United Wireless Company's Leader in Stock-Selling Campaign in West Used Methods of Other Promoters.
ADVERTISES FALSEHOOD TO HELP SELL SHARES
In Announcement in Press Local Man Said Corporation Was Consolidation of Marconi and De Forest Systems.
THE amazing success in the West of the United Wireless stock-selling campaign, whose frauds and methods were exposed yesterday afternoon in The Times, is due chiefly to George H. Parker, of Seattle, fiscal agent for the territory on this side of the Mississippi River. As United Wireless pro-consul for the vast region under his control, Parker has pressed his campaign with Napoleonic vigor, in the state of Washington alone, as told yesterday, disposing of hundreds of thousands of dollars of stock, intrinsically worth less than $2, for $20 to $40 a share.
While Parker's campaign has been spectacular in its aggressiveness, his methods have not differed from those of the other United Wireless promoters, all of whom display an almost uncanny genius for press-agenting. All the time the United Wireless made the absolutely fake announcement that it had acquired control of the Marconi companies, an announcement it now admits was false, Parker inserted in the Seattle press an advertisement that, like all the other United Wireless statements on this subject, was false, misleading and utterly without foundation.
What Parker Advertised.
Above his own signature, Parker advertised:
"The United Wireless Telegraph Company is a consolidation of the American DeForest, English and American Marconi and other companies, and controls all patents for long distance wireless telegraphy. They also own a controlling interest in the Canadian Marconi.
"The basis for transferring American DeForest and Marconi stocks to the United Wireless Telegraph Company has been taken up by our attorneys and finally perfected. Those buying of brokers at cut rate prices will lose on their transfer, no matter what price the stock was purchased at. We are now ready to take subscriptions for the United Wireless Telegraph Company's stocks.
"For further information call at the office of the United Wireless Telegraph Company, 202 Arcade Building. Agents wanted.
"George H. Parker, manager."
In the foregoing advertisement there are no less than three unqualified and brazen lies. United Wireless was not and is not in control of the English and American Marconi companies. It did not and does not control all patents for long distance wireless telegraphy. Its lawyers had not perfected a basis for the transfer of Marconi stocks to United Wireless.
Parker's Letters Big Feature.
Parker has not confined his activity to advertising in the newspapers. His circular letters have been a big feature of the stock-selling campaign that put him among Seattle's millionaires. These have been masterpieces of extravagance of statement of frenzied visions of the countless millions to be earned by his company. United Wireless to this day never has paid a cent in dividends and from all that can be learned there is no prospect of a dividend in the future, either near or remote. Yet Parker in a circular letter dated October 21, 1907, made the following statement over his own signature:
"Our president while here the first of the month, guaranteed that there would be a dividend declared in 1908, and paid. He also offered to deposit $10,000 in any bank in Seattle, the other party to deposit $10,000. If our monthly income during 1908 was not $50,000 per month, second party to take the $20,000; if it was, Mr. Wilson to take it. * * * Sign the enclosed application, mail same to me for whatever stock you wish, and you will take care of you in the future, even better than the investment in Bell Telephone is taking care of those who bought stock in that company and have held on to it."
Thus Parker in 1907 sent out the absolutely unfounded report that the stock would pay a dividend in 1908. It did not pay a dividend in 1908. It never has paid one, but Parker undoubtedly sold thousands of dollars' worth of stock on this one circular alone.
UNITED WIRELESS' CAREER IN STATE
Sixteen stations have been established in Washington by United Wireless as an adjunct to its stock-jobbing crusade in this state. Seattle has two of the stations, one at the University and another in the Hotel Perry. The fourteen others are located one each at Bellingham, Friday Harbor, Port Townsend, Everett, Tacoma, Chehalis, Olympia, Kalama, Aberdeen, Westport, Walla Walla, Spokane, Wenatchee and North Yakima.
