By Ray Schultz
J. M. Pattee left Omaha for good—some say he was run out—in the summer of 1873. The Nebraska legislature had outlawed lotteries, effective Sept. 1, so he regrouped in New York, where he owned a brownstone near Central Park.
Not a man of idle nature, as a reporter put it, he ran a few scams in the city, then made his way to Laramie and ingratiated himself with the right people. The Wyoming legislature passed a bill granting him a ten-year lottery license that could never be altered, and Pattee acted on it before the governor could sign it (which he never did).
It didn’t matter. The so-called Wyoming Lottery would operate entirely by mail. And Pattee could get away with it,for lawmakers had failed to keep lotteries like his out of the postal system.
Congress tried in 1865 with a law defining “nonmailable matter”—everything from explosives to lottery materials. But it failed to specify letters or circulars, and what it meant the courts could never figure out.
Realizing their error, the lawmakers attempted to clarify things three years later by prohibiting the mailing of “any letters or circulars concerning lotteries, so-called gift concerts, or other similar enterprises.” But this bill, too, was flawed in that it failed to set penalties for disobeying it.
So the politicians went at it one more time. In 1872, they forbade the mailing of “any letters or circulars concerning illegal lotteries, so-called gift concerts, or other similar enterprises, offering prizes, or concerning schemes devised and intended to deceive and defraud the public for the purpose of obtaining money under false pretenses.”
This law allowed postmasters to hold up payment of money orders. But it was almost as if they wanted to fail. The blunder this time was that they had added the word “illegal.” How could a lottery chartered by a state or an institution be considered illegal?
Pattee had studied the mail order business, and knew that there was more to it than lotteries. For example, he had doubtless heard of E.C. Allen, of Augusta, Maine, who in 1869 started Peoples’ Literary Companion, a paper filled with stories, homilies, recipes, songs and advertisements.
Other publishers followed Allen’s lead. A fellow Augustan named P.O. Vickery started Fireside Visitor, and W.W. Gannett followed with Comfort. Mailed to farmers whether they wanted them or not, these mail order papers were “the great business of the city, completely overshadowing everything else,” wrote Frank A. Munsey.
Pattee could do the arithmetic as well as anyone. He created The Times Illustrated, a promotional vehicle for the Wyoming Lottery. The cost was defrayed, in part, by paid advertisements for Red Cloud’s Great Indian Blood Purifier and other patent medicines.
He followed it with The Laramie News, in which he described Laramie and the local mining deposits: “There are within a hundred miles of Laramie City a hundred miles in length of gulches which will pay an average of five dollars per day in gold, for every day’s labor, and they can be worked with very little outlay of capital.”
Thus he sharpened his pen for a new venture—and just in time. On July 12, 1876, Congress enacted a new bill, dropping the term “illegal” when describing lotteries. Now it was unlawful to send any sort of lottery letter.
This bill turned out to be as hollow as the previous ones. But Pattee cancelled his next lottery mailing, saying “times have been hard,” and accelerated a plan he apparently already had: He prepared a letter for fools who had won his previous lotteries and were now on his sucker’s list.
“On account of the new Postal law and the penalty for sending letters concerning lotteries through the mails, I have been obliged to make some other arrangement to pay off the small prizes of $1 and 50 cents as it would cost the party receiving them more than the amount to pay the express charges,” Pattee wrote under his own name.
Instead, he awarded shares in “one of the most extensive gold mines on this continent.” Additional shares could be had for $2 apiece.
“It is the richest gold mining country in the world,” Pattee wrote. “For miles away up in the heights of those tremendous elevations in the Big Horn Mountains glisten rich veins of gold quartz that run in golden ribbons at close intervals across their breasts. Some specimens of gold quartz have been found which assayed $47,000 to the ton—a mountain of gold ore.”
But Pattee’s own employees turned against him. They sent a mailing to his “winner’s” list, offering for one dollar “a most complete exposure of this ‘arch swindler’s’ manner of defrauding the public during the past years.” They added that he planned to “foist upon those who have won good prizes in his last drawings, amongst whom we see your name, certain stock certificates…instead of the money they have RIGHTFULLY WON.”
Pattee returned to New York, where there was less danger of getting shot. He now worked only through designated criminals who would take the fall if there was trouble. One was N. Sherman Read, a tiny man known to friends as Nate. Pattee was married to Read’s sister Eunice, and they had often summered at Read’s resorts in New Jersey. In 1876, now working for his brother-in-law, Read opened a lottery office on Nassau St. near Park Row.
Flanked on one side by City Hall, Park Row was home to newspapers and advertising agencies–and dozens of lottery shops. “Entering the office of any one of these so-called firms, the inquirer finds himself surrounded on all sides by a ground-glass partition,” a reporter wrote. And each one had a “hard-featured man peering through a wire netting under the sign ‘Cashier.’”
These offices also sent quantities of junk mail. The city’s best printers and engravers were two blocks south on Maiden Lane, and the largest post office in the country, a five-story granite block known as the Whale, stood on the triangular lot bordered by Park Row and Broadway.
