OTHER FRAUDS Fraudulent Bankruptcies.—The Federal bankruptcy law says that if liabilities are so much greater than assets that a debtor cannot begin to pay his debts, he may "go into bankruptcy." Trustees are then appointed, to whom the petitioner must turn over all assets. The trustees divide available assets among cred itors, and the bankrupt is released. He is no longer in debt. Creditors can make no further demands upon him, regardless of how much money he may make thereafter. Fake statements made in order to acquire merchandise on credit or to conceal tangible merchandise violate the criminal law. Thus a dishonest dealer in silks, furs or diamonds can get stock on credit from whole salers, conceal or sell it to a "fence" (one handling stolen goods), announce himself bankrupt, and pay wholesalers only a percentage of the value of the merchandise illegally disposed of.
Most major swindles listed under finance and real estate are managed more or less by mail. Other forms are conducted by mail entirely, but in scheme and method they, too, come under the heads already listed. Selling "gold mine" and "oil" stock, and Utopian real estate, is often exclusively managed through the mails, or by telephone. The post office issues fraud orders against swindlers who try to keep within the "technical truth" in advertisements. When they advertise in a woman's magazine, "1 o yd. of silk for shirtwaists at 1 o cents" and send 10 yd. of silk thread, they are trading on the fact that "silk" generally means cloth, not thread.
frequently advertisements, with every mark of honest business, describing work women can "do at home in spare time." The initial payment is perhaps not over 1 o cents. But if the plan includes the purchase of materials for making embroidery or lace, or any other needle-work, she who endeavours to eke out an income in this way finds that she must invest many times and that her work never satisfies the company.
The mails are indispensable in the sale of fake patent medicines. Petty grafters advertise profusely in cheap fiction magazines, farm journals and country papers, "find ing their most fertile field in the delusion that because it is in print it must be so." Quack advertisements deliberately suggest that the reader suffers from a variety of diseases which a particular lotion or pill will cure.
business in America is old, but it is still very active. The modern American Shylock is suave, has a corps of legal counsel, auditors, expert advisers and high pressure sales men to help him get cash for his "working capital." It is claimed that ioo,000 workers in i,000 railroad centres pay from 24o to i,000% to unscrupulous lenders who buy wages at heavy dis counts. Over 35o offices exist, each handling from 400 to i,000 accounts. Employees frequently need cash when wages are paid biweekly or monthly. Even when wages are paid weekly, loan sharks keep up salary-buying pretences as long as there is the possibility of a salary to sell. Rural and industrial areas are full of small, secret offices for carrying on this usurious business. The Uniform Small Loan law, now in effect, wholly or partly, in 21 of the States has, to a certain extent, mitigated this evil. It authorizes any person to obtain a State licence, to make loans to $30o at not more than
a month, computed on unpaid balances. The law strictly regulates the conduct of the lender's business ; it prohibits, and provides suitable punishment for loans by unlicensed lenders or loans exceeding the legal rate.
BIBLIOGRAPHY.—See articles by J. K. Barnes in World's Work (Jan. Bibliography.—See articles by J. K. Barnes in World's Work (Jan. and Feb. 1923) ; H. J. Kenner, "The Blue Sky Promoter," in Credit Monthly (Nov. 1924) ; Frederick, The Book of Business Standards (1925) ; E. H. H. Simmons, "Security Frauds," Independent (Dec. 25, 1925) ; Ripley, Main Street and Wall Street (Boston, 1927) ; and Rukeyser, The Common Sense of Money and Investment (1926) ; Keyes Winter, "Parasites of Finance," in North American Review (Nov. 1927) ; and "Fools and Their Money" in Harper's (Aug. 1927) ; H. J. Kenner, "The Fight on Stock Swindlers," reprint No. 1962 of the Annals of the American Academy of Political and Social Science.
(J. C. A.)