The amount of money expended in the equipment and operation of the sixteen stations is a mere fraction of the sum realized by the United Wireless promoters from their sale of stock in Washington. Definite, itemized statements in regard to the affairs of the various stations are not obtainable from the representatives of the company. Any request for information results with generalities and platitudes that can be described only by the words, "hot air."
In Tacoma, where there are 150 to 200 stockholders, the station is situated on the top of the Tacoma Hotel. Among the stockholders in that city is George M. Shreeder, former president of the Tacoma Baseball Club. A broker who bandied some of the stock and placed ten shares for Shreeder declared at the time that United Wireless could be had all over the country at prices as low as $17 a share. When this statement was made, the company was selling its stock in Tacoma for $40 a share. The broker in question asserts that he had trouble with the Shreeder shares because of the corporation's refusal to transfer the stock on its books.
Other Tacomans who bought stock are L. H. Fisher, a shoeman, and C. A. Felmley, master mechanic of the Tacoma smelter, the latter of whom signed up for $1,000 worth.
Some Spokaneites Still Hope.
The Spokane station is located on the roof of the Carlyle Hotel. As is the case in Tacoma, the apparatus represents the company's only investment which does not represent more than $250 at the outside. The station so far has not been much of a success. Of those who own the more than 50,000 shares sold in Spokane, some have declared publicly their belief that the United Wireless is a fraud, while others hope for the best. Spokaneites who have investigated the affairs of the corporation do not consider the stock a good investment. As in Tacoma, difficulty has been experienced in having stock which the holders sold transferred on the books of the company.
The United Wireless station in Bellingham has been in operation since the summer of 1908, but the volume of business is small. Prior to the installation of the station, agents of the company sold stock in the city, but the names of the purchasers have not been ascertained, as it is only by an effort of the memory, according to the Bellingham correspondent, that anyone can recall the existence of the station. Hugh Eldridge, the Bellingham postmaster, holds stock in the DeForest company, the parent organization, but has refused to exchange these shares for United Wireless stock on the latter's conditions. The feeling is general in that city that the station is used merely as a blind for stock-jobbing operations.
Walla Walla Gave Site.
The United Wireless had a piece of unusual luck in Walla Walla. The city council donated ground for its use in the city park, and on this site the company has erected a station that represents only a small outlay of cash. W. A. Seale, the manager, asserts that messages have been sent by this station. Seale is the authority for the statement that Walla Walla County residents hold $50,000 to $60,000 of United Wireless stock. Zeno K. Straight is the principal holder of stock in the city, so far as can be learned, but will not tell just how many shares he purchased. Several of his relatives also bought considerable blocks. Straight has been made assistant local manager of the station. Well-known citizens of Walla Walla, when asked if they had invested in the stock made emphatic answers in the negative.
The two stations in the Grays Harbor country--the one at Westport, and the other at Aberdeen--are said to have worked successfully in sending and receiving messages, but are not patronized very extensively by the commercial interests of that section, though the local mills have a contract with the company to cover shipping. The station building in Westport represents an investment of probably $400 and the apparatus $1,500. The Aberdeen building cost about $300 and the local agent alleges that the apparatus, which it houses, cost about $5,000. It is estimated, however, that $2,000 would cover the cost of the apparatus, making the company's investment in the Grays Harbor country about $4,200. As told elsewhere the inhabitants of that section took $20,000 worth of stock.
Shop Girls and Laborers Buy.
H. B. Fauntleroy, the United Wireless agent in the Grays Harbor towns, conducted an active stock-selling campaign in his territory for several years. The sales were made in small blocks, ranging from two to 100 shares, many shop girls and laboring men taking a few shares each while the business men invested to some extent. The list of Aberdeen investors includes Emil Pfund, A. W. Barclay, Robert Birmingham, Ed Larkins, Charles Reid, G. R. Haukell, Mrs. E. E. Bacon, Scott Shelley and Harry Chandler. Chandler owns 100 shares. Frank Ashberg, of Elma, is another stockholder.
