The Topeka state journal., 1919-12-10
TOPEKA STATE JOURNAL
Information Bureau
FREDERIC j. HAsKIN, Director.
washington, d. c.
. FEDERAL BI,UE-sKY BILL.

A FEDERAL BLUE-SKY BILL.
| Washington, d. c.. Dec. "A ma
/ tional law to protect excitement-loVing
America against the evils of wildcat
speculation is, again planned by con-
gress.
"Blue-sky" laws enacted by some
thirty eight states have proved made
quate. Sucker lists kept for business
purposes by promoters of swindle
! schemes grow longer every year
| Instead of growing less gullible as
we advance in civilization, we seem
to become more trustful Brooklyn
| bridge and the subway gre sold daily
, to newcomers in New York City, who
! innocently hand over their cash to
smooth-tongued sharoers. Men who
\ would not invest in a business in their
/ own town until they had tested its
| financial soundness will without hesi-
South American fruit or rubber in
| vestment in response to a circular in
the mornings mail.
I You cannot legislate good Judg-
ment into the people," says one busi-
ness man. who thinks that people who
| invest savings in Eet-rich-quick
schemes, would. if shut off from this
! form of amusement, find some other
way to lose their money.
| Still. the chances are good that con-
sress will pass a national blue-slSy
/ law, insuring some protection to the
are noticeable in the thirty eight
states that pcnalize the wilful floating
of worthless stock and misrepresenta-
| ton of facts by promoters.
/ The malR trouble with the state
! laws is the difficulty of extradition.
Most of the laws provide for prosecu-
| ton OF the offender only if his bust
ness is organized in that state The
promoter of fake propositions usually
! Incorporates in one state and oper-
! ates all over the country, except in
the state in which he organized his
company. When complaints come in
to district attorneys of the states in
which he operates, they cannot touch
| the promoter, unless the state in
which he incorporated will extrad dite
! him. This any state is reluctant to
| do. and will not do unless its own
laws recognize the mans offense as
such, so that usually the case is
dropped.
The proposed law would compel
organizations that sell stock in more
than one state, and make use Of the
United States mails in doing so, to file
/ a statement with the treasury depart
Inent. This statement would contain
among other facts the names and ad-
dresses of members of the board of
directors, and of the corporation, and
| the number of shares held by each;
description of the capital and
finances of the rganization; and an
explanation of the project. The firm
would have to refer to this statement
on all advertising literature and in all
communications dealing with sales of
stock, explaining that copies of the
statement could be consulted at the
postoffice at the state capital and
offering to mail a copy free on re-
que ST.
Persons cheated by misstatements
of stock-selling companies that oper-
ated under this law could demand a
return of funds paid to the companies
and damages for any losses. Any mis-
representation of a project would be
punishable by a fine of not more than
| $1,000 or by one year of imprisonment,
or by both. The act provides that a
! bureau of the treasury department
be created to administer the law
The mine operators and promoters
object to the present bill on the ground
! that it would make it too easy for the
investor to sue. the company. in case
] it caused him a loss The advocates
of the law say it would never operate
to the detriment of legitimate business.
! There seems to he general agreement
that some sort of a federal law penal
izing deliberate Misrepresentation is
needed.
One factor which holds back enact
nent OF InlS law is the Sold Sltuat1on
| Gold mining has always been largely
dependent on speculation. and so lit
tie gold is mined now that bankers
and business men are apprehensive of
a measure. which. they claim. would
| further curtail gold prospecting.
Practically all except a few high
! grade gold mines are idle. 1t costs
| go per cent more to produce gold now
than five years ago, but operators
cannot raise the price on gold as it is
fixed at the mints at $20.67 a fine
| ounce. Manufa curing jewelers. and
| spectacle-nak kers are so hard put to
obtain sufficient amounts of gold that
! they melt large quantities of gold coin.
, The extent of this destruction of coin
| by industry is indicated by the fact
| that the mints allow for the melting
/ of about $3,5O0,000 in gold every year.
The present low rate of production,
| together with increasing destruction
| of coinage causes bankers to fear
that We will find ourselves without
gold TO protect our reserves.
The value of speculation is a much
discussed question. Without specula
| ton some authorities claim. We should
not have developed as we have indus
trially. The telephone, many of our
oil wells. Cripple Creek and Goldfield
| gold mines are few outstanding ex-
| amples of successful enterprises based
on speculation.
Against the notable instances of
! speculation that turn out well are the
/ thousands of cases of pure swindle, in
volving loss to the investors that far
over-balance the gains of the brilliant
successes. 1t is these swindle pro-
/ jects, in which the investor has not
single chance to gain anything, that
the federal law would attack. 1t does
Observation-Disclosures
SThe George NJ
y ~ &