text: i EM 'jm ' b x Ww, % S-fe, V \ 1 ■> <> ' \'• ■■ ,> ■ jjl t li !!! i. ■■ .. -Mi tf tllil X" % ■.! S' : X \ S. !sS K ill. S| 1 ■upi m m % •V' , /iW; ■ : ill I i mk j im ■ -■S'/; V ■M I | ; m ■ x x * N -'O' <■ p mg saw li '• J s nil tg >1 ■ s i i 1 & ; wm ■/-X. % X A "•iii * 'ami fj x a ".ii M M i. : A m \ % i« l i xx M ii. '-ii - m::- • 03%"' jF ; Xv.V p •V & i ii i '■ if: :r m !4 - : ;X^ X -A. w - « ' XX ;#r, X % ■X : X % V:? < m V : - V v - ■X U.::V. v x; m -Xs.?: m X M jm if X M Sr ■ i ; ; I - /'' r ,.v' i f y ' #'/ .X M '■ & " X." X (• m y. / \ x X .V r ^ BV: they J* * lx;' i -■ •(*" . 3 -t. X J / y V > y .3 4$ y J .* v .j HON. GEORGE B. CORTELYOU. FINANCIAL FRAUDS How the Mails of the Country Are Delayed with Schemes to Squeeze the Savings from People of Small Means. By GEORGE B. CORTELYOU, Secretary of the Treasury. There is no work under the jurisdic tion of the United States post office department which presents more dif ficulty to its officials than the admin istration of the law relating to the de tection and suppression of the swind lers who use the United States malls to prosecute a guerilla warfare upon the people of this country—and espe cially upon those whose Industry and thrift have enabled them to put by a little surplus against the inevitable "rainy day." 1 have been asked to say a few words on the subject of financial frauds that operate through the malls, and take pleasure in responding to such a request in the hope that what I shall say may have the effect of pre venting some hard-working and thrifty person, who has contrived by dint of self-denial to save up a little surplus, from falling a ready prey to the hun dreds of schemers who are living by their wits and making fortunes from honest but credulous individuals. Perhaps the most important thing to the possible victim is to know what are the most common characteristics of fraudulent schemes—the "signs" by which those familiar with their opera tions recognize their fraudulent char acter. One of these earmarks is the prom ise of excessive profits or dividends; another is the actual payment of ex cessive dividends—at the start! One or both of these features invariably accompany all such cchemes. And In the days when frauds in the mail are numbered by the thousands and com petition for the spoils of the people's savings is almost as keen as it is in legitimate lines of business, the throw ing of bait in the form of several large monthly dividends has come to be regarded as a practical necessity. There was a time when the mere promise of big profits was enough to insure a liberal response, but today the use of "dividend bait" is regarded as a necessary and highly profitable investment on the part of those who wish to secure the largest possible returns. The great "Fund W" swindle, operated in Chicago in the early '90s, may be cited in illustration of the type. It is especially typical not only because of its immense success but because it has apparently furnished the model upon which many succeeding frauds have been based. It is true that many, perhaps most, of the present day schemes are seasoned with the "Investment" flavor, rather than that of speculation, but the principle of their operation and appeal is the same. This is the way in which the historic "Fund W" was worked: Under the name of "Fleming & Merriam's Mutual Cooperative Fund W" an appeal was made to the people to send their money for the purpose of creating a "great centralized fund" to be used in speculative operations in grains, provisions and stocks on the Chicago board of trade and the stock exchange—the emphasis being placed on the opportunities offered by the board of trade. In all the printed matter put out by these clever swindlers, the plea substantially this: "The great fortunes of the kings of the pit have been built up because these men had capital enough to swing the market their way; there has been no work, no chance, no gamble about it, for they had the ready money with which to back their gigantic deals; they knew the irresistible power of great capital in one controlling hand and were able to make the whole country of smaller speculators—whose capital, although immense in the aggregate, was under scattered control—pay tribute to them. "It is time the common people, the small speculators, learned this trick of the captains of industry, trated their scattered capital in irresistible body, placed it in capable and expert hands and recovered from the kings of the pit some of the millions which for years the smaller speculators have been contributing to these swollen fortunes. Your available money, added to that of thousands and tens of thousands of other small speculators, will form a centralized fund of proportions which will dwarf the available money of the biggest speculator who ever operated on the board of exchange; the manipulation of the market by the means of this huge fund will be based upon the investigations of a corps of the shrewdest and most capable crop and market experts in the country, for the huge proportions of the fund itself and the profits at stake not only render the employment of the best talent necessary but also easy, as the proportion of the expense to the aggregate profits will be trifling." "For purposes of convenience, we have placed shares in this great fund at ten dollars. If you send $100, you will get the profits on ten shares from the moment your remittance is received—if a thousand dollars, the profits on 100 shares." This is the gist of the appeal which went out to the cities, towns, and was a