The Washington times., 1921-10-12
BANKERS
ASK BLUE
SKY DILL
House Committee Told of $50
Corporations Being un-
der Suspicion.

Washington is a hotbed for
fraudulent stock promoters, and
passage of the "blue sky" bill
pending in Congress is necessary
to protect hundreds Of persons who
are daily investing in bogus cor
porations in the District, according
to testimony before a subcommit-
tee of the House District Commit
tee today by Francis x. Wholley,
Edirector OF the Better business
Bureau.
Date on Suspects" Given.
wholiey furnAred the committee
with data concerning several sus.
pectcd corporations. He laid special
stress on the operations of the
United States Discount Corporation,
which, he Ssaid, was being operated
here with a charter obtained in Wis
consin.
The names of three Government
officials were linked by M. Wholley
with this corporation, which is cap
italized at $1,250,000. He gave their
names as Robert Watson, director
of the United States Housing Corpo-
ration; q Mr.. Reed, treasurer Of the
|
win, a former assistant SECRETARY of
one of the Government departments.
This corporation gives commits
sion of 40 per cent to its statesmen
and 1t axes about 15 per cent year
to run the company" Wholley de-
clared. He added that with these ex-
orbitant expenditures 1t virtually
would be impossible to run the COM
pany.
After the committee meeting Who'll
ley told reporters the Department Of
Justice was investigating the organi-
zation. He made no charges against
any of the Government officials or
intimated they were being used by
clever stock promoters.
ESQ Under Suspicion.
Something must be done now" he
added. Every day in the year new
corporations bob up in Washington.
Most Of them are fraudulent. AS
mater of fact, the Better Business Bu-
reau now has more than ESQ corpor-
atoms under suspicion. know posi-
lively that at least 100 of these organi-
cations are operating in the District
today"
whoIley told Of the exceeding high
commissions which are given to sales
men and declared this city is infested
with hundreds of men and women who
go about peddling stock OF every kind,
most Of which is worthless. He cited
several instances which rad come
directly to his attention in which ex-
convicts were opening companies OF
every kind. He told OF meeting a
man who served in Leavenworth
After a warning by Mr.. Wholley the
man left the city.
"If Congress will pass the blue sky
bill," wholley said, IT am sure hun
dreds Of thousands of dollars will be
saved to the people of the District.
The Better Business Bureau and all
other reputable concerns will CO.
operate In every way possible. / want
to impress on this committee the
necessity for some drastic action to
run these fraudulent stock promoters
out Of the District"
Bankers Urge Bill.
Eugene A. Thompson, representing
the District Bankers Association, and
Henry II. Mckee, president of the
National Capital Bank. also appeared
before the committee and urged pass
age OF the bill. They cited many
cases In which Washington investors
had put money into corporations
which were sure TO fail.
The question OF advertising came |
before the committee and the wit. |
nesses praised the Washington news |
papers for their desire and their
action In keeping out advertisements !
of corporations which are suspected as
The witnesses said, how
ever, that many corporations have re-
sorted to the use OF the telephone In |
advertising their stock.
The committee, headed by Congress-
man Brown, appeared interested In |
the number Of suspected corporations
and the witnesses were interrogated |
fully.
When Mr.. wholley referred TO the |
officials he did not give
their names and only did 80 when they |
~sra doxv,a ndod hv the coxnr.Ift..