The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-11-04
TOPEKA STATE JOURNAL
Information Bureau
FREDERIC }. HAsKM. Direess<,
washington, ID. q.
Ew BLUE sky BUSINESS,

American people are being exploited
by the greatest blue sky business In
the history of the world in the opln-
ion of government officials who have
made a careful study of the vending
here of foreign currencies- There Is
much perplexity as TO just how II can
be regulated and its most perpicious
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
doubtful value, there is a question as
to whether or not such laws would
cover the dealing in currencies-
The case of the German mark is
the most notable. Billions OF German
marks have been purchased by Amer
leans, 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 its 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 fragrant.
The German mark has had more pub
Lefty because of the conspicuous po-
sition of the German nation in world
affairs. Also, the fact that the Ger
man reparations are involved in the
matter has added interest and tended
to give wider circulation to reports
concerning the dealing in this depre-
ciated currency
ing is selling to Americans for dollars,
notes of European countries which are
payable only in those countries and
not payable anywhere in gold Ex-
change 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 go up again, ultimately
bringing him a value very much great
er 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 foreign
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 a Polish bond today for a given
sum in dollars. By delaying delivery
even a day or two. the deprecfatinG
bond at a lower price than that paid
them by their client.
The speculation looks highly attrac-
tive to uniformed purchasers To be
offered government bonds at small
prices seems an easy Chance to make
money. 1t would be if the bonds were
worth even the small price asked
One of the companies specializing in
this type of business offers a sort OF
grabbing of miscellaneous foreign Sc
curities for a lump sum. A dozen
bonds, national. municipal and indus
trial, are offered for n lump sum- The
the total of $2S.2S5.- The lot is offered
to the purchaser at $192.5e. 1t seems
an excellent investment
Another offer which recently at
/ i g
some Polish securities For a lump
sum of approximately $40. a lot of
Polish bonds having a par value of
about $4,000 was offered. Secretary
of Commerce Hoover examined this
proposal and discovered that any per-
son could buy these SECURITIES in the
open market for about So The COM
pany offering the bonds claimed they
were a bargain at $50 1t is not i'm
probable 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
to a point where the bonds could
have been purchased for Sc.
Doubtless some of the companies
offering these currencies and securi-
ties hav6-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 currencies
and 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 Of
fering 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 he1
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 Amer
lean purchasers would make money
on them.
Gold is the backing of bonds and
currencies. American paper dollars
are worth 81 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 becausesthe
whole world knows they have prac-
tically no gold back of them.
Now, the stern fact that makes 1t
impossible for the investors ever to
win is this. These countries have is
sued 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 in
stance, gets back on her feet she will
get the gold to put back of her marks
and they will return to par. There is
not enough gold in all the countries of
the woffd to bring the German mark
back to par.
The outstanding volume of Austrian
crowns is approximately one trillion.