Evening star., 1920-01-17

INVESTORS from ITduuuleHt SCHcihcS vi
inscriptions promoters is now Sc
riously proposed by Senator Kenyon
of Iowa. Some of the states have
blue sky laws. but little attention is
paid to them, according to the Iowa
senator. He believes that the people
OF the United States are being robbed
of hundreds of millions of dollars by
the issuance, of stock in corporations
where there is no intention of ever
making the corporation a success.
Ihere has been a tremendous in
crease in the number of corporations
fraudulently promoted since the end
of the war. People who have never
had money to invest before have it
now. Where they have invested it in
liberty bonds or other government
securities paying comparatively low
rate of interest promoters of wildcat
corporations, by promises Of large re-
turns. have succeeded in getting these
people to exchange their government
bonds for stock in worthless corpo-
rationS.
Robbed in Stock Deals.
statement that since the armistice
was signed the people of the middle
west have been robbed of some
x2O0. 100000 in fraudulent stock
deals. In other parts of the country,
not excepting New York, the people
have not escaped. The farmers, who
nave been prosperous, have been in
duced to part with money. liberty
bonds and war saving stamps by
slick organizers.
1T is time the people had some pro-
lection from these sharks and shy
sters." said Senator Kenyon. discuss
ing his bill. mo honest corporation
can find fault with this proposed la y.
some of the states have blue sky
laws. but little attention is paid them
A federal law will be better observed,
or some of these gentlemen who are
now engaged in robbing their fellow
men in a polite and artistic way by
worthless stock issues win enjoy a
respite in prison."
The Kenyon bill has been referred
to the Senate interstate commerce
committee. and subcommittee,
headed by Senator Mclean of Con-
necticut. has been appointed to hold
hearings on it and to report back to
the full committee. Senator Kenyon
has announced that he will do all he
can to have the bill enacted into
law.
Must File Statement.
Under the proposed law, when an
Offering is made to the public of an
original issue, security by any cor
poration engaged in interstate COM
merce. the issuing company must file
with the United States postmaster at
its legal address. and also with the
Federal Trade Commission at Wash
ington, full statement regarding
the purpose of the corporation and
what it is intended the money OBJ
tanned from the sale of the securities
is to be used for
The facts which must be included
in this statement are: The purpose
for which the corporation is organ
lied; the names of the officers, di-
rectors and promoters; whether the
securities are held by a holding COM
pany: what commissions the officers.
directors or promoters of the COM
pany are to receive for floating such
securities. Also the latest balance
sheet of the issuing corporation: the
purpose to which the proceeds of the
sale of the new security are to be
devoted; the terms of f1otation. show
ing the price at which the securities
are sold by the issuing corporation.
These statements are to be public
any one. All circulars sent out for
the purpose of aiding the sale of Sc
curities must carry the statements,
too.
Any purchaser who has bought
stock where a misstatement has been
made in the statement provided for
under the bill, may recover twice the
amount of all moneys paid for such
stock. and may bring action against
the officers. directors and promoters,
provided the suit is brought within a
year after the purchaser shall have
knowledge of such material misstate-
ment.
Plan to Reach Promoter.
The bill proposes to use the long
arm of the Post Office Department to
reach the promoters. 1t provides that
to be mailed, any original issue Sc
curity, or any statements required
under the bill. knowing that state
ment to be false, shall be fined not
less than $4,000 or imprisoned for not
more than five years. or shall be both
fined and imprisoned.
The proposal of some of the fore
most business men and professional
men in the country that an interna-
tional conference be called to readjust
the credits of the world. issued on
Wednesday and signed by J. =. Nor
gan, Herbert Hoover, Frank 4. Van
derlip, Harry A. Wheeler. Daniel Will
lard and others, was called to the at
tention of the Senate yesterday by
Senator Owen of Oklahoma. Senator
Owen has given the problem much
study and is the author of a bill to
create q IOTelSn eNCHdHSe Ddnh dS
part of the federal reserve system. So
far this bill has not had the backing
of the administration.
Senator Owen told the Senate that
it would do well to study the situation
with regard to international eX-
change. A world shortage in COM
modities, expansion OF credits, the
vast accumulation of gold in the
United tSates, imitation of currency.
all have had their part in bringing
about the situation. he said. The fact
that foreign exchange has dropped
SO low, when the nations of Europe
are attempting to exchange their cur
rency for that of the United States. is
interfering with the export trade of
the United States to a very great de-
gree. Senator Owen said that he had
appealed many times to the admin
istration to call an international con-
ference to see if steps could not be
taken to relieve the foreign exchange
situation. but the appeals had been in
vain. He put into the record he wrote
President Wilson November last on
this subject.
Must Debate Currency.
The currency so vastly inflated by
the nations abroad must be deflated,'
said Senator Owen, land it must be
brought back to a gold basis
Senator Mclean of Connecticut
chairman of the Senate banking and
currency committee, in an interview
today. admitted the precarious situa-
ton in international credits. He ad-
mitted. too that if there should come
a sudden tremendous falling off in the
export business of the United states
and great quantities of goods des.
tined for consumption abroad should