&heS\egegf UntversityCity -^dtfii- Cornell University Library PN4899.S14U62 The siege of University City, the Dreyfus 3 1924 011 490 376 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/cletails/cu31924011490376 31' m It By SIDNEY MORSE Sometime (^tbe Editorial Stajf of "Success Magazine' Managing Editor, The Craftsman " Director Peoples'" Ihiversity Offi UNIVERSITY CITY PUBLISHING COMPANY UNIVERSITY CITY SAINT LOUIS, MISSOURI 1912 UNIVERSITY Copyright 19ia by CITY PUBLISHING UNIVERSITY CITY SAINT LOUIS, MISSOURI COMPANY TO THE AMERICAN PEOPLE WHO LOVE TBUTH, CHERISH JUSTICE AND KEEP ALIVE IN THEIR BREASTS THE SPARK OF ETERNAL VIGILANCE AGAINST OPPRESSION WHICH IS THE PRICE OF LLBERTY THIS VOLUME IS INSCRIBED LEST WE FORGET PUBLISHER'S NOTICE. The Siege of University City is sold exclusively by subscrip- tion. The Winner, the Woman's Magazine, and the "Woman's Farm Journal, formerly numbered their readers hy the millions. The investors in the Development and Investment Company, the People's United States Bank, the Lewis Publishing Company, the University Heights Realty and Development Company, and other Lewis cor- porations number manj' thousands. The membership of the Ameri- can Woman's League is upwards of one hundred thousand. The enrollment of citizens in the American Woman's Republic bids fair to run far into the millions. There is not a town or village in America where persons directly connected with the so-called Lewis enterprises are not to be found. There is not a man or woman in America but has heard something of the Lewis case, and has some degree of curiosity to know the actual facts here presented. The notoriety of this case is world-wide. The Siege of University City is the only comprehensive and authentic history of the great Lewis case in existence. We propose to distribute at least a million copies of this book throughout the United States. To that end agents are wanted in everv communitv. We will compensate any purchaser who will send us the name and address of an experienced solicitor, or other competent person, whom we can employ as local representative. Special blajiks for this purpose will be furnished on application. Address the Uni- versity City Publishing Company, University City, Saint Louis. Missouri. VI PREFACE Every newspaper man, every editor, every periodica] publisher in the United States is aware that The Siege of University City is the greatest business romance America has ever known. The Indianapolis News deserves distinction as the only newspaper to investigate and print the facts. The New York Times once under- took a similar inquiry at the instance of former Governor David R. Francis, of Missouri, but this was thwarted by the peace negotia- tions then pending between Mr. Lewis and Postmaster-General Cortelyou. Except for these instances the press has been content to publish doctored news dispatches from St. Lonis or to accept the inspired output of the Administration news bureau at Washington. John V. Dittemore, now head of the Christian Science Publish- ing Company, in Boston, once brought the Lewis case to the per- sonal attention of S. S. McClure, of McClure's Magazine, and Sam- uel Hopkins Adams, the distinguished journalist. Dittemore expressed to Lewis the hope that an investigation would follow. None was made. No journalist has ever taken up this theme. No magazine editor has ever assigned it as a subject for investigation. It has been conceded that no periodical publisher could afford to antagonize the Postoffice Department of the United States by giving publicity to anything approaching a true history of the Siege. Why? do you ask.^ Because there is not a publication in America which could not be excluded from the mails, nor is there a publisher who could not be financially ruined by the tactics that have obtained in this case. The arbitrary discretion exercised by the Postmaster- General under existing postal laws hangs like a veritable sword of Damocles over the periodical publishers of the United States. I have sought at different times to interest a considerable numoer of journalists, editors and publishers of my acquaintance in the project of making the Lewis case the subject of a great magazine serial. I was informed, more or less pointedly, that not even the so-called muckraking magazines could afford to antagonize the power of the Postoffice Department. I must make one exception. One daring j'oung publisher consented to handle the story. In his presence I submitted the proposition to the novelist, David Graham Phillips, whose "Treason of the United States Senate" was per- haps the boldest journalistic venture of modern times. Mr. Phil- lips promised, on the completion of certain manuscripts then in process, to visit University City in July, 1911, to make a prelim- inary investigation. Within a week he had met death at the hand of an assassin. THE SIEGE OF UNIVERSITY CITY On taking up the subject of printing this volume with the same publisher, by letter, a few months later, I received this reply: "I have not read the book, but if the plan which you and I discussed some time ago with David Graham Phillips had been carried out, I think that a sale of a million copies would have proved a very mod- erate estimate. There is no doubt but that there exists in this Lewis case one of the most gigantic business romances that has ever hap- pened. I know that you see it in that way, and I assume you have had the book so written as to get the full benefit of the opportunity. * * * But, as I told you when we were discussing this matter with Phillips, Lewis has made so many strong enemies throughout the country that, while I sympathize with him and believe in him and his integrity, I should not be willing to run any risk of finan- cial loss in the handling of this story. * * * I do not see what could be done to queer the sale of your book, if it is properly writ- ten ; but with the knowledge of what was done to Lewis, I do not want to get my fingers burned in that fire." Inability to command the services of the journalists employed by the great magazines, and the unwillingness of periodical publishers to take up the sub- ject on their own initiative, must be the writer's apology for ven- turing to break a lance in this arena. In seeking to carry out, to the best of my own ability, the plan discussed with Mr. Phillips, I have gratefully availed myself of his masterly insight and admonitions. The first essential to a proper presentation of the Lewis case, he felt, was, that it must be ap- proached in a sympathetic spirit. I recall vividly the scene of our interview in Mr. Phillips' spacious chambers at the National Arts Club in New York, overlooking quaint old Gramercy Park. I re- member, also, the story of Abraham Lincoln's War-Secretary, Stan- ton, which Phillips told to illustrate his attitude toward Lewis. Lincoln was presenting to his Cabinet the merits and demerits of his three greatest generals as candidates for supreme command. The record of none was without flaw. Grant was accused of over- fondness for whiskey. Sherman was charged with being too hot- tempered and profane. McClellan, it was hinted, was sluggish and over-cautious. "They all seem to be devils," said Stanton. "Now, what I want to know is, which of 'em is my kind of a devil." "The Postoffice Department," said Phillips, "has tried to make out that Lewis is a devil. But from all I can hear of him, he is my kind of a devil. In other words, most of the criticisms against Lewis are really due, I suspect, to the fact that, like myself, he is a radical. "Don't commit the fatal blunder," continued Mr. Phillips, "of trying to keep back or cover up anything. If I undertake to write Lewis' story, I want to put all the charges against him into my first chapter. Then I want to freely admit the truth of every charge that can be substantiated. If Lewis has stolen any chickens, let THE DREYFUS CASE OF AMERICA me give the correct date, the name of the police judge by whom he was fined, and whether he got ten days or ten dollars. Let me first get all this out of the way. Then, when I go down the line after these Government officials and accuse them of destroying his business, if they start the hue and cry that I am trying to defend a chicken thief, all that will have been fully discounted." In the chapter, "Trial by Newspaper," and those next following, I have sought to obey this admonition. As the plot of this story has evolved itself and fallen into true perspective, its horizon has seemed to widen. There has gradually developed, a three-fold interest, not merely personal, but also national, even historic. As a simple unadorned biography, no ro- mance has ever gripped or held me with more absorbing human interest. As current national drama, one can feel in it the vital throb of great political and economic issues. As history, it thrills with the passion of the age-long Aryan strife for human freedom. Lewis, a few years ago, was known throughout the Central and Far West as "the man who beat the United States Government." He is now more often called the Dreyfus of America. The change is significant. The battle has gone sorely against him. Only the unquenchable fires of the very temperamental optimism which cre- ates and sustains antagonism to him, have prevented the shadows of tragedy from darkening about his path. For this story, viewed in its merely personal phase, is a tragedy. One of the tortures of the Inquisition consisted in piling great weights upon the victim's chest. Others were added. Then more. At last the power of human resistance was exceeded. The life of the strongest man was literally crushed within him. Lewis still breathes under the debts that have been piled upon him. But expense is constantly being added to expense. Attack follows attack. Indictment succeeds in- dictment. That the outcome must inevitably be some form of tragedy, unless relief shall come, seems too clearly manifest. The mere personal equation of temperament and character, and of the spirit of the man who has sustained a contest so unequal, presents, to the moralist and biographer an alluring theme. But underlying all considerations of temperament, motive and other aspects of personality, are the national issues, the social, political and economic problems of the times whose interaction forms warp and woof of the changeful pattern of this story. Lewis figures not merely as a publisher of cheap magazines and women's newspapers. He appears rather as a pioneer in the transformation of a whole branch of the periodical publishing industry, namely, mail order publications. He is here seen not only as a promoter, but as an organizer of almost unlimited supplies of wealth through the aggre- gation of small savings. It was not his ambition to become a banker. Yet he founded the first mail order bank in America and later led the agitation for a national postal bank. To this the Post- THE SIEGE OF UNIVERSITY CITY. ofBce Department at length has tardily yielded. Lewis projected, in the American Woman's League, the first great women's National co-operative industrial organization. He proposed, in the People's University, a new type of institution for popular education. He projected the University City Plan, for the transformation of the West End of St. Louis into a parklike City Beautiful through the co-operation of a group of real-estate owners. He first proposed the linking of University City with the heart of St. Louis by electric subway. These conceptions stamp him as a man of creative con- structive intelligence of the highest order. Many millions of dol- lars in substantial property values have been added to the wealth of St. Louis by his projects and activities. Lewis' editorial opinions on social and political topics are strik- ingly progressive, even radical. He has advocated in the Woman's National Daily, postal bank, parcels post and other progressive legislation. He has been outspoken in his opposition to the central- ization of economic and financial power in the trusts. He has warmly advocated equal suffrage. He has espoused the moral issues of temperance, social purity, conservation of child life, and other movements with which the activities of women are most closely as- sociated. While nominally a Republican in political affiliation, Lewis' views are colored by a personality wliicli is essentially demo- cratic in the broadest meaning of that term. A radical, an active innovator, a democrat of the democrats, the whole tendency of his life is liberal and progressive. His work has been, and necessarily is, antagonistic to the principles of conservation of vested interests for which the Republican party in America now stands. There is something about this case which makes the blood boil, the nerves tingle and the arm instinctively stretch itself as if grop- ing for some sort of weapon. One finds his thoughts turning upon such topics as the rise of Protestantism, and the English, French and American revolutions. One thinks of Luther, of Cromwell, of Patrick Henry, of the Adamses, men who raised single voices of protest in defiance of those who assumed to dominate and rule over them. The terrible fascination which the power to destroj' appears to exert in the minds of underlings clothed mth a little brief author- ity, recalls the atrocities of the Inquisition and the torments of the medieval torturers. The purpose of this volume is to suggest that the timely use of ballots today may jirevent the untimely resort to bullets tomorrow. The abuse of administrative power is the death of democracy. It should be fought to the death upon its every manifestation. Sidney !Morse. University City, May 15, 1912. CONTENTS. PAGE Introduction 21 CHAPTER I A City That Is Set Upon a Hill 43 CHAPTER II Trial ey Newspaper 52 CHAPTER III The Making of a Great Mail Order Man 86 CHAPTER IV The Founding of The Winner 109 CHAPTER V The Reforms cf General Madden 136 CHAPTER VI Lewis Slips into the Cogs 153 CHAPTER VII The Rise of The Winner 176 CHAPTER VIII Invention and Promotion 187 CHAPTER IX The Founding of University City 211 CHAPTER X World's Fair Days 227 CHAPTER XI Is Credit a Discredit? 255 CHAPTER XII The Rise of The Woman's Magazine 268 CHAPTER XIII Banking by Mail 295 CHAPTER XIV The Post-Dispatch Extra 322 CHAPTER XV Investigation by Yellow Journalism Sii xi PAGE CHAPTER XVI Is Roosevelt Responsible? "" CHAPTER XVII The New Federal Bank Examiners 885 CHAPTER XVIII The Inspectors' Report '*^^ CHAPTER XIX Order Number Ten '^^^ CHAPTER XX Concerted Action *52 CHAPTER XXI Home Rule vs. Federal Usurpation 466 CHAPTER XXII The Three Options 509 CHAPTER XXIII The Attack on The Woman's Magazine 539 CHAPTER XXIV The Defense of The Woman's Magazine 571 CHAPTER XXV CoRTELYOu Shows His Hand 601 CHAPTER XXVI The Great American Fraud Order 630 CHAPTER XXVII Plot and Counter-plot 657 CHAPTER XXVIII The Double Vindication 700 CHAPTER XXIX Delenda Est Carthago 735 INTRODUCTION. The Question of Temperament — The Question op Motive — The Men and Their Motives — The Kansas-Bristow-Anti-Dice Theory — The Platt-Cortelyou Theory — The Dreyfus Case of America. The spirit of despotism at war with the spirit of democracy; the East in conflict with the West; George Bruce Cortelyou of New York matched against Edward Gardner Lewis of St. Louis: this, in sum, is the theme of The Siege of University City. The plot embraces a multitude of men and events. But the main action turns on the strug- gle of two human wills pitted, like a pair of gamecocks, in deadly combat. The issue may be narrowed to a question of opposing tem- peraments. These two men and their respective followers were mu- tually antagonistic. Each instinctively breathes the spirit and as- sumes the mental attitude of one of the two basic factions into which America (like all democracies) tends to fall, and the dissensions of which, like the mutual enmities of summer clouds, menace the Re- public with the lightnings of civil strife. Cortelj^ou, the aristocrat, typifies autocracy, — the rule of one man over his fellows. Lewis, the democrat, typifies individualism and local autonomy, — self-govern- ment, equal opportunity for the many. Came a day when their opposing interests impinged. Followed a clash of their wills like steel on flint, a mutual challenge, an open war. Each was the responsible head and leader of a nation-wide fol- lowing. Cortelyou led the organized forces of the existing order. LcAvis voiced the popular, but unorganized, demand for change. Neither would admit defeat. They fought on, unmindful of con- sequences. Battling over a national arena, not only did they involve their own followers. Many of the people themselves took sides and enlisted in the fray. Thus came about an incipient insurrection, a spectacle of national, even of historic moment. Seen in this light. The Siege of University City is more than a mere biographj'. This tragic story of a remarkable life, is typical of a phase of civilization in America of deep and abiding interest. Nay more. It is an episode of no mean significance in the age- long strife for human freedom. Once the reader's mind is attuned to this dominant note, insurrection against autocracy, this whole his- tory falls into complete harmony. Let us strive throughout the din of charge and counter-charge which follows, to keep uppermost in mind the pitch of this clear bugle call. I remember one summer afternoon in boyhood, taking a short cut across the hayfield after pitching a load of hay, to find a few 21 22 THE SIEGE OF UNIVERSITY CITY moments of coolness and comfort in my grandfather's shady sitting room, overlooking my grandmother's old-fashioned New England garden. I recall the incident plainly, after the lapse of years, for I then chanced on a copy of "Robert Elsmere." The opening words of that enchanting story are still blended in my mind with the peace- ful atmosphere of that homely scene, redolent of summer odors, and vibrant with the droning of bees, and the creaking of the farm wagon under its top-heavy load of hay. Much dejjends on one's introduction to an author. In some part, this summer scene may account for my growing liking for the writings of Mrs. Humphry Ward. I procured them one by one from the gray stone village library, and pored over them with ever increasing interest. But in large part my liking is explained by the insight of a kindly critic, who drew my attention to the fact that they were all primarily "studies in temperament." My grandfather, a devout believer in Universalism, had procured this copy of "Robert Elsmere" under the impression that it con- tained a semi-historical account of the movement towards Liberalism tending towards the overthrow of orthodox religion. A closer view shows that the writer's theme is the effect, on a man of emotional temperament, of the shattering of the ideals and symbols of a devout soul, and the change wrought in a whole life by the wrench in passing from the ritual of the Church of England to the atmosphere of another and an alien religion. The art of the -ivriter attaches the readers' sj^mpathies so warmly to the personality of Elsmere as almost to sweep one, by force of emotion, to a like conclusion. But the main object really appears to be other than this. In its true light the story is seen to be a consummate protrayal of a special temperament, reacting under prescribed conditions. The task of writing The Siege of University City has been like finding one's way to the heart of a bewildering labyrinth. I have groped for months in the mazes of this story. I have brooded over many assertions and denials. But I have come upon no other clue leading to the centre of this much vexed controversy, than this thread of temperament that runs throughout the conduct of human life. Let me then set it down at the outset as my belief that the differences of opinion and conduct, clashing at daggers drawn throughout this tragic drama, have arisen mainly from inherent dif- ferences of temperament between the principal actors, Cortelyou (with his aids) and Lewis. The other figures on the crowded stage have been mere puppets caught up and whirled into action, by social, economic and political influences such as determine the destinies of every age, all the more certainly because most men are unconscious of being thus borne along. Simply stated, I mean this: A cabinet officer of a Republican cdministration of the United States of America in the year of grace 1905, appointed from a metropolis by approval of the president of a great monopoly, is sure to be a man of extreme conservative THE DREYFUS CASE OF AMERICA 23 character. The editor and publisher of a Western mail order magazine circulating in rural districts, originator and promoter of a popular mail order bank, and many similar enterprises, is equally sure to be of opposite temperamental characteristics. No man lives to himself alone. The cabinet officer will be cautious and regular, actuated by the habits and impulses of his kind. The j'outhful editor and promoter will be daring and novel. The inevitable result of any opposition of their interests is apparent: a conflict of their wills, not simply as individuals, but as champions of great opposing forces. If the under currents involved are national in scope, and permanent in tendency, and the champions men of might and keen wit, the battle may well be of Homeric proportions. THE PHILOSOPHY OF THE SIEGE. Look for a moment at the stage setting of this drama. We are in a piece of wild cow pasture, just outside St. Louis. Here Lewis has built him up a city. University City, and established a large model printing press for his rural magazine. He has surrounded himself with gardens. He has erected a great Egyptian Temple. In this he has placed the great press of the Woman's National Daily. It is Lewis' proud boast that the only daily newspaper for women is printed on the greatest press in the world. It is a big saying, characteristic of the man. Equally characteristic is the fact that it is true. Lewis bought out the only rival newspaper for women then published in Chicago. And he specially stipulated in his contract with the Goss Printing Press Company that "The Lewis" should be the largest and finest piece of printing machinery on earth. The building in which this great press is installed was originally designed by Lewis for his mail bank. It was characteristically un- like any other bank building in the world. Instead of the bank it received the printing press. Since that day the doors have stood wide open. Crowds of visitors of all sorts and conditions of men, and especially women, have thronged the lofty skylighted hypostyle hall where typical phases of Occidental and Oriental thought con- front one another in bewildering contrast. The visitor's sense of strange amazement is soon lost in sheer wonder at what many would regard as not only the greatest press, but the greatest pulpit of the age. For, from this centre went out the words of fire and of inspira- tion that have stirred a million homes. What were the thoughts suggested to these different persons ? The spectacle is inspiring. A half score broad ribbons of white paper stream into the monster's maw, to be almost immediately vomited forth tidily trimmed, folded and printed papers. On the morrow these papers, freighted with the latest news and opinions, and in- stinct with fiery messages, are to be presented by rural carriers throughout the United States to half a million homes. Each bystander must react on this scene according to his experi- ence. A child responds only to the bulk and roar of the monster 24 THE SIEGE OF UNIVERSITY CITY as a thing of terror or of fascination. A subscriber to the Woman'i National Daily quickens with new interest at seeing the actual mak- ing of a paper that has grown to be a portion of her daily life. A stockholder tends to calculate on dividends. A student of social affairs ponders its editorial tendencies and influences. Only a jarac- lical newspaper man or publisher assumes the owner's standiaoint, and forms a complete picture of the soul that centres in this machine. He alone sees in imagination the lumbermen hewing timber in the Northern forest; the logs floating downstream to the mill; the wood being ground into pulja, the raw material of paper; the ground pulp taking its tortuous way among the vats and emerging into long sheets of paper threaded over the hot rollers of the intricate paper machine; the freighting and drayage of paper rolls, with the inci- dents of delay from strikes and untoward climatic conditions; the news-gathering by wire and cable; the work of copying and type- writing, putting into literary shape, and all the minutiae of editorial supervision ; the mechanical details of composition in type ; the stereo- typing, and the making ready; the printing, mailing and distribu- tion, including the work of the army of canvassers and other agen- cies of subscription; the advertisements, their solicitation, arrange- ment; and the whole office machinery of receipt and of payment. All, or most of these, are outside the experience of the casual ob- server. Only the publisher, the editor, the statesman, and the student of social history together, can adequately discern and appre- ciate the influence of such a mechanism upon the progress of human civilization. Y^et all this and more is embraced in the vision of the press. Such is the purpose confided to its mighty mechanism. With- out the press the realization of this vision of united energies and the achievement of its purpose, the distribution of popular education and enlightenment, would be impossible. Whence came the press.'' Who made possible its manifold benefi- cence ? Not the inky printer's devil ; not the printers, nor the feed- ers, nor even the chief pressman. Their knowledge is limited to its manipulation. A serious breakdown demands the attention of the master mechanic, the press builder, who comprehends the intricate structure in its entiret_v. But the builder of the press is not in reality its maker. Its true origin must be sought elsewhere. Some one, before the press was, or could be, contemplating its whole vision and comprehending fully its intended purpose, had first to bring it into existence out of the realm of thought. The inventor first gave being to the great machine. Brooding over the chaos of possibilities, like the spirit of creation at the dawn of Genesis, with closed eyes and idle fingers, he created the press out of pure mind stuff in the workshop of his imagination. Here he first reared the needful framework, and attributed to it the required rigidity. Thus he fashioned platen and roller, shaft and gear, feeding, printing, cutting and trimming apparatus, until the whole seemed complete and capable of executing its confided THE DREYFUS CASE OF AMERICA 25 purpose. Finally, still in thought, the inventor applied the neces- sary power; and experienced the creative joy of witnessing in the pure ideal the operation of the perfected mechanism. Every device that has come to bless or ban mankind has been thus first built in the imagination of some man, apart from the concrete materials of its construction. The world has ever been, and ever will be, indebted primarily for the blessings attendant upon progress, to those few gifted individuals who possess this order of creative imaginative intelli- gence. All recognize the inventor and first maker of the great Goss printing press as a benefactor to the race. How much more are we forced to yield admiration to the superior intelligence which accepts so vast a completed mechanism from the inventor's hand as but a minor, though essential factor in the achievement of his far larger purpose. That Edward Gardner Lewis is a man generously endowed by nature with this rare gift, a high order of creative constructive intelligence, I think no one who knows him, or knows the product of his life, will question. To the correlative endowment of such an imagination, namely, a temperament sanguine, buoyant, opti- mistic, I desire to draw attention. For without proper allowance for this, no such man's conduct is comprehensible. Lewis' crea- tive gifts and his optimistic temper are inseparable. They are like substance and shadow. His imagination teems with creative visions. His temperament admits of no misgivings as to their practical real- ization. An imagination like that of Lewis' embraces a press, a city, a nation, the whole world. It thinks in periods of time past, present, and to come. It grasps a tool, a trade, a whole industry, or a score of industries, with equal facility and versatility. His mental workshop is adequate to any undertaking. Mind stuff is plentiful. Potential energy is unlimited. All is in readiness for any emprise. And the atmosphere in which these imaginations glow is that of perennial summer bathed in perpetual sunshine. Turning, by way of contrast, to the opposite extreme of tempera- ment, one is reminded of the ancient poet who depicted the Adver- sary as going up and down the world among the sons of men, and appearing before the Lord to point out their short-comings and ask leave to test their sincerity and truth. Lest I be supposed to dis- tort the meaning of this passage, I quote here a paragraph from the introduction to the book of Job in the well known Modern Reader's Bible, the application of which will be seen later in our story : "The sons of God pass in review before the throne, and are ques- tioned as to the provinces of the universe which they have in charge. Among them comes 'the Satan.' Most unfortunately, the omission in English versions of the article has led the popular mind astray on this incident. Unquestionably the word is the title of 26 THE SIEGE OF UNIVERSITY CITY an office^ not the name of an individual. The margin of the Re- vised Version gives 'the Adversary.' The word expresses that he is the adversary of the saints in the same -way that an inspector or examiner maj^ be considered as adverse to those he inspects or examines. It is easy to understand how such a title should pass over to form the name of an individual — the Adversary of God, Satan, the Prince of Evil. * * * Those who come to this work with the association of the other 'Satan' not entirely dismissed, see in the attitude of the Adversary personal malignity. I can not. No one would see a sinister motive in a scientific experimenter, who revised his plans because his experiment was shown to be one degree short of being exhaustive." Students of comparative literature will note the similarity be- tween the function here attributed to the Adversary and that as- signed by Goethe to the Mephistopheles in Faust. The Adversary, the inquisitor, the prosecutor, the sheriff, even the hangman, or other executioner, have their undoubted place in the great social manifold. Each in proportion to the sincerity and efficiency of his services, is entitled to the respect and appreciation of mankind. But such avocations imply what may be called the inquisitorial temperament, a mental habit diametrically opposed to that which accompanies the labors of constructive idealism. The inventor who, with boundless optimism, has created in the sunny chambers of his imagination a device that the world will not willingly let die, occupies the antipodes of thought from the capitalist to whom he may appeal for financial assistance; or from that of the inspecting engineer who ruthlessly applies every known stress to test the practicality of the mechanical model. An inven- tion may be sound ; a model, unsound. Thus will come about con- troversy and disagreement. A later model which more truthfully externalizes the inventor's ideal, may command the unhesitating approval of both capitalist and engineer; and may win the plaudits of an admiring world. Not infrequently the inventor's original conception, while ideally perfect, can not be made to work at all in available materials of construction. The inventor in such cases is ideally right, but practically wrong. He then requires the co-operation of practical mechanicians to modify or adapt his ideal to the needs of reality. Many of the noblest dreams of the greatest constructive imagina- tions of all ages have failed, or been retarded in realization, for the want of such sj^mpathetic practical co-operation. The mind of Lewis produced in the realm of the pure ideal dur- ing the period of this story, conceptions of periodicals, banks, uni- versities, homes, cities, and their every appurtenance, in a kind of ecstatic exaltation that was almost without conscious effort. His problem was to externalize them rapidljr enough to make way for new conceptions crowding thickly upon their heels. Money was required. But each of these undertakings would represent vast THE DREYFUS CASE OF AMERICA ■ 27 increments of value. Lewis proposed that those who would furnish the wherewithal to externalize his conceptions should share freely in the resulting gains. Why not.'' The workshop whence came these creative visions was still available; rich, as far as he could see, with an opulence beyond all possible demand. The conceptions of Lewis were desirable; so desirable, indeed, that thousands of people became enthusiastic to see them carried out. He set to work to put his ideals in practice, and on the largest scale. The ideas he conceived were vividly expressed on paper. Plans and models followed ; these were no sooner seen than admired. That they did not always work as he intended without adaptation is an experience common to every inventor and creator. Time and continued adaptation to practical detail were needed. Premature interruption meant death. Now the test of the inventor is his model. Does it work? Here is the great question of the capitalist and the engineer. By their very temperament these men are constrained to suppose that pos- sibly it will not work. Their business, before approving any new contrivance, is to disclose faults of construction that might develop under workaday conditions. Many an inventor has besieged the doors of capital for a life time, and in the end carried his cherished invention unrealized to the grave. Lewis applied his inventive mind to this problem of securing adequate capital, and took a short cut to obtain it. After working for a time with a small group of capitalists, he turned from them and took the whole world into his confidence. He appealed to the masses. They understood him. They sympathized with his views. More, they assisted in the realization of his visions. They provided the needed capital; and awaited the results. That is to say, many persons of like buoyant temperament among the masses co-operated with him. Not all. Those of the opposite, the inquisitorial temperament, did not approve. Being themselves denied the rich gifts of creative imagination and opti- mistic hopefulness, they honestly did not believe his brilliant schemes were feasible. Moreover, there was wanting the one test, that of practical experience. The like had not been done before. All such conservative individuals drew the attention of others like- minded with themselves, and, especially those in higher positions of authority, to the nature of Lewis' undertakings. Professional in- quisitors were soon employed. Duty, as these men conceived it, required them to demand for every new device, whether social or mechanical, a complete working model that could withstand every conceivable test and strain. And they required the suspension of all financial activity until such model had been subjected to satis- factory trial. There, I think, you have the crux of the whole Lewis controversy in a nutshell. Lewis boldly announced that the Woman's Magazine and the Woman's National Daily were destined to become the 28 THE SIEGE OF UNIVERSITY CITY greatest periodicals in the world. He predicted that the People's Postal Bank would be one of the greatest financial powers in the Nation. University City was to be the most beautiful of munici- palities. The American Woman's League, and the People's Uni- versity, were projected by him as well within the possibilities of rapid and complete realization. Persons gifted with creative imagi- nation and its accompanying optimism tend to be readily persuaded that Lewis was not only thoroughly sincere in these beliefs, but that he may have been justified in his opinions. Persons of the inquisitorial type of mind look about in vain for working models of any such social, commercial and economic machinery. Lacking what they deem the one sure test of practical experience, their minds instinctively repudiate Lewis's pretensions and stigmatize them as the consciously fraudulent mouthings of a despicable charlatan. It is but one step in the thought of such persons from this position to the conclusion that it is their bounden duty to protect their more visionary brothers and sisters from the financial sacrifices of over-optimism. Such a belief, if sincere, demands action, and instant action. Soon after this, the whole inquisitorial machinery is in full swing. The ill-starred promoter of ideals is doomed. The saddest thing about this case is the apparent absence of any intelligent co-operation on the part of those highest in authority; of any wise discrimination and aid which might have suggested how the new social and economic machinery devised by Lewis could have been carefully modified and adapted to existing condi- tions and so brought to final success. THE QUESTION OF MOTIVE. Closely allied to the question of temperament is that of motive. What motives actuated Lewis and his associates in building up his enormous enterprises ? What motives impelled the men who brought about the catastrophe, and from a state of picturesque beauty, and busy profitable industry, laid University City in a state of siege? Every year of psychological study adds something to our knowl- edge of the inner workings of the human mind. We are beginning to understand inner causes. Lovers of Dickens will remember the unhappy consequences to Mr. Wickfield, in David Copperfield, of taking it as a working theorj^ that every person is actuated through life by a single dominant motive. The action of the mind far more resembles that of the great combination lock on the modern safety vault, than that of a single steel spring. The bolts of these locks are controlled by a series of contrivances called tumblers. As the lock is manipulated, first one tumbler, then another, is released or engaged. The last in the whole series must be reached in order, without error of manipulation, before all can be operated together. Then the bars can be shot freely to and fro. A condition of single mindedness, that is, of being controlled in any action by a single motive, is extremely rare, if not absolutely impossible. Most per- THE DREYFUS CASE OF AMERICA 29 sons would be surprised if they could become conscious of tlie inter- play of emotions and impulses in their own minds. The last mo- tive in a whole series leading to an important act or line of conduct is, in fact, most often the one least consciously regarded. With what motives did Lewis organize the Lewis Publishing Company? What motives led him to propose and organize the People's Bank? Why did he organize the Development and Invest- m.ent Company; or propose the University City Improvement Plan; or start the American Woman's League, or any of his other enter- prises? The true answer is perhaps as deeply hidden from the man himself as from the public at large. Was it desire for wealth, for power? Was it philanthropy? Was it an aspiration to exert his strength in the control of new forces working to the advance- ment of mankind? Was it a crude effort of a youthful mind striv- ing to manipulate levers of a vast machinery of organization and finance, the proper purposes and functions of which he was unable fully to comprehend? Or was it the sane and rational activity of a master mind, carrying out the studied plans of a foreordained and competent leader? Then again, with what motives did the complainants against all these institutions — the postoffice inspectors and other officials and inquisitors — proceed steadily on lines that compassed their destruc- tion? What motives guided the pen of George B. Cortelyou when, on a certain night, he signed the Order Number Ten that wrecked the People's Bank? What were the motives that caused him to sign the letter of withdrawal of the second class entry that suddenly stayed the entire publication of the Woman's Magazine and Farm Journal? Quite possibly the final impulse of decision sprang from motives unconscious and unregarded, motives hidden deeply in the roots of mental habit, motives acquired subconsciously from long living in the environment of conservative departmental and prac- tical governmental affairs. We cannot tell. But we can and must surmise. THE MEN AND THEIR MOTIVES. Now, to establish a suspicion, or support an accusation against any man, of a wholly interested or an utterly unworthy motive, is extremely difficult. A man in front of a rattlesnake, or at a fire, or in a serious crisis of government, may be, and often is, unconscious of the unloosing of the deep seated springs of action within himself, which, operating through a long chain of previous reasoning, results in sudden and decisive action. Manifold are the screens which conceal the secrets of depart- mental action from the public gaze ! Difficult and dangerous to impute motives ! Yet a proper judgment as to the equities of the Lewis case can hardly be reached without pondering well the motives of several public functionaries. Postoffice Inspectors Dice, McKee and Sullivan in St. Louis, were all investors in Lewis enterprises. Travers, chief clerk in the office 30 THE SIEGE OF UNIVERSITY CITY of Madden, who was then third assistant postmaster general at Washington, contributed shorthand lessons to the Winner Maga- zine. Barrett, assistant attorney-general for the PostofEce Depart- ment, on the occasion of the winding up of Lewis' first great enter- prise, the Progressive Watch Company, by order of the postofEce, accepted from Lewis the friendlj^ gift, or parting testimonial, of a sample gold watch. Shortly after retiring from the Postoffice Department, Barrett was retained by Lewis as counsel for the Controller Company of America. Later he also appeared as coun- sel before Madden on the occasion of the citation of the Winner Magazine, in 1902, to show cause why its second-class entry should not be withdrawn. Complaints against the Winner Magazine were referred to Inspectors Dice, McKee and Sullivan as part of their official duties. They made no adverse recommendations. The hearing on the Winner Magazine held before Madden, with Barrett as Lewis' attorney, and Travers, Madden's chief clerk, resulted in no unfavorable action. When, later, charges were brought by other inspectors against the Woman's Magazine, successor to the Winner, and recommendations were then made that its second-class privileges be withdrawn. Madden refused to concur. Nor could final action against the Woman's Magazine be secured by the in- spectorial service, until Madden himself had been asked to resign "for the good of the service." There are several considerations of motive here evident. The inspectors, who throughout maintain an attitude of utter distrust of Lewis' honesty, hold that his motives in his relations with the above mentioned postoffice officials and others were evidently bribery and corruption. Further, while there is nothing on record directly to prove that Madden, while a postoffice official, ever was in any way the beneficiary of Lewis, j'et the inspectors can point to the fact that some months after leaving the service. Madden, like Bar- rett, became an attorney for Lewis to present the case of the Lewis Publishing Company before the United States Court of Claims. The inspectors hold that this proves that Madden had been an obstructionist to public policy in the Department over the Lewis case, from interested and unworthy motives. Their attitude towards Madden points to suspicion on their part, that he, like Barrett and Travers, may have received, in some manner undisclosed, benefits at the hands of Lewis. Money was plentiful. Lewis distributed favors widely. The motives of bribe-giver and bribe-taker are freely attributed to him and to all officials of the Postoffice Depart- ment who have in any way shown him leniency or favor. If the motives of Lewis himself are difficult to see; if the mo- tives of tlie members of Government and of the postoffice are deeply hidden, what are we to say of the motives of the men who have stood forward and publicly accused Lewis as a fraud.'' These are principally four: a man named Nichols, an old em- ployee and co-partner of Lewis; William Marion Reedy, the editor THE DREYFUS CASE OF AMERICA 31 of the St. Louis Mirror; the reporter Betts of the St. Louis Post- Dispatch, and a discharged employee, one I. K. Parshall, who turned informer. To the writings of these men we can trace definitely a chain of events which led to this tragic downfall of a popular ideal. The first definite attack of anj^ kind upon the People's Bank appeared in the Mirror. This is a St. Louis weekly literary jour- nal, of local circulation, sometimes supposed to be subsidized, or at least aided by what is locally known as the "Big Cinch," a loosely defined group of St. Louis monopolists. However this may be, some articles certainly appeared on the subject of the People's Bank, in the Mirror, written and signed by Reedy. The bank was characterized outright as a fraudulent scheme. This caused com- ment; but perhaps not more than such an article would cause in an adverse strain in a similar paper on any new financial enter- prise. Often the tone of such articles changes when the new con- cern begins to advertise. But in this case dire results followed, because of what happened afterwards. The first of the articles was clipped from the Mirror by Howard E. Nichols, with a definite and well considered purpose. Nichols had been formerly associated with Lewis, as secretary and treasurer of the Mail Order Publish- ing Company, publishers of the Winner, and had left suddenly under circumstances to be hereafter narrated. The clipping Vfas placed in an envelope, accompanied with an abject letter of con- fession of trickery on his own part by Nichols, and with a scurrilous accusation against Lewis as an accomplice and a fraud. It was directed to the one man who could be supposed to act quickly and decisively, namely, William Loeb, Jr., private secretary to President Roosevelt. Loeb, presumably, did not know anything of the mat- ter, but sent it, with all the weight of his authority, to the right quarter for dealing with such an accusation, namely, the PostofEce Department at Washington. The governmental machine was thus set in motion. The letter of Nichols and the cutting from the Mirror came back from Washington to the St. Louis division of postoffice in- spectors. On the basis of this letter, and of sundry complaints, the possibility of which is inherent in any widespread scheme for inter- esting the masses, definite cases were made up against the Lewis enterprises. Investigations were held. Lewis announced his read- iness to do whatever was suggested. But what was recommended by Postoffice Inspectors Jas. D. Stice and W. T. Sullivan was that a fraud order denying entirely the use of the mails be issued against the People's Bank; and that the privilege of second-class entry at the one cent a pound rate (by which alone cheap magazines can live) be withdrawn from both his popular magazines, the Woman's Magazine and the Woman's Farm Journal. If these suggestions had been carried out by the authorities, this procedure would at one stroke have wiped Lewis out completely, 32 THE SIEGE OF UNIVERSITY CITY and would have inflicted enormous losses on tens of thousands of innocent investors. The inspectors' reports were given to the Inspector-in-Charge, Robert Fulton, at St. Louis. By him and with his approval, they were transmitted to Vickery, Chief Postoffice Inspector at Wash- ington. He referred the case against the People's Bank to the Assistant Attorney-General for the Postoffice Department, Russell P. Goodwin. The case against the magazines was sent to Madden. This latter was left over. But Goodwin recommended to the Post- master-General, Cortelyou, that a fraud order against Lewis and the People's Bank be at once issued. We are now at the point of real decision. Cortelyou, wishing to act legally, delivered the ]5a- pers to Attorney-General Moodj^, for an opinion. Moody found the process legal, and by his assistant, Hoyt, advised that "upon the facts submitted" the proposed fraud order would have the due sanction of legality. George B. Cortelyou, thereupon, we may imagine, withdrew into the private office of the postmaster-general in the majestic Post- office Building in Washington. Having first secured himself from interruption by instructing his uniformed attendant to deny him to all inquirers, he proceeded to review the Lewis case "upon the facts submitted." At last, taking pen in hand, he crossed the Rubicon by attaching his signature to the fateful fraud Order Number Ten. Thus was Lewis' doom sealed. The People's Bank was ruined. In the meantime the inspectors' report and recommendation as to the withdrawal of the privilege of second-class entry from the Magazine and the Farm Journal, had been referred in due course to the bureau of Third Assistant Postmaster-General Madden. There, under circumstances which will appear, the report lay pend- ing nearly two years. In February, 1907, the resignation of ]\Iad- den was demanded "for the good of the service." This left the post of third assistant ijostmaster-general vacant. There was then no special official left to decide this question. Once more, in imagination, we may see Cortelyou retire into his private office to review for himself this troublesome Le^vis case. Once more his decision is adverse. In the closing hours of his ad- ministration, he took the long debated matter in hand. Almost as his last official act, he affixed his signature to a letter to the post- master at St. Louis commanding the withdrawal of second-class privilege from both the Lewis publications. Now is Lewis doubly doomed. Nothing but his own unflinching spirit and the loyalty of his thousands of women subscribers and Iriends could ever have given him the vestige of a cliance. That he is now, despite indictment after indictment which followed, still upholding these same ideals, still fighting, still issuing his paper, is cause for unstinted admiration for liis pluck, courage, and determi- nation; even though we look upon his life as a tragedy, and of the THE DREYFUS CASE OF AMERICA 33 losses of his thousands of investors all over the country as a still deeper tragedy. Nichols is a halfbreed of Spanish blood of some natural shrewd- ness and sagacity in business affairSj who became dissociated from Lewis under certain very suspicious circunistances. He is now a seller of hairdye in St. Louis. Lewis and he were and are enemies. Nichols' letter to Loeb shows plainly enough his temper, his educa- tion, his character. It was ■svritten according to his own testimony when the contrast between his own poverty at Christmas time with only twenty-five cents in his pocket, and Lewis' amazing prosjoerity was vividly present to his imagination. William Marion Reedj', editor of the Mirror, a well-known man about town in St. Louis, is a character fit to challenge the pen of a Dickens or a Maupassant. Reedy may be aptly hit off in a single phrase, as the antipodes of a Puritan. His publication combines some of the characteristics of the notorious Town Topics of New York with others of Elbert Hubbard's Philistine. Reedy himself, while somewhat corpulent in body, is a man keen of mind, light, witty, apt at conversational repartee, and versed in every form of shrewdness, sensuality and savor. Apparently devoid of the finer moral scruples, fixed principles, or whole-hearted spiritual convic- tions, Reedy is nevertheless a literary artist of no mean order. The freedom with which he spices and garnishes his weekly editorial diet of scandal and travesty of local happenings and personalities, amuses and entertains a certain dilettante class of readers. The Mirror, like venison which epicures prefer "high," that is, slightl}' rotten; or like Camembert cheese, which some regard as best when "soft," i. e., meltingly decadent; requires a cultivated taste to enjoy. Happily its influence is ordinarily confined within the pale of its limited local circulation. Nichols, whose office was adjacent to that of Reedy downtown in St. Louis in the Ozark Building, has testified that Reedy, meet- ing him in the hall one morning, remarked in substance: "I spent the day yesterday with your old partner Lewis. He has a fine home out there; but is a rotten judge of whiskey. He's getting rich. Do you think he can stand the gaff".''" Nichols, averred later that he did not know what the "gaff"' might be; but replied that he "Did not know." Said Reedy, "I think not;" and thereupon published the famous first of his attacks against the People's Bank. What was Reedy 's motive in publishing this article? Was it to protect the people, or to gratify the desires of his subscribers for a sensation ? Was it to satisfy his own curiosity as to the result of the gaff"? Did he imagine that this instrument for landing a fish might bring Lewis to negotiate next week for a writeup in the Mirror of a diff"erent sort? Reedy remarks in one of his articles that if certain bankers and capitalists of St, Louis, naming them, would assure him that the 34 THE SIEGE OF UNIVERSITY CITY project of the People's Bank was sounds he would withdraw all criticism and opposition. Were these bankers and business men interested in local newspapers, railroads, real estate or banking interests that would be in any way seriously affected by Lewis and his bank? Did they make known to Reedy that the People's Bank was objectionable to them? Did they express to him the opinion that Lewis was an undesirable citizen, and should be squelched? The idea that Reedy 's true motive in attacking Lewis was the protection of the investors of the bank, or that he was conscious of a sense of duty, if depicted in an after-dinner speech, would simply convulse to the verge of hysteria a group of the St. Louis newspaper men and bon vivants who know him. It may be safely assumed that Reedy had some good business reason for devoting space in the Mirror to the People's Bank and E. G. Lewis. It was not simply to fill up space. Whether his motives were those of the inuckraker, the blackmailer, or the subsidized press agent of oppos- ing interests, is a secret which may be known only to himself. The truth is never likely to come out. Postoffice Inspectors Stice, Reid and Sullivan, whose names ap- pear again and again in this story, are men whose motives are of little consequence. They were mere cogs on the wheels of a depart- mental machine, for the movement of which they were in no true sense responsible. They were told to investigate, and they investi- gated. Their business was to find out what was wrong. They pro- ceeded on the theory that if the Lewis enterprises were honest and properly conducted nothing adverse to them could be discovered, even upon the most rigid investigation; and that if not so conducted they ought to suffer the consequences of exposure. The inspectors in the original investigation were Jas. D. Stice and Col. W. T. Sullivan. The character of Colonel Sullivan, now deceased, has been placed on record by Congressman Joshua W. Alexander of the third dis- trict of Missouri, an unimpeachable witness. Judge Alexander de- scribes himself as being a life long friend of Colonel Sullivan; and characterizes him as a man of rare probity and a keen sense of offi- cial honor. Sullivan may, therefore, be presumed to have been sincere in his opinion and recommendation as to the Lewis enter- prises. Inspector Stice has told his own story and indelibly impressed his personality upon the record of the Ashbrook Hearings. Un- questionably Stice was and is honest and conscientious in accord- ance with his conception of his official dut}'. No man as clever as Robert Fulton would have admitted to his confidence unneccessarily a subordinate as zealous and as transparent as Jas. L. Stice. Stice placed himself before the Congressional inquisitors, to employ his own phrase, "like an open book." The man unquestionably has at all times meant well. He has always done his level best. But Stice's limitations are as apparent as his virtues. He is simply a THE DREYFUS CASE OF AMERICA 35 stolid fellow, slow and plodding, circVimscribed in his experience and subject to the envy and petty jealousy which narrow-minded men are prone to feel when brought into contact with the person or affairs of those more largely gifted by nature and more prosperous than themselves. Stice, the lowly postoffice inspector, drew a stipend hardly larger than that of the chief clerks and stenogra- phers of the Lewis Publishing Company. Yet the power lay in him to strip from Lewis' face what he conceived to be the mask of his pretenses, and prick to collapse the bubble of his fortunes. Such a man might easily be puffed up by this consciousness of overruling power. The practices and policies of the Lewis Publishing Company, as we shall see, can be comprehended only by projecting them against the background of the publishing industr)^ of America taken in its largest and broadest aspects. Similarly, the People's Bank must be seen in projection against the background of the entire banking industry, not only of America, but of the whole world. An Alex- ander Del Mar could comprehend the People's Bank. James L. Stice could not. Stice saw in the favorable report of Del Mar only another successful effort on the part of Lewis to bribe an investi- gator and deceive the public. Even let the members of a con- gressional committee, one and all, arrive at a conclusion contrary to that of Stice; let their conclusion be ratified by the court of claims ; and let that verdict be approved by the Congress of the United States of America, and by overwhelming public opinion. Still, Stice would doubtless go to the grave unalterably convinced of the propriety of his conduct and the rectitude of his own conclusions. Nichols, in his letter to Loeb, confessed to having fooled the postoffice inspectors. He also accused Lewis of guilty knowledge of his trickery. The Mirror articles contained insinuations of the corruption by Lewis of previous postoffice officials. There was also a challenge to the newly appointed postoffice inspectors designed to pique their pride and excite their suspicions and alarm. On demand of Inspector-in-Charge Fulton, Nichols furnished a detailed statement containing an alleged biography of Lewis, calculated to inspire that official with mingled feelings of distrust, aversion and contempt. Later one I. K. Parshall, recommended by the local postal officials of St. Louis to Lewis as an employe, having been discharged, furnished the inspectors with an unsigned memoran- dum, alleging improper and fraudulent uses of the mail by Lewis and his associates. Lewis alleges that the motive of Nichols and Parshall in their complaints and accusations was envy and revenge; that of Reedy, either blackmail or the supposed interest of the monopolists of St. Louis, of whom Reedy is alleged to have been the tool. The in- spectors in the first instance appear to Lewis to have been not un- naturally prejudiced by the publicity of the charges against him 36 THE SIEGE OF UNIVERSITY CITY of having unduly influenced previous postofBce officials, and of hav- ing conspired to deceive the Department upon previous occasions. The pride of the inspectors, according to Lewis, was likewise piqued. The case seemed conspicuous and important enough, in the event of a favorable issue, to insure recognition for them, and perhaps advancement in the service. The inspectors, therefore, themselves deceived by misinformation, are believed by Lewis to have decided the case in advance; and thereafter to have sought only evidence such as would justify their preconceived opinions. THE KANSAS-ERISTOW ANTI-DICE THEORY. Meanwhile a curious situation revealed itself at Washington. During the presidency of McKinley and the forepart of that of Roosevelt, the administration of the Postoffice Department was torn almost asunder by internal dissension and disorder. The spirit of faction, self-seeking and intrigue was rife. The whole atmos- phere was imbued with mutual suspicion and distrust. All sorts of charges were being bandied about. These ranged from inattention to duty, or incompetency, to forms of corruption involving moral turpitude. A scandal of national proportions was imminent. Each official and employee was wrung with anxiety to keep his own skirts clear and his official head safe upon his shoulders. Innocent and loyal employees reported to their superiors, as in duty bound, sundry circumstances tending to cast suspicion upon the actual wrong- doers. Guilty men, to escape the consequences of their misdeeds, sought to shift back the burden of suspicion and responsibility to their accusers. No one felt that he could trust his neighbor. Treacher^' lurked everywhere. Not even the most lo^'al and compe- tent employee could feel assured of the loyalty of his associates or even as to the tenure of his o'wn office. Madden, the tliird assistant postmaster-general, had under way during this period an alleged reform of the division of second- class mail matter, a branch of the service wholly within his juris- diction. This reform policy provoked the publishers affected to obstructive litigation. Madden, therefore, had frequent need of legal counsel. The evidence submitted by publishers in support of their claims consisted moreover of subscription lists and orders far too bulky to be conveyed to Washington. Madden, therefore, required also expert agents to examine such evidence at the pub- lishers' offices, and report upon the facts. These duties would normally have fallen to the bureaus respectively of Assistant Attor- ney-General for the postoffice, R. P. Goodwin, and of Fourth Assist- ant Postmaster General J. L. Bristow, then in charge of the post- office inspection service. The success of the class of work which Madden had most deeply at heart would thus have been dependent upon the good will, loyalty and efficiency of their co-operation. So extreme, however, was the disorganization into which the service had fallen, that Madden was unwilling to entrust these im- portant issues to the handling of any one not under his immediate THE DREYFUS CASE OF AMERICA 37 ' control. He, therefore, took a step which sowed the dragon's teeth of enmity and strife by which his after years of service were embittered. He formally protested to Congress that the services of the assistant attorney-general to the postoffice were not accept- able, and that the postoffice inspectors were unreliable and law- less. He asked for special counsel and a corps of special agents amenable to him alone. Congress granted his request. Madden thus exchanged, for the co-operation of Goodwin and Bristow, their personal and official enmity. The storm cloud of threatened investigation that had long been lowering over the Postoffice Department broke at last. Bristow was made pilot. As head of the inspector service he was consti- tuted chief inquisitor, and was assigned the congenial task of inves- tigating his associates. Bristow and the inspectors enjoyed almost unlimited command for months. They alone had access to chart and compass. They alone knew whither the investigation was tending. They alone knew how to shape their sails to ride the fury of the gale. When the tempest had spent its rage, it was seen to have made shipwreck of many an erstwhile fair career and name of good report. Sundry ambitions and reputations were wholly foundered. Others came weatherbeaten into port. A few, and among them those of Madden, snugly rode out the gale. Bristow alone had been able to spread all sail to the breeze. Thus the storm which wrecked many of his rivals literally swept the ship of his own fortune safely into haven. No man can with propriety investigate himself. Hence Bristow's department alone escaped the probe. Sundry rumors there were that the chief inquisitor himself had not previously scrupled to profit by some of the very irregularities which he so roundly con- demned in other men. But these were hushed when it became ap- parent that Bristow was basking in the presidential smile. From being the most obscure chief of the newest and least influential bureau of the Department, Bristow suddenly became a leading power. The whole inspector service shared with its chief the glory and prestige of his spectacular achievement. Those inspectors, especially, who were most closely associated with him and were known to possess his confidence, became, as it were, embodiments of his authority. These men who had but recently held the whip of inquisition over the officers of a great department, and had brought not a few of its guilty chieftains to their knees, became, especially in their own esteem, personages of no mean consequence. Mean- time, Bristow had evidently cast eyes of political ambition upon his native state. Once firmly seated in the saddle he deliberately made use, it is alleged, of the postal inspection service to destroy his rivals at home, and build up for himself a stout political machine. Now, the St. Louis inspectorship-in-charge, the authority of which then extended over Bristow's native Kansas, was at that time held by George A. Dice, Bristow is alleged to have coveted this 38 THE SIEGE OF UNIVERSITY CITY post for a henchman of his own, Inspector Harrison. So one day Inspector Paul E. Williams made his appearance at Dice's office, having come all the way from Chattanooga, his own official domicile, or perchance from Washington, to St. Louis as Bristow's emissary. His mission was to convey a demand that Dice withdraw in Har- rison's favor, and accept a transfer to some other city. Any other inspectorship that he might choose, except only Chicago, was pledged to Dice, an undertaking which argued the assurance of despotic power. But Dice, being a native of Danville, lU., and known to Representative Joseph G. Cannon, was not without politi- cal influence. Dice refused to go. He appealed for protection to the then all powerful Speaker. Uncle Joe intervened. Bristow was whipped off from his prey. The affront that his dignity thus suffered so angered Bristow that, it is alleged, he could never forget nor forgive. Dice was then at an advanced age. He survived but a few years. On his deathbed he was still haunted by the enmity of Bristow. Nor could he die in peace until, during his last hour, he had dictated a statement to his sons of the manner in which Bristow had hounded him into the grave. Thus, the victim of in- spectorial plottings passed away. Among the proteges of Bristow, according to the friends of Dice, was one Robert M. Fulton, a young Kansan whose appoint- ment to the postoffice service, it is alleged, was irregularly obtained, and who was, thereafter, advanced by Bristow over the heads of his associates, and far beyond the merits of his just deserts. Ful- ton, it is further alleged, was placed by Bristow under Dice at St. Louis to spy upon him and secretly report if grounds for charges against him could be found. Now Dice and his friends, including the inspectors loyal to him, and the postmaster at St. Louis, F. W. Baumhoff, were personally friendly to Lewis and his enterprises. They found no fault in him. Indeed, Inspectors Dice, J. D. Sullivan and McKee were all investors in the Lewis enterprises. What more promising clue could any investigator ask? Cases against the Lewis enterprises had been made up at Washington and forwarded to Dice. Investigation by him and his inspectors resulted in no evidence of misconduct being found. Then Bristow sent Harrison, who it will be remembered, was to have succeeded Dice, together with one Holden. The two reported that the second-class entry of the Winner Magazine should be withdrawn. The effect of favorable action by the third assistant upon their recommendation would thus have been to dis- credit Dice and impugn the efficiency of his administration. Fol- lowed a citation by Madden, despite his own suspicions and disap- proval of the inspectors' service. Barrett appeared as attorney for the Winner. The case was held up. Months passed. Years followed. Still no unfavorable action against Lewis was taken. Meantime, Barrett accepted a sample watch from Lewis. The two men were pilloried together in Bristow's great report. Mad- THE DREYFUS CASE OF AMERICA 39 den's Chief Clerk, Travers, became a paid contributor of shorthand articles in the Winner. Additional charges were formulated against Lewis. Barrett, learning of these through Travers, warned Lewis, and advised him to retain attornej's. Lewis complained to the Department of this warning as an attempt to blackmail. An investigation followed. Dice had meantime died. Fulton, young, radical, flushed with triumph from his connection with the recent investigation at Washington, in full assurance of the confidence and if need were, the support of his all powerful chief, was promoted to the vacant place. From Dice he inherited the legacy of these various complaints and charges that had been accumulated against Lewis as a basis, according to the friends of Dice, of charges of corruption and Incompetency. The opportunity had come at last to prove that Dice and men loyal to him had been derelict. F'ulton grasped it with avidity. He first made inquiry as to the status of the case against the Winner Magazine submitted long ago to the third assistant. He was advised that no action had been taken or was intended. Then came the Travers-Barrett leak of information opening the way direct to the bureau of the third assistant, hitherto untainted by scandal's slightest breath. The third assistant had not acted. Per- haps the very man who had flouted, condemned, and scorned the inspectors service, and had passed through Bristow's inquiry, un- touched, might yet be reached by a campaign conducted with suffi- cient acumen, energy and sagacity. That were indeed a triumph. Comes now a letter of instructions from Washington. The post- master-general had been fully advised. Fulton was ordered to follow the case up wherever it might lead, "even if it touches people in Washington." Such, in brief outline, is the theory that the mutual jealousies and animosities of a cabal of the postoffice inspector service, may have furnished the motives that animated some of the principal actors of this tragic drama. Upon this theory, Lewis is not to be considered as in any way fraudulent or dishonest, but merely Un- fortunate in becoming by the veriest chance the football of depart- mental jealousy and inspectorial intrigue. THE PLATT-CORTELYOU THEORY. What of the possible motive of George B. Cortelyou? Madden, who played no small part in this controversy, boldly alleges a con- spiracy between the late Senator Thomas C. Piatt of New York State, and the former postmaster-general. A bronze tablet upon the entrance gates of University City bears among other records the following legend: "People's United States Bank, founded November 14, 1904, assassinated July 6, 1905." The officials of the Postoffice Department concerned in the alleged conspiracy and "assassination," including Cortelyou, enter their general denial, and plead in justification their official oaths and duty. The lips of Senator Piatt are closed in death. 