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About Omaha daily bee. (Omaha [Neb.]) 187?-1922 | View Entire Issue (Nov. 18, 1906)
THE OMAHA SUNDAY BEE: NOVEMBER IS, 1906. " Ge Rich Quick" Schemers i J TIE Art of Wall Ptroet Investing," In t a f.'imjHrt coinp:P d by John Moody, a New York publisher, turns an arc light on "waji that are dark ar.d trirks that are' not vain, but profitable. Illuminating lha methods of promoters who swindle.. The greut number of Investment now before tho public In alluring colors gives pertinent Interest to Mr. Moody's paper, lie says. In part: There art! get-rich-qulck schemes of many 'kinds and they are exploited In many ways; Home times through tho columns of news- papers, some times in financial or mining Journal?, but more often through circulars t other advertising matter. The moat Hiirrrspfui are usually mining propositions, slthough many other kinds have flourished equally as well. One of the most notorious promotion frauds of this kind was a ' guar- nnteed egg company." the stock of which was offered for sale in New York City a few years ago The promoters of this vwuiiiiy r-ne i,nmui;it3L a. roneaie pros pectus, offering the salo of 7(per cent guar anteed preferred stock at par. with a large bonus In common stock. Careful Inspec tion of the prospectus revealed the fact that the prospective earnings, which were te amount to a fabulous sum, were to re sult from the sale of cKgs at high prices. the said eggs to lx laid without fall at a certain unoeaalng ruto by several thousand hens, which were the entire stock In trade of the company. These hens were sup. posed to do the double work of hatching rww broods of chickens and at the samo tlma laying their regular guaranteed pro- portion of eggs. It was also assumed that only hens and not roosters would be hatched, and that every egg would be good, The ensencs of the "guarantee" on the preferred stock appeared to be wholly based cn tho theory that the hens had somehow been forced Into a promise to 1 iv egg night and day. If need be, in order not to ullow the preferred stock dividends to lapse in any pos.slbl way. The company was capitalized In the neighborhood ot Jl.OO.Ooo and its only trangible property, iiylile from the chickens, was a farm of twenty acres, located about thirty miles from New Tork. Eas: Stork flood Seller. Absurd as this whole proposition was, there were enough Investing idiots walk ing around loose In New York City to "nibble" at this bait to the extent of ov r $9o,0(O in cash. And It was suited n good authority that most of these sub- mm Iptions come from New York City peo ple who had never seen a chicken farm In their lives, and probably didn't know any more about the chicken and hen lay ing business than the chickens themselves knew about the preferred stock they were assumed to be guaranteeing the dividends on. Shortly after this exploitation the promoters quietly folded their tents and Htole away, as certain kinds of promoters have a way of doing, with the result that the Innocent but superficial investors are Ktlll waiting for their dividends, and are holding their stocks as "permanent invest ments." Another Instance of the get-rlch-qulck scheme which fooled a large number of supposedly sane Investors was the promo tion of the "sea water gold" enterprise a few years ago. A certain man named Jergensen, who was more avaricious than honest, happened to discover an article In an encyclopedia which brought to his knowledge the fact that sea water con tains a small percentage of gold, but that no method has ever been discovered whereby the separation of the two could be brought about. He then devised a scheme for pretending that bo had him self Invented a secret process for doing this very thing, and thereby induced in vestors to pass their ready cash his way, He built a small plant on the water's edge ' at South Lubec, Me., a portion of the plant being constructed out of sight and under water. He then secured a small quantity of gold bullion (a small genuine g.old brick) and exhibited to certain people In the city of Boston, at the same tlmo malting the statement that It was the result of a test of his secret process for washing gold from sea water. His in- credulous listeners wore invited to go to the government assay office with him to test the genuineness of the little brick, This they did, and, to their surprise, found that it was all pure gold. Then, as a further proof of his discovery, Jer gensen Invited them to go to South Lubec with him and see his plant. They did so, and saw the mysterious looking machinery. pnrt of which was under water. They were duly Impressed. He -then explained that he could not let them see how he did It, as he must naturally guard his se- cret. But the next morning he appeared with a small can full of new gold dust, which he said he had