“Sucker List” and the Evolution of American Business Fraud

Edward J. Balleisen The “Sucker List” and the Evolution of American Business Fraud

in the early 1950s, mickey mantle burst onto the american sporting scene as a power-hitting outfielder for the New York Yankees. After a bumpy first year in the majors in 1951, this young man from rural Oklahoma soon became a star, attracting close attention from fans, the press, and promoters of all kinds. As a 1957 article in the Saturday Evening Post recounted, Mantle proved especially willing to listen to the pitchmen who promised to multiply his new sources of income. Within a mere week of arriving in New York City, he had signed a contract with a predatory agent who generously promised to secure all manner of endorsement and business deals, modestly reserving a full 50 percent of Mantle’s earnings. Over the next few years, the Yankee phenom periodically took flyers on a series of ill-advised investments, including $3500 ($1000 paid in cash, the rest through a promissory note) for shares in a fake Oklahoma insurance company, hawked by a notorious sharper “who had served three prison terms and had an ‘FBI file an inch thick.’” Mantle’s remarkable lack of financial acumen meant that he “led the sucker list.” And yet, the Saturday Evening Post profile also noted that Mantle learned from his mistakes rather quickly. By 1957, he had employed a reputable agent who identified excellent endorsement opportunities, which dramatically increased his income (Povich 1957, 19–20). This vignette incorporates several key features of the broader history of deception and misrepresentation in American marketplaces.

social research Vol. 85 : No. 4 : Winter 2018 699 A SONG OF SAFETY In the young Mantle, one can see sever- My morning mail is a penance to me. al stock figures: the country bumpkin, Long, fat envelopes meet my eyes, the callow youth, and the credulous Filled with advice that is proffered free, celebrity, but also the savvy pupil who Telling of many a wondrous prize. became “more wise” through instruc- Old hooks baited with new disguise, Bundles of bunkum, a daily grist, tion in the school of wily charades. In New revamping of same old lies— the brief depiction of those who eager- PLEASE take my name off the ly sized up Mantle and took advantage Sucker List! of him, one gets a sense of the omni- Hawkers from Maine to the western sea, present American snake-oil salesmen Selling unsalable merchandise. who have found fertile ground in a Proffer me many a golden key— society that has often celebrated entre- Me, who’ve been bitten in too many buys. Towers with no roof but the bright blue preneurial innovation and aggressive skies, marketing. That same discussion hints You and my earnings good-by I’ve kissed! at the steady growth of anti-fraud in- I have sought plums in poor fruitless stitutions that took aim at duplicitous pies— economic actors, shared intelligence Please take MY name off the Sucker List! about them across government agencies and jurisdictions, and at least Booms in oil? (bring my snickersnee!) Rising industrials? Let ’em rise! sometimes curtailed their capacity to All my visions of Araby operate. Taken as a whole, the Satur- Are gone where the last year’s bird’s nest day Evening Post article contributed to lies. a longstanding public discourse about I’m a year older—I hope more wise! all the lies lurking throughout Ameri- Dreams of Golconda? I can resist. Buy for a fall? Then watch things rise! can commerce, a dialogue that sought Please take my name OFF the to caution consumers and investors sucker list! but simultaneously offered pointers to

ENVOI those who would deceive. Prints and pamphlets, circulars free, The Mantle profile also refer- That paper the nation so lavishly. enced, without comment, a specific Let me alone. You’ll never be missed! tool of duplicitous marketing: the PLEASE TAKE MY NAME OFF THE SUCKER LIST! “sucker list.” Rosters of easy marks, —Anonymous, Logansport Pharos-Tribune, compiled by and circulated among Jan. 13, 1926 the purveyors of consumer fraud and

700 social research get-rich-quick schemes, have been around for at least a century and a half, and have become a mainstay of commercial duplicity in the United States. The emergence and evolution of the sucker list illu- minate some key themes in the long history of American cons and scams: close connections between fraud and capitalist innovation; the persistent cut and thrust between fraudulent promoters and an ever-growing corps of anti-fraud professionals; and the ambivalence that Americans have often expressed toward the victims of consumer rip-offs and investment swindles, as cultural depictions of them swing between ridicule and sympathy.

