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.
[Illustration: 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.