Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-01-25


fooled, p. T. Barnum of circus
fame used to say. II he lived
today Mr.. Barnum might well
say that Americans have a positive
passion for separating themselvs from
their cash for stock in will-o' the wisp
oil wells that are never sunk, mines
that are never worked and patent
medicines that are never put up. Stock
jobbing is not a new pastime in this
| country. But since the armistice was
| signed it has reached the dignity of a
profession. It's proportions have be-
come SO enormous that members of
Congress have become alarmed. They
see the danger of thousands of the
victims of the promoters Of new and
worthless corporations becoming real
Enthusiastically to turn on business
and business men. A bill has been in
troduced in the Senate by Senator
these later day pirates.
This measure, which provides for
pitiless publicity regarding every new
issue of stock and imposes penalties
Of fine and Imprisonment for those
seeking to defraud, has been referred
to subcommittee of the Senate inter-
state commerce committee. The sub
committee has already gathered a
great amount of information showing
the operations of the stock jobbers.
and is preparing to get down to work
on a bill which will effectually check
these operations.
Quick to Accept Opportunity.
| With billions of dollars worth Of
liberty bonds and war savings stamps
in the hands of millions of people. the
stock jobbers saw their chance. If
they could persuade these bondhold-
ers to trade in their liberty bonds
and war savings stamps, worth real
money, for worthless stock. the game
, was won. But the pioneers in this
game of graft did not dream of the
extent to which their schemes were
to go in a years time. Not only
have they been able to take millions
| upon millions of dollars worth of
government bonds from their holders
in exchange for practically worthless
stocks, but they have found it easy
| to persuade farmers who have made
money in the last two years to sub
| scribe for their stock; easy to per-
suade widows who have had small
amounts of life insurance left them
to part with their Insurance. money.
The Senate committee has received
testimony to the effect that in the
year 1919 $4,000. 1000. 900 par value of
oil stocks alone have been hoafed In
I the United States. And there is tes-
| timony, too, that only one-sixth OF
one per cent of all the oil production
of the. country has come from these
companies whose stock has been
ioated by promoters. The other
| 80 SIS per cent of the oil production
has been produced by companies that
(, have not been hawking their stock
about In fact, their stock is closely
held and hard to buy.
Not Confined to Any Section.
The stock jobbing operations have
not been confined to any one section
of the country. The committee has
on in New England, in New York. in
the south and particularly in the
great middle west. 1t is impossible
to go into any little town in north
ern Illinois, northern Missouri, Iowa,
Nebraska, South Dakota and Mime
sofa without finding the hotels SO
crowded with agents selling stock in
all kinds of new corporations that
there is literally no room for tran
1 finv1
say those who have been in that part
of the country recently.
These agents say to their pros
pects: you are getting only 3k to
AZ per cent interest on your liberty
bonds and war savings stamps. Look
at these securities of ours which pay
interest Of from to 40 per cent"
And every night they return to the
hotels loaded down with liberty bonds
and war savings stamps.
1t has been the conclusion of the
senate committee that the people need
the protection of the federal govern
ment to prevent them from being
robbed further. Out in Iowa alone,
I according to attorneys of the highest
standing, the people have been rob-
bed of between s2oo.ooO.o 900. the lowest
estimate, and 100000. 900 in the last
year. 1t is true that many of the
| states have so-called blue sky laws
| to prevent just such transactions,
but they are dead letters for the
most part. Many Of these state laws
| seek to control the stock agents by
making them take out licenses. But
this plan does not seem to hinder
their operations.
story of Stock Jobbing.
| D. F. Kelleher, a former law partner
formerly an internal revenue collector.
told the committee graphic story of
how the stock jobbers operate. 1t
seems that one group of promoters in
his state hoated a million dollar cor
poration last year and sold all the
stock. They found it SO easy that they
are now planning to float a ten-mil-
lion-dollar corporation. Mr.. Kelleher
said that there are three factors which
make 1t easy for the promoters and
agents to sell the stock.
First. they hitch up with men who
stand well In the community but who
are hungry for money. In fact. in
Iowa many former state officers have
been persuaded to lend their names to
some Of the corporations-among them
two former governors of the state.
Sometimes these men participate in
| the selling agencies. The commissions
for selling these new stocks are never