40 THE SIEGE OF UNIVERSITY CITY The late Thomas C. Piatt of New York was president of the United States Express Company. He was reputed to be the domi- nating factor in the so-called express trust. Piatt was for many years the Republican "boss" of the Empire State. The election of Theodore Roosevelt as governor of New York was made by and with Senator Piatt's approval and consent. Later he was active in the fateful movement to shelve Roosevelt as a vice-president, which by a freak of fate opened to him the portals of the White House. Piatt, through his power as "boss," caused himself to be appointed senator from New York, and in that capacity represented, not the people, but the express trusts and their allies. Some light was thrown upon this man's character, or lack of it, as well as upon his motives touching national legislation, by the celebrated suit of Mae C. Woods. This young woman was formerly employed, it is thought, upon Piatt's private recommendation, in the PostofEce Department at Washington. Miss Woods alleges under oath that she was employed by Piatt to advise him of the inception of any adverse legislation. She did upon one occasion so notify him. He hurried to Washington. The proposed measure was squelched. The senator, thereupon, in complimentary fashion as- sured her that her timely warning had enabled him to save for the express companies many hundreds of thousands of dollars. The circumstance that Miss Woods' suit occurred shortly after the elopement of the senator with another woman employee of one of the departments at Washington, occasioned much newspaper gossip. The whole affair in connection with a senator of the United States amounted to a national scandal. One of the phases of national legislation opposed by Piatt was the creating of a postal savings bank under the auspices of the postal establishment of the United States. Such a bank did not then exist, in America, although postal banks have operated for many years in England, France, Germany and other countries of EuroiJc. Agitation for such a bank in America had been practically continuous for years. The passage of such a measure by Congress had been averted through the influences commonly known as the money trust and the express trust. Of these Piatt was a moving spirit. The People's United States Bank was a mail bank institu- tion. The new bank, through its certified check system as an easy means of forwarding money without charge, touched with the finger of competition two of the most sensitive nerves in the ex- press companies' business: the transportation of currency, and the sale of money orders. It is easy, therefore, to understand the earnest nature of Senator Piatt's opposition. The possible connection of Piatt and the express companies with the postoffice, and of the three with Lewis and his bank, may be inferred from the following facts : George B. Cortclyou was appointed postmaster-general from the State of New Y^ork by Theodore Roosevelt at a time when Piatt, THE DREYFUS CASE OF AMERICA 41 as senior senator, boss of the Republican party, and political repre- sentative of the most powerful financial interests, was in control of Federal patronage. Cortelyou had been previously private secretary successively to Presidents Cleveland, McKinley and Roosevelt. A stenographer by occupation, he owed his rise solely to his fidelity to his employers' interests. Cortelyou thus enjoys the rare dis- tinction of having shared the inmost confidences of three presi- dents of the United States whose administrative policies were widely variant. His acquaintance includes, it is seen, several more or less distinctly opposing and antagonistic groups of public men, closely associated with those administrations. A man of strongly marked individuality, of fixed principles, and of the courage of his con- victions could hardly have thus adapted himself with chameleon- like rapidity to the changeful color of his environment. The ideal private secretary is the transparent glass, the open tube or the clear wire through which his master's will can be transmitted without let or hindrance. The capacity to adajst oneself acceptably to the service of three men of dominating wills as widely divergent as those of Grover Cleveland, William McKinley and Theodore Roosevelt, easily qualifies Cortelyou as the model private secretary of the world. The will of a man so constitued, if he can be properly said to possess such an attribute, must be, as a mechanic would say, hung upon a universal joint, and so capable of turning in any direc- tion. Moreover, a private secretary must be discreet. One capable of passing from this opposing camp to that, yet in no wise breaking faith, is evidently the very pink of tactful propriety and reticence. Cortelyou is a sphinx. No private secretary ever employed about the White House has made more friends by communicating tactfully the information which it was his duty to impart, or fewer enemies by withholding secrets that it was his policy to maintain inviolate. None of these relations ever disclosed the real Cortelyou. Cortel- you, the convenience, was for many years as well known as any public figure in America. Cortelyou, the man, has always been essentially an unknown quantity. Upon Madden's theory of a conspirac}'' in the Lewis case, Cortelj'ou is alleged to have been the tool of Piatt and his allies in the abuse of the discretionary power reposed in him as postmaster-general of the United States. THE DREYFUS CASE OP AMERICA. This case is being made up for submission by the Congress of the United States to the adjudication of the court of claims. But the tribunal of last resort is the aroused and enlightened conscience of the American people. How may the individual citizen arrive at a just and tenable conclusion as to the manifold issues and equities involved ? This volume purports first to set forth all the essential facts. These are substantiated by official records. The principal actors are allowed to suggest in their own words their own hypotheses 42 THE SIEGE OF UNIVERSITY CITY and theories. The author undertakes to indicate what allowance it seems to him should be made for diiferences of temperament, and for possibilities of motive. He points out, also, what he believes to be the underlying social, commercial, political and economic tenden- cies involved. Upon a careful study of these considerations, all may draw unbiased and unprejudiced conclusions. At the least all may be in the position so to do, in so far as their own tempera- mental character will permit. The fact that Lewis has been practically in a state of insurrec- tion against the United States Government for the past six years, interesting as this in itself might seem, would be comparatively in- significant were it not for the additional fact that he is supported in his rebellious attitude by the sympathies of many hundreds of thou- sands of his fellow citizens, and literally by millions of women. The facts herein narrated speak for themselves. They are well worth the attention of every American citizen, of every leader of social and democratic movements throughout the world, of every editor of responsible papers, of every professor of sociology; of every man or woman who delights in the struggle between progress or the spirit of life, and inertia or the spirit of decay. Lewis was presented one evening as speaker on the occasion of a banquet at St. Louis, to an audience of four or five thousand souls. When someone commented upon the power of numbers rep- resented by such a vast assemblage, he rejoined, "What would you say if you could see the one and a half million readers of the Woman's Magazine all gathered together?" The notion has clung to Lewis' mind as a symbol of the power of his editorial following. Let no one lightly brush aside the Lewis case upon the theory that it is of trivial import. It is not. It is a matter of eminent national consequence. It is a matter of world-wide significance. It is a matter of abstract truth and justice. This fact is known to the leaders of progressive democratic movements upon both sides of the world. The Lewis case is the Dreyfus case of America. CHAPTER I. THE CITY THAT IS SET UPON A HILL. The Siege — The Beleaguered City — Is Lewis vSaint or Sinner? — The Notoriety of the Siege — Which Theory Is Right? — The Truth About the Siege. University City is besieged. There can he no douht of that. All the tokens of a siege are present, save only the physical ruin that comes from the shells, and such marks can not be long delayed. Leave the buildings, the machinery, the grounds for another year; windows will crack, plaster will fall, machinery be rusted and ruined, lawns dry and unkempt. That these signs and those of bullets are not to be seen in University City, as they were, for instance, in Peking when, after long months, the first file of East Indian troops crept up the waterway, and found the waiting people smiling but hungry, is solely because the siege is one of paper, orders, indictments, citations, fees, instead of one with bullets, shells, and a visible investing army. All the other signs of a siege are here. The army of outside helpers who have fled; the small number of active fighters who are left; the solitariness, the hunger; the piecing out of means to an end; the weary watching for relief; the presence of a few war correspondents who every now and then get through news to the outside world; the band of faithful women and a few children, who bravely daj"^ after day return to their self- appointed tasks ; the eager, inspiriting voice of the captain ; the earnest endeavors of his lieutenants. university city. To live in a state of siege and see no visible assailant, — that is a strange feeling. All round the besieged city are courts, judges, offi- cials, editors, bankers, business men in their strongholds, waiting for its final downfall. Inside are the few locked in the tower. Afar are the forces, alwa3's invisible, but always felt, of the higher powers ; the masters of equity ; the presidents of organizations ; the editors of the great newspapers and journals; the President of the United States himself. There, without, are also the educators, teachers, churches, and the masses of men and women who, in their hearts, wish only for the right and truth to prevail. Sieges many there have been. But for all history and for all time, the siege of University City will stand out as the one peculiar case of a "City That Is Set Upon a Hill" besieged by invisible forces, and vrrecked by invisible foes. University City besieged, is still University City beautiful. Del- mar Boulevard drives like an arrow from the bow of the Mississippi 43 44 THE SIEGE OF UNIVERSITY CITY River, in the bend of which the City of St. Louis lies, straight west through the heart of University City. It bisects the central plaza, and passing up a gentle incline, pierces a wide gateway flanked by Zolnay's famous lions. Beyond the gate, amid a clump of old oak trees nestle the houses. Just without the gatewaj^, adjoining the plaza, are the principal buildings of the Lewis Publishing Company. The home of the Woman's National Daily, an enormous structure originally designed for the People's Bank, modeled from an Egyptian Temple at Kar- nak, looms upon the south, windowless and mysterious. The winged globe of eternity, in weatherbeaten bronze is seen over the narrow slanting gateway midway its pale expanse of sloping wall. Upon the north rise the graceful lines of the Woman's Magazine build- ing, the far-famed Octagon Tower, with its tall windows, and its chubby cherubs atop. Its stately steps are now deserted of throng- ing feet that have worn hollows in the solid stone. The long, low, oblong two-story building of the magazine press lies silent in its rear. The presses are idle and rusting. Northeast of the Campus rises a spacious and dignified structure in the French Renaissance style, the Art Institute of the American Woman's League. The busy hum of potter's wheel is silent. Rooms lately full of famous masters and eager students, modeling sculpture under Zolnay, or moulding priceless porcelains under Taxile Doat, the world renowned master from Sevres, in France, are empty. Doat's famous collection of porcelains is sold. The art treasures are locked up. Honor students have been sent home. The gentle finger of death has beckoned Vanderpoel, America's most famous teacher of human figure painting, from the scene before he became aware that the ideal city of his dreams was destined again to become the battle ground of contending forces. Others have fled. Only Zolnay in his linen blouse at his scvilpture in his lofty studio ; and the genial Doat, at his marvelous pottery, still plod on, lonely in their devotion to the ideal of the People's University, faithful believers in the future of the League. The halls below are deserted. The lawns of the Campus are un- kempt. From time to time those in University City hear the slow booming of the reports of the indictments of the Government. Sometimes they see in the daily press the flashes of wit from the riflers in the distant courts. The besieging armj^ is one of account- ants, collectors, lawyers. It is led by inspectors, captained bj^ heads of departments, urged on by presidents, judges, the leaders and rulers of the people. The people themselves wait, anxiously watch- ing the result. For if the siege is not raised there will be no papers of the people, no People's Bank, no People's LTniversity. Such, in brief, is this most notable siege of the "City That Is Set Upon a Hill." The little municipality, meantime, carries itself with a park-like air. Broad boulevards run straightway. Parkways sweep in grace- THE DREYFUS CASE OF AIMERICA 45 fill curves. The lawns are wide and in the summer time are vel- vety and green. Shade and shrubbery abound. It is an ideal place for children. Their voices ring happily in its open spaces. The whole atmosphere and surroundings are rural rather than suburban. St. Louis, itself, lies below the eastern horizon in a pale haze of smoke. Westward, the outlook is to the prairies of Missouri. West, North and South stretches a wide rolling level, for hundreds of miles. Many miles from the river come the real foot-hills of the Ozarks. University City itself is set upon the first beginnings of these rolling heights. It stands upon the soft incline at the top of the street called Delmar. Already its brief life has given it such an eminence that nothing can prevent the whole world from observ- ing and noting well this story of its siege. University City, though small, is well and solidly built. It con- veys on every hand the unmistakable impression of firm adherence to the motto: "The end is to build well." The landscape garden- ing and engineering of the parkways, sidewalks, shade trees, sewers and promenades, are beyond all rational criticism. University City is no flimsy advertisement, no exposition white-washed shell destined to be dismantled in six months. What has been done has been well done. There has been careful forethought and consid- eration. It has been built with high class, well paid labor. Evi- dences of breadth of plan, thoroughness and sincerity of purpose abound on every hand. The rise of University Cit}', its extraordinary prosperity, its .KJege and bombardment, and its sudden tragic downfall, are the sub- jects of this story. Eight years ago the central plaza was all wild cow pasture ; rough ground, of rich loany alluvial soil, covered with coarse grass and bushes. The surrounding fields were then worth, at most, two thousand dollars an acre; and this was chiefly a pros- pective value because of the proximity of St. Louis. Within this eight years a beautiful city has arisen. The value of University City now runs far into the millions of dollars. These six or eight years have witnessed a series of building opera- tions truly remarkable. Hundred of tons of concrete and thousands of barrels of cement have been incorporated into the plant of the Lewis Publishing Company alone. Train loads of stone have been required for the walls and foundations of the buildings. Tons upon tons of terra cotta have been consumed upon their decorations. Tiles innumerable cover the Press building, the Art Academv and the other structures. Tens of thousands of dollars' worth of pol- ished white and yellow marble have gone into the single item of the facing of the Egyptian Temple, and for mural decoration within the other buildings. A single grand staircase in Italian marble and bronze on the ground floor hall of the Octagon Tower, cost nearly twenty thousand dollars. All this splendor was erected out of the profits of the millions of dimes of the women of America, given willingly for the little Winner and the Woman's Magazine, and 46 THE SIEGE OF UNIVERSITY CITY for the beautifying and glory of what they learned to consider as their own ideal. University City. Lewis has often said that he has no magic means of coining money ; yet these silver coins came trun- dling in, as if at the touch of a wizard wand. A CENTRE OF MANIFOLD ACTIVITIES. These items comprise but the outer shell. The mechanical equip- ment of the separate publishing establishments, each known as the largest and most highly specialized of their kind in the world, are the real heart of University City. We cannot see all the invisible effects of these presses in enlightening the minds of the people. But we can see the visible mass of complicated mechanism that the siege of the city has stilled. The newspaper plant of the Woman's National Daily alone, including the great Goss printing press, comprises a small mountain of printing, typesetting and stereotyp- ing machinery, all specially constructed for University City, and all of the highest grade of excellence. The mechanical plant of the Woman's Magazine and the Woman's Farm Journal, totals over a score of carloads of presses and folding, stitching and binding ma- chinery. The plant, in addition, contains a complete equipment of art and protographic studios, typesetting, stereotj^ping and photo-engraving paraphernalia. The whole is equipped with elec- tric power motors, and fitted with the latest mechanism. The entire establishment of these magazines not only bulks largely before the eye of the visitor, but commands alike the admiration of the archi- tect, engineer, and practical man of aifairs. The physical aspects of University City are, as we have seen, tangible enough. They present themselves vividly to the eye of the imagination, and lend themselves easily to that concrete im- agery wherein alone the masses of men are wont to think. They represent the exertion of forces which can be measured. But all human experience and philosophy teaches that back of this physi- cal force, underlying as it were, sustaining, and acting through the physical phenomena, is some kind of potent spiritual force, in the living conceptions of the minds of men, of which inner force these outward things are no other than the visible, tangible embodiment. What, then, is the soul of University City, which has caused so great a stir? Why has it given rise to so vast a controversy? To settle once for all these questions, and clear the common mind as to what is the inner meaning of this unseemly and bewildering strug- gle between a whole department of the Government of the United States of America, and a private citizen, is the object of this story. The eight years' transformation from cow pasture to University City seems little short of a miracle of creation, a Monte Cristo dream turned to reality. It suggests the inevitable question. What was the origin? How came this wonderful transformation to be brought about? The answer is wrapped up in the career of Edward Gardner Lewis. THE DREYFUS CASE OF AMERICA 47 Lewis was the pioneer promoter of real estate values in Uni- versity City. Here, just outside the limits of St. Louis, he built his own residence. Here, he erected the plant of the Lewis Pub- lishing Company, upon the open fields. His was the moving spirit in the incorporation of University City as a separate municipality. And it was he who was afterward honored with the position of its chief magistrate. The nub of the controversy is, therefore, the personality of the man who thus made University City possible, who brought about its realization, and rendered it beautiful and famous. IS LEWIS SAINT OR SINNER? Is Lewis a saint or a sinner? The Siege op University City undoubtedly turns on this question. Two of the principal depart- ments of the United States Government have sought for six years to prove that Lewis is a fraud, a crook, a wilfully evil-minded man. They have sought to take him away from University City, and lock him up for a term of j^ears in a United States penitentiary, like a common thief, or footpad, or embezzler. It gives one cause to wonder how many of the hundreds of men in that penitentiary are really deserving of their fate. Lewis behind bars, and Lewis in his little city, happy and smiling through the long Siege, are a contrast that vividly strikes the public mind. And the siege is still on. Lewis is now, not for the second or third time, but for the twelfth time, under indictment by the Gov- ernment. Had any one of the previous efforts of its attorneys been successful, the upbuilding and beautification of University City would long since have been arrested. The past seven years have thus witnessed the spectacle of a private citizen, not only engaged in the creation and management of extensive interests, real estate, publishing, banking and associated enterprises, but at the same time withstanding the utmost efforts and resources of the machinery of one of the most powerful governments in the world to compass his conviction, incarceration and ruin. The losses of these six years of warfare have fallen, as so often happens in war, not only upon the principal combatants, but also upon many thousands of persons innocent of all wrong-doing. Lewis' personal resources have been completely wiped out. The in- vestors and creditors in his various enterprises have sustained losses running into the millions. The Government of the United States has expended hundreds of thousands of dollars of the public funds on the contest. Two Republican administrations have sustained a loss of prestige that is incalculable. The Lewis' enterprises at University City are at a standstill. The great Goss press is silent. The People's University is in abeyance. Its classes are stopped. There is no magazine any more. The whole community is suffering a check. But Lewis is at large, and Lewis is not a man, were he in jail, to remain quiescent. New enterprises are projected. Addi- 48 THE SIEGE OF UNIVERSITY CITY tional building operations are being planned. Some, indeed, are getting quietly under way. Books are being prepared and printed. Friends are not lacking. The great public is at last rousing itself. A tragedy fills all with a sense of impending evil. What has hap- pened to one, may happen to all. Persons familiar with the story, are filled with amazement at the spectacle of Lewis' continued courage, energy and optimism. The more distant and less well- informed world is vaguely stirred with strange misgivings as to the realities at the bottom of Lewis' prolonged and successful re- sistance against such overwhelming odds. THE NOTORIETY OF THE SIEGE. Happy, they say, is a nation that has no history. University City without its siege would be University City without its story. The mere transformation of pasture land into an attractive suburban municipality on the plains of Missouri, or the mere creation of a manufacturing and printing establishment, however admirable or successful, would not themselves justify the making of a book. Nor would they attract any widespread attention. Yet the name of University City is perhaps today more widely known through- out the United States, and even in Europe, than that of any other municipality in America, with the exception of the four or five principal cities. The press of the entire world has given the unique little com- munity extraordinary publicity. Public opinion has concerned itself with University City to a degree that is unprecedented. Such opinion is divided after an astonishing fashion. Families, friends, neighbors and communities have aligned themselves upon opposing sides. A citizen of St. Louis, or indeed any resident of Missouri, can hardly travel anywhere in America, without finding himself continually questioned as to the facts, and placed in a position of involuntary arbitrator on this question: What do you think of Lewis.'' of the American Woman's League? of the People's Bank? of University City? University City is a Mecca to many. To others it is a scandal and a reproach. Meantime that vast receptacle, the common mind, is slowly digesting certain information upon these matters. The Woman's Magazine was wont to circulate to the number of one and a half million copies each issue and the Woman's Farm Journal approxi- mately half that number. The Woman's National Daily, for many months issued nearly half a million copies daily. The Wom- an's National Weekly still circulates in considerable numbers. These hundreds of millions of pages were full of news and illustrations about University City and its doings; interviews articles, descriptions, stories, reports of cases, all spiced with stirring editorial comment. The conventions called by notices in these papers were attended by thousands of delegates representing local chapters all over the United States. They came to University City in train loads. These periodicals circulated nationally over THE DREYFUS CASE OF AMERICA 49 the widest area that ever newspaper supplied. It was the proud boast of Lewis that no postoffice in America was so small as not to receive two or three copies of his journals. Supplementing these enormous channels of publicity came a flood of circular matter, and pamphlet literature of such volume, that Lewis' total output is said to have comprised more by weight than one-fourth of the outgoing mail of the entire City of St. Louis. All this has enabled the publisher-promoter to place his own story vividly and continuously before the public. The PostofEce Department has added to this original flood by issuing, itself, to inquiring citizens and to the press, a series of pamphlets, at public cost, in justification of its ofiicial course in endeavoring to limit, withstand, and even arrest this tide of publi- cations sent at the expense of the Government, in a manner which it sought to brand as fraudulent. The Lewis case has furnished quantities of newspaper copy. Many are the good stories culled from it that have gone the rounds. "Lewis has sold a million watches by starting an endless chain; cured men of smoking by putting tabloids in their coffee; taught his subscribers that the World's Fair was an annex to his Publish- ing Company; coaxed millions from old ladies, farm girls, washer- women and servants, and hidden away the spoil; juggled discount notes, and so confused bankers as to make millions by ringing the changes ; bought land and sold it to his deluded subscribers for ten times its worth; offered dollar shares in a newspaper that he did not own; sold worthless stock in a company for manufacturing bottle stoppers out of the returns of his old newspapers." So the tide runs on, tinged with charges of every kind of exhibition on his part of personal vanity and of fraudulent scheming. And all these tales are colored with the idea that Lewis is the great get- rich-quick man of Missouri. The great St. Louis dailies have necessarily covered the case mainly from the news standpoint. Its most sensational facts and phases have been purvej^ed by them to the American reading public, hot and well-spiced, with the hectic cleverness of newspaperdom. Paragraphs, more sober, have been distributed through the channels of the Associated and United Press. The salient features have been sent by cable abroad through the press associations of London, or direct to English and European papers. WHICH THEORY IS RIGHT? The existence of University City, and the siege of it, having thus become noised abroad by Lewis, by the Postoffice Department and by the American and European Press, by editors of associated magazines and by writers attracted by its vivid interest, public opinion has gradually become crystallized on one or another of three different theories. Lewis' friends and sympathizers class him as a genius, a wise innovator, an ardent reformer. They attribute his failures and 50 THE SIEGE OF UNIVERSITY CITY losses directly to the opposition of the Government, moved thereto by financial interests, such as the express companies, or to the at- tacks of newspapers such as the St. Louis Post-Dispatch, the Rural New Yorker, and others, which he has antagonized while setting himself up as champion of local and rural interests. The official theory of the postal establishment, commonly sup- ported by postmasters, letter carriers, and their adherents every- where, is simply that Lewis is a law-breaker. In their eyes he is a publisher who is wrongly using the mails to ask money for the promotion of his private schemes, or for plans which he never meant to carry out. They hold that the investigation of his enter- prises revealed conditions such that it became the duty of the autliorities to proceed against him, as they would against any other fraudulent person using the mails to get money for goods he did not and could not deliver. The newspapers, in the third place, depict Lewis as an extra- ordinary get-rich-quick schemer of the Colonel Mulberry Sellers tvpe. They deem him a man whose sensational career deserves no more consideration at their hands than is necessary to round it out into a good newspaper story, or a cleverly written Sunday feature article. This theory is that Lewis is a man bent on getting rich by the easiest and quickest scheme; that he has money hidden away and wants more. All his plans are said to be self-advertise- ments. All he desires is thought to be the dollars. When he has thieved enough from the public, the paragraphers intimate, he will retire and start a harem, or bask in California, or riot in Paris. How unlike this reportorial notion is to the true state of the afl'air, readers of this book can judge. THE TRUTH ABOUT THE SIEGE. The whole controversy, from the date of its inception has now been extended over a period of twelve years. The mass of assertion and denial to which it has given rise is enormous. The news items and editorials concerning it, cut from the dailj' press, kept in Uni- versity City, occupy a dozen large scrap books. They number many thousands of clippings. The magazine articles and pamphlet liter- ature relating to it occupy several drawers of a large filing case. They number many hundreds. The dockets of the State courts of Missouri and the Federal courts are broadly blazed with a trail of the Lewis case, leading up to the Supreme Court of the United States at Washington. The transcripts of the records of these cases constitute more than a score of fat well-printed volumes. They occupy hundreds of pages. The standing committee of the Congress of the United States on postoffiee expenditure, known as the Ashbrook Committee, has recently (1911-1912) undertaken to investigate this subject thoroughly from top to bottom, affix the blame and, if necessary, advise changes in the postal law. For Lewis has claimed damages from the Government to the amount of three million dollars for the destruction of his business. The testi- THE DREYFUS CASE OF AMERICA 61 mony taken in the Ashbrook hearing already runs into several thou- sand printed pages. The justification for this present volume becomes clear as the noonday sun, and its necessity is felt as that of fresh air in a long closed room, when in a careful study of all the documents, including letters of the general public, it appears that no ordinary person, in fact, no one at all, other than the two or three chief actors, could by any other means obtain a well-rounded view of all the issues of this most complex argument. Every newspaper article or editorial, every document, every pamphlet heretofore produced, upon either side of this controversy, has related to but one phase, or at most to some one or two angles of the complex subject matter. Many such contributions have been based upon utter misapprehen- sion of the true state of facts as a whole. All manner of preju- dice, bias, envy, spleen, malice, greed, expediency, and denial of fairness, justice, and the rights of others, is insidiously instilled into many of the documents. Seeping thence from mind to mind, they have imbued the atmosphere of the case with rank and poi- sonous odors that only the sweet fresh breeze of the noblest and highest public opinion, inspired by the sense of fairness and the love of truth, can disperse. One of the parties is a Department of the National Government, the PostofEce. The gravest charges are made against two Repub- lican administrations. The other party-in-chief is a private citizen. The business enterprises involved are the property of some hun- dreds of thousands of small investors, with a few larger ones, scat- tered through every State in the Union. There is hardly a town, or even a decent-sized village in vbnerica where there are not one or more persons directly concerned, either in the magazine, the stock of the Lewis companies, or of the bank, as member of the League, or as student, actual or prospective, of the People's University. The notoriety of the case has been increased by the Ashbrook Con- gressional investigation. This has drawn men from all parts to give outspoken witness as to the truth. Altogether, it is perfectly apparent that the public demands the facts. For the case cannot be settled until the white light of truth is allowed to penetrate the entire controversy and throw into relief all of its inner workings. Thus alone can every episode be made to stand out in proper per- spective and proportion. Thus only will the true relations of the varied parts of this living drama at last appear. CHAPTER II. TRIAL BY NEWSPAPER. The Machinery of Publicity — A Job for Somebody — When E. G. Lewis Was in Hartford — The Modern Mississippi Bubble — Lewis and His Publications — Is Banker Lewis Fraud or Victim? — Lewis, the Financier — Wild-cat Financiering — Fanatical Finance — Lewis' Vast Ex- ploits op the Past Ten Years — The Schemes of E. G. Lewis — Other People's Money — The E. G. Lewis Bub- ble — Lewis, the Martyr — The Motives op the Press. Everyone nowada}'s reads the newspapers. Most men form their opinions almost at unawares from news items and editorials. The court of public opinion is the court of last resort in a democracy. Its final decrees are omnipotent. The officers of this great court are newspaper men, the gentlemen of the Fourth Estate. Reporters are the advocates. Editors are the judges. The public is one vast jury of fifty million or so, that reads instead of listens. In some- body's happy phrase, trial by newspaper has been substituted in America for trial by jury. The court of public opinion has become the palladium of national liberties. The subject of this present story has been brought prominently before the court of public opinion on several distinct occasions during the period of the last seven years. The pleadings have been voluminous. The arguments were lengthy and worded with force and skill. But thus far no clear verdict has been rendered. Each newspaper discussion has ended, to employ the legal phrase, in a mistrial. The great jury has disagreed. A large number of news- paper readers have undoubtedly formed the opinion that Lewis is a crook. Others have reached the opposite conclusion: they think he is a very useful citizen, and a victim of conspiracy and persecution. Now, a man's judgment or opinion upon any subject can never be any better than his information. The opinions of most persons about Lewis have been formed from newspaper stories which they have read, but the exact details of which they have probably forgotten. Whether their present conclusions are right or wrong depends, there- fore, almost entirely upon the truth or falsity of the original stories which thej'^ have read. For the purpose, therefore, of refreshing the minds of many persons who have formed their opinions as to the subject of this story from the widely circulated press accounts, a small group of newspaper stories has been selected for republication. These may be taken as quite fairly representative of the hostile attitude of the press. Chosen from among hundreds of newspaper 52 THE DREYFUS CASE OF AMERICA 68 clippings after careful analysis and comparison, they embrace prac- tically the entire mass of current rumor and feeling about Lewis and his alleged frauds. In substance, these stories have been reprinted in many forms throughout the English-speaking world. Few persons can have seen them all. Those who have previously read one or more of them will find them convenient here for com- parison with the facts. Others may enjoy their picturesque details and racy style. All will recognize that this mass of comment must have had some origin. If, upon the whole, it does not truthfully represent the facts, then the fountains of public opinion must some- how or other have been poisoned. THE MACHINERY OP PUBLICITY. A few words are needful as to the machinery of newspaper pub- licity. Neither the big city daily nor the country weekly can have a special correspondent or other representative available to cover every important piece of news in every part of the land. Modern newspapers depend primarily upon the Associated Press and similar types of news-gathering organizations, for their news from distant parts. These organizations maintain what is known as a news ser- vice, to which, under certain conditions, newspapers may subscribe. Each newspaper covers its own local news. Tlie reporters and edi- torial staff of a local paper, after preparing for their own columns the news items of the hour, telegraph the substance of their stories to a central bureau. Thence, in turn, they are dispatched to all the subscribers of this special service that desire them. A single news- paper representing locally a great news service can, therefore, color and shape the entire news dispatches to all its fellow members touching any subject as to whicli its owners may chance to have a personal interest. Another custom that is practically universal among newspapers is that of copying good stories from the columns of exchanges. The exchanging of newspapers is quite usual. Every newspaper main- tains its exchange list of other periodicals to which it is mailed daily. Each has its exchange desk, where an editor receives copies of other periodicals, and examines them for matter of possible interest to his own readers. Thus, news items and feature stories printed by a local newspaper, if thought to be of sufficient interest, are clipped and reprinted in part, or in entirety, by many newspapers in widely scattered places. The more sensational a story, the more often it is likely to be republished. The main events of The Siege op Univer- sity City, its skirmishes, sorties, battles, and the outlines of its great campaigns, have been thus prepared by the publishers of the great daily newspapers in St. Louis. They have been placed upon the wire as news dispatches to the various press associations with cen- tral offices in the great cities. Thence they have been scattered as exchanges far afield, over the length and breadth of the whole con- tinent of America, and sent abroad to Europe or the Orient. Such stories are unhesitatingly accepted by the authority of news- 54 THE SIEGE OF UNIVERSITY CITY paper custom^ without attempted verification. The law of libel is supposed to deter tlie local publisher who originates the story from misstatement. Other newspaper editors assume that the facts are substantially as stated. They take a chance on reprinting anything that they think likely to be of sufficient interest to their readers. The mere fact of the appearance^ therefore, of these items in rep- utable newspapers published in widely scattered places, is no real criterion of their reliability. In the interest of sober historic verity they must be traced to their source. This source, in nearly every case, must be the office of the newspaper at St. Louis in which they were originally drafted. The sources of information used by the authors of the story must then be considered. The business and political interest, and the possible bias of the owners of the news- paper that first stood sponsor for these news items or stories, must be thought of. The circumstances, the prejudices, the passions of the hour, all must be allowed for, in any final test of truth. Finally, the actual facts of judicial or commercial record must be stated and compared with the newspaper stories as sent to the world at large. It must be remembered, however, that the first business of a news- paper is to interest its readers, even to startle, to make them read. NewspajDer reporters are not on the witness stand. It is not incum- bent on them to give the whole truth. Certain of the articles which follow were no doubt published in perfectly good faith. But the editor of the paper who was respon- sible for their republication in distant parts would be among the first to admit that he had been obliged to depend upon second-hand and hearsay sources for his information. He would freely acknowl- edge that the facts stated are fragmentary. He knows full well that if reset in their original relations they might present an altered aspect. He is well aware that, in common with other editors, he has made no attempt at verification and has few or no facilities for so doing. No really accurate story of the amazing growth of popular magazines and mail order institutions in the great Middle West of America has yet been written. Few full accounts have appeared, even of the special institutions at University City that have caused this ever-growing trouble with the Government, and among other things have rearranged for American women the centre of the hab- itable world. Yet the notion of The Siege op University City as a comprehensive story should make a vivid appeal to the journal- istic mind. A JOB FOR SOMEBODY. The editor of the Beacon- Journal of Akron, Ohio, expresses admirably a mental attitude which is doubtless shared by a oreat majority of his editorial brethren. His challenge is here cheerfully accepted as a gage of battle. An attempt will be made in this vol- ume to give the "impartial survey" therein desired, with fullness and such skill as the writer can command. The text itself will, it is hoped, be accepted as its own "guarantee of impartiality." Cer- THE DREYFUS CASE OF AMERICA 63 tainly, the necessity for this story could hardly be more aptly or forcibly expressed than in the following leader entitled, "A Job For Somebody": One of the many feature writers who are looking for subjects for copy could fill a popular need by giving a concise and unbiased account of the drama that has taken place in St. Louis and elsewhere since the suspicion of the Postal Department was directed at the E. G. Lewis enterprises, his postal banli, his newspaper and his American Woman's League, with its club features and various ramifications. Whether it is prosecution or persecution, the case has gone to a length, and involved a number of persons suiBcient to make it of national im- portance. Yet the impartial searcher after truth is baffled at every angle when he tries to make up his mind as to its rights and wrongs. The fragmentary treatment in newspapers is most inadequate, because it gives only an occasional brief glimpse of a long course of events. The Postal Department has been most active in the matter, but has little to say. The Lewis organizations have much to say, orally, in their publications, and through the medium of press sheets. They call Lewis the American Dreyfus, and accuse the Postal Department of all manner of chicanery in making cases against him, specifying in their accusations as fine a set of subterranean motives as ever the muckrake dragged forth. The loyal member of the League believes that Mr. Lewis is a martyr, and that nothing which is said against him counts. To the outsider, the natural and manifest bias of the statements which come from Lewis and his organization interferes with satisfactory study of the situation. The reader becomes lost in the maze of fervid counter- attack and unsupported conclusions, and longs for at least a skeletonized account of the technical charges. The promoter of the League is chiefly recommended by the large num- ber of earnest women who have been led to believe in the sincerity and practicability of his plans. Evoiy one will hope that they be not doomed to disappointment. Meantime, if the cause is just, it could best be helped by the impartial survey of some skilled writer and investigator whose name and employment would be a guarantee of his impartiality. WHEN E. G. LEWIS WAS IN HARTFORD. The national celebrity, or notoriety, of the Lewis case, has set at work the local reporters of the newspapers in the vicinity of his early home. A considerable contribution to Lewis' newspaper biography all over the world has thus been made in articles first contributed to the Connecticut press. The following story entitled, "When E. G. Lewis Was in Hartford," taken from the Hartford (Conn.) Globe, may be quoted as a good example: The amazing story of the life of Edward Gardner Lewis, who is now under indictment in St. l/ouis on charges of using the mails to defraud, and whose enterprises, which drew subscriptions said to amount to ten million dollars, chiefly from women, are in the hands of a receiver, pos- sesses more than a passing interest for the people of Hartford, since it was in this city that he started his first so-called scheme. He was at one time a student at Trinity College, %vhere he possessed the reputation of being an extraordinarily Isright young man in everything but his studies. Edward Gardner Lewis is the son of Rev. William Henry Lewis, rector of St. John's Episcopal Church of Bridgeport, the largest church in that city. His fatlier graduated from Trinity in the class of 1865, and has since received two honorary degrees from his alma mater. An uncle of Lewis' also graduated from Trinity, and Lewis himself came to Hartford and to Trinity in the fall of 1886, when he entered college with the class 56 THE SIEGE OF UNIVERSITY CITY of 1890. He stayed only about a month, however, as he was forced to leave college on account of ill-health. LEWIS IK COLLEGE. He returned in the fall of 1888 and entered the class of 1892. While at college he paid his board by managing an eating club, and paid his college bills witli wages received from a tobacco firm, for which he traveled around the state seUing cigars. He was never a good student, and his friends believed that the reason why he did not stand well in his studies was that he was interested in too many outside activities. He did not have time to devote to the pursuit of the sort of knowledge contained in textbooks. To show that Lewis did not spend all of his time in the chase after the mighty dollar, it was known to his friends (and was one of his proudest boasts) that he assisted, without pay, in studying and arranging many of the exhibits in the American Museum of Natural History in New York. He was an expert taxidermist, and used to spend hours in his room at college stuffing and mounting birds. This was his only recreation, as he did not indulge in athletic sports. At one time in his life he received an injury to his spine, and had gone West to recover from it. His tales of the AVest always gathered an inter- ested crowd of listeners at college. He was always pleased himself when he could gather a number of fellow students to listen to his talcs of bass fishing and hunting, and in time he got the nickname of "the great Western liar." He left college after about two years, but Ii:ept up his interest in Trinity and helped in the education of two younger brothers, one of whoifl graduated in the class of 1903, and is now with Edward in St. Louis. After leaving college he continued to woik for the tobacco firm, and opened offices in the Goodwin Building at the corner of Asylum and Haynes streets. He also took an agency for a diamond firm, and later started selling watclies, from which he es-olved his scheme of selling jewelry by the endless chain plan. IK BUSINESS AT HARTFOKD. Shortly after he started in business for liimself he began selling on a large scale his cure for the tobacco habit, which he called "Corroco," or "Anti-Tobac." This was prepared in tablet form by Parke, Davis & Co. of Detroit, Mich., and was sold to druggists on a neat standard, which held a dozen packages of the remedy. The pacliages sold for twenty-five cents each. In connection with the remedy, he issued a pamphlet, which purported to tell the story of the discovery of tlie cure. According to this pamphlet, Lewis was traveling in South America when he came upon a tribe of Indians, from whom he received the great secret. The Indians had contracted the habit of smoking from the whites of the country. The health and prosperity of the tribe had steadily declined under the influence of the weed. The chiefs of the tribe and medicine men saw that something must be done to restore the lost powers of their warriors. In response to their prayers to the Great Spirit, an herb was discovered which killed all desire for nicotine. LTnder its influence the tribe again arose to its old-time power. The pamphlet was illustrated with colored drawings of Indians and South American scenes, made by Lewis himself. For he possesses artistic ability, in addition to his other accompHshments. The pamphlet made interesting i-eading; and the remedy appealed to women especially, since they could treat their husbands, brothers and sweethearts with the "Anti-Tobac" without their knowing they were being treated. It must have been about this time that I^ewis discovered the principles that have made him so successful in getting money out of women. The enterprise prospered. The remedy was put on sale in New York and sur- rounding states. Branch offices were being established even as far west as Michigan. But the production had outgrown Lewis' capital, and he began to aeek tor more. He interested Gilbert F. and Louis F. Heublein THE DREYFUS CASE OF AMERICA 57 in his scheme. He had persuasive ways and appeared to be a bright young man who was trying to make his way in the world, so they sub- scribed a small amount of money for the business. Even then Lewis did not have enough capital. The enterprise went to smash. At one time he was employing thirty girls at his offices in the Goodwin Building, packing and shipping the remedy. His offices were pretentious, and visitors immediately received the impression that they were in the offices of .1 prosperous firm, whose head was destined to make a name for himself in the world of finance. When the business failed some of the furniture was taken by the Heiibleins. HIS CAREER AS PUBLISHER. In 1895 Lewis found himself in Nashville, Tenn. His total wealth amounted to one dollar and ten cents. His career since has been ex- ploited in the newspapers, and is well known throughout the country. He has a wonderful newspaper plant in St. Louis. In one of the build- ings alone he is said to have an equipment of Goss presses worth over one hundred thousand dollars. His LTniversity City outside of St. Louis is known far and wide as one of the most beautiful places in the country. The streets are named after colleges and universities throughout the coun- try, but, strange to say, none of them bears the name of Trinity. He built up his magazine for women on the supposition that thousands would willingly pay ten cents a year for a magazine, where a few would pay one dollar a year. This theory worked out with the most flattering success. At his magazine office in St. Louis, where thousands of sight- seers were attracted during the World's Fair and afterwards, every person who came into the building was required to sign his name in a register. Lewis' magazine circulation was built up in this way. A young woman attendant, who was stationed at the register, asked each visitor to take a year's subscription to the magazine. There were few refusals. No one wanted to think twice of spending a dime while on a pleasure trip. Some of those who were asked to subscribe wanted to look at the magazine first. One Hartford man who made such a request refused to subscribe. He describes the magazines as a collection of clippings from more reputable magazines. He felt sure that none of the material in it was original. The magazine was successful, however. It always contained a large amount of advertising, as its women readers were a most profitable field. Lewis always had himself insured up to the limit. At times he was said to carry policies aggregating one million dollars. Many Hartford com- panies have carried his policies. Lately his life has been considered too much of a risk. He does not now carry nearly so much insurance. He made his companies beneficiaries of his policies, and made the statement that he did not want his death to interfere with the investments of those who trusted him with their savings. One of those who still believe in the integrity of Lewis, is his wife. She declares that she will fight side by side with him, and that he will eventually free himself of the charges made against him. Lewis himself says that he has been persecuted all along by the express companies. He maintains that they are behind his present prosecution. He says they are jealous of him because of the money he handled in his dollar bank scheme, which would otherwise have been passing through their hands. THE MODERN MISSISSIPPI BUBELE. Every well-conducted daily newspaper maintains a "morgue," namely, a file of newspaper and other clippings on the biography of every person in the public eye. From this obituaries and biographi- cal sketches required by news items can be prepared on instant no- tice. The occasion of the legal proceedings whereby the so-called 58 , THE SIEGE OF UNIVERSITY CITY Lewis enterprises were thrown into a receivership in July, 1911, gave temporary news value to Lewis' life story. The editors of many newspapers ordered from the morgue, the envelope marked "E. G. Lewis," and "heated up" a rehash of the contents. Articles of this tj'pe appear to have been jarepared in local newspaper offices at St. Louis and circulated either on request, through some news- paper service, or from interested motives. The following story taken from the Boston Herald of July 31, 1911, prefaced by a news paragraph about the postoffice inspectors, from their correspondent at Washington, is of this character. The original sources from which it is drawn are, as we shall see, the statement of Nichols, the reports of postoffice inspectors, and a speech in defense of the Postoffice De- partment by Senator Burton of Ohio. As the sequel will show, it is for the most part a tissue of fabrications. Lewis, who was born in Winsted, Conn., the son of a clergyman, is under indictment in St. Louis, charged with using the mails to defraud. Enterprises which drew subscriptions said to amount to nearly ten million dollars, chiefly from women, are in the hands of a receiver. He started his career as a flnancial wizard on a capital of one dollar and ten cents. The records of the civil and criminal proceedings against Lewis show that in the twenty-five years since he left college he has invented many schemes and won the confidence of many persons who were willing to risk their savings in the hope of being made rich quickly. Senator Burton of Ohio, in defending the action of the Postoffice Department toward Lewis' enterprises, said i-ecently on the floor of the Senate: HIS MODEST CAPITAL. "They are as numerous as the list that Bagehot gives of the absurd enterprises in which people were urged to invest about the year 1700, when the wheel of perpetual motion and a lot of other ridiculous things furnished the basis for the formation of stock companies." Lewis' wife, with whom he eloped (?) from Baltimore, where he was studying for the bar, says that she furnished the dollar and twenty-five cents with which he laid the foundation of his dazzling rise to wealth in St. Louis. "It was all he needed," she says, "but he had me, and I was his vice- president. And 1 have enough in my own name now, and always will have, to furnish him another dollar and twenty-five cents should he ever need it. .'Vnd I can be his vice-president again." He made money even during his college days. On leaving college he sought to build up a fortune with a sarsaparilla blood medicine. This failed, and he lost all he had made with the other cure. He was suc- cessively sales agent for a diamond broker and a demonstrator for watches. Finally he drifted to Nashville, Tenn., where his inventive brain originated "Anti-Skeet" and "Bug Chalk." EASY 3I0NET IN BTJO KILLING. It was here that Lewis awoke one morning in 1895 to find that his total assets were one dollar and ten cents. Then he had an idea. He went to a wholesale house and bought a gross of ordinary crayons for thirty-five cents and a bottle of oil of wintergreen for twenty-five cents. He poured the wintergreen over the chalk, and after capturing a live roach he went to the drug department of the store and announced a demonstration of his "Wonderful Bug Chalk." He made a chalk-mark on the table and set the roach free. When the bug started to walk across the chalkmark and smelted the wintergreen it backed off and went the other way. He sold the mixture of crayon and THE DREYFUS CASE OF AMERICA 69 Avintergreen in the store for seven dollars ;ind fifty cents, and then made a house-to-house canvass with the challv. He soon had a small bank roll. Lewis then originated "Anti-Skeet" and "Anti-Fly." These preparations were tablets which, when burned, made a cloud of smoke supposed to be deadly to mosquitoes and flies. His first corporation was formed to take over these preparations, but the sheriff finally seized the assets, including a carload of "Anti-Skeet," and one of Lewis' partners committed suicide. The sheriff was induced to release the carload of mosquito tablets, and Lewis moved on to St. Louis and began his career in this city. SCHEMES GALORE FOLLOWED. There i'ollo%ved in rapid succession "Dr. Hott's Cold Cracker," warranted to "crack a cold in half an hour"; "Walk-Kasy Foot PoM'der," which made money for Lewis the first siimmer, but went out of business in the winter; "Anti-Cavity," a toothache medicine; "The Progressive Watch Company," an endless chain scheme by which one could get a watch by paying a dollar down and inducing a number of other persons to do the same; a mail order publishing concern through which Lewis first entered the publishing business with a small magazine to exploit cheap jewelry; an installment company to sell watches and jewelry for one-third down and the rest monthl3% the cost of the article being really covered by the cash payment; an addressing machine company which sold stock, but no machines; a coin controller which sold devices for use on telephones, but which proved to be an infringement on a patent; a collection agency to assist -mail order houses to collect accounts, mainly from children who answered advertisements in the weekly papers and magazines; and a guessing contest on tiie attendance at the St. Louis Exposition. Then Lewis turned his back on the smaller creations of his mind and went in for greater things. He organized the Development and Invest- ment Company, a holding company for later schemes. The stock of this was guaranteed to pay one per cent dividends a month. In 1901 he bought the Woman's Farm Journal and the Woman's National Weekly* with the purpose of drawing subscriptions to his stock-selling scheme from women readers. He paid for both publications chiefly with stock in his investment company. GREAT MAIL OKDER BANK. His first big enterprise came in 1904 with the organization of the Peo- ple's United States Bank. This was to transact all of its business through the mails. Its office was at University City, a suburb of St. Louis. Here Lewis harl established the Uni^'ersity Heights Realty and Development Company and the Lewis Publishing Company. The bank was chartered under the laws of Missouri in November, 1904-, with one million dollars capital stock, half paid up. Lewis subscribed to nine thousand, nine hundred and fifteen out of ten thousand shares, and said he bought the stock with his own money. The following March the capital was increased to two and one-half millions, with two millions paid up. It developed later that this two millions had been entirely subscribed by sixty thousand persons throughout the country, mostly women, who were reached through the Woman's Magazine and Farm Journal. Complaint v^fas made to the Postoffice Department that Lewis was using the mails to defraud in connection with the bank, and in July, 1905, a fraud order was issued against the bank. The evidence upon which tlie postmaster-general issued the fraud order showed that Lewis had not put in a cent of his own money, but that he had received and held as payment for stock two million, two hundred and ninety thousand dollars, and had accounted to the bank for only two million, two hundred thousand dollars. He had represented that there *Evidently the Woman's Magazine is intendcrl. This is an example of tlie in- accuracies to whicli all newspaper stories are liable. 60 THE SIEGE OF UNIVERSITY CITY were seven directors, independent, strong, capable men, "standing between the intrigue and influence of the cold-blooded banking business and the people's money." Investigation showed that there were only five, and they consisted of Lewis, the. editor of his magazine and three employees of the publishing company. Out of the paid up capital of two million dollars Lewis lent himself nine hundred thousand dollars. The State of Missouri finally acted. A receiver was appointed in August, 1905. At that time the banl^ had about one million dollars left. Lewis represented to the stockholders that he was the victim of a persecution by the money powers. He notified all the stockholders that no one should lose a dollar. He would assume all the loss. He induced them to send him their stock and gave them in return his trustee notes. These were secured by a trust deed on his income above his living expenses. He then increased the stock in his publishing company to th]-ee and one-half million dollars and traded it for bank stock, with the result that he got back one million, seven hundred thousand dollars ot the banlc stoclt. When the receiver finally paid eighty-five per cent on the bank stock Lewis presented what he had and got a half million dollars in cash, and had nine hundred thousand dollars of his notes paid. MAGAZINE WITH KEAI, ESTATE. In 1906 Lewis started a daily paper called the Woman's National DaOy. This was used to promote various new schemes. One was the United States Fibre Stopper Company. This was to manufacture stoppers of paper or fibre. He represented that the English rights had been sold for half a million dollars. This proved to be untrue. The stock has never been worth anything. In 1908 Lewis announced through the Woman's Daily a so-called "Read- ers' Pool." Every person who sent in five dollars in subscrijjtions to the paper would have a certificate of membership in the pool. Of each five- dollar remittance two dollars was to be set aside. When the fiind grew large enough land was to be purchased for the members. Finally Lewis announced that he intended to close the pool on a certain date. He urged that enough be sent for a fiftj^-acre lot, to cost seventy- five thousand dollars. When the time was up I,ewis said he had more than enough to buy fifty acres. Since that time the members of the pool have been unable to get an accounting, to find out how much land was bought or what was paid for it. LEAGUE TO MAKE WOMEX RICH. Following the "Readers' Pool" came the most pretentious scheme of all. He organized the American Woman's League as an auxiliary of his publishing company. In his first literature he proposed it as a scheme for paying his debts. Membership was to be secured by sending fifty-two dollars' worth of subscriptions to his paper. One-half the money remitted was to go for subscriptions. Tlie other half went into a fund for the benefit of the league membership. This was to be limited to one million persons. It would give an endowment of twenty-six million dollars. The league was to own the publishing com])any, the real estate and a liank. It would have an income estimated roughly at three million, eight hundred thousand dollars a year. The endowment of twenty-six million dollars would re- main undisturbed. This income would build and support clubhouses in all parts of the country; establish a free university with instruction from the lowest grades to the highest, and in all professions; found an old ladies' home, library, orplianage and loan and relief fund, and give other benefits. As a bait to attract women. Lewis launched the Founders' Chapter, to be composed of the first hundred thousand members who sent in fifty- two dollars each. Men could get in for twenty dollars. He promised one ^University City Plaaa looking eastward down Dcluiar Boulevard ^Soine "view in kjos wlicn ilie site was purchased by the Lewis Publishing Company ^Artist's sketch prior to erection of present buildings ^Panorama of Uui'-.