secretly washed out during the night. After that, for a whole week, while his visitors remained, he ap peared every morning ' with a moderate quantity of gold dust, which he exhibited as a result of the previous night's work. As this production steadily continued, his audience grew. Others cams on from Bos ton, and the wonderful discovery was on the Hps of a steadily increasing number of 'people. When he next went to Boston, taking, the gold dust with him, and con- verted It Into cash at the assay office, many apparently shrewd people were thor- oughly convinced and regarded his claims as absolutely proven. He then organized a compuny to sell stock, and us the snow- ball had begun to roll, it very quickly In creased to glgantlo proportions. Gold from Sea Water. Within a short period investors In Bos- ton and vicinity were sacrificing good bonds and stocks, withdrawing savings bank de posits and generally falling over each other in a mad rush to get In on the ground floor When Grant Me! WAS conducted at ones to where Sheridan, was located with his troops drawn up In line of battle facing the confederate army near by. They were very much ex- 1 1 iui, and expressed their view mat this was all a ruse employed to enable tho con federates to gut away. They xaul tl.ey be lieved that Johnston was marching up from -North Carolina now and Lie n.ovmg to Join him, and they would whip the rebel" where they now wire in nve nanuics tf I would only let tlieiu In. llul I had lid doubt about tne good fouu of Ltu, ui.J prsttjr oon was cuuducicd to where hs was. I found him at tho houa of a Mr. McLeau, at Appomattox Counhoiut, null fol-UKl Marshall, una of his staff officer j, . waiting my arrival. C had known Crenertl Leu in the old i my and had served wuii him In the M -x-,i jii war, bul did not sup,Hse, oning tj iu difference In our aw aud lank, that t.u would remember ni(, w liile 1 would more naturally remember him distinctly becauso ho was the iiiletof stjff of ieneril S'Olt ir. the Mexlcun war. Wiitn 1 h-iJ '- .'; m!.. I' tl j: tii.in ns 1 n.r. , xp.ite.1 -i .u v. - r, . r.: lh .; w us then taking pla.v. ai.a 1 0:1st iuui'.:y was In rough garb. I was wltlmut a ord, as I usually was when on i.-ie-hai k 'oh the field, and wore u soldier" uIoum for a coat, with the shoulder straps of my rauk to Indicate to the array who I w. When I went Into the houw I found General J.ee. We greeted each oikar4 and alter LUung Lands tou.lt uor this sea-water gold bonanza. It wni afttrwurd estimated that before th fraud was publicly exposed Jcrgenfen and Ills ac- complices had secured nearly a million dol- lars. Ths final outcome was that Jergenacn secretly escaped to Europe with most of the money, and his victims are whistling lor their "great profits"' to this day. llar.y other nchcmes equally as fraudulent have been wotked during recent years In Wall street and elsewhere, and though con stantly exposed In the newspape.rs, yet new ones crop up nearly every day and the pu- He continues to bite. The advertising col- umns of the newspapers and magazines are juh tQ overflowing with roseate propositions for the Investment of money; gold and cop- per mines; industrial undertakings; new rallroad projects; traction companies, and varoug other promotion schemes. Millions of dolIars are Invested every week by small ,nvestors In thl8 country, and a large pro- portlon of lt U conBtantly "stce.ed" Into un- channels." with a resultant loss to thousands Of Investors. A an Illustration of how persistently and easily unsuspect ing people are milled and swindled, ' in stance the following: A very consp.cuous concern, has been "operating for the past five years or eo one of the largest and cleverest mining swindles ever known In the United Slate. Sumptuous offices are maintained In Broadway, New TorV, and "-bout forty branch offices have been es- tabllshed In various cities of the United States and Canada. A number of honest men have been drawn into the scheme by baits of alluring commissions, and have peddled the rotten shares of this Ann of stock Jobbers among their friends and neighbors, to the loss of their own peace of mind and reputations. The plan of this swindle Is neat and comprehensive. The firm announced that it would operate on the law of averages, and by handling many mines the good ones would make up for the failures. Considerable bluffing lias been done in the way of crude mining opera tions, but none of the "mines" have proved successful, and none are likely ever to be successful. Dividend, but No Profits, "This firm of sharpers began paying dividends on shares, when no profits were earned, for which they should be Jailed for the common swindlers they are. Stock In tho worthless companies was exchanged for stock in equally worthless companies Whenever shareholders grew tired, and the victims of conspiracy were