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in that way. Furthermore there hasn't been any favoritism about refusing the applications that have been turned down. Kansas corporations have been turned down just as quickly and just as coldly as foreign corporations.

For instance, a railroad, which, if constructed, would very likely be a good paying proposition, has been projected through a part of the state which needs just such a line. Farmers and business men in several towns have given considerate money toward it in the way of bonuses and some work has been done. Application was made for permission to sell stock and the correspondence in the matter, representing inquiries into every phase of the company from the legality of its charter to the birth records of the promoters, makes a file fully two inches thick. The application was refused, first on the grounds that the company had no assets, and second, because the character of the men promoting it was not deemed by the bank commissioner to constitute a sufficient guarantee of the proper disposition of the proceeds from stock sold. One of the promoters, for instance, was found to have "jumped" a board bill in a distant city, and later to have become entangled with the postoffice department so seriously as to have been forced to take an involuntary "rest cure" for a year or so.

The file of correspondence in that company's case is a good example of the manner in which the "Blue Sky" Law is applied.

"We don't take any man's word for anything," is the keynote of it, and while it may appear that the thing is carried to the extreme, Mr. Dolley estimates that the few thousand dollars the bureau has cost the state has saved the investors already no less than a million and a half dollars. The first thing that was done when the company applied for a certificate was to call for a copy of its charter, by-laws, balance sheet, promotion literature, blue prints, and references for each of the officers of the company. Every promise, estimate or possibility in the literature was noted and each man given as reference was written to. At the same time, through confidential channels, the men given as references were investigated, and through various other chan

nels the record of each man in the company was obtained. Probably no fewer than a thousand different sources of information were tapped, the net result of which was that the certificate was refused. Taken all together, these inquiries have extended into every state in the Union, Canada, Mexico, Central and South America, Europe, Japan, the Philippines and South Africa. Generally speaking, banks are the best sources of information, because the banker has a lively interest in protecting his depositors against fraud. The state bank examiners 'act as a sort of detective force, also, picking up here and there stray bits of information which often prove quite valuable.

One of the numerous land development companies was found to have no other asset than a cancelled concession in Nicaragua to a tract of land which, even if the concession were valid, could be bought from the government at twenty cents an acre. The company had stocked this at five hundred dollars an acre. The plan, of course, simply was to sell all the stock and let the stockholders fight it out with the government of Nicaragua and get, if they won, land which was worth just one twenty-five hundredth part of what they paid for it.

A majority of the applications made to the bank tommissioner have come from mining and oil companies. These present the most difficult problem under the law, because only an expert is qualified to pass judgment upon an oil or mining property—and if the property is in an oil or mineral district any man's guess is as good as an expert's opinion on an undeveloped property. It is the miner's axiom that "Gold is where you find it." So is oil. About the best that can be done with these companies is, when the property is in a recognized oil or mineral district, to base the action to be taken upon the character of the men who compose the directorate. Then Mr. Dolley plays safe by refusing certificates to nearly all of them. In mining and oil stocks the safest rule to go by is that nobody is giving anything away. If a group of men have a gold mine with reasonably good prospects—and bear in mind that the only mine with a reasonably good prospect is one that already is "in ore"—there is no need for

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them to sell stock—in other words to give away part of their mine for less than it is worth. The same holds good, in a general way, with oil companies.

One of the "mining" companies, for which a certificate recently was applied, was found to consist of the keeper of a desert water-tank grocery store, a saloonkeeper, a gambler, an employee of a livery stable, the porter of the saloon, and the clerk in the grocery store. The mine was a ten-foot hole in country rock that wouldn't assay a dollar to a million tons.

Another company, composed of a bunch of gamblers, had located half a dozen claims on state school land already under lease, to which the company couldn't get the shadow of a title. The land had ore, all right, but the only thing the stockholders could get out of it would be the right to sue the state for possession.

With manufacturing, plantation or irrigation companies, it is a simple matter almost at once to decide the merits of the securities offered for sale. One Arizona company, for instance, offered land "close to the Roosevelt Dam." It was close, too, but it couldn't have been watered for a million dollars an acre. Just the opposite was a Gulf Coast townsite proposition where it would have required a deep sea diver to set the surveyor's stakes.

Another favorite form of swindle is the life insurance agency. The investor believes he is buying stock in the company itself, but as a matter of fact he simply is buying stock in a company which has a contract to write insurance for some established company—a mighty doubtful asset at its best. For instance, there was a certain company in Detroit whose only asset was a contract to write insurance for a certain percentage. This

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How's This For Painstaking Care? The correspondence in the investigation of one company made a file two and a quarter inches thick.

contract was then sub-contracted to an agency company. Stock on both companies was sold to investors and it is estimated by Mr. Dolley that not less than $100,000 of the two stocks was sold in Kansas, some of which was sold even after the life insurance company had learned of the fraud and cancelled the contract, which was the only asset of both companies.

