The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1924-10-15


4 The heaviest iesses Of all doubtless
hre- caused by the ,foisting Of worthless
ecurities upon the, public. Such losses
greatly exceed the losses caused by
sunterfeiters, although their activities
appear to be on the increase.
a A new brand Of "counterfeiting" has
bow come to light. Three men have
been arrested in connection with the is
uance !. of fake bonds. bonds which
here pa1nied off as Obligations of the
Steel and Tube Company Of America.
Fhis latest episode IL peculiarly dis
urbing since It opens such vast posi-
bilities for hood-winking unsuspecting
Investors.
All of which prompts the following:
What guarantee do buyers OF CONNER
iai papers have that the paper they
buy IL genuine and has not been issued
by some executive or other employe
Without proper authority and sold for
She purpose Of stealing the proceeds?
q The value OF the commercial paper
b this country compares with the value
+ new stock and bond issues. Banks
IND others Invest hundreds OF millions
& ( dollars, even billions, In these pieces
{ paper without even taking the trou-
fie to call UP the firm or company
EiKning the paper to make certain that
HE paper Is genuine.
Think OF the possibilities for swind-
ing this loose, unbusiness-like system-
r. lack OF systenn-opens up.
Il Americas whole method OF handling
commercial paper Is unsatisfactory and
4hould be reformed.
Most of the time the buyer Of
iece of commercial paper not only does
lot know for certain that the paper Is
Genuine, but he doesn't know how
nany other pieces Of paper the issuing
company has put out. It may be re-
Ter regarded Clafiin paper as abso-
itely top notch. Yet the buyers of 1t
admit the slightest idea of how many
billions OF paper ClaflinAhad outstand-
hg at any time. They bought 1t on
lind faith. Then one day the terrible
rash came.
a bank president recently told me
hat he zsed to have the same regard
mixers had. But he did some real
Giving into what was what and con-
lhded that II would be the part OF
afety TO have nothing more TO do with
bis particular Investment. Subsequent
vents thbroushiy justified his action.
.
whySnot have every piece Of CONNER
iai pepper registered BY the Federal
eserve banhs3
.e 2 ---------
would not this accomplish much7
BUYERS would know that the paper
ad been issued In due form by the firm
If company issuing 1.-THE Federal Re
erve bank would see to that.
Thea, scarcely less iInnortant, banks
nd others would be able to ascertain
ID a minimum OF time and trouble just
ow much paper any concern had out
Handing. Had some such simple plan
cen in force the Claflin failure never
you'd have reached the dimensions it
i'd.
why should the Federal Reserve
anks undertake such atRsk?
Because Il IL to the Federal Reserve
anlxs that banks holding commercial
aper take their paper for rediscount.
IA Is IN the interest Of the Federal Re-
erve banks themselves that they
houId know exactly how much COM
nerciaI paper is afloat and how much
being issued by each concern. Such
Information would be extremely useful
{ certain times. 49, -
The Federal Reserve banks are in
,osffion to organize the necessary ma
Nhinery,, for we are beginning TO see
that In our normal times our federal
eserye banks are not being overworked.
The American peoplee have been too
n asy-going in the matter OF dishonesty
#sut they are becoming less compliment.
rhose in q position to institute meas
kres calculated to diminish dishonesty
|houId bestir themselves forthwith.