Charlevoix county herald., 1919-05-09
Get after BOGUS
STOCK SELLING
Federal Trade Commission to
Curb Widespread Misrep-
reSentati0n.
GLASS SAYS MENACE EXISTS
Holders Of Liberty Bonds and War
Savings Stamps to Be Protected
Against "Get.Rich Quick"
Schemes.

Schemes.
Washington.-The federal trade
commission has officially announced
that il will cooperate with the treas
ury department. the capital issues COM
mittee and banking and commercial
institutions throughout the country to
sentation in the sale Of stocks and Sc
curitieS, recognized as being at this
time "A particular menace to holders
of Liberty bonds and War Savings
stamps.
The commission will accord lmmedi-
ate consideration to complaints pre-
scented to it involving alleged fraudu-
lent practices in the sale of securities
in interstate commerce., The commits
sion has designated Commissioner
Huston Thompson to supervise the
entire subject.
The commissions action follows ap-
peals made to ii 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 en-
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-
tlons in the sale OF securities consti-
tute an unfair method of commerce"
Federal courts, ii 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 very
large amount Of government bonds by
taking them in exchange for stock"
declared In letter to the commits
sion that "a menace 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:
"The treasury department is pecu-
liarly interested in the effort to re-
strict improper stock flotatons at this
time for the following reasons:
"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 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
ly 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-
orlng to induce persons of all classes
to purchase government bonds. have,
to large degree. brought into being
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.
"The result has been that these pro-
moters have already displaced 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-
erations; because the government can
not expect successful fiotations Of It's
own securities. or the preservation Of
proper price therefor In the finan-
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 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.
at cannot be expected that proposed
legislation, even II 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 way can he found where
by even the fraudulent promoters and
those who indulge In unfair practices
In selling stock can he stopped, the
treasury department fees that such
action will be of great benefit to 1t In
the immediate future.