Wireless telegraph companies also have offered a big field for fraud in the last few years.

One of them disposed of an enormous quantity of stock in Kansas before postoffice inspectors raided the company's office and sent several of its officers to prison. In Topeka, the state capital, alone, Mr. Dolley found stock for which $80,000 had been paid, and found only part of what had been sold. Probably there was at least $20,000 more invested in the company in that one city, and not one cent of it ever will come back. Widows, elderly maiden ladies who hoped to lay aside enough to afford them a competence when they should be no longer able td work; young men investing for the same reason, and business men who wouldn't put a cent into a legitimate manufacturing enterprise in their home town, all were caught.

Such instances might be multiplied to an indefinite length, but they may be taken fairly to illustrate what no longer is going on in Kansas, but which is going on in every other state. People are being swindled right and left, without the slightest compunction on the part of the swindlers or any fear of the law. The lawmakers are too busy protecting their constituents against the "rapacity" of the railroads and other forms of legitimate industry into whose securities the people might put their savings if they were not frightened away from them by the lawmaker's cry of "wolf."

The value of a law such as the Kansas "Blue Sky" law lies, of course, in its enforcement. Enforced partially it is nearly as bad as no law at all, but enforced impartially, and by giving the investor the benefit of the doubt, it is bound to save—and is saving—the people of Kansas, millions of dollars. And Kansas is fortunate in having such a law and in having it impartially enforced.

But Kansas is not alone in profiting by the law. The little corner of Mr. Dolley's office, set aside for the one clerk who was expected to handle all of the routine work pertaining to the enforcement of the law, has grown into a national institution which might well be called a national bureau for giving free advice to investors. The one clerk has multiplied into two clerks and three stenographers who are kept busy six days in the week answering inquiries that come from every state in the union as to the advisability of purchasing stock or bonds in this or that company, or whether investments already made are considered safe. In one week, by actual count, there were 842 letters of that kind received from other states.

In addition to this heavy correspondence, every letter of which is answered with all the information considered necessary, come hundreds of letters thanking Mr. Dolley for warnings already extended.

"God bless you for your work, you have saved me from ruin," is not an uncommon statement in them. Some of them are pitiful. "I have invested every cent I had in Blue Sky Consolidated. Is there any way I can recover it?" is the question contained in hundreds of the letters. The majority of these letters are from women, whose writing and stationery indicate a station in life where their little savings have been a fortune to them. After reading half a dozen of them, one rather wishes the law provided that any male, able-bodied citizen might take an axe and send a few of the Blue Sky peddlers in the opposite direction from the location of their stock in trade.

In this admirable plan for the conservation of the poor man's money, there is

one defect, and it will exist either until every state in the union has enacted a law similar to the Kansas statute, or until the government requires the same conditions of the investment companies that is required in the Kansas statute before permitting them the use of the mails and express companies. As the situation now is there is nothing to prohibit the fake investment companies from advertising their insecure securities and transacting a large business through the mails before the postoffice inspectors can ascertain the status of the company and obtain evidence which will warrant the arrest of the swindlers for using the mails to defraud.

The work of the postoffice department has been greatly facilitated, however, by co-operation with the Kansas banking department, whereby information of fake stock and bond companies regularly is exchanged. The information furnished by the Kansas banking department has resulted in the arrest of a number of fake promoters and the driving of several others out of business. The difficulties under which the postoffice department works are so great, however, that, as shown in the annual report of the Department of Justice, only ten cases of that kind were brought before the courts in the last fiscal year, while there must be anywhere from a thousand to five thousand companies whose stock is for sale but is worthless at any price.

So far as the states are concerned, it is probable that within another two years a majority of them will have laws similar to the Kansas statute. Every day's mail brings to Mr. Dolley letters from members of the legislatures of other states asking for copies of the Kansas law with a view to drafting a similar measure. Every state in the union is represented in these letters, and in one case, Missouri, ten members of the legislature were represented. Five requests have come from other countries.

"I never dreamed of the extent of the swindling operations carried on by dealers in stocks and bonds until I heard of your Kansas law and made an investigation here at home," an Illinois legislator wrote. "My investigation was neither extensive nor deep, yet it leads me to believe that three out of five persons in

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the ordinary walks of life who have the saving habit have been swindled at some time or other in the purchase of worthless stocks. If the conditions I found in my own neighborhood obtain throughout Illinois, the swindlers must have obtained millions of dollars."

