Evening star., 1922-03-12
ny WILL p. KENNEDY.

|
~ YHILE Congress has been
NN/ working for more than a
v v year to put through a new
tariff bill that will raise
enough money to meet absolutely
necessary expenses; while a bonus for
! the former service men has been de-
layed by inability of the cleverest
| financiers to devise a way to pay it..
and while industry generally on which
hundreds of thousands of persons are
dependent for their bread and butter
has been slowed down for want Of
| capital, crooks and swindlers are TAX
| ing $5O0.000.000 in cold cash every
year out of t1e savings of the people
through the sale Of fraudulent and
worthless securities. Uncle Sam has
| decided that this must stop. not only
| for the protection of those who are
so susceptible to the glib arguments
and alluring circulars of the slick
and unscrupulous fake promoters. but
equally for the conservation of the
ready cash. so that it may go into the
promotion Of legitimate enterprise,
| through the development of which
employment may be provided for
every citizen.
! Under special rule. national
"blue-sky" bill will probably be
passed by the House during the COM
ing week which has the support of
the Treasury Department, the Post
office Department, the investment
bankers of the country, the National
Association of Securities Commits
sioners, representing thirty-nine
| states. and of public sentiment gener-
| ally. This measure, ito prevent the
use of the United States mails and
other agencies of interstate commerce
for transporting and for promoting or
procuring the sale of securities con-
trary to the laws of the states" is
fathered by Representative Edward
E. Denison of Illinois. and was favor
| ably reported by the House commit
tee on interstate and foreign COM
merce. Representative Denison had
a hearing before the rules committee
Thursday, and has received assur-
ances that this measure will be
brought up very soon under special
rule. making it Immediately in order
for passage by the House.
X x X X
While this is designed as federal
law. it makes no effort to invade the
police power of the states, but to help
those states that help themselves.
backing them up and preventing the
use Of federal agencies in interstate
commerce to accomplish within the
states what the states themselves
have forbidden by statutes.
Forty-two states now have fraudu-
lent securities laws. thirty-nine of
them real "blue-sky" law4 under
which the fake stock promoter can
not operate within the state. and
threeiNew York, New Jersey and
| Maryland-have enacted the type of
flaws known as fraud acts. to punish
fraud after it has been committed in
connection with the sale of securi-
ties, rather than laws to prevent the
sale of fraudulent securities. All the
states, in fact, except Colorado, Con-
necticut, Delaware. Nevada, Pennsyl-
vania and Washington. now have such
laws. The last legislature of the state
of Washington passed blue-sky law
but it was vetoed by the governor be-
cause it was not as comprehensive as
he thought it should be.
Officials charged with the admin
fistration Of these state blue-sky laws
have found that there are regular
gangs who prey upon the public by
the sale Of fraudulent and worthless
securities. There are thousands OF
these professional crooks. many OF
whom have court records and who
are experts in the organization and
iexploitation of all manner of get-rich-
quick concerns. They use expert
statesmen, work out all sorts of plaus-
ible and attractive schemes which
promise fabulous returns on invested
capital. and rob the people of their
savings. Their victims are usually
men and women of small means and
little business experience. and who
of a security.
The National Capital has been i
happy and extraordinarily profitable
hunting ground for these securities
sharks. because there has been no
law to prevent their operations and
because there is an army of medium
salaried workers here who get paid
at regular intervals. Investment
bankers and securities brokers gave
amazing testimony during special
committee, which deferred action
pending the passage or the FEDERAL
statute. Representative Denison, ap-
lpreciating that the conditions in the
National Capital are extraordinarily
5razen and scandalous and that the
government employees are being
robbed ruthlessly, is now drafting a
bill specially applicable to the Dis
trict. which will supplement the gen
era1 law.
Wh,ie these f1y-by-night concerns
are generally unable to qualify their
offerings under the securities laws of
most of the states, yet the states
having done the best they could to
protect their citizens, are still at the
mercy of the sharpers. The agents
of the get-rich- quick companies who
cannot go into these states and sell
their paper within the jurisdiction OF
the state authorities boldly take ad-
vantage of the immunities of inter-
state commerce. Having organized
their companies with imaginary as
sets, they print great quantities OF
ialluring circulars, prospectuses and
pamphlets, giving glowing descrip.
tions of their properties and pros
poets Of fabulous returns, and flood
the states with such literature