-crsity City, shozvuig the imj^rovcmcnts of the Lctvis Publishing Conif>any ami system of parkzvuys laid out by the landseape engineers of the Unn-efsity Heights Realty & Devehpvient Company ^Same vietv (iv part) in the early summer of 1004, showing the above grounds occupied by Camp Lewis. This view shows the condition of the estates of the Uni- n versify Heights Realty & Development Company when Urst purchased by .lie Develop- ment & Investment Company. This tract was then far beyond the extreme outskirts of the residence district of St. Louis. Land development and building activities even farther westward are now rapidly proceeding both to the north and south of this location 11 i 55ll-?i = = 2 ^c; =^^ ; " ^iT. S.E.^^. bfl +: -^ ! "^Ii; P ' fj tj ^ '^ i-^^5l^i|l .? °^ ■£ tc tj i-2 S 2-2 ° s ; p h^ ^ '^ -i ^ :'!.' . =. S-"V *- i- -■s J-' •5 £ £ ■t.-a g-g'1^2 5 g t;'^ 5 -="■,.« ^^ °? S 5 ^ -S-S <.> 2 C S^^ a. o^ 5 £ ; 2"3^ his „-^ <»^-|^ "^ C-^^-'^ s = ° = «.= ^ja°KS.B S5.2 ;-: |a, ^.5 t-^ THE DREYFUS CASE OF AMERICA 65 million dollars of publishing company stock. He said this endo%vment would pay one million dollars the first year and several times that there- after. Last year the league was announced to have twenty-six thousand life members at fifty-two dollars each. This would have made a fund of one million, three hundred and fifty-two thousand dollars. Last fall, after persistent demands for an accounting, Lewis said he had received only some eight hundred and ninety thousand dollars. He had paid out over one million dollars. Nothing came of the great educational university except correspondence lessons from three existing concerns with which Lewis had contracted. The league is now said to have nothing but an indebtedness of about two million dollars. Last summer, when Lewis had defaulted on the notes of all his enter- prises, including his trustee notes, and money had quit coming into the league, he had a "hurrah for Lewis" meeting in this city.* He insisted that every one of his schemes had proved a fortune maker, and boasted of eight million dollars of assets, with liabilities of only one-third of that amount. He said that if a building fund of two and one-half million dol- lars could be raised all his enterprises could be financed. He proposed to issue debentures against this fund, and in spite of past experiences the women gave up one and one-half million dollars more for debentures. From these schemes the postofEce authorities estimate that Lewis had taken in ten million dollars. He is still optimistic. He hopes to have his trial set down for the week of October 33, when the American Woman's League is to have its convention in St. Louis. "My trial vifill draw twenty-five thousand more women than the con- vention," he says. LEWIS AND HIS PUBLICATIONS. Occasionally a newspaper paragrapher attempts to sum up the Lewis case by means of a signed article. The writer of the follow- ing extract from the Houston (Texas) Chronicle appears to have attempted to inform herself, by examination of the Lewis publica- tions and by reference to the original documents of the Postoffice Department. This story, headed "Lewis and His Publications," by Miss Grace Phillips is a good illustration of the difficulty of grasp- ing the true facts of the Lewis case from sources of information hitherto available. There is no doubt that the arbitrary power vested in the postmaster- general by the Postoffice Department is dangerous. So is the power of the President as commander-in-chief of the army and navy, or that of congress to declare war or coin money. It is expected in all three cases that this power will be exercised with discretion and judgment. There are few cases on lecord where it has not been. That of E. G. Lewis is most cer- tainly not an exemplification of the latter. This is shown by his own publications. I knew the Woman's Magazine as a clean, attractive little monthly. It was printed on fairlr good magazine paper, and embellished with many cuts Its cover pases compared favorably with those of most magazmes, whose single copy cost as much or more than the Woman's Magazine for the year. It was utterly out of the question to suppose that tlie^ cost, five-sixth's of a cent per" copy, paid more ',han the expense of sending it out I remember, also, the first picture I saw of the home of the Woman's Magazine and its curving marble stairway. After that there wasn't so 'This phrase is a clear "give away." It shows that this article although printed news item from Washington in the Boston Herald was actually prepared in some newspaper office in St. I^ouis. By whom or for what reason, can only be conjectured. 66 THE glEGE OF UNIVERSITY CITY very much to remember, except University City, tlie publishing house, and those marble stairways. It was about this time the "persecutions" by the Postoffice Department began. The Daily started the same way — first as a general newspaper at one dollar per year. It was readable, general in scope and clean in contents, and must have been a godsend to tens of thosands of fam.ilies w-ho had never before subscribed to a daily paper, and who, probably, otherwise never would have been able to do so. As in the case of the Magazine, it was utterly useless to suppose that the cost of the Daily, one-third of a cent, more' than paid for sending it out. Its revenue came also from Uni- versity City. It exploited in turn the People's Bank, the People's Savings Trust Company, the League, the Realty Company, the University, the Daily itself, the Fibre Stopper Company, the Readers' Pool and the Debenture scheme, all originating in and centreing around that little St. Louis suburb and forty-year-old Mr. Lewis himself. I have not the slightest desire of disparaging any good Mr. Lewis may have intended to do. But as he started, according to his own statement, with less than five dollars a few years ago in St. Louis, and is now writing about his millions, and this without a day of manual labor, we realize that he must have made this out of the labor of many other working people. Let us see who these are: He has gotten from American women ten mil- lion dollars in the last ten years. And this is how he obtained it. It is difficult in speaking of Mr. Lewis to talk of less than millions, but truth and a desire for consistency impel me to mention that his first plan for saving womankind from the rapacious claws of capitalized wealth was an endless chain letter. Each recipient was to send ten cents for ten more circular letters. These tliey were to mail. The proposal was that when the chain was complete the sender of the dime should receive a thirty- dollar watch or bicycle. The Postoffice Department stepped in and broke the chain. In retaliation, I suppose, for not receiving the watch or wheel, they have been hounding Mr. Lewis ever since. When this was stopped his publishing proclivities took concrete and active form. Then the Woman's Magazine, a circular letter for the Peo- ple's Bank, was started. Out of the ten thousand shares of stock issued Lewis held all but eighty-five at the time of organization. Complaint was soon made that this banli, tlirough Mr. Lewis, was using the second-class mailing privileges fraudulently — that is, for soliciting money for bank stock of an unsafe institution. A hearing was held by the Postal De- partment. Upon recommendation of the assistant attorney-general for the I'ostoffice Department, and after the attorney-general of tlie United States had rendered an opinion it issued the now famous fraud order. Here are some of the things the Department found: In soliciting sub- scriptions Lewis represented that he himself would take and pay for one million dollars of tlie stock. The board of directors would be composed of seven strong financial men. The directors could not and would not loan either to themselves or the president, Mr. Lewis, a single dollar of the bank's funds. The Supreme Court of Missouri appointed a receiver and closed this bank. In their decision they say: "How were these sensible and practical promises kept and performed by the corporation? Indifferently well, it must he admitted. For example, tlie bank was organized with a directorate composed of Lewis and nominal stockholders, Lewis underlings at that, i. e., men subordinate to him in his other enterprises — mere vestpocket corporations of his — with not a banker in the lot, and witliin a few months of its organization nearly a million dollars of its capital is found loaned to the said publisliing com- pany, thus doing exactly what he had promised should not be done." The evidence showed the following frenzied financiering: On the day after the postal inspectors began their investigation, Lewis deposited as assets of the bank two notes for two hundred thousand dollars to cover THE DREYFUS CASE OF AMERICA 67, money expended by himself. One of these notes, for fifty thousand dol- lars, was unsecured. The other, for one hundred and fifty thousand dol- lars, was signed by employees of his. At the time the capital of the bank amounted to two million dollars Lewis had appropriated for his own in- vestments o\'er nine hundred thousand dollars, invested forty-live thousand dollars in stocks of his own enterprises and had agreed to loan sixty-five thousand dollars on an unsecured note. This article then closed with a discussion in similar vein of the American Woman's League and a warning to the women of Houston who were interested to beware of that organization. IS BANKER LEWIS FRAUD OR VICTIM? The story of the People's United States Bank, for reasons which will appear, resulted in enormous newspaper publicity. The follow- ing news item, from the Chicago News of July 11, 1905, under the caption. "Is Banker Lewis Fraud or Victim," was among the first serious discussions in the great out-of-town dailies immediately after the fraud order was issued. The following headlines are char- acteristic of the sensational manner in which the story has been most commonly handled. "Is Banker Lewis Fraud or Victim"? "Romance of Rise of People's United States Bank is a Fairy Tale in Realm of Finance." "Lures Vast Hidden Funds." "Promoter Feels Heavy Hand of Stern Postal Authori- ties, but Still Retains His Superb Nerve." In "going after the money in socks and under carpets," E. G. Lewis, promoter of the People's United States Bank of St. Louis, discovered wealth greater than that in gold mines. The gold turned up by his remarkable prospecting is in coin and good paper of the realm. How he lured two million, four hundred thousand dollars from the pock- ets of frugal and suspicious rural folk makes a story which is a climax to his daring ventures in the magazine field. His publication, the Woman's Magazine, has, according to postofRce receipts, a circulation of one million, six hundred thousand. His Woman's Farm Journal has a circulation of seven hundred thousand. He sends either of his papers for ten cents a year. In six years he has built up his business from an original modest capital of one dollar and twenty-five cents. OF TIRELESS ENEROT. This was not enough for Lewis' tireless energy. He also engaged in the real estate business on a large scale. He invented a coin slot machine for telephones and a rapid addressing machine. He started a bank which within a few months had a paid-up capital of more than two million dol- lars. All the bank stock was sold through advertising in his magazines. His readers, with few exceptions, live in small towns and the rural districts. They have been taught to look up to Editor Lewis as an oracle, a financier of the greatest ability, and a man whose honor is not to be questioned. In answer to his advertisements he received one remittance of five hundred dollars from a man in Pennsylvania. The money was in twenty-doUar gold pieces. It was wrapped in old newspapers and bound up with an old pair of suspenders. The letter accompanying this deposit informed the banker that it was the result of seventeen years' frugality. FEARED TO TRUST JAKE JONES. "I send you this money," wrote another purchaser of stock, "because Jake Jones, who runs the home bank here, robbed my apple orchard when he was a toy, and I am afraid to trust him." Another man said he was glad to have a chance to deposit his money in a St, Louis bank. His letter said; 68 THE SIEGE OF UNIVERSITY CITY "Bill Applegate keeps books in the bank here, and I know if I put my money in there lie will tell everybody in town how much I've got." He has taught each of the stockholders to speak and write of the bank as "our" bank. Lewis not only uncovered secret hordes in country homes. He also had a design to enlist co-operation by country bankers. He planned to have his certified checks on sale at country banks throughout the country, and even in all foreign countries. His scheme was to supply banks with his certified checks, to be used to remit money through the mails. The country bankei- was to sell the check and deposit the amount received in his own bank to the credit of the People's United States Bank at three per cent. Chicago mail order houses have already begun to feel the influence of the bank, and within the last few months thousands of dollars have been remitted by that method. ST. LOUIS BOWED DOWN. During the St. Louis Exposition the Lewis Publishing Company kept open house in its new building near the exposition grounds. It maintained a camp for its subscribers at a cost of seventy-five thousand dollars, and its searchlight attracted attention from all visitors. St. Louis spoke of Lewis as its coming man. Until the Government discovered alleged fraud in his bank, Lewis was considered a great and honorable financier by thousands of his fellow townsmen. He is thirty-five years old. Since he graduated from college he has been engaged in publication ventures. One after another failed before he started the Woman's Magazine. For this he secured subscribers at such a rapid rate by the endless chain system that there were not presses of sufficient capacity in St. I^ouis to turn out the required nmnber until he set up his new plant near the exposition. LEWIS, THE FINANCIER. That the same theme has lent itself to the service of the editorial leader writer is apparent from the following excerpt from the Min- neapolis Times, of July 14, 1905, entitled "Lewis, Financier." Is E. G. Lewis, of the People's United States Bank of St. Louis, a fraud, a genius, or an abused man? That he may have been a fraud re- mains to develop. That he was a genius of the Rockefeller order is cer- tain. That he was an abused man is possible, but hardly probable. Aladdin's lamp never produced more remarkable things than did this same Lewis, when he brought two million, four hundred thousand dollars from the stockings, the carpets, mattresses and other money-hiding places of the rural population of many states. The owners of these millions are naturally the most suspicious and at the same time the most gullible of victims. But in these days they are learning caution and demand to be shown. That Lewis v/as a publisher of great ability is not questioned. Had he avoided the bank idea and stuck to the publishing business he might have made his pile in a few years. Starting six years ago with a capital of one dollar and twenty-five cents, Mr. Lewis has, in the interim, built up two monthly magazines, one with a circulation of one million, six hundred thousand, the AVoman's Magazine, and the other, the Woman's Farm Jour- nal, with seven hundred thousand average circulation. This is a business record that stamps Lewis as a circulation builder of rare ability. There IS hardly a daily paper in America that would not pay him a big salary. This thirty-five-year-old man, Lewis, was one of the ornaments of St. Louis. His townspeople considered him tlie legitimate successor of Rus- sell Sage before the developments that led to his downfall. Lewis has not accepted the interference of the Government with good grace; he has even secured a temporary injunction against the Postoffice Department, preventing the stamping of his mail "fraudulent," and its THE DREYFUS CASE OF AMERICA 69 return to senders. He will try to make good his claim to purity in busi- ness. Verily, the days of miracles are not over. WILD-CAT FINANCIERING. The following editorial, entitled "Wildcat Financiering," from the New York Commercial, was reprinted by the Peoria (Illinois) Herald-Transcript of July 12, 1905. It affords a good illustration of the manner in which news items and editorial opinions are dif- fused by republication throughout the rank and file of the daily and weekly press. Another brilliant example of wildcat financiering has come to light in the affairs of the failed People's United States Bank of St. Louis. Con- fiding depositors, on the very best showing that the receiver can make in his estimates, will lose six hundred thousand dollars. 'Die total amount of paid-up subscriptions and stock was two million, four hundred and thirty- five thousand dollars. This immense sum was gathered in by one Edward G. Lewis, who was a money-maker of the most earnest modern variety. He succeeded with a mail order magazine and forced its circulation up beyond the dreams of the regular weeklies and monthlies. Money seemed so plentiful and so easy to take that Lewis deemed it a sin to permit it to lie around loose in the hands of incompetent owners. So he started a bank and gave the people who read about it in his magazines the privi- lege of becoming their own bankers. Everybody would be part owner of a bank ! Oh, inestimable privilege ! And Lewis was right. Thousands bought stock, and then deposited their remaining change in their own bank. Such a privilege ! Lewis was the man behind the bank, so to speak. As the golden stream came into the People's Bank from the people, he "took what he wished and left the rest," as Kipling has put it. He might have gotten it all, indeed, in course of time, had not some one stumbled onto his ingenious scheme of financiering. Hence, the court proceedings — and the subsequent loss to investors. The St. Louis concern with the high-sounding title was presumed to be owned by the people who bought the stock. It really was a one man bank. All that came to the mill was grist for Lewis. Are more examples of crookedness required to awaken officers to a proper sense of their duty? FANATICAL FINANCE. The Post-Dispatch of St. Louis is the representative in that city of the Associated Press, unquestionably the most powerful organ of publicity in the world. The motives of that newspaper in its dis- cussion of the subj ect of this story will appear hereafter. Here it is sufficient to observe how admirably the following Sunday supple- ment feature, originally printed under the caption "Fanatical Finance," lends itself to the out-of-town newspaper paragrapher in search of the sensational for interesting copy. Newspaper psychol- ogy is unerring in its selection of a point of contact with the com- mon mind. Every reporter and editor instantly perceives that the personality of Lewis is the central issue. Observe how this story is handled so as to throw the biography of the hero — or as Lewis is here regarded, the villain — into high relief. Edward G. Lewis, five feet five inches tall, who five years ago came to St. Louis selling "Anti-Skeet," is the newest prophet of that cult which teaches the gospel of get-rich-quick. In five years, from a start, if his own statement is to be accepted, of one dollar and twenty-five cents, he has risen to a position of leadership 70 THE SIEGE OF UNIVERSITY CITY which, according to the statements of a receiver, a bank examiner and others, will cost his followers in one enterprise alone six hundred thousand dollars. He did it all by a vigorous campaign of promising much for little. He pointed to one venture which was a success, and declared an original investment of five dollars in that venture would have netted the investor five thousand dollars. That was enough. The cupidity of the credulous ones was aroused. From old stockings, old pots and kettles and old holes in the floors there came pouring in to him a total of approximately two miUion, seven hundred thousand doUars in less than a year. Lewis became a deity in the minds of his fanatical worshipers. They did not question his remarkalile statements. They asked for nothing, except permission to "get in on the ground floor" — and they took no thought of the fact that the man on the ground floor is in the greatest danger when the superstructure collapses. LEWIS LIKE DOWIE. Lewis, in the field of Fanatical Finance, is much on the order of Dowie. He is not like Arnold and Ryan and Major Dennis and others of the strictly get-rich-quick concerns which flourished before him, except in his long reach for cash and his power to drag it from the secret hiding places of men and women all over the country. He is more like Dowie in that his followers believed in him fully, and that all but a very small percentage of them seemingly refused to doubt him, even after the post- office and state investigations had been started. Lewis' words — and he is a prolific word-monger — were believed by his more than a million followers. Lewis' building — a towering structure of ornate and attractive design, set high on a hill where twelve million World's Fair visitors could not help seeing it — lingers in their memory as a temjjle. Lewis' promises of great wealth from little risk whisper pleasantly, despite the din produced by the relation of facts. And therefore Lewis' followers kept on digging more deeply into their old socks, their old pots and kettles and their old holes under their floors to get move money to send him, even after the fact of State and Federal action was generally known. Since xhe issuance of the postal fraud order Lewis has received a large suia of money which he has turned over to the receiver for his bank. POWER OF PliOMISE. In lifting himself into his present position, Lewis relied almost wholly upon the Power of Promise. This gave him his start, and his graduation from "Anti-Skeet" to the Woman's Magazine, the University Heights In- vestment and Development Company, a half-dozen other concerns, and finally the most gigantic of them all — the People's United States Bank. With the Power of the Promise, employed vigorously through the col- umns of his magazine, whose cheap price gave a wide circulation in homes where few or no other publications entered, he lifted the lids on remote family strong boxes, and attracted a golden stream to the Lewis coffers. He pointed to his building, or to the picture of it, and said: "Sec wliat one dollar and twenty-five cents has done under my manage- ment in five years. Give me your dollars and quarters and I "will make them multiply even as my own has done." And the money came. MAKE "plain people" A POWER. And thus would the plain people — those from the headwaters of the creeks, the necks of the woods, the remote fastnesses of the forests and the THE DREYFUS CASE OF AMERICA 71 isolated localities of plantation and range and field, become ttie real money-power of the Nation, if not of the world. Their bank would be the most powerful in history; its support would be sought before any great thing was done; its help would be solicited ere any powerful railroad, any great financier, or the Government itself, undertook a great enterprise. Did J. Pierpont Morgan desire to startle the world by some Titanic performance in iinance? His first step would be negotiations witli the People's Bank — the bank owned by the people who heretofore had never been considered, much less consulted, when anything was being done. Did the Government want to issue bonds for some great undertaking? The bank which held the money that came from old stockings, old kettles and pots and old holes under the floor would have to be consulted in advance. MILLIONS IN IT. And notice was served that tlie People's Bank would not lose money through the power it thus held. It would make a profit on everything, and this profit would go into the purses of the farmers, the farmers' wives, the small merchants and mechanics, the clerks and stenographers whose wise acceptance of opportunity to combine their wealth had placed them in the position of financial dictators of America. Were there doubters? There loomed before them a photograph of the Woman's Magazine Building, and this statement: "Great office building of the Woman's Magazine and Woman's Farm Journal (Lewis Publishing Company) erected for cash, without mortgage or lien, at a cost of over half a million dollars, in fi%'e years, from a start of one dollar and twenty-fi^'e cents. This shows what can be done if enough people combine to do it, even at ten cents per year each." Lewis preached this gospel of great wealth for the common people, if they would send him their money, with a persistency and insistence which could not be excelled. He preached it with a gigantic searchlight mounted on the top of his building and flashing its gleam into the faces and memories of all World's Fair visitors and all others who were within a radius of forty miles. He preached it with the vociferous voice of his magazines witli their enor- mous circulations. He preached it -s^ith pamphlets and letters and circu- lars. He preached it through the tongues of his followers, each of whom became a disciple who was not afraid to let his voice be heard. The searchlight was a flame into which the moths dashed. The voice was a siren song. It lured them to linger and forget their pain even while they were being scorched. LEWIS'" VAST EXPLOITS OF THE LAST TEN YEARS. The number and variety of Lewis' interests and enterprises have always appealed to the newspaper men as "good copy." Numerous compilations have been published. The first attempt was part of the great "scoop" published by the St. Louis Post-Dispatch on May 31 1905. It was based on information compiled by postoffice in- spectors. The Post-Dispatch widely heralded this story as a "beat," or exclusive article, secured in advance of other St. Louis newspa- pers. Tliis, coupled with the sensational nature of the story, at- tracted the universal attention of exchange editors. Clipped and filed away in the morgues of the principal newspapers, it has be- come the source of many subsequent articles. The following para- graphs, under the subhead "Lewis' Vast Exploits of the Last Ten Years," are but a small fraction of the original Post-Dispatch story. The remainder will appear in due course hereafter. 72 THE SIEGE OF UNIVERSITY CITY According to information compiled by postoffice inspectors, it is stated that in August, 1895, Lewis was in NaslivilJe, Tenn., selling a tablet com- posed of saltpeter and insect powder, a mosquito preventive. It was said that he was badly in debt, and that a certain Howard E. Nichols loaned hhn one bundled and fifty dollars, and agreed to exploit the business in Memphis. Having some success, Lewis organized a company, but shortly afterwards the business failed, and was taken charge of by the sheriff. A preparation for perspiring feet and a tooth powder started by Lewis and Nichols, who had been associated with him in Tennessee and in the Diamond Candy Company, enjoyed good sales one summer, but after that died out. The Progressive Watch Company was started in October, 1898, with a plan to sell watches on an endless chain system. This business was not profitable. About April 1, 1899, the Postoffice Department denied this company the use of the mails, issuing a fraud order. The Winner Magazine was then started. The Progressive Watch Com- pany, then known as the Mail Order Publishing Company, was merged into the Winner Magazine. Soon the National Installment Company was started. This was a scheme to sell jewelry on the installment plan. The plan did not pay, and v/as dropped. The Development and Investment Company followed this. This com- pany, it is alleged, was designed as a holding company for the various other companies operated by Lewis, or to be later started by him. Some money was made in this, the profits going to pay the debts of the Winner Magazine. In 1901 Lewis obtained five thousand dollars from a St. Louis business man, a part of which was used in making a first payment on the purchaser price of the Woman's Farm Journal, and the remainder in paying the debts of the Winner Magazine. The Journal was owned by F. J. Cabot, who is now interested in the Lewis magazines and in the bank. The remainder of the purchase price was paid Cabot in stock of the Develop- ment and In\-estment Company. Nichols and Lewis separated May 13, 1903. Since that time Lewis has organized and incorporated the University Heights Realty Company, Allen Steam Trap Company, Lewis Publishing Company, United States Fibre Stopper Company, California Vineyards Company, Camp Lewis, Bachelor Pneumatic Tube Company, the World's Fair Contest Company, and the People's United States Bank. He has increased the capital stock of the American Coin Controller Company, the Development and Investment Com- pany, and the People's United States Bank. THE SCHEMES OP E. G. LEWIS. Everyone has doubtless played the game of Rumor or Scandal, whereby one person of the company whispers a story to his neigh- bor. He in turn whispers his understanding of the same story to a third, and so on around the circle. The last person in order tells the story aloud, usually to the astonishment of all present. All who have tried this experiment will appreciate the humor in the develop- ment of the paragraphs just given from the Post-Dispatch in 1905, to the following article from the St. Louis Censor, a St. Louis week- ly of local circulation. An analysis of this article shows traces of the newspaper story of Lewis' early days from the Hartford Globe, of the Post-Dispatch stories based upon the postoffice inspectors' re- ports, and of many similar sources of information. On comparison with the facts concerning Lewis' various incorporations, the follow- THE DREYFUS CASE OF AMERICA 73 ing lists will be found to shrink by approximately two-thirds. The sardonic humor of the accompanying paragraphs, entitled "The Schemes of E. G. Lewis; Being a Complete Review of His Many Promotions," will then be apparent. That old saw, "fact is stranger than fiction," is borne out every day in the vario:is Lewis cases. If the prototype of this man had been introduced to the public as the hero of a Chesterton novel the author would have been ridiculed for his exaggeration. I have compiled a list of Lewis' many promotions, and I am certain the reader will marvel at the versatility shown by the promoter. This list was obtained after some trouble. It is authentic, and is as nearly chronological as possible. Moreover, it is pub- lished in the Censor for the first time: CORROCO TABLETS: A preparation made and sold by Lewis while he was a student at Trinity College. It was a cure for the tobacco habit. Appealed especially to women, who could put tablets in coffee without hus- bands, sons or brothers suspecting its presence. SARSAPARILLA BLOOD MEDICINE: Lewis manufactured and sold this ill Bridgeport, after leaving college. Lost in this all he had made by the sale of Corroco. DIAMOND SALES COMPANY: In this Lewis acted as sales agent for a New York broker, who represented an Amsterdam house. WATCH SALES COMPANY: Lewis here represented the Waterbury Watch Company as demonstator. CATHARTIC MEDICINE COMPANY: A company formed at Nash- ville, Tenn., for the manufacture of a medicine called Laxative Prunes. ANTI-SKEET COMPANY: Also at Nashville; manufactured a tablet which, when set on fire, made a cloud of smoke supposed to be deadly to mosquitoes. BUG CHALK COMPANY: This was a chalk that would draw a line over which bugs could not crawl. ANTI-FLY COMPANY: A tablet similar to Anti-Skeet, which had to be burned to be effective. CORROCO COMPANY: This was a corporation formed in Nashville, the name similar to the first preparation manufactured. It took over all the Tennessee preparations, such as Anti-Skeet, Anti-Fly, Bug Chalk, etc. There was some trouble with stockholders, and the sheriff of Nashville wound up the concern. THE CORONA COMPANY: This was the first corporation organized by Lewis in St. Louis. It included the various bug poisons which had been properties of the Corroco Company in Nashville. The Moffett-West Drug Company was interested for a time with Lewis in the Corona Com- pany. I)R. HOTT'S COLD CRACKERS: A remedy one might suppose was on the order of Uneeda Biscuit. Not so. These were pellets which would "crack a cold in an hour." HUNYADI SALTS COMPANY: A stomach preparation which in- fringed on the rights of a foreign bottling house. DIAMOND CANDY COMPANY: Said to have been a meritorious proposition, but failed for lack of ca])ital. Molasses candy, put up in yel- low tissue paper, lUce the Yellow Jacket of more recent date. HYGIENIC REMEDY COMPANY: Formed to take over several preparations. WALK-EASY COMPANY: As its name implies, this was a foot- powder, to be dusted into shoes. ANTI-CAVITY COMPANY: A drug that would instantly stop tooth- ache. PROGRESSIVE WATCH COMPANY: This was an endless chain scheme. A dollar would be paid down, and when the purchaser sold a cer- 7i THE SIEGE OF UNIVERSITY CITY tain number of coupons for a dollar each, and had remitted the total to Le%vis, he would receive a sold watch. Stopped by the Federal officials. MAIL ORDER PUBLISHING COMPANY: A company formed to exploit cheap jewelry. Published the Winner Magazine. NATIONAL INSTALMENT COMPANY: Formed to sell watches, jewelry, etc. The purchaser would pay thirty-three and one-third per cent down and the balance monthly. In all eases the first payment covered the cost of the article and allowed a small margin of profit. The rest was velvet. LEWIS ADDRESSING MACHINE COMPANY: A stock selling prop- osition. No machines ever sold. COIN CONTROLLER COJIPANY: A corporation in which Lewis in- terested many St. Louis bankers. Every cent anybody put into it was lost, for it was soon discovered that the device infringed on the patent of another. THE MAIL DEALERS' PROTECTIVE ASSOCL\.TION: Formed to aid mail order houses to collect delinquent accounts. AVOMAN'S FARM JOURNAL COJIPANY: Published a magazine that gained a large circulation through methods questioned by the postoffice. WOMAN'S MAGAZINE: A periodical exploited as having the largest circulation of any publication in the United States. Ultimately refused admission through the mails. ALLEN STEAM TRAP COMPANY: Manufacturers of a device to catch condensed water and send it back to the boiler. A good-talking device for stock selling purposes, but not practicak UNIVERSITY HEIGHTS REALTY AND DEVELOPMENT COM- PANY: A corporation with which St. Louisans are more or less familiar, and out of which grew University City. THE RICHARZ PRESSROOMS COMPANY: Formed to print the Woman's Magazine and Woman's Farm Journal. CONTROLLER COMPANY OF AMERICA: A great national com- pany, formed to take over the local company. Much stock sold, but com- pany wound up for infringement of patent. WORLD'S FAIR CONTEST COMPANY: A guessing contest as to attendance at the Ix)uisiana Purchase Exposition. It was really a lottery, cleverly carried on so as not to break the letter of the law. CALIFORNIA VINEYARDS COMPANY: Land to be cultivated for purchasers who bought on the installment plan. LEWIS PUBLISHING COMPANY: A corporation formed to take over many of his enterprises. FIBRE STOPPER COMPANY: To manufacture bottle stoppers out of wood pulp. Much stock sold ; no machines. PEOPLE'S UNITED STATES BANK: A mail order money scheme that grew like a prairie fire. Wound up by Federal and State officials. Depositors recovered less than one-half. PEOPLE'S SAVINGS TRUST COMPANY: A banking scheme that succeeded the hank. INTERNATIONAL LANGUAGE SCHOOLS: To teach foreign lan- guages by correspondence. ART "pottery COMPANY: Lewis claimed to have discovered a wonderful clay in University City. He sent to Europe for an expert who would run a china factory. Stock sold on report of clay deposit and expert coming. HYGIENIC REMEDY COMPANY: This was revived by Mrs. Lewis, who advertised in Lewis' publications and conducted a mail order business in many nostrums. WOMAN'S NATIONAL DAILY: A newspaper which Lewis said would revolutionize the publishing business. Gone a-glimmering, like all the rest. ST. LOUIS STAR PUBLISHING COMPANY: Purchased from Na- THE DREYFUS CASE OF AMERICA 75 than and August Frank; part cash; mostly paper. Used as a great stock- selling enterprise, nearly twelve thousand persons buying stock. Question of this stock issue to be aired in court. Newspaper now said to be back in control of the Franks. ST. LOUIS SUBAVAY COMPANY: A proposition that gave Lewis opportunity to talk in big figures. WOMAN'S NATIONAL LEAGUE: A scheme recently fully described in these columns. "^¥hat has become of those various enterprises?" I asked an intimate friend of the promoter. He shook his head, for he didn't know. And of all the millions of dollars that have passed through Lewis' hands, how much do you think he has salted away? "Very little, if any," he said. "Every time Lewis took anything in, it went to noisier up some other project. All his life he has been stepping from one cake of ice to another, like Eliza in 'Uncle Tom's Cabin.' It was impossibl'3, under such circumstances, for him to accumulate anything." OTHER people's MONEY. The most recent and exhaustive summary of Lewis' alleged schemes appears in a tabulation from the Rural New Yorker, of Oc- tober 7, 1911. The publisher of the Rural New Yorker, Mr. John J. Dillon, may be fairly said to have developed the most extreme case of Lewisomania of which there is any record. Dillon, as the avowed champion of the Postoffice Department, would seem to have had access to their sources of official information. His belief in both the official theory of the Postoffice Department, that Lewis is a law- breaker; and in the newspaper theory, that he is a get-rich-quick schemer, amounts to a species of fanaticism. J'urther reference to the campaign against Lewis of the Rural New Yorker will be neces- sary in connection with the American Woman's League. But the reader should know that Dillon is engaged in a crusade for Lewis' extermination. Otherwise the rancor in the following paragraphs would be incomprehensible. Whether the alleged letter with which this article opens was ac- tually written by "A Victim," or was in fact manufactured for the occasion, is a question suggested by glaring inaccuracies and mis- statements in the succeeding paragraphs. The caption is "Other People's Money." Why not publish a list of the E. G. Lewis schemes and companies he promoted? 'The people who have been caught with one scheme would be interested to know of others and the list would serve to show the scheming activity of the man. A VICTIM. Pennsylvania. We would not feel justified in attempting a complete list. St. Louis daily papers, the Financial World of New York, and the Censor Maga- zine of St. Louis have already published lists more or less complete. In some of the mail order schemes he seemed to have only an indirect interest. The follov/ing list* is nearly if not quite complete: *Diamond Sales Company, Watch Sales Company, Cathartic Medicine Company, Anti-Skeet Company, Bug Chalk Company, Anti-Fly Company, Corroco Tablets Com- pany, The Corona Company, Dr. Hott's Cold Crackers, Hunyadi Salts Company, Dia- mond Candy Company, Hygienic Remedy Company, Sarsaparilla Blood Medicine, Walk- Easy Company, Anti-Cavity Company, Progressive Watch Company, Mail Order Pub- lishing Company, National Instalment Company, I,ewis Addressing Machine Company, 76 THE SIEGE OF UNIVERSITY CITY Practically all of these, except the League, are now defunct, or out of his control. Several of them are in the hands of the receiver recently appointed by the court. But since the receiver took over his concerns he has proposed two more companies: The University Heights Publishing Com- pany* and the Regents Corporation. He is, however, under indictment by a Federal Grand Jury charged with fraud in four of the above schemes, and it is not lilcely that he will venture promises extravagant enough to induce many people to part with their money. It is only fair to say that the candy company has been regarded as a legitimate business, but failed, and that the endless chain scheme was not classed as a lottery by the Postoffice Department at the time Lewis started it. The World's Fair Contest was, however, started later, and was a lottery pure and simple. Even Lewis now admits as much. The Rural New Yorker and other papers were solicited to go into it at the time, as it con- tained a scheme to increase subscriptions. We, of course, turned it down with a smile and a bang. But on Lewis' own testimony it took about two hundred thousand dollars out of the pockets of the people and about one- half of that was profit to him. Of course it is impossible to tell now just how much money he has col- lected from the people on shady schemes. It is variously estimated from eight to ten million dollars. It is practically all lost to the people who sent it to him. Much of it was sent him from seven to ten years ago. Prac- tically no interest or dividend has been paid. Many of the victims are dead. Others h.ave given up hope of return. At first it was thought that the mortgage notes would be good. But it is now found that many of the notes are not secured at all. In some cases the mortgages were nearly five times the original purchase price of the land. In other cases mortgage notes were sold, and after the money was received promissory notes were issued instead of the secured notes. Stock was sold under 'the promise that a fifteen per cent dividend was about to be declared, and that it would pay one hundred per cent within the year. Members of the League were promised extravagant and numerous benefits, and millions of endowments. One alone was to furnish an annual pajTnent of twenty to thirty dollars for life. In lieu of this, one twenty-dollar ten-year worthless debenture note has now been substituted. Instead of the millions of promised endowments the League is, on his published admission, hopelessly in debt. The correspond- ence schools have refused lessons because previous service was not paid for. Papers on his list have refused to fill subscriptions for the same reason. Yet, with aU this record, Lewis goes right on and organizes two new companies. He appeals to the people to put their money into one of them in the hope of making profit out of enterprises which he has already aban- doned because he had operated them at a loss. If any person wants to part with money to such enterprises, we have no protest to make, but we want our people to know the facts. Coin Controller Company, Mail Dealers' Protective Ass'n, Woman's Farm Journal Company. Journal of Agriculture, Woman's Magazine, Allen Steam Trap Company, University Heights Realty and Development Company, Richarz Pressrooms Company, Controller Company of America, World's Fair Contest Company, California \^ineyards Company, Laguna Cliico Plantation, Lewis Publishing Company, U. S. Fibre Stopper Company, People's United States Bank, People's Trust Company, International Lan- guage Schools, Art Pottery Company, Hygienic Remedy Company, Woman's National Daily, St. Louis Star Publishing Company, St. Louis Subway Company, American Woman's League, Development and Investm?nt Company, Readers' Pool, Builders' Fund, Success Magazine Endowment, The Founders* Chapter, Men's LTniversity League, Chemical Frieze Company, Faultless Suspender Company, Art Museum Society, Camp Lewis Company, Bachelor Pneumatic Tube Company, Pacific Trading Company, Ozark Herb Company, Telephone Controller Company, The Debenture Scheme, Moffett-West Drug Company, Endless Chain Scheme and Lottery, Edwards Publishing Company, Claire Art Company, Publishers' Reorganization Company, Depositors Agreement, Woman's Republic. *This is probably a mistaken and inaccurate reference to the publishers of the pres- ent volume. Mr. Lewis is not, and never has been, connected, directly or indirectly, with this company. ^ - THE DREYFUS CASE OF AMERICA 79 The full-orbed conception of the Lewis case, according to the newspapers, may be rounded out by the following amusing inter- view from the St. Louis Censor. Further and peculiar attention to the attorneys Claude D. Hall and Judge S. H. King will be de- manded at a later development of this story. The delicious humor of the comments of Attorney Hall can scarcely be appreciated with- out a better comprehension of the relation of that young gentleman to the receivership proceedings against the Lewis enterprises, than can, at this point, be properly afforded. Such as it is, however, this story has been set in circulation as veritable news matter, tricked out with some skill of literary style, to swell the turgid tide of mingled fact, fancy and falsehood which threatens to engulf Lewis' reputation, and cover it forever with an unexampled depth of pub- lic contumely. THE E. G. LEWIS BUBBLE. We accept Attorney Hall's challenge to write a book wherein to tell of Lewis' many schemes, and incidentally to pay deserved at- tention to the hero of the following interview. It is entitled "The E. G. Lewis Bubble." Within the next few weeks there will be unfolded in the St. Louis courts a narrative that will prove more sensational than the tale of John Law's Mississippi Bubble or De Lesseps' gigantic Panama swindle. It concerns E. G. Lewis and his manifold activities. The reason this matter is only now being brought to a head is because for the first time a firm of attor- neys in private practice has been engaged to sift to the bottom all affairs connected with the LTniversity City publisher. Heretofore the investigations and prosecutions, undertaken by Federal and State officials, have been con- fined to one line of procedure. It has not been in the province of those in charge of the cases to go beyond certain boundaries. Attorneys in pri- vate practice have not heretofore been engaged to thoroughly sift these afi'airs, because those who have claims against Lewis are so widely scattered, and the amounts of the majority of the claims have been so small, that a unity of action has never come to pass. Now, however, there is a getting together of those who have lost their money, and headquarters for a gen- eral prosecution of Lewis along all lines has been opened in the Central National Bank Building. The St. Louis attorney who leads in this activity is Claude D. Hall. Among others associated is Judge H. S. King of Pow- haski, Okla., who is attorney for the Osage Indians. Judge King has been retained because of his special knowledge of receivership proceedings. He is a Mississippian by birth, and was a member of the St. Louis bar prior to his removal to Oklahoma. In these attorneys' offices clerks and stenographers are working days and far into the nights collecting, classifying and preparing evidence which win be used in the various proceedings. So complex is the situation, and so does one event hang upon another, that with a given fact in hand it often takes one man a day to trace it back to its origin. Meanwhile Lewis, the cause of it all, is on the Pacific slope, engaged upon his latest scheme, the American Woman's League. The last word from him came Saturday. It referred to an event scheduled to come off Friday night. The date was not kept. Some people in Los Angeles had asked Lewis to appear before them and explain what he had done with certain of their moneys. He failed to keep the engagement, sending a message that he was ill, afflicted with gall stones. Don't even smile, my reader. That is the word which was sent. 80 THE SIEGE OF UNIVERSITY CITY But to revert to tlie scene of action in St. Louis. Two proceedings already iiave been commenced, one in the nature of a foreclosure, and the otlier involuntary bankruptcy. But they are not a marker to the court case whicii will be filed witliin a few days, and which will set the whole country to tallcing. The Censor is not yet at liberty to state tlie nature of this proceeding, but it is of a magnitude to bring into the limelight everything concerning the mayor of University City and his money-squeez- ing schemes. II02^TE CEISTO MILLIONS. When the Abbe Faria told Kdmond Dantes that the treasure hidden on Monte Cristo Island totaled thirteen million dollars, the young man was overwhelmed with astonishment. He had never heard of sach a sum being in the possession of an individual. Attorneys engaged in this research concerning- Lewis state that in the last ten years he has dragged in from one source and another the sum of twelve million dollars, only one million less than the romantic mind of Dumas dared conceive for his fantastic plot. "How nrach is there left?" the attorneys were asked. They sighed as they admitted they did not know. "We can find assets valued at only two and one-half million dollars," replied Mr. Hall, "and that is principally incumbered real estate." "Who Kre the losers of the difference?" I asked. "Principally women who are scattered all over the country, from Maine to California and Washington to Florida. Of these there are evidently several hundred thousand. There were some men caught as well, princi- pally ministers and farmers." "Tell me how he got this money?" I asked. "Do you want to write a book?" queried Mr. Hall. "It would fill a book to tell of his many schemes. Here is one, however, and it is well substan- tiated by affidavits. In 1905 Lewis purchased, through one of his com- panies, a tract of land now lying in University City. It was seventy acres, and cost one hundred and fourteen thousand dollars. A short time after this he mortgaged this same trtict to another of his companies for five hun- dred, thirty-seven tliousand and some odd dollars. Then his second com- pany proceeded to sell mortgage notes in various denominations all over the country. Subtract one hundred and fourteen thousand dollars from five hundred and thirty-seven thousand and you have four hundred and twenty-three thousand dollars, which the people paid in — and paid in for what? F'or Lewis' imagination. To be sure, they held and still hold these mortgage notes, but what is back of the notes? Nothing, so far as the four hundred and twenty-three thousand is concerned." THE REORGANIZATION. "Tell me about that trusteeship scheme?" I asked. "That is somewhat complex," said Mr. Hall, "yet the general outline can be easily given. Lewis owed the Class A publishers something like one hundred tliousand dollars. Their representative, John H. Williams, visited St. Louis, in an effort to collect the money. He couldn't, and so the trus- teeship scheme was thought of. It involved the turning of everything over to Williams for a term of five years; everything, mind you, including all the evidence of debt scattered all over the country. For these Williams was merely to give his receipts. At the end of five years he would tell the people what had been done, and send them pro rata what he had netted, if anything had been netted. Now, what a plan ! It was all right for the publishers of Class A, for they would have got theirs. But how about the hundreds of thousands of others: No, we prefer to have a show-down now, and that is what we are after." "Now that I am on the subject," continued Mr. Hall, "I want to say we have reason to believe that some of those mortgage notes on the Universitr City property were issued before any mortgage was recorded. In many THE DREYFUS CASE OF AMERICA 81 instances where persons sent in money for these notes, they now have noth- ing to show. At the time they received interim receipts — Lewis was a great fellow to give interim receipts — and later, when they called for something more tangible and were told to forward the interim receints, they did so, and never got anything in return." THE AMEttlCAK WOMAu's LEAGUE. "What about the Woman's League, I-ewis' latest scheme?" I asked. "We are just getting into that," said Mr. Hall. It appears that Lewis started out to get 550 each from one million women. In return they were to have subscriptions from certain magazines, were to belong to a certain order, and chapter houses were to be erected by Lewis at different points. It was the chapter house idea that caught most of them. There, on a prominent lot in their town or city, would be erected for them a handsome building. Lewis was going Andrew Carnegie one better. The Laird of Skibo only puts up a part of the money, letting the cities do the rest. Lewis was going to do it all. At least that is the way his prospectus reads. But, to date, we have not heard of a single chapter house that has been built; nor even of a corner stone having been laid for one. Today's rnail brings a letter from some woman living in Pontiac, 111., and a second letter from a woman living in Wheeling, W. Va. Both seek information as to when their chapter houses will be commenced." "Have all of Lewis' publication interests gone to smash?" I asked. "Practically," replied Mr. Hall. "The last of those, published at Uni- versity City, the Woman's National Daily, which was recently changed to a weeklj', has v.ithin the last few days been leased to the Woman's League. I don't quite know what this move means." "'How about the St. Louis Star?" "That is another complicated matter. Lewis bought the controlling in- terest in the Star from Nathan and August Frank, paying part cash and for the balance gave his notes, -n-ith the stock as collateral. Then he in- creased the capital stock of the paper and sold a good many small share lots to people as premiums on subscriptions. Here again he made use of the interim receipts; and did not deliver the actual stock. All these transactions have got to be taken into account when figuring that deal. Besides this, Lewis published the Star at a continued loss. We understand that he used money for this enterprise which should have gone into other channels. It is being shown, for instance, that some of the Woman's League money had gone into the Daily." It is not known just when Lewis will return to St. Louis, but representa- tives of the attorneys are keeping in close touch with him and are thor- oughly posted as to his whereabouts. SOME SCHEMES. The present review of newspaper opinion would not be complete without the following article from Collier's Weekly of December 4, 1909. The edge of this article, tempered of the steel which has made Collier's so trenchant a blade in the fight for national right- eousness, cleaves almost to the dividing asunder of bone and mar- row. This stroke was weighted by some ten thousand dollars* worth of advertising in Collier's previously paid for by the American Woman'd League. It fell with exceptional directness upon thous- ands of subscribers secured to Collier's under the League Plan. Col- lier's, recognizing the part played by temperament in human affairs and aware that the conservatism proper to that periodical is opposed to Lewis' sanguine optimism, characterizes Lewis as a promoter to an "unsafe degree." It regards his statements and promises as "ex- 82 THE SIEGE OF UNIVERSITY CITY travagant." The editor holds^ without doubt sincerely, that such promises cannot be expected to be materialized. All these matters must be reserved for further consideration in connection with the American Woman's League. No phrase could be coined which would hit off so aptly this editorial from Collier's as a recent pregnant avowal from its own editorial columns; namely, "Collier's has be- come notorious for its betrayal of its friends." The American Woman's League Is an organization for soliciting sub- scriptions to magazines which is being promoted by J\Jr. E. G. Lewis of St. Louis. In some places the connection of Collier's, "Everybody's" and various other publications with the scheme has been described by the use of the expressions "co-operate," "participate," and "are responsible for." This creates a wholly wrong impression. Collier's and various other pub- lications have permitted Mr. Lewis and the members of his organization to solicit subscriptions for them on a percentage basis. This is exactly the same connection — and no more — that exists between all magazines and many thousands of subscription agents throughout the United States. For the fulfillment of whatever promises or contracts may exist between Mr. Lewis and the members of the American Woman's League Mr. Lewis alone is responsible. It is also true that Collier's has printed Mr. Lewis' adver- tisements. This entails upon us the usual responsibility for the good faith of our advertisers. Fundamentally, the plan of the American Woman's League is reasonable. An ordinary American town of ten thousand pays to the large periodicals about five thousand dollars a year. The getting of this business costs the publishers, in agents' commissions and otherwise, about thirty per cent, or one thousand, five hundred dollars a year. For the women of the town to foi-m a little organization, attend to renewing the subscriptions, collect the commissions, and use the income to foand and maintain a club-house is feasible from a business standpoint and a wholesome thing for any community. But Mr. Lewis, having the promot- er's temperament to an unsafe degree, goes beyond this and makes extrav- agant statements and promises of a correspondence university, an orphan asylum, and various other adjuncts which can not reasonably be expected to materialize. We believe that all the women who enter his organization with any greater expectation than to secure a small club-house for their towns will suifer unhappy disappointment. As to the criminal charges which were brought against Mr. Lewis by the Federal Government some years ago, he was completely exonerated by the dismissal of one suit and the dropping of the others by the Government. It is also true that in connection with various schemes of past years, Mr. Lewis has solicited and received large sums of money from the public; in these schemes, those who sent money to Mr. Lewis have not only failed to receive the profits which Mr. Lewis led them to expect, but have also been unable, in many instances, to get back from him their original investments. Finally, the women who work for and earn a club-house from Mr. Lewis should in every case see to it that the title to the property is taken in the name of the local women who have built it. Any other system is unfair to the women who do the work. LEWIS, THE MARTVR. The last of the newspaper articles which it seems necessary to republish, appeared in the New York Financial World of July 15, 1911, under the caption "Lewis, the Martj'r: His Friends Insist He is a Very Much Persecuted Man." The editor of the Financial World finds it extremely puzzling to understand how Lewis' friends can imagine that he is a "nmch maligned" individual. For staring one in the face is the "mountain of evidence that the Government THE DREYFUS CASE OF AMERICA 83 has gathered against him," and also the "chronic financial embarrass- ment" which has beset all his various schemes. Let it be admitted once again, that the Lewis case is puzzling. The magnitude of the mountain of evidence collected by the Gov- ernment is appalling. But over against this mountain bulks in equal magnitude the accomplished result: the League, the Great Press, the Heights, the City on the Heights, and the things these stand for, all in exquisite beauty and suggestion, as seen in Lewis' allegations and reply. Beyond all these, there looms as background another moun- tainous pile, white at the peaks, pitch dark below, and green as grass in between, the theories, convictions, imaginings, fancies, ac- cumulated and marshaled in serried ranks, by the industrious gen- tlemen of the press. Thus the editorial in the New York Financial World : E. G. Lewis, the St. Louis financier of meteoric fame, has launched, in his short cafeer, nearly two dozen separate ventures. None of these turned out profitably to the multitude of stockholders, notwithstanding that he raised for them somewhere in the neighborhood of between five and eight million dollars. Yet he still has staunch friends who strongly assert that he is the victim of persecution upon the part of powerful financial inter- ests. They even go further by charging the Postoffice Department with lending aid to his enemies to crush him. There is no question about the sincercity of Lewis' defenders. But it is puzzling how thej' can bring themselves to think that Lewis is a much maligned individual, in face of the mountain of evidence the Government has gathered against him, and the chronic financial embarrassment which has beset all his several ventures. Throughout their defense of Lewis, their one cry is that he is honest, and that no evidence has been produced to prove he has lined his own pockets with one dishonest penny. Herbert Hungerford, a magazine writer, in an article published in de- fense of Lewis and his American Woman's League, says of him, after ap- praising in his own fashion the character and work of the man: "No one can tell me that this man is working for his own selfish ends. If this were true he could have retired as a millionaire long before he ever attempted to establish the League. In fact, I cannot conceive of any in- telligent person who could think for a moment, in the light of Lewis' actual achievements, that he has any other motive than the betterment of his fel- low men." Here is a picture of a martyr, who has had almost every evil force work- ing against his altruistic endeavors and is a verj'' much misunderstood man. If this be so, measured by every other commercial sentiment, and this is the only practical way to judge any man who has started out to malie other people happy on their own money, Lewis has been a most miserable failure. Every venture he has conceived was a house of cards, a flimsy structure, collapsing when the first adverse wind came in contact with it. In an address Senator Burton of Ohio made in the Senate in the de- fense of the Postofiice Department's ruling in the case of Lewis' publica- tion, the Woman's National Weekly, no words were spared in tearing to pieces this reputed martyr's character. His whole record as a promoter was revealed as proof that the Government, instead of persecuting the man, as his friends contend, was using its great power to protect the public from his further operations. Senator Burton gave a list of his promotions. * * * Scarcely another instance can be cited where any single promoter who had conceived so many schemes for the purpose of enlisting capital, all of which at one time or another stranded on the rock of bankruptcy, still had so many friends to plead his cause against the power whose bounden duty 84 THE SIEGE OF UNIVERSITY CITY it is to protect the public against fraud. In ttiat respect I^ewis is a phen- omenal character. He is possessed of a magnetism which wins friends for him in spite of the disaster he has left in his tracks. THE MOTIVES OP THE PRESS. The documents and ofBcial records examined by the present writ- er compi-ise very many thousands of printed and typewritten pages. Several months of conscientious application would be required upon the part of any journalist who aspired to acquaint himself with all the facts which would entitle him to the expression of a mature and well balanced opinion on this much debated case. Analysis of the foregoing stories or even denial of their patent misstatements would seem, therefore, at this stage to be a gratuitous undertaking. A general denial cannot indeed be entered. For a considerable proportion of the facts alleged are true. That is, if separated from their context and considered independently, certain of these state- ments in fact and word are perfectly correct. Specific denials, un- supported by evidence and in heterogeneous order, are unintelligible and unconvincing. Accordingly, these newspaper representations will be allowed to stand without further comment. The reader will thus be in position to form an unbiased judgment concerning the newspaper theory of Lewis' personality, upon comparison of the allegations above set forth with the facts of record which will be stated as the story proceeds in its develoiament. The fact ought not to be overlooked, however, that newspapers are organs for the expression of the opinions and promotion of the interest of the persons by whom they are controlled. The motives of newspapers, like the motives of men, very often escape the probe of the most searching analysis. Proof of bias or unworthy motive is mostly unattainable. The general character of a publication, its past policies, as shown by its own printed columns, and the known affiliations of its owners and their associates, such are the facts from which probable inferences may be dra^vn. The Post-Dispatch of St. Louis is a widely read, influential and responsible daily newspaper with a circulation of about three hun- dred thousand. It was the publication in its columns of the orig- inal "scoop" of May 31, 1905, that first let loose the dogs of rumor against Lewis. Most other publications, thereafter, appear to have regarded Lewis as fair game, upon the principle that when the first voice has been lifted with the alarm "Stop thief !" all men are in duty bound to join the hue and cry. Most newspapers seem to have accepted stories of the Lewis case from press dispatches, or ex- changes, and to have republished them without animus, merely as interesting news matter. The controversy between Lewis and the Postoffice Department in- volves the last two Republican administrations. Presumption might arise that such stories as the above would be most acceptable to the administration press. Such, however, does not appear to have been the case, except at particular crises. Lewis has always been THE DREYFUS CASE OF AMERICA 85 nominally a Republican. He has continuously proclaimed his con- fidence in Theodore Roosevelt and in President Taft. These facts have prevented the case from assuming any kind of political com- plexion. On this question of motive, the publications above quoted may be taken as fairly representative. Let us see what they are. The Akron Beacon- Journal speaks for the large class of progressive publications and their readers who are honestly seeking for more in- formation about Lewis enterprises. The Hartford Globe repre- sents the type of publication actuated by the not unkindly interest of a local newspaper in the spectacular career of a financial pro- moter born in their neighborhood. The Boston Herald might pos- sibly be suspected of generally hostile motives arising from conser- vatism, from sympathy with the Administration, or from the busi- ness interests and affiliations of its proprietors. The article of Miss Grace Phillips in the Houston Chronicle concludes with the follow- ing paragraph: "It might be well for those Houston ladies who are so enthusiastic in Mr. Lewis' behalf to acquaint themselves with the facts in the case;" which sage counsel awakens the suspicion of some local differences in mental attitude already taken. It like- wise calls to mind the graceful classic rejoinder, "Tu quoque" (Do thou likewise" fair writer!"). The Chicago News, the Minneapolis Times, New York Commer- cial, and Peoria Herald are types of journals that reprint the news as they receive it, in good faith and make such editorial comment as the news dispatches seem to warrant. The motives of the Post-Dispatch and the Rural New Yorker have already been intimated. The editorial from Collier's, the Pharisee of American journalism, appears to be in the nature of a self-serving declaration. Like the smile of the cat that swallowed the canary, it suggests mingled emotions of self-satisfaction and apology. As to the St. Louis Censor and the New York Financial World, they may be dismissed as periodicals of a type such that the least said concerning them the better. Lewis' early business ventures, or try-outs, which embrace a con- siderable proportion of his alleged schemes and failures, will be dis- posed of in the next chapter. CHAPTER III. THE MAKING OF A GREAT MAIL ORDER MAN. Howard E. Nichols — Lewis in College — The Corroco Com- pany OF Connecticut — The Truth About No-To-bac — Lewis as a Salesman — The Corroco Company of Tennes- see — Anti-Skeet in St. Louis — The Corona Company — The Hunyadi Salts Company — The Hygienic Remedy Company and Others — Lewis' Early Ventures — The Proprietary Medicine Business. Edward Gardner Lewis makes his first appearance upon the hor- izon of the postoffice insjjectors' official record in the fall of 1895 at Nashville, Tennessee. Carlyle has remarked by what insignificant accidents men live in history. Lewis' entire career has been colored by a chance meeting at that place with an uncultured half-caste drummer for a patent medicine concern, who would else have been utterly unknown to fame. No casual contact could have seemed more insignificant than the meeting in Nashville of these two young men, Lewis and Nichols. Yet the crossing of their paths is the first turning point upon which hinged the action of this American na- tional drama. HOWARD E. NICHOLS. The sequel will show that Howard E. Nichols, in time, became Secretary and Treasurer of the Mail Order Publishing Company, established by Lewis as publisher of the Winner, afterwards the Woman's Magazine. As subscription managei-, Nichols received the postoffice inspectors on the occasion of their several examinations of the Winner. He boasted of having juggled, on one occasion, the card cabinets containing the subscription lists of the Winner, in such fashion that the inspectors were induced to count portions of the subscription list the second time. This alleged trick resulted in many and serious consequences for Lewis and his associates in after years. Nichols severed his connection with Lewis under circumstances already mentioned. The two men became totally estranged. Nich- ols drops from sight for several years. Lewis prospers amazingly. Comes a critical moment. Lewis is under attack by the Postoffice. Nichols, like a concealed viper, suddenly rears his head and strikes the envenomed fangs of scandal and libel deep into Lewis' business reputation. The poison of mistrust, with which the public esteem of Lewis was thus inoculated, pervades the public records. It still circulates in the columns of the press. Probably, it can never be altogether neutralized. Partly, it would appear, in revenge for 86 1 ■ 2 ■-=; tU) o s--^ <-■ -2 o H ^ ^ o .