Seattle Daily Times, June 16, 1910, pages 1-3:

The Wireless newspaper

Stock  Sold  at  $40  Not  Worth  More  Than  $2  Per  Share

TO  BOOST its colossal stock-selling campaign, United Wireless resorted to fraud--by falsely advertising that it controlled the Marconi companies, had a monopoly of the wireless field, and was equipping the Chicago & Alson railroad with its wireless block system.
    It repudiated its own preferred stock in one instance in Denver.
    It announced that it had made a net gain of $5,000,000 in one year, whereas this vast sum represented simply an increased valuation placed by the company's promoters on its patents.
    It advertises its assets as valued at $26,599,947, but includes in this worthless stocks and bonds, to which it gives a fictitious value of $14,128,710.
    Analysis further reduces the alleged value of its assets to about $2,000,000, with the greater part of this under suspicion.
    It consistently evades giving any detailed facts regarding the source of its earnings, but contents itself with wild and visionary promises and predictions.
    What few general statements it does make regarding its income fail to agree, this year the company advertising its earnings as $700,000, while last December in the south it claimed more than $1,000,000 income; the previous spring its treasurer announced one day that the earnings were $900,000 to $960,000 a year and a few days later advertised them as $800,000.
    It is selling its stock at the inflated price of $40 a share, though conservative financial authorities consider the stock worth only a couple of dollars a share.
    Its stock never has paid a dividend.
    It has been denounced as a fake and a huge stock-selling swindle by The Financial World, of New York, and The United States Investor, of Boston.
    It has sold hundreds of thousands of dollars worth of stock in the state of Washington, chiefly to persons of moderate means who were swept off their feet by the company's wild promises, but who will be lucky if they get 40 cents a share when the bottom drops out.
    George H. Parker, of Seattle, fiscal agent for the territory west of the Mississippi, was a poor man three years ago, but now owns a palatial home, automobile and the other accoutrements of the wealthy, and is said to have a fortune of $3,000,000.
    These form only a few of the facts that may be presented in the indictment of United Wireless.


THE  UNITED  WIRELESS  TELEGRAPH  COMPANY has succeeded in the state of Washington in selling hundreds of thousands of dollars worth of its stock, in reality worth less than $2 a share, at prices ranging from $20 to $40 a share.
    Probably for the first time in financial history a stock has steadily increased in price until it sold at more than four times its par value, yet it has never paid a dividend. Something like three-quarters of the company's $20,000,000 capital stock has been sold, and as it has gone for as much as four times its par value, it has brought in, probably $30,000,000. The total value of its equipment, stations, etc., according to the company's own figures, is about a million and a half. Its actual value may be much less.
    It has succeeded in garnering its golden harvest in this state, despite the fact that many of its most important claims, those that would influence the men of small means to invest, have been exposed elsewhere either as absolutely false or distortion of the truth.
    It has succeeded in drawing this great sum from the pockets of those who ill could afford to lose it, by an adroit and cunningly-planned appeal to the gambling or get-rich-quick instinct. It dangles before the public the record of Bell telephone and other stocks that advanced by phenomenal jumps. And following the rule of the superiority of the superlative over the comparative, like any fake circus sideshow, it puts United Wireless in a class above even those great properties.

Company's  Earnings  Small
    Capitalized at $20,000,000, it promised to pay 200 per cent on the investment in two years. At the quotation of $40 a share it, therefore, would have to earn $80,000,000 a year. According to its own showing it now is earning only $70,000 yearly.
    Claiming $26,599,947 in assets, it includes in this amount worthless stocks and bonds which it lists at $14,128,610. The Financial World, of New York, doubts whether all these stocks and bonds would bring $150,000 at a forced sale. The greater part of the stock is that of the defunct DeForest Wireless Company. United Wireless itself admits this stock does not represent a real value in tangible assets.
    It includes also in its assets $5,520,233.60 for patents and patent rights, completely ignoring the fact that the principle of wireless telegraphy cannot be patented any more than the principle of gravity. The United States government makes its own instruments without asking United Wireless or anyone else for the right.
    In boosting the sale of its stock it falsely advertised that it had acquired a controlling or dictating interest in the Marconi companies, and in its literature listed the Marconi land and ship stations as part of the United Wireless system. It falsely advertised that it had acquired control of all wireless companies that might become competitors. It falsely advertised that it was installing its wireless block system on the Chicago & Alton Railroad, saying that this job "alone will pay large dividends on the total capitalization of the company."

