Confessions of a confidence man; a handbook for suckers

Preface

BOOK should have a purpose. The moralists A demand it and we accept. It may, however,

be cautious to observe that the only discernible design of the average volume is to take some trifles of cash from the pocket of the reader. In this detail the authors of the present writing lay claim to originality. These confessions are intended, primarily and finally, to keep the money of their audience at home, safe from the lures and trammels of outrageous temptors. In how far they may succeed in this high and laudable ambition depends upon him who reads, for good counsel is lost upon vacancy.

It is one of the commonplaces to observe that several billion dollars are lost by our public every year because that public loves to chase the fen-fire of quick and easy money and persists in this ancient pursuit in spite of every protestation. What is not so well understood is the fact that a large and growing class of men makes its fortunes by preying upon this fatuous hope of riches in the poor, the simple and the illadvised, and that what many a man regards as error, misinvestment or unhappy speculation is, in fact, no more than downright robbery by cunning instead of by violence. From this type of crime no man and no class is immune, and this is the main point made by the present confessor. The rural banker is as prone to the wiles of the confidence man as the

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Vill Preface veracious and authentic rustic, and the man of edueation and position is today more likely to be gulled than the obscure simpleton. Indeed, it is the man who feels himself most secure that stands in the greatest danger. Accordingly, most men may read some profit out of what is set down here. That, at least, is the intention of the retired and chastened chevalier d’industrie who sponsors it.

There is, to be sure, a class whose members could never, by any chance, be deceived by such devices as are here set forth; a kind of person far too clever, astute, far-sighted and aloof. To this group you and I unquestionably belong. If we read at all it must be for entertainment, not for profit or information, since we know whatever is knowledge. Paraphrasing what Mark Twain is reported to have said of Kipling, we know whatever is to be known—you know it all and I know the rest. We are in need of no teaching, and ‘‘Confessions of a Confidence Man,’’ can serve uS as no more than a reminder of the fallacies of the man next door. It is to him, of course. that the serious undertone of the book is addressed.

EDWARD H. SMITH.

November, 1922.

Chapter I—age Of Con Ii.—trimming The Financier Jii._-the Talking Typewriter

IV.—SCHEMES FOR BUSINESS MEN V.— FRAUDS FOR THE WISE

VI.—THE WONDERFUL WINDOW CLOSER .

VII—GoLD AND GREED . ... .

VIII—PATENTS AND PIRATES. .

IX.—THE CoLoR OF ROMANCE. .

X.—THE WIRELESS PIANO... .

XI.—THE PUBLIC’S CREDULITY . .

XIT.—Om AND Your MONEY XIII—THE GOLD Brick, MODERNIZED .

XIV.—THE PEOPLE’S LIBERTY BONDS XV.—MILKING A Dry BREWERY XVI.—THE DISCRETIONARY SWINDLE XVII.—THE GAME OF GAMES... .

XVIII.—RapIO AND CHAIN STORES . .

PAGES

CHAPTER I.

THE AGE OF CON.

Crosby, found himself poor and determined to be rich.

It was no sudden geysering of ambition within him. He had been fluctuating between fortune and indlgence since boyhood. Several times after his sixteenth year Crosby had made himself wealthy by means within and without the law, and just as often he had spent and speculated and skidded his way back to poverty. And there he stood now, beside the highroad, looking wistfully back to his fortieth year and forward to being moneyless within a few months. The prospect did not disconeert him. He had been tossed about long enough to be perfectly resilient. But he must get in motion at once. He must have a scheme of some kind and go to work.

By the time the roses were blowing in the suburban gardens, W. C. Crosby—under a somewhat altered name—had flowered out in Broad Street, overlooking Wall, as an installment dealer in speculative stocks. The euphemism he permitted himself in the matter of his firm name was dictated by caution. Not that

|: the placid spring of 1910 a young man, W. C.

he was, as the phrase goes, known to the police, but that the post-office inspectors, the commercial-rating people and others of the prying crew who often interfere with the best-laid plans of dishonest men, were far too familiar with his proper name and many of his past peccabilities. These gentlemen would unquestionably have called Crosby a confidence man— and who are we to dispute official opinion? The fact remained, however, that they had not then lived to prove it. They had arrested this scheming gentleman several dozen times in the course of twenty years or so, but they had never yet been able to close retentive doors against him. All of which they attributed to bad luck and Crosby to his own perspicacity.

