Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1919-01-01
LIVELY PRE.LEGisLATlvE AS
sEMsly IN PROGRESS At
STATE CAPITAL.
BATTLE ROYAL BETWEEN
Los3lEs WILL FOLLOW
Threat 81 Banking Association TO Have
Strongest Law Enacted Followed BY
Preparation Of Bill BY Prometsrs TO
Restrict on Their Own Operations
Bankers Sitting Tight on Proposition.

Des Moines, Jan. Lone Of the
merriest pre-nssembiy fights OF the
winter is raging now In Des MONIES
between the banks and the fraternity
of so-called blue sky" salesmen-pro-
fessional promoters OF stock COM
panies. Present indications are that II
will end in a battle royal between
Hobbies representing the promoters and
the Iowa Bankers Association which
passed resolutions strongly condemn
ing blue sky" operations at its annual
convention.
The situation is developing about
like this. according to reliable
who Is in complete touch
with it:
After the legislative committee OF
the bankers association announced
following meeting a few days ago,
that 1t would propose and push Dill
regulating stock sales, the "biuc
skiers" suffered an attack of nerves,
which resultey very shortly in the
drafting of bill by one Of their
number. This bill proposes to make
the lawful limit of promotion expense
Is per cent of the receipts from stock
sold. 1t has been placed with repre-
sentative elect who Is banker, ana
whom the promoters expect to intro
duce it, thereby giving it the stand
ing of his personal financial connec-
tons.
Bankers Sit Tight.
The bankers, interestedly watching
this maneuver for position, meanwhile
are reported to be sitting tight, de-
clining to indicate what percentage OF
promotion expense their measures Will
allow, and intimating only that it viii
be "a whole lot less than 10 per cent.
1t seems to be all a question OF pro-
motion expense. those who oppose sky
blue" salesmanship figuring that
regulation of this item will autonati-
cally regulate other phases of the
matter. The bankers barrage Is aimed
at a lot of folks who they claim have
invaded Iowa, selling stocks in all kinds
of plantations. factories. prospective
towns, companies and what not.
Promotion expense of these institu-
to 80 per cent, averaging about rs per
cent. This means that the promoter
draws an average Of $4,000 out OF
every 100000 of capital stock sub
scribed, before the roll-top desks have
been installed in the company's new
offices.
-, Companies fer Stock ss'iscs ~
Which is alleged to tend to the
greatest abuse Of all: The fiotation
of companies which originate In the
minds Of the promoters themselves,
in which the promoters hold practically
no stock and the prime motive for the
creation of which is the possibility OF
collecting a large promotion fee.
With a strict limit placed on the
figure promoters may charge, the
bankers believe this latter class OF.
blue sky concerns will be thorough
~ exterminated. because the great
financial incentive no longer will exist.
What Bankers Propose.
The bankers bill. in addition to fix
ing a promotion maximum, will pro-
vide. it is reported. that this fee must
be collected in addition to the COM
pany's declared capitalization, and not
taken out Of it. Under present condi-
tons, it is claimed that promoters will
take about $250,000 out Of the
capital Of 100000 concern. leaving
the working funds with which to start
the business, $750.000. The bankers are
reported ready to propose that. in a
similar case, the promoters must COL
lect the $1,000, 900 for the company
and their fees in addition.