"Young man," said Boston's reform District Attorney, "if King was selling corner lots in heaven and advertising them in the newspapers, I couldn't stop him, because I haven't anybody to send up there and prove that they are not there."
King wasn't selling corner lots in heaven, but he was selling stock in a Texas company that was the next thing to it, so far as tangibility is concerned. It was only when he actually took from investors money sent to him to buy real stocks, and pocketed it, that he was put in jail.
LAWS TO PROTECT INVESTORS
A plan for the protection of the investor by statute is embodied in a model law drafted by the American Mining Congress of Denver, and recommended for general passage:
AN ACT.
To Prohibit the Making or Publishing of False or Exaggerated
Statements or Publications of or Concerning the Affairs,
Pecuniary Condition or Property of Any Corporation, Joint Stock
Association, Co-partnership or Individual, Which Said Statements
or Publications Are Intended to Give, or Shall Have a Tendency to
Give, a Less or Greater Apparent Value to the Shares, Bonds or
Property, or Any Part Thereof of Said Corporation, Joint Stock
Association, Co-partnership or Individual, Than the Said Shares,
Bonds or Property Shall Really and in Fact Possess, and Providing
a Penalty Therefor.
Section 1. Any person who knowingly makes or publishes in any way whatever, or permits to be so made or published, any book, prospectus, notice, report, statement, exhibit or other publication of or concerning the affairs, financial condition or property of any corporation, Joint-stock association, co-partnership or individual, which said book, prospectus, notice, report, statement, exhibit or other publication, shall contain any statement which is false or wilfully exaggerated or which is intended to give or which shall have a tendency to give, a less or greater apparent value to the shares, bonds or property of said corporation, joint-stock association, co-partnership or individual, or any part of said shares, bonds or property, than said shares, bonds or property or any part thereof, shall really and in fact possess, shall be deemed guilty of a felony, and upon conviction thereof shall be imprisoned for not more than ten years or fined not more than ten thousand dollars, or shall suffer both said fine and imprisonment.
This law has been enacted in six states and a campaign for its general enactment is under way. But let not the credulous investor suppose that even such a law would guarantee him against loss. The Secretary of the American Mining Congress, Mr. James F. Callbreath, offers the following comment:
CAMPAIGN OF THE AMERICAN MINING CONGRESS
"I do not believe that any one law can effect protection to mining investors, nor that the protection afforded through the Post Office Department forbidding the use of mails for fraudulent advertising matter can fully cover that ground. The greater part of mining frauds are perpetrated without the use of the mails.