New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-12-28
Government Agents Dis
cover Scheme to Swindlc
Owners of Liberty Bonds
No Law to Stop Them
Promoters Plan for Big
Harvest as Result of Pros
pcrity Among the Workers
By Theodore NJ. knappen

WASHINGTON, Dec. 27.--The facts
in announcing the approaching tcrmi-
nation of its activities, to warn the
country of the enormous losse9 being
sustained through the sale of worthless
and fraudulent securities, which it has
to some degree checked, are mentioned
in it's recent report to Congress regard
ing its work.
That report substantatcs the state
ment that schools are being formed in
various parts of the country to drill
statesmen in pcrsuading investors to
subscribe for unmeritorious or worth
less securities" and gives much space
to The subject of financial explorations
by "rcck!ess or inscriptions pro-
motcrs"
The field for this sort Of financial OPP
orator has been greatly enlarged, says
the report, "by the wide Distribution OF
Liberty bonds, and the purveyor OF
stocks and bonds is no longer put to
the necessity of seeking out a select
list of prospective purchasers with
money to invest He now has the en-
tire American public, and the transac-
ton becomes one OF persuasion TO
tradc-to trade government bond
bearing low rate of interest for
stocks or bonds baited with promises
of high rates Of return and prospects
of sudden riches.
Can and Should be Stopped
"If unrestricted, this traffic would
unsettle the placement OF hundreds OF
millions Of dollars of Liberty bonds
which ultimately would be dumped INTO
the market with depressing effect
otto sacrifices of the original buyers oil
the bonds come to naught. It is partly
an economic problem, partly political.
"This unlicensed and unrestricted
traffic is crevcc in our iinancla!
structure. through which flows con-
slant torrent Of funds in utter wastage.
1t can and should be stopped But more
than that, it is a source OF heavy imam
cial loss to hundreds Of thousands who
have right to look 70 their govern
mcnt for the protection this committee
recommends should be given.
CAS- an illustration Of the dangers in
question. the committee appends to
this report as Exhibit b a quotation
from q recent report of one of its dis
trict committees describing the estab-
ljshment Of schools for the edeucation
of stock salesmen In Exhibit c. 4
typical case that came before the com
mittee is summarized for the purpose
Of showing the type of promotion
scheme that should be suppressed
Training Men for Fraud
Exhibit 3, which consists of an eX-
cerpt from a report of one of the
twelve district committees, is as fol-
lows
"Two schools for stock statesmen have
been established here to tram
men for fraudulent operations in the
near future.
81 quote as follows from two reports
which | have before mo:
"'He assured me that there was a
better field than in any of the stock
sales propositions that have been adj
vcrtsed lately owing to the safety
and the fact that the law cannot
! touch them
"The above relates to a proposition
to sell farmers a years member
ship in a farmers service company, for
which they are to pay S25, and receive
nothing but the right to buy goods
from tho company The company has
neither the goods nor place Of bust
necss, nor is there much Of any proba-
biity that they will ever do any bust
, ness except to sell berships.
"By selling memberships they cvadc
both our committee and the Blus Sky
commissions. because there appears to
be no way in which we can reach a
man who is willing to put w good
money for anything so intangible as
the rights he receives under this plan
suckers" Never so Plentiful
81 quote as follows from an nvesti-
cation OF another similar enterprises:
"'Tho sales manager gave u a talk
on the financial condition in this
country as we'll as Canada, dwelling
particularly on the fact that there
never was q time when all the
suckers had the money they have at
present H. said that as soon as the