guess concern one of the country. The response was instantaneous and enormous. Although the scheme was in operation only a few months, it took in over $2,000,000. In the mails of the day on which Post Office Inspector Stuart, of Chicago, enforced the fraud order against this swindle, more than $15,000 in post office money orders came was received at the "Fund W" office. The check books of the concern showed that this money with that received in other forms of remittance was to be used to pay a "dividend" amounting to $20,000. A further examination into the affairs of the swindle established the fact that the current receipts from victims were used right along to pay without any regard whatever to any deals on the board or any profits therefrom—and these were put out where they would do the most good in stimulating those who received them to increase their "investments" and to spread the news of this quick and easy road to wealth among neighbors and friends, of these so-called monthly dividends amounted to more than 12 percent. Here was actual fulfillment, not when the victims cashed and found the dividends. Some promise! Those "dividend checks" that they were honored, any misgivings they had harbored, disappeared and they felt that their financial future was more than assured. The show showed these remittance letters to the friends they wished to favor and this process multiplied the victims in a cumulative ratio besides drawing a big increase of "investments" from the original victims. Of course, the number of the earlier victims was very small in comparison with which this cumulative process was the crop of culture developed when once the effect of the stimulant was realized from a broad territory. Therefore, it mattered little if the first or original crop of victims received a total of "dividends" amounting to original investment with a good profit added. So long as new victims multiplied in numbers with each incoming mail and the older ones added to their speculative contributions, the "dividend" game could be played with impunity. "Investors" by the tens of thousands poured an ever-increasing volume of money into the treasury of this infamous get-rich-quick swindle, and when the post office department shut down the iron gate of the fraud order, thousands of angry letters of protest were sent to the head of the department at Washington. These protests demanding the inspector's removal were so strong and carried evidence of actual profits so plausible that the post office inspector was summoned to Washington to explain the situation. Which he made or needed to make was to produce the proofs that the concern had been paying "dividends" from moneys received as investments, not from profits actually earned. He was told to go back to his work. Subsequently, the case was turned over to the department of justice for criminal prosecution and the men in the swindle—or at least some of them—were convicted and sent to the penitentiary. But the work of these swindlers has lived after them in thousands of other schemes fashioned on the pattern of the "Fund W" in every essential feature. Of course, variations in almost infinite number have been devised, and some of them possess a degree of refinement which makes their likeness to the original difficult to distinguish. But the possible investor will do well to consider that the actual payment of or the promise to pay an excessive rate of return is sufficient ground for the suspicion that the scheme is questionable and should be sifted to the bottom before any money is put into it. This nation has enjoyed a long period of unexampled prosperity. As a result, thousands of men who a few years ago were either poor or only moderately well-to-do have become comparatively wealthy and have made more money than they need in the operation of their regular businesses. In fact, there is a great multitude of these new capitalists who have retired from their former occupations to live on their money. This means that everywhere there is an accumulation of capital seeking investment at reasonable rates, and the man who has a proposition which is essentially sound has only to make proof of this fact in order to command all the money needed whether the enterprise requires millions or only thousands. He has no need to deluge the mails with circulars and form letters making appeals to "the people" to come in with their savings. If his enterprise has real substance and bottom he can get the money from a few capitalists with less trouble than is required to write one set of circulars and form letters. And he does not have to promise "big monthly dividends" or anything of the kind. Capital is not impatient when it is secure; semi-annual or quarterly dividends will answer its purposes very well, and it is generally suspicious of anything which promises an extravagant percentage of return. In view of these facts there is but one conclusion to be drawn. The investment enterprise which has to conduct a house-to-house campaign, by means of the United States mails, or by solicitors, or both of them, to collect the savings of the working people makes practical confession that its proposition is not solid enough to command the confidence of those who are constantly looking for places where they can put their money and get a return insignificant in comparison with that promised by this class of financial institutions. SERIAL STORY THE HOUSE OF A THOUSAND CANDLES By MEREDITH NICHOLSON Author of "THE MAIN CHANCE." ZELDA DAMEHON." Etc. Copyright IM 6 ly Uol>b*-MerrlU Co. CHAPTER VIII.