Fake  Claims  Exposed
    Its methods and false claims have been exposed in the East and the Southwest. Big financial papers have analyzed its assets to the disappearing point. The Financial World, of New York, calls it a "fake," a "monumental fiasco," a "fraud," a "top-heavy financial house of cards," and brands its promoters as "smooth tricksters" and "a gang of as unscrupulous promoters as Wall Street has ever harbored."
    In Seattle and vicinity the company has sold thousands of dollars' worth of stock; just how much is not accurately known to anyone outside of the company's officials. Much has been sold in Puyallup and other towns between Seattle and Tacoma. In Tacoma there are between 150 and 200 stockholders, each holding 20 to 500 shares. In Spokane there are more than 50,000 stockholders. Efforts to ascertain the amount of money spent by Spokane and Tacoma citizens in the purchase of United Wireless stock fail to give definite results. Those who have plunged in the stock and now are beginning to doubt the wisdom of the investment, show unwillingness to talk, most of them preferring to take their medicine in silence. It is estimated, however, that the sum is more than $100,000 for each city.
    Chehalis citizens bought $17,000 worth of stock, and Olympia residents $5,000. Fifty to sixty thousand dollars' worth of stock was sold in Walla Walla country. Friday Harbor men invested $600 in the stock, and Hoquiam and Kalama $500 each. Considerable stock has been sold in Everett, though probably not as much in proportion to the population as in other towns of the state in which the company has erected stations.

Aberdeen  Residents  Plunge
    Aberdeen and neighboring places have about 500 stockholders who bought an aggregate of $20,000 of shares. Ten residents of Aberdeen alone own 120 shares. Only a small amount has been sold so far in Bellingham and Port Townsend, while quite a large amount has been disposed of in North Yakima, where the stock-selling campaign is in progress all the time.
    The stock-selling campaign in this state is directed by George H. Parker, of Seattle, general fiscal agent of United Wireless for the territory west of the Mississippi River. Parker, whose offices are in the People's Bank Building at Second Avenue and Pike Street, came to Seattle practically a poor man three years ago. In the meantime, according to The Financial World, he has acquired something like $3,000,000 for his services to the defunct DeForest Company and the United Wireless. He owns one of the handsomest residences in the North Broadway district, and is erecting a large apartment house. He is one of the directors of the company. Originally he was engaged in the insurance business in New York, but left that city to settle in Denver, where he became connected with the United Wireless promoters.
    All the United Wireless stock sold in the last two years, it is charged, has been the personal stock of C. C. Wilson, the president of the corporation, whose address is given as New York in the company's list of officers. The proceeds from the sale of this stock, minus the expenses, are divided, it is charged, between Wilson and Parker. Stockholders owning treasury shares, it is charged further, do not get the least benefit from these sales of Wilson's personal stock as the money derived goes into the pockets of Wilson and Parker, In the case of sales of treasury stock, the proceeds go into the treasury to develop the company.

Parker's  Rise  Sensational
    In any event, whatever the source of his wealth, Parker's rise to the millionaire class in three years is one of the most sensational features of the United Wireless Company's stock-selling campaigns.
    The stock-selling campaign in Washington, as elsewhere, has been preceded by the erection of a small station in the community where its agents wished to press their operations. The installation of these stations, as a rule, costs $150 to $200, and where definite figures have been obtainable the amount of stock sold always has aggregated many times the amount of the installation cost of the station. The presence of the station has made it easy for the corporation's agents to dispose of stock, the sales in many cases running into the thousands, as in Chehalis, where citizens brought an aggregate of $17,000 of shares, or in Walla Walla County where, as told already, the sales reached the amazing total of $50,000 to $60,000. The company's Walla Walla station represents an investment of $250 at the outside, but the mere fact that it is in the city, although it is not in actual operation for commercial purposes, made that territory a rich one for the men selling stock.
    The United Wireless stock-selling campaign is aimed chiefly at the person of moderate means but of a saving disposition who, as a general thing, has only a hazy knowledge of the finer points of high finance, and therefore is not qualified to read between the lines in the company's extravagant financial statements. Among this class the promoters have met with a success almost beyond belief in disposing of the corporation's stock. Thousands of persons of moderate circumstances have put an aggregate of millions into the company, tempted to take the risk by the glittering and wildly-optimistic claims of the promoters. A fortune at one stroke, riches beyond the dream of the average man, unlimited possibilities for gaining wealth and leisure--these are held tantalizingly before the eyes of the small investor with the inevitable result.
    To add to the delirium of the company's affairs, its officers have refused to transfer certain of its own stock on the company's books, with the object of keeping the stock off the market and out of the hands of brokers. Investors have found that they had to resort to the courts to force the company to transfer the stock which they had purchased and wished to sell, but in the meantime they had been shut out of the market and the corporation was able to continue boosting the price of its shares without any interference from competition.