tolled along by the 'dividends' paid out of the money they had themselves furnished. Recently cash dividends have been suspended, and 'scrip' dividends substituted therefor. It Is reported that this firm has bilked something like 16,000 small investors in the United States and Canada, to the tune of several million dollars." The methods for promoting all kinds Of swindles have in recent years been re- flned down to an exact science. Experl- enc9 naa proven that the most vulnerablo cls. of r.eor,le to he attracted bv in- vesting swindles, aside from women, are ministers, doctors, teachers and other pro fessional people. There are In New York a number of concerns who mako a busi ness of supplying classified lists of pos sible Investors for the use of those who wish to exploit mining swindles and other schemes. These lists are classified into $10 Investors, $ to $100 investors, $100 to $M0 investors, and' investors having $10,000 or more available. The $10 Investors are mostly made up of a class of, people who are In the habit of taking a small "flyer" occasionally of not over $10, investing this amount on the theory thut,;ft may turn out with a big profit, but that in any event the loss cannot exceed $10. This class ap peals to the swindler also, In spite of the fact u,at 018 amount Invested are so small for the reason that even If the scheme Is exposed as a swindle the individual amounts are so small that it would not pay any single per son to resort to law for the recovery of nla money. True it Is that a large num- Der or such investors, if acting in concert, would become a menace, but as a rule uch Investors are too widely scattered, or to unintelligent or indifferent to make any move of this kind. In number these $10 investor lists run into the hundred thou- sands and are the main avenue for floating all schemes of the cheaper and more openly fraudulent variety. Easy Marks Classified. The "twenty-five to fifty-dollar" list Is mada UD of country investors. Methodist and Baptist ministers, country doctors and rlajia,. of teachers: also barbers, wait- era nospltal nurses and the g0neral class of people who are able In one way or other to set aside for a rainy day from $25 to $100 per year. These lists are used in slightly more pretentious schemes, of course, with sometimes a little more merit to them. The $100 to $500 Investors consist of doctors of slightly higher grade than those referred to above; also college teachers and professors, small Wall street lambs. Episcopal and Presbyterian ministers, mercantile clerks. some country merchants and other thrifty people, who annually accumulate a few hundred dollars over and above their cost of living. Such lists are used for more pre- tentlous schemes, and In addition- to the promotion of frauds they are sometimes uBe-d in perfectly sound and legitimate en- terprlees. The higher grado lists, covering $1,000 to $100,000 investors, largely explain themselves, and while they are as often used by schemers for offering their wares, yet, as they are largely made up of more sensible and cautious people, they are not so popular In the "get-rich-quick' promot- lng fraternity of the larger lists of more modest investors. While swindles are promoted to a gigan seats. I had my staff with me. a good portion of horn wers In the room during the whole of the interview. What General Lee's feelings were I do not knew. As ha was a man of much dignity, with an Impassible face, it was im possible to nay whether he felt lawardly glad that the end had finally come, or felt sad ovtr tho result und was too manly to show it. Whatever his feelings, they wers entirely concealed from my observation; but my owu feelings, which had been quite Jubilant on the receipt of his letter, were sad und depressed. I felt like anything rather than rejoicing at the downfall of a foe who had fought so long and valiantly and had sufleied so much for a cause, though that cause was, I believe, one of the worst for which a people ever fought, and one for which there was the least ex cube. I do not question, however, the sin cerity of the great mass of tho.se who were opposed to us. General Lee was dressed in full uniform which was en tirely new, and was wearing a sword of considerable value very likely the cwonl which had been presented by Ihs state of Virginia; at all ev, nts. It was an entirely :ll.Tfr"nt swiu, from the one that would ordinarily b worn In the Held. In sry rough traveling suit the uniform of a piivate with the straps of a lieutenant gen eral I must have cjntr&ted very strangely with a man so handsomely dressed, six foct high and of faultless form. . But this was not a u atter that I thought of until aft?i ward. Wo town fell into a conversation about Brewed and Bottled in Omaha by the Fred Krug Brewing Co. "Exponents o! the Fine Art ol Brewing" tic extent through