INGENUITY AND INNOVATION IN THE WORLD OF CONS AND SCAMS American perpetrators of fraud have consistently updated and refined their business practices, deploying, as the anonymous author of the 1926 poem “A Song of Safety” described them, “old hooks baited with new disguise.” Almost immediately, the most inventive con artists and fraudulent promoters recognized the value of novel modes of communication, and so became early adopters of mail-order business, telephone selling, and Internet marketing. From generation to generation, fraudsters seized on the openings presented by emerging tech- nologies, like electricity in the late nineteenth-century, automobiles in the early twentieth-century, or cryptocurrencies in the last decade. They similarly took advantage of novel financial services, like the late nineteenth-century stock or commodity pool, or new modes of orga- nizing business activity, like the mid-twentieth-century franchising agreement. Vendors of fake investments saw that popular fascination with such transformational inventions tempered skepticism, while the uncertainties surrounding their evolution complicated the task of distinguishing enthusiastic but ill-founded optimism in sales talk from downright deceit. The savviest operators also proved adept at sidestepping any investigations of wrongdoing, either by paying off victims who voiced complaints, convincing the authorities that their actions did not rise to the level of illegality, deferentially promising to

The Evolution of American Business Fraud 701 cease and desist from prohibited practices, or moving beyond jurisdic- tional boundaries (Balleisen 2017, 142–73). The development of the sucker list exemplifies this pattern of clever adaptation. In the decades after the US Civil War, the relentless extension of the postbellum railroad, telegraph, and then telephone networks allowed American business-owners to dream of reaching much larger numbers of consumers and investors. But like all firms that wished to tap a national marketplace, the perpetrators of fraud faced daunting obstacles. Amid a late nineteenth-century society of a hundred million people spread out across thousands of miles, businesses had to spend considerable amounts to get their products or services before the public (Strasser 1989; Kreshel 1989; Ward 1996). For those duplicitous firms that wished to reach far-flung dupes, ex- penses for advertising, printing and mailing circulars, and hiring clerical and sales staff could quickly mount into the tens of thousands of dollars. John Hill, a long-time fraud investigator with the Chicago Board of Trade, estimated in the first decade of the twentieth century that stock swindlers spent $40 million a year on such overhead. Samuel Hopkins Adams, a muckraking journalist who heaped scorn upon the patent medicine industry in the early twentieth century, calculated that drug manufacturers expended a similar sum on newspaper advertising alone (Hill 1904, 93–94; Adams 1905, 124). Early developers of consumer brands, such as the Pittsburgh Heinz family, which concentrated on processed foods, and the Cin- cinnati firm Procter & Gamble, which produced soaps and other fat- based household products, confronted even more substantial costs as they pushed their wares. To reach retailers, manufacturers employed growing armies of traveling agents, who brought samples and marketing ideas across store thresholds. To reach consumers directly, enterprises mounted large-scale public demonstrations of their of- ferings, widely distributed circulars and pamphlets, and, especially after the 1880s, advertised aggressively. These undertakings required significant capital. By the turn of the twentieth century, national marketing campaigns cost hundreds of thousands of dollars, the equiva-

702 social research lent, as a share of the overall economy, of several hundred million dollars a century later1 (Sherman 1900; Koehn 1999; Dyar, Dalzell, and Olegario 2004). So long as advertisements and other marketing initiatives elic- ited a sufficient number of sales or enticed a sufficient number of suckers, enterprises could easily justify such enormous investments. But the efficacy of specific advertising campaigns proved difficult to predict, a problem that consumed manufacturers and consultants within the emerging advertising industry. Business journals and how- to guides around the turn of the twentieth century were filled with grousing about “wasteful” expenditures on commercial publicity, which usually prompted pleas for systematic assessments of particular selling techniques and attempts to improve the understanding of consumer preferences and tastes (Wilson’s Photographic Magazine 1898; Sheafer 1903; Moorehead 1916). The “sign posts to advertising suc- cess,” the head of one advertising agency argued in 1910, called for reaching “the right quality of people with the right influence at the least cost” (Foley 1910, 26). Firms that proved especially able to negotiate the expansive new selling terrain of a continental marketplace tended to follow, or even anticipate, this kind of advice. As early as the 1890s, executives at Procter & Gamble kept track of sales figures after particular advertisements appeared, while their counterparts at Heinz regularly inter- rogated sales agents for evidence about shifts in consumer demand. A decade later, leading manufacturers of consumer goods had begun to test advertisements in selected publications before embarking on national campaigns, to quiz customers about how they had become aware of their products, and to cultivate customer loyalty through as- siduous attention to customer complaints and suggestions. By the 1910s and 1920s, the most sophisticated marketing efforts conducted detailed surveys of households, which queried consumers (usually women) about not only their general attitudes to particular products and brands but also why they preferred some goods to others and how they made use of those goods. Market research

