Honduran Gold

By Ray Schultz

The United States was in a rare period of felicity in 1899. It had won the Spanish American War, taking over the remnants of the Spanish empire. William McKinley, a pro-business Republican with a benign nature, was in the White House; prosperity reigned. The automobile had been invented, the airplane would follow, and people could buy cylinders containing recorded songs like ”I Guess I’ll have to Telegraph My Baby,” by Arthur Collins. But nobody was more optimistic than the lucky few who received pink Express Mail circulars from Honduras at the start of the year.

These were for the Honduras national Lottery (aka the Louisiana Lottery). They offered 12 monthly drawings, each featuring a $30,000 grand prize and hundreds of lesser awards. They were sent by private Express Mail because it was a crime for lottery operators to use the U.S. Post Office. And, of course, they didn’t go to everyone: They went only to lottery enthusiasts—to the fools who had previously bought tickets from the company that had opened for business during Reconstruction.

In 1868, Louisiana was occupied by federal troops, and run by corrupt Republicans, “ignorant Negroes cooperating with a gang of white adventurers, strangers to our interests and our sentiments,” one Southern editor wrote, reflecting the racism of the time and place. Among the newcomers was a 31 year-old Baltimorean named Charles T. Howard. Some people said Howard inflated his Confederate war record, but it didn’t matter, for he had something in short supply in Louisiana: capital. It was provided by the New York gambler John Morris, and Howard liberally dispensed it to the Republicans in the legislature. His hosts rewarded him with an exclusive 25-year charter to operate a lottery, and made it a crime for anyone else to even start one. And the company was exempted from all taxes, except for a $40,000-a-year contribution to the state educational fund.

At first, the Louisiana Lottery sold chances mostly through policy shops in the state: the daily drawings were “the special curse of the colored population,” one observer wrote. But it soon moved into the mails, largely thanks to Dr. Maxmillian A. Dauphin, appointed by Howard as president in 1873.

Dauphin was born in 1837 in Alsace Lorraine, and emigrated to the United States at age 16 with a brother. But the siblings separated after arriving, and Maxmillian ended up friendless in New Orleans. He attached himself to Dr. Sam Choppin, “then the center of one of the most brilliant social, professional and political coteries.” and under his sponsorship became a physician. Then he went into business.

Dauphin knew that the lottery would never realize its full potential until it dominated the Yankee market, which it did within a few years. Next to New Orleans, Washington was the most lucrative city. The Lottery offered tickets at cigar stores, hotels, saloons and barber shops, and through bootblacks and newsboys in the streets. And, of course, it peddled them by mail, so many that Bin “D,” in the Washington post office was assigned to Dauphin, and clerks worked into the night, using “express wagons and furniture cars to haul the outgoing mail,” one account reported.

It was similar in New York and Chicago, where lottery agents mailed tens of thousands of packages a month, containing letters, certificates, logos, entry forms and tickets, all promising “grand” and “extravagant” prizes. One package sent in New York in 1880 said: .“No seed, no harvest.” The Lottery’s mailings pulled in $30,000 a day, or almost $11 million a year. And they constituted 45 percent of the entire business of the New Orleans post office.

The drawings were held in an ancient hall in New Orleans, with an alligator paddling around a pool outside. They were under the “personal supervision” of two venerated Confederate generals: Jubal T. Early and G.T. Beauregard. General Beauregard “was of large stature, but the progress of years weighed heavily upon him, and his shoulders were bent so as to throw his florid face, with its full white hirsute covering, forward towards the floor. Gray-blue eyes, fierce and penetrating, gleamed beneath bushy, overhanging brows. A suit of Confederate gray clothing, well cut and near, covered the aged man.” Then there was Jubal Early, “clad in black, and a handsome face crowned by now-white closely cropped hair was poised proudly above an elegant, dignified form.”