Tangle  of  Deceit
    The United Wireless Company's affairs, its demoniacal stock-jobbing methods, its frauds for the purpose of ensnaring inexperienced investors, its crazy financial statements that will not bear even superficial analysis, its half-truths and distorted truths, its wildcat promises and claims, all present such a tangled and interwoven network of deceit, greed and money-frenzy that it has been necessary for the sake of simplicity and lucidity to consider the different phases of its tremendous stock-selling campaign under separate headings. Fuller details on points already referred to will be found elsewhere.
    The United Wireless Telegraph Company originated in the DeForest Wireless Telegraph Company, which took over the patents of Lee DeForest about six years ago. The De Forest Company, following the plan of the Marconi interests, organized subsidiary concerns, among these the American DeForest Wireless Telegraph Company, which fell into the hands of Abraham White, a promoter who has been denounced by financial papers in the East. White found it convenient to make the subsidiary perform the spectacular and unnatural task of swallowing the parent corporation. The American DeForest Company then took in one or two other wireless companies and these were allowed the privilege of getting common stock in the American company for their holdings, provided they would surrender their old certificates and pay a consideration of about $1 a share for the common stock of the American corporation. In this way the old stockholders practically were frozen out of the new organization.

Lies  About  Marconi
    When the stock-jobbing possibilities of the American De Forest Company had been pretty thoroughly exhausted, the United Wireless Company was incorporated with the announced purpose of merging the American DeForest and Marconi interests. The Marconi companies refused to be swallowed, but this did not prevent the United Wireless, as told in detail elsewhere, from falsely advertising that it had obtained control of the Marconi corporations.
    The organization of the United Wireless was effected in February, 1907, under the laws of Maine. The company is capitalized at $20,000,000, divided in $10,000,000 common and $10,000,000 7 per cent preferred stock. The general offices are at 42 Broadway, New York City.
    The par value of the stock is $10 a share, but at almost steady intervals the price has been advanced until now $40 a share is asked by its promoters.
    Abraham White at first was president, but was succeeded by C. C. Wilson, of Denver, Col., who had been connected in an official capacity with the DeForest Company.
    Following this the company embarked on a stock-selling campaign in the East, then in the Southwest, then in the South, then on the Pacific Coast--a campaign conducted on a tremendous scale and with amazing success not only among the class of small investors but also among professional and business men of the larger cities.

