POST-OFFICE PROTECTION INADEQUATE
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.