The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-04-18

to $3,717, 313, 600. The amount dis
approved as representing fraud mr.
as being unnecessary was s9l7-
$4,000. Though the COMMITTEES
. had no means of enforcing its de-
cisions and doubtless much bins
sky stock was put on the market
without application to the COM
mittee it is eloquent of the extent
of blue sky issues in the United
States that practically one-ouarter
of the applications were turned
down by the capital issues commit
tee.
The committee estimated that
the American public is gulled 10
the extent of 100000. 900 annually
by worthless stock issues.
Investments Complete LosA.
This sum-" the committee said.
presents sheer waste and net loss
TO the people of the nation, not only
of dollars, but of morale. conf
dence, and the incentive to save.
The nations loss cannot be meas
ured alone in money values. but IN
terms of those things which make
for good citizenship"
The postoffice department. and
the department of justice prose-
cute swindles of this nature under
laws now effective. but neither can
function until the fraud has been
committed and the damage done.
The federal trade commission late
ly has undertaken to hail blue sky
promoters before it under the laws
governing unfair competition. Thus
swindles have been stopped almost
at their inception.
Legislation has often been pro-
posed to protect the public. but al
ways has fallen short OF enact
ment into law. The general plan
of proposed legislation is to create
a central bureau which must ap-
prove all security Issues in excess
of certain amount. about $780,
coo. Heavy penalties for breaking
this law would be provided
There have been many famous
blue sky swindles. One which sands
out in American and British an
nails is the Mississippi Bubble, a
vast development scheme in which
thousands lost their savings. The
recent PonZi scheme was not pre-
cisely a blue sky scheme, as there
was no stock selling involved, but
probably new legislation will be
framed TO include such enterprises.
Certainly any federal blue sky com
mission would be likely TO inquire
into such a scheme as soon as it
started operating. even though the
law did not provide specifically for
curbing such schemes of frenzied
finance. Official inquiry into the
basis of fraudulent schemes usual
ly is sufficient to burst the bubble
without any other action.
1t is rumOred that a number OF
brilliant American adventures
have gone to Russia to obtain con-
cessions there on which they plan
shortly to sell shares in the United
States. Officials, aware of their &C
tivities will issue proper warnings
when it becomes necessary, as it
has been ascertained that the plans
of the promoters do not include any
real value behind their proposed
stock issues. These promoters
realize that Russia is far enough
away to prevent thorough inveSti-
cation by prospective stock pUr-
chasers, and yet a sufficiently re
mantle part Of the world, under
present circumstances, to lure ad-
venturous investors to take
chance on making a sudden fos-
tune out of radium or anything
else the glib-tongued salesman may
suggest.
The federal trade commission is
now engaged in the compilation Of
a report embodying a survey of the
blue sky situation. There is
strong belief that upon receipt OF
this report congress at last viii act
for the protection of American in
vestors.