All sorts of methods of salting mines, even to the injection, with a hypodermic needle, of strong solutions of mineral salts into a mining engineer's carefully sealed sample bags, have been worked. The most honest, careful, and expert mining engineers have been deceived time and again, and salted right under their own eyes. Even a bland Chinee may be fooled. Take the instance of the Mulatos Mine: The bunch of Chinamen who proposed to buy it insisted on a mill-run test on fresh-mined ore, taken out BY THEMSELVES, for a five-days' run. They were not taking any chances, in their own belief. The owners of the mine, however—so runs the story—had a platform of plank arranged above the timbers at the top of the drift where the Chinamen brought out their ore cars. On this planking a man lay face downward where he could see each ore car that passed. He had a rather hard life for five days on the sandwiches and water which he took up there with him, but he managed to drop a pinch or so of nice gold dust into every car of ore that came trundling under him. The mill-run was an entire success from the viewpoint of the sellers, although not from that of the buyers.
There is no working law, let us repeat, which actually protects the investor against this sort of thing, nor which always protects even the promoter, though he be honest. The game is risky all the way along the line, in spite of state laws against the heinous crime of salting, which latter hath as yet by no means lost its savor.
THE MAIL AND MINING THIEVES
As matters stand to-day, the man selling mining stock on a fraudulent basis fears the Post Office Department much more than he fears the District Attorney. That is the main protection which the public has against such schemes. But to depend upon it is like trying to stop Niagara with a dam of reeds. The man who induces you to take your money out of the savings bank in exchange for stock in a mine, through such operations as have been described, thrives by reason of his use of the United States mails. It is a mail-order business pure and simple.
Let us see what machinery the Government has to protect you and prevent the letter-carrier from bringing daily to your door the flamboyant literature intended to lure your money from the bank. There are five hundred Post-Office inspectors employed in watching Uncle Sam's mail wherever it is carried, in keeping the vast and complicated machinery of the Post Office Department oiled and working smoothly, in running down Post-Office robbers and mail thieves and, lastly, in keeping the mail free from frauds. Ninety per cent. of this force is required to do the routine work of the inspecting branch; that is to keep the machinery running smoothly and to prevent delays. That leaves just ten per cent. for actual detective work such as is necessary in running down thieves and in tracing frauds. In the New York district, which comprises the state of New York as well as New York City, there is a force of twenty-five men working under a chief inspector. Of the ten men assigned to work in New York City, by no means all have special detective ability, and the time of these is taken up almost entirely in catching actual thieves.
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.