The Evolution of American Business Fraud 703 specialists analyzed the results, using the latest social science techniques emerging from the nation’s growing number of newly created graduate schools of business. The large-scale firms that led this trend included the Curtis publishing house, owner of the Ladies Home Journal and several other leading magazines; the advertising agency J. Walter Thompson; and Procter & Gamble. Together, their efforts led to a reconceptualization of the American economy, as firms tailored brands to particular demographic groups, separated by income (Stras- ser 1989; Koehn 1999; Dyer, Dalzell, and Olegario 2004; Ward 1996; Kreshel 1989; Wells 1999). The American mass market, manufacturers and distributors learned, was very much an agglomeration of dis- crete niches. To prosper in this context, businesses had to be able to identify and satisfy segments within the larger consuming whole. The individuals who ran fraudulent businesses learned similar lessons, turning to sucker lists as analogous means of improving the payoff of marketing investments. These rosters emerged contempo- raneously with the other techniques of amassing commercial information about American consumers and investors. While the editors of Curtis Publishing-owned magazines pored over the thousands of letters that arrived from readers and tracked likes and dislikes, some merchants of flimflam kept detailed notations of which Americans responded to their advertisements with requests for more information, and which ones sent money for fantastic cures or nonexistent job placements. While the managers at Procter & Gamble assessed the “pulling” power of various advertisements, some promoters of bogus securities sorted their clients into categories such as “Easiest,” “Very Easy,” “Easy,” “Fair Prospect,” and “Good if Properly Handled” (Wash- ington Post 1910). And while executives at J. Walter Thompson and other ad agencies cultivated a market for their expertise in analyzing consumer desires, a fraternity of information brokers in Chicago and New York City nurtured demand for ever more refined compilations of potential marks. Any attempt to piece together a precise history of the sucker list faces some daunting evidentiary hurdles, since name brokers who

704 social research catered to the swindling set tended not to deposit their business records in archives. Most discussions of this kind of early market research come from newspaper coverage and the public commentary of officials who had responsibility for enforcing anti-fraud laws—and the latter had strong incentives to exaggerate the social and economic threat posed by bogus firms. Nonetheless, one can identify at least the rough outlines of how this kind of information became an entrenched part of American commercial practice. References to mailing lists and repositories of letters from Americans who transacted business by mail first began to circulate publicly during the early 1870s. Although some manufacturers of these lists concentrated on ordinary customers of large-scale mail- order houses, others targeted individuals who responded to advertising from patent medicine makers, shady stock promoters, or some other mail-order swindle. By the turn of the twentieth century, there were several dozen name- and letter brokers operating in commercial centers like Chicago, Philadelphia, and New York, offering lists for sale and collections of letters for rent (New York Times 1871, 1873, 1879; Woodward 1886; Indiana State Journal 1896; Chicago Tribune 1900). These brokers soon expanded their means to identify likely prospects and grasped the value of dividing lists into ever finer demographic slices. In addition to buying rosters of former customers from deceptive businesses that ran into financial difficulties, they rifled through published directories of professions that had a reputation for ill-judged investment decisions, such as doctors, and paid insurance company clerks for the names of widows who had received lump-sum policy payouts. As early as 1908, businesses could rent letters from the sufferers of particular diseases and purchase the names and cur- rent addresses of “clergymen in Indiana, or owners of copper stocks in Michigan, or taxpayers in Columbus, Ohio, or professional men in Atlanta” (New York Times 1908). If a firm were so inclined, it could buy a relatively undifferentiated list of thousands of Americans who had answered deceptive advertisements, paying pennies per name. Alternatively, it could fork over as much as $100 per thousand names

The Evolution of American Business Fraud 705 for a “preferred list” of repeat dupes. The biggest asset held by many swindlers became the index cards containing the names of customers and annotations about past behavior (Montgomery Advertiser 1911; New York Times 1913; Hord 1924). By the 1920s, the sucker list had become an entrenched feature in the world of American scams. Over the subsequent century, journalists and political pundits continued to highlight the role of compiled registers of mailing addresses, and eventually databases of phone numbers and email addresses, in the marketing of retailing frauds, fake sweepstakes, phony charities, and investment cons. De- velopments in communications technology also consistently lowered the costs of contacting potential marks, first through dramatic falls in long-distance telephone rates, then through mass emails, and in the last 15 years, through Internet-facilitated robocalls (Duston 1992; Fried 2001; Salisbury 2014). Perhaps fittingly, the quality of any purchased sucker list has always remained opaque to purchasers. This informational asym- metry meant that many “tenderfoot promoters” paid for “a phony list made by taking names at random from telephone books in in- terior towns” (New York Times 1909). As this example suggests, every mode of marketing in modern America proved susceptible to deceit so long as counterparties did not have equivalent access to relevant information, even marketing techniques that ostensibly heightened the chances of successful deception. Given the frequency with which American entrepreneurs combined creative imagination with elastic morality, few such opportunities went unexploited.