That was nearly a dozen years ago. Since twenty years of scheming and swindling had not brought him low, this debonair concocter of business marvels looked forward to immediate prosperity and lasting immunity. He considered his installment-stock scheme perhaps the surest and safest of the many tricks he had devised or used in all his roguery. No need to describe it beyond the confession that it was purely a device for lightening the purses and shortening the bank balances of the avaricious and unwary. Crosby was not the only man and his by no means a solitary firm in this field. And none of the others had gone to jail, though some had passed it uncommon close. So Crosby felt at peace with trouble and went ahead.

Seven years later and six years after he had left this Broad Street business at the height of its prosperity to turn his variable and subtle talents to other endeavors, W. C. Crosby was placed on trial in the United States District Court in New York, charged with using the mails to defraud in connection with this long-extinct enterprise. And somewhat thereafter he entered the gates of Atlanta, which swing inward with alacrity and outward painfully. Here he remained a guest of the Government for two years.

Not long ago, Crosby returned from his expiatory pilgrimage, punished, chastened and even contrite. He is done with that moving and changing world in which he was for more than a quarter century a large and perhaps a luminous figure. He is finished with econ. And in token of his resolution he intends here to burn his bridges behind him by revealing completely the secrets and conspiracies of his craft. He goes on the assumption that he knows his subject as thoroughly as anyone living to-day—this with all proper modesty.

A man who has becn intimate and more or less continuously associated for upward of thirty years with the modern confidence or get-rich-quick game in a hundred of its variations, who has known nearly all the contemporary large operators in this field and has been closely or distantly connected with most of them, must be conceded very definite knowledge of his profession. In the same spirit it is reasonable to believe that a man who has taken perhaps one and a half million dollars from the public as his personal profit from his schemes must have possessed special gifts in his dubious line. The number and depth of the iniquities are confessed at the outset, with nothing to offset the evil record but the plea that the perpetrator has been punished beyond what is implied by a sentence of two years in prison, and the assurance that he is done with his crimes and is trying to make some sort of reparation by disclosing the whole fabric of swindling to the public for its future protection.

Crosby profited a million and a half by his crimes —and has nothing left. He defrauded persons im all parts of the country and in all stations, from the obscure sucker to the city banker. He worked every imaginable type of superior confidence trick. His activities took him over a good half of the United States and he has been engaged in scores of industries —mining, oil, inventions, lands, brokerage, banking, local and general promotions, building, real estate, engineering, electrical and mechanical devising, hotels, produce and what not. To many of the enterprises he initiated he brought the intent of honesty. As often as otherwise he planned his adventures along legitimate lines, but the itch of quick-and-easy money always overcame him and in the end his projects uniformly eventuated in fraud. Why he does not attempt to say, unless it was that the oblique was always easier for him than the straight.

For the purpose of this volume Crosby is the confessor and furnisher of information. What he wishes to attempt in the following narrative is an informative survey of the whole field of con—of that large and inclusive class of swindles based on misplaced confidence and worked by means of a certain definite psychology in the mass of mankind. It may not be amiss to say that the man who stands behind this material 1s a person of education and rather general culture. He is a graduate engineer; he was always an indefatigable reader of everything that concerned his multifarious activities and much that did not.

No man without unusual equipment could have done his deeds. Above everything else, he is a shrewd and sophisticated knower of life. He has watched the vain procession for many years with eyes that defeat all masquerade—a very different person from the crook as he exists in the mind of the general public, very different from the old type of confidence man.

The origin of the confidence game is not easy to trace. The Vedas and the Mediterranean classics reveal the ancient gods themselves as sad rascals. Petronius and the Gesta Romanorum contain descriptions of Latin roguery. Chaucer is forever dwelling on the trickery and scoundrelism of his contemporaries and in the succeeding era a whole literature of lawlessness had sprung up in Europe, reflecting the manners and methods of the engaging criminals of the sixteenth and seventeenth centuries, undoubtedly greatly romanticised. Lazarillo de Tormes in Spain, Gil Blas in France, and Till Eulenspiegel in Germany are the archetypes. England’s Robin Hood is a quotable but less analogous figure. The early English novelists are, however, brimming with the stories of picaroons who are the progenitors of the modern confidence man. Thechaste Richardson has a type in his Clarissa. De Foe’s Colonel Jack is of the stripe and so are the numerous picaresque heroes or antiheroes of Fielding. And Smollett in his Roderick Random described with uncanny exactness the work of a bunko steerer. Those familiar with this old romance will remember how Random and his friend Strop were accosted by a suave stranger on their arrival in London and shortly relieved of their gold in a card game, perhaps the very eight-dice-cloth which came into enormous profitableness in America a good deal later under the familiar name of banco.

