The sun. [volume] (New York [N.Y.]) 1833-1916, 1898-08-08
Traps ron SMALL INVESTORS,

the war with Spain was close NJ hahu, became
ppparent to all but invetcrate doubtersa q fort
night ago, and even these have now been
obliged TO yield to the logic ofundisputed facts.
Under the pressure Of capital seeking invest
mont the new Government 3s have advanced
q, lO5. yielding. at that price, but On per cent.
NOR annum to their purchasers, tho Lake
Shore and New York Central 3hs COM
nand a premium Of 8 points, and the New
York Central 81 per cent. debentures. Sc
cured only by Lake Shore stock as collateral,
bring O6. The shares of companies whose
ronds are leased at fixed rentals. such as the
ITorJem, the Morris and Essex, and tho Rome,
Watertown and 0gdensburg. are in demand at
rrices that make them net but 4 per cent. In
stocks and bonds OF less established credit.
such as those of Western and southern railroad
companies. there has been a large business. on
n basis Of per cent. for the bcst,and from thatto
4 and @ per cent. for more speculative kinds.
Judging from past experience. this condition
NJ things will soon lead to the bringing forward
of n number of new enterprises OF doubtful
merit, but which will appeal with more or less
success to that class of the community who
have but little money to invest. but who desire
10 get from it the largest possible income.
II ia a remarkable fact. that men, and particu-
larry women. who have by industry and ccono-
my accumulated NAL amounts of capital. the
loss Of which would be the loss of the labor OF n
lifetime, are moro ready to embark in hazard
ms sreculations than are the poSsesSors OF
ample fortunes. who could risk and lose the
larger part OF them without suffering even
Inconvenience. The 3 and 4 per cent. per an
nun offered by frst-class securities Ia rejected
for the 10 and 20 per cent. promised by
Inscriptions OF visionary promoters as the
yield OF schemes. which are certainly untried
md almost sure to prove illusory. Whenever
H.. l,,1l1,u lttpatC n 10 In Nn rim hlV
found that its initiation is chiefly due to the
money Of clcrgymen. women, salaried clerks.
srall shopkeepers and others like them. who
have saved it in sums of a dollar or five dollars
at n time through long periods Of years. and
who, Of oil people. ought to be the most eau
tious in parting with II.
The most recent illustration of this nfatua-
zion OF small investors and OF the ease by which
they are i~nveiGlcd into putting their money
into the traps set for 1t, is that OF the so-called
Electrolytic Marine Salts Company, which
promisedits shareholders immense profits from
extracting the gold held in solution by the
water OF the ocean. The promoters Of the
scheme obtained, it seems, 100000 in small
sums from their credulous dupes, upon repre-
sentations which a very little practical knowl-
edge would have shown, at the outset, to he OK
eggerated IL not false. and by tricks which
ought not to have deceived any level-headed
business man. That sea water contains minute
quantities of gold has long been known TO
chemists, but the amount of it is at most but
four cents worth in a ton Of the water. That
this trifing quantity OF the metal could be re-
covered profltably, is SO improbable, that moth
ing but the clearest demonstration should nave
induced belief in it.
The promoters Of this particular scheme
we're no doubt greatly assisted by the fact that
they proposed to obtain by it gold and not some
less precious commodity. From the earliest
ages gold has had a fascination for the human
mind which has LED to extraordinary efforts to
procure it. Solomon sent to India for 1t. and 1t
was the reputation Of that country for possess
ing it in abundance. which led to the expedition
Of Columbus, which. directed to India, ended in
discovering America. After Columbus came
the hosts Of Cortez, who. in search Of gold.
invaded Mexico, and Of Pizarro, who. with the
same object. conquered Peru. In later times
California and Australia, and. now. Africa and
Alaska. have drawn to themselves multitudes
who have cheerfully encountered extreme
hardships and even death in order to
wiring from the soil a few thousand
pounds OF the yellow treasure hidden in
It. To extend to gold mining in the sea the
same glamour that popular imagination has
cast over gold mining In the earth was easy and
natural. Indeed. hundreds Of gold mines In
NdllIOTUlas AubJTdlld, AlTiCd anu hldSkd, Wnlcu
have been sold to unsuspecting investors at
high prices. have contained as little gold as the
ocean does, and can be worked with as little
profit That an ounce Of gold. which can be
carried in the palm of ones hand. is worth In
the market as much as a ton Of steel rails. five
tons Of coal and more than twenty bushels Of
wheat ought to demonstrate to any rational
mind the cost Of producing IL. and the improb-
ability that a gold mine should be any more
profitable than an iron mine or q coal mine oil
Q wheat farm. Otherwise. the world would be
flooded with gold as 1t has been with silver. anG
It would sink in valuA as silver has sunk.
Next to gold mines patents for improvement
In machinery and In manufactures seem tx
have the greatest fascination for small In
Vestors, They have read Of the fortunes &c
ouired by the inventors OF the sewing machine
OF the electric telegraph. of the telephone. o
the Bessemer steel process. and Of a number o
less important labor-savinR devices. and the,
hastily conclude that every invention has a.
equal chance Of success. They are not awar
that the profitable inventions compare In mum
Der with those that are worthless as one 10
hundred thousand and that the archives Of tn
Patent Office are crammed with specification
and drawings not worth the paper on whic
they are spread. 1t is with them as 1t is wit
gold mines: for one that turns out to posses
value. a thousand cost more to work than the
yield. Nevertheless. every year people Of sma
means are entrapped into putting their none
Into companies gotten up to operate patent
and never see It again.
In Industrial undertakings. as in gold mimi
end In patents, the few that succeed and pa
good dividends are unthinkingly accepted a
iair indicators OF the quality OF the res
regardless OF the fact that they are exceI
lions and not the rule. Because the Stand
ard OIL Trust. the American Sugar Re1nin
Company. the American Tobacco Compan!
the American Telephone Company and the VI
Ftous gas companies Of the city earn largel.
the small investor hastens to embark in othe
enterprises Of a similar kind. expecting similI
returns, 1t is not necessary to name names
prove the unsoundness OF their reasoning. TIL
records OF the Stock Exchange show every da
sales at nominal, or next to nomina prices.
shares In industrial companies which at on
m stood high in public estimation. bl
hln