Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-30

group Of friends, and they form a
company. But they lack capital to
exploit the invention. so they sell
stock. Several things may happen.
They may get their capital and start
operations about the time that some
body else has perfected a new inven-
ton enabling an airplane to land in a
five-foot square. knocking the demand
for their device into what is COM
monty known as cooked hat. Or
perhaps they viii secure the necessary
capital and discover that il costs so
much 10 manufacture the device that
nothing is left over for dividends.
Again, the promoters may find that
all they can get after endless effort
is 5000, when they need S100, 900
10 start operations, and those who
have furnished the $75, 200 lose what
they have put into the scheme or, if
lucky, get a part of it back.
On the other hand, the invention
may turn out to be just what was
needed. There is a great demand for
IL. The dividends are large, and those
who bought stock in the first place
walk the streets so swelled up with
pride in their business sagacity that
they cannot resist the temptation to
buttonhole strangers and tell them all
about it.
Chance for Loss.
Investors in speculative enterprises
should keep in mind the fact that the
enterprise is speculative, and that
there is a good chance for loss. If
.they go into it with their eyes open,
and If they can afford to lose the
money on the chance that they might
fhNrQ 10 iy1r ~
more to be said on the subject. 1t is
through successful speculation that
great fortunes have been made. And
1t is through speculation that more
fortunes have been lost.
Conditions have improved in the
District as far as the sale of spurious
securities those. elassed as No. in
suggestions for losing money is con-
cerned. There are not as many cases
coming to the attention of the Better
Business Bureau and of investment
bankers as there were a few years
ago. But now and then a flock of
fake stock promoters descends on
Washington and unloads worthless
securities through pure fraud and then
gets out of town. Not long ago a
'boiler.house" operation was main.
tanned in Washington which took a
good citizens in the surrounding coun.
try. The "boiler-house" derives its
name from the confusion and noise
attendant upon the activities of many
men in one room, all telephoning at
the same time. This group used the
long distance telephone alone and
worked only outside of Washington.
Their method was to telephone a mer.
chant in, say, Frederick, Md, and ad.
wise him to buy some good security,
the name of which is we'll known and
trusted. The merchant would agree,
and the "boiler-house" worker would
tell him that his messenger would ar.
rive on the next train for the money
and that the stock would be forwarded
in day or two. The messenger would
appear according to schedule and get
the money. But the stock was never
delivered. The men who worked the
'boiler-house" shut up shop and left
town Immediately with thousands OF
dollars collected from kindly and
trustful business men in the vicinity
OF Washington.
Bucket Shops Operating.
Bucket shops are known to be oper
ating in Washington now, but the
difficulty of proving that they are
bucket shops mas prevented proSecu
ton. The law in the District requires
a stock broker to show when, where
and from whom he bought the stock
for a customer. The clever man may
operate his bucket shop here by main
tanning connections in other cities
When an irate customer demands tC
see his stock the smart operator will
procure 1t in another city in a manner
which indicates that IL was bong hi
when ordered. II the owner wants t.
trace 1t down farther to find out when
II was purchased, he must trace it ir
another city, the work requiring q
great deal OF time and expense. The
bucket shop operator, of course, il
one who bets on the market agains
his customer. He gets money to buy
the stock, but never buys it. II thu
stock goes down. he wins; if the stocl
goes up. he must either produce the