Only a few days ago four members of the firm of Burr Brothers, one of the most successful promoters of worthless stock in the country, pleaded guilty in the United States court in New York to a charge of using the mails to defraud, and were sentenced to one year each in the penitentiary on Blackwell's Island. Shelton and Eugene Burr, president and secretary-treasurer of this company, were born and reared in Leavenworth, Kas. Their offices in New York occupied an entire floor of the Flatiron Building and postal inspectors who raided the offices and arrested the members of the company November 20, 1910. estimated that they had taken in somewhere between forty and fifty million dollars.

Mr. Dolley estimated at the time the arrests were made that something like $300,000 of that amount had been received from Kansans. Later, when it was learned that the Burrs, through their wide acquaintance in Leavenworth, had sold large quantities of stock there, the estimate was raised to one-half million dollars. Out of their operations, the four partners in the Burr concern are estimated to have made fifteen million dollars, and they had just entered upon an advertising campaign which would have cost one million dollars when the postal authorities arrested them.

After the raid, Postmaster-General Hitchcock, who was in personal charge of the raiders, gave out an official memorandum which showed that when the Burrs ran short of stock in companies already organized, they organized new companies to keep up the golden stream which poured in on them. Among the stocks which were entirely sold out and of which the postmaster-general said, "the greater portion of the money evidently has gone into the hands of Burr

Brothers," were the Kern-We? tern Oil Company, the Coalinga Aladdin Oil Company and the People's Associated Oil Company. A list of seventeen companies, all of which had gone out of existence, also was given, in all of which the Burrs sold stock. According to the postmastergeneral, not one of the twenty-eight companies, for which the Burrs sold stock "has paid a dividend and most of them are failures."

A postal inspector, who was in charge of the offices after the raid said:

"Burr Brothers played fast and loose with their clients and the most pitiful feature is the manner in which widows have been fleeced on absolutely worthless stocks. Mrs. Laura E. Lawrence of Philadelphia had invested $4,000, the amount of life insurance she had received at her husband's death, in worthless mining stock. Mrs. David Crabb, a poor widow with a large family, had invested all her savings, $2,500, in absolutely worthless oil stock. The first day's mail after the raid brought in $650 in cash and $20,000 in money orders, in addition to which there was a large bunch of telegrams, making reservations of stock, from deluded victims who were afraid they would lose the chance to be swindled out of their money."

Wisconsin is the only state which has a law the effect of which is designed to protect investors, but it has failed in attempts to enforce it, in the work it was designed to do. But the Wisconsin law will be amended or repealed and a new law enacted, for a number of legislators in that state have asked for copies of the Kansas law.

So, the poor widows of Kansas, who gave their little all in exchange for worthless sheets of gaudy paper have not lost in vain. They have been the instruments for putting on the Kansas statutes a law which has saved millions of dollars for those who could not afford to lose it, and for awakening the legislators in other states to one of the crudest systems of robbery that has ever flourished anywhere in the world.

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Pacific Coast they are developing the fascinating idea of a broad highway, in sight of the Pacific, from the southern tip of the South American continent to the snows of the Arctic Circle. It is not beyond the pale of probability that some day this highway may not only be completed, but may cross to Asia on a new continent arising to link the old and the new hemispheres, where Bering Sea's shallow waters now ebb and flow, and so continue on through Siberia, and turbulent Cathay until it terminates in sight of the Atlantic.

Rut it is not this highway that interests us here; it is the possibility that the fires of earth now disturbing southwestern Alaska and the 1,000-mile chain of Aleutian Islands, will combine with other causes to raise the floor of Bering Sea until it emerges high and dry, joining the Americas with Asia, the Occident with the Orient, man's newest conquest with the cradle of his race.

Nor is this possibility so remote, for the western reaches of Alaska with the

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Aleutian dots of land form the earth's most agitated volcanic region. Half a hundred volcanoes have been counted west of Cook Inlet, some of them smoking and quavering, and throwing ash and lava far and wide, while the famous Bogoslof Islands, just off the route of steamship travel into Bering Sea, rise high in the air and sink again into the sea with an attendant demonstration of such grandeur and awe-inspiring magnitude as eye witnesses declare will be their most vivid remembrance until their dying day.

Even in the gulf of Alaska the restless forces of nature are extremely active, for within the last two or three years submarine mountains have suddenly arisen in the depths of the sea, snapping the government's Alaska cable in twain with such a jerk that the ends, on one occasion, were separated by more than a mile. Repeatedly has the copper strand been separated in this way, and soundings have shown the earth to have arisen much nearer the surface of the gulf than it was ever known to be before in that particular locality.

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