But all these rogues and their rogueries, with the exception of the last, bear only a distant relationship to the great American confidence game. They are the forgotten ancestors. Banco, or eight-dice-cloth, on the other hand, was one of the three immediate parents—if I may take such a liberty with parentage— of the game as it exists to-day. The other two are the old sawdust or green-goods game and the gold brick of poignant memory. These latter two appear to have been indigenous and all three began life in this country simultaneously, or within a single decade.

Banco, brought across the Atlantic by the inflowing British crook, was first put to work about 1855 in the Western United States, contradictory as that may seem. In my judgment it was preceded a few years by the gold-brick swindle in its most primitive form and followed in a few years by the green-goods fraud. These early confidence tricks are important to any consideration of the game as it now stands, since they reveal how social conditions breed, cultivate and change the practices and devices of the swindler.

The gold craze, which swept over the United States with the 1849 rush to California and the succeeding waves, gave rise to the gold-brick scheme. The country was drunken with gold greed. The marvelous stories of nuggets dug from the hills and millions washed from the California creek gravels had the population in so fabulous a frame of mind that nothing was easier for the sharper than to play the stranded miner forced to sell a brick of gold for much less than its value. This was the crudest form of the geold-brick game, which has passed through innumerable steps of evolution since then and is—though it may be a surprise—still worked in a greatly elaborated form.

The crook is always attracted to regions of sudden prosperity and quick expansion. There he finds loose and easy money. So it was natural for the recently arrived British swindler to flow west to California along with the gambler and the dance-hall prostitute. It was thus that the great and costly game of banco came to be introduced to America via the Pacific Slope. Baneo masqueraded as a lottery, but was simply a gamble with marked cards or a stacked deck. Its important feature was the manner in which the victim was led to the altar. Ropers and steerers were sent out who struck up acquaintanecs with miners who had more gold than sense and led them, after winning their confidence, to the banco establishment, where the victim was skillfully led along through a series of small winnings to a great wager—which he invariably lost. Here are all the characteristics of the complete confidence game, and it was from the ropers used in this swindle that we have the still eurrent bunko steerer. In later years banco, with its name transmuted into bunko, was played in every large American city and its victims were the verdant rubes of fragrant memory.

Green goods came into notice on the heels of banco and was again born of a social condition. During and after the Civil War the paper currency was enormously expanded and in many parts of the country the treasury certificate aud the bank note displaced specie for the first time. Many were not familiar with the new money or the precautions taken in its production, and these retarded ones were easy prey for schemers who pretended to sell counterfeit or genuine bank notes at great reductions.

Just who originated the green-goods idea has always been in dispute. Con men of the old school accredit it to various of their former leaders. Major Arthur Griffiths, the Scotland Yard authority, who made a study of this game a number of years ago, attributes it to James ‘‘King’’ McNally, who is said to have plied it first in New York. Griffiths got his information from the late Thomas Byrnes, the celebrated New York police inspector and detective chief, and from testimony given before the Lexow committee. The probabilities are with this authority. Certainly green goods was originally a New York game, and McNally was at least its first large operator.

In the green-goods game again success depended on the artful preparation of the victim, the winning of his confidence, the dulling of his good sense, the allaying of his suspicions and the excitation of his natural avarice—all the elements of the genuine confidence fraud. Later on one of the chief ingredients of the latter-day con concoction was added when the victim was made to take part in the criminal conspiracy and was thus stripped of his right to go to the police and complain.

Most present-day schemes are descended detail for detail from these old and sterile frauds. The everfruitful mining-stock swindle is a mixture of the gold-brick and green-goods rackets. And there isn’t a get-rich-quick mechanism in use to-day that does not employ some variant of the steerer who was first used in banco.

Now then, if the con game was first plied about 1850 it is precious close to seventy years old and ought to have been buried some time ago. Every few months the newspapers and periodicals expose some sort of bunko game. The courts are continually sending our fellows to jail. The people are much better educated than they used to be and there are practically no rubes left. But the confidence game is greater than ever and vastly more prosperous than its early disciples ever dreamed it could be.

W. A. Pinkerton was quoted some time ago as estimating the annual takings of con men at $10,000,000. He must have been using con in its very narrowest sense. All the old estimates placed the figure between $25,000,000 and $30,000,000 with the leaning toward the greater amount. This was supposed, in the days before the war, to include the peculations of stock swindlers, promotion schemes, crooked brokers and all their crew. To-day such figures are entirely inadequate, as will appear. At the moment it is impossible to calculate with any accuracy what total the year’s swindlings will arrive at, but all estimates place it in the hundreds of millions, probably in the billions.

