Evening star., 1923-07-19
BY II. Ii. TREVOR.

In seeking to learn what results
may be expected, on the present con-
certed drive by the authorities and
tho newspapers against bucketeers
and crooked promoters, 1t is well to
study the results of the similar drive
| conducted at the time of the public out
burst against the financial underworld
between twelve and fifteen years ago
Now, as then, the outstanding demand is
that better safeguards be provided for
the small investor.
The greatest tragedy incident to the
periods in which financial Swindlers ply
their trade on huge scale is the extent
to which their depredations are made in
the ranks of the small investor. Always
/, it is the purchaser of securities of linn
tied means who is the prey of the finan-
cial vuiture. His limited knowledge of
market conditions and of securities, val
ues and other conditions makes him a
natural object of attack.
Driven Out BY L. S.
Fifteen years ago it was the fraudu-
lent promoter who was NEST active in
the raids into the ranks of the in
vestor of limited means. The type of
fraudulent promotions W hich flour
ished in those days was di sven out of
business by the federal authorities
and the newspapers, and ives kept out
of business later by the newspapers.
The type Of bucket shops which
thrived in those days was put out OF
business by the federal authorities
and the New York Stock Exchange
authorities.
For short while all was quiet
Then a new type of bucket shop be-
gan to reach menacing proportions
the vanguard of the swarm of bucket
shops that has crashed in the last
few years
The new bucket shops were started
by men who had had their training
in the older houses. but they invaded
a field which had not been touched by
the older inStitutions-the field of
buyers of curb market securities. par
cicularly the low-priced stocks which
were attractive to the investor of
small means.
@ Wholesale stealing OF the hard
earned money of tens of thousands
Of these little people, especially dur
ing the war markets, went on for sew
aral years absolutely unchecked by
the authorities. 1t was following the
gathering i'll of millions upon millions
of dollars on the exploitation of these
small investors in curb stocks that
the new style bucket shops eventually
entered, within the past four years,
into the exploitation of securities
which are listed on the New York
Stock Exchange.
Proved TOO Much.
Ii was the latter line OF eXploita-
Gon which proved too much for the
bucket shops because OF mounting
overhead and adverse market COndi-
items, and which led to the wholesale
crashes of these houses in the spring
OF 1922. followed by some Struggling
failures this year
For a proper idea OF the develop
ment of the group of bucket shops
that have crashed in the past two
years. it is necessary, the reader will
perceive, that we look into the con-
ditions surrounding the activities and
the downfall of the bucket shops chat
flcurished fifteen years ago. Let US
do so:
The bucket shops of fifteen years ago
We're a direct menace to the opera
tions of the New York Stock EX
change Not only was this true be
cause these houses pretended to be
brokers in securities listed on the
New. York Stock Exchange, hut also
because these houses also conducted
their operations in such manner. many
of them. as TO convey the impression
TO the unsophisticated that they were
members of the New York Stock EN-
change.
Menaced Exchange.
They styled themselves members Of
the New York Standard Stock EN-
change" members Of the New York
Bonds and Stocks Exchange" etc. Not
unnaturally. many of the >abuses of
which they We're guilty We're laid by
their clientele at the door OF the New
York stock Exchange, and gradually
there developed a public sentiment
asanst the stock exchange. attribu-
table in no small extent to the mis-
taken ideas created by these condi-
tiOnS.
In IL more direct and material way
the New York Stock Exchange was
Damaged by the fact that much of the
business which might otherwise have
gone to IL was diverted into the buck
ct shop channels. Although some peo-
pie were aware that they were deal
ing with bucket shops, or SurmiSed
that they were. and Were giving at
tcnticn not so much to whether their
orders for purchase Of securities
might actually be executed as they
were to whether the houses were
big enough" to pay their bets. most
of the customers of the bogus brok-
erage houses We're under the impress
sion that they were dealing with bona
fide institutions.
Raids Often Hurt.
In yet another way. the New York