The Washington herald., 1922-10-08

the press that the radio industry
would soon attract hocks of fake
promoters and financial parasites
findings of the Better Business BI-
reau of New York City. This or
ganization had been in operation for
only few days when IL began TO
receive complaints against alleged
wildcat radio companies that were
hawking their securities throughout
the city, feecing small investors out
Of their savings by high-pressure
stock-selling methods, utterly false
representations, and ridiculo is
promises OF fabulous future cara
ings.
The bureau has just made public
a report OF the investigation of what
it terms one of the most reprehensi-
BILE of these blue-sky, mushroom
companies. organized a few mon. hs
ago with an authorized capital of
$4,000, 900, the par value of the stock
being 81. The sales organization of
ths company has been active in
hawking stock and has already tax
en- in many thousands of dollars
from small investors, so the bureau
reports.
According to II. J. Kenner, man l.
ger of the Better Business Burelu,
radio get-rich-quick schemers are
running true to form. They organ
ize their corporations on a shoe
string and induce the public to
finance their ventures and pay for
manufacturing or distributing eS-
periments. Having launched their
stock sales campaigns. the wildcats
take care of themselves first, by f3t
salaries for services, which con sist
principally in selling to the public
more stock through wild promis es
followed by little or no perform
ance. The cost of promotion is pro-
hibitive, 40 to 80 per cent OF the
money paid for stock going to he
sales department.
Their cupidity stirred by the poD-
ularity of radio, professional pro-
motors-and others-are attempting
to broadcast among wage earners
and other uninformed investors mil
lions OF shares of stock in enter
prise5 alleged to be formed for he
purpose Of manufacturing and dis
ltributing radio apparatus for anna
teur uses" says the special report
OF the Better Business Bureau, IN
discussing the first get-rich-qui..k *
radio scheme il has investigates
Right at the beginning of its in
vestigatiOn the bureau recognized
i'll the leading spirit of this particu-
lar outfit. a professional promoter
whose methods in promoting a mn
tor stock last year called for action
by the National Vigilance Commit
tee Of the Associated Advertisi Il Z
Clubs of the World.
Priced at 81 Per share.
I'm line with the usual practice OF
vendors OF blue-sky securities. this
radio stock was recently advanced
In price from 81 (par value) tc
$780," says the bulletin, which
quotes an official of the company -
saying that this boost was justified
as the company had been mak,rG
big profits all the time. 200 per cent
being the average made on most o!
the products turned out.
But the trouble with the 900 pc:
cent profit, the bureau found, was
that it existed mostly on paper
The company was producing so lit
tie that its profits from merchandise
sales were almost negligible. New
ertheless. an executive of the COM
pany stated that because of eno-m-
Gus profits, shares would be selling
for 81 each, before the snow flies.
But, according to the Better Busi-
ness Bureau Bulletin. the leading
promoter of the company admitted
under cross-eXamination, that lis
concern would be insolvet II he Gid
not feed 1t money constantly firm
stock sales. Another official of the
company admitted early this mon h
that his company was insolvent
that it had not operated at a profit
and that the unified orders. viii n
stock statesmen said were piled up
| in the offices of the company.
amounted to only a few thousa nd
dollars.
During the past few months. TIC
bulletin states, the radio company in
question has been flooding tha
United States mails with stock sell
ing literature of the wildcat Va
riety. Thus. the officers. members
of the board Of directors. and others
connected with the company We're
described in glowing terms as wor!d
4
their way to the top in this new iu-
dustry.
One of the directors is describe 4
as the former financial advisor of
one of the most famous banking
| houses of the world. who had heen
the associate of J. +. MorCan. Cor
nelius NJ. Bliss. jr.. Gov. Benjamin
Strong. jr.. J. d. Rockefeller. jr.. lie
, late Henry 7. Dawson. Herbert
Hoover. and Others
The bull etin states that the dir"c-
tor i'm question promptly denied .nar
he had ever achieved these financial
hOnors. anG then severed his col-
neCtiun with the radio company. 1t
Yates also that the promoters
claimed vice president of one of
the best known and most reliable
banking houses Of New York Gig
had joined their board of directors,
but that this also proved false.
Promise Big PROFITS.
I'm rder to impress prospective
stockholders with the flourishiag
condition of the corporation" the
bulletin continues. Statesmen said
that enormous profits were being
made, that forty to fifty men ware
at work in the factory leased by the
company in New Jersey, and that its
products had been bought by the De
Forest Company and by Butl=r
Brothers mail-order house.
Investigation showed these state