FRAUD V. ANTI-FRAUD The development of the sucker list, then, reflected the participation of fraudulent promoters in a wider process of innovation at the heart of modern capitalism, as manufacturers, advertising agencies, publishing houses, and securities distributors developed modern techniques of selling. At the same time, however, one should see the emergence of this logistical feature of business fraud as one move in an ongoing

706 social research battle of wits between the purveyors of scams and a growing phalanx of anti-fraud professionals. The latter group steadily expanded from the mid-nineteenth century into the twentieth. Many anti-fraud endeavors arose in the private sector as entrepreneurs sought to cash in on the demand for better intelligence about which economic actors, products, and services merited confidence. The invention of credit reporting, the expansion of accounting services, and the development of anti-fraud journalism all involved business models that either certified counterparties as trustworthy or called them out as bearers of commercial falsehoods. These undertakings commingled with anti-fraud work by nongovernmental organizations, many closely linked to the business establishment, including stock exchanges that dated back to the nineteenth century, and the Better Business Bureau network that originated in the early twentieth century and invested substantial resources in anti-fraud education and extensive monitoring to curb false advertising. Others were linked to consumer movements, particularly from the 1930s onward, such as Consumers Union, Consumer Federation of America, and the Consumer Education and Protective Agency. Over the decades, a greater proportion of activity also occurred within the confines of government, as a growing number of local, state, and national agencies embraced anti-fraud missions.2 The war between the dissemblers/deceivers and those dedicat- ed to exposing their exaggerations and frauds had a dialectical character, as inventiveness on one side prompted tactical responses on the other. In the case of the sucker list, one impetus came from the massive accumulation of public anti-fraud discourse, like the Satur- day Evening Post profile on Mickey Mantle. Such commentary extended well back into the nineteenth century and was itself a response to a legal culture that often cast a skeptical eye on fraud allegations. Throughout the nineteenth century, prosecutors, judges, and juries all tended to presume that adult white men should be able to look out for themselves in their contractual relationships. As a result, it often proved difficult to make a formal fraud allegation stick in the

The Evolution of American Business Fraud 707 courts (Balleisen 2017, 43–74). This legal reality generated a world predicated on the assumptions of caveat emptor (let the buyer be- ware), in which buyers needed to keep a sharp lookout. P. T. Barnum summed up the key premises of this society in his first autobiogra- phy, as he recalled the lessons that he learned as a young clerk in a rural Connecticut store. “Each party,” Barnum explained, “expected to be cheated, if it was possible. Our eyes, and not our ears, had to be our masters. We must believe little that we saw, and less that we heard” (Barnum 1855, 99). Amid such a cutthroat business environment, editors, journalists, and writers found a strong market for news and commentary about deceptive business practices and outright frauds. By the latter decades of the nineteenth century, urban newspapers and national magazines furnished regular coverage of prevalent cons and commercial duplicity, while trade journals increasingly boasted regular sections devoted to exposing “Frauds and Humbugs” in their corner of the marketplace. Throughout the nineteenth century and into the twentieth, moreover, the nation’s readers exhibited a steady thirst for books that explained how the most common frauds worked, presum- ably fortifying consumers and investors against such imposition (Bal- leisen 2017, 75–95). Insofar as all the anti-fraud newspaper articles, magazine exposés, and books put American consumers and investors on their guard, such publications heightened the value of having a list of the particularly gullible. The emergence of state-level securities regulation during the early twentieth century provided an additional prod to the development of sucker lists, or at least the ones enumerating those who had supposedly bit at circulars promising “Booms in oil!” or “Rising industrials!” In 1911, Kansas passed a “Blue Sky” law, which imposed onerous new constraints on the issuance of new stocks and bonds within the confines of the state as a means of fighting back against promoters of fraudulent stocks. Over the subsequent 15 years, many other states passed similar legislation. In 1921, New York, home to the largest securities market in the country, enacted the Martin Act,

708 social research which extended criminal and civil penalties for securities fraud in the state, and also provided the attorney general’s office with power- ful tools to compel the production of evidence from suspected firms (Winter 1927; Loss and Cowett 1958, 7–10). All this state-level regulatory action encouraged the sellers of dodgy investments to pursue out-of-state customers, who would face greater legal barriers in bringing civil suits or making criminal allegations against far-flung brokerage houses. Since the targeting of faraway customers increased marketing costs, it raised the premium for access to good information about easily persuaded investors. “It doesn’t make much difference how stringent a blue sky law may be,” one journalist observed while discussing the prospects for national anti-securities fraud legislation during the Coolidge Administration, “so long as the United States mails are open to the promoter who merely moves across the border and bombards his sucker list without fear of molestation” (Hall 1924, 16). The impulse to devise systematic repositories of fraud-related individual behavior, however, was not confined to the peddlers of spurious consumer goods and investments. Firms, nonprofit organizations, and government agencies all came to pursue similar endeavors, directed toward tracking the tricksters rather than their dupes. Private credit reporters led the way as early as the 1840s, as their massive ledgers filled up with evaluations of trustworthiness among the country’s seekers of commercial credit, including those who had demonstrated a penchant for prevarication in their dealings with counterparties (Balleisen 2001; Sandage 2005; Olegario 2006). By the first decades of the twentieth century, the National Associa- tion of Credit Men had refined this practice through the work of its Investigation and Prosecution Unit, which not only amassed systemic files on alleged perpetrators of credit fraud, but also developed an extensive “Rogues’ Gallery”—an indexed photographic library of those malefactors (Credit Monthly 1928). The US Postal Inspectorate similarly compiled “life records of the chief swindlers” around the country, kept on “cross-reference index cards” (Carpenter 1911, 38).

