The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1919-04-12
Gambling With Other Fellows Money

Gambling With Other Fellow Money
Among the myriads of gambling stock pro-
motions that are being continually used to entice
the public's dollars from safe investment chan
nels is the following.
A moving picture company is organized with a
capitalization of 100000 preferred stock and
100000 common. The preferred stock is to pay
eight percent dividends and with each share OF
preferred stock goes bonus of two shares OF
common stock, one share of the above mentioned
company and one share in a second corporation
having 100000 capitalization, al common stock.
The first company is formed for the purpose
of financing and producing one feature film, the
scenario for which is the product OF the COM
pany's president. The public is asked to provide
all the capital for the undertaking by subscribing
for the $5OO,OOO of preferred stock at par.
1t is estimated the first feature film will be
very profitable. The company's prospectus men,
tions that 1.-THE Birth of Nation film is sup
posed to have returned over 5000 per cent profit
and is still running, and suggests that if the
company's film nets as much percent as The
Birth of Nation, every 500 invested will re-
turn $4,000, and every $1,000, 100000" It's
funny how small cleverly written prospectus
can make that little word eff" appear!
To continue, out of these "if' profits the
$500, 900 preferred stock is all to be paid off to-
gether with it's eight percent dividend. There
after forty per cent of the profits to go to the
common stock holders of the first company, forty
spercent to the promoters and twenty percent is
to be paid into the treasury of the second COM
pany. The second company then and thereafter
will continue the profitable production of feature
md tic will no aS nrOVi6pd
for in the case of the first company.
Now note these points. The public is to fur
nish all the money required for this enterprise
by buying the 100000 preferred stock The
promoters apparently risk none of their own
money. 1t will cost this company in the neigh
borl,ood of twenty-five per cent for organization
expenses and for selling the preferred stock. So
the 100000 received from the sale of the pre-
ferred stock will have shrunk to $375,000 by the
time the company is ready to proceed with bust
ness
Of course, all this will not matter eff the
company's feature film is as profitable as "The
Birth of a Nation" That word eff, however,
makes this proposition pure gamble instead of
a business enterprise For eff the feature film
is flat failure instead of success, every cent
of the rNlblics money back of the project will be
lost
The savings account at the paltry three per
cent is better. In that case you have the growth
represented by the three per cent we'll your
principal intact In the above the chances
are many to you will never make the profits
danged before you for bait and will lose all your
principal Better still will it be to invest in good
five percent bonds or to make five or six percent
on your money by owning your own home.
Then, if you have the ability and persever-
ance to study the science of investing you can
learn to invest in equities. Thus you can build
your way step by step to. financial independence,
as the masons or carpenters construct house in
its logical sequence.
But you will lose your money practically every
time you try to get rich quick, and hand your
hard earned savings over to some slick tongued
stock salesman who promises huge profits.