The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1911-10-25
Way of the Promoter
Dupes Are Easily Separated From Their Money BY En-
ticing Schemes For Quick Wealth

tieing Schemes
There are many favorite devices Of
mine promoting that work out per-
fectly at different INES depending al
ways on the temper of the public and
the degree OF general speculative ex-
known at the REORGANIZATION" Of
fering. y company is projected for
any amount OF capital stock that may
be thought advisable by the promot-
or. the millions of dollars ION paper)
concerned being governed by the price
at which the stock is being sold.
A $4,000. 900 organization having
stock of the par value Of 81. but plac-
ing that stock at cen a shore, be-
comes virtually a $500 enterprise.
The REORGANIZATION offer is generally
at q low figure. such as one cent a
snare. and the investors are told that
upon the organization of the company
treasury stock will not be offered for
less tha ten cents q share.
Seeing what they believe to be an
immediate profit or 900 per cont, they
take advantage of the Offering, look
ing upon che percentage Of their gains
instead Of upon the property in ques-
ton. 4 great many of these conn.,
panies are never formed after the pre-
organization stock has been sold.
Another pet scheme that has been
worked time and time again is to float
a parent corporation. placing the stock
at par or near it. The company owns
nothing. but Its object is 10 organizes
other enterprises that will possess
something, retaining in each one the
control of the stock. The promoter
aGr.es not personally 20 appropriate
one share of the stock IN the suhsid-
lazy companies unless he pays the cur
rent price for the shares.
Tie p%ostoficc department. in Wash
ington issued a fraud order against an
outfit of this type in Boulder. Colo.
and proved that the promoter owned
the control in the present organiza-
ton. As h a company controlled the
subsidiary companies 1t was plain that
the promoter absolutely dictated the
policies of every one of his concerns.
He became so indiscreet as to boast
in the circulars mailed to the stock
holders that he had a competency for
life from his business in salaries and
commissions amounting to several
thousand dollars a year. He had gath
cred in we'll in excess of $1,000. 900.
having sold stock to more than 5000
persons. The only tangible asset that
could be found was a subdivision In
the outskirts of Boulder. Colo. The
total value of the piece Of land was
perhaps not over two per cent Of the
funds he had secured from trusting
investors. 1t was not the intrinsic or
even prospective worth Of any one
property that appealed to these peo-
pie so much as the prospect of sud
den wealth through making a pro-
motion margin on all of the other
companies organized.
So eager We're the stockholders of
the origina! corporation TO see the
i plans succeed they actually CONSTITUTE
ed the majority OF the stockholders in
the subsidiary concerns. The parent
organization was paid a cash commits
other companies. although everything
was conducted in the same ONCE. Thus
a part Of the money received was dis
bursed to the shareholders of the or
iginal organization as dividends.
About five per cent of the money in
vested in the stocks Of these subsid-
larry corporations came back to them
through the vehicle of the parent com
pany. They were immensely satisfied.
too. so long as stock could he sold in
these various corporations and the par
company could pay dividence. over
half of which went to the promoter.
The stocks of these various companies
had an active market value. although
it is doubtful If five per cent of the to.
tai cSlIIleHlS COulu D0 accounted lOT
by any marketable assets.
There have beer cases where pro-
motion advertising has absolutely fall
sifed. One of these which was float
ed from Denver. Colo. was founded
on the assertion. clearly made. that
the property %adjoined the great Mis-
pah min in Tonopah, New. 1t was
actually .tw%enty-four miles distant, out
on the desert.
Frauds of this type became COM
mon but they were such fragrant
hrea ches of the Law operations along
this line became difficult.
Many misleading prospectuses and
advertisements have been made posi-
BILE by the liberal use Of photographs.
The promoter OF oil propositions will
print cuts of sushers. pumping wells.
refineries. etc. as belonging to ada
cent enterprises.
Now. while the word adjacent" is
taken by most people TO mean "adjoin-
ing" this is not the case. Adjacent"
means lin the neishborhood Of"
while adjoining means "abutting."
Promoters Of mining enterprises will
use %eneravings Of we'll known pro-
ducers and of scenes underground.
Some Of these pictures have been en-
ployed hundreds of times and. while
the literature" does o state that
they are scene of the property under
consideration. 1t infers that when the
flotation period is passed and the
mine is operating the property should
look something like the picture in the
book.
To go out and locate a few claims
under the federal statutes is extreme
ly inexpensive. but to take that small
stretch OF mountain scenery and pic
ture 1t is a ~slumbering bonanza is an
art. To analyze man. prospectusns in
an impartial and impersonal way is to
come to the full realization that after
all. the company owns nothing but a
location such as n of the stockhoId-
ers could buy for perhaps less money
than he contemplated investing in the
! company.
From tho brief statement: o. the
ownership Of .hc ground by location
the prospectus writer begins to dilate
on the names Of the claims that have
3 spicy. breezy, western air. such as
Kicking Horse. Injun Roy. Wbip-poor-
| will, Mexican Kid. Silver Glance. Gold
eli Wasp, Hurricane. Hobo, Ragtime.
etc. He then explains the proximity
OF shipping points. and the rates for
! hauling and treating ore in mills and