The Guarantee Co. Methods.
The Guarantee Company system is a new phase of "promotion" that has come to the surface during the past two years, but which, through police and legal investigation, has about reached its limit.
A strictly legitimate guarantee company is modeled much after the Fidelity and Insurance Bond corporations. They issue secured bonds for all necessary business purposes, and are reputable and responsible. About 1903 a promotion gang in Chicago stole the name "Guarantee," and half a dozen fake guarantee companies were started.
In all the phraseology of tricky finance there is no word so overworked as "guarantee." And this means that experience has proved it to be highly effective in the hooking of "suckers." Depend upon it, that no word or phrase achieves marked popularity in the literature of the "small investments" appeal which has not demonstrated its rare effectiveness as an agency of deception; the phrase that does not draw the money is promptly thrown out by these shrewd fishers of men, who check up their returns as accurately and systematically as the most legitimate mail order business.
If the small investors of this country could reach anything like a fair knowledge of just how much and how little there is in each of these appealing "catch words" in each phrase, the plausibility of which has been scientifically tested, they would be well on the way toward being able to protect themselves against the cleverest and most convincing of these appeals. Perhaps the writer can do the public more service in analyzing a few of these "star phrases" than by any amount of denunciation of the wildcat schemes and schemers which deserve as harsh a characterization as any man can frame.
RURAL RESIDENTS CANNOT BE TOO PROMPT IN TYING DOWN THEIR PROPERTY.
But, to return to the word "guarantee," which has attained first rank in the terminology of the investment trickster, there is scarcely a circular, folder or advertisement, or any other piece of literature put out by the pot hunters of small savings which does not display the word "guarantee" in big type, and with reiterated emphasis. If this institution chances to be of a financial character itself, rather than a mining, oil or industrial concern, the word "guarantee," or its twin, "security," will be found incorporated in the name chosen for the company.
Get a list of 100 wildcat investment schemes which are dead beyond hope of resurrection, and it is a safe prediction that one-half the names will contain the word "guarantee" or "security." These two words are as common to the eye in the graveyard of fake investment schemes as is that of Smith, Jones or Brown in any country cemetery; they adorn practically every other tombstone in the last resting place of defunct financial frauds.
The question of the value of either of these words in the title of a corporation or concern is disposed of by the statement that there is no legal restriction in the choice of names of companies; the organizers are as free to name their flimsy creation "The Rock of Gibraltar Guarantee Security Company" as the parent is to saddle a weak, under-sized male child with the name of Samson. And, as a rule, there is as much license or propriety in giving the name of the mighty enemy of the Philistines to a stunted boy as there is for applying the name "guarantee" or "security" to a company which is brought into being for the purpose of going out after the savings of the "small investor."
Why? Because the companies which are really warranted in making either of these words a part of their corporate name do not have to go into the highways and hedges and beat the bushes for their business; it comes to them by force of their "financial strength." They have no need to drum it up.