Every evening, Wilmington daily commercial., 1919-12-22
A Federal Blue-Sky Bill
By Frederic J. Haskin

HQHl0 ST the cN1iS OF NlluCat SIFItiAiltb II
again planned by Congress.
'fBluc c-sky" laws enacted by some 3S
States have proved inadequate. Sucker
lists kept for business purposes by pro
motcrs Of swindle schemes grow longer
every year.
Instead Of growing less gIllble rs we
advance IN civilization, we seem to become
more trustful Brooklyn bridge and the
subway are sold daily to newcomers In
New York CITY, who innocently hand over
their cash to smooth-tongued sharpers.
Men who would not invest IN n business
In their own town until they had tested its
financial soundness win without hesitation
sink their savings into fake South
American frui or rubber investment IN
response 20 circular IN the mornings
mail
"You cannot logislato good Judgment
INTO the people" says one business man,
who thinks that people who invest saw
ugs in get-r,ch-u,uck schemes, would, u
shut off from this form Of amusement, hnd
somc other way 10 lose their money.
Still, the chances are good that Congress
will pass a national blIe-sky law, lnsuring
some protection Ia the people. Good ei-
fects of blue-slxy laws are noticeable IN
the - States that penalize the wiiful
fffklitftF tf WNfttittSS SNtfA sssitA
scntation Of facts by promoters.
uE9Ec-rs IN STATE I. ws.
The main trouble with the State laws
s he q thcult Of extraditiOn. Most OF
the laws provide for prosecution OF the
offender only il his business Is organized IN
hat STATE The promoter OF fake propo-
rltions usually incorporates ~ one state
and oys,ratcq MI over the country, except
IN the State in which he organized ms
company. When complaints come IN 10
district attorneys Of the States IN which
h, oFrrratr4a. thew cannot uch the pro-
MOTE. unless the state IN which he in.
o,rDorated Will extradite him. This any
state Is reluctant . DO. and viii not do
unless its own laws recognize the mans
oiFcnsc ~ such, So that usually the case Is
dropped
The proposed law would compel or
gani6atiOns that sell stock IN more than
one State. and make use of the United
States mails in doing So, to file state
mcnt with the Treasury Department.
THIS statement would contain among
other facts the names and addresses OF
members of the hoard Of directors, and OF
the officers of the corporation, and the
number Of shares held BY each; descrip-
sion oi the capital and finances OF the
organization: and IN explanation OF the
Drolecf. The firm would have 10 refer to
this statement on al advertising tltera-
ture and IN an communications dealing
with sales Of stock, explaining that copies
Of the statement could Ee consulted at the
post Office at the State rapital, and offering
10 mail a copy free on request.
Persons cheated hy miSstatements q
stock-selling companies that operated
under this law could demand a return ot
funds paid 70 the companies damages
for anv losses. ANY misrepresentation OF :
project would be punishable by tIne ot
not more than $4,000 Or by one year 81
imprisorment, or bv both. The act pro-
vidos that a bureau of the Treasury Pc
partment hc created 70 administer the
law
The mine operators and promoters OBJ
iect 10 the present bill on the ground that
II would make il too asv for the investor
to SUE the company. in case 1t caused him
loss. The advocates Of the law say II
would never operate TO the dctrIment OF
legitimate business. There seems 70 be
general agreement that some sort OF
Federal law penalizlng deliberate MS
II needed.
One factor which holds back enact-
mont Of this law IS the gold situation
Gold mining has always been largely de
pendent on speculation, and so little gold
Is mined now that bankers and business
uarn are appTchensive Of measure, which.
they claim, would further curtall gold
MANY GOLD MINES IDLE.
Practically al except = few high grade
Gold mines are idle. 1t costs 90 per cent
snore TO produce gold now than five years
.yo, but operators carinot raise the prce
on gold as il Is fixed at the mInts at s20-6l
! fine ounce Manufacturing jewelers. and
urrtacle-nakerS arc so hard put to OBJ
tain sufficient amounts Of gold that they
melt large quantities Of gold COIN. The .
Extent OF this destruction OF coin by IN /.
dustry is Indicated by the fact that the /
mints allow for the melting OF about So /
5O0, 900 In gold every year The present /
ow rate of production, together with in /
destruction of coinage causes
bankers to fear that we viii find ourselves
rithout gold TO protect our reserves.
The value OF speculation IS q much-dls-
russed question Without speculation
,orne authorities claim, we should not
save developed as we have industrially.
The telephone, many OF our OIL wells,
cripple Creek and Goldheld gold mines
Ire a few outstanding examples OF sue
zsssfuI enterprises based on speculation.
Against the notable instances of specu-
alton that turn out well are the thous-
nds of cases of pure swIndle, involving
oss 10 the investors that far over-balanee
he gains of the brilliant successes. Il Is
hese sw1ndle projects, IN which the in
estor has not single chance 10 gain any
hing, that the Federal law would attack.
Il IN te,r-t~ zrF4ef4 20
peculation, as certain amount Of hazard
. necessary IN investment. The crime OF
peculation is In misrepresentation OF
sets.
In the Texas oil fields the distribution Of
be oil Is so peculiar that the only way to
,cate it Is to dig. As machinery and labor
re expensive, a certain amount Of capital
must be collected before a shaft can be
unk. In such case, promoter intent on
raud issues circulars to describe giant
usher of oil, 900 barrels day-In the
cart of the oil district The honest pros
ector who states facts as they are on his
ircular stands little chance beside the
nscrupulous company. What mex
erienced investor would buy stock Of
ompany that stated frankly it believed
i to be located at a given spot and would
ig there when $50, 900 capital was raised.
he could have shares in an oil well
oouting up 1000 barrels q day?
Such incidents the advocates of the
ederal blUe-sky law regard as unanswer-
bic arguments in favor Of legislation.
hen misrepresentation Of facts is penal
u