The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1919-02-19
FAKE STOCKS
FLOOD COUNTRY
Secretary Of the Treasury Glass
Asks Congress for Laws to
Protect Public.
GRAFTERS CARRYING ON
CAMPAIGN OF FRAUD
Plausible Promoters Are Selling
Stock of Doubtful Value in All
Sections of Country.

WASHINGTON. Feb. 13.-Drastic leg
ela,ion to protect the government in
IS inancIal operations and the peo-
pie Of the United States from threat
aneG grave injury growing out OF
he ISSUANCE of securities Of doubtful
xol.:h we; asked of congress today by
sec"etary Glass.
l., a letter to Chairman Kitchln OK
he house ways and means commit
tee. NJ. Glass urged early enact
?cnt O.. o. law drawn by the capital
,ssuas commission, which would re-
tuire al corporations or persons de-
iYrg 10 sell stock through the mails
or through advertisements in newspa-
ocrs circulated through the mails, to
!e with the secretary comprehensive
statement of the stock. It also would
make the persons required to sign the
statemsnts personally responsible for
my falsity therein. Wilful violation
of TIE act would be punishable by fine
OF $1,000 or Imprisonment Of one
ear. or both, and persons suffering
from intentional Misrepresentation
m the statements could recover DAM
age
TIE country is being flooded with
stock flotations al the present time,
| .,any OF which are of doubtful worth
and many Of which are fraudulent,
Mr.. Glass letter said '"The millions
t holders OF our Liberty Bonds are
being selected by paid agents to ex-
harge these bonds for these securi-
ties. thus not only seriously diminish
ing resources which should be kept
2vailable for government financing,
hu1 Is we'll bringing in many cases
financial loss and ruin and seriously
:eonardizing national finances from
! the resultant sale on the market OF
government securities by those who
have thus obtained possession. OF
them. Public protests are coming IN
from all parts of the United States.
while the condition I have pointed
ont is not new one, 1t represents ac
the present time an especially grave
nencce to the public and to the gov
:f112ent and for the common protec-
:..on of both. make this appeal to
congress for the legislation indicated,
- cope with and to suppress this
evil.
Permit me to point out that this
~n"1sn:l action by congress will not
of itself be sufficient to suppress ef-
rectually this evil. because there are
many transactions with which con-
ofeSs may not have constitutional au-
hort to deal. Supplementary legis-
'ation !,y the several States will also
6e recessary. The promoter or stock
ven;:er whose agents go from house
TO house relying upon personal con-
.-ersations and solicitations without
ne house of the mails or any Of the
F-nited states governmental agencies
~ hardly be reached through IA
.:cn"l legislation. On the other hand
hey can he adequately controlled by
stat" LEGISLATION and the obvious
ooethod would be to require all per-
sons desiring to sell shares of stock
to the public TO obtain first a license
from any State in which such shares
are to be offered.
At the present time legislatures Of
! scat many States are in session
nd earnestly hope that proper ac-
;ion ,nas- be taken by them in coor-
i;ra:;en with legisla ton that congress
q rfcasc to enact"
Public service corporations whose
stock issues are approved by State
commission. would be exempt from
he requirements of the proposed act,
hit IL other corporations engaging in
Interstate commerce which propose
% sell stock through the mails would
have TO tile the required statements,
81 ~ j,e. n (,f
he financial officer and majority Of
ehe board Of directors
Fui! details Of the corporations or
ganized would be required in the
statement, such as the names and
addresses OF the officers and direc-
tors. the capitalization, commissions
paid for selling stock and a certif-
cate of two disinterested persons
stating the fair cash value of any
property rights or interests acquired
Or % be purchased by the corpora
tor from the sale of stock.
Every advertisement and prospec-
,us dealing with the stock would have
TO state that the proposed act had
been complied with and notify the
ouilic that the required statement
vas fiieG with the treasury and with
he postmaster of the capital city Of
ne state where the offer or sale was
'eir% made
The act would not apply to sales
II "uhli" auction or on stock ex-
,hangcs approved By the secretary Of
he treasury. nor to offers of shares
'wned by bankers. brokers and deal
rs 20 their customers in accordance
With licenses granted by the secre-
arr.
Establishment of a bureau in the
rcaSury TO administer the act and
appropriation of S+5e 900 for it's ex-
'en&"s during the fiscal year ending
uae 80. 1920. would be authorized
X t!na hill 1,I,ich u.n,1l.l laono,,,o