circulars and by mail, yet much business is also done through the medium of newspapers, magazines, etc. Many (but not all) of the large metropolitan dailies will sell advertising space in which notorious swindles are promoted; magazines also of high grade in other ways, constantly sell space for the exploitation of mining, real estate and other schemes; the columns of country dallies and weeklies are not only open as a rule to such schemes, but for a consideration they will often publish "write ups" recommending or booming a particular enterprise. The "write-ups" generally con sist of editorial or other special articles which are prepared or indorsed by the promoters themselves, and they, of course, pass in the reader's mind as genuine and truthful. These ore, of course, frauds of the most palpable kind, s,nd the publication of such matter is entirely unfair to the readers of the paper. It is a species of cheap and Insldlqus deception which should, wherever found, be condemned In unmeasured terms. Another Illegitimate method of the promo tion of swindles is through the trade Journals, particularly in the mining indus try. Tills country is nowadays flooded with mining newspapers and journals, which, whll3 ostensibly independent and legitimate In their character and methods, are, as a matter of fact, actually owned and controlled by the same people who are engaged In the promotion of mining and other swindles on a gigantic scale. These Journals are filled with special articles and editorials which recommend and describe In glittering terms the stocks and possibil ities of this and that enterprise In mining, or oil, or real estate, or manufacturing, In which they themselves are Interested. This 1b a more modern method of exploit ing swindles than some of the others, and apparency has been most effective. Roles to Follow. In considering roseate prospectuses nnd the various other plans which are con stantly found in the public prints offering shares for sale, one set of rules of nearly universal application, which will usually go a long way toward the protection of the Investor, is this: Always question any proposition offering stocks or bonds for sale whore such offers are made directly by the company itself, and not through a banking house or other reputable concern. If no bankers are handling the sale of se curities, it is usunlly the case that thero is something "shndy" about the scheme. There are. exceptions, of course, but not many. If the securities are offered by Lee al Appomattox old army times. He remarked that he re membered me very well in the old army, nnd I told him that as a matter of course I remembered him perfectly, but, from the difference In our rank and years (thery being about sixteen years' difference in our ages), I had thought It very likely that 1 had n"t attracted his attention sufficiently to be remembered by him after such a long Interval. Our conversation grew so pleas ant that I almost forgot the object of ottr meeting After the conversation had run on In this style for some time, General Lee called my attention to the object of our meeting, and said that he had asked for this Interview for the purpose of getting from me the terms I proposed to give Ids army. I said that I meant merely that Us army should lay down their arms, not to take thorn up again during the continuance of the war unlees duly and properly ex changed. Ho said that he had so und'-r-stood my letter. Then ws gradually fell off again Into conversation about matters for eign to the subject which had brought us together. This continued for some littlo time, when General Lee again Interrupted the course of the conversation by suggest ing that the terms I proposed -to gh e his army ought to be written out. I culled to General Parker, secretary on my staff, for writing materials, and commenced writing out the following terms: APPOMATTOX C. II., Va . April 9, lbi. Gem-rat R. E. Lt-e, Commanding C. S. A. General: la accordauco wiih the substance of my lelter to you t,t the Mil lnt., I propose to n-ct-ive the sutrt-mlt-r of iho Aiiuy of NurtUvrn Ylrsuua va the fuiU. s" -p -j u in ssswwiiMs.iiMI mmwm m sn..wmsii umt i n mum mm rmiMnmmmnmn C. Well be a bankers and brokers, the next step should be to ascertain the standing, reputation and financial strength of the bankers or brokers themselves. Wall street and other financial centers of the country have their full share of irresponsible concerns of this class. The apparently plausible statement Is frequently made that money Is saved to the company and Its stockholders by avoiding the employment of a banker or agent to market securities.' But this is not bo in ninety-nine cases out of a hundred. If a proposition has merit the promoters always find it much more economical to go to a concern which has specialized and de veloped the proper machinery