    At least half a dozen barefaced frauds have been worked by the United Wireless Company to deceive the public into buying its stock at prices absolutely without justification. The exposure of these frauds, however, seems to have had no effect in bringing the promoters to a realization of their extremely slippery position. They have rushed on in their mad stock-selling campaign, every now and then with a blare of trumpets and a hip and hurrah and a wild crescendo of extravagance, giving the price still another boost. The chief frauds committed by the company are summarized as follows:
    It advertised in its highly colored literature that it owned a controlling interest in the Marconi companies, even going so far as to list the Marconi land and steamboat stations as part of the United Wireless system. This was an absolute falsehood.
    It announced that it had a monopoly of the wireless field. Another absolute falsehood.
    It announced in its literature that it was installing its wireless block system on the Chicago & Alton Railroad. Another absolute falsehood.
    It advertised that it had made a net gain of more than $5,000,000 in one year, a profit of more than 26 per cent on the last capital stock and 35 per cent on the amount of the stock issued. Another falsehood.
    It issues papers in different towns, including The Wireless in Seattle, the news in which is represented as obtained by wireless, this being another fraud to catch the attention of possible investors and arouse their interest in the promoters' inflated bubble.
    In several of these instances the company or company officials have been forced to admit that the claims were untrue. In the meantime, however, the false assertions probably had influenced thousands of persons of moderate means to invest their savings in United Wireless stock.
    United Wireless frauds, in the order given in the foregoing, are considered in detail in the following paragraphs:
Two  Frauds  Related.
    For the sake of brevity the first two--its claim to control the Marconi companies and to have a monopoly of the wireless field--may be taken up together, as they bear an intimate relation to each other.
    On the cover of a pamphlet issued by the United Wireless Company shortly after its organization, the corporation announced itself as "owning a controlling or dictating interest in American DeForest, Marconi, other and subsidiary companies, thus practically controlling the entire wireless field." It is in this same pamphlet that the United Wireless had the brazen effrontery to list the Marconi as part of its own system, incidentally letting the cat out of the bag that the Marconi interests had the great Atlantic liners under contract.
    In another pamphlet a statement is made that can convey no impression to the reader other than that the British government has contracted to use the United Wireless system. A definite statement to that effect is not made, but it is impossible to escape the inference.
    In a folder issued presumably in 1909, but still in circulation, United Wireless announced that "as the United Wireless Telegraph Company has purchased the wireless companies in America capable of doing any commercial business, and owns the basic patents, it is now doing 90 per cent of the wireless business in the United States." In another pamphlet the company advertises that "We control all wireless companies that might become competitors."
    John L. Schuyleman, of Portland, Ore., states that he received a personal letter from George H. Parker, of Seattle, general fiscal agent of United Wireless for the territory west of the Mississippi, in which Parker asserts that the United Wireless Company owns more than 51 per cent of the English Marconi Company.
Repudiated  by  Marconis.
    The benevolent but imaginary assimilation of the Marconi companies met with prompt and vigorous repudiation by the Marconi interests which, at the same time, warned all their stockholders to have nothing to do with the United Wireless project.
    When Fred S. Stewart, fiscal agent of United Wireless in Portland, Ore., took the stand in his libel suit against John L. Schuyleman, he was forced to admit under oath that United Wireless owned only the American DeForest Company and a controlling interest in the Shoemaker company. Also, he was forced to admit under oath that United Wireless had not purchased all the wireless companies in America capable of doing a commercial business, as it alleged in its literature.
