Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1936-11-07

The new company was registered shortly
after the securities act Of 1888 Was enacted
and several times offered its stock, BY mail,
TO the stockholders Of the old company, al Of
the stockholders OF the old company having
been sent q registered prospectus Of the new
company. The stock Of the new company was
offered as IS ana IS cents per share to the
stockholders of the old company but at no
time was there ever mentioned that enc stock
could Be traded for ths other on any basis.
Such solicitations were stopped BY the new
company IA the fail Of 1854 OF shortly there
after. as Il was found not much money could
be raised that way at that time.
Trade in stocks
In the syFang Of 1885. stockholders OF the
old company residing in New York, Pennsyl-
vania, and Connecticut advised the officers
that they had received letters from some men
in New York and Boston. these men stating
that they were authorized TO take In the stock
Of the old company plus 10 cents per share
and deliver stock Of the new company. The
unwary stockholders OF the old company knew
that the new company had been registered
with the SEC and they al had received E
prospectus from the new company They
thought the trHde-fn proposition was o. X.
and they fen for the game without notifying
late. OF course the crooked solicitors kept the
money they collected. mailed back the old
stock certificates TO their owners, but de-
Iyered none Of the new stock as they had
none to deliver. It was a brazen steal and the
solicitors even had the effrontery to have
printed IN Boston and New York letterheads
bearing the name Of the new company and
their personal fictitious names as eastern
representatives and pool managers"
SEC Did Not act
Previous TO the PASSAGE Of the securities
act Of 1888 the officers OF the company would
have turned over al the evidence IN this rank
fraud TO the postal authorities and to the
attorney generals OF the states In which the
crooked gentry operated However. they be-
lieved that It was duty OF the SEC 70 so
after such cases and stop them. Therefore,
ell hA fHrneN
to the SEC IN MAY, 1885. Nothing was done 70
apprehend or stop the fraud and in July the
company officials also turned over the facts
and evidence 30 the postoffice department.
Five months later letter was received from
the chief counsel OF the SEC stating they
could not find the criminals and besides they
believed the case was not In their surisdic-
ton as it as a ''trade-in'' of securities and
not q sale Of securities They advised the
company officers to turn the matter over 70
the postal authorities, which already mao
been done. To this day, the postal authorities
gave not found the cuiprlts. the point de-
Hsre 10 bring out In this case is that ene
sly-by-night stock saiesmen or rather trad
ers-An." as named by the SEC, took advsnt-
age Of the fact that the new company was
registered and played upon the gullibflity Of
It's prospective stockholders. unlawfully tax
Ing the money that the issuer company might
have used for the legitimate development OF
its rnfne-and forever closing that source OF
capital from which the issuer company might
have financed itself.
Enforcement Ne6Gea
From these premises and specific cases I
think you win agree with me that modffica-
tiong and enforcement of the act OF 1855,
are q necessity and believe that the SEC.
which stiu is q young organization, later VIII
strictly enforce the law.
have left for the conclusion Of this dis
cussion. rather than its beginning, the DEF
milton Of ''merttorious, primary mintng VEN
kure." should say Il is promising iookinR
prospect, with st least enough deyelopments
70 indicate. that with good management ana
sufficient capital, 1t can be advanced to
profitabIe undertaking. I lay special stress
on the phrases good management and SUI
ficient capital"
II developed mine needs money for MIN
or other purposes. It usually can obtain such
capital. but sometimes at heavy sacrifice 70
shuse that made the mime"
Most Of you listening to me today are not
directly interested Ia primary mine financing
as you have good positions with, or own, prof.
table companies with plenty Of resources.
But--ezisetna mines DO not last forever and
you have children and grandchildren who de-
sire TO engage ia the mining industry. Give
them g chance; and Join with those OF as
who plead for q modification and enforcement
Of our laws, so we can finance these initial
ventures
After an Is said and done, all Of our sue
ressful mines be they great or small were
once primary ventures. II we are going 90
continue 20 have new mines. as the old ones
become exhausted, we must keep on financing
and developing primary propositions.
In the last analysis, there ts no other way
70 perpetuate the mining industry.