Perth Amboy evening news., 1919-04-18
GLASS SAYS MENACE EXISTS
Holders Of Liberty Bonds and War
Savings Stamps to Be Protected
Against scet-Rieh-o Quick
Schemes.


commission has officially announced
that It viii cooperate with the treas
ury department, the capital issues com
mittee and banking and commercial
institutions throughout the country to
curb the present widespread misrepre-
sentation In the sale of stocks and se>l
curities, recognized as being at this
time a particular menac to holders
Of Liberty bonds and War Savings
stamps.
The commission viii accord immedi-
ate consideration to complaints pre-
sented to 1t involving alleged fraudu-
lent practices in the sale Of securities
In interstate commerce, The commits
SION has designated Commissioners
Huston Thompson to supervise the
entire subject.
The commissions action follows APP
peals made to 1t by representatives
of the treasury, capital issues com
mittee, federal reserve board, Asso-
ciated Advertising Clubs of the World
and numbers of banking and CONNER
cial interests, that the power given the
commission under Its organic act to
prevent unfair methods of commerce
In interstate commerce be at once m
ployed to protect holders of govern
ment war securities from bogus, "get-
rich-quick" schemes under which pro-
moters offer to accept Liberty bonds
In exchange for stocks Of doubtful
value.
1t was urged that the commission
act on the ground that misrepresenta-
lions in the sale Of securities constt
tute an unfair method Of commerce"
Federal courts, 1t was pointed out,
have held that securities are "articles
Of commerce"
Glass Says Menace Exists.
Secretary Of the Treasury Glass,
stating that promoters of worthless
stocks have ALREADY displaced a very
large amount of government bonds by
taking them in exchange for stock"
declared In a letter to the commits
sion that "a la exists which may
seriously interfere with the placing OF
the new government issue, II the stock
promoters are left without any re
straint or restriction" His letter In
part follows: y
1.-THE treasury department is pecu-
liarly interested In the effort to re-
strict improper stock fiotations at this
time for the following reasons:
1.-THE offering Of investments to the
public completes with the offering Of
government securities, and, as you are
aware, the treasury proposes to invite
the public to subscribe to a very large
issue Of securities shortly. Stocks and
securities of a legitimate investment
character compete with the govern
ment, but not nearly SO much as high
" speculative stocks offered with all
the allurements customarily held out
by irresponsible persons whose prin-
cipal design Is to obtain money from
investors without regard to the value
Of the stock sold. The operation of
the government in the past, In endeav-
oring to induce persons of all classes
to purchase government bonds, have,
to q large degree, brought into being
a very large and new class of investors
who are without experience or knowl-
edge to guide them wisely in making
Investments. But the very efforts OF
the government agents, in persuading
such persons to become investors. have
prepared the way for promoters to
place many worthless stocks.
1.-THE result has been that these pro-
moters have already displaced a very
large amount Of government bonds by
taking them In exchange for stock,
and to such an extent as to undo the
work which is so essential for the sue
cess of the governments financial op-
e~rations; because the government can
not expect successful fotations Of Its
own securities, or the preservation OF
a proper price therefor in the fnan-
cial market, unless the great number
Of small buyers continue to hold their
bonds. >
May Interfere With Loan.
warned by the past, the treasury
department feels that a menace exists
which may seriously interfere with
the placing of the new government is
sue, If the stock promoters are left
without any restraint or restriction.
SIT cannot be expected that proposed
Legislation, even If promptly enacted,
can become operative in time to be Of
substantial benefit to the government
in the next loan campaign.
"It has been suggested that the fed
eral trade commission has authority,
under its organic act, to take action
which would remedy the evil, at least
in part. II a way can be found where
by even the fraudulent promoters and
those who indulge In unfair practices
in selling stock can be stopped, the
treasury department feels that such
action viii be of great benefit to 1t in
the immediate future.
"This department will welcome &C
ton by you to that end, and win be
glad to cooperate in every proper
manner
GARTER GLASS"