The New York herald., 1922-02-19
Rate Fixed by Broker.

Tie broker was to sell this stock at
par or better. depending upon the de-
mand. 1t is not difficult to compute
his prospective profit should the cor
poration back him up. In other words,
prospects of the corporation could be
made to appear roster and roster each
thirty days so that the apparent value
of the stock would steadily increase.
This process. however. would have
to be done in spite of the fact that 1t
does not take $50 days to drill well
or even a series of wells. The sales,
therefore, would have to be completed
before the crash came-if it were to
come-that is to say before it was
made apparent that the company
would not be able to produce oil in
sufficient quantities to continue to
pay dividends on $1.000.000 WORTH of
stock at IL per cent. a year.
When the demand for the stock be-
gan to lag the directors met and de-
clared a dividend of 2 per cent. a
month instead of 1 per cent. The first
dividend rate was found not hign
enough to be a really effective bait.
These dividends were actually paid, as
in the first case. The money was OBJ
tanned through, more juggling of
leases.
By this time the corporation had
come into control of large tracts of
land.
There was slight possibility
wrote the postal inspector, that the
public might have profited even then,
oil iv,o IL n
legitimate venture in oil. But it
was not planned that the promoters
should involve themselves in any such
uncertainty and they therefore took
no chances whatever. Their profits
Chose of the insiders, tie promoters)
were to come from stock jobbing."
New Prospectus Put Out.
To carry out this program the SELL
ing broker advertised that the COM
pany had come into control of 51,273
acres of land. A new prospectus was
put out claiming production at the
rate of 600 barrels of oil day. Later
this claim was increased to 1,500 bar
rels day. When the prosecution be-
gan, however the records of the pipe
line company which bought all of the
corporations oil showed that the
monthly production was at the rate Of
1929 barrels, for which the corpora
ton received just $227.11.
The new prospectus declared that
current earnings are sufficient to
cover the present per cent. monthly
dividend requirements three times
over, and are increasing. The SUBJ
stantial additions to output expected
in the next few months will, of course,
be reflected in greater earnings and
subsequently larger dividend disburse-
ments."
The selling broker unloaded more
than 100000 shares of the corpora
tion's stock while the dividends were
being paid. The quotations on the
stock rose at one time to SIZE share.
Six officials of the corporation were
indicted in New York as a result of
the efforts of the Postal Inspection
Bureau of the Post Office.
Stock of the kind issued by this oil
corporation is the variety for which
small investors are exchanging their
Liberty bonds and Victory notes at
bucket shops with the hope of in
creasing their dividend rates to 10 and
20 per cent. Postal inspectors warn
that the mere payment of high divi-
dends does not prove that the corpora
ton Offering stock is a reliable, pro-
ducing concern.
Motor Car swindIe.
In Dallas the president of a motor
car manufacturing company drew
sentence of five years in Jail because
his concern was able to convince 10000
persons that 81 100000 should be paid
for it's stock.
This motor car company began
operations by advertising for me-
chanics, clerks and other workers.
The advertisement solicited mail
application accompanied by a stamp
for reply To workers applying stock
was offered together with letter ex-
planning that positions would be more
sure to those who owned shares of
TIE corporation. This was reason
able. 1t was made to appear that the
corporation planned to share profits
with workers to get more efficient
labor.
The scheme met with generous re-
sponse from workers who bought
stock and wanted jobs. The stock
began by selling at 81 a share. Shortly
after the corporation advertised that
on a certain day at midnight the price
would be advanced 100 per cent. to So