The sun., 1919-05-24

stock and bond salesman turned to IN
the Liberty Loan campaigns and devoted
himself to selling Liberty bonds. The
takers among them were careful to pre-
serve the names and addresses of the
bond buyers and the amounts they
bought. Selected names from these files
have been exchanged among the fra
ternity and the Sucker list" thereby en-
larged.
In many small towns, moreover, the
newspapers helped the bond drives and
made the buyers feel good by printing
their names. These also have gone into
the archives Of the shady promoters. In
n few cases in New York holders of
Liberty bonds have actually been ap-
preached by the same salesman who sold
them the bonds, now trying to get them
In exchange for oil stock.
From the facts here presented a good
many persons will find out how II hap
pened that they have been receiving
oil literature" and have been solicited
over the telephone to buy shares In COM
panies they never heard OF.
Trade BODY Issues Warning.
This invitation sent out for publica-
ton by the war loan organization Of
the Treasury Department and later by
tho Federal Trade Commission cannot
DO repeated too many times:
Watch the stock pedlers
Readers: Get the names and ad-
dresses of all persons and companies
offering you speculative or doubtful
stocks and securities. particularly IL
in exchange for your Liberty bonds
or War Savings Stamps, with copies
OF their literature" Mail them
promptly for investigation to the
Federal Trade Commission,
Washington, DC.
And this may be matched with a
warning from the Associated Advertis-
Ing Clubs of the World:
At least s5 per cent. of the oil ad-
vertisins IL fiamboyant misleading
and deceptive. 1t has become an
orgy of lurid words and bombastic'
figures 1t not only contains false
statements but 10 built on promises
which, in the opinion of well in
formed oil men and financiers. do not
stand one chance in q thousand of
being fulfilled
During the war the Capital Issues
Committee, which was authorized to dis
courage stock issues in excess Of $780,
600 that were incompatible with the
public interest, succeeded In exercising
some restraint on the wildcatters, but II
did not take them long to wake up to
the fact that the law esta blishing the
CAPITAL Issues Committee and its rules
neglected to provide q penalty for vio-
lation Of those rules
The committee ceased to function on
December 81, and until the Federal
Trade Commission recently began to ex-
ercise supervision over stock issues there
va, an interim during which the phony
companies ran wild. The commission IL
now sending out a QUESTIONABLE reoulr-
ing all sorts of information as to the
corporation's business, plans. intentions
backing and responsibility.
One OF the questions is: DO you onei
to accept exchange or dispose of Thrift
stamps, War Savings Stamps or Liberty
bonds in order to sell your own stock OF
securities ?' In case the answer Is yes
the corporation must reply to this one
Twill you voluntarily cease and desis'
from such practices in the futureF
New Law Has Teeth.
There are teeth in the law creating
the Federal Trade Commission, for the
penalty for false or incomplete informa'
ton may be a fine of from s1,ooo &c
$4,000 or imprisonment for not more
than three years OF both.
Talking to the Bond Club yesterday
Paul N. Warburg, formerly member
of the Federal Reserve Board, took VI
the question of protecting investor
against INSCRIPTIONS promoters II,
thought Federal or State laws enacted
TO accomplish this would have TO lnciuo'
all security issues and in the long Tur
would be likely TO develop red tape de'
Law and Government Interference. whicF
under political pressure some day migh'
prove highly detrimental to the couh
\ try's interest"
ION the other hand" Mr.. Warbure
| said. unless Investment houses devise
themselves the proper safety appliances
there IL no doubt that conditions may
arise calling for very drastic Federal Of
State legislation"
In his opinion the investment house'
ought to get together in all the Fedora
reserve districts OF their own free VII
and ask the Federal reserve agent ane
governor of the Federal Reserve Bani
TO serve on q voluntary committee o.
three or five, which. much like the Ole
capltal issues committee, would be pre-
pared to examine a prospectus oeior'
| the securities were offered and certify
that papers authenticating the facts Sc
forth in the prospectus had been filed.
| Unless something OF this sort
done" Mr.. Warburg said, "it Is only
question OF time for some grave disap
pointments or scandals TO occur, dis
crediting future issues and interfering
fiwith the free and healthy development
Of our security market. II on the othel
hand the strong and reputable invest
mont houses of their own accord sub
iect themselves to whatever little de
lay and red tape may be necessary 4
dealing with their issues they will II
the long run best protect their own In
terests Because in so doing they will
help in keeping the crook out and pre-
serve a clear field for those who are no
afraid to have the searchlight turneS
upon the securities they are about t
offer"