The sun., 1919-10-08
URGES STRINGENT =.
BLUE SKY MEASURE
Houston Thompson Tells
House Committee People
Face Swindling Era.
ha = = vl,sH
IND0RSES TAYLOR BILL
-s, --------- 3,!a
Advocates Widest Publicity
I. for All Kinds Of Stock =
I" Transactions.
INDORSES TAYLOR BILL
spsctai Despdtca TO rnE suN.

Special Despatch to rnE SuS. :
WASHINGTON, Oct. T.-The American 3
people will be neeced out of $500. o.ooo. 900 ;
annually through fake securities unless
Congress enacts a stringent blue sky !
law, Houston Thompson. Federal Trade .
Commissioner, declared before the House ..
Judiciary Committee to-day. :
10 THE time has arrived" he said, :
when the utmost publicity regarding
the value of stock or security TO the
prospective purchaser be given by the
promoter or underwriter Offering tho ser Z.
curlty for sale. Unless this Is done
each year approximately s5Oo,ooo,00o
u I'll be squandered in wild cat invest-s
ments, and the public will continue TO !,
purchase so-ca1led Legitimate stock pi- !,
ready waterlogged by bonuses and COM I
missions" Mr. Thompson opposed the
plan Of having the Government invcsti-,,
gate all stocks and bonds before being.
issued. claiming that Il would amount.
to Government guarantee and that.
In spite OF most careful Investigations.
the Government might be put In the
position of indorsing unsafe invest
ments. !.
He advocated fullest publicity for all
stock transactions and indorsed the blue,
sky bill OF Representative Taylor (Col.) q,
which in general was approved by Pres
ident Wilson in his address to Congress
on the high cost of living, but asked 2
that 1t be amended so that in any ad- {.
yertisement the exact amount of the
selling agents commission must be-,
stated. I
Text of Amendment.
r-l,
Every person, firm, association or cor
poration Offering for sale to the public
Interstate commerce bonds, stocks or ,
other evidence of ownership in any COR
poration shall print on the front page
of any and all circulars, prospectuses.
letters literature and in the body OF any
Advertisements describing or mentioning
tho security for sale in type larger than
the type otherwise used. the names OF
the promoters and underwriters and the
rate of commission OF commissions or
bonus received by those promoting, con-
solidating, underwriting or selling stld
security and the net amounts to be re-
ceived from said sale by the issuing en-
tirety, corporation or association"
mo public officer wants saddled on
him n law that will require him to ap-
prove of security in advance of its
SALE" Mr.. Thompson continued. THE
approval of a stock even after thorough
investigation might cause the sale of n
security that would afterward turn out
worthless or very much deprecateh
The investor would take the officials
sanction as a governmental elSrantee
and wheno the stock turned out badly
criticism would fnll on thc official ana
the Administration. ... :
Would Put Burden on seller.
"A successful law should put the our:
den on the one Offering the security fort
sale That burden should require the I.
underwater to bring TO the attention ofS
the purchaser, through all tho!r circu-
lars. advertisements and letters com
plate knowledge of the names of the@
promoters and underwriters, the rates or
coJrniSsions and bonuses received for
selling the security and the net amount
received hv the corpora ton originally. /.
issuing the security. This iniormati1ns
with other information should he dio1s
with the Secretary Of the Treasury or 7,
some Other official Of the Government. /.
and at the post offices in the capital Q
citit, uf tn Srat"s where tho stock IS
sold x
at is Necessary ia require more than .
The simple filing of the information with /.
-h- public official. Great Britain went; /;
this far some wears ago and tho aota
was not q success. There must b1 the Z
connecting link. the additional require .
ment OF requiring the publicity through !.
the circulars and advertisements. Then.
the pUrcha ser will be put upon notice :
No longer will security be waterloggads !
with promotion bonuses. Failures wiils
necessarily be less and consequently thes
cost Of living should be reduced, for the
sum total of failures iu this country
duo to wlldcatting or waLerloe".rs s,
curity has 4 certain effect on the COST
Of living. II 4 man has n right to
know uAds" the pure food law what in
gradients n Hockage contains ana car'
b. punished orimlnally HJr mlsraprosr-
ratior. why should the purchaser z So
"urity not have the SAME riEht Of ,rOc~-
ing what is behind the security? IN ths
first instance. failure 20 live ny TO t'r
law NAV cause one 10 take into his rye-
tenn poisonous food: In the second no
food at all"