The herald and news. [volume] (Newberry S.C.) 1903-1937, 1919-04-18
after BOGUS
STOCK SELLING
Federal Trade Commission to
! Curb Widespread Misrep-
resentation.
GLASS SAYS Menace EXISTS

FOLDERS Of Liberty Bonds and War
Savings Stamps to Be Protected
Against "Get.Rich- Quick"
Z, Schemes.
Washington.-The federal trade
nmission has officially announced
it will cooperate with the treas
department. the capital issues COM
(ttee and banking and commercial
Institutions throughout the country to
Scnrb the present widespread misrepre-
sentation in the sale Of stocks and Sc
earities, recognized as being at this
time particular menace to holders
of Liberty bonds and War Savings
stamps.
The commission will accord immedi-
ate consideration to complaints pre-
sented to it involving alleged fraudu-
lett practices in the sale Of securities
iHinterstate commerce, The commits
sion has designated Commissioners
Illusion Thompson to supervise the
eentire subject.
The commissions action follows ap-
! peals made to it by representatives
aof the treasury, capital issues COM
nsittee, federal reserve board, AssO-
aated Advertising Clubs of the World
and numbers of banking and CONNER
sla interests, that the power given the
!>onmission under it's organic act to
rent unfair methods Of commerce
interstate commerce be at once en-
r1eyed to protect holders Of govern
ut war securities from bogus, "get-
h-auick" schemes under which pre-
kers offer to accept Liberty bonds
M exchange for stocks Of doubtful
value.
DIT was urged that the commission
ST on the ground that mlsrepresenta-
fs0ks in the sale of securities consti-
tie an unfair method Of commerce" !"
federal courts, it was pointed out,
have held that securities are ARTICLES
S6 commerce"
Glass Says Menace Exists.
Secretary Of the Treasury Glass.
stating that promoters Cd worthless
stocks have "already Displaced a very
large amount of government boa- . by
taking them in exchange for STOCK" J"
declared In a letter to the commits
yAion that "a menace exists which may
seriously interfere with the placing Of
Ahe new government issue, II the stock
promoters are left without any re-
straint or restriction" His letter in
part follows:
ssThe treasury department is pecus
iiarly interested in the effort to re-
strict improper stock flotations at this
time for the following reasons:
saThe offering Of investments to the
public competes with the offering OF
Agovernment securities, and, as you are
ware, the treasury proposes to invite
kthe public to subscribe to very large
issue of securities shortly. Stocks and
securities of legitimate investment
character compete with the govern
meht, but not nearly so much as high
" 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-
ering to induce persons of all classes
to purchase government bonds, have,
to a 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 persuadins
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 a 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 flotations of its
own securities. or the preservation OF
proper price therefor in the finan-
al market, unless the great number
0of 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.
eft cannot be expected that proposed
legislation, even if promptly enacted,