Evening star., 1927-03-23

future. After Ponzi was released from
the Massachusetts Jail, where he was
punished for defrauding the public in
his famous international postal coupon
scheme, he went to Florida, and pro-
ceeded to exploit investors who came
back for more. George Graham Rice,
who was sentenced to Atlanta in con-
nection with security operations. came
back to Wall Street as a broker, and
recently. through his alleged journal,
the Iconoclast, has sold vast quanti-
ties of securities. The Attorney Gen
eral of New York has undertaken to
suppress Rice's activities.
Reform is possible, but in each spe-
cific case it is q highly conjectural
matter. 1t is a safe rule for the pub
lie never to buy securities from a man
who has served a Jail sentence for Sc
curity frauds.
Operate Under Aliases.
Many bucketeers operate under
aliases, and select a new one after
leaving the penitentiary. The lay
man may be fooled by the guise, but,
If he will consult his banker, the lat
ter has access to the facts.
When DIR. Cook started out, the ma
ture of his security operations was
palpably Objectionable to the expert
observer. One journalist publicly re
marked at the outset: Il would rather
buy corner lots at the North Pole from
DR.. Cook than shares of his oil COM
panies'
In Wall Street, the optimist who is
wrong is frequently more popular than
the pessfmist who is right
All too frequently corporation presi-
dents by their studied silence lead
the public to assume that favorable
rumors, which in fact are baseless,
are true. Such false impressions
temporarily cause a rise In the stock
of the corporation. and may give in
SiderS an opportunity to make money,
but such a policy entails a negative
breach of trust to outsiders.
Walter S. Clifford, president of the
American Telephone e Telegraph
Co, is therefore to be commended
for his uneuuivocal denial of recent
rumOrS. lie was as swift to deny
rumors, which the Street considered
favorable as he would have been to
spike false reports which were un-
favorable.
Not Under Consideration.
mo action" said Mr.. Clifford, "of
any sort is even under consideration.
The corporate reorganization, stock
spHt-up and increase suggested IN
a morning newspaper are absurd.
They are out of harmony with the
aim and ideals of the company, as
any one who has followed it's progress
and read its report must know"
Bravo! 1t is not surprising that
an investment stock like American
Telephone & Telegraph has adjusted
its market position in accordance with
long term changes in interest rates.
incidentally, there is some evidence
of a recurrent public delusion con-
corning the magic value of stock
dividends. In 1922, spectators mis-
judged the value of Standard Oil Sc
curities during an epidemic of melon
cutting in that group. Stock dividends
as such add nothing to the real wealth
Of shareholders. The declaration of
stock dividends merely involves a
bookkeeping alteration, transferring
items from surplus, which belong to
the common stockholders, to capital.
The process of giving two shares for
one is analogous to giving two nickels
for a dime. Melon cutting may call
attention to corporate growth and
prosperity, but they would be visible
anyway to the trained observer.