The Topeka state journal., 1919-12-10

not aim to injure legitimate specula
tion, as certain amount of hazard is
necessary in investment. The crime
of speculation is in misrepresentation
of facts.
In the Texas oil fields the distribu-
ton of the oil is SO peculiar that the
only way to locate it is to dig. As ma
chinery and labor are expensive, a GER
tain amount of capital must be col
lected before a shaft can be sunk. In
such a case, a promoter intent on
fraud issues circulars to describe a
giant gusher of oil. 600 barrels a
day--in the heart of the oil district" !"
The honest prospector who states facts
as they are on his circular stands little
chance beside the inscriptions COM
pany. What inexperienced investor
would buy stock of company that
stated frankly it believed oil to be To-
Gated at a given spot and would dig
there when $4,000 capital was raised.
if e~could have shares in an oil well
spouting up 1000 barrels a day?
Such incidents the advocates OF the
federal blue-sky law regard as un-
answerable arguments in favor of leg
israt;on When misrepresentation of
facts is penalized, the honest prospec-
htor can state his project plainly with
out being placed at disadvantage.
Thus, they state, legitimate speculation
will be encouraged by the proposed
law
One test of genuineness for the in
vcstor is that the more eloquent and
lavish the promises of stock COM
pany selling cheap stock, the less like
ly they are to be fulfilled. The oil
well company would not be peddling
cheap stock If the oil gushed forth as
claimed.
A mine investor. telling of a parallel
case says:
"out in the gold field man wanted
to sell me stock in mine--easy to
get at, beautiful prospects. l said.
Have you enough money to pay my
board for n month"; He nodded.
Then If you were practical pros
pector you would take off your Goa t.
pitch in and dig out a chunk of gold
and take it to the bank and sell 1t to
get your machinery. II your mine
was what you say it is, you would keep
it for yourself, instead of begging peo-
pie to take gold away from your
That just such propositions as this
do get serious attention and coax the
money from men who boast of the
1evel-headed management OF their bus
mess is one of the anomalies of human
nature. The word gold mine" is the
der.
One clever. long remembered
scheme which appealed to this roman
d
operate mine advertised as ''the long
lost bullion mine of Corfez" The
mine" was merely a cave in a west
ern mountain. but fanciful advertise
ments. reefing with illusions to Span
ish gold, buccaneers, and treasure. sc
thrilled the victime that they fell over
one another in their eagerness to be
included in the deal. Luckily for them,
however, the prosaic eye of a gov
ernment agent fell on the alluring
literature of the Cortez mine. Tho
government detective was proof
against both romance and promises
The promoters soon found themselves
in court, and admitted the fraud.
A mine owner gives small investors
this advice:
Before investing my money. I look
up the man who makes out the COM
panys reports to see if he is known
to mining engineers as an honest man.
The amount of care and time / take in
proving the firms character is in pro-
portion to the amount of money ]
invest
THE investor should remembering
to sink his money in one speculative
project is a pure gamble. just as to
write life insurance on only one man
would be big risk. But when the
company insures number, the
risk diminisaes. So the man who buys
stocks in mines only partly developed
has a better chance to make profits
If he scatters his investment"