The Washington herald., 1920-12-12

issues offered for business expansiou
BY well established companies win
big asset and big earning power.
q. o. CLERKS Trscke1.
Most Of the money invested in
Wildcat companies has come out OF
the pockets Of small trzdesmen.
clerks. stenogrzphers. vsitresses,
bootblscks and other ware earnerr
struggling with the high living coat
| problems Gevernnent e1ployes A.
wasAtngfsn are declared % have
bought considerable stock On 60
company nssted In tkis city. Per-
sons In strsightened circumstances.
crediting the extrsvagsnt reports Of
stock statesmen a. 70 the great for
tunes made In the movies, have az
changed their liberty bonds for
movie stock certificates which WIN
never pay a cent OF dividend
The vigilance committee was
created last summer by the Ma
tional Association Of the Motion
Picture Industry, the membership Of
which is made Up OF the vell-estab-
lished producing. distributing and
exhibiting companies OF the country
The committee is composed of James
r. ouirk. editor Of Photoplay AAez-
zine. chairman; Frederick H El-
lott executive secretary Of the Ma
tiona Association OF the Motion
Picture Industry: Paul Gulick, OF
the Universal Film Manufacturing
Company: Nathan vIdaver, counsel
for the committee. Martin J. ouig-
ley. OF the Exhibitors Herald; Les
ley Mason. Of the Exhibitors Trade
Review, and Fred J. Beecroft Of
the Motion Picture News.
Onicials OF legitimate film produe-
ing companies, many Of them pIon-
eers in the industry. who have de-
voted their lives to the development
of the movies. feel that next 70 the
victims Of the wildcat companies,
they are the worst sufferers. be-
cause Of the I'll repute the opera
ttons Of fake concerns cast on the
whole motion picture field.
Only Two Conpanies Sound.
Only two or three OF the seventy
companies Investigated had any az
sets or proven earning capacity
when their stock was offered to the
public. Only about half a dozen
could boast ofhcers or promoters
who had any real experience in any
branch Of the motion picture in
dustry.
The committees Investigation dis
closed some interesting methods OF
finance, and some pitisble stories Of
individuals who had put their trust
in the tales told by the promoters OF
motion picture companies. II found
that among the victims Of these un-
scrupulous promoters were boot
blacks, Mattresses. government en-
ployers, and even q few government
oGcisls.
One young woman wrote the
con0nittee that she had invested
$4,000, her whole fortune. in a COM
psny promoted by q former in
structor in a dancing school. This
young woman, the sole support OF
an aged mother and an invalid
aunt, believed the glowing tales Of
vast returns to be made by the in
vestment of comparatively small
sums in film producing company.
| The dancing master induced a half
| dozen Of his former pupils TO invest
$3.50 apiece in his company. prom
Using TO make them film stars. He
made similar promises to several
I mattresses and chambermsids en-
ployed in a big New York hotel.
selling each of these women stock
to the amount Of from s25e to $500.
| Finally one OF his women victims
complained TO the District Attor-
ney. and the promoter was arrested
charged with grand larceny. The
treasurer OF his company is a fugi-
tive from justice
Chance 20 BE Filmed
A motion picture company, now
struggling with the production Of a
film play near New York City.
spurred up it's stock sale in a SINH
lar manner. When .wage-esrners
approached by stock statesmen hes
itated to invest, the latter prom
Used the prospective stock-buyers
engagements at good wages in the
production Of the company's play.
Thus scores of movie contracts
were issued to stock buyers When
the company began filming, boot
blacks, BARRIERS, hotel porters and
mattresses all stockholders, all
I prospective motion picture stars
began focking to the studio where
they presented their contracts for
movie engagements.
1 Some of these persons came from
places as far distant as Cleveland,
Ohio. When they arrived at the
studio. their attention was called TO
an inconspicuous clause in their
contracts stating that IL had to be
countersigned by the casting direc-
tor The latter was compelled 10
play into the hands Of his unscrupu-
lous employer inasmuch as the ap-
plicants were wholly unfit to take
any part. whatever. in motion pic
ture production.
The stock issue Of another motion
picture company organized without
any assets was underwritten by q
New York banking and brokerage
firm which. sublet a block Of the
stock TO another brokerage firm 20
sell TO the public. The par value OF
the stock was IS per share. The un-
derwritsr agreed to pay the com
cent for marketing the stock. The
brokers who agreed TO sedd part of
the stock for the underwater raised
it's par value to SO a share without
consulting the company which had
issued the stock. But the motion
picture company received only 81 q
share as its original contract with
the underwater stipulated. For ev-
cry share OF stock thus sold to the
public, the brokers received s1.5o.
the underwater $3.50, and only So
per share ever got into the treasury
of the embryo movie company. In
this Instance the cost Of selling the
stock was actually $50 per cent, one
and a half times as much as the
nominal value OF the stock.
Launched Three Fskes.
The brokerage firm. which raised
the stock arbitrarily to Increase IL,
own comnfssion ha. 6ur4,1 81.