The Goldfield news and weekly tribune. [volume] (Goldfield, Nev.) 1911-1947, 1916-01-15
BROKERS' ORGANIZATION SHOULD ACT

If the national association of brokers, organized not
long since at San Francisco, is DESTROYS OF rendering. a
service to the investing public and at the same time gain
ing the complete confidence of that public in its good IN
tentiOns and in its power to protect the interests OF IN
vestors, it can do all of this by taking steps to curb the
pernicious activities of certain persons, styling themselves
brokers, who have done a thriving business IN the past
by trading stocks of little or no value for listed securities
that are not in active demand in the markets OF the co1n-
try. This is an evil that has reached widespread pro-
portions and one which directly affects the business OF
brokers. the value of mining company shares and the wei
fare of the mining industry.
Instances of the practice of this abuse are readily
available and can be found in advertisements contained in
many newspapers. The so,called broker, either through
advertisements or direct letters to clients, offers stocks
of cheap promotions, at a few cents a share, in exchange
for listed or other stocks of established value, urging the
exchange on the ground that the latter stocks are "in-
active and that the 1ower-priced Securities present
better chances for large gains. These assurances are &C
companied by glowing reports of the value of properties
represented bv the cheaper stocks and by arguments de-
signed to convince the holder of the higher priced shares
that these have little chance of advancing in price, since
thev have remained stationary in the markets for a long
period.
The method EMPLOYED by these sharpers is to Sc
cure a claim or group of claims in some district of estab-
lished or promising value and to incorporate a company,
usually vastly over-capita1ized. The stock of such a
company will then be listed on one of the more obscure
upon which quotations are made in units OF
dollars weekly the promoter is enabled to give his stock
a semblance of "activity" in that immediate market. This
is a time-worn method of conveying to the uninitiated the
idea that a stock is in active demand. an idea that in
variably arouses a desire on the part of the tyro in stock
trading to possess that particular stock.
By such expedients these wildcat operators, avoiding
any direct infraction of the laws and without arousing the
suspicion of the postofhce authorities, are enabled to get
rid of their worthless certificates, in exchange for
temporarily inactive shares in mining companies
of established or reasonably good prospective worth.
Their stock, created for this purpose and costing
them little more than the price of the paper upon which
the certificates are printed, is sent out by the fake pro-
moters, who receive shares, in lesser amounts, worth from
five to fifteen cents-and the profit they are thus enabled
to realize is readily computed. The abuse is of far wider
extent than is realized, even by many reputable brokers,
and it's elimination would be a service of actual value and
would appear to be altogether within the province and
power of the new national organization.