that persons will
continue to be gulllble and to purchase bonds
in order to provide money TO pay him. This
is purely a lottery and the moment that a
lack OF confidence in the companies arrives
the whole thing goes to smash and the more
recent investors lose their money. This has
been the experience of other states where
the experiment has been tried.
Massachusetts Sentiment.
Secretary Lesueur quotes the following
from reports made by Hon George s. Mer-
rill to the legislature of Massachusetts in
lS9l-y2, respectively:
ut il doubtful, If, since the famous South
Sea bubble, such a gambling mania has
seized an intelligent people as that devel-
oped in the spread OF the assessment endow-
ment and its natural and legitimate off
spring, the bond investment insanity.
I'VE hold mass meetings in Boston at
which the governor and our chief citizens
are present to condemn with warm words
the Louisiana Lottery. From my experience
in the insurance department the past eight
months, believe that the commonwealth OF
Massachusetts had better four years ago
have passed q statute legalizing the Louisi-
ana Lottery and authorizing it to open "a
branch office in the front corner
of tho Old South church, or
A
enacted the statute that allowed this class
of corporations to do business, with the
wreck and rum which has already come and
which In large measure is to follow, II this
business goes on as at present"
Blast from Kansas.
State officers of Kansas have issued cir
cular showing up the methods of bond COM
panies. The document is to be given the
widest possible circulation and is signed by
X. s. Osborne, secretary of state; John Il.
Little, attorney general, and l.. H. Snyder,
superintendent of insurance. 1t is headed:
'Oficiai Notice-t'raud! A SwindleW and
begins as follows:
las officers of the state of Kansas it be-
comes our duty to warn the people of GER
tain fraud and swindle which has sprung up
within the last three or four years to which
the proper attention OF our state legislature
has not yet been called We refer to the
many so-called bond investment companies,
that is, companies that Issue and sell their
own bonds collecting a monthly payment
from each purchaser until the bond is said
to mature when the company promises to
pay the face of the bond, which is usually
Sl,000.n
Then follows some extracts from the pros
pectus of one of the companies, showing its
plan and holding out glittering Inducements
to investors, closing as follows:
Our former attorney general Hon. John
N. Ives, gave written opinion strongly con-
| demning these so-called bond Investment
companies, which opinion is fully concurred
in by the present attorney general The
closing sentence of that opinion is as fol-
lows.
"'Until the legislature shall, by some ad-
ditional legislation, provide that such cor
porations may be formed in the state, and
provide for the protection of the parties who
may be induced to invest in their socalled
| bonds, l am clearly of the opinion that the
| business which they contemplate doing is
| illegitimate and should not be tolerated in
| the state much less sanctioned by any of
| the state officials
Thereafter all companies, officers or agents
| of bond investment companies. whether
! home or foreign, found operating in the state
| of Kansas will be prosecuted for swindling.
| In conclusion we hereby ask the assist
! ance of all good citizens in stamping out this
| fraud and swindle by reporting to the secre-
| tary of state the names of companies, OFF,
GERS or agents doing business within the
limits OF the state of Kansas"
Nebrask Moving.
| The example of neighboriug states will
| probably be followed by the authorities of
| Nebraska. The attention of the State
| Banking department has been called TO the
| bond schemes by State Bank Examiner Nc
Grew in the following letter, filed u few days
ago:
To THE HONORABLE STATE BANKING BOARD
| LINCOLN: Gentlemen-My attention has
been called to the fact that there are a mum
ber of so-cal,ed "bond investment compa
MES" who are operating within the state
The common plan of advertising adopted by
the concerns is printed circulars distributed
| by mail and IN person, but some of them
even have the temerity to advertise in
leading newspapers the location OF their Of
fees Several of these circular advertise
ments have been placed in my hands and arc
enclosed herewith. They contain u sense
less conglomeration of life insurance and
building and loan statistics intended to de
ceive the uuwary into the belief that they
are making an investment in an institution
| operated upon n similar plan, when, in fact
it is n lottery pure and simple, with the ex
ceptlon that the managers name in advance
who shall draw the lucky number.
They usually print series of numbers
which run something like this: l then 4
then l6; then then 80; then l2 then AS
and so on. But glance at the plan viii
show that whoever has been favored with
bond No. will receive $500 or $1,000
as the case may be, as soon as
there have been sufficient suckers
induced to pay into the treasury an amount
of money equal to the face of the bond. after
deducting the sum retained by the managing
officers for expenses, which is usually very
large per cent of the amount contributed
Then, next, the person who holds No
I 10 in the series comes in for the payment o
his bond us soon as enough victims have re
sponded.
In matter of fairness, the d-fashionet
lotteries, diven out of existence by stringent
postal laws, were models of honesty com
pared with these disreputable concerns. Ii
those II was at least presumed that afte
deducting all expenses of the promoters th'
balance was fairly distributed by chance
among it's victims, but these concerns do no
even make a pretense of this, but selec
themselves in advance who among thei
number shall be permitted to receive tn,
contributions OF the victimized.
Bond No ! is usually held by some promi
nent parsonage in the vicinity where h,
resides who at once rushes into printed
testimonial of the ''high character" of Uh,
promoters of the concern and that he is ''wel
satisfied with his investment"
Some months ago one of these concern.
had the impudence To apply to this board TO
certificate of authority under the buildin,
and loan association act of 1891 To transac
business in this state. The application wa
rejected without ceremony. But IL seems
that they are still carrying on the bushes
within the state, and as they attempt TO de
ceive the public by endeavoring to maxi
X