    In the end the United Wireless Company has had to confess that it had no control of the English and American Marconi Companies, thus acknowledging that its statements in its own literature to that effect were unqualifiedly false.
    Before the Stewart libel suit, however, the falsity of the United Wireless Company's claims to a monopoly of the wireless field had been exposed by the United States government through a letter written by William S. Cowles, chief of the bureau of equipment of the navy department. In explanation of the first paragraph quoted it is necessary to state that the company leads its customers to believe that the United States government does business exclusively with United Wireless, another of its tricks to boost the sale of its stock. In his letter the chief of the navy bureau of equipment wrote:
    "First--In reply to your letter of April 17, 1909, the bureau informs you that the United Wireless Telegraph Company has supplied at various times instruments for use on board vessels of the United States service. These instruments, however, have been purchased outright from that company and are in no way subject to their control. The government does not pay any royalties or rentals whatever on them.
No  Wireless  Monopoly.
    "Second--Insofar as the United Wireless having a monopoly in this country of wireless telegraphy, such statement is in direct variance with the truth, as there are numerous wireless telegraph companies in the United States supplying instruments and wireless service to the public. The wireless apparatus on board vessels of navy is supplied by practically all of these companies, the United Wireless having furnished only a few sets as compared with the entire installation of the navy department.
    "Third--In regard to the stock-jobbing activities of this company, you are informed that the bureau has been repeatedly assured that its purchase of apparatus would never be used as an advertisement for such purposes and such is entirely unauthorized."
    The United Wireless' false claim in regard to the Chicago & Alton Railroad comes next on the list:
    In one of its pamphlets, United Wireless tells of its new wireless block system for railroads and then goes on to make this statement: "The Chicago & Alton Railroad tested this for a period of six weeks, have ordered it on every passenger engine on their road. Company is now equipping road with these devices. This alone will pay large dividends on the total capitalization of the company."
    Fred S. Stewart, the Portland fiscal agent, in testifying in his libel suit against Schuyleman, admitted that this was false. He said, under oath, that the company was not equipping the Chicago & Alton Railroad with its wireless block system, thus giving the lie direct to the statement made in United Wireless' own literature.
    The fourth fraud--the false claim of a tremendous gain in business--went unchallenged until Stewart's suit for libel. In one of its 1909 folders, which is still in circulation, the company made the following assertion which, if it had been true, would have precipitated a scramble among the Morgans and the Rockefellers to get hold of its stock and undoubtedly did help to create such a scramble among small investors:
    "The United Wireless Telegraph Company made a net gain of over $5,000,000 last year, which is a profit at over 26 per cent on the capital stock and 35 per cent on the amounts of the stock issued."
Not  Cash  Profit.
    Fiscal Agent Stewart when testifying in Portland, was forced to admit that this alleged $5,000,000 net gain did not represent a cash profit but an increased valuation placed by the company on its patents.
    This is not frenzied finance. It is the finance of delirium tremens.
    The fraud worked by United Wireless in issuing newspapers purporting to contain news received by wireless is the last that will be considered under this heading. Other frauds or near-frauds and shady methods used in the stock-selling campaign are self-evident in the sections of this expose dealing with the company's finances, earnings and stock values. In the wireless newspaper fraud, the case of the one in Seattle known as The Wireless will suffice. This publication prints dispatches and baseball scores which its readers are led to believe are received by wireless.