for the floating of securities, rather than under take to do It themselves. The banker not only has the clltntelo, but he lias the or ganization for handling the business ef fectively and economically, and, of course, in many cases his prestige and general reputation have much to do with making the flotation a success. For all this he frequently charges a good round commis sion; sometimes too much, perhnps, but not so often as is generally supposed. In deed, it would in most cases upon investi gation prove to be a fact that without the banking medium the flotation would cost far more than the usual amount repre sented y an apparently heavy discount or commission. It Is a part of the busi ness of the banker to float securities, Just as It is a part of the business of the trust company to pay coupons. People some times think It strange that a large cor poration, with an oftlce in New York City, should pay a commission to a trust com pany to cash the coupons on its own bonds each fix months, when It apparently might do tills work Itself. But the an swer to this is that the trust company maintains the machinery and organization for paying the coupons of not merely one, but of perhaps 100 companies, and, there fore, can afford to do such work at amlnl mum cost and for far less than the cor poration itself could possibly do It. It will be seen, after reading the fore going chapter, that the simplest and quick est way of avoiding the "get-rich-qulck" scheme, no matter where or how pre sented or however roseate and plausible Its promises and claims may be, is to never entertain any proposition which In not offered through u banger or other agent, 'and then, having adopted this rule, to go one step further; never have dealings with a banker, broker or financial agent until you have Investigated und are satisfied as to his character, standing and general rep utation. lng terms, towlt: Rolls of all the officers and men to be made In duplicate. Una copy to be given to an ofllcer uestgnuleu by me, tho oilier to bo retained by audi ulhcer or o dicers as you may designate. The ollicers to give iheir Individual paroles not to take up aims against the govtin uient of the I nltcd Slates until properly exchanged, and each company or ivgi rncuuil command"! sign a line, parole ten the uien of their commands. The arms, artillery mid public prop,;itly to be puikeu bud stacked and turned over to the ottlcer appointed by me to receive them. Tins will not embrace the side arms of lh ottHLTS nor their private horses or bag gage. This done, each officer ot man will be ulowed to return to their homes, not to bo dlsluibed by I'nited Slules authority so long as they observe their paroles and the laws In force where they may reside. Very respectfully, V. 6. GHANT. Lieutenant General. When I put my pen to the paper I did not know the Hist word that I should make use of in writing the terms. I only knew what was in my mind, and I wished to express It clearly, so that there could be no mistaking It. As I wrote on the tliougnt occurred to me that the officers had their own private horses and effects, wldch were Important to them, but of no value to us; also tr.at It would be an unnecessary humiliation to call upon them to deliver their sido arms. No conversation, not one word, passed between General Lee and myself, either about private property, side-arms or kin dred subjects. He sppeared to have uo objections to the terms first proposed; or If he bad a point to make against them he wished to wait until they wers In writ ing tu make iu When La read ovvr that C Remember it? Remember the luscious Fall pippins, the "roasted potatoes" and the cool, gamey, frostrseasoned turnips you used to tuck away just to "fill in" and whet up an appetite for dinner ? C And then on Thanksgiving morning when you peeped into the kitchen and saw those yellow, mellow pumpkin pies and the alluring mince-meat and the big turkey Oh ! the big eyes, and the hungry mouth ! Remember that appetite ? Ask the boy! boy again, with a boy's appetite. . w r " fee-' will make your Thanksgiving dinner "fit for a King" and your Thanksgiving appetite fit for a boy ! C. Luxus supplies that palate refreshing, taste-tingling something "not on the bill" which invites an old-fashioned "fill" of good things. C Luxus is unique among beers light and sparkling with a piquant snap that makes it "the most exquisite refinement of the brewer's art." It is the crowning gift of the Season's bounty. ' C For an old-fashioned Thanksgiving zest order a case or two of Luxus sent home today, and have it ready. Your dealer has it or we will supply you direct. Last Big Land in Oklahoma Over a halt million acres of agricultural lands will be opened to settlement this fall in Southwwt Oklahoma. ' The quarter Sections will be sold to the histiest bidders. . Minimum price, $5 