New-York tribune., 1921-11-02

sky laws, which represent crude ef
fort to protect the public by laying
down specifications regarding the vir
tue of securities. The investment
banker has felt that these laws throw
obstacles in the way of legitimate Sc
curity dealers, which can easily be
evaded by the crook. The prevailing
to further enactment of blue-sky laws
and in favor of fraud acts, which char
acterize misrepresentation Of securities
as a crime.
With the great food of new popular
interest in bonds in recent years, even
the old line standpat bankers are COM
ing to recognize the worth of human
interest selling appeals, and the dele
gates know that the takers have shown
an acute grasp OF psychology.
THE fraudulent advertisers,' SAID
the report on scurrllous advertising
which was presented TO the convention,
of making their reading material and
advertising most attractive flower
Observation-Disclosures the flowers are
noxious. 1t seems to your committee
that legitimatN investment houses could
within proper lines take lesson to
the extent of making advertising much
more attractive in form and feature,
while, of course, carefully guarding
against the extreme and sometimes un-
dignifed language of the fraud"
Error Always Possible
And yet, none realize more than the
investment bankers themselves that
eliminating losses in securities involves
far more than eradicating the out and
out swindlers Even the best houses
and those with the highest intentions
sometimes err in Judgment and the in
vestor loses.
The problem of protecting the pur
chaser of securities against mlssteps
taken on the advice of honest dealers
was treated in report made pubic
tonight by the Industrial Securitiese
Committee, of which Harold Stanley,
vice-president of the Guaranty Trust
Company, of New York, is chairman.
What comes after the sale Of an
investment issue?" asks the committee.
ssThe originating house has an obliga-
ton which should be faced and frankly
accepted. Ii anything goes wrong
prompt steps should be taken for the
formation of a protective committee
The motif Of protecting the investor,
a subject of special interest TO Tribune
readers, twelve thousand Of whom in a
year write letters to the financial ed
itor for guidance along these lines, per-
vaded the discussion Of the public util
ity situation.
Asserting that the time was ap-
preaching for financing public utility
corporations once more by the sale Of
ste *, which represents ownership, in
stead of bonds, which constitute loans,
Cyrus Pierce, of Cyrus Pierce & CO.,
San Francisco, urged safeguards Of this
character:
"First, the income Of the company
must be sufficient and so stabilized that
the dividends on these junior securities
will be paid with the same punctuality
as the interest on the funded debt, and,
second, the security upon which the
issues are based must be ample to
safeguard the principal.
Street Railways Discussed
FIR. Pierce aroused some opposition
by asserting that street railways had
drifted to a level OF bad earnings
which made it inadvisable 10 consider
them among public utility investments.
+. l.. Warren, Of Stone & Webster,
engineers, which manage many street
railway properties, In rcbuttal called
attention to the essential character Of
strectcar service. Answering tbs point
| that the streetcar cannot survive the
| competition Of the automobile Mr..
Warren said that in group Of cities
| whsch he studied the per capita use
Of streetcars, despite the automobile,
was greater than Ave, ten or fifteen
| yeass hHo,
There Ia not" remarked Mr.. War"
| rer, ~ company running gtrcetcars
/! that has got to stick 10 those rails If
some other method will give that gcry-
| ice better. the street railway business
liz not noipn To biAzes We must give