Read Chapter 1: Scheme to Defraud
Read Chapter 2: A Nation of Petty Gamblers
Known for their beauty and even more for their vast ore deposits, the hills around Laramie were in 1868 the scene of almost daily knifings. But things calmed down when the Union Pacific arrived—by1875, passengers were rushing off trains to dine on dishes like minced liver on toast and calves tongue with tomato sauce, and there was one other element of civilization: A lottery run by a man billed as “Pattee, J.M., capitalist.”
Pattee had left Omaha—some say he was run out—in the summer of 1873. The Nebraska legislature had outlawed lotteries, and that law took effect on September 1, one day after his Temple Lottery drawing was held without his presence in a back room. Worse, people throughout the West had seen this story from Leavenworth: “J.M. Pattee, a well known lottery man, who figured conspicuously in an Omaha gift enterprise, was arrested here last night, in answer to a telegram from Omaha, on charge of obtaining money under false pretenses.”
Pattee regrouped in New York, where he owned a “fine brown stone residence” near Central Park. But his vacation was interrupted on Sept. 18 when, as Theodore Dreiser wrote, “one of the most startling financial tragedies that the world has ever seen had its commencement”—the collapse of Jay Cooke’s banking house, and the resulting panic.
Many men were ruined. Others found ways to exploit the situation. “The financial panic which has for the last two months, paralyzed the business of every section of this country and of Europe has prevented thousands from investing in tickets,” the Kentucky Lottery said in a December mailing, implying that the odds of winning had improved.
City Novelty Co. of Philadelphia took a similar approach: “The Crisis that has so suddenly burst upon the Country and so rapidly extended to every branch of Business, has particularly affected manufacturers of Jewelry, and we find ourselves carrying a very extensive stock of FINE GOODS for LADIES’ AND GENTLEMEN’S WEAR,” it said in a brochure, adding that the offer was “PERFECTLY LEGITIMATE, AND NOT A LOTTERY.”
For his part, Pattee worked the suckers through his “brokerage ” on lower Broadway—with limited success. He needed a new premise, and he found it, after months of research, in the Wyoming territory.
He arrived in Laramie late in 1874, and as he had in Omaha 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 he acted on it before the governor could even sign it. But he had learned his lesson: There would be no public drawings in Laramie, or anywhere else.
On the contrary, the so-called Wyoming Lottery would operate entirely by mail. He retained the Laramie Daily Sun as printer, and started mailing circulars to his list. “Every ticket a prize! No Blanks! NO BLANKS!” he wrote, failing to mention that most prizes were for fifty cents, half the price of a ticket. Yet he could get away with it,for lawmakers had failed to keep lotteries out of the mail, or even control them.
First came the 1865 law defining “nonmailable matter”—everything from explosives to lottery materials. It failed to specify letters or circulars, and what it meant the courts could never figure out.
Congress clarified 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; the lottery men ignored it.
So the politicians tried again. 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 to the frauds. 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?
But Pattee had studied the mail order business, and knew that there was more to it than lotteries. He had doubtless heard, for example, about E.C. Allen, of Augusta, Maine. Allen had figured out that newspapers could be mailed for as little as a half cent per copy, and in 1869 he 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 promotion 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. Both of these one-shots qualified as “advertising circulars, filled full of the cheapest and most disreputable advertising with only enough reading matter interspersed to give them the semblance of newspapers.” But the Laramie News was different—it also 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,” Pattee or an associate wrote.
He added that “Wyoming contains enough coal and iron to supply the whole world for ages,” then made this claim: “There is less of crime and immorality in our city than in most places in the East.”
Thus he sharpened his pen for a new venture—and just in time. On July 12, 1876, Congress enacted a new postal 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.
He continued that an old miner named John McCasey had discovered “one of the most extensive gold mines on this continent,” shares of which would be awarded in lieu of the prizes. Better yet, 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.”
Meanwhile, Pattee was derided for not conducting lottery drawings. “The only drawing we have ever heard of in connection with the lottery outfit, is the drawing of money from all the fools in this country and Canada,” the Cheyenne Leader observed.
In response, Governor John Thayer vetoed the bill giving Pattee a ten-year lottery license. Then, as in Omaha, Pattee’s own employees turnedagainst 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 admitted that they had “been in the employ of J.M. Pattee, whose ‘LOTTERY SWINDLES,’ dated from this place, have become so notorious,” and they warned that Pattee 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.”
Another man might have been undone, but not Pattee, who prided himself as being “calm and composed in meeting and disposing of all issues arising from realized facts.” He was not going to be stopped by a tactical defeat.
NEXT WEEK: The Pirates of Park Row
Copyright 2008 by Ray Schultz
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