~ "C ^ "^ _-i£ "^ i o - 'o t- hX '^ (o '~ t-. C: 5 a fj aH^ O s ti) ^ ^ <«^ a sa, \<4^% ^~r->^-f^ ■r **. 1i ! l-fl &M t^ b-S t^5 THE DB.F:YFUS case of AMERICA 89 Lewis' charges, and partly out of envy and from spite, Nichols has struck at Lewis, time and time again. His first reprisal took the form of certain conversations with Wil- liam Marion Reedj^, editor of the Mirror. The nature of these in- terviews, one of which we have given from Nichols' own testimony, may be further surmised from the surrounding circumstances. The first overt act was the letter from Nichols to William Loeb, Jr., Sec- retary to President Roosevelt, which enclosed a clipping from the Mirror by Reedy containing an attack, itself doubtless inspired in part by Nichols, against the People's United States Bank. Fol- lowed an affidavit, furnished by Nichols to PostofBce Inspector-in- charge Fulton of St. Louis, containing the untruthful biography of Lewis according to Nichols. It was on this Nichols' biography that the postoffice inspectors in large part based their first investigation and report. The Post-Dispatch of St. Louis published lengthy ver- batim extracts. Then and thereafter the Nichols' conception of Lewis' personality and character, and of the nature of his business transactions, furnished, as we have seen, the standards for the char- acterization of Lewis for the whole press of the United States. Nichols again struck by appearing as a witness at the Ashbrook Hearings. During that testimony, he discloses a close personal relationship with one of the attorneys, S. H. King, who appeared in the recent (1911) receivership proceedings against the Lewis en- terprises. Nichols thus appears as Lewis' Nemesis, ever applying to Lewis' later expectations and achievements, the standards of those earlier days. The story of Nichols will be developed more fully in connection with the Mail Order Publishing Company and the People's United States Bank. The object of anticipating it here is to meet fairly the challenge that Lewis is shown to be essentially a faker by his first choice of vocation, and by his early association with a man of the Nichols type. For Nichols' own letter, affidavit and testimony, now matters of public record, reveal a soul so petty, a mind so warped and twisted, that his claim of intimacy with Lewis is by far the most serious of his accusations. "Tray is known by the com- pany he keeps." Lewis has since associated with many distinguish- ed men; yet his connection with Nichols, from their first meeting at Nashville in 1895 to the settlement and severance of their affairs seven years later at St. Louis, has cast a sinister shadow over that period of Lewis' life. The personality of Nichols has unquestion- ably been among the most blighting influences of Lewis' whole ca- reer. Nichols overreached himself in his last appearance against Lewis before the Ashbrook Congressional Committee at Washington. The Committee yielded somewhat reluctant permission to hear this wit- ness upon what seemed a trivial and collateral issue. But in the end, two entire days were devoted to his testimony and cross-exam- ination. When Nichols left the stand he had been thoroughly taken 90 THE SIEGE OF UNIVERSITY CITY apart and the truth elicited from him. Incidentally the members of the Committee and the cross-examining attorneys had with unspar- ing candor limned his picture upon the sober pages of the official record. The incisive query of one stern analyst after another laid bare Nichols' ignorance^ his moral obtuseness, his total lack of ante- cedentSj his petty malice, his envy, his lust for vengeance. When Nichols left the committeeroom, one fancies that all present breathed a sigh of relief. Certainly the whole atmosphere of the Lewis case clears sensibly when the testimony of Nichols is analyzed, and the motives of his accusations are disclosed. Had Nichols and Lewis been able to foresee at the time of their first meeting in the private office of the Spurlock-Neal Drug Com- pany at Nashville, Tennessee, in the summer of 1895, the nature of their respective testimony before a Congressional investigation in 1911, they would have recognized that moment as a dramatic, even a tragic one. As their hands fell apart after the moment of their introduction, a chain of influence was started which was fraught with untold ruin and disaster. In blissful ignorance of the future, they merely compared notes as to their respective lines of business, and arranged to meet again at Lewis' office in the building of the Board of Trade. Nichols took on, as a side line, the sale of one of Lewis' proprietary articles. The men then parted, to meet again years later under circumstances which will appear hereafter. Let us see how they chanced thus to come in contact. This occasion and what took place afterwards, will be understood more clearly if we fall back to Lewis' first extensive business ventures while still a stu- dent at Trinity College, Hartford, Connecticut. LEWIS IN COLLEGE. Lewis first entered Trinity in 1886 as a member of the class of 1890, but was obliged to withdraw a month later on account of ill- ness. Returning to college in 1888 with the class of 1892, he shortly became a member of Delta Psi, a well-known college fraternal or- ganization. He took quarters with his fraternity brothers in their local club house. His natural aptitude for affairs led to his elec- tion as house steward and business manager. As such he formed the acquaintance of the representative of sundry importers of fine Havana cigars, whose custom it was to supply influential student or- ganizations with samples of their wares as a means of stimulating the demand for new brands which they were jjlacing upon the market. Perceiving a business opportunity, Lewis secured from cer- tain of these concerns, the wholesale agency for the Connecticut Valley and vicinity. His personal popularity enabled him to create a vogue for these goods in the college and university towns so num- erous in that locality. Thence the demand spread throughout his territory. He was thus successful in introducing a number of the new brands of cigars, and in developing a considerable business. The manufacturers from time to time made up and submitted to him complete sample cases of new lines of fine cigars. These he would THE DREYFUS CASE OF AMERICA 91 distribute among influential collegians, who would ask for tnem at the local shops. Lewis in this way would often have sold the goods before shipments could be delivered. Tempted by the quality of the fine cigars which he thus had con- stantly at hand without expense, Lewis smoked inordinately. He tells in this connection the following story: I was smoking at that time, eight or ten cigars a day. One day an old smoker came in to call on me, and while he was there, I put down a cigar, saying I would have to cut down my smoking a little. He asked me if the habit was getting the better of me. I said it was. He then suggested that if I would chew a little piece of black licorice it would overcome the ill ef- fect of the tobacco. I tried it and thought that the result was good. That suggested to my mind an opportunity to promote my sales still more. It occurred to me that, no doubt, many smokers would use more cigars if they knew of any way to prevent the injurious consequences. So I commenced to read the matter \ip. I found that the nicotine in the tobacco is an alkaloid poison. I remember that I came across stories about soldiers in the war who to avoid going into battle would tie a piece of plug tobacco under their armpits. The effect would be to bring on a temporary but very violent sickness. They would be carried back to the field hospital in the rear, but about the time the battle was over they would re- cover and be all right. I then had the key to what the licorice did. I knew it must contain some substance which acted as an antidote or palliative to nicotine poison- ing. So then I took up the matter with Parke, Davis & Co., the manufac- turing chemists, and had them go to the bottom of it. I found through them that the commercial source of licorice is the roots of certain legumin- ous plants growing in the Mediterranean region of Europe. This plant is called Glycyrrhiza, a plant with sweet root, from two Greek words meaning sweet and root. The English word licorice is originally from the same source. The root grows several feet long and an inch or more thick, has a sweet taste and has soothing and laxative properties. The licorice of com- merce is either the root of this plant or an extract from it. It is exten- sively used in the manufacture of tobacco. Its active principle is glycyr- rhizin, a peculiar sugary substance. About that time I got acquainted with a young Spaniard from Central America, who was a chemist. He told me that the natives in Central America chew the roots of certain plants for relief from tobacco poisoning, and that the native doctors make a brew for that purpose from these roots. He investigated the matter and found that this root produced a better ex- tract than licorice as a source of glycyrrhizin. This was a substance well known in trade channels, the extract of which was very much thicker and better suited to my purpose. I therefore adopted this and employed Parke, Davis & Co. to make me up a tablet containing the proper amount of gly- cyrrhizin. Each tablet contained more of this active principle than a large amount of stick licorice and was therefore much more beneficial to the smoker. I called these tablets Corroco, and made up my mind to organize a company and put them on the market. That was the origin of the Corroco Company of Connecticut, incorporated about 1888, my first important busi- ness venture. I coined the word Corroco on the spur of the moment, for no particular reason except that I wanted a word for a trade-mark that had a Spanish sound. THE CORROCO COMPANY OF CONNECTICUT. Lewis succeeded in interesting local capital in this project. While still a student, he opened offices in the Goodwin Block, Hartford, and employed quite a large force of girls, wrapping and mailing samples, filling mail orders and issuing circular letters to the trade. 92 THE SIEGE OF UNIVERSITY CITY He advertised extensively. Totally inexperienced in this class of business^ Lewis, as many another would-be advertiser has done, em- barked upon a campaign of national publicity without any proper ap- preciation of the enormous sums of money that such policy would re- quire. The new preparation was popular. Initial orders were large. The trade, as is usual in such cases, overstocked in anticipation of future demands. This compelled Lewis to manufacture heavily to fill orders. Then came the lull which always occurs with a new preparation, while the demand is slowly absorbing the iirst stock ordered and before second and subsequent orders can come in. Good strategy now requires that the demand be stimulated by heavy advertising. But Lewis' resources had been exhausted by his first advertising appropriation and by the manufacturing necessary to fill the resulting orders. His backers, realizing for the first time the amount of money that would be required, were unwilling to sup- port the project, which Lewis therefore regretfully abandoned. A gross business of approximately one hundred and fifty thousand dol- lars was transacted by the first Corroco Company, most of which, ac- cording to Lewis, went to swell the profits of advertising agencies and periodicals. The net effect upon Lewis' mind appears to have been the suggestion that the purchase and sale of advertising space was likely to be more profitable to the publishers of periodicals than to the advertiser. And this conclusion, so far as Lewis personally is concerned, his subsequent experience seems to have confirmed. The object of "Corroco," as advertised by Lewis, was to increase the sale and use of tobacco. He sold chiefly by wholesale to drug stores and tobacconists. He advocated his preparation as a means of increasing tobacconists' sales, and to that end invited their co- operation. His inventive mind suggested a simple form of vending machine upon the principle of the penny-in-the-slot instruments now so universally employed. Lewis, in fact, jDerfected this device and obtained his first patent at a time when there was but one previous American and two British patents in existence. His plan of cam- paign contemplated placing one of these vending machines contain- ing packages of "Corroco" tablets upon the dealer's cigar case. He proposed then to supply the trade with literature for distribution, showing that the habit of smoking would be rendered less harmful by "Corroco." Hence men who enjoyed smoking, but feared the injurious effects, need not discontinue but might smoke all they pleased. THE TRUTH ABOUT NO-TO-BAC. An amusing incident growing out of this early experience is notable as the point of contact between Lewis and the man who afterwards became his staunchest backer, H. L. Kramer, now far- famed as the proprietor of "Cascarets." While manufacturing the "Corroco" tablets, Lewis' attention was attracted to the advertise- ment by Kramer of a similar preparation under the trade title "No- to-bac," but for a totally different purpose; namely, to enable smok- ^Residence of Jackson Johnson, Aldcr)nan of University City -Lenox Hall, University City. E-vcliisi'i'e boarding school for young ladies. Erected i.-irt Instilutc of the American IVoman's League. Erected Ifiog -City Hall of Uni'oersity City. Erected igio THE DREYFUS CASE OF AMErIcA ^6 ers to break off the habit. Kramer's advertising contained a sugges- tion that, as the preparation was harmless, wives and mothers could administer it secretly in coffee or other liquids, and thus cure the male members of their families of the smoking habit by creating a distaste for the effects of nicotine. This latter style of advertising, it will be remembered, is among the various species of deception of which Lewis has been accused. In fact, he was highly indignant when his product was pirated as he supposed, and a style of adver- tising made its appearance which was directly hostile to the aims he had in view, and injurious to his business projects. Lewis' first communication to Kramer took the form of a sharp letter asking why the latter did not think up something original in- stead of pirating his product and counteracting the effect of his ad- vertising by a competitive publicity campaign. Kramer rejoined that he had been at the point of writing a similar letter. The two men, in other words, both contend that each had an original idea, and that both chanced upon the same product by an odd coincidence. The two future friends wholly lost sight of one another for several years after this exchange of correspondence, except through hearsay and their observation as competitors of one another's publicity cam- paigns. Kramer afterwards, as an advertiser, formed the acquain- tance of Lewis as publisher of the Winner Magazine. The two be- came fast friends under circumstances which will appear hereafter. Lewis eventually succeeded in interesting a group of New York business men in the "Corroco" tablets. To them he sold out his in- terests in the fall of 1892, on consideration of their taking over the unfinished business and assuming the liabilities of the corporation. A new charter was taken out by them as the Corroco Company of New York, but in this LeM'is was not personally interested. Lewis, after winding up the Corroco Company of Connecticut, abandoned for all time, as he supposed, the manufacture of proprie- tary articles. But the bent of his mind toward commercial life was altogether too strong to warrant his continuing long in college. He therefore left Trinity in 1890. about the close of his sophomore year. LEWIS AS A SALESMAN. During his college days, he also acted, for a time, as salesman for diamonds and other precious stones. A taste for crystallo- graphy is one of the strongly marked characteristics of Lewis' many-sided personality. One day while still a freshman at Trinity, chancing to pass through Maiden Lane in New York, he happened to see an especially fine display of uncut diamonds in the window 01 an importing jeweler. He stepped inside to get a closer look at them. As the stones were displayed by the proprietor upon a tray, Lewis amused himself by idly classifying them according to their several degrees of clarity, or as it is technically known, of "water." A natural ej'e for these fine distinctions of value in prec- ious stones is a rare gift, very essential to the successful dealer. The 96 THE STEGE OF UNIVERSITY CITY jeweler^ observing that Lewis had this gift^ engaged him in conver- sation, tested him somewhat further, and in the end employed him as wholesale agent or broker for the Connecticut Valley. Lewis, therefore, during his brief two years as a college student, maintained regular offices in a downtown office building in Hartford, and there carried on two distinct lines of trade as wholesale broker, in addition to the business of the Corroco Company. He continued these activities after leaving college until the sale of the latter con- cern. He then entered the employ of his uncle, George C. Edwards, in the fall of 1892, as traveling salesman. Mr. Edwards was at that time, president of the Bridgeport Chain Company. Their product was based upon a patent swivel, which, when introduced into a chain at intervals, prevented it from kink- ing and becoming twisted into knots. Lewis' ingenious mind im- mediately suggested a multitude of new uses for this device. His orders kept the designers and the factory constantly busy producing new styles of chain of every imaginable size and quality, required to adapt the product to a great variety of different uses. Without samples or instructions, he booked orders for chain curtain pulls, cow chains, dog chains; chains, in short, for every sort of purpose for which a chain could be employed. The firm caught the inspiration. Other salesmen were taken on. The business was speedily put upon a paying basis. Mr. Edwards was a director of the Waterbury Watch Company of Waterbury, Connecticut. As such he chanced to be consulted at this time, touching a new sales problem of that concern. The long- wind two-and-a-half dollar Waterbury watch was the first cheap w.atch to be successfully placed upon the American market. It's fame had created, on the part of both the trade and the public, the presumption that a Waterbury watch and a cheap watch were syn- on}'mous terms. The company was now ambitious to manufacture a line of watches of higher grade. It had invested heavily in this connection and had developed a satisfactory product. Its sales- campaign, however, had proved an utter failure. Neither the pub- lic nor the trade could be readily made to believe that a Waterbury watch could be worth anything over two-and-a-half dollars. After vainly suggesting that the company adopt another trade name than Waterbury for its high class line, Mr. Edwards told the stor}' of Lewis' campaign for the Bridgeport Chain Company, and at liis suggestion, Lewis was employed to demonstrate the new line of Waterbury watches to the trade. He was married at this time, and after attending the World's Fair at Chicago with Mrs. Lewis, he continued on a wide swing through the West and South, thus oc- cupying something over a year. Those who have known Lewis in more recent years can readily understand the sources of his early success in this capacity. Easy of address and winning of personality, he combines the qualities of initiative and fertility of imagination with a degree of energy and THE DREYFUS CASE OF AMERICA 97 resourcefulness altogether exceptional. Flis progress through the West and South from city to city was marked by lavish campaigns of newspaper advertising and spectacular window displays of high grade Waterbury watches by foremost local jewelers. At the conclusion of this camjoaign, Lewis entered into a contract with the company as Southern sales manager ;, the exact extent of his territory to be determined by experiment. This connection, which appears to have been creditable to Lewis and acceptable to his em- ployers, was terminated, to the regret of both, at Nashville, Tennes- see, in the spring of 1895, b}"- the sudden and serious illness of Mrs. Lewis. Lewis was married in Baltimore in 189 J. His wife had ac- companied him on his business journeys. This illness demanded his presence at her bedside. Attempts to cover his territory by oc- casional trips from Nashville as headquarters were frustrated by acute symptoms of danger. The physicians recalled him again and again to the detriment of his business interests. Compelled in this wise to sever his lucrative connection with the Waterbury Watch Company, a stranger in Nashville, without funds, yet confronted with the extraordinary expenses attendant upon Mrs. Lewis' illness, Lewis was compelled to cast about for another busi- ness opening. His attention was attracted quite by accident to the properties of pyrethrum, the chief ingredient of the ordinary "Per- sian" insect powder, as an insecticide, and especially if burned as a mosqaitocide. Lewis' own account of this simple incident is characteristic of the alertness of his mind and the versatility with which he has often adapted himself to the most untoward circum- stances. He relates the incident as follows: "When Mrs. Lewis was sick at Nashville, I had to give up my position with the Waterbury Watch Company because she couldn't move. She was sick for months, and nearly died. With a sick wife and practically without funds, I was thrown on my own resources. During that time I noticed the nurse, an old colored woman, kill- ing mosquitoes in the room with something she was burning on a shelf. I inquired what it was and found that it was a pyrethrum powder." On loolving at it he found that it appeared to contain a resinous substance which gave off thick fumes, and had the property when burnt, of stupefying or killing the mosquitoes. Not content with the mere folklore of a negro mammy, Lewis began to question local chemists and wholesale dealers. He also corresponded on the sub- ject of mosquitoes and mosquitocides with the Department of Agri- culture at Washington. His investigations in the end led him to de- vise a mosquitocide consisting of a particular quality of pyrethrum rich in certain resinous ingredients. The fumes of these resins ap- peared to be the active principle in destroying insect pests. This particular quality of pyrethrum made up in the form of tablets mixed with other substances to facilitate burning, he placed upon the market as a mosquitocide under the trade title of "Anti-Skeet." 98 THE SIEGE OF UNIVERSITY CITY Those who have been annoyed by the pest of mosquitoes will not be surprised to learn that Anti-Skeet under Lewis' spectacular ma- nipulation was an instant success. Thousands of purchasers used it continuously to their entire satisfaction. The sale was literally enormous and was maintained until its quality was impaired in later years by the unwise policy of Lewis' St. Louis associates in the Corona Company. Much the same formula is now publicly recom- mended as a mosquitocide in bulletins of the Department of Agri- culture. These facts would seem to dispose of any question as to the legitimac}' of Lewis' enterprise in this direction. THE CORROCO COMPANY OF TENNESSEE. Emboldened by the success of Anti-Skeet, Lewis recalled to mind his earlier experiment with the "Corroco" tablets, and organized the Corroco Company of Tennessee — his second incorporation. This concern brought out a number of proprietary articles, including "Anti-Fly," "Bug-Chalk," and others of a similar nature. Lewis' mind was working actively, but had not yet found its proper bent. The following extract from the report of the postoffice inspectors in re the People's Bank is of interest in tliis connection: Howard E. Nichols met him (Lewis) in Nashville, Tennessee, about August, 1895, when he was in debt for his board and was selling Anti- Skeet, a tablet composed of saltpetre and insect powder. Taking an interest in him, Nichols loaned him a hundred and fifty dollars, and promised to ex- ploit his business in Memphis, Tennessee. Lewis had some little success. He organized a company with himself, Gilford Dudley, a note broker, and Otto Stoelker. Stoelker sold his store for quite a sum and put his money into the business. Bad management soon summoned the sheriff to take an interest in the company, who attached everything in sight, among which was a car- load of Anti-Skeet. By fraud and deception, Lewis induced the sheriff to loosen up on the carload of Anti-Skeet which Lewis shipped out of the State, and the Corroco Company left Tennessee with several iudgraents against it, and Stoelker from grief and humiliation committed suicide. The inspectors acknowledge upon the witness stand that no ef- fort was made to verify the above statements. Lewis testifies that he was keeping house at the time mentioned, hence he could not have been in debt for his board. There is no evidence that the sheriff attached a carload of Anti-Skeet or any other property of the company. Lewis enters his denial. The utter worthlessness of Nichols' testimony may be inferred from the following letter writ- ten by Stoelker himself, sixteen }'ears after he was alleged by Nichols to have committed suicide through grief and shame. This letter was dated at Birmingham, Alabama, on December 3, 1911. It is addressed to Lewis and signed by Otto Stoelker. It was sub- mitted in evidence before the Congressional Committee in Washing- ton: Your favor of the 18th instant was duly received, but owing to the rush of Christmas business, I have been unable to reply sooner. You state that Viccause of my former business connection with you in 1894 or 1895, it Was claimed by some postoffice inspectors, during your recent trial, that I had committed suicide. I am astounded that oppression and injustice should be carried so far in a country supposed to be the freest on earth. It eeems THE DREYFUS CASE OF AMERICA S9 high time that our people become aroused in defense of their rights and lib- erties. 1 congratulate you on your vindication, and trust that you will receive reparation for the losses inflicted. If I can be of service in any way in this matter, let me know. In due course of introducing Anti-Skeet and other products of the Corroco Company, Lewis, in the summer of 1896, made a trip to St. Louis, and there opened up an energetic advertising cam- paign. Having ascertained by previous correspondence that the pest of mosquitoes was then troublesome, Lewis brought over from Nash- ville a carload of Anti-Skeet, and contracted for full page adver- tisements in the St. Louis daily papers. ANTI-SKEET IN ST. LOUIS. While not quite a stranger to St. Louis, having formerly visited that city in his capacity as salesman and demonstrator for the Wat- erbury Watch Company, Lewis' appearance on this occasion may be taken as the beginning of his permanent connection with St. Louis as a citizen and business man. What manner of man was he at this period of his career? What were his first impressions of St. Louis? What were the impressions of the business community with regard to him? The testimony of Nichols, quoting further from the inspectors' report, is as follows: Lewis came to St. Louis and induced the Moffett-West Drug Company to exploit the business here under the name of the Corona Company. Re- sults were not forthcoming, and Lewis abandoned the business to the Mof- fett-West Drug Company, which now owns it. Lewis' own statement at the Ashbrook Hearing is as follows: That was about sixteen years ago. I went to St. Louis from Nash- ville, and the sale of Anti-Skeet in St. I^ouis was very heavy. It amounted, I believe, to some forty or fifty thousand dollars there in a couple of weeks' time. One of the principal purchasers of it was the Moffett-West Drug Company. I became personally acquainted with Mr. Courtney West of that concern, and also with another partner, Mr. Niedringhaus of the Granite City Iron Ware Company. One afternoon they asked me if I would not join them in a corporation which the Moifett-West Drug Com- pany would back up with ample capital, for the manufacture of a num- ber of different preparations, including this "Anti-Skeet." I decided that I would. The company was incorporated. Mr. West, myself, and Mr. Niedringhaus, I believe, were the stockholders and officers. It was made a part of the Moffett-West Drug Company, a side concern to it, their agreement with me having been that they would back it up to ap- proximately one hundred thousand dollars. The St. Louis campaign which brought Lewis to the attention of the Moffett-West Drug Company affords an example of his early business methods. The facts show him to have been both enthusias- tic and practical, an unusual combination. He first placed orders through a local firm of advertising agents, with the principal St. Louis dailies for full page advertisements of Anti-Skeet, bearing the legend "For Sale at All Druggists." He then called upon the principal wholesale merchants and boldly demanded orders for one hundred gross lots of Anti-Skeet, then a comparatively unknown 100 THE SIEGE OF UNIVERSITY CITY preparation, upon the basis of net cash with the order or cash on de- livery. The wholesale merchants of the "Fourth City" were in doubt whether to be tlie more astonished or amused at Lewis' au- dacity. The MofFett-West Company, liowever, smilingly gave him a small order upon the usual terms of credit. Lewis offhandedly re- fused. Mr. Courtney West thereupon declined to have anything further to do with Anti-Skeet or its proprietor. Lewis already knew the effect of his peculiar methods of campaign. He retired to his hotel, knowing that he could afford to wait for his advertisements to come out. The plague of mosquitoes was very annoying just then in St. Louis, as Lewis had j^reviously found out. The full page advertise- ments of Anti-Skeet were hailed with delight. Buyers descended upon the local drug stores, like the swarms of invading mosquitoes they wished to fight, ready to exchange their dimes for boxes of the tablets advertised. Moffett-West and other wholesale merchants received rush orders b3r telephone, by letter, and by special messen- ger, for Anti-Skeet, Anti-Skeet, nothing but Anti-Skeet. Unwilling to purchase on Lewis' terms, Moffett-West were compelled to refuse all inquiries. Other merchants bethought them of Lewis' visit, humbled their pride, and placed small orders with Lewis for Anti- Skeet for cash. Next day witnessed a rapidly increasing sale. This was stim- ulated by additional huge advertisements and the word of mouth en- dorsement of already satisfied patrons. Demands upon the Moffett- West Company became incessant. Finally, an associate of Mr. West's in that concern, took upon himself the responsibility of dis- regarding the latter's wishes. He took from the cash drawer daily the large sums required to supply the demand of retail druggists and other merchants for about two weeks when mosquitoes were numerous and sales plentiful. Lewis stuck to his cash terms, both upon the principle of treat- ing all alike, and to avoid leaving a quantity' of his product unsold upon his own hands or those of the dealers. Suddenly a shifting of climatic, or other conditions, put an end to the mosquito pest. Thereupon, the sales of Anti-Skeet were temporarily at an end. The fact, however, that an unknown young man without credit or influential acquaintances could thus, in a single raid, lay open the business fortresses of a considerable city, dictate terms to her prin- cipal mercliants, and gather up a gross earning of forty or fifty thousand dollars within so brief a period, seems to have commanded respect and admiration. THE CORONA COMPANY. Lewis' recollection as to the organization of the Corona Com- pany is at fault. The ofiicial announcement of that company to the trade, according to their advertisement in the "Western Druggist," bears the signature of W. B. Woodward of Woodward & Tiernan Printing Company, the leading firm of printers of St. Louis; C. H. THE DREYFUS CASE OF AMERICA 101 West of the MoiFett-West Drug Company and C. P. Van Shaak of Peter Van Shaak & Sons, wholesale drug company of Chicago, as directors and of E. G. Lewis as general manager. Lewis does not appear to have been an incorporator or stockholder of this concern. He seems to have received, as general manager, a proportion of the profits on condition of assigning to the concern the trade-mark and formula of Anti-Skeet and Anti-Fly. This announcement states that the subscribers have demonstrated their ability successfully to conduct a proprietary medicine busi- ness. One of their preparations, Anti-Skeet, has reached the enor- mous sale of three millions of boxes in one season. The Corona Company ha? therefore been organized to handle their preparation with improved facilities and to extend their trade connections. Their dealings are alleged to cover seventy per cent of the wholesale and retail drug trade of the United States and to extend in addition to many foreign countries. In addition to Anti-Skeet, the Corona Company formulated and placed upon the market the preparation known as Dr. Hotts Cold Crackers, "guaranteed to break up a cold in one night." This preparation was said to be based on a physician's prescription, and consisted of three small tablets. Each tablet was said to be a sep- arate prescription, "the best for the purpose that skill and all the facilities, wide knowledge, perfect machinery, and unlimited cap- ital can produce." In regard to this remedy, Lewis states that the title proved to be the cause of failure. The success of Anti-Skeet, AValk-Easy and Anti-Cavity was largely due to their happy trade-marks. But the title. Dr. Hott's Cold Crackers, suggested to many readers some- thing to eat rather than a medical preparation. The advertising of this medicament, therefore, proved to be unprofitable. It was short- ly withdrawn from the market. Dr. Hott's Cold Crackers, as we have seen, masquerades in the published lists as one of the companies organized by Lewis. In this connection, he makes the following statement: There is one other concern I have been accused of organizing; that is, Dr. Hott's Cold Crackers. This is merely one of the preparations of the Mcffett-West Drug Companj'. It is a sort of cough mixture made to "crack" or break up a cold. It did not succeed so well as some, as many persons thought it might be something to eat — some sort of an iced or cold cracker. The idea of classifying it as one of the companies I organ- ized is simply ridiculous." Walk-Easy and Anti-Cavity were preparations gotten up in connec- tion with the proprietary medicine business at the time I intended to be- come permanently identified with the Moffett-West Drug Company. The rights were not made over to the Corona Company, however, and when they were unable to carry out their agreement I kept those preparations myself. I still own the patent rights and trade-marks. The similarity of these to a great number of the proprietary ar-i tides now on the market is at once apparent. The postoffice inspec- tors' report asserts that after Lewis' withdrawal from the Corona 102 THE SIEGE OF UNIVERSITY CITY Company, and the failure of the Hunyadi Salts Company, Lewis was for a time dependent upon sales of these preparations. The fol- lowing is their comment: Early in 1898 Mr. Lewis started the Diamond Candy Company. Lewis and Nichols then started the Walk-Easy foot powder, a preparation for sweaty feet, and Anti-Cavity, a tooth powder. They lived on the proceeds during the summer of 1898, but when cold weather approached, feet did not sweat as much and the business dried up as well. That concern owed nothing, however, as their credit was below toleration. Lewis is thus depicted in violently contrasting colors. On the one hand are the representations of Nichols adopted by the post- office inspectors without investigation. On the other are his own business records and the statements of his associates, reputable mer- chants engaged in extensive business dealings with the wholesale trade. The stock of the Corroco Company of Tennessee was held by Lewis and his immediate associates. None was ever placed upon the market or sold to the general public. He abandoned that con- cern and became associated with the Corona Company of Missouri for the best of business reasons; namely, to secure the financial sup- port and co-operation of the MofFett-West Drug Company, and to become established in a leading centre of the wholesale trade. Lewis was not among the owners or incorporators of the MofFett-West or the Corona companies. Hence these concerns are wholly out of place in any list of his alleged incorporations. No complaints are of record concerning any of these companies from investors, cred- itors or others. They are simply among the stepping stones whereby Lewis rose to the amazing position which, for a time, he afterwards occupied as one of the most admired and respected business men of the entire Southwest, and one of the best known and most loved men in the whole of America. THE HUNY.1DI SALTS COMPANY. The MofFett-West Drug Company was caught in the panic of 1897 and financially crippled. They were unable to live up to their agreement to finance the Corona Company. Consequently, Lewis was again thrown upon his own resources. His second venture at St. Louis is thus characterized by Nichols, as quoted by the post- office inspectors: Lewis then started the Hunyadi Salts Company, taking W. B. Wood- ward and other St. Louis business men into the enterprise. The Hunyadi Water Company got after them in court for infringement of copyright. I,ewis determined to fight while the others abandoned him. The ' result was Lewis lost his case, and owed considerable for printing, advertising, bottles, cartons, and bonds. Some of these debts on account of street car advertising were recently paid, to prevent further advertising in the state courts. That is what Nichols states. Lewis' own version is as follows: After leaving the Corona Company, I organized an enterprise for the manufacture of effervescent salts. Among them was one known as Hun- yadi Salts, and another known as Hunyadi Bromo. This business devel- oped successfully. We had large sales throughout the United States; THE DREYFUS CASE OF AMERICA 103 but we got into a law suit with the Hunyadi Water people. This dragged on a year or two and exhausted our resources. We won the suit. But, meantime, 1 had been obliged to compromise. The Hunyadi Water Com- pany paid the lawyers fees and costs; and I dropped that proposition. By an oversight on the part of the inspectors, apparently due to the omission of Nichols to furnish the name of Hunyadi Bromo as a separate proprietary article, it has escaped being included in the list of Lewis' alleged schemes compiled by the publishers of the Censor, the Rural New Yorker and others. By parity of reasoning it should be included therein as the Hunyadi Bromo Company; al- though in fact no such incorporation ever existed. The Hunyadi Salts Company was the last venture in the field of proprietary articles to which Lewis gave his own time and attention. Many traces of these early experiences, however, are indelibly im- pressed upon his after life. We may anticipate the future here to give an explanation which will clear away the prejudice attach- ing to a number of Lewis' alleged proprietary schemes. THE HYGIENIC REMEDY COMPANY AND OTHERS. A large amount of mail order advertising is done by individuals who employ trade names as a mere matter of convenience in keying their advertisements. Sometimes a separate trade name is used for every article, or a number of articles may be sold under the same trade title. The word company is used in deference to custom. But there is no sufficient reason why these small ventures should be act- ually incorporated. In many cases the cost of incorporation would be prohibitive. The only legal responsibility thus incurred is that the owner becomes personally liable for all the debts of the con- cern. Thus the absence of an actual incorporation is a protection to creditors, rather than the opposite. The names of a number of these so-called companies appear in the list of Lewis' schemes. These include the following: Hygienic Remedy Company; Edwards Publishing Company; Claire Art Com- pany; Chemical Freezer Company; Walk-Easy Company; Anti-Cav- ity Company ; and many more. Lewis makes the following statement in this regard: The origin of the Hygienic Remedy Company, Anti-Cavity, Walk- Ea.sv, and similar trade names, whicli have been quoted among the com- panies I have organized is as follows. 1 suppose 1 must tell the whole story. Mrs. Lewis has a sister who has lived with us for many years, and has been without means of her own. In order that she might not feel she was living with us as a matter of charity or without return to us, I have helped to find little novelties and prej)arations of one sort or an- other for her to sell. Then I would make up advertisements for her under whatever name she adopted for that particular novelty and run them in my paper. I paid for the advertisements myself. She attended to the business that resulted. This would bring her a little income each week, and thus made her independent. I have preferred to do that rather than give money direct. There is no one concerned with these matters except myself. There is nothing ob- jectionable in any of the schemes. Nobody else was interested. They were not companies. Nobody was invited to take stock. Everyone of those ]04 THE SIEGE OF UNIVERSITY CITY advertisements was charged to rny personal account and settled for at regular intervals. Mrs. Lewis has helped her sister from time to time and shared her profits. This has been a nice little source of modest in- come. I will frankly say that at times it has been the only source of in- come we have had. This was the case during the early days of the Win- ner Magazine. We started the paper with nothing, and built it up with- out capital and without resources. It took every penny that I could raise and scrape to do it. Mrs. Lewis' sister was then living Avith us, and in- stead of giving them spending money or money with which to run the liouse, I would run these advertisements. The Edwards Publishing Company was one of these small affairs. I believe they sold little stocking-foot patterns and dress patterns. They would go down town, pick up these things, advertise them under these trade names and sell them. That was not a company. There was no stock issued. They merely got up some novelty, gave it a name, and ran it for a year or so, until they shifted to something else. The Claire Art Company was also Mrs. Lewis' sister. Her name is Claire. It related to little fancy work novelties: but was not a company and had no stock. That is a regular mail order custom. That is all there was to that. The Faultless Suspender Company was another of the same sort. So was the Chemical Freezer Company. The Hygienic Remedy Company was the name finally adopted under which to sell a variety of different preparations. Among these were Walk- Easy and Anti-Cavity. They also had a line of several other proprietary articles including a tooth paste, a complexion powder, and several good pharmaceutical preparations. That was their standard company. That consisted of Mrs. Lewis and her sister. That is not a corporation. No stock was ever issued or placed upon the market. Numerous testimonials from the patrons of these different ar- ticles are preserved by the owners. Their operations do not seem to be subject to serious criticism. Two other concerns are also mentioned by the inspectors and the press in this connection ; namely, the Pacific Trading Company and the Ozark Herb Companjr. Both were organized by a St. Louis chemist and mail order man named Dub3^ Lewis makes the following explanatory statement as to the former concern, which plays a somewhat important part in the story of the "Siege:" Duhy was a chemist who had developed quite a nice little mail order business. He was a particular friend of Frank J. Cabot, publisher of the AVoman's Farm Journal. After I bought the Journal and Cabot had become associated with me, Duby felt the need of additional capital. He induced both Cabot and myself to join him in the Pacific Trading Com- pany. We had practically nothing to do with it except to furnish the capital. With us it was simply a venture whereby we might make a few liundred dollars each. Duby organized the company and ran the busi- ness. I afterwards gave Nichols my interest in the Pacific Trading Com- pany to get him off my hands. The articles of incorporation of this concern are dated September 10, 1901. The incorporators and first directors are :Messrs. Cabot, Nichols and E. P. Stark, who subscribed for twent.y, twenty and ten shares of stock, respectively. The capital was mentioned as five thousand dollars. It was divided into fifty shares of the par value of one hundred dollars each. The objects and purposes were stated THE DREYFUS CASE OF AMERICA 105 as the purchase, sale and mamifacture of all kinds of chemicals and pharmaceutical compounds and preparations, and the acquisition of needful formulas, copyrights, and letters patent. Lewis does not appear as an incorporator or otherwise as directly connected with this concern. Anj' interest he may have had was by way of loan or merely as an outside investor. Our chief interest in this com- pany is due to the fact that it figured in the settlement whereby Lewis, to quote his own phrase, aserts that he "gave Nichols the Pa- cific Trading Company to get him oif his hands." Exact details of this transaction do not appear to be on record. The Ozark Herb Company was also originated by Duby. Lewis stated that when this company was incorporated he either loaned it a thousand dollars or took a thousand dollars of its stock. The loan was afterwards repaid or the stock repurchased by Duby, who was the originator. Lewis' interest was only an accommodation. The A. W. Cooley Chemical Company, the Cathartic Medicine Company, and the Sarsaparilla Blood Medicine Company, are pure fictions, at any rate as far as any connection of Lewis with them is concerned. lewis' early ventures. The accompanying table* will assist the reader to grasp all of Lewis' early ventures in their proper relations as a single fact. His activities as a cigar broker are seen to have given rise to the Corroco Company of Connecticut, in some sense the parent of the Corroco Company of Tennessee. His experience as agent for precious stones led to his connection with the Bridgeport Chain Company as sales- man. This in turn procured his appointment as demonstrator for the Waterbury Watch Company. Thus, in due time he arrived at Nash- ville. There, the illness of Mrs. Lewis was instrumental in his dis- covery of Anti-Skeet. This preparatioai brought him to the atten- tion of the MofFett-West Drug Company, and led to the organization of the Corona Company. The partial failure of that concern again threw him upon his own resources, and led to the organization of the Hunyadi Salts Company and the temporary sale of Walk-Easy and Anti-Cavity. Such, in brief, is a summary of the early experi- *I,EWIS' FIRST BUSINESS CONNECTIONS Manager ^\f/ Club, Trinity College (iZgo-gi) Wholesale Diamond Broker (iSgo-g2) Wholesale Cigar Broker (iSgo^gs) iBridceport Chain Co. n^ r^ c r^ .-^...^^.Tw (Salesman ISQS-Q^) ^CoRROcoCo. of Connecticut nvlTERBURV Watch Co. (President 1S9B-92) (Demonstrator 1S93-94) ^Corroco Tablets (Southern Sales Manager iSg-}-os) 2C0RROC0 Company of Tennessee {President iSgygo) *Anti-Skeet «Anti-Fly ^Buc Chalk ^Peruvian Chill Belt ^Laxative Prunes 'Corona Company of Missouri (General Manager iSgd-gy) *Walk Easy ■^Dr. Hott's Cold Crackers •'Anti-Cavity ^Hunyadi Salts Company ^Dj^j^iqj^jj Candy Company (President 1897) Lewis and Leonard *Hunyadi Salts -^Hunyadi Eromo (Partner iSg8) ■^Lewis an Employee Only. ^Incorporated, ^Not Incorporated. ^Proprietary Articles (not Companies.) 106 THE SIEGE OF UNIVERSITY CITY ences which lie ab the background of Lewis' astonishing career. The Corroco Company of Connecticut, the Corroco Company of Tennes- see, and the Hunyadi Salts Company were the only three concerns in which Lewis definitely figured as incorporator. No stock of either was placed upon the market. None was sold to the general public. Nor is there any evidence whatever that anybody was defrauded. The MofFett-West Drug Company was a large and wealthy cor- poration as to which Lewis had no responsibility. The Corona Company was subsidiary to that concern. Lewis was merely em- ployed as general manager. The incorporators were men of wealth and standing in the community of St. Louis. One of them was president of a company, then and still the largest and most reput- able printing house of St. Louis. Another was a partner in the celebrated granite ware manufactories at Granite City, Illinois. A third was president of a wholesale drug business, a very respectable concern of the city of Chicago. The fact that such men as these adopted Lewis' preparation known as Anti-Skeet and their an- nouncements concerning it, would certainly seem to indicate that in their opinion, at least, it was in no wise fraudulent. Two of the incorporators of the Corona Company, Messrs. West and Woodward, joined Lewis in the Hunyadi Salts Company ven- ture, a fact which would seem to indicate that the company was a reputable concern. Its failure was due solely to the pressure of wealthy competitors, proprietors of the famous Hunyadi Waters. The management does not appear to have been derelict in any way. No presumption arises in relation to any of these concerns that would not attach to the proprietors of any similar line of business. Some half dozen of the alleged companies attributed to Lewis are merely the names of the proprietary articles. Others are trade names not incorporated. Still others are incorporations in which Lewis had no part. Many are pure figments of someone's imagina- tion. No fewer than twenty-one of the alleged schemes compris- ing the list described by Dillon of the Rural New Yorker as being "nearly, if not quite, exhaustive," are thus disposed of, and seen to be what they are- One hesitates to characterize this enumeration in a supposedly reputable periodical, of various proprietary articles placed upon the market by MofFett-West Drug Company and one of their subsidiary concerns, as so many separate incorporations among the false and fraudulent schemes of E. G. Lewis. Yet this list is padded by such terms as Anti-Skeet Company; Anti-Cavity Company; Bug-Chalk Company; Anti-Fly Company; Walk-Easy Company and others, for the obvious purpose of creating prejudice against Lewis' later en- terprises. The absurdity of this is manifest. Messrs. Parke-Davis & Co. of Detroit, Michigan, and many other reputable merchants, issue to the drug trade catalogues of proprie- tary articles containing many thousand different formula;. The publication of the trade titles of these different articles followed by THE DREYFUS CASE OF AMERICA 107 the word "company" could hardly be taken as evidence that the pro- prietors of that concern were the authors of an extraordinary num- ber of illegitimate schemes. Inquiry through the commercial agencies or the ordinary channels of the trade, would readily dis- close that many of the companies falsely attributed to Lewis had no existence except in the spleen or fancy of the sponsors for these gross misrepresentations. Dillon opens the paragraph introducing his truly amazing list of some sixty-five separate alleged schemes with the remark: "We would not be justified in attempting a complete list." About fifty titles are alleged, directly or by inference, to be separate incorpora- tions. Official records establish beyond peradventure, however, that the name of E. G. Lewis appears as an incorporator in fewer than twenty separate instances, the circumstances as to all of which will be later related. Ignorance, malice, or criminal carelessness may account for this discrepancy. Its total inconsistency with every sentiment of candor, fairness, or sincerity of purpose is manifest. Such gross and obvious manipulation, such piling up of evident mis- statement upon misstatement, operates upon the candid mind like an overdose of poison. The system rejects the entire nauseous mix- ture, and escapes the dangers attending the more subtle administra- tion of the same poisonous elements in lesser quantities and by slow degrees. THE PROPRIETARY MEDICINE BUSINESS. Lewis' activities as a manufacturer and vendor of proprietary articles were confined to a portion of the decade between 1888 and 1898. This was many years before the agitation against the so- called patent medicine business which culminated in the notable ex- pose by Samuel Hopkins Adams in Collier's Weekly, called, "The Great American Fraud," and in the editorials against the same evils of Edward W. Bok in the Ladies' Home Journal. That agitation has in recent years created much public sentiment against all patent medicines. This entire agitation has borne fruit in the National Pure Food Legislation, and the campaign in that behalf of Dr. Wiley. All this subsequent change of sentiment tends in no small degree, to strengthen the prejudice which, from the statements of Nichols and the inspectors, attaches to Lewis' early and perfectly in- nocent commercial ventures. A prejudice so founded is wholly irra- tional. Prior to this recent agitation the most reputable newspapers and periodicals willingly accepted the advertising of the so-called patent medicines and proprietary articles without question. Collier's Weekly itself must blush for the former contents of its advertising columns. The revelations and arguments adduced against this class of trade were then unheard of, and unthought of. Many persons then engaged in business of this character, and many periodicals aided and abetted them, who might not have done so, had the con- clusions and reflections suggested by present knowledge been at that time forcibly presented to their minds. lOS THE SIEGE OF UNIVERSITY CITY There is, however, notliing to indicate that the substances em- ployed in the proprietary articles sold by Lewis would have been objectionable to the most conscientious reformer, or contrary to the regulations of the Pure Food and Drugs Act of 1906. Lewis is not accused of having vended alcoholic preparations, or opium, or mor- phine derivatives, or any of the subtle poisons against which the re- formers so properly and feelingly inveighed. The whole attempt to belittle and discredit Lewis in this fashion, when strictly analyzed, falls of its own weight. "The mountain labors and brings forth a mouse." The two titles, Anti-Skeet and People's United States Bank, do, nevertheless, form a remarkable antithesis, which is much harped upon in the official literature at the Postoffice Department, and in the newspapers. These terms may fairly be taken to represent the two extreme points of Lewis' career. They represent the beginnings and the end of his imaginative and practical efforts, as Watts' tea kettle and his pumping engine represent two extremes of the inven- tive engineer. Postmaster-General Cortelyou, under cross-examination, has tes- tified substantially as follows : I recall that one report on the People's United States Bank outlined Mr. lewis' career. Statements were made that he was born in a certain place, was first here and then there, and connected with various lines of business, ending up finally at St. Louis. These were simple facts elicited in course of the investigation. The kinds of business he had previously engaged in and how he had conducted them had a certain bearing. The career of any man has a bearing upon his present operations. It gives some indications of his methods and leads to the discovery of things. Any man's past record might have a bearing on what he is doing today, but not materially. That cuts very little figure. "Past question," says Gen. Lew Wallace, "all experience is ser- viceable to us." Lewis' early ventures in the drug trade brought about two results of life-long consequence. The first was that they caused him to become a publisher. As an extensive advertiser of proprietary articles, he had the handling of many large appropria- tions. He was exposed to the solicitation of advertising agencies, and especial!}' to the visits of advertising men connected with the early tj'pe of mail order periodical. From these contacts and his own early experience, came his knowledge of the mail order field. The knowledge thus obtained revived his boyish taste for printers' ink. Later it enabled him to build up, for the Winner and the Woman's Magazine, the third largest mail order advertising patron- age in the world. CHAPTER IV. THE FOUNDING OF THE WINNER. Lewis vs. Ex-Governor Hill; A Contrast — Nichols' Biography OP Lewis — A Word About Periodicals — The Diamond Candy Company — The Barrett Watch Episode — Early Advertising Policies — The Mail Order Protective Asso- ciation — Commercial Success Assured — The Endless Chain — The Masthead of the AVinner — The Ten- Cent-a-Year Idea — Mile-Stones op Progress. The first issue of the Winner Magazine bears date of May, 1899. Six years later Lewis claimed to be a millionaire. The Woman's Magazine, successor to the Winner, was then said by him to be earning over a quarter of a million a year. This Monte Cristo change from poverty to affluence; this spectacular bound from the lowest point of his career to the highest ; this sensational and almost unbelievable access to prosperity, has riveted the attention of the newspaper paragraphers of a continent. Lewis himself has said that he had one dollar and twenty-five cents in his pocket when he decided to found the Winner Magazine. When pressed as to the lit- eral accuracy of this statement, he replied facetiously that he could remember about the twenty-five cents, but was not sure about the dollar. Lewis embodies this statement in one of his circular letters in the promotion of the People's Bank. He responded as follows to the sarcastic challenge of Postoffice Inspector-in-Charge Fulton, "Explain the process of organizing the Woman's Magazine on a cash capital of one dollar and twenty-five cents." The organization of a magazine from a start of one dollar and twenty- five cents into the largest publication of any sort in the world has been similar to the raising of a new born babe into a president of the United States. That process, I believe, has been carried out fifty-two times. I )iad the idea and secured the credit, backing and result by ceaseless work night and day for years. The banks of St. Louis, Chicago and New York have, during that period, loaned me approximately two million dol- lars. I do not recall having one of these notes protested. By work and the use of my credit, I have built up this business until it is vmiversally regarded, with the possible exception of those who have been unable to do likewise, as in many respects, a leading publication of the world. The political opponents of the late John Johnson, Governor of Minnesota, once tried to discredit him by asking the voters if they ■wanted as governor a man whose mother v/as a washer-woman, and who, as a young lad, had collected and delivered the wash by which the family was supported. They answered at the polls by giving him an overwhelming majority. It used to be the chief glory of our . 109 no THE SIEGE OF UNIVERSITY CITY democracy that, however lowly a man's origin, he might rise to any height his merit would permit, unhampered and unashamed. The instances of Garfield tramping barefoot behind the tow-path mules, and of Lincoln, the rail splitter, are of absorbing interest to every school boy, because they are supposed to symbolize an inalienable right of every free-born American. Lewis, the Yankee manufacturer of proprietary articles, the pat- ent medicine man, the vendor of nostrums, might well have been added to the ranks of these immortals as an ensampler of the moral- ist's favorite virtues of energy, enthusiasm, courage and economy, except for the misfortune of having been born too late. LEWIS vs. GOVERNOR HILL; A CONTRAST. A striking contrast is afforded by comparison of Lewis' experience with the postoffice officiary to that of his business rival, ex-Governor Hill of Maine. The latter preceded Lewis by several years as a pub- lisher of mail order periodicals. Plis publications were among the most conspicuous violators of all the postal laws and regulations, the exclusive application of which laws to Lewis plucked from him both the profits and honors of his labor. Hill was ahead of Lewis by so many years as to become a member of the Republican auto- cracy which for some years past has administered the law in the interest of its own aggrandizement. "As goes the state of Maine, so goes the Union." Hill as a prominent and influential politician in this pivot state, appears to have been immune from governmental interference. He has since become the chairman of the National Republican Committee. As such he enjoys the approval of the men who rule over the destinies of the American people. Lewis entered into the same arena only to find that the American ideal of equal opportunity had become a thing of other days. Lewis built the Winner upon the model afforded by Hill's and similar publications. He at first adopted the same methods. He indulged in similar practices. But he afterwards did more than they. He became a. reformer. He modified, refined and improved upon the practices of Hill and other rivals, until his publications were perhaps the least objectionable of any. Certainly they were superior to those of Vickery and Hill, which were exempt from the criticism of the latters' political associates. Suddenly the agents of Government discovered, or thought they did, that Lewis' previous business ventures had been unsuccessful. He had been in debt for his board, it was alleged. Lincoln was in debt for his board on one occasion ; but, happily for him, that was before it was deemed proper for postoffice inspectors to conduct ex- haustive investigations into men's personal affairs. He had per- suaded others to join him in a manufacturing company, which had turned out badly. Pie had sold nostrums. A former associate, it was alleged (falsel}'^), had committed suicide upon his account. Everything he touched had failed. He was, therefore, entitled to no credit for the great new enter- I Homes of E. C. Lewis and his brother, John IV. Lewis, respectively r->v-cN ,if thr i^i-iii lids ,1 III rmt bililillnas ,.! 