Pattee made full use of these facilities, not only for his lotteries but for schemes like the Bullion Gold Mining Co. and Carburrus Gold Mining Company.
He also got to know his fellow mail fraud artists. Ellis and William Elias were driven out of Cincinnati for swindling, then made a fortune in New York running “dollar stores”—stores in which the shopper never knew what he was buying. They enjoyed a “very unenviable reputation,” the New York Times wrote.
The brothers operated a mail room in which men and girls sat at two rows of tables shaped in the letter “L,” addressing envelopes. Also to be found there was H.P. Jones, a former post office employee who was “discharged from P.O. for NY for embezzlement or helping himself to other peoples’ money.” A handwritten note signed by him was sent to 140,000 people in the fall of 1878:
“A cousin of mine bearing the same name as yours, after the war was over, left his Regiment and I have not heard from him since. Now I do not know whether you are the same person or not but you can tell as soon as you see my signature to this letter.”
The note continued that a contest was about to be held, and that if the recipient agreed it would be rigged in his favor. Why this largesse? “I am sure that if a large prize was drawn by you and shown around that thousands of tickets could be sold in your County.”
A series of followup letters persuaded the sucker to pay $8 apiece for lottery tickets—a seemingly paltry sum by today’s standards—but the letters cost only a penny apiece to mail, and not much more to print. The Eliases had discovered the immutable law of junk mail—that a profit could be made even after expenses and the pilfering of cash-filled envelopes by postal workers.
Anyway, it was not their only business. They also ran several “stores,” including a jewelry store on Broadway and 21st St. (above which was their mail room). But their flagship was the Centre, a large outlet on 22nd St. and Broadway, in which they displayed gold and silver jewelry in cases. It operated on the same marketing principles as the junk mail business.
The Eliases promised in circulars that they could deliver “the most valuable articles to the purchaser at the same price as those of less cost,” but what they really offered was a lottery. The customers bought tickets in sealed envelopes from a cashier, who sat hidden in a teller’s cage. Most opened the envelopes to find that they had won cheap merchandise.
Operating on the border of legality, the pair had to pay occasional modest fines. But they “reaped a rich harvest from their numerous enterprises,” the New York Times reported. Ellis Elias alone had $300,000 in assets, including a country estate and $3,000 worth of trotting horses.
“A man who came in contact with the senior member of the Elias firm used to tell of seeing him exhibit a roll containing sixty one thousand dollar bills, one day, and when putting it back in his pocket heard him remark, pleasantly, that that was some that came in after he had got done expecting to make any money,” wrote George Rowell, whose ad agency was located at 41 Park Row.
Pattee could admire these accomplishments. And though they were competitors, he started working with Eliases on a matter that would benefit them both: The trading of names and addresses.
There was at this time no mailing list business per se. Some frauds wrote to small-town postmasters offering a dollar for the names of “all men (no women) as herein provided, who are permanent residents and who receive mail at your office.” Others asked customers for the names of their friends. “Any person, who will send us the Address of ten persons of their acquaintance, we will send free post-paid, a beautiful Chromo for their trouble, and Wholesale Price-list of Jewelry,” the City Novelty Co. promised in 1873.
Still another way was to copy names out of a city directory. But this was too much work for the average fraud—an easier method was to sell or rent names from each other. Pattee had 300,000, and he turned an unknown number of them over to the Eliases for a consideration.
This bartering of names quickly grew into a business. L’Orient Chemical Company of Bristol, Rhode Island, offered its letters to all comers in 1875.
By this time, using his list, Pattee had broadened his product offering. First, he went into stock brokerage with a Louisiana criminal named J.F. Barrett, using Andrew Simpson, his Maiden Lane printing foreman, as a front man. They mailed a newspaper called The New York Stock Exchange.
Next was an outfit called Heath & Co., The office was located a few doors away from a legitimate brokerage—Wm. Heath & Co. Victims received stock certificates and regular reports on how their investments were soaring, but requests to redeem the stock were never answered.
Then Pattee unveiled his masterpiece—the Silver Mountain Mining Co. For this, he hired a former postal agent named William R. McCall, who had also worked for the Eliases.
“Persons who invest a few dollars to develop the Mine may realize a fortune,” said the prospectus, which featured a map marked in several places by the word “ore.”
What they got, though, were regular reports and requests for more money to keep the mine running. Said one: “The Indians made their appearance last week, but have all but disappeared.”
It was the summer of Custer’s last stand and the lead-up to Hayes-Tilden presidential contest. The Brooklyn Bridge was being built—the noise could be heard on Park Row. And Pattee, like many other businessmen, coped with problems beyond his control. The Pennsylvania and New York Central Railroads stopped hauling mail cars because the post office had reduced their compensation by 10%. Then there was a nationwide rail strike. Meanwhile, he feuded with the Eliases. None of it stopped him from reaching the “zenith of his prosperity.”
But he was being watched.