The Evolution of American Business Fraud 709 As the Securities and Exchange Commission (SEC) began its anti-fraud work in the 1930s, one of its first actions was to build an intelligence network that included other governmental agencies working to combat securities fraud. Incorporating officials from every level of jurisdiction (metropolitan district attorneys, state attorneys general and securities regulators, postal inspectors, and counterparts in other countries, including Canada), this network shared information about prevalent frauds and the depredations of specific businesses and individuals. Drawing on the resulting stream of data about pros- ecutions and civil administrative sanctions, the SEC’s investigation unit curated a “central index and clearing house” of fraudulent brokers, brokerages, and promoters. SEC annual reports testified to the steady accumulation of ne’er-do-wells in this index, which grew from around 15,000 names in 1935 to over 53,000 by 1950 (Securities and Exchange Commission 1935, 35; 1950, 153). Decade after decade of tactical readjustments thus made the terrain of American business fraud more dependent on sophisticated information gathering. During the middle decades of the twentieth century, the anti-fraud forces gained the upper hand through an accumulation of anti-fraud legislation at all levels of government and heightened coordination among a widening set of anti-fraud bureaucracies. Business frauds hardly disappeared in this era. Suburbaniza- tion, the associated expansion of a consumer economy, the electron- ics revolution, a dramatic growth in franchising, and a host of other developments all created opportunities for novel twists on longstanding cons and scams, and thus new contexts that generated sucker lists. But the scale and scope of fraud retreated from the New Deal of the 1930s through the Great Society of the 1960s and into the 1970s. The worst consumer and investor frauds that came to light during those four decades paled in comparison to their counterparts of earlier and later periods, visiting far lower costs on victims and more frequently involving fly-by-night concerns or medium-sized corporations rather than leading corporations (Balleisen 2017, 245–315).

710 social research AMBIVALENCE TOWARD THE SUCKER Although the first public mention of circulating lists of fraud victims goes back at least to the 1870s, the phrase “sucker list” only appears to have come into written usage right around the turn of the twentieth century. By framing the individuals who appeared on such catalogues as “suckers,” those who used the term tapped into a longstanding critique of fraud victims as in some way deserving their lot. An 1880 lithograph that appeared in Puck magazine, “The Wildcat Mining Swindle” (fig. 1) nicely conveys this tendency.

Figure 1. J. A. Wales, “The Wild-Cat Mining Swindle,” Puck Magazine 7 (March 30, 1880), 70. Lithographic print in the possession of the author.

The Evolution of American Business Fraud 711 EASY In the aftermath of the California The sucker list Gold Rush and Nevada silver boom, Ameri- Is always long. Alas, alack, cans regularly fell for fraudulent mining The human throng promotions. The frequency of these invest- Seems ever ripe ment swindles prompted commentary de- For plucking hands! Most any chap signed to put Americans on their guard, Who understands as through this image that told the story The gentle art of “The Little Big Fraud Mining Company,” Of telling lies And seeming to an enterprise worthy of being known as Be wondrous wise “the Greatest Scheme on Earth.” In ad- Can dupe the best dition to portraying the wild promises of Of us who think, With knowing nod this duplicitous venture (massive chunks And crafty wink, of gold bigger than an adult man, filling That we’re too slick To be roped in railroad cars to the brim), the artist ren- By specious talk dered investors in the mine as ducks who And coaxing grin. were “Going in Green” and then “Going ’Tis such a cinch, No wonder that out Plucked.” A companion depiction of So many chaps “The Mining Region” at the bottom of the Well dressed and fat, lithograph showed a figurative graveyard, Go out for spins In auto cars with the bare bones of a deceased miner And smoke the best at the Little Big Fraud Mine still clutching Of good cigars, a pick, and some companion graves, in- And guzzle wine And live so high, cluding one for “Suckers Own Mine.” This Forsooth, they don’t pictorial representation underscored the Care what they buy, stupidity of the green ducks who could Can’t blame them much— How many fools fall for such transparent falsehoods, and Are found, both in sent the message that investors needed And out of schools, Whose greed invites to mind obvious warning signs if they The gold brick man, wanted to avoid getting plucked. Such Or else whose pride Promotes his plan! cautions were matched by extensive re- —Anonymous (Kalamazoo flections in newspapers and magazines, Gazette, Sept. 10, 1910) as well as American humor. By the early 1900s, a common joke was to characterize a mine as “a hole in the ground with a liar at the top” (World’s Work 1907, 8384).

