Evening journal., 1918-12-26
u. 5. TO CHECK SALE
OF Wildcat STOCK
Secretary Glass to Ask Con-
gress for Restrictive
Legislation
PUBLIC WARNED
AGAINST LOSSES

tIoft Is 10 ne lldut ny ih' toNNAH
ment to check the traffic In worthless
securities and protect the investing
public against wildcat schemes
which are expected to appear on tn;
heels OF the war and with the remova
of wartime rescricilons on the use o.
capital and the return Of business To
normal chanenls. In approving a de-
cislon OF the capital issues committee
which for many months has exercised
a sort of persuasive cont-ol over the
use OF capita, 10 suspend activities
December 81, Secretary Glass, OF The
Treasury Department, declared that
present conditions emphasize the need
for restrictive legislation Of this Kind
and said he expects Immediately TO ask
an act before the end OF the present
sesson.
Charles S. Hamlin, chairmsn OF the
committee, in a statement expressing
its intention TO suspend at the close
OF the year, shows the requirements
Of the Government, the large capital
needs OF the railroads and the readjust-
ment OF American industries on a
peace basis compel strict economy In
the use OF new capital and make 1t
imperative that wildcat stock issues be
prohibited.
"The extent OF the menace due to
the issue OF sich securities TO the
hilders Of Government bonds" said Mr..
Hamlin, "is revealer by the fact that
schools are being established In some
parts OF the country to drill statesmen
In the art OF persuadlng investors 10
subscribe for unmeritorious OF worth
less securities. This can only be pre-
vented. by legislation vesting in some
duly constituted public agency full
power TO restrain the Offering Of fraud
ulent or worthless securities
Secretary Glass in his statement said:
"The decision Of the capital issues
committee TO suspend It's activities on
December "a should not be Interpreted
by the business public as a warrant
for any expenditure OF capital for need
less or unylse purposes. whether pub
lie or private in their nature. Should
ii become apparent that voluntary re-
stralnts are not being exercised TO as
TO prevent the misuse OF capital, shat
request the committee to resume Its
control
MY chief mlsglvlng in accepting the
action Of the &, mmittee arises out Of
the need the committee has f-squently
expressed and Jhe Importance Of which
has become increasingly obvious, Of
protecting the pubic investor against
the flood OF worthless or doubtful
securities which threaten the market
when the restrictions are removed, and
present conditions emphasize the i'm
portanoe OF obtaining legislation as
speedily as possible so as to be able TO
cope effectively with the evil. The
Government not only should protect
itself as 10 future bond issues, but, as
well, owes a duty TO the Millions OF
Liberty Bond buyers 20 restrain reck-
less and fraudulent promoters, par
ticularly at. this time.
II intend TO ask Congress Immediately
for legislation that will check the traf-
flc In worthless securities while inn
posing no undue restrictions upon the
financing Of legitimate business, aud
shall urge that II be made effective be.
fore the close Of the present session.
II may become necessary be-
fore such legislation is passed TO re-
assemble the committee for the purpose |
Of resumnig its functions"
Mr.. Hamlin said the committee de- |
clded TO suspend, in view OF the rapid |
changes since the signing Of the armi-
stce, but that Il vii maintain its of |
fees in Washington for the present and |
not actually dissolve, so that II it IL |
found that "the sale OF new securities |
unduly with Government |
or for other reasons, IL may |
become desirable for the committee to |
resume its work"
Although the war emergency, which |
gave rise 20 the creation OF the COM |
mittee. has passed" said Mr.. Hamlin, |
1t is nevertheless imperative that capi- |
tai should be saved and not wasted, and |
the removal OF the restraining influence |
exerted by the committee during its ex- |
istence should not be construed as ap- |
proval Of the financing unnecessary |
public projects or private enterprises !
OF doubtful merit. On the contrary the |
financial needs Of the government and |
the large capital requirements OF the |
railroads and for the readjustment Of |
American industries 10 a peace basis |
compel strict economy in the use OF |
new capital.
while legitimate business may safely !
be left to work out its own problems, |
the Capital Issues Committee feels that |
II would be unfaithful to its RESPONSE |
bility II IL failed TO warn the public re- |
specting the enormous losses sustained |
by the nation through the sale OF |
worthless and fraudulent securities. In !
the opinion Of the committee the sale |
of such securities should be restrained
in times OF peace as we'll as in war |
and strongly urges that Congress es-
tablish adequate machinery to put a |
stop to this trafilc.
The Capital Issues Committee warns
the public and earnestly directs the at |
tentlon Of Congress to the problem. It |
is the intention OF the committee to
make a supplementary report to Con-
gress recommending a law to prevent |
these existing abuses and such imposi- |
tions upon the investing public"