The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-09-08
U. s. WILL STRANGLE
WILD SPECULATION
Sales of All Stocks and Bonds
Unapprovcd by Govern
ment to Be stopped.
TO CHECK ENTERPRISES
Vigilance Committees viii Re-
port Unnecessary War Time
Uses Of Capital.
Special Bespatch 10 THE suS.


WASHINGTON. Sept. 7.--As a part OF a
conservative plan to restrict still fur
Their the use OF investment capital to the
industries and enterprises which are
necessary from the standpoint OF ma
tionaI interest the Capital Issues Com
mittee is prepared to take stringent
measures to police all stock sales in the
United States and to stop the exchange
Of promotion stocks for Liberty bonds.
Hereafter every issue OF securities.
whether voluntarily submitted to the
Capital Issues Committee or not. will he
acted on and IL disanproved prompt
measures will be taken to stop both the
eale OF securities and the further de-
velopments OF future enterprises.
To accomplish its purpose the com
mittee Is TO create and equip a special
department with voluntary representa-
tives in every community in the land.
who, will be members Of great eco
nomic vigilance committee" which will
report all offerings of unauthorized Sc
curities to Washington.
The vigilance committee will keep In
touch with the financial institutions OF
the country and will report all SEEM
dngly unnecessary capital uses. such as
the construction Of new buildings, new
roads investments and other improve
ments. however financed. There will be
one vigilance committee in every COM
,nunity of $4,000 persons or more. Its
members will obtain and distribute in
formation respectig the operations of
persons and corporations offering Sc
curities without the approval Of the
Capital Issues Committee. The commit
AaA mill <l.,ta
rnittees OF the Investment Bankers AS
sociation. the Associated Advertising
Clubs, American Bankers Association,
the American Newspaper Publishers AS
ISOLATION and other agencies.
To Check Unpatriotic Promoter.
The effect Of this work will be far
reaching. Not only will every consider
able capital expenditure be reported TO
the Government, but the vigilance COM
1nitteernan will send In word OF budgets
that carry disguised or split UP items
of capital expenditure All financing ar
rangements made through banks are ex-
pected to come under their notice. Their
work is likewise designed TO protect the
investor against the INSCRIPTIONS or un-
patriotic promoter. -.- ...
The work will be under the direction
or John 8. Drum. member of the COM
mittee, as head OF a new department,
the organization of which will be an
nounced Monday. He will be assisted
by Paul Sinsheimer Of San Francisco.
The organization will be supported by
the Railroad Administration. the War
Industries Board and other Govern
mental agencies in putting the screws"
on projects that are disapproved. This
cooperation. 1t is believed, will assume
ample power OF enforcement.
Reports received by the Capital Issues
Committee from all parts of the country
indicate that the traffic in promotion
stocks has vastly increased since the
war, due to high wages and the fact
that millions of people have invested in
Liberty bonds. which many statesmen So
licit and eagerly accept in lieu Of cash
In exchange for the stocks Of enter
prises not passed by the committee. 1t
has been estimated that the traffic Of
doubtful securities alone amounts to be-
tween $3.50, 100000 and $500. 600, 900 an
nually. and to this must be added the
securities of enterprises which even II
OF value are yet incompatible with the
national interest at this time because
they interfere with the use of capital
ltbor and materials needed for es-
sential war production. The committee
believes there Is no doubt that a
large part of the money unwittingly in
vested by the buyers OF unlisted securi-
ties can be saved and will go directly to
assist the Government in meeting its
own financial needs through larger SUBJ
scriptions to Liberty bonds and War
Savings Stamps.
Plan to Conserve Money.
Chairman HamlIn of the Capital Is
sues Committee said; The plan OF the
Capital Issues Committee to restrict the
nf mt Rtt, IL
predicated on national necessity. The
hundreds of millions of dollars that 60
into the hundreds of enterprises that
could be postponed until after the war
are lost to the Government at a time
when our financial and economic re-
sources should be directed to the one task
of winning the war. They are like so
many soldiers withdrawn from the battle
line and put on work that should at least
wait until the main task is finished.
THE Government has established a
policy OF war business first to meet a
great emergency. The sale of unauthor-
lied securities not only robs the public
and results In economic waste. but also
II interferes seriously with the dstri-
button of Liberty bonds. The sale of I'M
authorized or disapproved securities
which may be intrnsically sound but are
economically unnecessary as serving no
and material resources of the country.
The extent of the misuse OF capital flow
ing into such enterprises compels the
Capital Issues Committee to take drastic
steps to conserve this capital for neces-
sary uses.
MANY a patriotic buyer of Liberty
bonds has been induced to exchange this
evidence OF his patriotism for some
worthless promotion stock in the belief
skilfully encouraged by many statesmen
who swarm the country. that by 80
doing his money was serving the coun-
try twice. Such belief is absolutely
without foundation: in fact, the selling
Of Liberty bonds has exactly the oppo-
site effect by depressing the price OF
Government securities In the market II
while the motive may he different II is
as unpatriotic to buy securities not
passed by the Capital Issues Committee
as II Is to sell them. and that in no case
IL the country served by the exchange
OF Liberty bonds for the stocks or bonds
OF any private enterprise.
McAdoO Approves Plan.
THE Capital Issues Committee is con.
fdent with the assistance of the Depart
ment OF Justice. United States Railroad
Administration. War Industries Board
Fuel Administration and other Govern
ment and outside agencies, 1t will be able
TO break up speedily the traific in unau'
thortzed issues which has assumed such
proportions as to be real menace"