11, 1 I. •zi'i • re. iile, cc III Uiii-.'cisilv C(/\ the coil ■ci-viiUir V, ,ll ck l:> u!. L^a ■ii.Qc. sfn hi;, rn ^lic bi I'i'i' Gill suniilicr house. Th SIIUlll 7 czi'S arc siuil -shols Uil.cii I'V Lc-u'is THE DREYFUS CASE OF AMERICA 113 prise which had sprung up magically beneath his hand. His pre- vious ventures having proved, in the inspector's opinion, unworthy, tlie new ones also were assumed to be a mushroom growth. His whole history must therefore be placarded to the world. His worst enemy must be selected to narrate the story of his past. This with- out verification must be accepted as the standard by which to meas- ure his veracity and the probity of his intentions. The whole must then be given to the press in order that the hands of his oppressors might be upheld and all his efforts at rehabilitation be discredited. Such are some of the reflections that suggest themselves when the facts about the Mail Order Publishing Company and the Winnei are placed in contrast with the tissue of fabrications given by Nich- ols to the postoffice inspectors, by them to the press, and by the press to the world. Nichols' biography op lewis. The following paragraphs from the inspectors' secret report on the People's Bank, if put in their true light as being colored by Nichols' hostility to Lewis and warped by his tortuous personality, would be wholly insignificant. They gain force and sinister signifi- cance only as embodied in an official act which set in motion the powers entrusted to the Government by the people, not for the pro- tection, but for the destruction of a wholesome industry. The inspec- tors say: Early in 1898, Mr. Lewis started the Diamond Candy Company in partnership with H. M. Leonard. Orders began to come in, and Lewis sent for Nichols to come and take care of the business while he went on the road. Nichols took charge, but money failed to come; and after he tired of paying bills out of his own pocket, Scudder-Gale & Company brought suit for unpaid bills, placed Leonard in bankruptcy, and put the Diamond Candy Company out of business. In October, 1898, they started the Progressive Watch Company, a plan to sell watches by the endless chain system, through the medium of a book, for one dollar each. The sales were not plentiful enough, and the plan was changed to the use of cards instead of a book, the cards being ten cents each. That business prospered, but the Postoffice Department stopped the business as "a fraud" about April 1, 1899. They changed the system to what was called a simple instead of a compound system, with a subscription card for a magazine, thinking they would get some mail order tiouse to take over the list of subscribers. The papers and mag- azines shrunk from the plan, so, in self-defense, they started the "Winner Magazine." The Progressive Watch Company, which was then called the Mail Order Publishing Company, was merged into the Winner Magazine, and soon thereafter they started the National Installment Company, de- signed to sell cheap jewelry on the installment plan at fabulous prices, ex- pecting to get cost out of first payment and all after that to be profit. The scheme did not pay, and Lewis and Nichols had some disagreement over the scheme, and they dropped the plan and used the letters received as evidence of the benefits of advertising in the Winner Magazine. In connection with the Winner Magazine, they then organized the "U. S. Mail Order Protective Association," designed to collect bad debts, which the trust scheme advertisers passed upon as no good. The busi- ness was confined mostly to children who had sent for cheap jewelry, per- fume tablets, package blueing, sachet powders, etc., and many were fright- ened into paying. The money collected passed to the credit of the trust ]]4 THE SIEGE OF UNIVERSITY CITY scheme man, and he was paid by certain advertising space in the Win- ner, and Lewis and Nichols held the money. The lists furnished were used for sample copies of the \Vinner. The business soon ceased. The above are in substance the charges made by the inspectors upon which Lewis is denied due credit for one of the most marvelous achievements in the entire record of the publishing industry. Upon such a basis rests in large part the widespread prejudice against this portion of Lewis' career. A WORD ABOUT PERIODICALS. The candid reader must disabuse his mind wholly of the atmos- phere of hostility and interpret for himself the facts which here confront him. This publishing of a mail order journal is the basic fact of Lewis' career. For Lewis is primarily a publisher. The Winner, afterwards the Woman's Magazine, was his first and his representative jaablication. Any jseriodical by its very nature re- veals the character of those who fashion it. A publisher impresses his personality indeliblj^ upon his wares. His ideals and his state of culture are alike patent in his columns. He must needs share his inmost confidence with his readers. All this Lewis has done to a marked degree in the early volumes of the Winner and the Wom- an's Magazine. By them he stands or falls. The testimony of Nichols, or of the inspectors, as to what he ma}'^ have done, or could have done, or failed to do, is totally irrelevant and immaterial. Men do not gather thorns from figs, nor grapes from thistles. Let us look at Lewis' own output, and judge him bj^ the standards which he himself has set. A periodical is a stool which must have three sound legs of policy. The stool itself may be said to be the physical thing published; that is, the white paper impressed with printer's ink. The three legs are the editorial, advertising and circulation policies of the owner. All these are equally essential. The default of either with- draws a necessarjr supi^ort and topples the whole structure to the ground. The founder of a periodical must, therefore, have ab least the primary instincts of an editor, an advertising solicitor, and a cir- culation builder. The great publishers are individuals who combine all these. And Lewis is one of the great publishers of the world. The origins of the policies of the Winner and the Woman's Maga- zine on these three lines may be traced to as many portions of Lewis' career. A tradition of the publishing business runs to the effect that the men of mark have owned printing presses and brought out some sort of a juvenile publication in their 'teens. Lewis is no excep- tion. The rectory at Meadville, Pa., when the Rev. William H. Lewis, his father, was rector in that city, was located upon Diamond Square, hence Diamond News was the name of Lewis' first baby. This is the way in which he tells the story: My first attempt in the publishing line was in the rectory at Mead- ville, Pennsylvania. Two issues cnnic out. Then it went into honorable liquidation. I sold a l)illy-a;oat to pay back the subscribers. THE DREYFUS CASE OF AMERICA 115 The itch to be a publisher, once it gets into a man's blood, dies hard. Nobody who knows anything about the publishing business will doubt that Lewis always had the making of some sort of period- ical as his aim. Representatives of advertising agencies and of countless publications found him a congenial spirit. He drank up their stories about their own publications, and their views about the trade, with a willing and greedy ear. His experience as an adver- tiser, his talks with advertising men, and his observations of the campaigns of his competitors, undoubtedly contributed to shape the policy in that regard which later became a distinctive feature of the magazine as j-et unborn. But a periodical must have circulation. "A legitimate list of sub- scribers" is a requirement of the law. How, without capital, to obtain subscribers in advance of publication was the problem which lay across Lewis' path and barred his way at the very threshold of his ambition. The solution of this problem came by one of those sudden intui- tions which are characteristic of the insight men call genius. It was a chance remark of an old smoker that suggested the Corroco tablets. An old negro mammy killing mosquitoes suggested Anti- Skeet. The mention of a news item in a casual conversation on a doorstep was the immediate occasion of the founding of the Win- ner and the Woman's Magazine. THE DIAMOND CANDY COMPANV. The story of the Diamond Candy Company intervenes at this point, because it was this that led indirectly to the Winner. Lewis and Nichols can best tell in their own words this story: My next door neighbor, says Lewis, a Mr. Leonard, came to me in 1898, and told me he had a sort of molasses candy which he was con- vinced would have a very large sale under a plan by which he proposed to put it up. He undertook to furnish the capital. I was to look after the sales, and he was to do the manufacturing. I agreed, and we started the business as partners. I sold so much of that candv and a number of others, that Mr. Leonard could not fill the orders. He did not even have the money with which to buy molasses. That was the time of the Omaha Exposi- tion. I secured the concession for the entire Exposition; but when I got back instead of the orders having been filled, they were stacked up there untouched. The company could not fill them. The matter was in a state of chaos, so I dissolved the company. I paid the debts myself out of my salary and earnings during the following two years. I went to the dif- ferent concerns to which the company was indebted and told them the cir- cumstances. I voluntarily assumed the entire indebtedness, and ultimately paid it all. The Diamond Candy Company was not incorporated, but was a partnership, therefore no stock was sold. And as Lewis paid the current bills, nobody was defrauded. He still preserves vouchers for the total amount of some three hundred dollars for various forms of merchandise paid for by him in this behalf. The following is from Nichols' testimony at the Ashbrook Hearings: 116 THE SIEGE OF UNIVERSITY CITY When Mr. Lewis had this candy company, he invited me to go to St. Louis. X found when I arrived that he had quite a candy business there with lots of orders on hand. He had an order supposed to cover all the molasses candy and angel cake concessions at tlie Omaha Exposition. Mr. Leonard had then spent about all the money he had or could spare. I be- lieve the first bill 1 paid out of my own pocket was for clean towels. It struck me as so funny that they did not have a dollar and a quarter to pay a small bill of that kind, that I have remembered it all this time. At any rate, the candy business did not liold good. About this time, Lewis, Leonard, and myself were sitting on Lewis' front steps one night talldng about a man in Chicago selling automobiles on the endless chain system. We finally adopted that endless chain plan for a watch scheme. We made up ten coupons into a book, and sold the book for one dollar. You would buy the book for one dollar, sell these ten coupons to ten of your friends at ten cents each and thus get back your dollar. Each of these persons would then bring their coupons to us, and get in exchange a numbered book from which they could sell the coupons to ten of their friends; and thus they, too, would get their dollar back. Meantime, after all the first ten coupons came back to us, we then had one hundred coupons out. And then you got a watch. THE BARRETT WATCH EPISODE. In furtherance of this plan, the articles of incorporation of the Progressive Watch Company were filed under the laws of Missouri in January, 1899. The incorporators were Lewis, Nichols and Mrs. Lewis, who subscribed respectively for twenty, twenty and ten shares of its capital stock of five thousand dollars. This was divided into fifty shares of the par value of one hundred dollars each. Th^ three original certificates of stock, dated January 29, 1899, still remain in the stock book, never having been detached. No other certificates ever were issued. No stock was sold; and, of course, no one could have been defrauded. The following is Lewis' statement on this head before the Ash- brook Committee: My attention was attracted in 1898 to what is known as the endless chain plan. I commenced to evolve that plan in my mind as a means of getting advance subscriptions for my new magazine, which was not then started. I had not at that time even settled on its name. Each person who got a certain number of subscriptions under this endless chain sys- tem was to receive a bicycle, or for other numbers, a watch, or other premium. The cost of the premiums at wholesale was from twelve to eigh- teen dollars. It had been my ambition to be a publisher practically all my life. Ever since my first attempt at Meadville I had been trying to make enough money to go into the publishing business. I had the idea of bringing about the publication on an enormous scale of a very low priced magazine. This was before the time of cheap magazines. I believe it was before Munsey's ten-cent magazine broke the ice. The thought I had was that if publish- ers were spending ninety per cent of the subscription price in obtaining the subscriptions — which I knew from investigation to be the fact — then the low price of the magazine would take the place of premiums, and It would sweep the country. I thought this was the way to go about it in- stead of spending about ninety per cent to sell the magazine. After my experience with the Diamond Candy Company, I began to cast about in my mind for means to start such a magazine. I had come to the conclusion that I might as well start at St. Louis as anywhere. Just then I hit upon this endless chain idea. The rumor is that I started with ^"^ r- "^i-v ^University City street scene in winter. The Lewis residence is at the [eft ^Rear view of the Lezvis residence. Observe the swimming pool and pergola Types of homes creeled ni ihuversity City by officers and directors of the Lewis Publishing Company Residences of ^Cily Clerk Francis 1'. Pulnant. "Alderman James F. Coylc, and ^Frank J. Cabot THE DREYFUS CASE OF AMERICA 119 one dollar and twenty-five cents. I am certain of the twenty-five cents but not the dollar. I drew up the plan in detail and submitted it to the Assistant Attor- ney-General for the Postoffice, General Tyner. 1 had never seen him. I did not even know who he was. I simply inquired if the plan was legiti- mate, and whether it conflicted with any rules and regulations. I received a reply from his assistant, Harrison J. Barrett, saying that it was en- tirely proper, and authorizing its use. I then started the plan, which proved extremely successful. It brought us an enormous subscription list in advance of publication. Then I received a letter from the assistant at- torney-general's office stating they had decided that the compound system of the endless chain was a lottery, but that the single series was not. The sending out of cards which were to be themselves returned was held to be allowable because the sender would know to whom they had been mailed. He would thus have them in his control. But the compounding of that series by cards sent out by subscribers to their friends was held to be a lottery, because it would be beyond the control of the originator of the chain. The assistant attorney-general, however, in view of the fact that he had previously authorized us to use the plan, and had then ruled on it as legitimate, agreed to give us a reasonable time to wind the business up. I immediately notified him that we would do so, and thanked him for the courtesy. When the Progressive Watch Company was wound up there was left over one of the premium watches that cost about twelve dollars. I did it up in a package and sent it to Mr. Barrett, with whom I was not ac- quainted at the time. I asked him to accept the last watch of the series. I thought he was entitled to it for his courtesy. I told him that if he would examine it he would see that it was only a twelve dollar watch, whole- sale. He refused the watch. I then wrote him again saying that I had caused his initials to be engraved on it, and that I did not offer it for its monetary value. If he was satisfied of that by examining it, I said I Avould be very glad to have him keep it, or if not, then he could send it back. Some months later, when I was in Washington, I called at his office. He laughingly pointed out the watch to me on the mantelpiece still in the original mailing box as I had sent it. He considered it as quite a joke. I had also regarded it as a joke, until some time later Fourth Assistant Postmaster-General now Senai;or Bristow made an investigation of the Postoffice Department. Mr. Barrett, and Judge Tyner, I believe, were brought into the controversy. Mr. Bristow in his report called attention to the receipt by Mr. Barrett of this watch from me. Later, this extract from Mr. Bristow's report was printed in a separate leaflet by the Post- office Department, and widely circulated throughout the United States. It was cited, I suppose, as an attempted bribery upon my part, but I in- tended this watch just as a souvenir. Here was a high official of a great Government. The presentation to him of a watch costing twelve dollars as a consideration of value would be to my mind a ridiculous proposition. But 1 was young and green, then. I did not know that such things would be twisted, misconstrued, and misrepresented as they often are. Afterwards Mr. Barrett went into a law office in Baltimore. He be- came a member of a law firm there. I engaged his firm as counsel for the Coin Controller Company of America. I had a contract with the Maryland Telephone Company, and employed Barrett to handle the local details. I felt that perhaps the twelve dollar watch I sent him might have had some- thing to do with the loss of his position. I had some compunction about that. But, Mr. Barrett to-day, so far as my knowledge is concerned, is an honorable, upright man. He has certainly been .so in all of his relations with me. Nichols has attempted in the following testimony to place another light upon this incident: 120 THE SIEGE OF UNIVERSITY CITY I know about the gift of a gold watch to Mr. Barrett, as Mr. Lewis and I were partners at the time. The watch was purchased personally by Mr. Lewis from the L. Bauman Jewelry Company. It was worth more than twelve dollars. The watches we sent to the mail order subscribers cost anywhere from ten to fifteen dollars. They were not so good as that v.e sent to Mr. Barrett. I remember this because the clerk who waited on Mr. Lewis telephoned me that he was buying a nice watch, and wanted me to come down. I said I was too busy. I imagine that Lewis paid about thirty-five dollars, wholesale. The watch was given to Barrett with the opinion of both myself and Lewis that we wanted him to feel under some small obligation. I know that was so, as far as Lewis is concerned, because he so stated to me. In talking tlie matter over he said: "If we can make him feel all right, Nick, we can get closer to him." The reader thus hns before him both versions of this incident. The motives of Nichols having been indicated, he must draw his own conclusions. The following is an additional statement made by Nichols in this connection: There was nothing really illegitimate about the Progressive "VVatch Com- pany. When we started, we submitted the question to Judge Tyner, and he wrote a letter back, which letter I have and can show. It may do Lewis some good. Afterwards, the postoffice authorities objected to the system, and I was in continuous fear of the inspectors. I remember that the post- oiEce people once sent us a notice of the new rulings. I went over person- ally and asked them what it meant. They said they could not tell me more than was contained in the notification, but the officer in the postofiice bu- reau said: "If you have any doubts about it, just let the thing alone." I re- plied that we had inquired, and that we had been told it was all right. We decided to go ahead. There was nothing illegitimate in the plan, except that probably the method of selling miglit be objectionable to the De- partment. It was just like forming an insurance company. We depended upon the lapses for Avhat we made. But I do not think anybody, even I, ever accused Jlr. Lewis of using it as a scheme to defraud. We conducted the business so as to strictly comply with the postal regulations. But we Mere inspected three or four times and that made me think we might get into trouble. It was as if a man has been stopped three or four times on a street corner by a policeman and told that he looked suspicious. That is why I thought we might ha\'e trouble, not because we were conscious of any fraud. Hindsight is better than foresight. Had Lewis been able to read the future he would doubtless have refrained from presenting a gold watch to Harrison J. Barrett. Nor would he have taken ad- vantage of the courtesy of that official to continue to obtain sub- scribers by the endless chain. But Lewis was engrossed from Octo- ber, 1898, to April, IS99, in the task of building up the circulation of the publication he proposed to launch, and in other preparations, He gave little or no heed to personages and events which after- wards conspired to seize him with a viselike grip and fasten him upon the public pillory. It may be doubted whether Lewis even knew until long after- ward that Joseph L. Bristow of Kansas had been appointed by President IMcKinley, on April I, 1897, as Fourth Assistant Post- master-General of the United States, in charge of postoffice in- spectors' service; nor that Bristow proceeded to manipulate that THE DREYFUS CASE OF AMERICA 121 service with a view to building up for liimself in Kansas a political machine. The fact that Bristow procured the appointment of Rob- ert M. Fulton in June, 1897;, as clerk in the postoffice at Cripple Creek, Colo., with a view to the evasion of the civil service re<;ula- tions and to his subsequent appointment as a postoffice inspector, was, of course, totally unknown to Lewis. Nor did he have any means of suspecting the consequences which that appointment would entail. Even the appointment of Edwin C. Madden, as Third Assistant Postmaster-General, in July, 1899, three months after the birth of the Winner, was a circumstance to which Lewis probably gave no heed. Assistant Attorney Tyner and his assistant, Barrett, entered into his thoughts only in so far as their official rulings affected the conduct of his affairs. These men entered and assumed their places upon the stage of national affairs at a time when Lewis little dreamed that he would ever touch their lives or occupy, by any chance, the centre of the stage of public interest. Before we take up, therefore, the report of Bristow, or the story of his polit- ical manoeuvres and aspirations, or attempt to discuss the reforms of General Madden, we must place ourselves in Lewis' position, and view with his own eyes, as nearly as we can, the origin and develop- ment of the Winner, the magazine that he eventually founded. EARLY ADVERTISING POLICIES. Lewis still preserves a handsomely bound morocco volume, em- bossed in gold, "The Winner, E. G. Lewis, Editor, Volume I, 1899." His pride in the first output of his editorial skill is perhaps par- donable. But, certainly, it is a far crj^ from the first issues of the Winner of 1899 to the Woman's Magazine of six years later, not to mention the gap which separates it from great monthly maga- zines for women at the present day. The Winner is a tj'pical mail order journal of the old school, now happily extinct forever. Lewis, being without capital or previous experience, naturally and necessarily fashioned it largely after the existing models. The editorial contents consist chiefly of fiction and miscellany, bearing the evident earmarks of the traditional pastepot and shears. The selection of material was not, however, without traces of the editorial insight into the tastes and interests of a rural feminine constituency, for which Lewis, as an editor, has since become so notably distinguished. Mechanically, the first issues of the Winner consisted of sixteen pages, well printed upon a superior quality of book paper, which bears little evidence of yellowing after the lapse of thirteen years. The illustrations on the whole are good and well printed. The advertisements are of the usual mail order variety. But even from the early issues they bear impress of the policj' by which the Winner, afterv/ards the Woman's Magazine, became, in a few brief years, the third largest and most profitable advertising medium in America. The adver- tising of the Winner was for the most part clean, in sharp distinc- tion to the columns of its immediate competitors. For these were 122 THE SIEGE OF UNIVERSITY CITY then and for many years after polluted with a class of advertise- ments such as would not now be tolerated. Lewis has always prided himself upon his advertising policy. The first issue of the Winner contained this first tentative groping toward the absolute guarantee which he was afterwards among the first to publish: Our advertising columns will be kept free from objectionable ad%'er- tisements. Any of our readers who think they have reason to complain of their treatment from answering advertisements should communicate with us. * * * * Our advertisers, if defrauded by anyone answering their ad- vertisements, will also please communicate with the Winner. Lewis further explains his intentions as to advertising as follows, in the second issue: We will not follow the usual methods, but have plans of our own. We believe an advertiser is entitled to know just what he buys. We, there- fore, tell hira exactly how many papers we mail each month to paid sub- scribers. If he wislies, we will send liim a postoffice receipt. We have only one rate, and while it increases each month \\'ith the circulation, yet it is a flat rate and is the same to all. AVe will not vary from it, since we are independent of our advertising and not dependent on it. Partly from the policj' thus announced at the outset, and partly, no doubt, from Lewis' wide personal acquaintance and strong friend- ships with the representatives of advertising agencies and his knowl- edge and personal experience in the mail order field, the Winner at once secured a liberal advertising patronage. Not all of the advertising carried in its early issues would now be regarded as unobjectionable. But still much of it was of high character. None fell below a standard of ordinary decency, which was rare among the mail order periodicals of that day. The Win- ner, in brief, as to its advertising policy, like all other publications, crept before it could walk erect. Yet, from the beginning, the aspirations of the publislier were indicated clearly. THE MAIL ORDER PROTECTIVE ASSOCIATION. The Mail Order Protective Association, criticised by the inspec- tors, was a device successfully employed by Lewis to promote his advertising patronage. It was explained as follows by him at the Ashbrook Hearings: Early in the publication of the Winner Magazine, it contained a great amount of what was called trust advertising, because many adver- tisements were headed "We Trust You." An enormous amount of such ad- vertising was then published, saying that the advertiser would send mer- chandise on trust, depending upon the honesty of those who ordered it. The consignee then sold the merchandise, remitted the money and received a premium, somewhat as tlie Larkin Soap business is now run. These con- cerns sold perfumes and a great variety of novelties. There soon grew up throughout the country a large body of systematic robbers. They would answer every one of tliese advertisements in oil the magazhies, and that was the last that would be heard of them. They simply kept the mer- chandise. Some of the advertisers asked me if I could not devise a plan for stopping them. I devised this plan. I suggested that all the mail order advertisers send me the names and addresses they had of all tlie dead-beats and robbers of that sort. I then made up an alphalictical list by states. By that we could THE DREYFUS CASE OF AMERICA 123 see if the same person was doing business systematically with all the dif- ferent concerns that were complaining. We thought that if we could pre- sent the facts to the gentleman, he would probably desist. The advertisers sent me thousands of names. I checked them up and found that this was a systematic business. There were probably two or three thousand men and women throughout the country engaged in it. We called ourselves the Mail Order Protective Association. The names of all the advertisers were printed plainly at the top of the letterhead. The process was this: When we got the analysis of a person's operation, wc would enclose it in a letter as follows: "We find that on such a date you ordered goods from such and such concerns." We then gave him a list of his transactions, with the total amount, say sixty dollars. As a general rule the sixty dollars came back. That was the end of that man's dealings. That broke it up. This was simply an adjunct of our advertising department. It was not a corporation. No one had stock in it, nor was anyone defrauded. It was run on the order of a merchants' credit system. We were not doing business for ourselves, but simply to protect our advertisers. Our arrange- ment with the advertiser was that in return for collecting these accounts they would spend at least one-half the money with us in additional adver- tising. After it had compassed its object it was dropped. The fourth issue of the Winner, that of September, 1899 (the August number having been omitted and the subscriptions extended in order to advance the date of mailing), contains the first appear- ance of the advertisement of the Swanson Rheumatic Cure Company, afterwards a steady patron. H. A. Swanson, the proprietor of this remedy, will appear hereafter as a staunch supporter of Lewis, an investor in certain of his enterprises, and an incorporator of the People's United States Bank. The January, 1900, issue was sig- nalized by the first of the series of half page advertisements of Cascarets. These ran continuously thereafter for many months, and contributed not a little to its prosperity. Kramer, as one of the leading patrons of the great advertising agency of Lord & Thomas of Chicago, was a personage of no small influence with that concern. Through him Lewis appears to have formed the personal friendship of A. L. Thomas, the president of that agency, and of his associates. The Winner was shortly in receipt of al! the advertising it could carry. Early in the second year of its existence the great mail order concern of Sears, Roebuck & Company tried out the Winner, with the result that a contract was closed beginning with the September, 1900, issue, whereby they carried for many months the equivalent of full page advertisements. From that time on the commercial success of the Mail Order Publishing Company was assured. These early contracts between Lewis and leading mail order ad- vertisers are of two-fold interest. They not only indicate the sources of the wide and intimate knowledge of the whole mail order field which Lewis afterwards displayed. They also introduce some of the men who became Lewis' financial backers, and whose wealth and influence assisted him in launching, one after another, his ambi- tious projects, and sustained them when attacked. Out of the bizarre and dubious advertising columns of the early issues of the 124 THE SIEGE OF UNIVERSITY CITY Winner thus shines clearlj', in the light of Lewis' subsequent achieve- ments, the rare capacity of gripping strong men to him in the bonds of those intimate and cordial friendships which last througli life, and sustain with fortitude all the shocks that cliance or fate can bring. Kramer appears to have been attracted to Lewis by the success of his endless chain system, which the latter generously placed at his disposal. The immediate effect of this combination was to bring about the personal relation between Lewis and Kramer, from which their strong and lasting friendship sprang. A joint premium arrangement was made. This afterwards, however, became the occasion of perhaps the earliest controversy between the PostofEce Department and Lewis. It was the subject of an adverse ruling, and had to be abandoned. The mail order industry was then growing fast. Lewis was in daily contact with its most active spirits. As he developed under this stimulus his ambitions grew apace. The natural bent of his mind revealed itself in the constant raising of his business stand- ards. His new-found friends watched the rapid development of the Winner with keen and sympathetic interest. The following is Lewis' statement to the Congressional Committee In this regard: Many of the best business men became intensely interested in the Win- ner. This was particularly the case with Major Kramer, who figures large- ly in tlie later enterprises. He lives at Kramer, Indiana. He built the town of Mudlavia, where you take mud baths at the Indiana mineral springs. T am now speaking of the year 1903 and forward into 1903 and 1904. Major Kramer was the owner of the Sterling Kemedy Company, pro- prietors of Cascarets, a wealthy man. His company was running some of the most abominable advertising that had appeared at that time in the press. At least, the illustrations were, from my point of view, of that character. During 1903, he came to St. Louis. Although I had carried his advertising since 1900, I had only seen liim once before. I was hard pressed at that time on the magazine. I was having difficulty in getting the neces- sary funds to meet its enormous growth. I could not put up the adver- tising rate fast enough to keep pace with the circulation. Some months would intervene before I could get the benefit of the higher rate. Major Kramer, at that time, threw down on my table about a dozen large quarter- page advertisements of the kind he was then rimning in the newspapers. They contained illustrations of a recumbent female figure in light attire. Kramer asked me what they would cost in the Woman's Magazine at the current rate, which was then four dollars a line. I figured up that they would amount to several thousand dollars. He wrote out his check for the proper sum, and handed it to me. I gave it back. I told him that I could not insert that advertising in the magazine at any price. That was something new for Major Kramer. I do not suppose any other publication in the country had refused his advertising, unless, per- haps, the Ladies' Home Journal He then became very much interested in what I was doing, and offered to pay all my bills of every sort, give me the assets and accounts receivable, and pay me twenty-five thousand dollars a year if I would leave St. Louis, and run his Cascarets business. I told him no. I had decided to be a publisher, and was going to stay. It was a little time after that meeting with Major Kramer" that I found my banking credit at the National Bank of Commerce seemed to be almost unlimited. When I went down to renew my paper and ask for an THE DREYFUS CASE OF AMERICA 125 increase, it was given so quickly that I could not quite place the reason. I did not find out the reason until some years afterwards, that Major Kramer had gone to that bank and guaranteed my line of discount. The effect had been to increase it to a very high amount. Several other men of means in the city and elsewhere also gave me a helping hand as I went along. After that, Major Kramer used to endorse my paper in blank. I would send him up ten, twenty, or thirty blank notes, and he would endorse them in blank. He never had one of them, come back to him. I do not recall that he ever received even one dollar's profit in money from my enterprises. He has fought this fight all through with me. I think he has spent without exaggeration, at least one hundred and fifty thousand dollars of his own money in these battles without taking any obligation from me of any sort. I will say that the friendship between us has become one of the fine things of life. He is perhaps the dearest friend I have. There never has been any money consideration between hira and myself. If I were to telegraph him today, I believe he would go down and pawn his watch, if he had noth- ing else, and send me the money. He would send it first, and then per- haps would come down and see what I was doing with it. Shortly after the incident of the refusal of Kramer's advertise- ments, above narrated, Lewis adopted the policy, in which he was the pioneer among mail order journals, of publishing an absolute guarantee of the patrons of his advertisers against loss. To main- tain this standard, he was compelled to exclude a large amount of proffered advertising from his columns. lie therefore published a circular, which is among the landmarks of his career, defining the various classes of objectionable advertisements which he refused to publish. The courageous attitude thus taken went far to account for the prosperity of the Winner, and laid the basis for the supre- macy of the Woman's Magazine. THE ENDLESS CHAIN. The characteristic impress of Lewis' personality during this period is, however, marked chiefly upon his circulation efforts. The sec- ond issue of the Winner, June, 1899, contained a three-page illus- trated ^vl•ite-up, entitled, "The Great Subscription Card System of the Winner.'" This feature not only contains the complete descrip- tion of the endless chain. It rings throughout with the true note of mutual confidence between publisher and reader, which can be sounded successfully only by one who has the instincts and aptitude of a great publisher. This friendly attitude became in after years the dominant note of Lewis' editorial columns. Let us see what the endless chain system, as practiced by Lewis in building up the circulation of the Winner, really was. The fol- lowing explanation, quoted from the second issue of the Winner, is placed in the mouth of Secretary Nichols, but the article bears internal evidence of having flowed from Lewis' facile pen. This is taken from a supposed interview with a visiting subscriber: Our plan is this: You had a card given to you by a friend. You sent that card to us with ten cents for three months' subscription to the Win- ner and received ten cards like the one you sent. These ten cards you gave to ten friends. They in their turn sent them to us with ten cents each, and received ten more cards themselves. When your cards have all reached 126 THE SIEGE OF UNIVERSITY CITY this office, with ten cents each for three months' subscription to the Win- ner, you may have as your reward your choice of the premiums in our catalogue, given for the return of ten subscription cards. But, sir, suppose that I cannot get all of my friends to get their cards out. Do I lose all I have done? No, indeed. You may have duplicate cards to give to others who will send them out; or, if you become dissatisfied at any time while you have your cards, you can get bacli the ten cents which you sent to us. You need only drop us a postal giving us your series card number, and tell us that you wish your money back. Besides this, you will remember that your ten friends each get three months' subscriptions to one of the most inter- esting magazines ever published. Few would suspect oiFliand that any intent to defraud lay at the root of this fair-seeming proposition. One invested a dime. For this he received a three months' trial subscription to a monthly magazine. Had the transaction closed with that, no question could have arisen. But one also invited ten friends to do the like, upon the expectation that for this slight service he might be rewarded, eventuall}"^, with a cash bonus of eight dollars, or choice of certain premiums of equal value, wholesale. Obviously, if every originator of an endless chain received a premium, the time must come when the publisher would be unable to cash up. No publisher could afford to pay, for every subscription, a cash bonus of eight dollars; or to purchase premiums of the average value of that sum. The possibility of the endless chain as a commercial venture lays in the element of lapses which is implied. Not only must the originator of the chain deliver ten subscription cards to as many other persons, but each of the ten must in turn deliver to others an equal number. Thus a total of one hundred and ten cards must be put in circula- tion. AH of these must be returned before the originator of the chain can, upon the strict terms of such an offer, be rewarded. The same principle, in effect, lies at the root of manj"^ enterprises. Upon this principle Henry Bowman gave the life insurance business in America its first great impetus, and reared the gigantic structure of the New York Life Insurance Company. The same principle obtains in various forms of fraternal insurance and benefit asso- ciations. The same principle lay at the root of the numerous bond investment companies that flourished contemporaneously with the Winner Magazine. The same principle has built up the Interna- tional Correspondence School of Scranton, Pa., and other great modern educational institutions of like character. All these enterprises have the following features in common: A proposition is made, which, upon its face, is obviously "too good to be true." The slightest reflection will, and does, show everyone that if the conditions should be complied with by every participant the funds must be speedily exhausted, and disapointment must ensue. The conditions, therefore, are manifestly such that everyone cannot, and will not, comply. Each person who attempts to do so expects to be the fortunate participant; and here, as elsewhere, the few succeed, the many fail. The founder of the Woman's Magazine, of the Peoples' United States Banic, of the American H'onian's League and the (Promoter of many corf^orations, at the age of two years. Tlie source of all the manifold acti-cilies herein set forth Edwara Garaucr Lewis (shown below at Ihc rigJii), his brothers John (hv his side) and Robert ( ni Ihc rear). The Lczvis family at this time, 1SS3, were residing on Diamond Square at AleadvUlc, Penvsyli-ania, where Lewis, at the age of twelve, pub- lished ike two first (a)id last) issues of his first periodieat, the "Diaino)id Xczvs" THE DREYFUS CASE OF AMERICA 129 There has been a remarkable quickening of the public conscience as to all enterprises involving these common features, and depend- ing for their prosperity upon this principle of lapses. Looking back, after the close analysis to which these projects have been sub- jected in recent years, the elements of chance, which, in the opinion of the legal authorities of the Postal Department, brought the end- less chain within the limits of the national lottery law, are clear enough. But fairness demands that we should not make our judg- ment retroactive. Experience in the actual operation of all these dilFerent schemes has been required to show precisely where to draw the line between the elements of chance and those of lawful enter- prise. When Lewis first adopted the endless chain as a circulation method in 1899, neither he, nor, be it particularly noticed, any one else, had sufficient experience with its actual conduct to know just how it would work out. There was then no basis for the conclusion that it would be harmful to the participants; or wrongful upon either moral or legal grounds. The whole plan was submitted frankly in advance to the postal authorities, and was approved by them. These facts exonerate Lewis from the slightest conscious- ness of doing wrong. The actual conduct of the endless chain by the Mail Order Pub- lishing Company was liberal. The originator of an unsuccessful chain had the privilege, as we have seen, of sending out additional cards under the same serial number, to any amount that he or she might wish. The effect of persistence in distributing additional cards would be in time to overcome the presumption of chance. So that, by industry, a subscriber could free the scheme wholly from the taint of lottery. Lewis found by actual experience that the chances upon the compound series amounted to a practical cer- tainty that the full one hundred per cent of cards in circulation on any given chain would never come to hand. He then adopted, in practice, the policy of awarding premiums upon the receipt of ap- proximately sixty per cent of any compound series. By this wise liberality he distributed large numbers of watches, bicycles and other premiums to the originators of the various chains. The effect was the redoubling of their energies in his behalf. The actual receipt of these premiums in various communities stimulated new subscrip- tions, and the inception of new chains. The whole network col- lectively produced for the Winner an enormous circulation, and, moreover, a class of subscribers which watched for the monthly issues, and scanned their columns with a degree of intimate inter- est altogether exceptional. THE MASTHEAD OP THE WINNER. The publishers' announcements to the public, printed in the column under the masthead of a publication, afford to persons famil- iar with the publishing business an almost infallible index to its business status and its general course of development. This column 130 THE SIEGE OF UNIVERSITY CITY tells to those who by experience are able to interpret it much the same story that a fever chart tells to a physician. Every paragraph is symptomatic of some condition of vital import to the business health of the publication as a piece of property. Every change indicates clearly a shift of policy for which there is an underlying business need. Lewis' first announcement in his second issue describes the Win- ner as a monthly magazine^ published by the Mail Order Publishing Company at the Ozarls; Building, Tenth and Pine streets, St. Louis, Mo. The terms are announced as fifty cents per year in advance, single copies five cents. E. G. Lewis is editor and business manager, H. E. Nichols secretary and treasurer, Mabel G. Lewis vice-presi- dent and associate editor. The problem of small remittances, which afterwards in large part gave rise in Lewis' mind to the conception of a postal bank, was evidently forced on his attention at the very outset of his publish- ing experience. Under the caption, "General Instruction," readers are told that remittances may be made by express money order, postoffice order, or draft on New York, payable to the order of the Mail Order Publishing Company, or bj'^ registered letter. Either of the above forms are said to insure absolute safety from loss by mail. But since all these forms involved an expense to the remitter in the form of fees, the publishers agree to accept postage stamps, preferably of one or two cent denominations, for the fractional portions of a dollar. No further change occurred until the December issue of 1899. This bears, for the first time, the legend, "Entered at the Postoffice at St. Louis as Second Class INIatter, October, 1899." The signifi- cance of this will appear in full hereafter. The reader need only bear in mind that the Winner was properly entered. The publish- ers' column of this issue says: The growth of the Winner has been so rapid that it is now one of the largest magazines in the world. This issue goes into the homes of nearly H half million paid subscribers. It uses two carloads of fine book paper. It takes thirty-two clerks five weeks simply to write the names and ad- dresses on the wrappers. Three of the largest presses run fifteen days and nights to print it. New presses are now in process of erection. The publishers' announcements under the masthead of the July, 1900, issue contain a number of additional paragraphs, indicating clearly that the necessity of securing the renewals of the subscribers first obtained by means of the endless chain was pressing. The following paragraphs are significant: THE GREY AVRAPPER: If your Winner comes to you in a grey wrapper, you will know that it is a notification to you that the time for which your paper has been paid has expired. Wc ask that you remit at earliest convenience for the coming year, if you desire to obtain the cash in advance rate of fifty cents. DISCONTINUANCES: Subscribers wishing the Winner stopped at the expiration of their subscription must notify us to that effect. Other- wise, we shall consider it their wish to have it continued. All arrears must THE DREYFUS CASE OF AMERICA 131 be paid. Sending paper back, notifying postmaster, or club agent, is not notice to us. We mal^e this very plain, so as to have no misunderstandings. The subscription price of the Winner is payable in advance ; this is never pressed, however, with our preferred list of true and honorable old sub- scribers. Responsible subscribers will continue to receive this journal until the publishers are notified by letter to discontinue, when all arrears must be paid. We lilte to regard all old subscribers as friends, and we do. Obviously, subscribers secured upon the endless chain plan are now being carried beyond the paid-in-advance subscription period, in expectation of renewal. This is a fact the interest of which will appear in full hereafter, in reference to postofEce investigations. It is well to bear it in mind from this point on. THE TEN-CENT-A-YEAR IDEA. The second anniversary of the founding of the Winner is sig- nalized as the pivotal issue as to its circulation policy. Upon this the door turned which opened the way to a new era of prosperity. Across the top of the cover page of the issue of May, 1901, occurs for the f^rst time this sentence: "We will send the Winner to any address for one year for ten cents." The policy of keeping up the original subscription rate of fifty cents a year had been maintained only at the cost of an enormous drain upon Lewis' personal energies, as well as upon the earnings of the publication. Practically the entire subscription revenue had been consumed in the cost of premiums, contests and various circu- lation efforts. The publishers had been, in effect, obliged to carry on a merchandise business in premiums, in addition to their legiti- mate work of publication. Their columns had been necessarily taken up by their own subscription efforts, to the exclusion of edi- torial articles and profitable advertisements. Lewis' ingenuity had exhausted itself. Yet the million circulation for which he aspired still seemicd utterly beyond his reach. His mind in brooding over this problem naturally harked back to the days of the endless chain, now forbidden by postal regula- tion. The enormous quantity of dimes received on that plan for three months' subscriptions to the Winner, and the ease with which those subscriptions were secured, came vividly back to his recollec- tion. The large proportion of renewals brought in by a temporary half-price reduction tried out the preceding subscription season, indicated, to Lewis' way of thinking, that this had been a move- ment in the right direction. The advertising revenue was alreadj' sufficient to maintain the publication at a profit, provided the cir- culation department could support itself. Lewis reasoned that he bad been accepting three months' trial subscriptions at ten cents, and afterwards carrying them for the balance of the year. All the while he had been making costly efforts to obtain renewals at fifty cents. It would be far more economical to accept ten cents, he con- cluded, outright for a full year, and depend for renewals upon the pulling power of this bargain in editorial values. After consider- 182 THE SIEGE OF UNIVERSITY CITY ing the matter from every angle, he at last summoned the courage of his convictionSj and cut the Gordian knot. The following is the first announcement of the policy which made the Woman's Magazine rich and famous and was followed by a gen- eral price reduction throughout the whole field of periodical pub- lications in America: Beginning with this number, the subscription price of the Winner has been reduced from fifty cents to ten cents a year. We believe that no such paper has ever before been published at this price. Nor is this all. We shall greatly enlarge and improve the Winner until it becomes the best monthly magazine in America. The subscriptions of all our readers who are paid-up in advance, will be extended. Thus, if you have paid fifty cents for a year's subscription, your paid subscription will be extended four more years. Instead of giving premiums, which are generally unsatisfactory both to the reader and publisher, we have put the subscription price of the Winner down to the lowest price at which we can publish it. We shall depend on the merits of the paper itself to hold subscribers. MILESTONES OF PROGRESS. Lewis' files of the Winner and the Woman's Magazine are broken by the absence of the remaining issues of 1901 and the entire year of 1902, during which the name of the Winner was changed to the Woman's Magazine. A single copy of the January, 1902, issue has been preserved. This shows an increase of size of the Winner to twenty-four pages, and much improvement in editorial contents and mechanical appearance. It contains a feature article on the rural free delivery, with illustrations supplied by the superintendent of that service. The clearing of Forest Park to provide a site for the World's Fair grounds is described and fully illustrated. The magazine also contains an illustrated "double spread," showing an attractive artist's sketch of the proposed entrance to the Exposition. The Winner, in short, takes on the general characteristics in great part afterwards familiar to readers of the Woman's Magazine. The editorial policy for the year 1902 is announced as follows: The Winner Magazine, the first magazine to be sold for one cent per copy, has met such wonderful response from the public, that we have set about producing for the year 1903 the best printed, best illustrated, best edited, and most interesting magazine that has ever been sold for less than one dollar per year. Eight more pages will be added. Beginning with the February number, we shall take our readers on a TRIP AROUND THE AVORLD. A magnificent series of photographs and articles to accompany them, have been secured from famous travelers. A series of magnificent full and double page views of the great World's Fair, St. Louis, 1903, illustrating the building of the fair from start to finish, will appear in each issue. These will be printed on finer and heavier paper. Many of the foremost men in religion, politics, science and travel will contribute to the Winner Magazine. Early among these will be an article written for us by Rt. Rev. Henry C. Potter, D. D., Bishop of New York, and the foremost Protestant Clergyman in America. Great stories of ad%'enture, love, and romance will appear each month. Altogether we have set as our mark the foremost home magazine in the world. Today we have in excess of half a million paid-in-advance sub- s I 3 a THE DREYFUS CASE OF AMERICA 135 scribers, and the Winner Magazine is the only magazine in the great Cen- tral West. We give no premiums. We send no sample copies, excepting to club raisers and on special request. Any person who cannot find ten cents' worth in twelve issues of this magazine, would better invest his dime in Government bonds, and live on the interest. The cleanest, brightest, best printed, and most interesting family magazine published is offered for ten cents a year. If you have any friends who have not already subscribed, you cannot do them, yourself, and us a greater favor than by securing their subscriptions at once. A significant change in the subscription policy of the Winner produced by the change in price is noted in the paragraph headed "Discontinuances," run under the masthead in the publishers' col- umn. Subscribers, wishing the Winner magazine stopped at the expiration of their subscription, need not notify us to that effect. We shall discontinue if they do not renew promptly when notified that the time paid for has expired. No subscriber will receive the Winner Magazine a single issue beyond the time paid for in advance. If you want this paper to continue coming to you, renew promptly when the circled X is stamped on the wrapper. An important advance in the standards of the Winner's advertis- ing policy is also indicated by the following absolute guarantee: ADVERTISEMENTS.— The publishers of the Winner Magazine use every reasonable effort to see that only the advertisements of reliable houses appear in its columns. While we cannot undertake to adjust mere differences between advertisers and their customers, yet we wiU make good the actual loss any subscriber sustains from being swindled by any adver- tiser in our columns, provided the complaint is made within sixty days of the date of issue in which the advertisement appeared. Rumors of the proposed reforms of the Department had already become current among publishers in the mail order field and em- ployees in the postal service^ but Lewis supposed that his recent changes in policy had improved the character of the Winner to a point which would exempt him from official interference. The re- duction in price had excluded all premium and similar subscription schemes known to be objectionable to the Department. The adver- tising guarantee had necessitated great care in the censoring of the advertisements published. The editorial features, and especially the campaign of publicity in behalf of the World's Fair, the feature articles descriptive of the various branches of the national adminis- tration of government, and the educational and other departments, were, for a low-priced publication, of exceptional literary merit. We must consider briefly the nature of the alleged abuses, the circumstances by which they were brought about, and the occasion and purport of the proposed reforms. A clear view of this topic is essential to a proper understanding of the events which followed. To obtain such a view the reader must keep in mind the chief char- acteristics of the typical mail order journals. The importance of the above detailed discussion of the little Winner Magazine of St. Louis, will be better understood as we proceed. CHAPTER V. THE REFORMS OF GENERAL MADDEN. The Act of 1879 — The First "Reform" — The "Abuses" op the Mail Order Journals — Madden's Views and Policies — ■ Findings of the Penrose-Overstreet Commission — The Lewis' Case, Typical. The Forty-fifth Congress opened in the midst of the world of printers' ink a veritable Pandora's box.* This came about by the passage of the Aett of March 3, 1879, creating what is known as the second-class rate of postage. For the provisions of this Act have let loose upon the publishing industry all the furies of interne- cine competition among themselves, and of controversy with the PostofHce Department. These have raged ceaselessly since the be- ginning of the so-called reforms of General Madden. Every pub- lisher in America has suffered from these evils, but the Siege of University City affords perhaps the most conspicuous illustration. True, there was one good thing at the bottom of the box which, like the spirit of Hope in the fable, has been some consolation in the midst of the injurious influences of this most vicious measure. This was the second-class or pound rate itself. But even the periodical ^Pandora's Box — A box which Pandora was fabled to have brought from heaven, containing all human ills. She opened it, and all escaped and spread over the earth. At a later period it was believed that the box contained all the blessings of the gods, which would have been preserved for the human race had not Pandora opened it, so that the blessings, with the exception of Hope, escaped. — Century Dictionary. tThe following are the provisions of this Act which bear upon the subject of this story: Section ?•: Mailable matter shall be divided into four classes. First, Written Mat- ter; second. Periodical Publications; third. Miscellaneous Printed Matter; fourth. Merchandise. Section 10: Mailable matter of the second class shall embrace all newspapers and other periodical publications which are issued at stated intervals and as frequently as tour times a year and are within the conditions named at Sections 12 and 14 of this act. Section 12: Matter of the second class may be examined at the office of mailing, and if found to contain matter which is subject to a higher rate of postage, such mat- ter shall be charged with postage at the rate to which the enclosed matter is subject, provided that nothing herein contained shall be so construed as to prohibit the inser- tion in periodicals of advertisements attached permanently to the same. Section 14:' The conditions upon which a publication shall be admitted to the sec- ond class are as follows: First. It must regularly be issued at stated intervals, as frequently as four times a year, and bear a date of issue, and be numbered consecutively. Second. It must be issued from a known office of publication. Third. It must be formed of printed paper sheets, without board, cloth, leather, or other substantial binding, such as distinguish printed books for preservation from periodical publications. Fourth. It must be originated and published for the dissemination of informa- tion of a public character, or devoted to literature, the sciences, arts, or some special industry, and having a legitimate list of subscribers; Provided, however, that nothing herein contained shall be so construed as to admit to the second-class rate regular pub- lications designed primarily for advertising purposes, or for free circulation, or for circulation at nominal rates. 136 THE DREYFUS CASE OF AMERICA 137 publishers who advocated the passage of this law have found it to savor of the little book of Revelation^ which was sweet upon the tongue, but bitter in the belly. True, it created in favor of the periodical publisher a discrepancy of 400% between the second-class rate of postage (one cent a pound) required of him, and the next higher, third-class rate (four cents a pound), required of his nearest rival. Yet it branded him with the offensive stigma of accepting a Government subsidy. Worse still, it bore the seeds of a postal censorship and espionage fraught with the gravest menace, not only to his property rights as publisher, but even to the freedom of the press itself. This law still remains vipon the statute book. Indeed, it lies at the very foundation of the publishing industry. So deeply are its provisions entwined with all the relations of publishers to one another, to the public, and especially to the PostofEce Department, that it can not be repealed until a new law can be drafted which will adequately protect every existing interest. The difficulties of drafting such a law are many, but the dangers of the present stat- ute are such that there should be ceaseless agitation, until the prob- lem is solved and the publishing industry is removed from the shadow of the deadly Upas-tree of official espionage and censorship. A brief outline of the history of postal legislation is not only needful to any clear view of the real issues of the Siege of University City. It is also required to enable the reader to exert his influence as a citizen in behalf of proper postal legislation. Let us try, then, to get at the outset a good grasp of these very vital matters. THE FIRST "reform." The necessary and immediate effect of the second-class law was that many publishers sought to secure its advantages by casting their output into the form of periodical publications. Followed an enormous development of periodical literature. The publisher of books (especially cheap fiction or classics and other standard works, either not copyrighted in America or the copyright on which had expired) took advantage of this law by issuing vast numbers of paper-bound volumes as periodicals under a common title and consecutive serial numbers. This practice con- tinued uninterruptedly over a period of twenty years, namely, until after Madden's appointment as third assistant postmaster-general on Julj' 1, 1899. An enormous bulk of such books, chiefly fiction, was by that time flooding, and in the opinion of the postal authori- ties, congesting the second-class mails. The publishers and authors of permanently bound books, and especially of copyrighted works of fiction, objected to this as unfair competition. Postmasters-gen- eral, in their annual reports, had for many years invited the atten- tion of Congress to this and other alleged abuses with a view to remedial legislation. Congress had uniformly refused to act. Finally, during the administration of McKinley, and under the in- structions of Postmaster-General Charles Emory Smith, Madden, 138 THE SIEGE OF UNIVERSITY CITY as third assistant, took up the subject. He reported that, in his opin- ion, this particular class of alleged abuses could be excluded from the second-class mails under existing law. The publishers were then cited to appear at Washington, and their second-class entry was suminarily withdrawn. The proud old Boston house of Houghton, Mifflin & Co., publish- ers of the Atlantic Monthly and of a long line of distinguished American authors, was at that time bringing out the Riverside Series, a popular fiction series of high character. The traditions of this concern were (and still are) perhaps the most elevated of any publisher in America. An implied stigma was thus attached to their fair name as having been engaged in an illegal enterprise. With this was coupled the destruction of a profitable, and, as they supposed, legitimate portion of their business. The offices of this concern are in the very shadow of Bunker Hill. They could not submit tamely to such an invasion of their rights. Their com- bativeness was roused. They determined to contest the issue in the courts. The decisions resulting from this litigation are among the landmarks of postal history. From them the whole course of ad- ministrative narrowing of the postal service, by a construction of the law of ] 879, in absolute contravention to its spirit and to the intention of its founders, has taken its departure. The case of Houghton, Mifflin & Co. in the matter of the River- side Series was carried to the United States Supreme Court. There it was lost. The right of the Postoffice Department to exclude such publications at their discretion was declared in effect to be unre- viewable by any court. There was, however, a dissenting opinion in this case, from which the following is quoted: It was admitted at the bar that for more than sixteen years prior to May 5, 1903, the PostoflBce Department had acted upon the identical con- struction of the statute for which the appellants contend. During that period many different postmasters-general asked Congress to amend the statute so as to exclude from the mails as second-class matter, such pub- lications as those issued by the appellant, and which under the present rul- ing of the Department, are declared not to belong to that class of mailable matter. Again and again Congress refused to amend the statute, although earnestly urged to do it by the Department. Representative Cannon, now Speaker, in a speech in opposition to the proposed change, explained the reasons that induced Congress to pass the Act of March 3, 1879, stating: "The question was discussed, unless my memory greatly misleads, and the legislation was advisedly had." The result is that, after Congress had uni- formly refused to comply with the requests of postmasters-general, the PostofBce Department ruled that the appellants' publications could not go through the mails as second-class matter. Thus, by mere order of the De- partment, that has been accomplished which different postmasters-general have held could not be aeeomplished otherwise than by a change in the language of the statute itself; which change, as we have said. Congress de- liberately refused to make, after hearing all parties concerned, and after extended debate in the House. The intent of Congress was to give the masses the benefit of the distribution of all forms of literature through the mails at » cheap rate, and thus to promote the widespread dissemination of 2008 THE DREYFUS CASE OF AMERICA 139 reading matter. The scheme of publishing complete books in the guise of separate issues of a periodical may, or may not, have been explicitly intended to be authorized by Congress. The phrase, "such as distinguish printed books for preservation from periodical pub- lications," in the third clause of Section l^i of the lavi^, would seem to suggest that printed books in paper covers not designed for pres- ervation might be issued as periodical publications. But the Post- ofBce Department held otherwise. Then the Supreme Court held that in the exercise of his discretion the postmaster-general is not subject to review. That this device operated in harmony with the spirit of the law cannot be doubted. The classics and other standard literature, as well as cheap books of a lower grade of literary merit, published in this manner, were eagerly welcomed by the masses of the people. Enormous editions were purchased and read by persons who could not have afforded to buy them at a higher price. A wider knowl- edge of good literature has perhaps been disseminated among the masses in America by this means than by any other plan devised before or since. These serial books having been selected for the first attack as the most conspicuous abuse, and having been successfully "re- formed" out of existence, the Departraent, flushed with triumph and reinforced by favorable court decisions, next turned its atten- tion to the cheap mail order journals. A general investigation was instituted as to the status of publications of tliis class. Rumor had it that a list of some sixty periodicals had been drawn up by the third assistant, the second-class entry of which would be withdrawn if the Department's policy was sustained in court. THE "abuses" of THE MAIL ORDER JOURNALS. The grounds on which the mail order journals were objected to were chiefly two. One was the distribution of too large a pro- portion of sample copies. The other was the practice of mailing the publication continuously to subscribers for many months and even years after the paid-in-advance subscription period had ex- pired. It is worth while to note these points, for these two prob- lems have been the issues around which the controversies of Lewis and of many another publisher with the Postoffice Department have chiefly raged. The reader should also be familiar with the act of Congress of March 3, 1885.