Great Falls tribune., 1922-04-22
The HQSki11 Letter . '1zsss;as Rsssa
vICTIMIzlNG THE AMERICAN INVESTOR.

cember 81. 1918, and in that short time
handled applications to issue certifi-
Gates amounting to s., n, 7,315, 600 The
amount disapproved as representing
fraud or as being unnecessary, was
$017, $4,000. Though the committee
had no means of enforcing it's deci-
sions, and doubtless much blue sky
stock was put on the market without
application to the committee, it is elo-
quent of the extent of blue sky issues
in the United States that practically
ne-quarter of the applications were
turned down by the capital issues com
mittee.
The committee estimated that the
American public is gulled to the ex-
tent Of $500 900, 900 annually by worth
less stock issues.
investments Complete Loss
'This sum-" the committee said,
"present sheer waste and net loss to
the people of the nation, not only Of
dollars, but of morale, confidence and
the incentive to save. The nations
loss cannot be measured alone in money
values, but in terms of those things
which make for good citizenship
The postoffice department and the
department of justice prosecute swim
dies Of this nature under laws now
effective, but neither can function un-
til the fraud has been committed and
the damage done. The federal trade
commission lately has undertaken to
hail blue sky promoters before it under
the laws governing unfair competition.
Thus some swindles have been stopped
almost at their inception.
Legislation has often been proposed
to protect the public, but always has
81 ckr into 1ox
The general plan of proposed legisla-
ton is to create central bureau,
which must approve all security issues
in excess of certain amount, about
100000. Heavy penalties for break
ing this law would be provided.
There have been many famous blue
sky swindles. One which stands out in
American and British annals is the Mis-
sissippi Bubble, a vast development
scheme in which thousands lost their
savings. The recent Ponzi scheme was
not precisely blue sky scheme, as
there was no stock selling involved,
but probably new legislation viii. be
Certainly any federal blue sky con,mis-
sion would be likely to inquire into
such a scheme as soon as it started
operating, even though the law did not
provide specifically for clrbing such
schemes Of frenzied finance. Official
inquiry into the basis of fraudulent
schemes usually is sufficient to burst
the bubble without any other action.
1t is rumored that number of bril-
liant American adventurers have gone
to Russia to obtain concessions there
on which they plan shortly to sell
shares in the United States. Officials,
aware of their activities will issue
proper warnings when it becomes nee
essary, as it has been ascertained that
the plans of the promoters do not in
clude any real value behind their pro-
posed stock issues. These promoters
realize that Russia is far enough away
to precent thorough investigation By
prospective stock purchasers and get
sufficiently romantic part Of the world,
under present circumstances, to lure
adventurous investors to take chance
in making a sudden fortune out of radi
um or anything else the glib-tongued
statesmen may suggest.
The federal trade commission is now
engaged in the compilation of re
port embodying a survey Of the blue
Sky" situation. There is strong belief
that upon receipt of this report con-
gress at last will act for the protec
tion of American investors