The Washington herald., 1913-01-04
ANOTHER GREAT AMERICAN
BUBBLE BURSTS.

tCopyrsht. 1918. By c. NJ. Keys. New York.l
About six years ago a couple Of men
who had become enamored of the mall
order business and had been successful
at it got It into their heads that there
was nothing In the world that could
not be done by mail. Particularly, they
thought the selling of stocks and bonds
was a neglected art. They conceived the
idea that IL they could start concern
with enough capital behind 1t to justify
their spending a lot OF money advertising
and circularizing they could make for
themselves an everlasting fortune.
So they started the Sterling Debenture
Corporation. The name itself was a
masterpiece. Sterling means solid.
substantial. and true; in finance II means
gold of quality. "Debenture'' is an Eng
lish term of excellent repute and carries
with 1t the underlying idea of a bond.
something 10 rely on. something intrin-
sically sound. Corporation" Is a high
sounding substitute for company" The
combination OF the three words was one
OF the strongest assets that these pro-
moters had when they started In busi-
ness.
Their first big venture belied the name.
They made a deal with a struggling
company that was trying to finance a
new invention made by a Dane. namely,
the telegraphone. Under their contract
they got this stock for a price under s.
a share. When they came to determine
at what price they should sell It they
went all the way at once, and deter
mined for all time the character OF their
new institution. They set the price at
$40 share, OF more than IS above their
contract price. In other words, out of
every so that the public would con-
tribute less than s. would go to work.
The rest would represent expenses and
Profit.
In exactly the same way they have
been sowing the wind for the past six
years. They have been assafled, criti-
c!sed, called harsh names. and generally
set down by intelligent critics as devious,
crooked, and unscrupulous promoters.
They have not paid much attention to
these criticisms. On the contrary, they
have worn an air of virtue most becom-
ingly and have even, at times published
circulars and pamphlets crtticising, in no
uncertain terms, the wicked ways of
Wall Street and of the banking frater-
nifty. II seems strange now to contem-
plate the very large number of people
throughout the country who not only be-
lieved in these promoters and the con-
Germs which they floated. but have been
willing To champion them against their
critics. Some Of the most acrimonious
correspondence that the writer has ever
received came from deluded victims Of
this particular syndicate objecting to
criticism of their activities.
The amount of actual money that has
passed through the hands of the Sterling
Debenture Corporation during the six
years or so of their activity is largely
matter Of guesswork. 1t is loosely esti-
mated at from S5,000OOJ to SaO.OcO.OOo 1t
probably is much nearer to the former
figure than to the latter. At any rate,
most OF it undoubtedly went for advertis-
ing and other expenses; a little of II
found its way into the unfortunate indus
tries that were supposed to feed at this
trough, and the rest of 1t represents
profits 10 the promoters.
A few days ago Fede. al officers de-
scended upon the Sterling Debenture Cor
poration and took its officers to jail to
await their trial on the usual charge of
using the mails to defraud. For some
years past every effort has been made
by the government to get grounds for this
charge against this corporation. II has
been thought, however. that these pro-
moters were too skillful and surrounded
by too good legal advice to permit any
action that would lay them open to a
criminal. prosecution. OF late, however,
II has been pretty hard going and pos
sibly vigilance has relaxed to a certain
extent in the corporation under the stress
of extraordinary efforts to raise money
From every point OF view, there Is
melancholy about this episode
The men themselves are clever, gifted
men. quite capable individually and col
of carrying on a straight and
honest business successfully. Some of
them are honest at heart. One of them In
particular. when he drifted into this
business, was as clean and high-minded
a young fellow as one would meet In q
days journey. He lacked only the cour-
age to turn back when he found the
truth. While. therefore, one must con-
denim without reservation, there still is
room for pity that men so well equipped
for nfe's battle should have found II
necessary TO follow paths so crooked and
so dangerous
The real pity. however, is for their
victims. The writer has handled dog |
ems of letters from women, poor men. !
and dependent young people who had
been deluded into buying their worth !
less ware. There are literally thous- |
ands throughout the country who have |
sunk a great deal of their slender capt. |
tai in 'he stocks of the foolish enter |
prises financed by this corporation. It |
nay well be doubted that a single dollar |
the telepost. the linen MILL !
the plantation, the weakling banks, and |
The foolish insurance concerns that have |
passed through their hands. are either |
outright losses already or are SO weak /
rom the financial operations that |
have been performed upon themi iPthat
hey probably are not long for this
world
When the whole story Of this busi-
ness comes out. 1t should be publish
ID in book form and distributed by the |
United states Government free of charge.
II II could be put into the hands of whole
1t probably would do more
han any other one story could do to
wipe out the get-rich-quick game In this
country. and to establish a statute.
which would make 1t compulsory here /
Is it Is in England, and in other well
governed countries. that every public
iotation of stocks or bonds should be
by declaration of the
mount made out of the iotation by
he promoter.
In this connection, lest such legisr
alton should seem impossible. here Is
paragraph from the amendments Of the
bank act now under debate