It may seem puzzling, all this enormous expansion in con in spite of the attacks made on the swindler from every side. But to me the reasons for it are good and clear. Confidence is a business, and, like all business, changes and conforms to conditions. In fact, con takes rise from the conditions of life about it and adapts itself as does social life. And con plays an invariable chord in the human make-up—good old earthy greed. But this greed must be played upon according to the times and circumstances. Few are swindled with gold bricks nowadays, for there is no gold fever, but many are mulcted by means of fake stocks.

There are other reasons why con is perennial. It has taken advantage from the beginning of the public foibles, of what is now termed mass psychology. Our people know that the great American fortunes were made either from the natural resources of the country—mines, oil, timber and land—or from spectacular inventions, or from fortunate speculation. Rockefeller is the man who stands for the first type, Henry Ford for the second, and J. P. Morgan for the third. That is the way the popular mind sees these things. It remembers the few successes and forgets the many failures.

So the con man bases all his schemes on these three great wealth producers. Almost without exception he offers his victims a chance to get rich through mines and oil wells, through some wonderful mechanism or patent or through speculation. No wonder con grows constantly greater.

In the old days of plain bunko steering, which I think ended back in the 1890’s, the average haul from a victim was a few hundred dollars. When the famous Hungry Joe Lewis cultivated Osear Wilde on his American tour and got a five-thousand-dollar check from the poet it was considered a remarkable coup and two countries were struck with mirth and wonderment, even though Wilde saw through the scheme in time to stop payment of the check. But nowadays a first-class confidence operator would spurn a scheme that promised only five thousand dollars. That is almost the irreducible minimum and most swindles of these times are aimed at pots from five to fifty times as great.

One other change has come over the confidence man. Once he tackled only the rustic, the simpleton, the suburban merchant, the stranger in town. Now he pays little attention to this class. To-day your swindler goes after the most experienced and most cynical. The banker and man of moneyed affairs has recently become a favorite mark of the most expert confidence man for reasons which will shortly appear. So I may as well begin by exposing a series of schemes aimed exclusively at banks and bankers. I guarantee that all these devices have been successfully demonstrated by myself and others and that they are being worked at this very hour. At least two of these tricks originated with me, though I wish now I had been better employed.

It must be borne in mind that these devices represent the refinement of the swindler’s art, for he is dealing now with men used to finance, trained to investigate, practiced in caution. That I and other men have been able to victimize the occasional banker hardly reflects on the astuteness of bankers in general. There are bankers and bankers, and the swindler naturally uses discretion in selecting his quarry. There can be no doubt that the average banker is pretty well informed in the matter of swindles and not to be taken in. But there are men in the profession who are not too well up on the most modern expressions of the subtle con game.

Any time you feel in the mood to buy shares in banks and so become a banker I ean tell you how to begin. In many cities are brokerage houses which regularly hold auction sales of assorted blocks of bank stocks. To these concerns consignments of bank stocks are sent by estates and individuals with instructions to sell to the highest bidder. Men who buy such securities are always conservative. They calculate the earning power of the stock and fix their top bid before they go to the auctions. Thus by bidding a fraction of ‘a point over the top anyone can get bank shares. Naturally a schemer can always afford to pay more for any article than a legitimate investor.

These auction sales of bank stocks had been interesting me for some time, when a number of years ago 1 found a way to make use of them. Another broker and I were out of operation at the time and looking for a scheme. I explained my idea to my friend and we promptly pooled some resources and bought forty-five shares of the stock of a prosperous bank in a Central Illinois city. We paid, as I now recall it, $122 a share. I then boarded a train and went to Illinois. As soon as I reached the town I made some inquiries to find out who was the attorney representing the bank in which I was now a stockholder. Having discovered the name and business address of this person, I went at once to the bank and approached the cashier.

‘“‘T’ve just bought some shares in your bank,’’ said I. ‘‘How soon can I have them transferred ?’’

The cashier was very polite and genial. It would take a few days to make the proper transfer on the books and issue a fresh certificate. Would I have it sent or would I call?

“‘T’ll be back next Monday if that will give you time,’’ I told him, and we fell to talking.

*‘Did you buy this stock for investment or specujation?’’ he wanted to know.

‘Oh, I buy anything,’’ I answered. ‘‘I considered this a good buy when I made it, but I’m always ready to take a profit.’’

My man grew pardonably enthusiastic. The price of $122 a share was very low. It was, in fact—as such prices always are—considerably below the book value. My banker, however, exalted the stock far beyond its book face. His institution was prospering. This year would show much greater returns than the last. No doubt the stock was actually worth $175 and should go to $200. This ebullition of hopes I expected and took advantage of. To make my man stress his boasts I asked him to repeat. Then I called for a bank report, which was given me, and I went my way.

