The Greeley tribune., 1907-12-12
TRAPS FOR THE TRUSTING
Greater Skill Employed Fishing for Investment oaek-
er." Than Ever Was Used by an Angler in
Entrappng the Willy Trout
BY HON. WILLIAM sARRET RlDGELy,
comptroller OF the Currency

| their business: 1t comes to them BY
force of their financial strength. They
have no need to drum 1t up.
However. scores OF oil. mining and
investment companies which do not
use either of these clever catchwords
in their corporate titles cannot be
charged with undertaking the pull.
ing power" OF such phrases: in their
literature this kind OF bait is EN-.
ployed with the greatest skill and
plausbility.
One of the most common ways In
which this idea Is dressed is this:
We guarantee you under all condi.
.tions and at all times to get you. with
out cost to yourself. the highest mar
ket price for your holdings" This
sounds very assuring; 1t carries with
it a protective and almost paternal At
mosphere and seldom fails to inspire
in the trusting investor the feeling
that there is a strong hand ready to
take the investment off his shoulders
the moment 1t threatens to become q
burden.
This particular phrase is especially
fortunate and typical. by way OF illus
tration, for the reason that 1t couples
with the word guarantee" another
term which is warm favorite with
the word artists OF the get-rich-quick
studies. refer to the phrase high
est market value"
nails to credulity is displayed the pos
sible investor should invariably re-
member these points:
First A guarantee Is never stronger
than the guarantor
Second. A security only has mar.
ket value" in the fair and true sense
of the term where large demand for
it meets large supply; there. and
there only, exists an active market
and genuine market value"
Let these two propositions (which
any reputable banker OF broker will
tell you are axiomatic) be considered
separately: There Is no virtue in the
word guarantee" II this simple fact
could have been firmly fixed in the
minds of the small investors of this
country they would have been saved
the loss of millions of dollars since
our present period of wonderful pros
perity began. In these days of highly
perfected business organization the
process OF finding out the real re-
rponsib,lity Of any financial or buai-
ness concern BAs been reduced to n,
exact science and made available to
all Is 1t reasonable to suppose. un-
der these conditions. that any COM
pany or corporation which cannot
stand on its own feet can get any re-
sponsible concern to guarantee its
bonds or other so-called securities:
Never! Such a supposition is absurd
on the face OF 1t and an instance
where 1t has been done Is not, 30 far
AZ | know. to be found in actual prac-
ttce. Dig down under the guarantee"
Of the company which asks you to In
vest your savings and what do you
find? That II you do invest you and
your fellow victims are really your
own guarantors; that the financial
strength OF the concern Is really tho
money which you and your associates
pour into it; that it's only financial life
blood comes from the purses of the
small investors and that when the
stream OF vitality from this source be-
gins to dry up the services Of the
financial undertaken are In near and
Inevitable demand. Reduced to its last
analysis, the black-type declaration OF
guarantee" In the literature of the
"get-rich-Quick" concern simply means
that 1t has something to sell You. Cen
orally 1t is also an Invitation to you to
pay in advance for the flowers to
adorn your own financial funeral.
AS to the other pet phrase: High.
est market value"-or market value
Of any kind for that Inatter-a very
few words will suggest the situation:
Excepting where very large de-
mand meets very large supply in a
free. open and comparatively un-
manipulated market. where sales are
regularly made OF record and those
records command the respect and con-
fidence OF the legitimate financial pub
lie. there is no market value" save
that which is arbitrarily. made by the
broker. He Is the market: he makes
the price by the simple process Of
thumbs up" or thumbs down."
The man who Is on the sucker list
OF wildcat concern receives an an.
nouncement that "all Indications point
to the conclusion that next week the
stock OF the Honor Bright company
will sell at not less than five points in
advance OF the present price" Next
week he gets notice that the predic-
tion of an advance has proven true. II
he is unsophisticated enough he re-
cetves the announcement with solemn
credulity and credits the author OF the
promotion literature with great acu-
men and shrewd prophetic powers. He
figures up the profits he would have
made on the advance and condemns