712 social research For many American elites in the late nineteenth and early twentieth centuries, the common appearance of duplicitous operators like those in the mining industry represented an unfortunate but unavoidable byproduct of a capitalist society. These elites retained a strong commitment to the nineteenth-century ethos of caveat emptor. They presumed that American investors and consumers should be able to look out for themselves; and that in circumstances where they found themselves “Going out Plucked,” the experience would make them less likely to fall for future impositions. Rather than turn to state regulatory authorities for anti-fraud policy, they preferred to rely on nongovernmental efforts at closing informational imbalances. One can see a similar inclination in many early discussions of the sucker list once the term began to appear in newspaper coverage and social commentary. After a large sucker list from one New York City brokerage firm came to light in 1900, a prominent New Orleans lawyer described the roster as populated by “gilt-edged idiots” (Cleve- land Plain Dealer 1900). In an editorial a decade later, reflecting on the growing ubiquity of sucker lists along with the associated avalanche of investment circulars that cascaded into the nation’s mailboxes, the New York Times wondered “who does not invariably crumple up this part of his daily mail and throw it into the waste basket?” (New York Times 1910). Such comments presumed that anyone with even a modi- cum of sense would pay no mind to the fanciful promises made by those firms that relied on catalogues of fools. There was, however, another potential lesson to draw from the accumulated illustrations of just how many Americans found themselves ensnared by a beguiling sales pitch for a phony deal. As the anonymous author of the 1910 poem “Easy” observed, “The human throng / Seems ever ripe / For plucking hands,” since “The gentle art / Of telling lies / And seeming to / Be wondrous wise / Can dupe the best / Of us who think … That we’re too slick / To be roped in / By specious talk / And coaxing grin.” Pretty much everyone, in other words, was vulnerable to duplicitous salesmanship; in the right circumstances everyone could be a young Mickey Mantle, bedazzled by the bright lights of New York.

The Evolution of American Business Fraud 713 This alternative interpretation of sucker lists resonated with a growing number of government officials who in the early twentieth century had begun to target fraud operations, such as urban district attorneys and US postal inspectors. These officials discovered massive rosters of potential marks in their investigations of fraudulent promoters, and saw value in highlighting their existence to the press. After a 1911 raid on one New York City stock promoter, postal inspectors made a big show of the “most wonderful ‘sucker list’ they had ever seen,” running to a full 200,000 names, “kept in small cases, which covered an entire wall” (Kansas City Star 1911). A few months later, a federal fraud indictment against a different New York City brokerage house that sold mining stocks alleged that it had amassed a list of over 120,000 names, “divided into four classes labeled ‘special,’ ‘good,’ ‘fair,’ and ‘worth trying’” (Grand Rapids Evening Press 1911). If so many individuals could find themselves drawn into a clever scam, these officials implied, the government had an obligation to protect them and work to limit the socioeconomic damage created by fraudulent firms. After a series of ever-larger investment fraud scandals during the 1920s, and then the stock market crash of 1929, this view gained ground among elites, the general public, and eventually, policymakers. Such moral framing helped to consolidate an anti-fraud co- alition that sustained aggressive congressional legislation, such as the creation of the SEC in 1934, and the expansion of the Federal Trade Commission’s anti-deception authority in 1938. During the 1930s, as Americans struggled to come to grips with the Great Depression and gave the Democratic Party sufficient electoral majorities to fuel the New Deal, the sucker list gained iconic force as a symbol of popular vulnerability to imposture and imposition amid modern capitalism. Two images testify to this cultural reso- nance. The first illustration (fig. 2) appeared in a widely read form of popular culture—the syndicated newspaper comic strip. The Septem- ber 29, 1936, offering of the “L’il Orphan Annie” strip features Drake, who served as butler in the Warbucks household. Marveling over the large number of circulars that he receives for get-rich-quick schemes,

714 social research Drake reflects that despite his lack of social station, he has nonetheless qualified for “the sucker list.” Even though he concedes that “my time may not be very valuable,” he nonetheless consigns the stack of marketing entreaties, unread, into the family’s rubbish bin.

Figure 2. Chicago Tribune, Sept. 29, 1936.

The second image (fig. 3), appearing in the new but influential magazine, Life, depicted a publicity stunt from a 1937 Better Business Bureau (BBB) annual convention. Posing for the magazine’s photogra- pher, a BBB official from Cleveland displayed a register of fraud victims obtained by the business-affiliated anti-fraud organization—in this case, over 1600 individuals who had chased after easy riches by investing in a fraudulent Canadian gold mining company. By taping the pages of the list together, this catalogue of investment dupes took on the appearance of a scroll rather than a stack of papers, underscor- ing the extent of greed and poor judgment among American investors. Before World War I, most public invocators of sucker lists felt the need to spell out their meaning or provide explanatory context. The creators of these two images from the 1930s presumed that readers already had familiarity with the phrase, recognizing it as an en- during feature of modern economic life. Each rendering also suggests

The Evolution of American Business Fraud 715 Figure 3. Life Magazine, Sept. 13, 1937.