    The United Wireless Company's own financial statements fail to stand the test of analysis. Even when considered by themselves and apart from all else that is known of the corporation's methods, these statements when examined disclose misinformation, trickery, financial quackery in the very items that should be scanned most carefully by the prospective investor.
    There is a vagueness, a lack of detailed data, such as would awaken immediately the apprehension of any conservative financier or broker. There is a wealth of generalities, an appeal to the get-rich-quick instinct, a bold extravagance of statement, calculated to dazzle the man not accustomed to the methods of the stock-jobbing pirate.
    The company's 1910 financial statement lists its assets as valued at $26,599,947.13.
    When analyzed these figures shrink to a little more than $2,000,000, with the greater part of the $2,000,000 under suspicion.
    The 1910 statement gives the value of patents and patent rights as $5,520,233.60. In the statement of the previous year the figures were given as $5,005,100, while in the 1908 statement the same item was listed at $500,000, the figures in the 1910 report thus showing a tremendous gain in two years--in the imaginative powers of the company's bookkeeper.
    Patents and patent rights form no asset at all. In the first place the United Wireless, according to the United States government, has no monopoly of the wireless business. The basic principle of wireless telegraphy cannot be patented any more than the basic principle of steam, gravity or fire. The United States government makes most of its own instruments and asks no one for the right. High school boys on both the Atlantic and the Pacific Coasts rig up their own little stations with instruments manufactured by themselves, and ask no one for the right. These boys, in addition to making themselves something of a nuisance to the wireless companies and the government, have attained remarkable success in some instances and highly satisfactory results in most instances.
    The Financial World of New York, in discussing the 1909 report of the United Wireless Company, stated that if the patents and patent rights could be sold for $200,000, the price would be excessive, as the "actual business done by the company's whole outfit would not warrant such a price." The great General Electric Company, which in 1908 did a gross business of $45,000,000, places a valuation on its patents and good will of $1, or a sum more than 5,000,000 times less than that of the United Wireless.
    A field exists for the manufacture of wireless apparatus, with a fair manufacturer's profit on the capital invested, but there is nothing to prevent steamship companies and other users of wireless from following the example of the government and the high school boys. They can equip their own boats and stations, and in doing so can take the best features of every device now in use. If the transportation companies did not follow this course, they would be certain, just as soon as the business was established on a good basis, to exact from the wireless company a rental, or a percentage of receipts that would make it impossible for the wireless corporation to pay more than a moderate return on the replacement value of the equipment.
    In the same financial statement--that of 1910--the United Wireless Company lists United Wireless stock in its treasury at $4,823,460 (par). This is stock that may be turned into cash if the public remains in a gullible mood. But whoever considers this an asset, remarks The Financial World, in discussing the same item in the 1909 report, has coming to him his day of cruel disappointment.
    The financial statement of 1910 lists among the company's assets "stocks and bonds of other companies (book value) $14,148,610."
    The largest part of this item is made up of the stock of the American DeForest Company, which was absorbed by United Wireless on the latter's formation. The DeForest stock can be bought by the wagon load for 3 and 4 cents a share, and is a drug on the market even at that price. The Financial World doubts whether all these stocks and bonds, listed at $14,128,619 in the company's assets, would bring $150,000 at a forced sale.
Not  "Tangible"  Asset.
    The United Wireless Company itself admits that the DeForest stock is not a tangible asset. In one of its announcements it made this remarkable statement:
    "The stocks and bonds of the American DeForest Company, while they do not represent a real value in tangible assets, do represent an investment of millions of dollars in cash made by about 15,000 stockholders scattered throughout the United States, which cash or a great portion of same has been spent in past development of wireless, from which the United Company receives material advantage and profit."
    This deceptively frank explanation only serves to raise a barrier of verbiage between the unwary investor and the real point at issue, which is: How does United Wireless figure out such a tremendous value for a stock that the company itself admits does not represent a "real value in tangible assets," or, in other words, no asset at all.
    Omitting the three items already discussed--patents and patent rights, United Wireless stock in treasury and stocks and bonds of other companies--the alleged assets of the company shrink to $2,107,643.53, and even this amount is in grave doubt because of the company's ingrained tendency to exaggeration and extravagance of statement. But giving the United Wireless stock-jobbing experts credit for having approximated the truth in regard to the other items in their financial statement, there still would be only $2,107,643.53 in assets to take care of a $5,700,000 issue of preferred stock, non-cumulative in its right to a 7 per cent. dividend out of the first earnings, to say nothing of an authorized issue of $10,000,000 of common stock, of which about $9,000,000 is outstanding.
    The same vagueness and dearth of detail characterize the other items given as assets in the company's financial statement. Cash in treasury and treasury agents hands is sold by the company to total $317,448.70, but there is nothing to show definitely whether this is from stock sales or income.
Proposition  Top-Heavy.
    Factories and equipment are valued at $35,552.54, this item throwing a flood of light on the affairs of the corporation and inevitably suggesting the question: How can a business with more than $26,000,000 assets be conducted with three small factories, whose combined values aggregate a paltry $35,552.54? This item alone should scare out the average Wall Street investor, for it shows plainly that the United Wireless Company is a top-heavy financial house of cards, a term applied to the corporation by The Financial World.
    The surplus of $6,582,329.74, claimed by the company in the 1910 statement, is hardly worthy of consideration. No facts or data are given in support of the claim; the itemized statement that any legitimate enterprise always is glad to supply is not to be found in any of the company's literature. The surplus in any event is almost wiped out by the elimination of the grossly exaggerated valuation of patents and patent rights, and is turned into a huge deficit when the worthless American DeForest stock is removed from the list of alleged assets.

