Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-11-06

washington, u. u, Nov. Tile
American people are being exploited by
the greatest blue sky business in the
history of the world, in the opinion of
government officials who have made a
careful study Of the vending here of
foreign currencies. There Is much per-
plexity as to just how it can be regu-
lated and its most pernicious. aspects
halted. No federal blue sky law exists
and those OF many of the states are
regarded as loose. Even if there were
adequate legislation to govern the sales
of securities of doubtful value, there
is a question as to whether or not such
laws would cover the dealing in cur
rencies.
The case of the German mark is the
most notable. Billions of German
marks have been purchased by Ameri-
cans, as well as by citizens of other
countries, in the hope and expectation
that great rewards would be reaped
by the purchasers upon the return of
the mark to it's gold par value. The
! trick in the situation is that the mark
cannot recover.
The mark is by no means the only
case. Others are even more flag
rant. The German mark has had
more publicity because Of the con
spicuous position of the German ma
ton in world affairs. Also, the fact
that the German Preparations are in
volved in the matter has added in
terest and tended to give wider circu-
lation to reports concerning the dealing
in, this deprecated currency.
What the blue sky operators are
doing is selling to Americans for dol
lars, notes of European countries
which are payable only in those
tries and not payable anywhere in
gold. Exchange in all these European
countries steadily declines from week
to week and in some of them from day
to day. This means that a broker can
sell German marks today for a given
price and by tomorrow the buyer will
have lost money. What the buyer
fondly hopes is that the tide will turn
and that on some future tomorrow the
mark will 60 up again, ultimately
bringing him ga value very much
greater than he paid.
Sharp Deals In Bonds
But the sales of currencies are not
the sole blue sky business of this
sort. Sales of securities of these for
eign countries and cities are in much
the same class, although, in some
cases, there is a shade more hope for
them. In such cases, the brokers are
even more fortunately placed. They
can sell q Polish bond today for a
given sum in dollars. BY delaying de
livery even a day or two, the depre-
ciating currency will enable them to
buy the BOND at a lower price than
that paid by their client.
The speculation looks highly at
~tractive to uniformed purchasers. To
be offered government bonds at small
prices seems In easy nance to make
money. 1t would be if the bond were
worth even the small price asked. One
Of the companies specializing in this
type Of business offers a SOFT of grab
bag Of miscellaneous foreign securi-
ties for a lump sum A dozen bonds,
national, municipal and Industrial, are
offered for a lump sum-. The par
value OF these bonds adds up to the
total of S2S.2S5. The lot is offered
to the purchaser at S192.50. 1t seems
an excellent investment.
Another offer which recently at
tracted many Americans consisted of
some Polish securities. For a lump
sum of approximately $50, a lot of
Polish bonds having a par value of
about $4,000 was offered. Secre-
tary OF Commerce Hoover examined
this proposal and discovered that any
person could buy these securities in
the open market for about So. The
company offering the bonds claimed
they were a bargain at $50. 1t is not
improbable that when the company
printed its circulars, the cost of the
bonds in the open market would have
been as much as $50. The elapse OF
some weeks during which the printed
literature was being circulated, saw
the depreciation of Polish currency to
a point where the bonds could have
been purchased for ST.
Doubtless some Of the companies
offering these currencies and securi-
ties have some faith in them and when
they prepare their literature they
quote fair prices. If the literature
should be put out at the turn of the
tide when the prices Of these evidences
Of indebtedness started upward, the
offerings would indeed be bargains.
The trick in the thing is that the
chance of a rise in these quotations IS
remote. To buy these currencles n
securities therefore, Is to bet on a
sure loser. No one ever went to a
, horse race who put his money on a
horse that he knew was sure to lose.
Yet. the fact that the companies offer
ing these foreign bonds remain In
business seems TO indicate that some
thousands of Americans constantly are
doing a thing equally foolish.
Not Enough Gold in the World
The principal reason the Investors
must lose IS that it is impossible for
them to win unless some King Midas
comes along and turns everything ne
touches into gold. He would have to
work a good many eight-hour days to
touch enough objects to produce the
volume Of gold necessary to bring
these currencies and securities back
to a point where a majority of the
American purchasers would make
money on them.
Gold is the backing of bonds and
currencies. American paper dollars
are worth 81 each because the whole
world knows that there is actual gold
back of the currency. European
marks, rubles, kronen, ct cetera, are
not worth their normal value because
the whole world knows they have
practically no gold back of them. .
Now, the stern fact that makes 1t
impossible for the investors to win IS
this: These countries have issued
paper money and bonds payable IN
paper money, in such enormous volume
that there is not nearly enough gold
in the world to make them good. The
argument has been made that when
Germany. for instance, gets back on