The Great Match Company Fraud
The Washington Supreme Court rules against a local match manufacturer for selling fraudulent stock based on fake inventions.
The story, cleaned up
A cleaned-up reading of the newspaper page: spelling and layout repaired, one story lifted off a crowded page. It follows the original closely but it is not a transcription. The original page is below; read it if a detail matters.
A decision in the case of the Washington Match Company of Tacoma, reached by the Supreme court yesterday, gives three judgments against the company for the amount paid by stockholders for stock. The judgments are obtained on the ground that fraudulent misrepresentations were made by the company in order to dispose of its stock. There were three cases decided yesterday, the test case being that of J. J. Mulholland vs. the Washington Match company. The company was incorporated with a capital stock of $1,200,000, divided into 240,000 shares. Lucius T. Hales subscribed for 239,096 shares and transferred 108,000 shares to the company to be sold as treasury stock. Mulholland alleges that it was represented to him that Hales was the inventor of a match-making machine which had been perfected and found practical, capable of producing 6,400,000 matches every ten hours while wrapping them and stamping advertisements on each match. Mulholland was induced to buy 400 shares for $400, only to discover the claims were false. The supreme court upheld Mulholland's position, as well as the claims of Florence Woods and Robert Dick, who were also defrauded by the company.
“Mulholland alleges that it was represented to him that Hales was the inventor of a match-making machine which had been perfected and found practical.”
Investment scams built on the promise of 'revolutionary' new technology are a recurring feature of the Pacific Northwest economy, from 1904 match-making schemes to modern-day tech bubbles. This case highlights how the court system served as an early regulatory mechanism for protecting retail investors against the 'booster' culture of the time.
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