    Of all the sordid scandals in the history of United Wireless, none throws a more ghastly light on the motives of the promoters than the company's repudiation of its own stock and its refusal to transfer on its books stock that is transferable legally. The company in both instances sought to prevent buyers of stock from placing it on the market; it aimed to shut them out of the market so that it would have the field entirely to itself and thus be able to force the price up yet another notch whenever the promoters so desired.
    Almost from the beginning the promoters seemed to have realized that once the stockholders began putting their shares on the market, it would spell the doom of their tremendous stock-jobbing campaign, would leave them powerless to maintain the stock's fictitious price and the moment that happened, the bottom would drop out of United Wireless, and its iridescent dreams of phantom millions.
    Two kinds of stock were issued by the company, one transferable and the other not transferable for two years. The non-transferable is the stock given in exchange for the shares of the defunct American DeForest Company, but the company without legal right, in fact in defiance of the law, has refused to transfer other stock on which no restriction whatever was placed.
    Most of the stockholders are persons of moderate means, who would not care to risk the expenses of a legal battle to enforce their rights, but on the contrary would fear to throw good money after bad. In a number of instances, however, stockholders with more resources than the others have gone to the courts and compelled United Wireless to recognize their legal rights.
Court  Orders  Transfer.
    Henry L. Sprague, of New York, is one of the stockholders who forced the company to recognize his rights to sell the preferred stock that he held. Sprague instituted proceedings in the supreme court of the Empire state against the officers of United Wireless as a result of their refusal to transfer his stock. The defendants, he told the court, were selling preferred stock from the treasury while holding up his own and other outstanding preferred shares. The case was fought before Justice Gerard, who granted Sprague an injunction restraining United Wireless from selling any more of its treasury shares until it transferred his stock. That the Justice regarded the United Wireless as a stock-selling scheme appears from the following remark which he made when granting the injunction:
    "It appears that the defendant is selling stock from its treasury, and plainly alleges that is the reason why it does not wish him sell. It appears that the defendant is selling this stock to the public through a concern called the New York Selling Agency, which has issued a circular which, in red letters, refers to this stock as the livest wire in the investment field today."
    A striking instance of the company's treatment of its own stockholders occurred in Denver. The Bank Brokerage Company, of that city, presented to the company for transfer a certificate for seven shares of preferred stock, that apparently met every legal requirement of a proper stock certificate. It was signed by the United Wireless officers, sealed with the official seal and registered by the transfer agents of the company. Moreover, it stated positively on its face that it was transferable and as such had been purchased by the holder.
Stock  Declared  Worthless.
    But when this certificate was presented, it was declared by the very officers of the company who issued it to be worthless!
    No attempt was made by the officers of the company to deny the authenticity of signatures, seal or printed certificate. Nor was it denied that the company had received $70 in payment for the certificate.
    It was refused arbitrarily on the ground of "legal reasons" and declared worthless, which means that the signatures of the United Wireless officers are worthless and that the seal of the company is worthless.
    This repudiation of its own stock by the company caused a sensation in Denver. No one ever had dreamed that the promoters would dare go to such a length.
    The United Wireless' course in regard to the nontransferable stock has been not less reprehensible or dishonest.
    An agreement was stamped on the stock issued by United Wireless in exchange for the securities of the American DeForest Company, by which these shares could not be transferred for a period of two years. An agreement of this kind is legal if concurred in by the company and the person making the exchange. The United Wireless promoters then executed another of the coups designed to keep stock off the market and without legal right or justification passed a resolution extending the time for transferring the stock in question another two years, thus keeping it tied up for four years. That the holder of the "stamped stock," as it is called might not want to accept the additional two years' agreement made no difference with the financiers of United Wireless. The latter simply said they would not make the transfer and the stockholder either had to throw up his hands--the figure is singularly appropriate in this instance--or seek redress in the courts.
Announcement  Held  Back.
    The resolution referred to was passed at the annual meeting of the stockholders in Portland, Me., in January, 1909, but the company delayed until the following March before making official announcement of its action, or nearly two months after the stock practically had been outlawed. The resolution is of more than passing interest because of its strange assertion that the stock under consideration was of doubtful validity. In full it follows:
    "Whereas, there has been issued to large numbers of stockholders certificates of stock in exchange for securities of the American DeForest Wireless Telegraph Company, and the stock so issued is of doubtful validity by reason of the inadequacy of the consideration received therefor; and
    "Whereas the stock so issued has been stamped nontransferable for a definite period of time, and it is deemed to be to the interests of the holders of said stock and to the interests of the company generally to eliminate any question as to the validity of such stamped stock; now, therefore, be it
    "Resolved, that in consideration of and upon the holders of said stamped stock agreeing to and having said stamped stock stamped nontransferable upon the books of the company for a period of two years from the 15th day of February, 1909, that then and in such event the action of the board of directors in issuing such stamped stock in which is not stamped 'nontransferable' for the said further period of two years."
Directors  Make  Mistake.
    In explanation of their astounding action, the United Wireless directors stated that they believed when the basis of exchange of securities of the American DeForest Company was agreed upon, that these securities would be valuable enough to justify the exchange but that they were mistaken.
    Which means that the innocent investor in United Wireless is expected by the directors to pay for the latter's admitted stupidity and inefficiency.
    This was not the only "funny work" on the part of the United Wireless promoters in regard to the standard stock exchanged for the American DeForest securities. The company first agreed to make the exchange without any cash consideration. Later, in clear violation of this agreement, and after much stock had been exchanged, the United Wireless promoters refused to carry out the deal any further unless the unlucky investor put up $10 a share and bought an equal number of United Wireless shares at the company's own price. This course was decided on when the directors adopted the following resolution:
    "Resolved, that the board of directors be, and they hereby are, authorized not to issue any stock in exchange for stock in any other wireless telegraph company unless there is paid on account of the stock so issued at least $10 per share in cash and unless, further, the holder of such stock shall purchase and pay for at the company's then selling price an equal number of shares to those exchanged."