—Continued. The man I was looking for came to the door quickly in response to my knock. "Morgan—" I began. "Won't you come in and rest yourself, Mr. Glenarm?" he interrupted. "I reckon you're tired from your trip over—" "Thank you, no," I snapped. "Suit yourself, Mr. Glenarm." He seemed to like my name and gave it a disagreeable drawling emphasis. "Morgan, you are an infernal blackguard. You have tried twice to kill me—'' "We'll call it that, if you like,"—and he grinned. "But you'd better cut off one for this." He lifted the gray fedora hat from his head, and poked his finger through a hole in the top. "You're a pretty fair shot, Mr. Glenarm. The fact about me is,"—and he winked,—"the honest truth is, I'm all out of practice. Why, sir, when I saw you paddling out on the lake this afternoon I sighted you from the casino half a dozen times with my gun, but I was afraid to risk it." He seemed to be shaken with inner mirth. "If I'd missed, I wasn't sure you'd be scared to death!" For a novel diversion I heartily recommend a meeting with the assassin who has, only a few days or hours before, tried to murder you. I know of nothing in the way of social adventure that is quite equal to it. "Morgan, I hope you understand that I am not responsible for any injury my grandfather may have indicted on you. I hadn't seen him for several years before he died. I was never at Glenarm before in my life, so it's a little rough for you." To visit your pleasure on me." He smiled tolerantly as I spoke. I knew—and he knew that I did—that no ill feeling against my grandfather lay back of his interest in my affairs. "You're not quite the man your grandfather was, Mr. Glenarm. You'll excuse my bluntness, but I take it that you're a frank man yourself. He was a very keen person, and, I'm afraid,"—he chuckled with evident satisfaction to himself,—"I'm really afraid, Mr. Glenarm, that you're not!" "There you have it, Morgan! I fully agree with you! I'm as dull as an oyster; that's the reason I've called on you for enlightenment. Consider that I'm here under a flag of truce, and let's see if we can't come to an agreement." "It's too late, Mr. Glenarm; too late. There was a time when we might have done some business; but that's past now. You seem like a pretty decent fellow, too, and I'm sorry I didn't set you sooner; but better luck next time." "Well," I said, seeing that I should only make myself ridiculous by trying to learn anything from him, "I hope our little spats through windows and on walls won't interfere with our pleasant social relations. And I don't hesitate to tell you,"—I was exerting myself to keep down my anger,—"that if I catch you on my ground again I'll fill you with lead and sink you in the lake." "Thank you, sir," he said, with so perfect an imitation of Bates' voice and manner that I smiled in spite of myself. "And now, if you'll promise not to fire into my back, I'll wish you good day. Otherwise—" He snatched off his hat and bowed profoundly. "It'll suit me much better to continue handling the case on your own grounds," he said, as though he referred to a business matter. "Kill a man on your own property requires some explaining—you may have noticed it?" "Yes; I commit most of my murders away from home," I said. "I formed the habit early in life. Good day, Morgan." As I turned away, he closed his door with a slam—a delicate way of assuring me that he was acting in good faith, and not preparing to puncture my back with a rifle ball. I regained the lake shore, feeling no great discouragement over the lean results of my interview, but rather a fresh zest for the game, whatever the game might be. The sun was going his ruddy way beyond St. Agatha's as I drove my canoe into a little cove near which the girl in the tam-o'-shanter had disappeared the day before. The shore was high here and at the crest was a long curved bench of stone, boldly reminiscent of Alma Tadema, and as clearly the creation of John Marshall Glenarm as though his name had been carved upon it. It was assuredly a spot for a pipe and a mood, and as the shadows crept through the wood before me and the water, stirred by the rising wind, began to beat below, I invoked the one and yielded to the other. Something in the withered grass at my feet caught my eye. I bent and picked up a string of gold beads, dropped there, no doubt, by some girl from the school or careless member of the summer school. I counted the separate beads—ony. They were round and there were 50 them. The proper length for one turn about a girl's throat, perhaps; not more than that! I lifted my eyes and looked off toward St. Agatha's. "Child of the red tam-o'-shanter, I'm very sorry I was rude to you yesterday, for I liked your steady stroke with the paddle; and I admired, even more, the way you spurned me when you saw that among all the cads in the world I am number one in Class And these golden bubbles (O girl the red tam-o'-shanter!), if they are not yours you shall help me to find the pwner, for we are neighbors, you and I, and there must be peace between our houses." With this foolishness I rose, thrust the beads into my pocket, and paddled home in the waning glory of the sunset. That night, as I was going quite late to bed, bearing a candle to light through the dark hall to my room, heard a curious sound, as of someone walking in the house. At first I thought Bates was still abroad, but I waited, listening for several minutes, without being able to speak. To mark the exact direction of the sound or to identify it with him. I went on to the door of my