The company pretended for some time to furnish the news service of The Tribune, a small morning newspaper published in Aberdeen. The service, however, became one of the jokes of the day and did more that anything else to bring United Wireless into disrepute in that section; as the public soon perceived that the service was simply a rehash of the news in the previous afternoon's issue of the Daily Times, of Seattle. A United Wireless representative in Seattle, it is believed in Aberdeen, took the edition of The Times, clipped out its pages and forwarded them to The Tribune. During the time that it had the alleged wireless service The Tribune never published an important news story that happened after The Times of Seattle went to press. The alleged service finally was discontinued last spring by the United Wireless on the ground that The Tribune failed to pay the bills.
Station in Port Townsend.
The station in Port Townsend, a city that does not hold very much stock, is maintained principally for relay purposes and on that account is probably one of the most important owned by the company in that state. The Puget Sound Tugboat Company does considerable business with this station, as also
steamship companies whose vessels are equipped with wireless. Otherwise the patronage is not heavy in any sense.
In Chehalis, where $17,000 of stock is held, the company opened its station last July and does some bona fide business there, though not enough, it is stated, to pay the operator's salary. All the stock sold there was handled by T. T. Scudder, one of the company's agents who later moved to Tacoma. The principal stockholders in Chehalis include John Miles, C. O. Gingrich, Frank Donahue, Charles Dieckmann, Dr. A. R. Parish, A. E. Frost and George Osgood, each holding from $1,000 to $5,000. Some of the Chehalis investors refuse to tell how much stock they purchased and apparently are not anxious to talk about their plunge into the United Wireless speculative maelstrom.
The Friday Harbor station was erected in 1908, and is one of the company's main relay centers on the Sound. Friday Harbor residents did not buy shares to any extent as they believed the company was so big that a minority stockholder would stand little chance. Dr. George S. Wright, of that place, bought some stock, as also Hans Lee, of Shaw Island. Bert Coffin, the company's Friday Harbor agent, put some of his cash into the stock, but the example of those named was not followed generally.
Low Price in One Case.
At the time of the installation of the station the stock was sold at $18 a share, but V. W. Frits, of The Friday Harbor Journal, states that Capt. Seale, representative of United Wireless, offered the stock to him for as low as $6 a share. Searle's chief argument to Friday Harbor people was that Congress about to pass a law requiring that all vessels of a certain tonnage be equipped with wireless.
United Wireless conducted an active stock-selling campaign in North Yakima and vicinity, where it built a station in Sumach Park, just outside the city limits. The station consists of a small frame building and a pole about 200 feet high, but up until a short time ago had not been put in operation. Several North Yakima stockholders have experienced difficulty in having shares which they purchased in the East transferred on the books of the company.
In Everett, the United Wireless proposition was sized up as a stock-selling scheme, and consequently the company has not met with the big success there that rewarded its efforts in other communities, yet has quite a number of stockholders in the City of Smokestacks. The Everett station was installed at the end of last summer and is in actual operation, but enjoys little or no patronage. The structure was erected on a site where it could be reached easily by prospective investors, instead of in the part of the city that would have been most advantageous for receiving and sending messages. What stock Everett took was sold principally on the strength of the station's installation, which was advertised widely at the time.
Olympia Station in Operation.
The station in Olympia, where the company placed approximately $10,000 of stock, has been in operation about a year and a half. It is estimated by A. H. Christopher, of Olympia, a former stockholder, that the corporation's holdings in the capital city could be covered by a few hundred dollars. Among the Olympia stockholders are Fred Stocking, secretary of the Y. M. C. A.; E. B. Raymond, the fire chief; William Cook, proprietor of the Columbia House, and Dr. H. L. Strickland. Stocking holds only a small amount of the shares. Christopher, the former stockholder, was one of the lucky investors, selling his shares for double what he paid for them.
The station in Kalama has been in operation almost continuously since its installation, but only $500 of stock has been placed among local residents, who for some reason failed to take much interest in United Wireless despite the presence of the building and apparatus. Most of those in Kalama who do own stock received it in return for power, lumber and lease of real estate. Those who paid for their stock refuse to talk much about it.
