Evening star., 1919-01-24
Capital Issues Committee.

Caldwell Hardy, chairman of the capi-
tai issues committee of the fifth fedora
reserve district. has issued statement
to all banks. bond houses and Investors
the work which the capital issues COM
mittee performed during the, wzir ano
which contains several paragraphs OF
interest to all holders of liberty bonds
Mr.. Hardy says that "in order that nc
injustice may be done to any person
whose securities have been dfSa pproved
and in order that persons whose securi-
ties have been approved, may derive nc
undue benefit from such approval, he
desires to call attention to the factors
that have entered into the consideration
of applications.
He says: The committee was moi
authorized to approve the worth. the
validity or security of any issue, Ii was
required to determine whether or moi
the issue was compatible with the ma
emergency. Disapproval, therefore, rest
ed on the one feature of incompaubkit,
with national interests for the time be
ing. whether the proposition Submit &c
was in other respects sound or unsound
On the other hand, the approval of rhe
committee had no further significance
than that the purposes to which 1.-THE
proceeds of the securities were to be
devoted would tend to strengthen the
industrial and economic power of the
country for war purposes"
Action Not Decisive.
One important thing which Mr..
Hardy says is that "in the light of the
above. investors who contemplate pur-
chasing securities which have been
approved or disapproved by the capi-
tai issues committee should not treat
the action of the committee as de-
cisive in determining the value of the
scurities from the investors stand
point. but they should. by careful in
vestigation of the particular security,
determine for themselves whether or
not 1t is an attractive investment"
Mr.. Hardy discusses matters relat-
ing to liberty bonds and their owners.
He says that the relaxation of control
over security issues is, in the opinion
Of the committee. likely to be followed
by great activity among persons who
desire to issue securities that are
either highly speculative or fraudu-
lent; and the committee fears that the
holders OF liberty bonds, especially
the holders of small amounts, will be
tempted to exchange their bonds for
worthless securities. The wide dis
tribution of liberty bond issues has
had this result: Many persons who
never. before owned investment Sc
curfties are now the holders of bonds
in small denominations. Many of
these holders subscribed for patriotic
reasons and are ignorant of the value
of the bonds as an investment and of
the ways in which they can be used
as an asset. This makes such hold
ers ready prey to unscrupulous
statesmen who offer securities which
promise large dividends or merchan-
disc of slight value in exchange for
bonds. 1t has come to the attention
OF the committee that in many in
stances liberty bonds are being sold
or exchanged by small holders at
prices as low as IS. The committee
believes that this is due to the fact
that many small holders Of the bonds
are ignorant Of the means which ex-
ist for disposing of them, and be-
lieve-and by unscrupulous persons
encouraged in the belief-that they
cannot realize upon the bonds except
by holding them to the date of their
maturity.