* The phrase "including sample copies" in this act is without limi- tation. It was therefore construed by publishers as conveying the right to mail at the second-class rate as many sample copies as they pleased. The costly magazines could not afford to take full advan- *A11 publications of the second class, except as provided in Section 25 of said act (of March 3, 1879, ch. 180, 1 Supp., 249), when sent by the publisher thereof, and from the office of publication, including sample copies, or when sent from a news agency to actual subscribers thereto, or to other news agents, shall * * * be en- titled to transmission through the mails at one cent a pound or a fraction thereof, such postage to be prepaid as now provided by law. 140 THE SIEGE OF UNIVERSITY CITY tage of this privilege. Only the cheap mail order journals could profit by it to the fullest extent. They had already learned that very large editions could be gotten out at a merely nominal cost per copy. They knew also that sample-copy circulation was even more valuable to many mail order advertisers than a distribution to annual paid subscribers. Accordingly, they welcomed this act as the very charter of their liberties. A large class of mail order publications sprang up and flourished amazingly. The circulation was limited onlj^ by the number of copies the publisher could aiford to manufacture, or by the number of acceptable names and addresses that he could, bj- hook or crook, secure. The ambition of such publishers to build up a large mailing list resulted in the purchase of lists of names and addresses from many sources. Many of these, by reason of clerical error, death, removal, change of name by marriage, and other causes, were of the class known in postal parlance as "nixies" (doubtless from the German nichts; nix, not known); that is, persons concerning whom no in- formation can be obtained at the postoffice addressed. Many sam- ples were sent to a class of persons who did not approve the con- tents of the editorial columns or advertising pages of certain of these publications. Such persons were affronted, and indignantly refused to accept them. Mail carriers and other employees at the local offices reported to the Department, through the postmasters, that quantities of sample copies and expired subscriptions were thus being refused. Others were being torn from the wrappers and dropped upon the floor of the postoffice, or in the adjacent street. Quantities of such refused copies of mail order periodicals were regularly collected by many postmasters and burned. At the cities which became the chief centres of this industry many tons of separately addressed sample copies of mail order journals were being deposited in the mails. The postal employees not unnatur- ally complained through the postmaster to the Department of the enormous labor of handling and routing them. Railway mail clerks similarly complained of the labor caused by this enormous tonnage of periodicals marked sample copies. Many millions of both subscribers' and sample copies of these same journals were being accepted and welcomed by the recipient. They were, indeed, the only periodicals which found their way into the extreme rural districts, with the exception of local weeklies and the cheaper class of agricultural papers. Very few persons residing in large cities are aware of the dearth of reading matter that exists today in such localities. Men likelj^ to be called to the office of postmaster-general are of a class unfamiliar with these conditions and unresponsive to the needs of rural people. It is unlikely that any poshnaster-general of the United States ever read through a copy of one of these cheap little papers, or entertained the opinion that any one else (except perhaps a very uncultured person) would, could or should content himself with such a form of literature. The THE DREYFUS CASE OF AMERICA 141 good influence which was exerted upon the whole by these papers was, therefore, mostly overlooked or disregarded by the Depart- ment. The burden of complaint from the postal officiary was really caused by the non-delivery of a small fraction of their total output. Yet the culminative effect of many complaints over a series of years resulted in a postoffice tradition that there was little or no real popu- lar demand for the cheap mail order journals. No conclusion could be at greater variance from the facts. Yet this tradition seems to have been the animus of the agitation in the Department which in the end gave rise to the so-called reforms of General Madden. The custom of continuing to mail copies to subscribers, after the paid-in-advance subscription period had expired, was particularly objected to by postmasters. Many publishers printed notices that subscriptions would not be discontinued until the subscriber gave an order to that effect and paid up his back subscription. Not a few publishers would carry subscribers for years beyond the original paid-in-advance subscription period. They would then attempt, by threats of litigation purporting to come from an attorney or col- lection agency, to collect arrearages. An impression was adroitly conveyed that the act of accepting a periodical from the postoffice a single month after the paid-in-advance subscription period had expired, involved a legal obligation to pay for the subscription for another year. Many persons, therefore, became suspicious, and refused to take from the postoffice either sample copies or expira- tions. Indeed, those who did not like a periodical would sometimes lefuse to accept it before their subscriptions had expired. Another complication was caused by so-called gift subscriptions. One occasion of these was the cheap price at which the mail order journals were sold. Another was the publishers' offers to agents and club raisers of premiums and prizes for various contests. Many persons who happened to like a periodical would present subscrip- tions to their friends. Oftentimes they would fail to notify the recipient of the gift. Then the latter would refuse to accept it from fear lest the act of taking it from the postoffice might involve some obligation. Agents and club raisers anxious to win rewards in various subscription contests would not infrequently send to the publishers, as legitimate subscribers, names of their townspeople without asking consent. The recipient, not knowing why the paper was sent, would oftentimes refuse to take it out of the postoffice. In these various ways the number of undeliverable copies left on the postmaster's hands was constantly augmented. The Postal Laws and Regulations required the postmaster in such cases to notify the publisher. They provided that undelivered cop- ies should be held to be returned in case the publisher saw fit to forward postage for that purpose. The copies of the cheap mail order journals thus refused had. however, no value to the publisher. They were not worth the postage to bring them back. The post- masters' notices were, most of them, ignored. Some publishers 142 THE SIEGE OF UNIVERSITY CITY would even neglect to strike oft' tlie names of "nixies," or persons reported as deceased, removed, and the like, from his subscription list. His sole object was to maintain his circulation; this was at- tained by the mailing of the copies, whether deliverable or not; for the postoffice receipts that a certain number of copies had been deposited in the mails were commonly accepted as proof by adver- tisers without much inquiry as to the legitimacy of the circulation. Experience has since shown that many of these conditions could have been corrected by a very simple device, which became a law on May 12, 1910. The PostofEce Department now returns to the publisher undeliverable copies of his periodical, and requires him by means of postage due stamps affixed, to pay a sum equal to the cost of transmitting them at the third-class postal rate. The effect of thus penalizing the publisher is automatically to cause him to clean up his subscription lists, without offensive espionage or other departmental interference. Unfortunately, no such device appears to have suggested itself to the official mind at the period in ques- tion. So objectionable had the mail order journals become to the Postoffice Department, and so numerous were the complaints, that at the instance, and with the approval of Postmaster-General Smith, Third Assistant Madden determined to apply the drastic remedy of "reforming" v/hat he deemed the worst offenders among the mail order paper wholly out of existence. madden's views and policy. The device adopted was a further exercise of the unreviewable discretion of the postmaster-general. A construction was for the first time placed upon the law of 1879, far narrower than the evi- dent intent of Congress. Madden himself says: I was appointed third assistant postmaster-general on July 1, 1899, by President McKinley. I then had something over seven years' experience in a. local postoffice at Detroit, Michigan. Part of my duties as superintendent was to look after and report on the mailings of second-class matter, and to appiv the law and regulations locally. I had taken especial interest in the suliject and made a study of it. During this time the annual reports of the Department, and especially those of the postmasters-general, were dealing with so-called abuses in the second class. The Department was complaining that publishers were imposing upon the service, and mailing as matter of that class, many publications not deserving that classification and those rates. These annual reports enumerated and explained the abuses, and appealed for legislation to correct them. An annual report of the postmaster-general subsequent to my appointment as third assistant complained that probably fifty per cent of all the matter mailed as second- class was not Ia-\vfu!ly entitled to that rate. Immediately after m^y appoint- ment, I, therefore, took up the study of the subject from a departmental standpoint. I had a number of conferences with Postmaster-General Charles Emorjr Smith. y\ll attempts to secure legislation had failed. Many members of Congress liad privately said they considered the existing law ample to get rid of most of the abuses complained of. I agreed with that. After mature consideration and mapping out a plan of procedure, I pro- posed to the postmaster-general that an administrative reform of the abuses be undertaken. This was favored. President McKinley and his Cabinet approved. Thereupon I drew and the postmaster-general signed three THE DREYFUS CASE OF AMERICA 143 amendments to the Postal Laws and Regulations. They were known as the reform regulations. They amounted to a revised interpretation of the law of second-class mail matter. They were published for the benefit of the postal service and the publishing industry on July 17, 1901. It was pro- vided that they should not talie effect until the first of the following Octo- ber. This was to give publishers due notice of how the law would be ad- ministered after that date, and give those who could the opportunity to work out compliance. The purport of Madden's first regulations was to place a new construction upon the fourth clause of the Act of March 3, 1879, and chiefly upon the affirmative provision requiring "a legitimate list of subscribers" and upon the two negative provisions excluding periodicals "designed primarily' for advertising purposes or for free circulation or for circulation at nominal rates." The questions raised by the language of this statute have no- where been specifically answered by an Act of Congress. What is a legitimate list of subscribers ? Congress has not determined. What is the standard of judgment as to the primary design of a publication? What are the distinguishing marks of a publication "designed primarily for advertising purposes," or of a publication "designetl primarily for free circulation, or for circulation at nomi- nal rates"? What is a nominal rate? Are sample copies (specific- ally included in the publisher's right to mail at the second-class rate by the supplementary act of March 3, 1885) evidence that a publication is designed primarily for free circulation? If so, what proportion of sample copies will create such presumption? The an- swers to all these questions and many more are left by Congress wholly within the discretion of the postmaster-general. And the Supreme Court of the United States has definitely ruled that if the postmaster-general is acting without fraud in the exercise of a reasonable discretion, his decision will not be subject to review. The reforms of General Madden and his successors have con- sisted in building upon this manifestly inadequate basis of law a towering superstructure of administrative construction. Each postmaster-general, by his third assistant, has answered these ques- tions and many others in accordance with his own views, and there has been no man to say him nay. The process of this reform from the departmental standpoint is further explained by Jladden in the following language: Let it be understood that an administrative reform of this kind has two phases. First, there is the refusal to admit to the second class, publica- tions of the types or characters inhibited hj the new regulations. Second, all the publications of those types or characters already in the second class must be excluded. Manifestly, any other coui-se would be outrageous. The Department has no power to charge different rates upon matter of the same character. It would not do to have some portion going at the second-class rate of a cent a pound, and another portion at the third-class rate of eight cents a pound, if the difference in rate depended, not upon a difference in the character of the matter, but merely upon whether the act of classifi- cation occurred before or after the date when the new regulation took effect. The mail service must be open to all upon equal terms and condi- tions. Otherwise the Departr^ient would be conferring a monopoly upon 144 THE SIEGE OF UNIVERSITY CITY those fortunate enough to come into existence and get into the second class before the new regulation tooii effect. For the third-class rate would be prohibitive of competition. Just about the beginning of this administra- tive reform Congress passed the Act of March 3, 1901.* I was myself consulted by the chairman of the Postoffice Committee in the House con- cerning the language and purposes of this statute before it was enacted. Its language shows its purpose. It was to protect publishers from hasty or ill-considered action by a postmaster or by the Department, and to prevent the striking down of an enterprise without warning. Under the regulations the local postmaster determines in the first in- stance what is first-class, what is third-class, and what is fourth-class mat- ter, and charges the rate prescribed by law for those classes. It is differ- ent with second-class matter. The third assistant postmaster-general, at the Department at Washington, determines in the first instance what is second-class matter. The visual custom is this: The local postmaster receives an application for the entry of a publication in the second class. The application, accom- panied with a copy of the publication, is sent to the third assistant. In the meantime the applicant is required, if he desires to mail the publica- tion before a decision is rendered, to deposit in trust with the local post- master, as a protection to the revenue, an amount of money suiiicient to cover the third-class rate should the third assistant decide against the pub- lication. The publisher, under the regulations quoted, has the right to ap- peal from an adverse decision by the third assistant to the postmaster-gen- eral. No blanket order could be issued to postmasters to exclude from the second class, publications, which in their judgment, were prohibited by the new regulations. Each individual case must be tried and decided upon its own merits and by the third assistant postmaster-general. After some successes in my own work I was importuned by my superiors, by my subordinates, and by many publishers, to hit hard and fast, under the cover of the public approval gained, and beat down what they regarded as abuses. It is surprising how many pulilishers will regard the pul)lica- tion of a rival an abuse, how superior officers will regard the publication which has criticized them or their work an abuse, and how suliordinates will try to curry favor by appealing to the human weakness of the superior whose vanity or egotism has been enlarged by a success. It is not easy, under such circumstances, to preserve an even keel. I resisted the pushing and the persuasion to move headlong without compass or balance. I sought to keep squarely within the four corners of the statute and to have the morals as well as the law fairly on ray side. The Department had been lax in its administration of that law. That was no fault of the publishers. Many things had been classified as of the sec- ond class which had no legal right to that classification, but it was not by fraud. It was the Department's own wrong of positive sanction or sufferance. Publishers were bound to assume that the law had been properly adminis- tered, and on the faith of it had spent their capital and energies in estab- lishing their enterprises. Even if their publications were in that class by doubtful right, they were not to be regarded as criminals or wrongdoers. Now, after many years, with the law standing as it had stood from the first, with no change in the publications, but only a change of regulation, which might or might not, under judicial review, prove to be "consistent with law," those enterprises could not be ruthlessly struck down by sud- denly changing the classification and assessing a prohibitive rate upon their products. Congress appreciated the difficulty and delicacy of the reform work and •When any puUicntion lias been .icconlcd second-elass mail privileges, the same shall not be suspended or annulled until a hearing shall have been granted to the parties interested. THE DREYFUS CASE OF AMERICA 14,5 fortified me with a corps of my own inspectors (special agents) and my own special attorney. Now, the third assistant's office, which had adminis- tered this law for so many years, proposed to move forward within the lines of law. THE VIEWS OF PUBLISHERS. The following remarks of Mr. John J. Hamilton bear directl}' upon the .subject of this story. The case of the publishers against the reform policy of General Madden and his successors has no- where been more ably presented. Mr. Hamilton said : The attitude of the Government toward publishers has changed in the past few years. The spirit of suspicion has gone out from some source and permeated the whole postal officiary. The attitude of the clerks in the city postoffices all over the country, who are charged with the duty of look- ing after second-class matter, has become suspicious, and in some cases, even unfriendly; as if every publisher were potentially, at least, a violator of law, lacking only the opportunity. * * * There was neither cowardice nor inefficiency in the postal administration between 1879 and 1890; but a truer insight into the meaning and purpose of the law than has prevailed from 1890 to 1906. All the eloquent denunciations of second-class matter which Mr. Madden has quoted from postmasters-general, beginning with Mr. Wanamaker and running down almost to the present, have been based upon a profound misunderstanding of the original intent of the law. * * * Mr. Madden has demonstrated that the law in its present inter- pretation is unenforcible. He admits that if he should go ahead on the lines of this policy, in the construction he puts upon it, and make no dis- crin:iinations, he could throw out of the mails and destroy or heavily dam- age, from sixty to seventy per cent of all the newspapers and from seventy to eighty per cent of all the periodicals in the country. I agree with him absolutely. But I think this is because he has accepted the incorrect inter- pretation of the later postmasters-general, instead of the true interpreta- tion put upon the laws by tlie postmaster-general who was in office when the statute was enacted, and his immediate successors. They personally knew the real intent of Congress in making the laws what they were. * * * CRITICISM OF THE ACT OP 1879. Most of the annoyances to which publishers, postal officials, senators, representatives and others have been subjected in recent years, in the form of friction between the Postoffice Department and publishers, have arisen from recent interpretations of the following proviso in the statute: "Provided, however, tliat nothing herein contained shall be so construed as to admit to the second-class rate regular publications designed primarily for advertising purposes, or for free circulation or for circulation at nomi- nal rates." I was glad Mr. Madden attacked this proviso in so vigorous a fashion; for nothing could be truer than his statement about the consequences of a uniform enforcement of its provisions in the new sense in which he now construes it. It can be done only by stationing an officer at the door of every publisher, to execute the decrees of a censor. It would establish a censorship in the most dangerous sense of the term. I am glad Mr. Mad- den was big and patriotic enough to say that he does not wish such a cen- sorship; that there is no need for it; that it would involve widespread dam- age to a great interest. *Addre55 of Jolin J. Hamilton of the Iowa Ilomestead, speaking as a member of the Postal Committee "of the National Agricultural Press League, before the Penrose- Overstreet Congressional Postal Commission at New York, October 2, 1906, on the theme "A Plea for the Business Freedom of the American Press." 146 THE SIEGE OF UNIVERSITY CITY Congress desired to shut out what is known as "house organs" or spur- ious newspapers or magazines issued by wholesale and retail merchants, manufacturers, and others, as mediums of communication with their. cus- tomers and the public. The exception made of publications designed pri- marily for advertising purposes, or for free circulation, or for circulation at nominal rates, was not aimed at any genuine newspaper or periodical, Imt solely at the "house organs," for they always have one or more such characteristics. The house organ was legislated" out of existence or com- pelled to pay circular postage; books paid the postage rate prescribed by- law; newspapers and magazines were undisturbed in their free develop- ment. Such was the true intent of the law of 1879. FREEDOM OF THE PRESS. I agree with the Postal Committee of the American Newspaper Pub- lishers' Association in recommending that the words "nominal rates" be stricken from the law. The pi'ovision opens the door to a censorship of the press through interference with its business methods. I also endorse their statement that all publications were designed primarily for advertis- ing purposes which implies that that part of the troublesome proviso should also go. * * * And right here I wish to enter my emphatic protest against the state- ment that one cent postage is a subsidy to the press. At the head of the pinli blank which publishers are required to iiU out, sign and swear to as a condition precedent to securing entry in the second class, somebody has put the following misstatement: "A publisher's second-class mailing privi- leges are in the nature of a subsidy, because the cost of distribution is mainly borne by the public treasury." (Laughter.) I have signed and sworn to several statements under this heading, but always with the feel- ing that I deserved to be prosecuted for perjury for assenting to what I regard as a falsehood and an insult to the American press. I hope that this commission will recommend that Congress enact a law, if necessary, requiring the public printer to omit such statements from future editions of this document. (Applause.) THE VALUE OF THE CHEAP PERIODICALS. The educational influence of an abundance of good, cheap reading matter Vi'as never more needful than in these days of vast immigration of foreigners to our shores. The press is the eyes, ears, and tongue of the public. It is fundamental to all scientific and industrial progress. In the wars against tuberculosis, yeUow fever, and other contagions, and, indeed, in every effort to secure public co-operation, it is indispensable. In times of epidemic, the poor and ignorant are usually the first victims, and their homes the foci of infection. Such homes are invaded only by the very cheap publica- tion and the sample copy. The cheapest of these abound in current infor- mation about hygiene, sanitation, and the like. They let the light of mod- ern science into these dark places, dispel ignorance and prejudice, pave the way for quarantine, allay panic, and spread the gospel of cleanliness. What short-sighted folly to curtail and curb the very influence which turns your mobs into organized inteUigence ! The old style freedom to publish includes the liberty of publishing a very j)00r newspaper or magazine. If the editor lacked originality, he could use the scissors and paste-pot to the fullest extent. Advertisements were taken as a matter of course, as they had been part of the American newspaper from the beginning, just as selected miscellany had been. All that was re- quired was "a list of legitimate subscribers," very small, of course, if the publisher was not able to engage in the business on a large scale or employ a corps of efficient editors, writers, reporters and managers. * » * Legitimate publications are not asking the Government to protect them from unfair competition. They do not complain of the use of premiums or the circulation of free samples or advertising copies by other publishers. THE DREYFUS CASE OF AMERICA 147 They know that such evils are forms of competition, and correct them- selves. They know that success comes only from good management, based on merit. AH they ask is to be undisturbed as long as they obey the laws. They want their rights defined by law and not by administrative regulation. They want the protection of the courts. Let violators of the law suffer; but stop, once and forever, administrative interference with legitimate pri- vate business under the guise of collecting correct postage rates. (Applause.) CUSTOMS OF THE TRADE. There are certain ancient and well-established practices of the publish- ing business which it would be idle for the PostolBce Department to try to •wipe out, which it never will be able to do away with entirely, and which therefore it has no business to interfere with in a few cases. These are rooted in the habits of botli publishers and subscribers all over the country. They exist at ten thousand small postoffices, in every little hamlet in the land. They will always exist there, and will always be tolerated by the postal authorities in these local spheres. Some of these are the following: First. The practice of cutting rates to whatever extent is necessary to secure circulation. Second. The practice of offering premiums to both subscribers and club agents. Third. The practice of making low clubbing rates in combination with other publications. Fourth. The practice of giving away subscriptions to friends, relatives, and others, by the publishers and other persons. Fifth. The practice of selling subscriptions, in small or large numbers, to subscription agents and others, at reduced rates. Sixth. The practice of continuing to send papers to subscribers, after the time paid for has expired. These practices cannot be uprooted without revolutionizing the whole local newspaper business. When laws are proposed at Washington to pro- hibit them, it is common to quote the Postoffice Department as promising that they will not be enforced as against the small country paper. The argument is urged that they are intended for other and larger publications. It is thus tacitly admitted that it is not intended to enforce such laws uni- formly; in plain English, that it is proposed to make fish of one and fowl of another. I wish, however, here to commend what Mr. Madden says about treating all alike. That is the true principle. Partiality is the essential vice of all bureaucratic government. Never since our Postoffice Department began to interfere in such matters has it been able to treat all alike. Never will it be able to enforce such a policy uniformly. The only remedy is to stop the experiment. Let the publishing business regulate itself. Give publishers the liberty they used to have. Let them alone until they disobey the law. Then let the courts enforce the postal laws, as they enforce all others. FINDINGS OF THE PENROSE-OVERSTREET COMMISSION. This concludes our brief sketch of the so-called reform policy of the Postoffice Department of the alleged abuses of the .second class. Its value will be greatly enhanced, however, if we anticipate future developments by quoting here certain of the conclusions of the Pcn- rose-Overstreet Commission, the further acts of which will appear hereafter. Under the caption "Views of the Commission," in its official report to Congress, occur the following statements: The enormous (iisproportion between the periodical rate (second-class) and the printed matter rate (third-class) is undoubtedly the prime cause of the tremendous expansion of the periodical press in the United States. Although the United States press stands relatively low in the scale of book- 148 THE SIEGE OF UNIVERSITY CITY making, it produces approximately sixty per cent of all ttie periodicals pub- lished in tlie world. At the same time this disparity lies at the root of most of the evils and abuses that have infested the pei-iodical press. It was the immediate pro- genitor of the book abuse whereby complete novels, chargeable in their own proper character at the third-class rate, were transmuted into period- icals by the thin disguise of a serial name and number. It is the immediate cause of that worst ty])e of so-called "mail order paper," which is but a combination circular, plastered over with enough reading-matter to make it look something like a periodical. The policy, however, of giving printed matter in the periodical form this tremendous advantage over printed matter in other forms, is so deeply rooted in the American postal system that it will probably never be wholly eradicated. While it is probably true that the reasons which may originally have existed for the extraordinary advantages accorded periodicals have largely ceased to exist with the invention of wood pulp paper and the iypesetting machine, there is yet great foice in the argument that the ad- vantage of the low rate has been passed on to the subscriber, and that it is too late now to take it from him. * * * Another reason wliy no final and definite action can be grounded upon an approximate estimate of the cost of second-class mail matter, is because the gradual adjustment of the publishing business throughout the long pe- riod of time to a low second-class rate, renders it practically impossible to raise that rate to any degree worth the attempt. In order to continue in business at all, numbers of publishers must have the power to get their transportation done in some way at a cost not much above the present rate. In view of the nice adjustment of prices and methods to the one cent a pound rate, a radical horizontal increase (whereby the service could no longer be had in any form at the present price) would result simply in destroying all publisliers on the margin to the advantage of those above the margin. Commenting upon the standards of classification of the Act of 1879, the Commission makes the following assertions: In truth, the diiiiculty with the classification attempted by this statute is simply that it does not classify. * * * In the Act of March 3, 1879, the draftsman, instead of holding fast to the safe and xmiversal principle of classifying by simply enumerating the objects to be embraced, departed from it in a measure and proceeded to make an elaborate system of definitions. Instead of taking, moreover, as the elements of his definition, the char- acteristics of the physical things to be classified, he proceeded to construct it out of the purjjoses for which those tilings, namely, newspapers and periodicals, were supposed to be designed. A newspaper or periodical must be "originated and published for the dissemination of information of a public character, or devoted to literature, the arts, sciences, or some special industry." Now, the object of a definition is to define, to delimit. It shoidd serve as a means of separating the things contained under the term defined from all other things. But in what way can it be said that a requirement that certain printed matter should be "devoted to literature" serves to mark it off from anything else that can be put into print? There is practically no form of expression of the human mind that cannot be brought within the scope of "public information, literature, the sciences, art, or some special industry." It would have been just as effective and just as reasonable for the statute to have said, "devoted to the interests of humanity," or, "devoted to the development of civilization," or, "devoted to human intellectual activity." The prime defect in the statute is, then, that it defines not by qualities init by purposes, and the purpose described is so broad as to include every- thing and exclude nothing. THE DREYFUS CASE OF AMERICA 149 With the exception of a few instances where the publication has been excluded because tlie information was deemed not to be public, no periodi- cal has ever been classified by the application of such tests. Any attempt to apply them generally would simply end in a press censorship. * * * So with respect to the prohibition against publications designed primar- ily for advertising purposes, for free circulation, or for circulation at nom- inal rates, we have here again an attempt to define by ol^jects and pur- poses. What was in the mind of the author is clear enough. He wishes to prohibit the misuse of the privileges for commercial ends, as distin- guished from the devotion to literature, science and the rest. But the pro- vision expresses a purpose, not a rule. Dealt with from the standpoint of design, advertising becomes a word too wide for practical application. Either every periodical is designed for advertising purposes, or no periodical is so designed. This is neatly put in an article by Mr. James H. Collins, an advertising expert, in the issue of Printer's Iiik for July 35, 1906 (Vol. LVI., No. 4), thus: "There is still an illusion to the effect that a magazine is a periodical in which advertising is incidental. But we don't look at it in that way. A magazine is simply a device to induce people to read advertising. It is a large booklet with two departments — entertainment and business. The en- tertainment department finds stories, pictures, verses, etc., to interest the public. The business department makes the money." But let us assume that the term "primary design for advertising pur- poses" could be assigned a reasonably definite and precise meaning: still a more absurd way of preventing the commercializing of the press could hardly be imagined than to cast upon an executive department, the de- termination in each individual case, of the mixed question of fact and law involved in an inquiry into the primary design of the publication. How can an executive department, whose business it is to transport from day to day, week to week, and month to month, great masses of physical objects, conduct, as it goes along, a judicial inquiry into the primary de- sign behind their publication? Since primary design means principal or chief design, the inquiry is a continuing one, and accompanies every issue. A publication not designed for advertising this month may become so next month. Under the head of "Methods of Administration" occurs the fol- lowing paragraph: The Commission concurs in the view that it is highly essential that the administration of these classification statutes should be uniform and stable. Such vast amounts of capital are now invested in the publishing business that mere uncertainty as to the postal privilege of an established periodical publication may depress the value of the property to a ruinous extent. So long as a great disparity continues between the third-class rate for ordi- nary printed matter and the second-class rate for periodicals, the relega- tion of a publication from one class to the other amounts to practical anni- hilation. The present third assistant postmaster-general, whose energetic enforce- ment of the existing statutes deserves the highest commendation from an ad- ministrative point of view, was the first at the Commission's hearings to in- sist upon the great possibilities of injury inherent in the present system, and the fact that changes in the executive might either undo all that had been accomplished by way of reform or, on the contrary, by even more drastic exercise of the discretion lodged in the Postoffice Department inflict incalculable injury upon the publishing business. The Commission, therefore, recommends that the administration of the law as to second-class privileges be vested in a special tribunal with power to review the decisions of the postmaster-general. Such a commission was asked for by the publishers with practical unanimity, and was indeed orig- inally recommended by the third assistant postmaster-general. 150 THE SIEGE OF UNIVERSITY CITY The net result of the labors of this Commission^ as will be seen hereafter, was the formulation of a law designed to codify and amend all previous postal legislation in such fashion as to clarify the law and free it from all vagueness and ambiguity. The pro- posed measure, however, did not meet with the approval of Congress. The law of 1879, although confessedly inadequate and incapable of righteous administration, still lies at the basis of the periodical pub- lishing industry of America. That industry is still regulated by the traditional narrow construction policj' of the Department, sub- ject to such modifications as the personal views of new postmasters- general and third assistants may choose to enforce from time to time. THE LEWIS CASE, TYPICAL. The Siege of University City is of abiding interest as in itself a complete illustration of the dangers implicit in this vicious law. The sequel will show the actual realization of all the evils above described. We have seen how a typical mail order journal, the Winner, looked to Lewis from his standpoint as publisher. We have also seen how such a periodical was viewed by Madden as third assistant postmaster-general. We are now in a position to follow understandingly the series of events whereby Lewis slipped into the cogs of the departmental machine and by his vigorous pro- tests started the controversy between himself and the Government. 2 SS S a 5 ^ 2 a 2 .-^ 2 =>. •-1 rl '^ ~ i ^ CHAPTER VI. LEWIS SLIPS INTO THE COGS. Madden Probes the Winner — The First Citation — Lewis' Atti- tude TowARD.s Madden's Reform — Change of Name to "Woman's Magazine" — The Travers Shorthand Epi- sode — Was Lewis a Bribe-Giver? — Bristow's Report on Lewis — Baumhoff's Story — Enter Vickery and Fulton. The seven years' war that has raged during the siege of Univer- sity City may have had its origin, to borrow one of Lewis* happy figures of speech, like a prairie fire. Somebody carelessly drops 3 match. From this tiny point of flame springs a conflagration that swallows village and farm-stead and takes grim toll of life and property as it sweeps on its devastating course. Who then dropped the first careless match? When, where, and by whom was the first spark kindled that later fiUed the whole heavens of the postal world with lurid blaze? The debate on this crucial point of the combat still rages hotly. Inspector Stice, as chief witness for the Govern- ment at the Ashbrook Hearings, tells one story. Lewis and Nichols tell another. A third solution is suggested by an outside witness, F. W. BaumhofF, a former postmaster at St. Louis. We have now to lay each of these stories before the reader. The occasion of the first real controversy between Lewis and the PostofBce Department was the attempt of General Madden to apply his reform policy to the Winner. For Lewis sought to forestall the withdrawal of his second-class entry by conforming to the new requirements. To signalize this change of policy he altered the name of his publication from The Winner to the Woman's Maga- zine. This step gave the Department a technical advantage over him which afterwards opened a fatal breach in his defenses. The fight started somewhere in the midst of these events. Let us see what took place. madden probes the winner. The appointment of Madden as third assistant, it will be remem- bered, took place July 1, 1899, three months after the first issue of the Winner. The first so-called reform regulations were not issued until the following year, namely, under date of July 17, 1901. On that very day an inquiry into the status of the mail order journals was instituted. The postmaster at St. Louis received the following communication from the third assistant: Sir: You are directed to require the publishers of the Winner to make on inclosed form, No. 3501, the sworn statement contemplated by para- 163 154 THE SIEGE OF UNIVERSITY CITY graph 10, section 295, Postal Laws and Regulations, showing the status of the publication at the present time. This communication was transmitted by the postmaster under date of July 19, and was acknowledged by Lewis, as manager of the Winner, the following day. He submitted a sworn statement. The Mail Order Publishing Company was said to exist for the sole pur- pose of publishing the Winner as a monthly magazine. The Win- ner was said not to represent any trade, business or organization, but to be a family magazine exclusively. The editors were said to have no pecuniary interest in any enterprise represented in its col- umns. The number of copies printed was represented as between four hundred thousand and five hundred thousand of each issue. A legitimate list of three hundred and seventy-six thousand, two hun- dred yearlj^ paid-in-advance subscribers was claimed, together with about one hundred thousand short term subscriptions. The sub- scription price was stated as twenty-five cents per annum. The aver- age number of sample copies of each issue was said to be from twenty-five thousand to seventy-five thousand. Lewis in his letter of transmittal says : We do not offer premiums of any nature whatever, nor have we done so for the past five or six months. We rely entirely on the literary con- tents of our paper to secure and hold our subscriptions. The editorial contents of the Winner are compiled and written especially for the class of people who get it. The paper might not appeal to persons of a higher education; yet it is exactly suited to the people who pay for it, or they would not subscribe for it at any price. THE FIRST CITxVTION". A few months later, Lewis was rudely awakened to the fact that the future of his enterprise might be dependent upon the determi- nation of a will other than his own. The following letter as of April 2, 1902^ was sent from the office of the third assistant, ad- dressed to the postmaster at St. Louis : Sir: Promptiy on receipt of this communication you will inform the Mail Order Publishing Company, publishers of the Winner Magazine, that the Department will afford them an opportunity to show cause why this publication should not be denied the second-class rates of postage, on the grounds : (1) That the list of subscribers is not legitimate, as required by law. (2) That it is primarily designed for advertising purposes and within the prohibition oftlie statutes. (3) Tliat it is circulated at a nominal rate and within the prohibition of the statutes. (4) That its circulation is not founded on its merits as a news or literary journal. The hearing may take place at .vour office or at the Department, pref- erably the former. Arguments, statements, or evidence submitted by the publisher must be in writing, and must reach the Department not later than April Iti, 1902. It is not necessary for a publisher to appear at the Department, but if he desires to do so he should arrange for a date when it will be convenient to hear him. No action appears to have been taken by the Department prior to this citation. The investigation of the Winner by Postoffice In- THE DREYFUS CASE OF AMERICA 155 specters Harrison and Holden referred to by Howard Nichols had, however, been made during this intervah This citation appears to have been caused by their report. Lewis, meantime, as will appear in full hereafter, had incorpo- rated an enterprise known as the Controller Company of America for the manufacture and sale of a pay station device as an attach- ment to private telephones. This concern had entered into a eon- tract with the Maryland Telephone Company of Baltimore. Har- rison J. Barrett, formerly, as will be remembered, an assistant attorney in the Postoffice Department, had severed his connection with the service and become a member of a private law firm at that city. Lewis had retained Barrett as counsel for the Controller Company of America. On receipt of the citation of April 2, 1902, his thoughts turned to Barrett on account of the latter's previous experience and ac- quaintance in the postal service. He immediately wrote Barrett a letter reqiiesting his advice, and transmitting a draft of the re- sponse which he proposed to submit to the third assistant. This letter and response, which was returned by Barrett with his approval, afford conclusive evidence of Lewis' mental attitude at that time with regard to his future policy as a publisher. lewis' atpitude towards reform. During the interval between the citation of April 2, 1902, and the month of August of that year Lewis took up with other mail order publishers the subject of the reform policy of General Mad- den. He sought their opinions and advice with a view to deter- mining what his own attitude and policy as a publisher ought to be. Many of his competitors elected to fight the third assistant. They met his citations with injunction proceedings brought in the courts of the District of Columbia, which have jurisdiction in such cases over the administrative officers of Government. The effect was, as we shall see, to bring the reform policy to a halt. The then existing posture of affairs is thus described by Madden: While this reform was under way we dealt with the publications class by class. Our object was to put all people on a level. Finally, we got to the mail order publications. This practically included ah. the magazines. About that time there were some hearing.s given. Among others heard were five publications of Governor Hill at Augusta, Maine, a large publi- cation centre, and five of the Gannett publications. After the hearings the publishers went into the district court and secured injunctions restrain- ing the postmaster-general and third assistant from taking any action until the matter should be heard. There were in all at one time nineteen publi- cations thus protected. Lewis was advised and solicited by his brother publishers to join with them in these proceedings. On the advice of Barrett, and after mature consideration, he resolved not to .antagonize the author- ities at Washington, but rather to conform to the evident wishes of the Department. A study of his correspondence of that period discloses two principal reasons for this course of action. Lewis, 156 THE SIEGE OF UNIVERSITY CITY in the first place, expressed himself at that time in his correspond- ence with Barrett and in his personal letters to the third assistant as wholly in sympathy with the policy of reform. For, as publisher of the Winner, Lewis was himself a reformer. He made the fol- lowing statement to the Ashbrook Committee: I believe myself that the Woman's Magazine did more to reform abuses in the mail order field than all the laws ever passed. We brought our competitors up against a new kind of competition. In the advertising field, the fact that we guaranteed our advertising and would stand good for any loss to the subscriber, raised the whole character of the mail order journals. We drove out the illegitimate paper which carried any kind of mail order advertising that could be gotten through the mails. I remember when I first published an absolute guar- antee, a leading mail order publisher came all the way from New York to see me and "protest against our advertising policy. He said, in effect, that it would ruin the mail order publishing business. I received a great many similar protests from other publishers and mail order advertisers, by letter. We stuck to that policy, however, and the eilect was to compel our competitors to clean up their advertising columns. In the circulation field, we introduced the competition of the paid-in- advance subscriber, who paid for the paper because he wanted It. The effect was to drive out the illegitimate papers, which did not make any pretense of having paid subscribers, but got the names in any way they could, and then kept them on their lists forever. The results to our advertisers proved that unpaid circulation was relatively unprofitable. Previous to that time, the average mail order paper did not figure on re- newable subscriptions. If they could once get a person to subscribe, they regarded that name as a permanent fixture on their lists. The effect on the subscriber in the rural districts, where the mail order papers chiefly circulated, was to cause the belief that the subscriber would not have to renew, but that he would get the paper without further pajTnent until he died. It became practically impossible to renew subscriptions by simply sending out a notice. All this increased the cost of securing renewals and correspondingly reduced the revenue of legitimate publications. We came into the mail order field at this time with a periodical which was much better in every way. We used better paper stock, ran our presses more slowly, and aimed at a higher level of mechanical excellence. We guaranteed our subscribers against loss through advertisements. Sub- scription revenue, therefore, became important. We sought the paid sub- scriber who would renew in cash. We spent very large sums of money to secure that class of subscribers, and were, I believe, the only publication in existence at that time, in our comjietitive field, which was making any attempt to expire and renew its subscriptions in a legitimate manner. We went to means that, so far as our competitors were concerned, were unusual and extraordinary, to cut off our subscribers at the end of the paid-in- advance subscription period, and to secure renewals. General Madden was the first third assistant to attempt to reform these so-called abuses; that is, to establish and codify rulings to govern those matters. They had never been ruled upon before. This brought about a very bitter controversy between the mail order publishers and the third assistant. We were urged by other publishers to join in their injunction proceedings, but we did not join. We stood out by ourselves. We announced to the third as.sistant and to the publishers, and it was well known at the time, that we were in sympathy with the reforms that were being undertaken. Lewis, in the second place, believed that the Department being, as he thought, in the right, was bound to win in the long run, and '^Drawing room, Lewis' rcsidoice in University Cily -Eniraucc luiU aud Irrin^ room Observe that a glimpse of the drawing room is seen adjacent to the living room iipon the right Siinf sliof's liikcn by Lczvis of the zvliolcsouic out-door life which has been for nuiuv years his only reereal ion and in zvhicli I\]rs. Lezvis has ahvays shared. Tlie Lezvis' I'laz'C no children, but titcir tzvo nieces and the little folic of their neighbors at Unii'Crsity City come in for a full share of these innocent enjoyments. The Leun's szainnning pool is ah>wsl a public institution THE DREYFUS CASE OF AMERICA 159 that sooner or later the new rulings would become effective. He, therefore, saw the necessity of at once shaping his business policy in such a way as to be ready to comply when that time should come. So he resolved on a general housecleaning, and determined to sig- nalize the renovation of the Winner by adopting a new name more in keeping with the ideals of the improved publication which he had in view. CHANGE OP NAME TO WOMAn's MAGAZINE. We must now trace the steps taken to comply with the Postal Laws and Regulations. While somewhat technical, these details serve to illustrate the usual customs of the Department. They also have a vital bearing upon what follows. About the first of August, 1902, Lewis appears to have asked the postmaster at St. Louis to advise him of the decision of the Depart- ment on his response to the citation of April 2. The postmaster, on transmitting this request to Washington, was advised, under date of August 4, by H. M. Bacon, acting for the third assistant, as follows: Sir: Referring to previous correspondence and tlie notice to show cause in the case of the Winner Magazine, published by E. G. Lewis, I have to inform you that, owing to the delay in securing a decision on cases now before the' Supreme Court of the District of Columbia, which involve like questions, the Department has determined to take no further action on this case until the court has rendered its decision. This is looked for early in the Fall term. You are directed to notify the publisher of this decision. Lewis next consulted Barrett as to the steps necessary to be taken in connection with the change of name. He was told that such a change was held by the Department to be equivalent to the end of an old periodical and the beginning of a new one. A formal appli- cation for the entry of the Woman's Magazine to the second class would, therefore, be required. The only exception made by the Department in case of the re- entry of an old publication under a new name, as against an entirely new periodical, was a waiver of the deposit of postage at the third- class rate pending the final decision. Lewis instructed Barrett to advise the Department of the proposed change, and request the courtesy of the customary waiver. Barrett therefore dispatched a letter to this effect from his law ofEce at Baltimore to the third jissistant, under date of August 14, 1902, when the latter was on a vacation at Atlantic City. He also addressed a similar letter to W. H. Landvoight of the Classification Bureau of the PostofEce Department. From this the following paragraph is taken: I wrote General Madden in regard to issue of a temporary permit, without deposit, in connection with application for re-entry of the Winner, St. Louis, Mo., by reason of change of name to the Woman's Magazine. As 1 advised you, he told me that a temporary permit would be authorized without deposit, and the application held for the present. If you hear from him, and authority is given to the postmaster at St. Louis, will you please advise me? If you do not hear from him within the next few days, will you let me know, so that I can endeavor to unclog the wheels of government ? 160 THE SIEGE OF UNIVERSITY CITY The following pencil memorandum, under date of August 20, 1902, was written by Landvoight, and attached to this correspond- ence in the files of the Department: Mr. Fettis: Under no circumstances must any action be taken in the case of the Woman's Magazine until General Madden returns. He wants to handle the case personally. Called it up September 8. Pass this word all along the line to make certain that no one errs. Another longhand memorandum of the same date, signed by C. G. Thompson, is also attached to the same file: Authorize postmaster to receive the Woman's Magazine (formerly Winner) at the regular second-class rates, without a deposit, pending deci- sion of entry. Tlie above was dictated by General Madden at Atlantic City, N. J., August 18, 1903. As to the above memorandum. General Madden makes the fol- lowing explanation: Mr. Thompson was at that time a clerk in my immediate office. I was spending my vacation in Atlantic City, and, as I recall it, he came over with a package of papers on which it was necessary to have my decision, in various cases; and when he reached this case, he probably made that memorandum as my conclusion. That is all there is to that. H. M. Bacon, under date of August 25, acting as third assistant during the absence of General Madden, thereupon instructed the postmaster at St. Louis as follows: Sir: The Department has been informed that the name of The Winner will be changed to "The Woman's Magazine", and an application will be made through your office for its admission as .second-class matter. A request has been made that the deposit provided in section 441, Postal Laws and Regulations, be waived in this case. Inasmuch as the Winner is entered as second-class matter, if you are satisfied that it would be perfectly proper to do so, you may waive the money deposit required by section 441 of the Postal Laws and Regulations to secure payment of the third-class rate of postage. » » ♦ The day following Bacon instructed the postmaster at St. Louis, "in view of the fact that the Winner is no longer in existence, and is superseded by the Woman's Magazine," to request the publisher to deliver to him "the certificate of the Winner as second-class mat- ter, so that it may be forwarded to the Department for filing with the case of the Winner." F. W. BaumhofF, then postmaster at St. Louis, by his assistant, replied, under date of October 3, in substance as follows: I beg to state that several personal calls were made at the office of the publisher and we are in receipt of a communication from him, under date of the 1st inst., regretting his inability to locate the original certificate. As the office of publication was moved to its present location about two years ago, it is probable that the certificate was misplaced. Mr. Lewis, the publisher, further stated that in the event of the certificate being found later, he will gladly deliver it to me. General Madden, having by this time returned to his post, re- sponded to this communication, under date of October 9, as fol- lows : In view of the statement in your letter of the 3d instant, that the pub- THE DEEYFUS CASE OF AMERICA 161 Usher of the Winner is unable to find the certificate of entry of that publi- cation as second-class matter, the Department will not press its request for the surrender of that certifi.cate. Inspector Slice, when asked by the Ashbrook Committee why the above file of correspondence was read into the record as evidence for the Government, made the following reply: The entire file is put in to show the conditions that existed In the office of the third assistant postmaster-general at that time. There was an application pending from the Winner Magazine at the beginning. The third assistant postmaster-general had taken the position that he would not take any action at that time until these injunction cases were disposed of. While the citation was pending, the name was changed, and the same posi- tion was maintained by the third assistant postmaster-general. This brings us up to the time when the cases were actually taken up for the investi- gation by reason of the non-action of the third assistant postmaster-gen- eral's office, or as one of the reasons. The nonaction of the third assistant is further explained by the following letter (also introduced by Stice), under date of October 24, 1902, to the postmaster at Chicago: Sir: The Department is in receipt of your communication of the 9th instant, in which you ask whether the subscription price charged for the Woman's Magazine, of St. Louis, Mo., is not "nominal under the Postal Laws and Regulations." In answer, you are informed that there are now befoi-e the Supreme Court of the District of Columbia a number of cases in which practically the whole of the second-class law is involved. The Department has, therefore, determined to take no action on such cases as those of the W^oman's Magazine * * * until a decision has been reached by the courts. The significance of all this will be found in due course in a, let- ter over the signature of George B. Cortelyou, Postmaster-General, under date of March 4, 1907, five years later, purporting to be a denial of this application. During all these years, the Woman's Magazine, upon the hair-splitting technical theory of the Depart- ment, was not actually admitted to the second class. It was merely accepted by the Government on tolerance, by virtue of a temporary permit and waiver of deposit of the third-class postage. This fine- spun theory was sustained in court. But Lewis, meanwhile, had been officially notified by the postmaster at St. Louis to print at the mast- head of the Winner the following legend: "Entered at Postoffice, St. Louis, as second-class matter, December, 1899." F. W. Baum- hoff was then postmaster. He afterwards testified before the Ash- brook Committee in substance as follows: The date of December, 1699, in that memorandum of entry was undoubt- edly the date of the first entry of the Winner. The permanency of the entry as second-class matter of the Woman's Magazine was taken for granted. The incident was understood to be closed to the satisfaction of the Department. The only drawback was that the Lewis Publishing Company could not find the temporary permit for the Winner to offer in exchange for a new one. This also occurred in a number of previous cases during my administration, and had been passed upon in a similar way. The per- mit given to the publisher is not considered of much value. The records at Washington would show that a great many publications are in the same predicament. I remember distinctly that about a year later, after writing 162 THE SIEGE OF UNIVERSITY CITY several times on the matter, I received instructions to notify the publisher to continue. The notice read something like this: "By direction of the Postoffice Department you are instructed to continue mailing." I, there- tore, notified the publisher to that effect. LewiS;, on receipt of formal notification from the postmaster to print a oiemorandum of second-class entry at the masthead of the Woman's Magazine, naturally concluded that his application was accepted. Nor did he get any inkling to the contrary until the first attack was made upon the Woman's Magazine in 1905 under cir- cumstances which the sequel will show. THE TRAVERS SHORTHAND EPISODE. A few days after the application for entry of the Woman's Maga- zine was received at the Department, W. H. Landvoight, the super- intendei'it of the Classification Division, forwarded a copy of the first issue to General Madden, then on vacation, as will be remem- bered, at the Hotel Ravenwood, Atlantic City, with this memoran- dum of transmittal: My dear General; The application for the entry of the Woman's Maga- zine (formerly the Winner) as second-class matter has been received, and with it the inclosed copy of the new publication. This I send you for the purpose of inviting your special attention to the department of shorthand, on page 7. Please return the magazine in the inclosed envelope after it has served the purpose of its reference to you. This was the first of a new series of lessons on shorthand to appear as a department of the Woman's Magazine, under circum- stances which will be explained in the following communication: E. G. Lewis, The AVinner Magazine, St. Louis, Mo. Dear Mr. Lewis: I was in Washington week before last, and had a personal talk with the private secretary of Third Assistant Postmaster- General Madden. The name of Mr. Madden's secretary is Arthur M. Travers. I have known bim for many years, and known him intimately. We were both j'oung men in Detroit together. When I called on him several weeks ago I asked him to do all that he could for you if any con- troversy came up in the Department regarding your paper. He stated that he had called on you in St. Louis, and that he liked you very much. When Mr. Travers and I were in Detroit together be was a very expert stenograplier, and gave lessons to a number of young men in that com- munity. 