UNITED WIRELESS HEAD POSED AS DENVER BANKER
The United Wireless literature, among its many distortions and perversions of the truth, sought to give its stock a better standing by spreading broadcast the impression that C. C. Wilson, of Denver, the president, was a banker. As a matter of fact a Denver loan and investment concern of which Wilson is president and which was used as the medium for giving the impression that he was a banker, never had any legal right to the use of the word "banking" and was ordered by the state bank commissioner of Colorado to omit the term from its title.
The company obeyed this order as regards the signs on its windows and in other and similar ways, but United Wireless continues to use the forbidden word in its literature. In recent literature the word is omitted as regards Wilson, but is retained as regards W. A. Diboll, of Colorado, treasurer of United Wireless and vice-president of the alleged banking institution.
Until forced by the state bank examiner to change its title, the Denver concern in question went under the name of the International Loan & Banking Company of Colorado.
The Aerogram, the official publication of the United Wireless Telegraph Company, in one of its issues after Wilson had been chosen president of the wireless corporation, made the following statement:
"Col. C. C. Wilson, director and president of the United Wireless Telegraph Company, is also president of the International Loan & Banking Company of Colorado and also the president of a very successful Colorado gold mining company (which has no stock for sale) and is considered to be a man of large means."
In the same issue the magazine made the following reference to Treasurer Diboll, of United Wireless:
"Mr. W. A. Diboll, treasurer of the company, is also vice-president of the International Loan & Banking Company, Denver, Col., is a nephew of Col. Wilson and interested with him in many of his enterprises."
The attention of the state bank commissioner was attracted to the International Loan & "Banking" Company and he investigated its affairs. The company had obtained in a roundabout way the charter of a bank, but was making no reports nor giving any information to the state bank department. In the course of the investigation by the commissioner, the company disclaimed doing any banking business and the commissioner then ordered it to change its name. All this happened in the fall of 1908--to be exact, in October of that year.
Nevertheless, a pamphlet issued in 1909 again referred to Wilson as president of the "International Loan & Banking Company."
Still Used as to Diboll.
Recent United Wireless literature does not use the word "banking" in references to Wilson, but still describes Diboll as vice-president of the "International Loan & Banking Company," although the name of the company, to avoid serious trouble with the Colorado State bank department, has been changed to the International Loan & Investment Company.
United Wireless talks airly of the bankers who believe in its future, and its object in retaining the word "banking" in its sketches of Diboll is self-evident. American bankers as a class are extremely conservative, and anything that indicated that they had faith in United Wireless would tend to give the public greater reliance in the wild promises of the corporation's promoters.
Wilson has sought to gain prestige with the investing public by resorting to other schemes of a similar nature. In a pamphlet for which he was responsible, he is referred to as one of the men who built the first railroad into El Paso, Tex.: "this is where he made his first great success."
The first railroad built into El Paso was the Santa Fe, but B. G. Thomas, manager of The Morning Times of that city, who investigated the Wilson allegation, has been unable to find the least justification for such a claim. Thomas was in El Paso when the Santa Fe entered that city, was acquainted personally with most of the contractors and knows the history of the town and its people, but never heard of Wilson before. None of the other oldtimers have any recollection of any Wilson engaged in the construction of the railroad.
UNITED WIRELESS STOCK OF LITTLE REAL VALUE.
The intrinsic value of the stock which United Wireless is dumping on the public at a high price is less than $2 a share. A year ago The United States Investor, of Boston, figured the real value at $1.45 a share, but The Financial World, of New York, expressed the opinion that the Investor's estimate was too high, that the stock was worth less than $1 a share. At that time the United Wireless Company was offering the stock at $25 and $30 and advertising an early advance to $40. The price advertised by brokers was $4 a share. The Financial World remarked in this connection that those holding stock would be lucky if they received 40 cents a share when the bottom dropped out.