716 social research the ambivalent nature of public discourse around marketing decep- tions as American policymakers increasingly moved to tighten up anti-fraud regulation during the New Deal. In spite of sterner regulatory approaches, these representations of the sucker list made clear that duplicitous promoters retained their capacity for artful dodging, and that as a result the American marketplace remained home to much financial fakery. In the case of the illustration in Life Magazine, promoters had moved their operations to Canada, taking advantage of international boundaries to skirt the scrutiny of the new SEC. As the commentary accompanying the Life photograph noted, the existence of the sucker list showed that “sharpers and suckers flourish under the New Deal as they did under the Old.” All the fraudulent promotions finding their way to the butler Drake told a similar tale of reso- lute deceivers unfazed by tougher regulatory constraints. Such depictions of the relentless search for willing dupes sug- gested the importance of ongoing efforts to stem business fraud, whether through the extensive educational campaigns of the BBB or the creation of new anti-fraud bureaucracies such as the SEC. They could also underscore the salience of more paternalistic forms of regulatory oversight, including, as in the case of the SEC, rules to compel truthful disclosures of pertinent information. At the same time, these visual commentaries may well have reinforced a degree of popular contempt for the sucker that retained currency even as public policy pivoted away from the nineteenth-century presumption of caveat emptor. If hundreds of Ohioans “foolishly invested” in a worthless Canadian gold mine, perhaps they merited the harsh lesson that they received. Maybe the best way to curb fraud, exemplified by the comic character Drake, was for consumers and investors to shun the siren song of promises that were too good to be true, rather than rely on government to come to their rescue.

just as state and federal agencies tightened anti-fraud rules and enforcement campaigns during the mid-twentieth century, public commentary about the sucker list waned. After first appearing in

The Evolution of American Business Fraud 717 American newspapers around the turn of the twentieth century, use of the term grew steadily up to World War I and then took off, increasing fourfold in one newspaper database in the 1920s. It reached a high of approximately 300 stories a year by the 1930s—the same decade in which the L’il Orphan Annie comic strip and the Life photograph appeared in print. In subsequent years, the frequency of the term in the database declined, first to around 200 annual instances in the 1940s and 1950s, and then to around 100 yearly references in the 1960s and 1970s. In this later period, an increasing number of stories also referenced the use of sucker lists to push fake charities rather than fraudulent stock promotions or merchandising schemes.3 Here one sees the predilection of every new generation to con- struct its own argot of flim-flam, and the tendency of cultural tropes to exhibit a linguistic half-life. But perhaps one sees as well the dynamics of generational amnesia. Greater investments in anti-fraud regulation during the mid-twentieth century (a steady stream of national legislation mandating new truthful disclosures, whether about the costs of automobiles, or the contents of goods, or credit arrange- ments, along with the creation of consumer protection agencies at the state and local level) tamped down the worst kinds of commercial and financial duplicity (Balleisen 2017, 285–334). Sucker lists continued to be used during those decades, but public references to them receded, as journalists, opinion-makers, and policymakers came to focus on different issues. From the mid-1970s through the 2000s, bipartisan political movements for deregulation chipped away at anti-fraud policies. Troubled first by the economic stagnation of the 1970s and then by the intensifying pressures of globalization, a growing number of policymakers worried about the costs associated with regulatory burdens of all sorts (Balleisen 2015, lii–lxxi). In addition, many conservatives and moderates remained convinced that market-based reputational dynamics were the best way to constrain duplicitous commercial behavior. They had confidence that counterparties would shun firms that embraced deceptive tactics, and that, in the unlikely event that

718 social research the problem of fraud would begin to compromise confidence in markets, entrepreneurs would seize opportunities to close informational asymmetries and certify trustworthiness (Bentson 1977; Kripke 1979; Ribstein 2002). Sometimes the resulting deregulatory ethos led to budget cuts at anti-fraud agencies and to more forgiving enforcement postures, as with the administrations of Ronald Reagan, George H. W. Bush, and George W. Bush. In other contexts, that ethos deflected calls for imposing burdens on emerging industries, as occurred with the Carter administration’s decision to back off from close supervision of multi-level marketing firms in 1979, or the Clinton administration’s consistent opposition to oversight of Internet commerce and its decision not to regulate new financial derivatives such as credit default swaps. Alongside this broad reorientation of anti-fraud policy, the United States experienced a profusion of billion-dollar fraud scandals that implicated leading American businesses (Columbia-HCA, Enron, Arthur Andersen, Countrywide, Wells Fargo), as well as the flourish- ing of widespread but smaller-scale telemarketing and Internet scams (Balleisen 2017, 353–68). Amid this resurgence of business fraud, many social scientists have reexamined explanations for the prevalence of economic deception, whether as a result of differential access to information, the cog- nitive limitations of consumers and investors, or the psychological tendencies of those who commit fraud (Akerlof and Shiller 2015; Kon- nikova 2016; Ariely 2012). Public engagement with the sucker list has also made a comeback. After just about disappearing around 1980, the phrase has reemerged in American journalistic coverage since the early 1990s, with a renewed focus on its role in the predatory targeting of vulnerable populations and a more common presumption that readers, listeners, and viewers might not be familiar with the term (Bangor Daily News 1996; Fried 2001; Antilla 2014). Conceived amid the late nineteenth century’s initial forays into niche marketing, the American sucker list evolved in tandem with more reputable techniques of modern selling. Like the consumer

