The Madison daily leader. [volume] (Madison, S.D.) 1890-current, 1919-04-03
GET after BOGUS
STOCK SELLING
Federal Trade Commission to
Curb Widespread Misrep-
resentation.
GLASS SAYS MENACE EXISTS
Holders Of Liberty Bonds and War
Savings Stamps to Be Protected
Against "Get-Rich-o Quick"
4 Schemes.


Washington.-The federal trade
commission has officially announced
that 1t will cooperate with the treas
ury department, the capital issues com
mittee and banking and commercial
institutions throughout the country 20
curb the present widespread %misrepre-
sentation In the sale of stocks and Sc
curities, recognized as being at this
time q particular mi to holders
of Liberty bonds and War Savings
stamps.
The commission will accord immedi-
ate consideration to complaints pre-
scented to 1t involving alleged fraudu-
lent practices In the sale Of securities
In Interstate commerce, The commits
sion has designated Commissioners
Huston Thompson to supervise the
entire subject.
The commissions action follows ap-
peals made to 1t by representatives
Of the treasury, capital issues COM
mittee, federal reserve board, Asso-
clated 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 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.
II was urged that the commission
act on the ground that misrepresenta-
lions 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 a very
large amount of government bonds by
taking them in exchange for stock"
declared In a letter to the commits
sion that "a menace exists which may
seriously interfere with the placing or
the new government issue, IL the stock
promoters are left without any re-
straint or restriction" His letter In
part follows:
1.-THE treasury department Is pecu-
liarly interested In the effort to re-
strict improper stock ~fiotations 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 a very large
issue Of securities shortly. Stocks and
securities Of q legitimate investment
character compete with the govern
ment, but not nearly so much as high.
ly speculative stocks offered with all
the allurements c~ustomarily 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
oring to induce persons of all classes
to purchase government bonds, have
to a large degree. brought into being
q 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 o.
the government agents, In %persuadins
such persons to become investors, have
prepared the way for promoters t.
place many worthless stocks.
'sThe result has been that these pro
moters have already displaced a yer,
large amount of government bonds b.
taking them I'm exchange for stock
and to such an extent as to undo tn
work which Is so essential for the sue
cess of the governments financial op
erations; because the government car
not expect successful flotations Of 1t
own securities, or the preservation o
q proper price therefor in the finan
cial market, unless the great numbe
Of small buyers continue to hold thei
bonds.
May Interfere With Loan.
warned by the past, the treasur,
department feels that a n exist
which may seriously interfere wit
the placing of the new government Is
sue, II the stock promoters are lief
without any restraint or restriction.
'It cannot be expected that propose
legislation, even IL promptly enactet
can become operative In time to be 9
substantial benefit to the governmer
In the next loan campaign.
at has been suggested that the fet
ernl trade commission has authorit,
under its organic act, to take actio
which would remedy the evil, at lea:
In part. II a way can be found wher'
by even the fraudulent promoters an
those who indulge In unfair practice
IN selling stock car be stopped, tn
treasury department feels that sue
action viii be OF great benefit to 1t ]
the immediate future.
'arhis department win welcome a
tenn hv won - that and and will /