Yet the United Wireless Company, as a result of its adroitly planned stock-selling campaign, its wildly optimistic claims and grossly extravagant financial statements, has no difficulty in finding a ready market for its stock at $40 a share--four times the stock's par value.
Other Stocks Compared.
The par value of the stocks of the Union Pacific, the Chicago & Northwestern and the Chicago, Milwaukee & St. Paul is $100 a share. The Union Pacific stock paying a dividend of 10 per cent, is worth about $185. The Chicago & Northwestern stock, paying a dividend of 7 per cent, can be bought for about $168. The Chicago, Milwaukee & St. Paul pays a dividend, of 7 per cent and brings only about $147.
If these railroads, synonyms for reliability in the financial world, should adopt the United Wireless policy in regard to their stock they would advance them to four times the par value or to about $400 a share.
Such a course on the part of their directors would stamp them as hopelessly crazy in the eyes of financiers and experienced investors, yet these roads are on a dividend-paying basis and have millions of dollars behind them in tangible and bona fide assets. The delirious stock sellers of United Wireless, however, never call to the attention of the public any such comparison as the foregoing.
Not on Dividend Basis.
United Wireless is not on a dividend basis. Even its own promoters in their wildest flights of imagination never have made such a claim. The alleged assets shrivel to a bagatelle when subjected to examination. Nevertheless the company's officers have no hesitancy in multiplying the par value of its stocks four-fold, and, stranger yet, have little or no difficulty in disposing of immense blocks of the shares to buyers who least of all can afford to take chances in such an unscrupulous and wildcat game.
In the meantime the company is advertising in its literature that "we honestly believe preferred stock will be worth over $3,000 per share inside of ten years."
WHITE IN CONFERENCE WITH LAW OFFICIALS
NEW YORK, Friday, June 17.--Abraham White, former president of the De Forest Wireless Company, absorbed by United Wireless, had a conference yesterday afternoon with the United States district attorney and Inspector Mayer, of the post office department, who are conducting the investigation of the wireless company. White predicted interesting developments. He thought it possible he might be called before the grand jury.
At the offices of the United Wireless, the following statement was given out in comment on the criticisms of the company issued by Inspector Mayer:
"The conditions which existed in the American De Forest Wireless Telegraph Company before its acquisition by the United Company were not brought about by the present management of the United Company.
"No literature issued under the present management of the United company ever stated that it had a controlling interest in other wireless telegraph companies or that it had large holdings in the Marconi company. As a matter of fact, the holdings of the United company in the Marconi company were comparatively small.
Exchange for De Forest Stock.
"It is true that the stock of the De Forest company was exchanged for that of the United company, but that was pursuant to the original plan of the company.
"At intervals the market value of the stock was advanced, but this was justifiable in view of the increasing business of the company. It is not true, as accredited to Mr. Mayer, that while the inside officers of the company were privileged to sell their stock, all the outside purchasers were required to accept stock certificates stamped nontransferable. The fact is that all purchasers of United Wireless received stock which was transferable on the books at any time, and a large amount of this stock has been transferred. The stock stamped non-transferable until February, 1911 was that issued in exchange for securities of the American De Forest company.
"The stock issued to officers of the United for their salaries was based upon the selling price of the stock at the time it was so issued to them and the stock also was issued for cash advanced by the officers, reaching at one time the amount of $167,120.
Privileged to Sell.
"The officers, receiving it in order to recoup themselves for their advances, were thus privileged to sell, just as other holders were privileged to sell stock for which they paid cash.
"The further statement that operating expenses have been much greater than receipts also is untrue. The fact is that the receipts from operation of the active land and boat stations for commercial business have exceeded the expenses of operation and the surplus of receipts has been invested in additional stations and additional equipment.
"We agree with Mr. Mayer that the real assets of the company consist of land stations, patents, manufacturing plants and real estate, but observe that either through ignorance of the facts or with the intention to mislead, he omitted an important asset, namely, the number of ships equipped. We deny that any one officer or all the officers together have cleaned up $5,000,000 and possibly $10,000,000."