1 asked him when I was in Washintgon, week before last, if it would not be possible for him to conduct such a department in your magazine, say a page a month. He answered that he felt he could do this very satisfactorily, and to the material profit of any publisher who would use his articles on how to become a shorthand writer. I believe that such a department would be profitable to your magazine and would increase its merit as a publication for the dissemination of knowledge. I told Mr. Travers that I intended to take up the matter with you, and if it was of any interest to you that you would write him and get his terms for conducting sucli a department in your paper. Personally, I am interested in the matter, both from the standpoint of yourself and Mr. Travers. You are botli my friends, and I believe you could both help each other. AVith kind regards, I am, Sincerely yours, ■p. W. KELLOGG, General Manager The Kansas City World, THE DREYFUS CASE OF AMERICA 163 In pursuance of this project, a deal was made whereby Travers furnished a series of six articles, running from the August, 1902, to Januar}^ 1903, issues of the Woman's Magazine. For this he received a total sum of two hundred and seventy dollars. This cor- respondence was introduced into the record of the Ashbrook Hear- ings by Inspector Stice to show that Lewis strove to interest in his behalf employees of the PostofEce Department in bureaus where he either had matters pending or expected to have. The employ- ment of Travers was construed as an act of bribery. Attempts were made to show that Lewis profited by Travers' influence. Lewis testifies that the recommendation of Travers by Kellogg came to him out of the blue; that the articles submitted by Travers were superior to those which he had previously been running; that the price paid was no more than the ai-ticles were worth ; that Trav- ers was also contributing articles to other periodicals; and that he was conscious of no necessity for bribing Travers, for he had no reason to suppose that any unfavorable action against him was con- templated. The reader must, upon the facts here stated, and others which are to follow, form his own conclusions on this topic. WAS LEWIS A BRIBE-GIVER? The theory of the Government, according to the testimony of In- spector Stice, is, in substance, that Lewis endeavored by means of a systematic campaign of bribery to maintain representatives in his pay or interest, in all of the various branches of the postal service that might bear directly and vitally upon the conduct of his publica- tions. To support his contention, Stice submits this summary: Records of the Postoffiee Department show these facts: On September 23, 1899, Inspector E. L. McKee submitted a report on an investigation of the Winner Magazine, published by the Mail Order Publishing Company, of which E. G. Lewis was president, and found no violation of the postal regulations. On -^pril 14, 1900, Inspector McKee submitted a report on a second investigation of the Winner Magazine. He found no violation of law, unless an arrangement as to certain subscriptions received through the Sterling Remedy Company were held to be objectionable by the Postoffiee Depart- ment. On October 24, 1900, Inspector J. D. Sullivan submitted a report on an- investigation of the Winner Magazine. He found no evidence of any vio- lation of the postal laws. On December 10, 1901, Inspectors Harrison and Holden submitted a report on an investigation of the AVinner Magazine. They recommended that the second-class privilege be withdrawn, for the reason that the statute was not complied with. On May 12, 1902, Inspectors Price and John D. Sullivan submitted a report on an investigation of the Woman's Farm Journal. They found no violation of law. George A. Dice, who was inspector in charge of the St. Louis division, became a stoclcholder in the Lewis Publishing Company on its incorpora- tion in 1903. He held this interest up to the time of his death, in Novem- ber, 1904, and his son was employed by E. G. Lewis at the time this inves- tigation began, in February, 1905. 164. THE SIEGE OF UNIVERSITY CITY A. M. Travers, while chief clerk in the office of the third assistant post- master-general, was employed in the FaU of 1902, by the Mail Order Pub- lishing Company, E. G. Lewis, president, at a salary of fifty dollars per month as a contributor to the Woman's Magazine. Harrison J. Barrett, as an assistant attorney in the office of the assistant attorney-general for the Postoffice Department, accepted a gold watch from Lewis and Nichols, while an officer of the Postoffice Department. Upon severing his connection with the Department he became an attorney for Mr. Lewis, continuing until about November, 1904. Inspector McKee became a stockholder in one of Lewis' companies, the U. S. Fibre Stopper Company at a later date, about 1903. He obtained his stock at ten cents on the dollar, the price to the public being par. Inspector John D. Sullivan was a bondholder in the Development and Investment Company. Stice further remarks that the application for entry of the Woman's Magazine had been pending in the third assistant's Bureau since August 21. 1902, without unfavorable action. He says that the conduct of both Travers and Barrett was under investigation on charges of an attempt to obtain money in that connection by false pretenses. He recites these facts as substantial reason why the postmaster-general took this case out of the office of the third assistant and assigned it for investigation to the division of post- office inspectors. Stice clsewliere alleges that Lewis had been iu trouble with the Postoffice Department substantially all the time since 1899, and plainly suggests the inference that neither the Winner nor the Woman's Magazine were at any time in full com- pliance with the law, but would have been excluded by the Depart- ment except for Lewis' success as an adroit corruptionist. The in- ception of the antagonism of the Department to Lewis and his enterprises is thus plausibly accounted for upon the ground that he has been from the very outset of his career as publisher a vio- lator of the law. His alleged system of bribery is, upon this theory, held to be an admission of guilty knowledge of irregularities to be covered up. The Department, in proceeding against Lewis, is held to have done no more than to strip from him the mask of his pre- tenses, and to bring down upon him the consequences of his own misdeeds. BRISTOw's REPORT ON LEWIS. The officers of the Government thus involved with Lewis in a common accusation are Harrison J. Barrett, an assistant in the office of James N. Tyner, assistant attorney-general for the Postoffice Department; Arthur M. Travers, chief clerk in the office of Third Assistant Postmaster-General Madden, and afterwards for a time acting third assistant postmaster-general ; George A. Dice, postoffice inspector in charge at St. Louis, and Inspectors E. L. McKee and John D. Sullivan. Tlie bribe-giver and the bribe-taker (in the fa- miliar phrase of Theodore Roosevelt) are equally guilty. Hence these charges against Lewis can be sustained only at the expense of a presumption that the employees of the postal service are quite generall}' corruptible. The Government, however, does not hesitate THE DREYFUS CASE OF AMERICA 165 to accept this horn of the dilemma. It rejoins in substance, that the Postoffice Department during some part of the administration of McKinley and the first administration of President Roosevelt was, in fact, literally reeking with corruption; and that conspicuous among the high officials caught red-handed were Harrison J. Barrett and W. H. Landvoight, whose names are identified with the Lewis case. In further support of its contention, the Government points to the con- ditions disclosed in the famous report of October 24), 1903, of Fourth Assistant Postmaster-General Bristow. To further clinch the case of the Government, the famous citation from Bristow's report, touch- ing the episode of the gift of a gold watch b)' Lewis to Barrett, in behalf of the Progressive Watch Company, may now be given : EXTRACT FROM THE BEPOUT OP HOX. J. L. BRISTOW, FOUKTH ASSISTANT POST- MASTER-GENERAL, ON THE INVESTIGATION OF CERTAIN DIVISIONS OF THE POSTOFFICE DEPARTMENT, DATED AT WASHINGTON, OCTOBER 34, 1903. Prior to the beginning of this investigation, statements appeared in the public press to the effect that certain fraudulent schemes, popularly known as "get-rich-quick" concerns, were being allowed the unlawful use of the mails by the office of the assistant postmaster-general for the Postoffice Department. The failure of a number of these concerns in St. Louis, Missouri, brought numerous complaints to the Department. Inspectors W. J. Vickery and R. M. Fulton were placed in charge of the investigation. Their report is submitted herewitfi, marked Exhibit F. At that time James N. Tyner was assistant attorney-general, and G. A. C. Christiancy and D. V. Miller were assistant attorneys. Among other things it was alleged that Harrison J. Barrett, a relative of Tyner's wife, and iormerly his assistant, was extorting large amounts of money from these fraudulent institutions under the guise of fees for legal services in preventing the issue of fraud orders against them. Barrett was appointed assistant to Tyner on the 27th day of May, 1897, and served until December 31, 1900, when he retired to enter a law partner- ship with J. Henning Nelms, of Baltimore, Maryland. He was succeeded in office by G. A. C. Christiancy. The postmaster-general is authorized by law to refuse the use of the mails to anyone conducting a lottery business, or a scheme for obtaining money under false pretenses. All questions arising under the fraud or lottery statutes are referred to the assistant attorney-general for the Postoffice Department, and he passes upon the cases as presented and prepares orders prohibiting the use of the mails, known as fraud orders, for the postmaster-general's signature. These cases are not presented to the postmaster-general for consideration unless fraud orders are recommended by the assistant attor- ney-general. The responsibility, therefore, for the execution of the statute referred to rests with the office of the assistant attorney-general. The administrative methods of Tyner and Barrett can be most clearly illustrated by reviewing a number of cases that were passed upon by them. E. 0. LEWIS, ST. LOUIS, MO. E. G. Lewis, of St. Louis, Mo., was conducting what is known as an "endless chain" scheme. He offered a watch for ten cents, the conditions being that the original sender of the ten cents was to get ten cards. These he was to sell or give away to ten other persons, each of which was to send ten cents and recei\'e and distribute ten more cards. And when all of these were sent to Lewis with ten cents each, the watch would be for- warded to the starter of the chain. Lewis would get from original holder, ten cents; from first circle, one 166 THE SIEGE OF UNIVERSITY CITY dollar; from second circle, ten dollars; total, eleven dollars and ten cents, before the watch was sent. Barrett ruled that the chance of breaking this chain was so great that it amounted to lottery; that the possibility of one person controlling the action of one hundred and ten persons — in compound style — was so remote that it made the prizes dependent upon chance. He held, however, that the simple chain, which brought the prize on the second round, did not involve chance and was not lottery; that, if the scheme, in other words, gave the watch upon the payment by the ten to whom the first man sold his tickets, it might use the mails. (Exhibit F-2.) Lewis, according to Barrett's rulings, was conducting a fraudulent busi- ness. No fraud order was issued, however, and he was permitted to wind up the current business, upon the promise that in future operations he would simplify his plan as suggested by Barrett. As an acknowledgment of the kind and courteous treatment which he received at the hands of Barrett in disposing of the case, Lewis presented him with a gold watch, valued at thirty-five dollars, which Barrett accepted. Afterwards it appears, however, that under the new name of the Mail Order Publishing Company, Lewis operated the same old scheme. When Barrett was advised of this he wrote Lewis, under date of July 25, 1899 (Exhibit F, pp. 4-6), accusing him of bad faith in returning to the old scheme, and said: "You requested me, in consideration of my courtesy and leniency, to accept a watch, which you sent, and which I accepted in good faith ; but now I cannot, with self-respect, retain the watch, so I have returned it to you by mail to-day." It seems, however, that afterwards, amicable relations were re-establishfed between them, and Barrett again accepted the watch. Later, when Barrett retired from office, Lewis employed him as his attorney. The impropriety of an officer accepting a present from a violator of the law for an act of leniency should have been apparent to a duller man than Barrett. In September, 1900, the attorney-general ruled that not only was the compound system in violation of the law, but tlie simple scheme as well. The above extract from Bristow's report wherein for the first time the names of W. J. Vickery and R. M. Fulton are linked with the name of E. G. Lewis, was, with the exception of the sixth and sev- enth paragraphs, reprinted hj the Department and issued from the office of Assistant Attorney-General Goodwin in reply to inquiries concerning the Lewis case. Lewis was thus not only pilloried before the rank and file of the postoffice officiary (all of whom were close students of this report) as a bribe-giver and violator of law. That accusation was likewise imparted broadcast to the general public and the press. Stice further read into the record of the Ashbrook Hearing the memorandum of President Roosevelt, transmitting Bristow's report to Congress, and characterizing it "as thorough a bit of investigation work as has ever been done under the Government." Roosevelt states that the facts therein set forth "show literally astounding mis- conduct" on the part of Barrett. As to him, he says: In the oiEce of the assistant attorney-general for the Postoffice Depart- ment, under Tyner and Barrett, far greater wrong was inflicted upon the public than could be measured by a pecuniary standard, for in this office the corruption of Government oiEcials took the form of favoring get-rich- quick concerns and similar swindling schemes; in other words, the criminals, ''-Dining room of Lewis' University City residence -Lihrarv The library adjoins the entrance hall and living room upon the left. The dining room adjoins the library ^Giicst room in Ihc Lczi'is home "SIccl'ing al^irhncnt of Mr. and Mrs. Lcun's THE DREYFUS CASE OF AMERICA 169 whom it was the sworn duty of these Government officiiils to prosecute, paid them for permission to fleece the public unmolested. The President's memorandum closes with the following ringing peroration which, upon the theory of the inspectors, would include Lewis within the scope of presidential rebuke: No crime calls for sterner reprobation than the crime of the corrup- tionist in public life and of the man who seeks to corrupt him. The bribe- giver and the bribe-talier are equally guilty. Both alike sin against the primary law of the State's safety. All questions of diiference in party policy sink into insignificance when the people of this country are brought face to face \rith a question like this, which lies at the root of honest and decent government. On this question, and on all others like it, we can afford to have no division among good citizens. In the last resort good laws and good administration alike must rest vipon the broad basis of sound public opinion. A dull public conscience, an easy-going acquiescence in corruption, infallibly means debasement in public life; and such debasement in the end means the ruin of free institutions. Self-government becomes a farce if the representatives of the people corrupt others or are them- selves corrupted. Freedom is not a gift which will tarry long in the hands of the dishonest or of those so foolish or so incompetent as to tolerate dis- honesty in their public ser/ants. Under our system all power comes from the people, and all punishment rests ultimately with the people. The toleration of the wrong, not the exposure of the wrong, is the real offense. This official condemnation of Lewis and the interlinking of his name with that of an official said by the President to have been guilty of "astounding misconduct," was then (and still is) conclusive upon the official mind. Lewis was found by Bristow to be a corrup- tionist and a violator of the law. The President commended and approved his findings. Lewis, therefore, was a man to be regarded with suspicion for all future time, because, forsooth, he presented a watch to Barrett under the circumstances above narrated. baumhoff's story. Was Bristow wholly free from bias.'' Was the chief inquisitor himself guiltless of the irregularities which he so freely charged against others ? No such question seems to have crossed the mind of anyone connected mth the Siege of University City until for- mer postmaster at St. Louis, F. W. BaumhoiF, was placed upon the stand during the session of the Congressional Committee of Inquiry at St. Louis in November, 1911. BaumhofF was a most quiet, self- possessed, and unassuming witness. His testimony gave little promise of special interest, yet he electrified all present at the hear- ing by the bold assertion that he had always known what first caused the attacks of the Government upon the Lewis enterprises. He had kept silent during the entire controversy only for the reason that he had never before found a proper occasion to speak. BaumhofF then exploded a mine which had lain dormant for eight years; but which, if his testimony is credible, shatters the contention of the Government into a thousand pieces. For the first time since the report of Bristow as fourth assistant, he brought the latter's name into the Lewis case. He gravely charged, in substance, that it was Bristow who had instigated the early investigations of Lewis. The 170 THE SIEGE OF UNIVERSITY CITY inference was clear that Bristow had pilloried Lewis, not so much to expose any actual wrong-doing as to further his own unscrupulous ambition. The storj- told by Baumhoff, which, if confirmed by the investigations of the Congressional Committee, promises to let the light of day for the first time into the earliest beginnings of this con- troversy, is in substance as follows: My name is Frederick W. ' Baumhoff. I reside in St. Louis and am now in the bond business. I was formerly Postmaster of St. Louis for five and a haU years. I entered tlie service in 1881 and left it on Decem- ber 31, 1903. Meantime I filled various positions from the lowest to the higliest. I was all told twenty-three years in tlie service. An application was made by Mr. Lewis to enter a little magazine called the Winner during the administration preceding mine. I was then Assist- ant Postmaster. Mr. Lewis applied for and was given a franchise for second-class privilege. I had nothing to do with that. The Winner ]\Iagazine at first was a very small publication. They felt that the field would be greater if they changed the name to the Woman's Magazine. Every time a publication changes its name a new application has to be made. So Lewis applied for second-class entry on the Woman's Magazine. This was in the early part of my administration. The Depart- ment never acted on that. Mr. Lewis was given a temporary permit to publish. He was aslced to give up the old permit of the Winner Magazine, which was a little printed slip of paper but could not find it. So he was notified to use the old permit and continue publication. I wrote the Department, — the letter should be on file there, — and asked about the appli- cation. I was advised to continue accepting it and so notified Mr. Lewis. This constituted full and free entry of the AVoman's Magazine to second- class privileges absolutely. Mr. Lewis was first given a temporary permit. About a year later I received the order, "Please notify the publisher to continue." I understood that was final. My understanding of the matter is that the old permit could not be found and so could not be exchanged, and Mr. Lewis was therefore told to continue under the original permit. They told me to use the original permit. As far as my knowledge is concerned, the Woman's Magazine was legally entered as second-class matter. I always so considered it. The returns for the Woman's Magazine were made in exactly the same way as those of other regularly entered publications. If the Department gave a temporary permit and later directed the publisher to continue, it could no longer be considered as temporary. In no case within my knowledge was a temporary permit allowed to run so long. To aU intents and pur- poses it was continued as on a permanent order, and five years afterwards it was so construed by postoffice officials. I made many communications and several personal visits to the Department. I was assured that though many investigations had been made there was nothing against Mr. Lewis and his publication. There was no more reason why Mr. Lewis' publication should be selected than any other. Yet they have been investigated in every con- ceivable way. There were investigations during my administration, during administrations before me, and following my administration. There were investigations by postoffice inspectors, by people connected with the legal department, by local postoffice inspectors, by inspectors dispatched from otiier points, and by the special agents of the Department itself. Mr. Bacon, who is now in charge of the Department, himself came on and made an investigation lasting a week or two. I recall many investigations not only of Mr. Lewis' magazines but of others. This is customary. An investigation sometimes originates locally and sometimes at Washington. Often the work is done locally by direc- THE DREYFUS CASE OF AMERICA 171 tion of the Department, or it may be done by persons from the third assist- ant's office. That happened in a number of cases besides Lewis'. Lewis is simply unfortunate. He was not in my opinion specially picked out for investigation on account of anything he had done, but came into the matter accidentally. I may say I am not friendly to IWr. Lewis and not unfriendly. I don't suppo.se I have talked to him half a dozen times since I left the service. Some of his later plans I do not approve. But my story will bring out what I believe to have been the real beginning of what is now known as the Lewis case. SOME KAUSAN POLITICS. During the early days of Roosevelt's administration, there was much dissatisfaction in the Postoffice Department. Officials were fighting one another in rivalry, in attempts to get even on old scores and in many other ways. At this time quite a majority of all the postoffice inspectors were being appointed from Kansas. They were in many cases illegally appointed. To understand how this came about it is necessary to state one of the rules of civil service, otherwise called the classified service. There are many postoffices which are outside the classified list because of the small amount of mail they handle. The business of these offices grows as the population of the towns increase, and wlien they have attained the necessary size, these postoffices are also classified. Before a postoffice is thus placed under the civil service rules any one can be appointed as clerk or other employee, without being graded in examination. When the postoffice is classified all the employees on the payroll at that time are put into the civil service. So if any one happened to know that a given postoffice was about to be classified and could secure an appointment there as clerk, he could evade the civil service regulations. A good deal of that sort of thing was then being done. A man would be appointed as clerk at an unclassified postoffice. Shortly after, that office would be put in the civil service. Then the newly appointed clerk would be transferred to the postoffice inspectors' division and appointed as postoffice Inspector at some other location. There never was any difficulty in thus transferring men from one branch of the classified service to another. That is one of the weaknesses of our civil service regulations. A number of men were transferred about this time from local post- offices in Kansas to positions as clerks in offices which were about to be classified. Later, they were assigned to the postoffice inspectors' division from those localities. The records would show that a postoffice inspector had been assigned, say from Kentucky. So he was. But investigation would reveal that he was originally appointed from Kansas, then transferred to Kentucky, and from there appointed. This has a direct bearing on the Lewis case. BRISTOW VS. DICE. The inspector-in-charge of the St. Louis office for a long time was a very competent man. His name was George A. Dice. He is now dead. He came originally from Tennessee, but his home was in Danville, 111., Uncle Joe Cannon's town. An effort was made once or twice to remove Mr. Dice. An inspector was once sent to St. Louis under pay of the Department at Washington, with the delicate mission to get Mr. Dice trans- ferred. He was offered any place except Chicago. That was a fixture. Mr. Dice immediately appealed" to Mr. Cannon and the Speaker vetoed it. He went to the President about it and had it stopped. From that time on there were petty jealousies. A little fight developed within the service that finally drove Mr. Dice into his grave. He often complained to his friends of" the persecutions of the Department to get rid of him and get another man. Inspector Harrison, into his place as inspector-in-charge of the St. Louis Division. All the states of the Union are grouped into these inspectorial divi- 172 THE SIEGE OF UNIVERSITY CITY sions with headquarters in some railroad centre. For instance, Boston is headquarters for New England; New York City for New Yorli, Brooklyn and Long Island. A district often comprises several states. In our State of Missouri we are better provided for. We have two divisions. This again lias a direct bearing upon the Lewis case. Mr. Bristow of Kansas was then fourth assistant postmaster-generaL Formerly the State of Kansas was in the St. Louis Division, and therefore under the inspector-in-charge at St. Louis. Inspector Harrison is from Kansas. Every power that could possibly be exercised was used to put him in Mr. Dice's place in order to cover that state. When all efforts failed Congress took the matter up and a new postoffice division was installed with headquarters at Kansas City. This takes in Kansas City and one county out of Missouri, besides the whole State of Kansas. Harrison was made inspector-in-charge. He is now United States Marshal in Kansas. I do not know if that is how Mr. Bristow was elected Senator, but I do know that when anything in the way of politics was going on in Kansas, there were more postoffice inspectors there than in any other state. Per- haps they went there to prevent people voting illegally. Maybe not. You can judge for yourselves. Meantime every effort was being made to undermine Mr. Dice and find fault with everything he did. That I thinlc is how the Lewis case became prominent. The inspectors finally settled on the Lewis case as the means by which they could accomplish their end. LEWIS MADE THE "oOAT." That was about the time my service expired. I left December 13, 1903. Shortly after that, as we know, the Lewis case came up. The prime mover in it. was the man who succeeded Mr. Dice, a Mr. Fulton. My interest ceases there. After that I was not in the service and cannot tell what happened. Perhaps after I left Mr. Lewis suddenly acquired a good many dishonorable methods. I will say that during my service to the best of my knowledge he did not. Flis subscriptions continually grew and he had a very prosperous business so far as his publications were concerned. His People's Bank was organized after I left the service. Perhaps the very moment I left the office and closed the door behind me as Postmaster, tha Lewis publications suddenly went wrong. I do not know. I am not vouch- ing for them. I am giving a statement of facts, as I know them, which I have always believed led up to the investigation that followed. Mr. Lewis: All this is new to me, Mr. Baumhoff. I would like to get the specific ciicurastances. "i'ou stopped just when I was sliding in between the cog wheels. Was Mr. Dice's subscription to the stock of the Lewis Publishing Company utilized in connection with this affair? Mr. Baumhoff: Every action of Mr. Dice was passed upon by people under him. The Department encouraged that and still encourages it. There is often one body of inspectors going around and another following them to make sure. The point I am getting at is that the Lewis case was used in an effort to undermine Mr. Dice and find out something they could report which would show his incompetency. This caused those in authority to overlook the irregularity of the way In which the whole affair was conducted. Many other things the Department had on hand were waived aside. Everything was done to pusli tlie Lewis case. Clerks were detailed from the postal service to go out tliere to University City. They spent months at a time. Thirty, forty and if I remember right, at one time about seventy, clerks were there. The main matter of fault finding was the price he was charging for his paper. I think it was ten cents a year. After many in- vestigations which seemed to favor Lewis, the publication was finally closed up. That in a general way is the history of the case. The origin of it was an unfair attitude toward Mr. Dice. He did not want to leave St. Louis. His home was here. Yet one effort after another ■ II ■ ■■^— — •^■■=^»5:^rTO'"-"rr'i:ri^ ^' H ^-> - - ■^J i .^KLh^ i MS M|| •^ ..IP \. ^m S 1 1 j^ym^; ' ^^^d r\^ /J L ■^ ;^pfl!|»^.^„ p. ' -''" -^ '.■- ■ ■'■ ■- i^ ^^^im MK^j^ ' _ ^^ *?*%liJl A/r awd Mrs. Lewis escaping business and social cares. The reporters who called to interview Lewis when the Peoples' United Stales Bank was first thrown into the hands of a receiver were informed that he tvas horse-back riding Siuit'-sliofs lahcv hy Lcun's of household frts about ihc z^onnds of the University City resilience and on ilie farm ozvncd and inauaged hy Mrs. Leivis. Mr. Lewis' tzu'o collie dogs are called by him Ihc ollieial "Cat ll'ardens" of Lhiivcrsity Citv THE DREYFUS CASE OF AMERICA 175 was made to effect his transfer, and the Lewis affair came in as a by-play of that. The Lewis case, to use a slang express, was made simply the "goat". Did the Lewis case have its origin in Bristow's efforts to discredit Dice? Were Harrison and Holden sent to investigate the Winner in order to find charges against Dice of incompetence, corruption or neglect of duty.' Did they report as they were expected to report, to serve the purposes of Bristow and contrary to the true facts? Such, in substance, is the logical inference from Baumhoff's story. The issue between Bristow and Dice was a drawn battle. Dice was sustained by Cannon against the alleged persecution of Bristow. Nevertheless, the latter, whose influence was augmented by the suc- cess of his famous report, accomplished his end, first, by the division of Dice's territory, and afterward by hounding Dice into the grave. ENTER VICKERY AND FULTON. Lewis, meantime, to use his own picturesque phrase, had "slipped into the cogs" of the departmental machinery and had become inex- tricably entangled. The very page of Bristow's report upon which Lewis was pilloried as a violator of the law, contains the following sentences which, in the light of after events, bear a sinister signi- ficance : The failure of a number of these concerns (popularly known as get- rich-quiek) in St. I^uis, Missouri, brought numerous complaints to the Department. Inspectors W. J. Vickery and R. M. Fulton were placed in charge of the investigation. Their report is submitted herewith, marked Exhibit F. What, if anything, this report may have had to do with the endless chain scheme conducted by the Winner, is still imknown. But both Vickery and Fulton must have been cognizant of the attitude of Bristow toward Dice and of the latter's friendliness with Lewis. The eyes of Vickery and Fulton must often have turned to this page, which thus bore their own names cheek-by-jowl with that of Lewis. The phrases which thus characterize Lewis as conducting a fraudu- lent business and as a violator of the law, must have been indelibly stamped upon their recollection. The clever story made by Bristow of the simple incident of the sample watch to attach more firmly the stigma of bribe-taker to Barrett, and to characterize the friend of Dice as a corruptionist and breaker of the law, thus assumes a consequence out of all proportion to its proper nature. When Lewis' attention was first drawn to it, he dismissed it, doubtless, with a laugh. Yet, next to the charges of Howard Nichols, those of Bristow have probably been the most injurious that have been brought against Lewis during his entire career, CHAPTER VII. THE RISE OF THE WINNER. The Richarz Pressrooms — The Woman's Farm Journal — ■ Strides op Progress — The Elimination of Nichols — New Business Affiliations — The Vision of the World's Fair. Viewed from the higher altitude of historical perspective, it is easy now to see gathering below the horizon of Lewis' affairs in 1903 the clouds that afterwards bred a tempest so portentous. But to Lewis, at that time, the skies seemed clear. The fates at last ap- peared to be broadly smiling upon his enterprise. The years spanned by the story of the Mail Order Publishing Company, from the first issue of the Winner of May, 1899, to the organization of the Lewis Publishing Company on April 15, 1903, worked a transition in Lewis' fortunes little short of miraculous. We are now to inquire how he first got a firm grip on the lowest rungs of the ladder by which in a few brief years he climbed to fame and fortune. The chief problem in the development of the Winner as a piece of property was to provide the necessary mechanical equipment. St. Louis was never a centre of the printing and publishing industry. There were in the early days of the Winner, no pressrooms in that city capable of producing at moderate prices the enormous output required. The first earnings of the magazine were, therefore, swal- lowed up by the purchase of new printing apparatus. THE richarz pressrooms. The best equipped pressroom in St. Louis, from Lewis' point of view, and the one which he selected to print the Winner, was that of J. P. Richarz. Even this was very inadequate. The owner, a thrifty German and competent mechanic, was not by temperament or experience qualified to finance a large enterprise, nor did he have the funds. Lewis, in order to get his work out at all, was soon under the necessity of providing additional capital for Richarz. He was obliged also to purchase for the Winner, and install in the Richarz Pressrooms, or wherever available space could be rented in the vicinity, a large part of the machinery required to meet the needs of his ever-increasing circulation. Lewis foresaw that he must, in the end, maintain his own printing establishment. So, he conceived the plan of buying Richarz out. Tlie purchase of his first interest in the Richarz Pressrooms is an important step in his career. The way in which he financed the deal is characteristic of his ingenuity in financial affairs, since so widely noted. This deal introduces two men, George D. Allen and C. D. Garnett, who afterwards became Lewis' fast friends and backers. 176 THE DREYFUS CASE OF AMERICA 177 Lewis, in brief, negotiated a contract with the Garnett & Allen Paper Company, whereby, in consideration of his agreement to purchase from them for a term of years the paper stock required for the Winner, he obtained the use of five thousand dollars cash. The loan was payable in instalments upon easy terms. This sum he applied on the purchase at par of a third interest in the capital stock of the Richarz Pressrooms of twenty-five thousand dollars. The balance was to be deducted from the first profits accruing to the stock. He then pledged to Garnett & Allen the stock thus purchased as security for their loan. To employ a homely phrase, he thus made one hand wash the other. The Richarz Pressrooms Company, in which Lewis thus became a third owner, had been organized during the year 1900 as a close corporation. Two-thirds of the stock was still held by Richarz and members of his family. To protect his interest as a minority stock- holder, Lewis required Richarz to enter into a pool of their joint holdings. By the terms of the pool, Lewis became a director and secretary of the company. The concern agreed to contract no lia- bilities or indebtedness other than current bills without his consent. The purchase of paper stock by the company was thrown to Garnett & Allen. Lewis was authorized to receive, in addition to the divi- dends on his stock, one-fourth of the profits on all orders brought to the company by him. The cash paid over by him for his interest was to be used for the exclusive purpose of developing and increas-, ing the business and profits of the company. A contract was thereupon consummated between the Mail Order Publishing Company and the Richarz Pressrooms, whereby the latter concern undertook to print, fold, bind, wrap, and deliver to the post- office at St. Louis, the Winner for a period of four years, on an agreed basis. Payment was to be made, one-half in cash and the remainder in the notes of the Mail Order Publishing Company en- dorsed by H. L. Kramer. Postoffice receiists were to be accepted by both parties as proof of the number of copies printed and delivered. The work of printing the Winner was always to have precedence. The entire issue was to be printed within twenty days from the receipt of plates from the foundry. A board of arbitration was provided to adjust disputes. Tliis transaction was closed, and eight hundred and thirty shares of stock were assigned to Lewis on March 16, 1901. THE woman's farm JOURNAL. Having now established lines of credit on his two principal items of expense; namely, the cost of printing and paper stock, Lewis looked about him for new worlds to conquer. During the early days of the Winner the publisher of a local farm paper had offered Lewis one thousand dollars, on condition that he install the endless chain plan on that periodical and double its circulation within one year. This was The Woman's Farm Journal, an old established periodical, which bore an excellent reputation among advertising 178 THE SIEGE OF UNIVERSITY CITY men. Lewis accepted the offer, and more than tripled the circula- tion. This sum was very acceptable in itself, but of even greater value to Lewis was the acquaintance thus formed of Frank J. Cabot, who afterwards became one of his close associates. This is Lewis' story : In traveling around the country, securing advertising patronage for the Winner, I heard a great deal of a paper published in St. Louis, called The Woman's Farm Journal. Advertisers used to say: "There is only one paper that can come near your's in results. That is a little paper in your own city, the Woman's Farm Journal." I, therefore, talked the matter over with Mr. Cabot, the publisher, and finally bought the paper from him. Later, I took him into the business." To finance this deal, Lewis required the sum of five thousand dol- lars. To get this, he took in two advertising men, Messrs. Hack- stafF and Budke, connected with the Nelson Chesman & Co. adver- tising agency. His letter, under date of April 4, 1901, containing this proposition, shows the status of Lewis' affairs at that time. It also affords an insight into his manner of putting through a deal. Lewis says: The writer intends to purchase the Woman's Farm Journal of St. Louis. This paper is eleven years old. It has a profit of about five hundred dol- lars net per month. It has never been pushed or exploited in any manner, and is first-class property. The price set on it is fifteen thousand dollars. My intention, as soon as I secure this paper, is to increase its make-up and circulation, and also to raise its advertising rate with the September num- ber. With the facilities we have for publishing such a paper we can produce one hundred thousand copies each issue, at two hundred dollars per month less than the present proprietor pays. We also have facilities for running its circulation up very rapidly. By using the fine engravings and good stories that were published in the Winner a year ago, we can greatly im- prove the ccintents without expense. We can thus get everything out of this property that there is in it. We hope within a year to make it the foremost Farm Journal in the country. We also propose to purchase immediately, a very fine, large, rotary printing pre.ss. This is offered to us at one-third of its original cost and is practically brand new. We shall probably have to pay two thou- sand dollars cash and one hundred dollars a month on this press. But a very careful estimate shows that it will save about three hundred dollars a month net on the cost of producing the two papers. Tlie purchase of this press will be a joint proposition between the Mail Order Publishing Company and the Woman's Farm Journal Company, pro rated on the number of copies printed on it of each publication. Lewis then proposes to incorporate the Farm Journal Publishing Company for twenty-five thousand dollars, accepting the capital stock in full payment for the property. He offers Messrs. Hack- staff and Budke a one-fifth interest for par, namely, five thousand dollars cash, with a bonus of an equal amount in advertising space in the Woman's Farm .Journal and the Winner. He thus proposed to give them a fifth interest in the concern for the use of five thou- sand dollars for a few months. Lewis expressed the opinion that he could make the stock of the Farm Journal pay twenty per cent the first year of its life. THE DREYFUS CASE OF AMERICA 179 His offer appears to have been promptly accepted. Two days later a purchase and sales agreement was entered into between Lewis and Cabot transferring to the former the property of the Woman's Farm Journal, including its entire mechanical equipment, its good- will and accounts receivable. Another item speciiied in the pur- chase was a mailing list of two hundred thousand names for sampling. The consideration mentioned was fifteen thousand dol- lars. The sum of one thousand was to be paid in cash. An addi- tional sum of five thousand was payable in advertising space at current net rates in the Winner. Two thousand dollars additional was payable in Lewis' notes of hand, endorsed by the Mail Order Publishing Company. Lewis assumed a contract for news printing paper with the Garnett & Allen Paper Company on which a consid- erable balance of paper stock was yet to be delivered. He also gave as security for his notes a mortgage on the Journal itself. The property was, however, to be delivered to him at once free from all other liabilities. A memorandum of agreement to this effect was drawn forthwith, and the property at once changed hands. A separate agreement of even date shows that Lewis was not slow to make use of a method of financing that had once proved to be successful. The Graham Paper Company, one of the largest busi- ness concerns of St. Louis, by this document loaned the Farm Journal Company the sum of five thousand dollars upon terms almost identical with the Garnett & Allen deal; namely, on consideration of the exclusive purchase by Lewis from them of all paper stock required by the Farm Journal Company. The price of the paper in both cases was to be determined each six months by the current market rate. A slight complication arose on account of the unde- livered balance of stock due the Farm Journal on the Garnett & Allen contract; but this appears to have been amicably adjusted, and the paper used. Lewis next caused a new corporation to be formed to acquire the property of the Woman's Farm Journal. This was known as the Farm Journal Publishing Company. Its certificate of incorporation was placed of record on April 17, 1901. One hundred and fifty shares of stock in the concern were issued to Lewis and fifty shares to Nichols. Fifty shares appear to have been dividedbebween Hack- staff and Budke. The new company then took over the publication of the Journal, Cabot and Mrs. Cabot being retained in charge of the editorial end. STRIDES OF PROGRESS. A good deal of additional business resulted from the purchase of the Woman's Farm Journal. The new capital thus added to Lewis' cash resources eased his financial strain. A sense of security also resulted from his long-time contracts on presswork and paper stock. These conditions led to his removal from the cramped quarters he had previously occupied to a new location. Shortly after the Journal was taken over, he leased a suite of rooms on the second floor of the 180 THE SIEGE OF UNIVERSITY CITY office building at 108>^ North Eighth street, St. Louis, for a period of two years, beginning June 15, 1901, and immediately removed the equipment of the Winner and the Journal thither. The number and variety of Lewis' enterprises was now such as to cause him and his friends some anxiety as to what the outcome might be in the event of his sudden death. These and other con- siderations, to be explained in subsequent chapters, led to the organi- zation, in June, 1901, of the Development and Investment Company as a holding concern for his various interests. On June 20, there- fore, Lewis' entire holdings in both publications, consisting of three hundred shares in the Mail Order Publishing Company* and one hundred and fifty shares in the Farm Journal Publishing Company, were made over to this corporation. Nichols testified before the Ashbrook Committee that to his knowledge Lewis did not in fact thus transfer his holdings. Both the above certificates of stock, however, bear Nichols' signature as secretary. The chief landmarks of Lewis' progress during this period may now be rapidly sketched in. During the month of November, 1901, he contracted with the Kidder Press Company for the purchase and delivery of the rotary press mentioned in his proposal to Messrs. Hackstaif and Budke. The consideration mentioned was ten thou- sand dollars. This was payable in instalments over a term of twenty-three months. Delivery and installation of the press in the Richar.": Pressrooms was promised for the following August. During the month of December, Lewis entered into a contract with the Nelson Chesman Advertising Agency to place, during the ensuing year, the equivalent of five thousand dollars a month adver- tising in publications of general circulation, for subscriptions to the Winner and the Woman's Farm Journal. This advertising caused a rapid expansion of his business. The outlook at the beginning of the new year, led Lewis, in Janu- ary, 1902, to extend his quarters to include the entire second floor of the building at 108J'2 North Eighth street, to which he had recently removed. The terms of this lease permitted his placing the sign "Winner Building" over the entrance. A corresponding *A memorandum of statement of this company from January 1 to October 1, 1901, in Lewis' own handwriting is still preserved. The income from advertising space was represented in round figures as $72,000. that from subscriptions as $20,000. or a total of $92,000 cash revenue all told. The total expenses of all sorts were shown to be $74,000, a net profit of $18,000 for the period of nine months, exclusive of the three best months of the business vear. I^ewis estimated that his business for the following year would be approximately $S5,000, and a resulting profit in that case at the rate of $65,000 per annum. His assets, consisting of cash, bills and accounts receivable, paper stock and equip- ment, were represented in round figures as $31,000. The cash value of the subscrip- tion list was estimated as $56,000, independent of the good-will of the magazine itself. As against these total assets of $87,000 were shown bills and accounts payable of $14,000, and capital stock, $50,000 or $64,000 all told, leaving a net surplus of $23,000, exclusive of the franchise value of the publication. Lewis' memorandum shows a total of 274,000 paid-in-advance ten-cent subscriptions, and 113,000 twenty-five-cent subscrip- tions, procured at an advertising expenditure of $25,000. This memorandum appears to have been prepared by Lewis for his own informa- tion, as there is no indication of Its having been submitted to others. It also bears internal evidence of being a reliable statement of the facts. THE DREYFUS CASE OF AMERICA 181 change occurred at the masthead of the two publications and upon the stationery of both companies. A sworn statement of circulation of the Woman's Farm Journal was required of the publishers in February, 1902. The editors were said to be Lewis and Mr. and Mrs. Cabot. The Journal was repre- sented as independent of any trade, and open to all forms of adver- tising, except medical. The proprietors were said not to be inter- ested in any advertising in its columns except that of the Pacific Trading Company. This was said to pay the same as others. A total subscription of two hundred and sixty-two thousand copies each issue was claimed, at a subscription price of twenty-five cents per annum. The number of sample copies of each issue was stated as ten thousand. These were said to be sent out only at the request of present subscriptions and club raisers. Various financial statements were submitted from time to time during the summer of 1902 when business was dull and additional credit was required, to Lewis' banks, the Fourth National and the National Bank of Commerce, both of St. Louis. These were ac- cepted, after such investigation as is customary with conservative bankers, as the basis of substantial lines of discount. Lewis had apparently made good as a publisher, and won for himself an as- sured position as a substantial business man and citizen of St. Louis.* THE ELIMINATION OF NICHOLS. The break with Nichols, which was fraught with such disastrous consequences, occurred during the month of May, 1902. Nichols was, at this time, the owner of a two-fifths interest in the Mail Order Publishing Company, and a one-fifth interest in the Farm Journal Publishing Company. His interest in the Development and Invest- ment Company was nominal. This is Lewis' story to the Ashbrook Committee as to how the final rupture between the two men came about : One of the young women clerks came to me one day and said that she felt she ought to tell me something; that for months past Mr. Nichols had been getting down to the office early in the mornings to receive the mail, and had taken out the large club envelopes containing considerable sums of money, destroying the subscriptions and keeping the money; that she *A statement of the Mail Order Publishing Company as of March, 1902, shows an increase in the claimed surplus of that publication, over all liabilities, including capital stock, to $49,000. A similar statement as of April 6 claims a surplus increased to $70,000, due chiefly by reason of new subscriptions resulting from cash advertising. A total of $72,000 cash was shown to have been expended during the preceding six months in advertising for subscriptions. The results of this advertising became ap- parent in the increase of the surplus values of the Mail Order Publishing Company, which had risen to $85,000 by the first of May, and to $90,000 in July. Statements for the remainder of the months of 1902 are not available; but the statement for the first of January, 1903, shows a surplus of $90,000. exclusive of the cash value of subscrip- tion list now estimated at $250,000; or in excess of $300,000, all told. Advertising contracts were in hand at the beginning of 1903 for the ensuing year to the amount of over $250,000. There was estimated a probable subscription revenue for the year at approximately $100,000, and the current advertising running without contract at the same figure, or a total estimated income in excess of $400,000. The total cost of producing the paper for a year was estimated at $180,000, showing upon that basis a prospective profit of approximately $250,000 for 1903, 182 THE SIEGE OF UNIVERSITY CITY had seen him do this several times; that if I would look in the bottom of his desls then, 1 would find some envelopes that he had ready to take home that night He was out at the time, and 1 did look in his desk. Then I waited for him to come in. In the meantime I stepped out for a few mo- ments. During my absence he came in, found out what had happened, left the office, and never came back. Since that time he has been a very bitter enemy. I understand that he is the source of a large part of this misin- formation. He is now in St. Louis selling a hair-dye preparation. Nichols' version. This in substance, is Mr. Nichols' version: We were in the street car one day going home when Mr. Lewis said one man ought to run the business. 1 said, "Ned, it looks like you have all the say-so. Everything is done just as if it were your own." He said. "Yes, I know; but every time I get up a scheme, you knock it on the head." 1 said, "Ned, your schemes are so harum-scarum that they might get us into trouble." He said, "I want to run that subscription list up." I said, "If we do that, we have got to spend fifty or sixty thousand dollars with the Nelson Chesman Company and we will be swamped." He thought for awhile and then said, "Nick, what will you take for your ttock?" 1 said, "1 will not take anything for it, Ned. I tell you what I'il do. If you want to run the whole tiling, I will give you power of attorney and you can run it to suit yourself. I will take orders from you; or what- ever you say. I will just turn the business over to you, and if you bring the thing out of a hole, and make good, it will be the greatest thing you ever did." That very night he came to my home and said he wanted to talk the busmess over. 1 said, "All right, Ned, what will you do?" He said, "I will pay you seventj'-flve dollars a week." I was only getting fifty dollars, and not always getting that. Well, that is what he wanted me to do. To go on just in the same way we had been doing, but with him as sole owner. I said, "No; 1 have been king here too long. I have ruled this place just like a czar; and I don't believe, Ned, that I can work for you." He said, "Then you take the Win- ner, or the Woman's Farm Journal. I will take whichever one you don't take, and we will separate." I said, "No; if we separate, let us do it com- pletely." He said, "What are you going to do?" I said, "1 will take the Pacific Trading Company." This was a joint enterprise owned by Mr. Lewis, Mr. Cabot and myself, and Mr. Duby, the chemist, for selling patent medicines, including the hair dye. "Well," he says, "that is just the thing. I will run the two magazines, and you can run the Pacific Trading Com- pany." I had a little too much pride, probably; but I said, "Ned, I will make that business make itself. I know the patent medicine business from A to Z, but I don't know the publishing business." So I said, "I bet you dinners for two, that I will have more money in five years than you will have." I would have lost that bet, if he had taken it. So I stayed there pretty near two weeks. I signed up all the stock that Mr. Lewis presented to me. He said, "Nick, this is your old stock. You sign over the Woman's Farm Journal stock to me and 1 will sign over the Pacific Trading Company stock to you." I said, "All right, Ned. Give me a thousand dollars on the old account." I remember signing my stock over to him and he to me. He assigned me the stock for the Pacific Trad- ing Company. 1 assigned to him the stock of the Magazine. There was an arrangement and the matter was settled amicably, and carried out in good taith. ATTITUDE OF NICHOLS. The reason I severed my connection with him I will put this way. I kept arguing with Mr. Lewis to drop some of the things he had on foot. The Diamond Candy Company, the Progressive Watch Company, and so on. THE DREYFUS CASE OF AMERICA 183 were out of business. The Development and Investment Company and the Coin Controller Company were in business. But we had half a dozen other things in mind that we were talking about. One of them was the Univer- sity Heights Company. He had that scheme in hand, and I did not Hke it. I told him it was not proper and not right, and that I really did not care to go into it. He also had on foot this proposition of putting up a great big building, as he did do afterward. But from my view of the business at the time, I could not see where he could get the money. I knew that the contractors would want their money promptly. I do not know what he might have had in mind about acquiring the money with which to build that building. But I did not see where the money could come from as quickly as the contractors would need it. I knew at the time we didn't have the money to buy one acre of ground, much less ten or fifteen acres, and put up a building. I don't say that I contamplated severing my connection with Mr. Lewis because he was thinking about this thing. But I say this: If you had been associated with Mr. Lewis intimately for three or four years and had no faith in some of the schemes that he proposed to you, you, also, would have been rather timid about staying with him. I am afraid to say that he was as full of schemes as a dog is of fleas, because some of the Com- mittee might take exception to this way of putting it, and I do not want to appear fresh. Lewis' story touching the accusation of an employee that Nichols was abstracting money from the subscription mails is recited with- out prejudice, solely because it is essential to a proper understand- ing of what follows. Lewis admits that the charges were not made the basis of either civil or criminal proceedings. Nichols strenuously denies any wrongdoing. The sole fact of public in- terest is that Nichols felt himself to be aggrieved and, later, sought revenge by becoming an informer against Lewis and all his enter- prises. The versions of both Lewis and Nichols as to the severance of their relations are now before the reader, who is thus in a posi- tion to draw his own conclusions. The Winner was now successfully financed. It had turned the corner from investment to profit, and was in a position to make money rapidly. Lewis, through the Development and Investment Company, was reaching out for further investments, looking to quick profits. He was prepared to take speculative risks of which Nichols was fearful. It was thus evident, apart from Lewis' lack of confidence in Nichols, growing out of any suspicions he may have had, and other circumstances, that the differences of opinion between the two men as to future policies were irreconcilable. The final transfer of Nichols' holdings in the Farm Journal Pub- lishing Company was made on September 12, 1902. His stock was then assigned by him to Lewis, and by the latter to the Devel- opment and Investment Company. Lewis, upon the same date, also assigned to the Development and Investment Company his entire holdings of two hundred and seventy-five shares in the Mail Order Publishing Company. This is the last appearance of Nichols in any official relation with Lewis' enterprises. The withdrawal of Nichols gave rise to a complete reorganiza- tion of the Mail Order Publishing Company. On April 15, Messrs.. 