The generals were each paid tens of thousands of dollars a year to stand on stage once a month and “preside.” The drawings featured blindfolded boys from a local orphanage, wearing knickers, and were conducted before men who were “redolent of rum and tobacco and poor bathing facilities, and had no taste or money for clean raiment,” according to one eyewitness account. “With the utmost solemnity, Croupier Early proceeded to blindfold the boy beside him,” wrote another witness. “Located near the brazen drum, Croupier Beauregard, with corresponding gravity, tied a white handkerchief over the eyes of his juvenile assistant.”

The drawing began. Jubal drew the white paper from the encircling black rubber tube. “In measured tones he read the number, 48,146. The voice of General Beauregard was likewise measured and somewhat harder in its timbre when he called the figures on the white slip of paper which he drew from the little black tube: ‘200’ he said.” What it meant was the holder of ticket 48,146 had won $200.”

Several larger prizes were drawn, including jackpots of $100,000 and $300,000, but no winner came up to claim them, causing groans in the gallery. With good reason: One third of the tickets in the drum were unsold, still owned by the Lottery, which meant that the bettors were playing against the house. And the house did well. Government lotteries in Europe distributed up to 85% of their ticket money in prizes; the Louisiana Lottery kept more than half.

In 1890, Congress passed a law making it a felony to use the mails to conduct a lottery. Unlike previous bills, this one made it an offense to even to patronize a lottery by mail. President Benjamin Harrison signed it, and his Postmaster General, the retail magnate John Wanamaker, vowed to enforce it.

So Dauphin bypassed the mails, employing private express deliverers and removing he criminal taint for customers. His ads advised players to “remit currency by express at our expense. Give full address and make signature plain.” But the pressure and his rich New Orleans diet must have gotten to him, for in December 1890 Dauphin died at age 53 after a brief illness. Charles Howard was dead, too, having been thrown from a horse.

Paul Conrad, former chief clerk of the Lottery and part owner of an ice company, took over. The lottery office in Canada mailed thousands circulars over the border. They announced that “recent changes in the United States Postal regulations have rendered it preferable to more closely consult the interest of our Canadian patrons by establishing a branch office in Canada.”

At this point, the Supreme Court of Louisiana was deciding a case over whether to renew the Lottery charter or put it on a ballot referendum. The court, heavily subsidized by the Lottery, ruled to renew, and Conrad quickly got out a mailing hailing the victory. The pamphlet contained return express envelopes addressed to the New Orleans National Bank, again bypassing the Post Office. Worse, in John Wanamaker’s view, it was designed to look like a newspaper, and it was duly mailed at the second class rates for publishers.

Still, the publicity was bad for business. And in 1892, the U.S. Supreme Court upheld the anti-lottery laws. Conrad had one more trick: He relocated the Lottery to Honduras, again bypassing U.S. post office. “The Congress of the United Sates having lately passed laws prohibiting the use of mails to all Lotteres, we use the Express companies in answering correspondents snd sending Lists of Prizes to the U.S.A.”

The prices were as follows: Whole tickets, $2; Halves $1; Quarters 50C; Eighths 25C. The pieces also specified: “No order filled for less than one dollar.”

It’s not clear if Conrad was still involved (or even alive) at this point. Purchasers were advised to send their mail to E.J. Demarest, of Puerto Cortez, Honduras, C.A., care of Central American Express, in Port Tampa City, Florida.

The circulars also warned recipients to avoid fraudulent lotteries. “BEWARE of any lottery which claims to be drawn anywhere in the United States,” they said. “Buyers are cautioned against dishonest loteries. Fake lotteries give vendors thirty or forty cents on every dolllar for selling their tickets, therefore, an unscruplous vendor wll help their sale because it increases his profit.”

It’s not clear if the Honduras operation lasted far into the 20th Century: It probably didn’t. In 1901, during the first year of his second term, William McKinley was assassinated. His succssor, Theodore Roosevelt started an era of heavy federal regulation. And few of the old junk mail pirates survived.

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