It is only the biggest and most barefaced scheme that under these
conditions can receive any attention whatsoever from the
department, and even then its force is hopelessly inadequate and
incompetent for the work in hand, work requiring the
highest-class detective ability.
About twelve years ago the Post Office Department ran down and
convicted a swindler, Stephen Balliet, who was selling stock in a
mine full of water in Oregon and was known as "the mining genius
of the Northwest." He was tried three times, finally convicted,
and sent to prison. That case cost the Post Office Department
$18,000, took a man's entire time for two years, and required two
trips across this continent. The Government has not tried since
to get many such convictions.
Perhaps because of the pressure of other work, perhaps for other
causes, investigations of this nature are allowed to languish.
Some years ago, when the firm of Douglas, Lacey & Company was
reaping its harvest, an inspector was assigned to investigate the
concern's operations. He was one of the ablest inspectors of the
service, a man with real detective ability and a knowledge of the
devious ways of certain kinds of financing. He made a trip to
Mexico and subsequently sent in a report to Washington
recommending that a fraud order be issued against the concern and
that its use of the mails be stopped. He waited a long time and
then got word from Washington that more evidence was required. He
made another investigation and sent in another report,
recommending in even stronger language that the mails be barred
and the public protected. While on this work he was constantly
assigned also to other matters and finally was shifted to a
station in the South. The concern collapsed some years later,
leaving thousands of people in this country and in Canada bereft
of their small savings. There was no fraud order ever issued
against this firm, though shortly before it closed up it was
informed that if it continued to sell stock its use of the mails
would be stopped.
The burden of proof is on the buyer. If he turns to the District
Attorney he finds perhaps a sympathetic official, without power
to assist him. The man selling bogus mining stocks knows all
this; therefore his harvest goes on. It is better than the
green-goods game, better than the wire-tapping swindle, safer
than selling any other form of gold bricks. A few years ago a
reporter who was engaged in investigating the schemes of Cardenio
F. King--now in Charlestown jail, but then posing as "the apostle
of the golden rule in finance" and selling his stocks by the
barrel in every mill town in New England--made a call on the late
John B. Moran, then District Attorney in Boston and widely known
as a reformer. He asked Mr. Moran's help in proving that King was
a swindler.
"Young man," said Boston's reform District Attorney, "if King was
selling corner lots in heaven and advertising them in the
newspapers, I couldn't stop him, because I haven't anybody to
send up there and prove that they are not there."
King wasn't selling corner lots in heaven, but he was selling
stock in a Texas company that was the next thing to it, so far as
tangibility is concerned. It was only when he actually took from
investors money sent to him to buy real stocks, and pocketed it,
that he was put in jail.