The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1920-04-05

large BODY or new and inexperi-
enced investors throughout the
country who are unfamiliar with
the risks OF new business enter
prises, uniformed as to stand.
ard securities and an easy prey
to skillful stock statesmen. Even
during the war much activity
had developed in organizing To-
cal companies, but during the
past year they have multiplied
and the army of statesmen has
been increased until every pros
porous locality is infested.
The state of Iowa has been an
active field for these efforts, and
by the middle of 1918 the situa-
ton had become such that the
Iowa Bankers association passed
resolutions warning the public
against these irresponsible flota-
tons and urging the members Of
the association to discountenance
them.
The March. 1920, Bulletin of
the Iowa Bankers association is
devoted entirely to the same sub.
iect. The first paragraph is as
follows:
Never was there a time when
more stock promotion schemes
have been foisted upon the peo-
pie of this state. Promotions of
every kind, description and color
are being presented to the unsus-
pecting farmers, wage-earners
and others, but particularly to
the farmers. There is probably
not a banker in Iowa who can
not tell of some shair-raising
procedure under which smooth
tongued' and glib stock sales
men have loaded some farmer
customer. The more warnings
that have been issued by bust
ness and professional men, bank
ers, farm organizations and COM
mercial clubs, the greater the
number of suckers, as they are
termed, are uncovered by the
army of stock statesmen with
which Iowa is infested"
A prominent feature of the OPP
erations Of these statesmen has
been the exchange Of their
stocks for Liberty bonds.
The Des Moines Daily Capital,
discussing recently the collapse
OF corporation the stock Of
which had been sold to the ex-
tent of over 100000, said:
THE industry of stock-selling
in Iowa has been almost without
limit. Men with gifts for sales
manship left other occupations to
become stock sellers. Their MIN
Der has been SO large that they
have held meetings for discus
sion of ways and means of stock
selling. The people were found
to be easy marks. They yielded
up their cash readily. If they
could not pay cash they gave
their notes and the notes were dis
counted at the banks. The COM
missions paid to stock statesmen =
have been stupendous. The bust
ness developed many varieties Of
ingenuity. Stocks were sold at
par. If the sales were easy
stocks were advanced to large
premium above par. In some
cases the statesmen contracted
for the stock at certain price
with an agreement that all above
that amount was to be theirs.
1.-THE large and unnatural
amounts made by stock sellers
has done great damage to legiti-
mate industry. 1t will be hard
to make young man content to
work for $40 per week in some
legitimate business after he has
put in a year in stock selling at
profit Of $4,000 Per month.
There were stock statesmen, plen
ty of them, who were making
$4,000 per month. Others made
$4,000 per month, and in some
cases the sums were beyond all
reasonable comprehension"
The method Of some of these
flotations is illustrated by the
following statement from prom
inent man, who had been menu
Der of the Iowa state senate and
who was an official of a COM
pany organized to manufacture
farm tractors. The stock was
put on the market, and the meth
DDS of the flotation were such
as to bring the company into
court. The official made the fol-
lowing explanation:
1--WE made a contract with this
firm granting them exclusive
right to purchase our stock at a
stipulated price upon their pay
ing in advance for same. Most Of
their sales were on the INSTALL
ment plan. Under this arrange
ment the broker paid us a total
of $4,000, for which we issued
stock in the Farmers Tractor
company. In the meantime the
firm assured us repeatedly they
had sold upward Of 100000 and
would soon begin turning over to
us large sums Of money. We later
the broker had col
lected $4,000 as partial payments
on stock sold. We had received
but $4,000
Another case is reported as fol-
lows: @
"STORM LAKE, Ia, Feb. IL
Suit has been filed by Charles ].
Schmidt, of Maple Valley town
ship, against the Midland Cattle
company, asking that certain
moneys and promissory notes
given by the plaintiff for stock