The Evolution of American Business Fraud 719 survey, the focus group, and the personalized profile of Internet browsing, it reflected the embrace of innovation by American businesses and has become a standard feature of American sales culture. Perhaps unsurprisingly, the most recent of these techniques, analysis of browsing history, has become a key source of entries in databases of consumer or investor patsies (Lafrance 2015). We have every reason to expect that in the years to come the capacity to amass and analyze vast quantities of data will continue to accelerate, and that such analysis will draw on the daily inquiries, choices, and actions that most Americans readily make available to information technology firms, whether through their activity on Facebook or elsewhere on the web. And so we also have every reason to expect ever more sophisticated marketing assessments of individuals’ psychological tendencies and strong demand to purchase access to these evaluations, by legitimate businesses and ruthless scammers alike. Perhaps we will soon be reading about sucker algorithms. Whether or not the term “sucker list” has much of a twenty- first century future as a phrase in the commercial culture of the Unit- ed States, databases of consumers and investors who have suffered losses to scams are with us now and surely will be with us for decades to come. So too will be debates about the most sensible regulatory checks on these tools of predatory marketing. As in earlier genera- tions, marketing firms, trade associations, consumer organizations, and government agencies continue to weigh in on such matters. In the last few years, every one of these groups has stressed the importance of public education in fortifying consumers and investors against deceptive practices—the same posture of the 1957 Saturday Evening Post profile of Mickey Mantle, and a perennial regulatory impulse over the past two centuries. But stakeholders in fraud-related policy discussions have also explored other regulatory maneuvers that might keep pace with the ingenuity of fraudulent firms. Ideas have ranged from tightening up America’s National Do Not Call Registry, which has been overwhelmed by the capacity of marketers to flood phone lines with cheap robo-

720 social research calls, to expanding the enforcement capacity at key agencies like the Federal Trade Commission, to adopting some version of the European General Data Privacy Regulation (GDPR). The GDPR, which went into effect in the spring of 2018, requires businesses to inform European consumers about how they use personal data, to obtain consent for using their individual data, and to delete information about them at their request. This new rule has quickly prompted adjustments from businesses across the globe; whether and how it will modify the behavior of shadowy firms engaged in outright fraud remains to be seen (Fischer 2012; Stanger 2015; Tompor 2016; van Zuylen-Wood 2018; Satariano 2018; Kaplan 2018). The outcomes of policy debates in the United States will, of course, depend crucially on the ebb and flow of state and national politics. Given the Trump administration’s deep skepticism toward vigorous anti-fraud regulation, signaled most clearly in the post-2016 redirection of priorities at the Consumer Financial Protection Bureau, and Trump’s own checkered history as a business owner, one is unlikely to see much national action against predatory sales tactics until the federal government changes hands (Merle and Jan 2018). Again as in the past, decision-making will be shaped partly by moral framing. Will the dominant discussions of business fraud in our now-digital world characterize those hoodwinked by scams as cul- pable for their own cupidity and blindness, or as worthy of sympathy and evocative of widespread human vulnerabilities? If the experience of the past 150 years is any guide, we can expect ongoing refinements in the construction and use of sucker lists, swings in the stringency of anti-fraud policies, and sharp differences of opinion about how to un- derstand the susceptibility of so many people to the deceptive pitches that so often saturate American marketplaces.

ACKNOWLEDGMENTS I am grateful to Wendy Woloson, Sharon Murphy, and Ashton Merck for feedback on versions of this article, as well as to the participants in the New School’s “Cons and Scams” conference.

The Evolution of American Business Fraud 721 NOTES 1. This calculation comes from the website Measuring Worth; https:// www.measuringworth.com/calculators/uscompare/relativevalue. php. 2. The history of American anti-fraud institutions receives extensive examination in my 2017 book Fraud, including voluminous citations to scholarly literature and primary sources. 3. I compiled these statistics from Newspapers.com; the number of pages per decade in this database remained roughly constant across these years. A search of eight newspapers available through Proquest Historical Databases yields a remarkably similar statistical arc—a handful of stories in the 1900s, increasing to more than 20 stories a year during the 1920s and 1930s, and then a steadily decreasing number of hits over the next four decades. A search of “sucker list” on Google Ngram generates parallel data.

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