per acre, which is a very low figure considering the richness of the soil In the por tion of the New State. Purchasers must be qualified homesteaders and comply with homestead law as to residence, cultivation and improvement. . Term Are 14sabl Purhai,e.r has the privilege of paying for his farm in five enqal annual pay ments. The lands are moBtly rolling prairies, veil watered iy living streams. Corn, wheat, oats;, rye, alfalfa, cottoa aad all kinds of garden products and fruits of almost every variety can be grown, in abundance. This opening will be the best opportunity to get a farm at your own price ever offered the homeseeker. You cannot afford to miss it. You should loo no time in getting on the ground either to select a business location or to familiarize yourself with the lands on which you l:ited to tod. The rules and Regulations of the Interior IV.partment at Washington, D. C, for opening of these land are as follows: Sealed bids shall be received not before 9 a. m. December 3, or after 4 p. m. December 8, 1906, at Law ton, Oklahoma, Land Office, where iuds will be opened beginning December 10, 1900. Prospective bidders should make application for proper form on which to submit bids and for full information as to conditions regarding this land opening to "Itegiater and Receiver," United States Land Office, Lawton, Oklahoma, to whom all bids should be addressed when proper form has been received and all conditions have been com plied with. Cheap rates first and third Tuesdays of each month via Rock Island-Frisco Lines, only direct route to the Big Land Opening. Write for further information to JOHN' SNBASTIAX, Passenger Traffic Manager, La Salle Station. Chicago; or Frlttco ISuilding, St. Louis. Rock Island-Frisco Lines part of the terms about side-arms, horses and private property of the oftleers, he remarked with some feeling, I thought that this would have a happy effect upon his army. Then, after a little fur ther conversation, General I.ee remarked to me again that their army was organ ized a little different from the army of the Vnlted States Istlll maintaining by implication that we were two countries) that In their army the cavalrymen awl artillerists owned their own hordes; and he ask'-d if he was to understand that the men who so owned their horses were to bo permitted te retain them. I told him that a the terms were written they would not that only the omt-crs were permitted to take their private property. He then, after reading over the terms a second time, remarked that that was clear. I then said to him that I thought this would be about the last battle of the war I sincerely hoped so; and I said further I took It that most of the men In the ranks wei small farmers. TUo whole "The Beer You Like" Op RICH LANDS FOR FARMERS country had been so raided by the two armies that it was doubtful whether they would be able to put In a crop to carry themselves and their families through the next winter without tho aid of the horjes they were then riding. The United States did not want them, and I would, there fore, instruct the officers I left behind to receive the paroles of his . tops to let every man of the confederate army who claimed to own a horse or mule take the animal to his home. Lee remarked ayala that this would have a happy effect, llu then sat down and wrote out the follow lng letter: Headquarters Army of Northern Vir ginlo, April 'J, 1MJ5 iierni; I ierelve.1 your letter of this dale eontalnins; 1 1 1 -terms of surrender ot the army of north ern Virginia as proposed by you. As they are substantially the same as those ex pressed In your letter of the fcth Inst., the sre a. epted. I will proceed to deslirnate the proper officers to carry the stipulation into effect. K. K. LICK, General, Lieutenant General V. K. Grant. While duplicates of the two letters wers being made, tho Union generals present enlng II were severally , presented to General Lea. The much talked of surrendering of l.ee's sword and my handing It back tills and much more that has been said about It lh the purest romance. Ths word "sword" or "side-arms" was not mentioned by either of us until I wrote It in the termsN There was no premedita tion, and it did not occur to me until ths moment I wrote it down. If I hd hap pened to omit It, and General I' a had called my attention to It, I should havs put It In the terms, precisely as I acceded to the provision about the soldiers retain ing their horses. General Ie, after all was completed and befur.. t.iklng his leave, remarked that his army was in a very bad condition for want of food and that they were without forage; that his men had been living for several days on parched corn exclusively, and that he would have to ask me for rations and forage, I told him, "Certainly," and asked for how many men he wanted rations. Ills Continued on Pug Ten.)