    The action brought against the United Wireless Telegraph Company in New York yesterday in no way will affect the commercial department of the concern, according to W. B. Southwick, Pacific Coast manager of the company, with offices in Seattle, in a communication sent today to the office of The Times.
    "I know nothing about this action except what I have read in the newspapers," Southwick declares. "I have charge only of the commercial operation of plants owned by the United concern. Evidently this attack is directed at the stock department of the company.
    "Our concern now has ninety-eight steamships on the Pacific Coast equipped with our instruments and they are paying a good monthly revenue. Yesterday we signed contracts for two vessels, the Mirama and the Ramona, which shows that the shipping men of this Coast consider our instruments necessary to the operation of their boats. In addition to the steamships carrying our wireless sets we have forty-eight land stations either doing an active commercial business or contracted for. In fact, the United concern is the only wireless company doing a commercial business in the West.
    "In the East and in England we have a large number of vessels equipped and land stations installed. In Seattle we have recently completed a three-story factory building which is making wireless sets as fast as needed. Another large factory of the concern is located in Jersey City for supplying the eastern trade.
    "I have no fear but that this action in New York will end in a dismissal of the charges and that President Wilson and Vice-president Bogart will be vindicated."

    NEW YORK, Thursday, June 16.--Christopher C. Wilson, president, and Samuel S. Bogart, first vice-president of the United Wireless Telegraph Company, were released on $25,000 and $10,000 cash bail; William W. Tompkins, president of the New York Selling Agency, was unable to produce $10,000 and spent the night in the Tombs. All three men were arrested in a raid by the post-office inspectors in the offices of the United Wireless Telegraph Company at 42 Broadway.
    Chief Inspector Mayer charges that although the company has been running at a loss, the price of its shares has been advanced by manipulation to fictitious values, and that officers of the company have sold out their stock to the general public at a profit estimated in one instance at between $5,000,000 and $10,000,000.
Stock  Worth  Two  Cents.
    One instance of alleged fraudulent use of the mails is given as the mailing of a letter on March 3, 1910, to Michael O'Brien of Waterbury, Conn.
    "There are 28,000 shareholders of the company throughout the country," said Inspector Mayer in his statement, "many of whom have placed their savings in the stock of the company through false representations made by its officers.
    "The real assets of the company, consisting of land stations, patents, manufacturing plants, and real estate of all kinds, appear to be worth at a conservative estimate $400,000, or an actual worth of 2 cents a share."
    Two million shares have been issued at a par value of $10, but the stock has recently been put up to $50 a share.
    The inspector says the company originally was incorporated as the Amalgamated Wireless Sureties Company, in 1904. In 1906 it took over the assets and business of the defunct American DeForest Wireless Telegraph Company, which was then running at a loss, exchanging therefor its own securities on a 10 for 1 basis.
    "At this time," says the inspector's statement, "when officers of the DeForest Company were secretly conniving to abandon it and leave stockholders a mass of worthless securities, its stock had been forced to an alleged value of $12.50 a share, or $2.50 above par.
Patents  Worth  $20,233.
    "Another article in the statement sent out to stockholders was patents and patent rights, $5,520,233. The affairs of the company were recently audited by a firm of licensed accountants who placed the book value of all patents at $20,233.
    "The officers of the company have sold to the public thousands of shares, claiming all the while that they were holding their own shares and putting the money received from the public into the plants of the company. One of the officers is believed to have cleaned up $5,000,000 and possibly $10,000,000 at prices ranging from $10 to $50. The other officers have profited in proportion."
    None of the men arrested today had any explanation to make.
    Christopher Columbus Wilson, president of the United, is a financier of the self-made school. He was born in Mississippi in 1845, of Irish descent, and never had more than three months' schooling. He became successively a cotton farmer, a banker in Denver, a miner and, finally, a promoter of wireless securities. He lives at The Waldorf-Astoria when in New York.
    Further details of the Wireless swindle will be given tomorrow.