“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, includ- ing $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 agen- cies 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, busi- nesses 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 news- paper 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 particu- lar 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

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