Now anyone who is shrewd enough ean find fault with the average bank statement. If he can discover nothing worse he can always ery that the loans are too heavy. <As a fact, this is an evil of some frequency in banking and one at which much recent legislation has been aimed. It is called loose lending, or spreading too thin. The point at which overlending may begin is extremely variable and opinions will differ greatly about it in every case. Thus a crank may object to the methods of the most conservative bank. This was what I did in this case. It was my first leverage.

For several days I had to lounge about the city, seeing the sights, motoring to surrounding places or gassing with the hotel keeper. Then Monday came and I went, for my transferred stock. It was ready and the banker brought it to me, smiling and cordial. I examined the new certificate carefully and put it into my portfolio. Then I went to work.

‘‘T am now a partner in this business, am I not?’’ said I.

‘‘That’s what you are,’’ smiled the banker.

‘‘Well, since that’s so, I want to call your attention to something. In looking over this statement I find that the loans are pretty large compared to the surplus cash on hand.’’

‘‘Not at all, not at all!’’ protested the banker. ‘‘Our loans are all very conservative. We know our borrowers personally. All the money we have out is practically call money. No, indeed, we consider our Jending very small in view of the conditions.’’

‘“That may be,’’ I went on, ‘‘but I have had a good deal of experience in such matters and it 1s this overlending that breaks banks. I’ve got considerable money tied up here now and I’m naturally anxious—’’

“‘No reason for it,’’ snapped the cashier.

*‘So I wonder if you’d mind if I were to look over the books and examine the list of borrowers?”’

I said it blandly and innocently.

The banker went through the roof, as the word goes. No, indeed! That was the business of the board of directors. They were all conservative and clever business men. Look at the books? Not by a good deal! The more he talked the angrier he got, and I pretended to get as hot as he. Then I went out in a huff and directly to the office of the bank’s lawyer.

Mr. Black, the attorney, was in. I told him I was a stranger in town, having come in connection with some stock I’d bought in the local bank.

““Now I don’t come for advice,’’ I told him with a great air of determination. ‘‘I know what I want to do. All I require is a lawyer to conduct the legal matters for me.’’

‘IT guess we can accommodate you, Mr. Crosby,”’ he assured.

I told him that the bank had refused to allow me to see the books or list of borrowers. I was suspicious of the overlarge loans and wanted to get a court order forcing the bank to give me access to its records.

The attorney paled just a little and fidgeted. ‘‘ You intend going to court and asking for such an order?”’ he asked, almost incredulous.

‘‘That’s exactly what I’m going to do,’’ I said, closing my jaw and looking angry.

He was silent for some time, pondering this dilemma. He saw from my attitude that it was useless to try to dissuade me. Finally he said: ‘‘I’m sorry, Mr. Crosby, but I can’t represent you in this. I am the attorney for the bank.”’

I expressed great surprise and regret, got up and went my way as gracefully as possible. When I got down on the walk I began to chuckle, for I knew what was happening at that moment. I hadn’t left the lawyer’s floor before he was at the telephone calling the bank. The cashier assured him that I was a stockholder and that he didn’t know what had got into me. I must be mad, asking to see the books.

‘‘Do you know what he’s going to do?’’ asked the lawyer. ‘‘He’s going to court for an order to see the books.’’

“OWhat?’’

‘‘Do you know what that means?’’

‘‘Good Lord! What’s wrong with the fellow?’’

‘Tt means a run on the bank the moment the news gets out, whether he gets the order or not.’’

I can see the poor bank cashier trembling and stuttering.

‘“What can we do?’’ he demanded.

‘Get hold of Crosby,’’ said the lawyer, ‘‘and stop him at any price. Get his stock away from him if | you have to.’’

And they did. I soon received a summons to the bank, where I found the officers angry but frightened. They didn’t dare let me see the books, because to do so would be to establish a very dangerous precedent. Besides, they now had reason to doubt my good faith and could not risk letting me have access to such information as their books might have given me. No matter how faultless their business conduct, I had them in a hard knot. I had to be bought out and got rid of. They made me an offer and I laughed at them. Hadn’t the cashier told me three days before that the stock was worth $175 or $200? Well, if it was worth that then it was worth it now. There was much argument and passing of hot words, but I got $50 a share profit on my stock, forty-five shares of it.

When I got back to New York I found that my partner had done almost as well. He had bought thirty-two shares in a small Ohio state bank and forced the bankers to buy it from him at an advance of $55 a share. We now set out and began working this scheme steadily. For some months it went along smoothly and profitably. Then I was lured away to something still more lucrative, but my partner continued in the game with various assistants, and these men are still holding up banks by this simple and effective means.