room, and still a muffled step seemed to follow me,—first it had come from below, then it was much like someone going upstairs,—but where? In my own room I still heard steps, light, slow but distinct. Again there was a stumble and a hurried recovery,—ghosts, reflected, do not fall down stairs! The sound died away, seemingly some distant part of the house, and though I prowled about for an hour did not recur that night. CHAPTER IX. The Girl and the Rabbit. Wind and rain rioted in the wood, and occasionally both fell upon library windows with a howl and splash. The tempest had wakened me; it seemed that every chimney in the house held a screaming demon. We were now well launched upon December, and I was growing used to my surroundings. I had offered myself frequently as a target by land and water; I had sat on the wall and tempted fate; and I had roamed the house constantly expecting to surprise Bates in some act of treachery; but the days were passing monotonously. Memory kept plucking my sleeve with reminders of my grandfather, was touched at finding constantly his marginal notes in the books he had collected with so much intelligence and loving care, some of the outer wall, or perhaps, more properly placed. In the chapel, would be fitting; and I experimented with designs for it, covering many sheets of drawing paper in an effort to set forth in a few words some hint of his character. On this gray morning, I produced this: It occurred to me that memorial, a tablet attached to 1935, the life of John Marshall Glenarm was a testimony to the virtue of generosity, forbearance, and gentleness, the beautiful things he loped were not nobler than his own days. His grandson (who served him in 1911) writes this of him 1901. I had sketched these words on a piece of cardboard and was studying them critically when Bates came in with wood. "They're unmistakable snowflakes, sir," he remarked from the window. "We're in for winter now." Bates had not mentioned Morgan or referred even remotely to the pistol diot of my first night, and he had certainly conducted himself as a model servant. The gardener at St. Agatha's, a Scotchman named Ferguson, had visited him several times, and I had surprised them once innocently enjoying their pipes and whisky and water in the kitchen. "They are having trouble at the school, sir," observed Hates. "The young ladies running a little wild, eh?" "Sister Theresa's ill, sir. Ferguson told me last night. And Ferguson says that Miss Devereux's devotion to her aunt is quite touching." "Miss Devereux!" "That's the name, sir,—rather odd, I should call it." "Yes, it is rather odd," I said, composed again, but not referring to the name. My mind was busy with a certain paragraph in my grandfather's will: "Should he fail at any time during said year to comply with this provision, said property shall at once revert to my general estate, and become, without reservation, and without necessity for any process of law, the property, absolutely, of Marian Devereux, of the county and state of New York." "Your grandfather was very fond of her, sir. She and Sister Theresa were abroad at the time he died. It was my sorrowful duty to tell them the sad news in New York, sir, when they landed." "The devil it was!" It irritated me to remember that Bates knew exactly the nature of my grandfather's will. Sister Theresa and her niece were doubtless calmly awaiting my failure to remain at Glenarm House during the disciplinary year. I had given little thought to Sister Theresa since coming to Glenarm. She had derived her knowledge of me from my grandfather, and, such being the case, she would naturally look upon me as a blackguard and a monace of the peace of the neighborhood. I had therefore kept rigidly to my own side of the stone wall. "Bates!" He was moving toward the door with his characteristic slow Step. "If your friend Morgan, or any other one else, should shoot me, or if I should tumble into the lake, or otherwise end my earthly career—Bates!" His eyes had slipped from mine to the window and I spoke his name sharply. "Yes, Mr. Glenarm." "Then Sister Theresa's niece would get this property and everything else that belonged to Mr. Glenarm." "That's my understanding of the matter, sir." "Morgan, the caretaker, has tried to kill me twice since I came here. He fired at me through the window the night I came—Bates!" I waited for his eyes to meet mine again. His hands opened and shut several times and alarm and fear convulsed his face. "Bates, I'm trying my best to think well of you; but I want you to understand,"—I smote the table with my clenched hand,—"that if these women, or your employer, Mr. Pickering, of that damned hound Morgan, or you— damn you, I don't know who or what you are!—think you can scare me away from here, you've woken up the wrong man; and I'll tell you another thing,—and you may repeat it to your school teachers and to Mr. Pickering who pays you, and to Morgan, whom somebody has hired to kill me, that I'm going to keep faith with my dead grandfather, and that when I've spent my year here and done what that old man wished me to do, I'll give them this house and every acre of ground and every damned dollar the estate carries with it. And now one other thing! I suppose there's a sheriff of some kind of a constable with jurisdiction over this place, and I could have the whole lot of you put into jail for conspiracy, but I'm going to stand out against you alone, do you understand me, you hypocrite, you stupid, slinking spy? Answer me, quick, before I throw you out of the room!" 