 It's time for the Laun Jean Chronoscope, a television journal of the important issues of the hour, brought to you every Monday, Wednesday and Friday. A presentation of the Laun Jean Wittner Watch Company, maker of Laun Jean, the world's most honored watch, and Wittner, distinguished companion to the world-honored Laun Jean. Good evening, this is Frank Knight. May I introduce our co-editors for this edition of the Laun Jean Chronoscope? Mr. William Bradford Huey, author and analyst, and Mr. Carl Hess, press editor of Newsweek Magazine. Our distinguished guest for this evening is Mr. Donald C. Cook, chairman of the United States Securities and Exchange Commission. Mr. Cook, of course, is chairman of the Securities and Exchange Commission. You've been the sort of watchdog of public investment in Washington, and tonight I'm sure that our viewers would like some financial advice from you, sir. Now, first of all, we had done our program recently, Mr. Lasser, the income tax expert, and he made the statement that it is very difficult now for Americans to accumulate anything out of income. Is that your view, sir? Is that correct? Yes, that is correct. Well, in order to accumulate anything now, the average American family has to invest wisely. Is that correct? That is correct. And one of the ways in which they can invest is by investing in stocks. Now, uh... How many people have taken this course so far? Well, I would judge that there are in the United States as many as nine million holders of securities. Well, is that a large number comparatively? Yes, that would be, I would think, a very large number, certainly in comparison with other countries of the world, including the European countries where there, of course, are great numbers of investors. It's a very large number. Well, is it large in comparison with our capital, with the vast amount of industry there is to invest in? What about the diffusion of this? Well, I would think that in a country of 150 million people, of which there may be as many as 60 million heads of households, and varying degrees of wealth, that to get nine million holders is a very substantial amount. Although I would feel that there is still room for an even greater diffusion of security holdings in the country. That's an interesting point, Mr. Cook. Do you think that it would be good for our country if more and more people own stocks? Oh, yes. I very definitely do. You know, when you're a stockholder, you have a share in the profits of American enterprise. Well, buying stocks is still speculative, isn't it? Well, their speculation will never be completely eliminated, because all speculation means is that you're assuming certain risks which are necessarily inherent in a commitment. Well, how do you people try to make these risks less? Well, I think we have made them very substantially less. We try to do it in two ways principally. One way is to ensure that the business is honest. In other words, eliminate all of the fraudulent and manipulated practices to the fullest possible extent. Have you done that? Well, we have eliminated a great many of them, but of course, I suppose they never will be eliminated 100%. I mean, there's still a lot of sharpies around the country trying to meddle things. Yes, I suppose even while we're sitting here someplace in the country, fraudulent activities in the securities field are going on. Well, sir, is it possible today for these big operators, these crooks like from the past such as the Ponzi operation, these large-scale fleecing of the public, is that possible now? I would think the large-scale fleecing operations, as you put it, are well-nigh impossible. Although I think I would be less than frank if I didn't say that probably all over the country there are little miniature Ponzi schemes going on all the time. And there's still plenty of suckers in our country, I assume. Yes, Barnum said, of course, that there was one born every minute, but with the advent of large-scale production in this country, I think now we have about one a second. Could you give our viewers an illustration of the type of thing that you've halted in that category? Yes, I think I could tell you briefly about a little case. It didn't involve a large amount of money, but because of the extravagant character of the representations that were made, perhaps it might be of some interest. It could affect anyone? It could affect anyone, and did affect these particular people to the tune of about $100,000. The case I refer to is one in which some individuals promoted a company, which they represented as having very extensive coal and timber rights in Canada. And in approaching prospective investors, they told quite a Baron Munchausen story, and it went something like this. They told investors that one of their associates had been instrumental in unearthing fraudulent claims against the government during World War II, and had reported that fact to President Roosevelt, who was very grateful and therefore presumably interested in this individual's welfare. They also indicated that the Canadian government was very grateful for the assistance which the United States had given to it during the last war, and that they were therefore successful in getting a concession in British Columbia of something over 10,000 acres of land, and they would have the right to take the minerals out and take the timber out. And that story was actually believed by a number of American investors. That story was believed by a great number of Americans who went so far as to invest $100,000 in it. Is it fair to say, sir, that a good many of the fraudulent schemes have come out of Canada from the end of this country in the last few years? Oh, yes, many of them have. Why is that? Why Canada? Well, I think the principal reason is that with more rigorous enforcement activities in the United States, the possibility of having it happen here was minimized. In addition, we did not have what is called an extradition treaty to bring people back here to try them for security frauds. Has that situation been remedied? Within the last year, we were successful in getting a treaty with Canada, which has recently been signed and is now in effect. To bring the people back. Mr. Cook, could you give our viewers a simple rule of thumb by which they could recognize fraudulent operators in Stark Field? Well, of course, there are no completely satisfactory rules, but I think there are some guides. One I would say is always beware of promises of a high return. The facts of investment life are such that, except in the most unusual cases, yields are inclined to be modest and representations of high yields most likely to be false. Secondly, when you buy securities, it isn't like buying something that you can see and look at and hold. You're buying a piece of paper and trust and confidence plays a large part in it. Therefore, don't buy from strangers. Well, sir, now you have been a Democrat and you are now and you are still in office under the new administration. Now, our viewers will recall that this regulatory function, the SEC, was brought into being in the last 20 years under the new deal and fair deal administrations. Now, sir, do you think that any attempt will be made by the Republican administration to change the Securities Exchange Commission? I really don't think so. I don't believe that any of the statutes administered by the commission will be repealed or substantially modified. I don't believe that any of the policies of the commission will be substantially changed. I feel that this administration has just as much real interest in the welfare of American investors as any administration we've ever had since the inception of the commission. So you don't think that there will be, there's not going to be any attempt to, by these big businessmen that we now have in Washington, there's not going to be an attempt on their part to change the commission basically. Well, all forecasts are dangerous, but as I've indicated, in my judgment, I don't believe that any such attempt will be made. Now, sir, as a final question, you've mentioned that there are 9 million Americans who now own stocks. Do you believe that that number will increase in the next few years? I think it will increase and I think it should increase. I think that if more people own securities in the United States and have an interest in the profits of American business, that we will be getting a real bulwark for our free, democratic, capitalistic system which all of us want to preserve. Well, thank you very much for being with us this evening, sir. The opinions that you've heard our speakers express tonight have been entirely their own. The editorial board for this edition of the Lone Gene Chronoscope was Mr. William Bradford Huey and Mr. Carl Hess. Our distinguished guest was Mr. Donald C. Cook, chairman of the United States Securities and Exchange Commission. Giving a Lone Gene watch is almost like selecting a watch made to your own special order, because the Lone Gene watches your jewelry it offers you are chosen literally from hundreds of new and exclusive styles and models each year. Now, this has always been a Lone Gene policy because we realize that those who buy Lone Gene watches expect such exclusiveness. 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