The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1912-08-14
COMPTROLLER
AFTER SINISTER
STOCKVENDERS
KNOTT WARNED BANKS OF
STATE AGAINST DIscouNTING
NOTES GIVEN FOR STOCK OF
FOREIGN CORPORATIONS. WILL
ENOEAvoR TO STOP DANGER.
Gus PRACTICE.
Special to The Journal.

~FSNtAi 70 mo doHFuais
Tallahassee, Fla, Aug. 13-The
news from Georgias legislature that
a law would be enacted compelling
persons offering securities of foreig9
corporations for sale in the state 10
first register and have a certificate
from the proper authorities based upon
an examination of the securities offered
brings TO mind the fact that Florida
is sadly in need of a law of this kind.
The present comptroller, Hon. ". V.
Knott, had occasion as state treas
urer to note that stock of doubtful
value had been sold citizens Of this
state and which was offered and Of
ten accepted as securities by some in-
situations.
AS state treasurer Mr.. Knott also
observed that there were venders of
the stock Of insurance companies who
sold the stock for notes and placed
notes in banks receiving in exchange
therefor time certificates of deposit.
He always refused to accept these
Vestnents OF insurance companies
under the provisions of the insurance
laws.
Since entering the office of comp
troller Mr.. Knott. finding the banking
laws were being violated, las sent out
instructions to all state banks in
Florida, cautioning them against the
practice which it seemed had pre-
vailed in some localities; especially in
the case of a few of the smaller
banks. The following letter which was
issued by the comptroller last month
shows that he is pursuing a course
which will effectively check the vend-
ing Of stock of foreign corporations in
this state to large extent and will
doubtless save maBy dollars to in
vestors in this staA
Tallahassee, July %, 1912.
To the State Banking and Banking
and Trust Companies:
Gentlemen:
1t appears from information re-
ceived at this Office that time certi-
ficates of deposit have~be issued in
exchange for notes taken by agents
selling stock in corporations, and
that such certificates of deposit have
been offered to other banks at a dis
count Of about ten per cent, and
while such transactions have been
limited and are at present under
special investigation, others might oc-
cur through want of knowledge on the
part of bank officials.
Your attention is therefore called to
the fact, that under the law, a bank
is not authorized to issue a certifi-
which the certificate is to be issued
is first paid into the bank in cash.
1t is expected that you will adhere
strictly to the law.
Yours very truly,
w. Y. KNOTT,
Comptroller.
Since issuing this letter the Comp
troller has received numbers Of let
tiers from banks complimenting him
on the stand taken. One especially
strong letter of compensation comes
from Georgia's capital city and states
that the banks of that state have had
considerable trouble on account of this
very practice.
Fortunately the stock shysters
seem not to have gained much foot
hold in Florida and when they are
prevented from trading their notes to
the local banks for certificates of de-
posit it is strongly probable that they
will discontinue their operations in
this state altogether.