3 84 THE SIEGE OF UNIVERSITY CITY Garnett & Allen had purchased a one-tenth interest in the Winner and were admitted to the corporation. On the 8th of May a stock- holders' meeting took place. A new election of officers was held. F. J. Cabot, former publisher, now editor of the Woman's Farn\ Journal, became secretary in Nichols' stead. All outstanding shares of stock were cancelled. The stockholdings of the Company were then redistributed on the following basis: Cabot, one hundred shares; Lewis, one hundred seventy-five; Kramer, seventy-five; Allen, one hundred; Garnett, fifty. The ownership of the Mail Order Publishing Company thereafter remained substantially un- changed until its merger in the Lewis Publishing Company, under circumstances next to be described. NEW BUSINESS AFFILIATIONS. We have now seen how Lewis obtained his first real start by securing, within thirty days, cash capital amounting to fifteen thou- sand dollars, financing therewith purchases amounting to upwards of twenty-five thousand dollars, and still retaining possession in cash of sums sufficient to provide working capital for both of his new enterprises. He was now in full control of the Mail Order Publishing Company and Farm Journal Company. By stress of personality, he was also the dominant factor of the Richarz Press- rooms Company, which was practically monopolized by his pub- lications. The deals thus consummated had been made with prac- tical business men of high character. The presumption is, there- fore, conclusive, that Lewis' publications were well regarded in the trade, even at this early date. His personal character and reputa- tion as a business man must, also, have been good to enable him to negotiate these contracts. He had severed the last vital link be- tween himself and his former line of business by turning over to Nichols the Pacific Trading Company in exchange for the latter's interest in his publications. In place of Nichols, he had secured, as business associates, men of standing in the publishing industry and closely allied trades. As his credit became established he had formed valuable banking connections. His acquaintances and friendships with influential St. Louisans multiplied. His business and personal reputation as a citizen had grown apace. And all of this had taken place within two years after the first publication of the "S^'inner. THE VISION OF THE WORLd's FAIR. Then came over men's minds for the first time in St. Louis the vision of a great ideal, the Louisiana Purchase Exposition. The horizon of achievement was at once seen to be widened in every direction. The efl'ect upon Lewis' mind was almost magical. His own horizon expanded with a bound. An international exposition is a great promotion scheme. Such a project carried with it a kind of intoxication to which the most sober-minded citizen is liable. Lewis, a promoter by temperament, reacted to it as to his natural element. The World's Fair became the central image about which THE DREYFUS CASE OF AMERICA 185 clustered all his thoughts and dreams. The Woman's Magazine was perhaps the first periodical of national circulation to take up the Fair as an editorial topic. Lewis placed himself in touch witli the authorities almost immediately after it was announced, and at once opened his columns as a medium of national publicity. Hardly an issue of the Woman's Magazine appeared from that time for- ward without some advocacy of the coming exposition. Imme- diately letters began to pour in from Lewis' subscribers announc- ing the intention of making their trip to the World's Fair the occa- sion of a personal visit to the editor. All sorts of questions were asked by readers. Many wanted to know about accommodations at St. Louis. Others asked about the cost and other details of trans- portation. Still others inquired about seasonal and other local con- ditions. The office of the Woman's Magazine soon became a veri- table bureau of information. Lewis was quick to recognize the opportunity of earning the life- long friendship of a multitude of his most prosperous and ener- getic readers. Brooding over the matter, he came to see that the advantage enjoyed by the Winner of being located at the World's Fair city would be immeasurably enhanced if he could place himself in close proximity to the site of the Exposition. When the determination was reached to locate the fair grounds at the western extremity of Forest Park, his thoughts turned at once in that direc- tion. The emphasis laid by the promoters upon the architectural features of the Fair arrested Lewis' attention. The great variety of architectural designs submitted by the authorities for publication in the Winner, stimulated his imagination. The total effect of these thoughts and ideas culminated in a project, the successful issue of which is among the most stupendous achievements in the entire history of journalism. Lewis, in fact, determined to take possession of the entire machinery of publicity of the great Louisiana Purchase Exposition, and transmute it into a means of promoting his two publications. He resolved to purchase a location adjacent to the fair grounds and erect there a structure equal in stateliness and beauty to the World's Fair buildings themselves. He determined not merely to advise his readers about securing accommodations, but to entertain them as his guests. He devised a project for promoting the attend- ance to the Exposition itself, which was also to afford him a sub- stantial revenue. The mere conception of these schemes would characterize Lewis as a daring and original genius. The actual realization of them stamps him as a shrewd and sagacious man of large affairs. The entire design must have seemed to the friends who could re- member the occasion of his first coming to St. Louis as a vendor of Anti-Skeet, and his early struggles to secure a foothold, as little short of madness. Yet Lewis appears to have set about the job without the slightest misgiving. A suitable site had to be pur- ]86 THE SIEGE OF UNIVERSITY CITY chased. The building itself was j'et to be designed. The project must needs be adequately financed. To accomplish these results, the co-operation of all the various enterprises with which he was connected must be assured. To this end, Lewis conceived the idea of a consolidation of all his publishing interests into a single com- pany. And thus the Lewis Publisliing Company was born. The efficient instrument, by means of which Lewis worked out the financial and other problems with which he was confronted at the various stages of this great enterprise, was the Development and Investment Company. We must therefore now describe the combination of circumstances which gave rise to this concern, the manner of its organization, and the purpose for which it was in- tended. The organization of the Lewis Publishing Company, the purchase of the tract of land which became the nucleus of Uni- versity City, the story of the World's Fair Contest Company, and of Camp Lewis, will all then fall naturally into place among the other projects of which the Development and Investment Company was the patron and promoter. This concern, as will be seen, was designed by Lewis as a holding company for all his various in- terests and was often described by Lewis as himself capitalized; hence the title of a succeeding chapter. CHAPTER Vlir. INVENTION AND PROMOTION. Lewis as Artist, Ahtisan and Inventor — The Lewis Address- ing Machine Company — The Allen Steam Trap Com- pany — The Controller Company of America — The United States Fibre Stopper Company — The First Stock Put on the Market — The Question of Good Faith — The Fibre Stopper Company Under the Probe. The phase of Lewis' career which makes it so complex as to be the despair alike of biographer and reader^ is his astounding ver- satility. No sooner has one mastered the chain of reasoning and the series of events by which Lewis made the Winner Magazine a valuable piece of property, than it becomes necessar}^ to investigate what he was doing at the same time as an inventor and promoter of inventions. When these complex affairs are cleared up, one is confronted with his extensive real estate and building projects. Nor is this all. For the sequel shows that the germs of his still later ideals and conceptions of a City Beautiful, such as he sought to realize through the American Woman's League and the People's University, were even then looming on the horizon of his thoughts. We have considered Lewis as vendor of proprietary articles and as publisher. We have now to view him in the role of an inventor and promoter of mechanical devices. LEWIS AS ARTIST, ARTISAN AND INVENTOR. Lewis was drawn along the path which led to his wide activities as promoter by his innate bent toward all forms of skill in artisan- ship and mechanics. From boyhood he has been able to do almost anything with his fingers that human hands can do. Very early in life he picked up a working knowledge of taxidermy and in time became an expert taxidermist. He has always been an amateur artist and designer of no mean skill. Right in the middle of his fight with the Government he turned the chickens out of an old hen house, put in a potter's wheel and taught himself the extremely difficult art of molding, decorating, and firing porcelain, with no other assistance than the textbook of the great French ceramic decorator, Taxile Doat. Time and experience have made Lewis a master of many arts and forms of material. Wood, iron, concrete, clay, brick, stone, porcelain, wood-pulp, wax, cork, he has tried them all, harnessed, shaped and put them to use to make money for himself and others. He has gone on to work with real estate, banking, notes, bonds, education, and the ideals of men and wom- en. The plastic touch with which he has modeled porcelain has 1ST 188 THE SIEGE OF UNIVERSITY CITY also altered the very face of nature. It has removed hills, laid highways and brought into shape magnificent buildings and their equipment. Even the organization of companies, corporations; leagues and universities are only the application of the same innate aptitudes to his relationshiiDS with men and women. This natural and acquired ability to give expression to the prod- ucts of his mind in the form of sketches and models, gives a clue to one of those profound and characteristic insights whereby Lewis has been able to move and influence great masses of men and wom- en almost at his will. For his own instincts have enabled him to penetrate the secret that the masses of mankind are wont to think in concrete images. A model or picture is far more eloquent to the common mind than any form of argument. Acting upon this insight, Lewis has told his story in terms of clay, brick and marble, in such fashion that he who runs may read. The illustrations to this volume testify that the entire history of University City can be recorded by the photographic lens. The octagonal tower was first modeled by Lewis himself, then by a professional modeler, and afterwards built in actuality. Under the great marble stair- way, which is the central feature of the tower, is the remarkable model of the University City plaza, illustrated on another page. This shows the entire group of buildings embodied in Lewis' ideal conception. This model is in a high degree symbolic of the creative and constructive bent of his imagination. LEWIS AS INVENTOR. Except for the discovery of his superior business sagacity, Lewis would doubtless have sought a career for himself as an inventor. His name does in fact appear upon the rolls of the patent offices of a half-score different countries. While a mere boy he patented a nickel-in-the-slot vending machine. He adapted the same prin- ciple later to the first model of the coin controller for the telephone call station, which was really his own invention. The difficulty of addressing by hand the enormous number of wrappers required for the Winner, provoked in his fertile brain the device afterwards patented as the Lewis addressing machine, the forerunner of many widely used instruments. THE LEWIS ADDRESSING MACHINE COMPANY. Lewis has always been by nature sympathetic toward inventors axid appreciative of mechanical devices. The first device that he tried to make for sale, grew out of his publication business, being no other than the addressing machine above mentioned. Lewis himself tells the story in the following language: At the time the Lewis Addressing Machine Company was formed 1 had very little capital. I was just beginning to establish a banking credit. The circulation of the Winner Magazine was growing rapidly and one of the chief problems was the addressing by hand of more than a million wrap- pers every month. One night while I was on a train traveling to Chicago the idea struck me of using what is known as hectograph or stencil paper, by means of a mechanical device afterwards perfected in this machine. THE DREYFUS CASE OF AMERICA 189 When I got to Chicago I spoke to several newspaper men friends of mine about the matter, especially George Krogness. They became intensely in- terested. We decided that we would put the idea to a test. So I went out and bought one of the small clothes-wringers such as are sold to children, and some hectograph paper, and we made a demonstration then and tliere. We decided that the idea was patentable, and concluded to perfect the device and put it on the market. Three of us put up a thousand dollars each and formed a company. I took out the patents. They are, I believe, the pioneer patents in the addressing machine business. I concluded, later, that I should not have time to follow up the matter. I, therefore, bought back the interest from my two associates for two thousand dollars each. In other words, I paid them two for one. Tlien I suspended operations. I stiU own the patents and am the sole stockholder. No one was defrauded there. Lewis' recollection of this affair after eleven years, while sub- stantially correct, is not quite accurate in detail. The original memorandum of agreement between himself and his two associates bears date of November 10, 1899, some eleven months after the Winner was established. Lewis' partners were W. T. Davis and C. George Krogness, friends whose acquaintance had been formed by him while soliciting advertisements for the Winner. The ori- ginal document recites that for the sum of one thousand dollars Lewis, "as owner of the invention known as the addressing machine which he is now perfecting," sells a half interest in any patents he may procure. He also agrees to give as a bonus eleven hundred lines of advertisirfg space in the Winner. The Lewis Addressing Machine Company was formally incorpo- rated and the first shares issued in May of 1900. Patents were secured in Canada, England, France and Germany, as well as in the United States. The cost for this item alone was nearly a thou- sand dollars. The first model was built by Rudolph Goeb (an ex- pert mechanic of whom we shall hear again, then in the employ of Munn & Co. of St. Louis), during the last three months of the year 1900. The machine was remodeled by Goeb after Lewis' suggestions between the months of April and November, 1901. Various mechanical difficulties and the fact that Lewis' time was taken up by other interests, then led him to suspend further opera- tions. The resignation of his associates as directors in the enter ■ prise were received in November, 1901. His note for three thou- sand dollars in their favor in full payment for their interest, bears date of December 4, that year. The cancelled vouchers still remain in Lewis' file as evidence of his good faith. Lewis' first promotion thus netted his associates three-fold their original investment in additon to a bonus of advertising space, which was itself worth one thousand dollars, the face value of the investment. As Lewis says, "No one was defrauded there," unless it was himself. Lewis later made over the stock of the Lewis Addressing Machine Company to the Development and Investment Company. A new model was then perfected and a final patent was issued to Rudolph W. Goeb in behalf of that concern as late as January 25, 1910. In March of 1905 certain postoffice inspectors, finding this stock among 190 THE SIEGE OF UNIVERSITY CITY the assets of the Development and Investment Company, submitted to Levs'is a list of fourteen questions, in reply to which he stated in substance the above facts. He added that several of the machines had been built and put in use and that, at one time, negotiations for the sale of the patents were alm.ost closed with the manufac- turers of the linotype. The project, he said, was being held back until he could build the machines on a large scale and place them on the market. The stock was being carried on the books of the Development and Investment Company as of unknown value, an asset in suspense. The clever inspectors upon these facts, which they report in substance as being true, recommended that a fraud order be issued against the company upon the grounds that the machine and its company might be revived and might then be used to obtain money fraudulently. These are their words: This machine was invented by Lewis, its purpose being the printing of addresses on newspaper wrappers. Patents were secured, and C. George Krogness, ef the San Francisco Examiner, and W. T. Davis, of the Kan- sis City (Mo.) Star, purchased an interest. The machines were not a suc- cess, and the company died for that reason. Lewis states that he repur- chased the interests of the two gentlemen mentioned and the stock found its way into the assets of the Development and Investment Company, where it now rests. The machine was not practical, and the stock has no money value. Mr. Lewis states that the whole proposition is in abeyance and that the mails are not now used in furthering the sale of stock. We hold the proposition to be a scheme devised for fraudulent purposes and would not hesitate to recommend that a fraud order be issued, if there was evidence that the mails were now being used. Inasmuch as it is held in abeyance, its leappearance is liable at any time so long as Mr. Lewis enjoys the second- class privilege for the Woman's Magazine and the Woman's Farm Journal. It is included in the assets of the Development and Investment Company, another fraudulent concern, and for that reason, that company still being in active operation, we recommend that E. G. Lewis and the Lewis Address- ing Machine Company be cited to show cause why a fraud order should not be issued. Upon what theory the inspectors held that this was a scheme "devised for fraudulent purposes" it is difficult to imagine. THE ALLEN STEAM TRAP COMPANY. The next device to be called to Lewis' attention was the Allen steam trap, as to which he makes the following statement: This was a mechanical device for saving coal in connection with a steam engine. Mr. N. A. McMillan, now president of the St. Louis Union Trust Company, was an intimate friend of mine. He extended a large banking credit to me and also gave me personal credit. He was always my last resource. When I had borrowed all the money I could from the banks to carry out some exceptionally large deal or enterprise, I could always get an extra sum from Mr. McMillan. He called me into the bank one day and told me of a little patent, the Allen steam trap, which the inventor had brought to his attention. He told me if I would look at it, and if I thought it good, that he would join me in a company to develop and put it on the market. He suggested that we each put a couple of thousand dollars into it, grubstake the inventor and try it out. We did this and carried it along to a certain point. We then decided there was nothing in it to warrant giving it further attention or money. We, therefore, both pocketed our losses and forgot it. Mr. McMillan, the inventor, and myself were the only ones interested in that. (i, o O 6* a = ^ 3 o-g til s ^2 ; 13 ^ o-: S >-, 5 5^ IS "^ THE DREYFUS CASE OF AMERICA 193 Rudolph Goeb, the mechanical expert employed by Lewis, as foreman of his experimental plant, states that work on this device was conducted before the organization of the Development and Investment Company and that it was abandoned and the eiFects of the company stored in his custody in the fall of 1902. The reason stated by Lewis to Goeb at that time was that the competition of similar devices was such that the company had no prospect of more than a ten per cent proiit, which margin would not warrant further financial risk. A patent on the steam trap was granted to the inventor, Benjamin F. Allen, on September 27, 1902. Meantime, Lewis had become interested in the adaptation of the principle of his patent for vending machines to the control of tele- phone instruments as a device for measured service. This was on the same principle as the coin-in-the-slot-pay-instrument, the use of which is now so nearly universal. The first model for this device on lines of Lewis' own invention was perfected by Goeb during the spring of 1901. During the month of April Lewis privately, as an individual, retained Goeb to devote his entire time to the perfec- tion of the addressing machine and telephone controller, apportion- ing the expense between the two companies as best he could. He thus had in the spring of 1901 three separate mechanical devices; a steam trap, an addressing machine and a telephone controller, in process of development. A number of his friends and associates were interested with him financially. The expense incurred was already considerable and it was apparent that still more capital would soon be needed. From these facts sprang simply and natur- ally the Development and Investment Company, which was formed to take charge of and develop all these various devices. During the j'ear 1902, the brightest prospect of the Development and Investment Company appeared to be the patents of the tele- phone controller. The patents and processes for making fibre stop- pers had also been acquired. Hence, Lewis' experimental plant in the newly rented workshop on the suburban railway track, was at this time engaged upon no fewer than four separate inventions. As the history of the development of these has only an indirect bearing upon the main current of this story, they will here be sum- marily disposed of. Work on the addressing machine and the steam trap was suspended, as we have seen, before the close of 1902. The telephone controller device then for a time held the centre of the stage. THE CONTROLLER COMPANY OF AMERICA. The Controller Company of America was organized in 1901 and its product first placed upon the market in 1902. It continued in operation and appeared to be on the eve of great success in the year 1905, when all at once Lewis' whole resources became absorbed with his controversy with the Government over the right to use the mails. The story of the coin-controlled telephone has been sum- marized by Lewis himself as follows: 194 THE SIEGE OF UNIVERSITY CITY The coin controller was a device for an automatic telephone machine which locked the recei^'er until you dropped in a nickel and returned the nickel if the connection was not made. The inception of this company was in 1902. Slot machines were then practically unknown. I was inces- santly bothered by people coming into the building and using my telephone. One dajf the idea struck me that such persons might be made to contribute their share of the cost. As I studied over the matter, a simple device for locking the receiver so that you could not get connection until you dropped in a nickel, flashed into my mind. I worked this out, made one, and at- tached it to my phone. It collected quite a number of nickels the first day. So I then stepped over to the Union Trust Companv to see Judge Medill, the president. The Judge was a very wealthy man, but had the reputation of being very shrewd and a little bit "near," that is, conservative, in parting with his money. Mr. McMillan, who was then the cashier, asked me where I was going. I said I was going in to get the Judge to give me a couple of thousand dollars for something I had in my pocket. He laughed and said, "Show it to me when you come out." I said I would. Judge Medill was taken with the device and asked me what I was going to do with it. I told him I was going to take out a patent and sell it to the telephone com- panies, or else attach it to the telephones and go shares with them. He agreed to go in with me, took out his checkbook and wrote a check on the spot for, I think, two thousand dollars. I know that I called Mr. Mc- Millan's attention to it as I came out. I then went to my patent attorneys and made application for the pat- ent. It developed into a very effective device. We decided that we had a pretty good thing. A great many of Judge MediU's friends among the bankers and business men decided to come in with us, so we capitalized a company for two hundred tliousand dollars. ' Its stoclc was immediately taken by the wealthy men of St. Louis. Noljody came in that could not afford to take what he did purely as a speculation. We employed the best electrical and mechanical experts and they evolved what was the predecessor of the modern pay station. The difference was this: The only pay station they bad at that time was either one where you dropped in a nickel, then pulled a handle which rang a bell to attract the operator's attention, or another patent to conflict with ours, such that you dropped a nickel and the operator told you to hang up the phone until she formed the necessary connection. Even then she would have to hold the phone until she found out whether you got the person you wanted to talk to. The device that was evolved out of my patent was siich that, when you dropped the nickel and central plugged in, the return current, if the line was busy, would automatically throw out your nickel. That saved so much time for the operator that she could handle forty or fifty calls with these machines while she could only handle one with any other." The telephone companies commenced to take interest in the matter. We corresponded with one, the JWaryland Telejihone Company of Baltimore and finally struck a deal with them, whereby we deposited twenty-five thou- sand dollars and acquii-ed the exclusive pay station rights of that company. We then equipped the city of Baltimore with pay stations. When our con- trollers were cut in on the system, the telephone exchange promptly went out of operation. There was some difficulty with return currents. Some electrical problem still had to be solved. Jleantime, other cities were bid- ding for it and one of the most prominent stockholders, I think Mr. For- man, of the Fourth National Bank of St. Louis, secured an option for us on the pay station rights on the whole city of Brooklyn. It looked like a very paying proposition. But it was going to take a great deal of money, because whenever we made a contract we had to equip a whole city with pay stations. Eventually we were to get a percentage of the revenue, which we figured out would give us a very profitable monop- THE DREYFUS CASE OF AMERICA 195 oly. Some dissension arose among the stockholders. Some were for in- creasing the capital to a very large amount, sufficient to equip all the cities which wanted contracts. Others would not vote for increase. The corpo- ration split up. Practically nothing further was done. I do not remember what the final wind-up was, except that as an officer I joined with one or two others and paid every bill we could find any record of. Almost all of the stockholders were very wealthy men, to whom the whole aft'air was merely an incident, hut I went to a number of my personal friends whom I had induced to join and bought back their stock at one hundred cents on the dollar. I took the loss myself. The following testimony of D.avid Sommers before the Ashbrook Congressional Committee is of interest here: I remember Mr. Lewis coming to me and representing that the automatic telephone controller pay-station device in which he was interested, was a good thing, in his opinion. He advised me to take stock in it. I took some eighteen thousand dollars or twenty thousand dollars of the stock. Later, when the p'an did not work out as was expected, Mr. Lewis repaid me in full, with six per cent interest on my investment. Only the Coin Controller Company of America, of all of Lewi.i' enterprises investigated by the inspectors, escaped the recommenda- tion of a fraud order. As, therefore, it is not involved in the en- suing controversj^, its further history may be omitted. It will be sufficient to say that a concern under the style of the Coin Con- troller Company was incorporated under the laws of Missouri on January 18, 1901, with a capital stock of twelve thousand dollars. The ownership was distributed among Lewis' personal friends and business associates, including Kramer and Judge Medill. The deal- ings in this stock were confined to fourteen individuals, all told. Later, on April 12, 1902, a new incorporation was formed under the style of the Controller Companj' of America with a capital stock of one hundred and fifty thousand dollars. This was increased in May of 1903 to two hundred thousand dollars. The board of direc- tors at this period included Messrs. Forman, Shepley, Edwards, John A. Lewis, McMillan and Hill — all bankers prominently identi- fied with four of the principal banking institutions of St. Louis — and a number of other well-to-do business men. The prospects of the concern were thought by its directors to be exceptionally bright, but the attention of Lewis was distracted by his troubles with the Government and the company was soon afterwards disbanded. THE UNITED STATES FIBRE STOPPER COMPANY. Early in the spring of 1902, Lewis was approached by a young man named Mason, who represented himself as authorized to obtain capital for a meritorious invention. At Mason's request, in May of that year, Lewis accompanied him to the inventor's workshop in a dingy little room behind a plumber's shop in St. Louis. In these queer quarters he was shown the first model of a machine, which is illustrated in these pages, for manufacturing fibre stop- pers. Lewis was strongly attracted by what seemed to him the great possibilities of this invention. He at once proceeded to nego- tiate a contract with J. H. Rivers, the inventor. 196 THE SIEGE OF UNIVERSITY CITY The machine has since been perfected and gives promise of ultimate fulfillment of Lewis' most sanguine expectations. It is an invention for the production of bottle stoppers from felted wood- pulp fibre. These are adapted for all purposes for which the ordi- nary bark corks or rubber stoppers are now employed. They also have other properties peculiar to themselves. The story of this device was entertainingly sketched by Lewis for the Ashbrook Hearings in the account we now give in his own words: The United States Fibre Stopper Company is a company for making artificial corks for bottles. It has promise of a wide field of usefulness. As to this company I will say that it is a favorite child of mine. I have always been very fond of mechanics. I have taken out several hundred patents in various countries, and on some of them, different to most in- ventors, I have made money; yes, considerable money. I am very fond of my mechanical paraphernalia. LEWIS AND THE INVENTOR. The United States Fibre Stopper Company came into being in this way; Somebody came to me one day, along in 1901 or 1903 and said, "Lewis, there is a fellow working in the back end of a plumber's shop downtown who has been working for several years on an idea, which I believe is one of the big- gest things in America." I said, "All right; I'll go and see him." I went, and found the man working by the light of a candle, at night, on a process and machine for making stoppers out of ground wood-pulp, out of waste paper, in fact. It struck me it might be a valuable adjunct to my pub- lishing enterprise — we had a great deal of waste paper which is nearly all wood-pulp. I went into the matter and offered to help the inventor. He had come to a point where it looked to me as if he really had something useful. So I took him under my wing. I said : "Here, I'll tell you what I will do with you. I will rent a plant and equip it with machinery and put you in. I will get a first-class chemist to help you. If you need a first-class machinist, you shall have him, too. I will pay the bills. You can go to work night and day until you get it perfected. Then let me see it. I will expect some results within a reasonable time, because I am going to give you every facility." This I did. I had already rented a two-story workshop on the Suburban tracks, near Kingshighway. I equipped this place with all the machinery that he said he wanted. I furnished a mechanical laboratory; employed an expert mechanic; engaged the services of a chemist and set them all to work. They worked along some time, but the macliine did not get perfected. I finally became convinced that the inventor had fallen into a rut. He had thought of the idea, but he fell down every time on the process for per- fecting it. Then he was not capable of getting up and taking a fresh start. He did not go at it from a new angle. He would start at the same place where he had fallen. So, I went to him and said: "I am getting tired of this. I will give you so much a week, provided you keep out of the shop. Then I will get the best machinists and chemists I can get in the United States, and we will see what they can do." PROBLEMS OF MANUFACTURE. Not only was the machine to be constructed, but there were structural problems connected with the cork itself. The wood-pulp had to be felted, not simply compressed. If you compressed it, it got as hard as a stone, M-ith no resiliency. The ground pulp, to be properly felted, had to be made about the consistency of milk, winch is ninety per cent water. I refer to country milk from the cow. The water then had to be drawn out of that felted stopper. If you drew it from the top and bottom there was vertical cleavage after a time, and it came apart. If you drew the water from the sides, the cleavage was longitudinal. Sometimes, after the cork to^!:^tc/orsi^'r!:!;t"'""' "^ ""• ^''""^ '"*-> '^ ^"''^"^'-^ "'^^'-*^^ -< ^/- THE DREYFUS CASE OF AMERICA 199 had dried, it split lengthwise, and particularly if you put a corkscrew into it. They did not at first seem to be able to overcome the difSculty. I had already Inquired around for one of the best mechanical experts in the country and I had engaged a young man named Goeb — he calls him- self Gabe — whose training had been making astronomical instruments. He is one of those careful mechanists who take twice as long to put a thing together as others do. But when it is done it will work. Then I retained Dr. Gudeman, head chemist of the Glucose Trust in Chicago, and handed him several thousand dollars with which to experiment. I also engaged Prof. Caspar! and did the same with hira. We worked along for a year, until finally they brought the corks to me, sajdng, "We have perfected the process and perfected the machine." I submitted the corks in the form of discs used with crown tin caps for bottling, to the Anheuser-Busch Brewing Company and they bottled a lot of their goods with our corks, and subjected them to a very severe test. They were very glad to have promise of an artificial cork, because the holes in a bark cork are full of tannin and dirt. If you bottle beer with a bark cork, in a short time the tannin dissolves, and puts a blue streak through the beer. Then a large proportion of bark corks are porous through and through. If you cork any carbonated liquid with them, in a short time it will become flat, because most bark corks leak. MARKET FOR THE FrBRE STOPPER. If this artificial cork was what we had reason to believe, it was one of the largest monopolies in the world. To give some conception of what it means, I will say that in Baltimore is the Crown Seal Company, wliich has made millions of dollars on the little metal cap that goes on the top of the beer bottle. Inside that cap is a thin layer of cork. A considerable per- centage of these caps leak and have to be rebottled, while under our process the metal caps absolutely seal the bottle permanently. I submitted the stoppers to the Anheuser-Busch Company and they wrote me a letter, after an exhaustive series of tests, stating that was the very thing they had been looking for, and commending it in the highest terms. I submitted it to the great chemical houses and bottling houses throughout the United States and received everywhere reports commending it. One of the features of it was that it solved the problem of the non-refiUable bot- tle. We could make the cork any size, shape or color and put tlie name and trade mark on it without additional cost. When a corkscrew was put into it this trademark would be destroyed. The bottle could not then be refilled without detection. It was about this time that it became known throughout the world that the world's supply of cork bark was being exhausted. They had stripped the cork trees of Spain to such an extent, that each year the grade which had formerly been second was advanced to first grade. It is now almost impossible to get good cork. This new process of ours, if it was right, and successful, gave us the world's monopoly of corks. Moreover, our stoppers could be produced at about om-lenth the cost of bark corks. A MILLION-DOLLAR COMPANY. It looked pretty good to me. I had spent a great deal of money devel- oping it. But I was satisfied from the reports that we had succeeded in perfecting it. So at last we incorporated it for a million dollars. This was in 1903. I had it patented all over the world except in Scandinavia and Russia. I took patents in Mexico, Canada, the United States, France, England, Germany, and I believe Australia — almost the entire world — the patents running from ten to twelve up to sixty, even eighty, years in some countries. Our patents were the pioneer patents throughout the world. I came across only one other patent of the same nature. That was the Holmes patent in the United States, which was an attempt to do the same thing, but had never succeeded. I purchased it for twenty-seven thousand dollars, in order to get it out of the way. 200 THE SIEGE OF UNIVERSITY CITY One of the justifications for incorporating it for the large sum of a mil- lion dollars, was the fact that we were already in successful negotiations witli large concerns in foreign countries for the sale of the foreign rights. My idea was not to go into the sale of the corks ourselves under these patents; hut to lease the rights in the different countries of Europe and America for a sum down and a roj'alty of half a cent, to a cent, per gross for all corlis manufactured under the process. We had practically closed the negotiations to all intents and purposes in Germany and England. The representative of the German firm had traveled as far as New Yorli to see us. One proposal from a big paper house had got down to a figure of a quarter of a million dollars for the German rights in Germany, cash, and a royalty of half a cent a gross. The German patents are guaranteed by the German Government. You do not have to fight for your patent there. Once it is granted, the German Government protects it and guar- antees it. The deal for England, as I remember, was for half a million dollars, and the question in dispute was whether the contract should include the British colonies. MARKETING THE STOCK. The company was already incorporated. We had sold about one hun- dred thousand dollars of stock at par and two hundred thousand dollars of it had gone to the inventor. The price soon went up to double, that is, two dollars for a dollar share, because bids for it were coming in from the cork manufacturing companies. The great bulk of stock was, in fact, purchased by cork concerns, and users of corks. I was president of the company. I wanted to sell tiiis stock to develop various details of tlie proc- esses, to make the model machines, and to send proper people over to Europe for the sale of the foreign riglits. About that time we suddenly found out that we had not perfected the cork after all. A further mechanical problem had arisen in tlie structure of the cork. We found this out after we had sold the one hundred thou- sand dollars of stock mentioned. This was eight or nine years ago. Nobody knew about this mechanical defect except myself and the machin- ist. As soon as I found that out, I immediately stopped the sale of the stock. I did not, as I recollect, accept about fifty or se\£nty-five thousand dollars that had been sent in for stock. I refusecl to sell any more. Then I began to purchase back the stock I had sold. I ha\'e purchased back all, I be- lieve, but about twenty thousand dollars. I don't think there is more out- standing than that. In some cases, when I tried to purchase back and ex- plained the circumstances, the purchasers said the}' did not care to sell. They asked if I was going to de\'elop it. 1 said yes, and they said, "That is all right, then we will stay in." I paid back the same price at which I had sold. In the last year or two I have not been able to buy back, because I have had no money to do so. The inventor had received, I think, one- fifth of the stock for his rights and interests in it. That stock of the in- ventor is what has been peddled around and is somewhat in evidence in this controversy. I have not sold, nor has anj'one connected with me sold, with my knowledge, in recent years, any of this stock. None that I held myself has been sold in these last seven or eight years; and during that time I have purchased back at least one hundred thousand dollars' worth. I do not think that we stated in our magazine that we had sold the pat- ent rights for England for five hundred thousand dollars. I am not cer- tain. That can be seen. But if it was a bald statement that we had already sold them, I had ever}' reason to believe that we had sold them, as the negotiations were closed. The man who came out about the English deal — or it may have been the German one — was already at New York and wired me. I wired him back and told him what had' oc- curred and then wrote and told him. the situation, that I did not feel jus- tified in making the deal and that he could call it off for the present, be- THE DREYFUS CASE OF AMERICA 201 cause there was only one thing to do now, and that was to go at it again and see if we could not perfect it. QUALITIES OF THE FIBRE STOPPER. The defect we discovered was in the mechanical structure of the cork. After a time all the corks developed a flaw. We wished to correct this. This was seven years ago. It is now corrected and we have perfect fibre stoppers. The trouble was in the felting of the pulp wood or fibre. The action In felting is peculiar. It is comparatively simple in making paper, because this is not solid, but a thin, flat sheet, easily dried by running under pressure through hot rollers. In the stopper, it is a mass and must be felted and dried in such a way that it will not split and will not lose its resiliency. If you take one of these finislied stoppers and throw it on the floor it will bounce five feet or more. This was the problem, to preserve the resiliency and give it strength. One of these corks has six hundred times the strength of a bark cork. When the defect was developed I was so firmly convinced that we had one of the best things in the industrial world if it could be perfected, that I immediately doubled the force at work, got another chemist and then an- other and a third. I got other expert mechanics. We went to work on that thing and have worked at it without intermission, all these years, to within the last few months, in all eight years. In my judgment it is not only now perfected, but if I could save the cork company from the wreck of the Siege of University City, I believe I could sell all those rights for enough to re-establish all our enterprises again, and pay off our indebted- ness. I will say, in conclusion, that when we moved out to the country at University City, I erected there a large new plant, in a building one hun- dred and seventy-fi^e feet by one hundred and twenty-five feet, three stories high; and equipped it with the most modern machinery and a fine chemical laboratory. This work has gone on there uninterruptedly up to a few months ago, up to the first part of this year, 1911. Rivers and his friends had incorijorated under the style, the American Fibre Stoi^per Company. For convenience of transfer Lewis had new articles of association drawn up, under the title. The United States Fibre Stopper Compan}^, under the laws of South Dakota. Prior to this, in order to provide working capital, Lewis effected on September 24, 1902, the sale of three one-hun- dredths of the stock of the original companji- for three thousand dollars. The purchaser was H. A. Swanson, a heavy advertiser in the Winner and Woman's Magazine from the beginning, and after- wards one of Lewis' staunch backers. A similar interest was sold to N. A. McMillan of the St. Louis Union Trust Company. The new charter was granted in December, 1902. The executive board of the American Fibre Stopper Company held its last meeting on December 31, 1902, and Rivers was authorized to assign his pat ents and inventions to the United States Fibre Company, then in process of formation. THE FIRST STOCK PUT ON THE MARKET. In February, 1903, an arrangement was effected with the Ger- mania Trust Company of St. Louis to act as fiscal agent in the issue and transfer of stock. Instructions were given them to issue the entire stock to the Development and Investment Company, with the exception of eighty thousand dollars worth each to Swanson 202 THE SIEGE OF UNIVERSITY CITY and McMillan, and ninety thousand dollars each to Lewis, who was president, and Cabot, his associate, who was secretary. The following transaction was then carried out. The trust com- pany was instructed to issue and then to cancel one certificate of stock of par value of one hundred and fifty thousand dollars and to reissue that amount of stock on receipt of subscriptions accom- panied by cash. The cash was to be paid as follows: ten per cent to the treasury of the company; ten per cent to the trust company, for acting as agent; the remainder, eighty per cent, to be credited to the account of the Development and Investment Company as sales agent and promoter. The one hundred and fifty thousand dollars' worth of stock was then placed on the market at par. Advertisements were inserted in the Woman's Magazine and Farm Journal and a considerable amount was subscribed by Lewis' readers. Large subscriptions were also received from persons in- terested in the cork industry and persons using corks. In all, over one hundred thousand dollars was realized. Eighty per cent of the sums received by the Development and Investment Company on these sales of stock were available as gross earnings to cover the cost of sale and the expense of promotion and development. The surplus over this expense, if .any, was available for the payment of interest upon secured indebtedness of the Development Company. Any balance could be applied for distribution to stockholders. It can thus be seen how the Development and Investment Company was able to pay dividends. Rivers was first installed in the experimental plant of the De- velopment and Investment Company in July, 1902. He brought along from his former workshop the parts of two complete machines, of which the first was never assembled and the second was merely a model for experimental purposes. This obviously required to be rebuilt to turn out a commercial product. Rivers was sanguine that he could reconstruct this model within thirty days, and definitely agreed to do so. When his device was subjected to the tests of the experienced mechanics and chemists employed by Lewis, difficulties develoiJed. The machine was not completely rebuilt until October 10, 1903. Two months more were spent in further experimental work and changes. Rivers then invited the directors to witness a demonstration of the machines in December, 1903. This was the basis of a glowing announcement by Lewis of (he success of the in- vention, in the annual statement of the Development and Invest- ment Company for that year. But, notwithstanding this apparent success, it seems that Lewis was again misled by the inventor's state- ments. The device was not yet perfect. Further tests developed the failure of Rivers' second model to turn ovit a marketable product. Rivers was then dismissed, with his present of stock, and the prob- lem was given over to Goeb, a practical mechanic, by whom addi- tional years of experiment were necessary to develop a thoroughlv practical machine. But Lewis had in the meantime with his usual THE DREYFUS CASE OF AMERICA 208 optimism, recommended to readers and friends the purchase of the stock at par. Sales were made. Large quantities had been taken. Negotiations were pending for the sale of patent rights in foreign countries. Lewis even went so far as to announce in advertisements in his publications, the actual sale of the English rights for a lump sum of half a million dollars, with future royalties of half a cent a gross of corks. The deal, however, did not go through. This was said to be on account of the sudden discovery of a further flaw, on which Lewis himself stopped the negotiations, though he asserts that the minds of the negotiators had met and that all the terms of the future arrangements had been agreed upon. It was upon this tentative arrangement that Lewis based the representations which effected sales at one hundred per cent premium. Lewis was well aware that the United States Fibre Stopper Com- pany stock was at this time a speculative proposition. Legally, the offering of this speculative stock at public sale through the Devel- opment and Investment Company was clearly permissible. Whether, from an ethical standpoint, Lewis, without plainly pointing out its nature, ought to have recommended its purchase to his readers, or even permitted the appearance of advertisements of it in his pub- lications, is a question affecting his good faith, upon which opinions differ. The idea was good. The machines were being made. There was undoubtedly a profitable market for the proposed product. Lewis' error lay in his acceptance of the representations of Rivers' witliout a more thorough investigation than he evidently gave. As the sequel has shown, he was misled from the outset, both as to the status of the invention and as to the ability of the inventor to cope success- fully with the mechanical and chemical problems involved. Such difficulties are, however, inherent in most good inventions. Both the impulsive recommendation and consequent sale of this stock were made on Rivers' unverified promise and Lewis' antici- patory representations as to the sale of English rights, before con- tracts were actually in his hands. These are examples of Lewis' overwhelming optimism, his audacious and even reckless disposition to venture any risk, his supreme confidence of his ability to make good in the end. Such recklessness in a business man is absolutely unjustifiable. Lewis is deserving of unsparing criticism here. He stands blameworthy of all that has been meted out to him for both of these proceedings. THE QUESTION OF GOOD FAITH. Nevertheless, evidences, not of fraud, but rather of boyish good faith abound at every stage. He had confidence in Rivers, and believed that the inventor would make good. He believed that the English capitalists would sign the contract, embodying the terms which they had accepted. Above all, he had absolute confidence in his own ability to carry the project through to a successful issue, 204 THE SIEGE OF UNIVERSITY CITY and to realize in the end all his own and the stockholder's hopes. And he still has this confidence. Lewis, moreover, when pressed as to whether such conduct was right, falls back on his absolute guarantee to subscribers against all loss through the patronage of the advertising in his publications. He maintains that the appearance of an advertisement in the Wom- an's ^Magazine, and especially that of one of his own enterprises, was equivalent to his personal endorsement. He has many times paid back losses to others. He considered himself, individually, and the Woman's Magazine as a company, boiuid to make good any losses thus sustained, the same as they would be bound by their endorsement on commercial paper. Lewis thus takes the ground that the purchase of stock of the United States Fibre Stopper Com- pany in its early stages was safeguarded against the usual risks of speculation, by his ovm ability to back his representations and, if necessary, to relieve the purchasers of their investments. No attempt is here made to justify this line of argument. Laws of ethics or rules of business or common-sense may make Lewis seem quite wrong. But, that he acted in good faith and in the be- lief that he was fully justified, no one who is fully cognizant of Ihe facts of his career will question. This instance is characteristic of the worst i^hase of Levv^is' type of temperament; namely, a ten- dency to recklessness in overstatements, to extravagant optimism and to adventurous disregard of caution. His subsequent conduct, however, is equally characteristic of the best phase of his character. For, as he testified, he immediately, ui^on the final break with Rivers, withdrew all further stock of the United States Fibre Stop- per Company from the market. He notified the investors of the difficulties that had arisen, and undertook in case they so desired, to relieve them of their investments. He made good, in other words, both his express and his implied guarantees. Apart from liis lack of caution in properly testing Rivers' inven- tion, and his over-hasty reiJresentations to the public, especially in the case of the English negotiations, Lewis' judgment upon this fibre stopper invention appears to have been thoroughly sound, and his mode of handling the whole affair, skillful and practical. The employment of a reputable trust company as fiscal agents insured the proper handling and registration of the securities. The experimental plant of the Development and Investment Company was well equipped and well organized. It proceeded under Lewis' instructions to ojierate intelligently and in good faith with sole regard to the perfection of the process. The delicate and costly task of securing the necessary puatents received due attention. The negotiations for the sale of the foreign rights were of such a nature as would have been extremely advantageous to the company had the representations of the inventor been true and his expectations realized. The whole affair is typical of the best and the worst that THE DREYFUS CASE OF AMEEICA 205 can be alleged of Lewis as a promoter of mechanical inventions and processes. THE FIBRE STOPPER UNDER THE PROBE. The Congressional Investigating Committee, on the occasion of its hearings in St. Louis in November of 1911 made a tour of in- spection of University City. It afterwards called as a witness the expert mechanic Goeb, employed by Lewis on these inventions. The following digest of the testimony of this expert, and the statement of Congressman Redfield as to his personal inspection of this plant are of high interest as bearing upon the question of Lewis' good faith. Mr. Goeb said: I was first employed by Mr. Lewis iu 1901, to make three addressing machines. I was then in the employ of another firm, Messrs. Munn & Co. I was shortly after employed regularly by Mr. Lewis for experimental work and getting up new mechanical machines and perfecting his ideas. I first began work on t)ie Fibre Stopper Company in conjunction with Mr. Rivers, the original inventor, in 1903. Mr. Rivers was then let out and I had fuU charge after October, 1903. The thop %vas situated then at 4961 Suburban Railroad Track. It was specially fitted for perfecting the cork machines. We vacated those premises on August 1, 1909, and moved to University City on December 1, 1909. The original inventor, Mr. Rivers, I found, had made five or six differ- ent attempts to perfect the manufacturing system for producing the cork. He finally got to the place that proved it a complete failure. This was in December, 1903. He had announced his complete success to Mr. Lewis, but then developed complete failure in mechanical construction. I took command of that work on the first of January, 1904. During the seven years I have had complete charge of it, several expert chemists were employed. I v/as also assisted by machinists and expert draughtsmen. I was supplied with every facility for perfecting that ma- chine. At times I was obstructed by funds getting short. But the in- structions were to spare no pains and efforts within the limits of our funds and our capacity to perfect the machine. For seven years I have been en- gaged practically constantly on that work. The mechanical work went on along with the chemical experiments. Mr. Haywood was at one time general manager. He got Dr. Caspari, the head of a medical college or school of pharmacy in St. Louis, to work up chemical formulas. Caspari produced a form of treatment which was endorsed by the Anheuser-Busch Brewing Association as a result of tests made with the assistance of their chemists. After I had fulfilled my duty as a mechanic, in aiding to perfect the machine, Mr. Lewis made me the promise that he would give me fifty thou- sand dollars of his own stock, to show his appreciation of what I had done, whenever the machine was perfected. I finally announced to him that the machine was mechanically perfect, and he gave me fifty thousand dollars of the company's stock. Tlie machine is now, so far as practical purposes are concerned, perfect. There were three diiferent types since the first so-called perfected machine. The last machine embodies still other fea- tures, including what we call the Turret. This Turret machine is practically perfect. For material, lathes, supplies and labor, we have expended, perhaps, an average of five hundred dollars a week, sometimes more, sometimes less. On one machine, Mr. Rivers, the inventor, with a mechanical engineer as his assistant and ten mechanics, were at work for almost a year. At that time I estimated he had spent about twelve thousand dollars. There has been expended, I should judge, outside the investment in the building, about five hundred dollars a week for some four hundred and sixteen weeks, or over 206 THE SIEGE OF UNIVERSITV CITY two hundred thousand dollars, in perfecting cork machines, since the stock was withdrawn from sale. Congressman Redfield, of the Ashbrook Committee, here inter- posed his testimony as to the plant from a personal visit, as fol- lows: I think it is proper, on this particular subject, for me to put upon rec- ord in a very few words what I found myself in an examination over the floor of this building, to be the facts. I ought, perhaps, to preface it by saying that I am familiar with the construction of factories as they stand in at least the Eastern and Central .States of this Union, having visited many hundreds of them. I have built them myself. I have represented them, have owned them, of several kinds, and have examined factories in every one of the larger countries of Europe. I have never seen a more perfect, well-balanced, carefully designed and constructed building then this plant which we were shown yesterday. The building is not only brick, as many are, but it has concrete columns and cellar, concrete floors and a concrete roof. It has exceptionally fine light, and is of a thoroughly solid character. The equipment is in many respects of a peculiarly high grade. The elevators and some of the machinery show that great care has been used to get that which was of permanent value. It is not explicable on any other basis, for they could be had to do the work at much less cost. The building is not equipped for making heavy ma- chinery, but for the work of light machinery it is very nearly if not quite as good a plant as I have ever seen. The plant is entirely self-contained. It is equipped for designing, for experimenting, for making its own ma- chinery, and for operating that machinery when it is made. I do not know who the person was who designed that plant. I have not met him. I have no knowledge of hirn. But, whoever he was, he understands his business. I am very glad to make a record of the value of and the kind of work pul; into that plant. The subject of the practical value of companies based upon pat- ent rights in mechanical devices, in so far as it afFects Lewis' good faith, may be brought to a close by the testimony of F. R. Still, an associate of Congressman Redfield in his business enterprises. Mr. Still chanced to be passing through St. Louis while the Congres- sional Committee was in session and, quite by accident, attended one of the hearings. He was called by the committee at the sug- gestion of Mr. Redfield, as an expert to testif j' as to the normal and usual experience of companies engaged in the development of pat- ented articles and processes. This is the substance of Mr. Still's examination : I am one of the associates in business of Mr. Redfield, one of the com- mittee. I did not know of his presence in St. Louis when I came to the city this morning. I missed connections. I am not acquainted with any of the parties to this action and never heard of the United States Fibre Stopper Company, nor met Mr. Britt or Mr. Madden. My experience as a mechanical engineer and manufacturer has been as follows: Since 1886, I have been with the company I am with at present. I started as draftsnian and am now one of the executive officers and have been for years. Hardly any action has been taken in the company but what has been more or less under my charge. I have had a great deal of experience in developing inventions — blowers, heaters, dry kilns, dust sepa- rators, exhaust fans, steam engines, boilers, drying equipment; and am brought into contact with almost every kind of manufacturing. Nearly everything we make is patented. L-. T3 -^ ,C THE DREYFUS CASE OF AMERICA 209 We always have difficulty in developing patented processes. One case was a patented apparatus for drying bricks. A man named Alex Scott patented a process for conveying briclis to the kiln, setting them directly in, drying them and thus doing away with the dryer. We bought the pat- ent from the firm in Columbus which owned it, and organized a company timong ourselves and our employees. There was no stock in our own com- pany for sale, and we thought this was an opportunity to interest our men. The president paid for the patents and we took over the company, some twenty men becoming owners. We have now twelve plants working successfully on this device. But at first the system met with one difficulty after another. In burning bricks, (which is a science in itself), if the chief burner gets his back up or put out at all, one thing after another goes wrong. We drifted from one thing to another. We even purchased patentg on a down-draft kiln. But, after serious knocks, about two years ago we decided to drop it. We offered to take back the stock. The Scott Kiln Company was wiped out. After six years of activity and the best knowledge we had, we concluded the thing was worthless. This was two years ago. A year later, a key to the diffi- culty was found. We bought another patent, something we didn't have before, and now the kiln is a success. This is the history, in substance, of most of the great inventions. Nearly everything we ever had contact with caused us a great deal of grief, if not almost despair, before a successful conclusion had been reached. This has been the case, too, with the typewriter, and with the automobile. I am intimately connected with that. I know of no great invention which has not passed through that stage. I have never seen anything that was a suc- cess from the start. Mr. Slemp: Wouldn't you like to buy some stock in the Fibre Stopper Company yourself? (Laughter.) Mr. Austin: I was just going to suggest to Mr. Redfield and his secre- tary that they gobble up this concern while in St. Louis. Mr. Still: I don't know anything about that brand. Mr. E. G. Lewis: If you found a concern owning pioneer patents cov- ering forty, perhaps eighty, additional processes, with patents in United States, Canada, Mexico, France, and other countries, for manufacturing out of wood pulp a substitute for bark corks equally good, at one-tenth the cost of production, would you consider the ownership of such a process and patents very valuable? Mr. Still: It certainly sounds so. Mr. Lewis: Would you consider five million dollars an excessive capital stock ? Mr. Still: I would not. I think it would be an easy matter to get the money if it had been demonstrated that it was a success. I want to see it tried once. After that it is merely a mechanical process. Mr. Lewis: In other words, if one cork could be made, a million could, by duplicating the process and machines, and tliis would be satisfactory to demonstrate its value as at least five million dollars? Mr. Still: Yes. I don't know whether I v/ould put up that amount — with one cork. But I understand what you mean. Mr. Austin: I should like to see you float five millions of dollars on one cork. (Laughter.) Ma. Lewis: I mean the process having been demonstrated. Mr. Still: If, as you say, the largest users of the product in the world pronounced this product superior to anything they had used before or at least equal to it, and said, "That is exactly what we have been looking for," I should consider that good evidence you had perfected the patent. I would go the limit on that. Mb. Lewis: If, in the face of that you discovered a mechanical fault to be 210 THE SIEGE OF UNIVERSITY CITY overcome to make it really perfect, and you stopped the sale of stock, re- turned the money, purchased back stock sold, and then turned and spent another two hundred thousand dollars and over eight years in perfecting the invention, would you consider that a reasonable exhibition of good faith? Mr. Still: It sounds to me as though that would be about aU a man could do. Mr. Redfield: If a difficulty arose, not in the process, but in the physical nature of the material used, would that be a normal and usual difficulty? Mr. Still: Yes; I have a case myself of a high-speed blower. It pro- duced the high pressure we desired, but in course of time the metal of which the spider or wheel frame was made became fatigued by the speed. One alter another broke down. We replaced the material with steel made at much higher temperature; and they withstood the strain. We had to work oghteen months on it. I would have spent two hundred thousand doUars on it if necessary. I would certainly regard two hundred thousand dollars spent on perfecting a process for making artificial corks as a very small sum in comparison with its value. The story of the United States Fibre Stopper Company is by no means at an end. The machine produces artificial corks perfectly. Jt is now a matter of mechanical reproduction. Had Lewis' re- sources not been absorbed in the struggle with the Government in the years succeeding 1905, it is altogether probable that a complete equipment for the manufacture of fibre stoppers would have long since been installed in the company's plant at University City, and its products widely placed upon the market. CHAPTER IX. THE FOUNDING OF UNIVERSITY CITY. The Choice op a Site — The Growth of St. Louis — University Heights — Six Times One Are Six — A City Beautiful — The First Eighty-Five Acres — A Million Dollar Check — The Deal Under the Probe — Lewis Home at University City — Millions in Options. University City was founded in the fall of 1902, four years before it was set apart by law as a separate municipality. This event was the beginning of a new era for Lewis and his enterprises, marking, as it does, his removal from the Winner building down town to his present location, now the heart of University City. The change in his surroundings was reflected in his conduct of affairs. He judged men and events from a loftier viewpoint. His activities rise to a higher general level. They assume a more elevated tone and dignified character. They embrace greater values, touch per- sonages of higher economic and political rank, and acquire national rather than merely local significance. the choice op a site. Lewis has sketched the history of the founding of University City in his promotion literature, and in the columns of the Woman's [Magazine. He also told the story in full to the Ashbrook Con- gressional Committee. The following account is digested in his own words so as to present at one view, the process of reasoning which led him to pick out this particular location, and the sequence of events that followed. He says in substance: While I was busy attending to the growth of the Woman's Magazine, I had clearly in my mind that St. Louis was going to be a big city, one of the first in the United States. Probably, no city in all the United States has a future more assured than St. Louis. It is situated on the great high- way of the Nation, the Mississippi River. Its position is such as to hold the South, Southwest, and West as tributaries to its commerce. Its mer- chants' enterprises draw their business from an extent of country immense in size and fabulously rich. The city is known as one of the richest in the United States. Its wealth is spread in moderate fortunes among a great number of citizens, so that it lias become a city of attractive homes. In no other city are there so many people able to build and own the beautiful homes in wliich they live. Yet, by reason of its situation, no other city of its size has so little space available left for fine dwellings. Cities located on large rivers always develop their finest residence dis- trict away from the river, not along the river front. St. Louis is situated on a bend of the Mississippi, which is almost a horseshoe. The city occupies the space inside the bend. It has, therefore, been forced to build up and develop along the narrow tract leading away from the center of the bend. Its line of growth is thus necessarily toward the west. The finest residence section is naturally the West End, and only in this direction can more of these beautiful homes be built. 211 212 THE SIEGE OF UNIVERSITY CITY I saw that the city must increase. I knew that land values In the heart of the city must appreciate, that rentals must be raised. I realized that we would soon need larger quarters. We were then occupying the basement of some buildings down town, and the second and third floors of others wherever we could get the necessary rooms, as close together as possible. I saw that we should have to build or acquire a large plant somewhere in or near the city. I was the principal owner of this publishing company which was making a great deal of money. We were spending money freely, yet it looked as though we were going to make a great deal more. I con- cluded, therefore, that I would buy outright a suitable piece of property, establish a new plant and beautify the surroundings. I had some money of my own. Besides, Mrs. Lewis had some money. This credit of my own and my corporations, I thought, would be enough if properly managed to finance the whole scheme. I, therefore, began to cast about for a suitable location. I commenced to look over tlie city and suburbs of St. Louis very carefully. I made a careful study of the entire real estate situation. THE OttOWTH OF ST. LOUIS. The growth of a city is from high ground to high ground, from hill to hill. The hollows fill up later. This has been the case in St. Louis. To the south are the manufactories and brick fields. To the north the land is not laid out for fine residences. Therefore, the natural development has been west, from hill to hill. St. Louis has, in fact, developed in zones from height to height. Twenty years ago the liigh land from Twelfth to Eighteenth along Locust street was the fashionable residence district. Tliese mansions are now oiiices or restaurants. The tide next rose to Twenty-fifth street, which is the next highest land west of Eighteenth. Even as recently as ten years ago this was the centre of fashionable homes. The next jump was to Grand Ave- nue, which is Thirty-sixth street. Then came the long stretch to Taylor, or Forty-fifth street. Eight years ago this was considered the extreme west limit of St. Louis. Two more jumps were taken to Kingshighway and Union Boulevard. The centre of this is now Lindell Boulevard, where are located all the great private streets and places, and the costly homes of the wealthiest people of St. Louis. After this came new buildings in vacant land until you come to the next height, some distance out, which is now called University Heights. UNIVERSITY HEIGHTS. After a very careful survey, my attention was attracted to the high land which lies along both sides of what is now known as Delmar Boulevard. This is the main artery of the West End of St. Louis, because it was for- merly the old Bonhomme Road, the first French trail, which was the line of communication between St. Louis and the early settlers in the interior of the country. It is now a great east and west boulevard running through St. Louis straight west out into St. Louis county, right through the heart of University City. This location, on which the great octagon tower was put, had been the property of the Bonhomme Land Company. It was a vacant cow pasture which the owners had taken for a debt. My reasons for taking this tract of land enter into the whole proposition. The location was an ideal one for my purpose. Along one side is Forest Park, which had recently been selected as the location of the World's Fair Grounds. Next came the tract just then acquired by Washington University for its new buildings. This institution, the leading university in the neighborhood of St. Louis, had recently moved from its premises down town, and bought the laud next Forest Park upon the west. Here they have since laid out college halls and quadrangles in the style of Oxford and Cambridge Uni- versities. That fixes tlie environment, and gives the surrounding land a higlier status as to residence value. My tract is thus the centre of a complete little district in between Forest Park and Washington University on the south, and the far less demandable u S" ^ a ^ ^ ..;■ P ^ U o ^ "TJ «--, ■Ci, ~ O CI O t- •2 THE DREYFUS CASE OF AMERICA 215 land on the north, like a cork in the neck of a bottle. Through this district the progress of the building of fine residences must tend, and the conse- quent pressure must force up prices to almost any level which the owners see fit to demand. This tract lay practically alongside of the University, hence the name University Heights. The land was the highest in the dis- trict, and was unoccupied. The only objection was that it was thought to be too far out. Nobody in St. Louis seemed to have any respect for the property at that time. In fact, when I commenced to buy they made a rush to sell. The real-estate men of St. Louis even went to the National Bank of Commerce at that time, and asked the bank to withdraw its credit from me, because I was starting a fictitious real-estate boom which in their opinion would not materialize for thirty years. I thought that my judgment was better than theirs, and the event has proved that it was. SIX TIMES OJTE ARE SIX. I had a canvass made of all the vacant lots in the West End within the reasonable limits of possible growth for a fine residence section. I found in all there were only six thousand left. 1 then went to the building rec- ords, and found that those lots were being built up at the rate of about a thousand a year. The result would be that in about six years all the prop- erty intervening between the land I had in view, and the solidly built up portion in St. Louis, would be entirely occupied. There were six thou- sand vacant lots, and the people were building at the rate of one thousand houses a year. Every time I multiplied up those six times one thousand homes it made six thousand. I knew the intervening space would be cov- ered in six years, not thirty. I knew that the new homes would have to be in what is now University Heights or out beyond it. Having these facts well in mind, I determined to go a good deal deeper into the scheme than I first proposed. This tract of land lay along the main western road, just outside the city limits. The limits of St. Louis extend up to about Sixtieth street. Our tract would begin at Sixty-tliird. I found that I could not buy the corner lot which I wanted for the site of my publishing plant without acquiring the entire property. I, therefore, determined on buying that tract and a large amount of the adjacent property and that I would not only build up there a beautiful plant, but also surround it with high-class improve- ments. I would then make it a fine residence section and lay it out as a separate city from St. Louis. A City beautiful. A location outside the city line had some advantages and some disad- vantages. The tax rate was much lower. This was an important fact, in view of my calculation that I would have to carry my undeveloped prop- erty for at least six years. There is also greater freedom in laying out a. tract not within city limits. On the other hand, the municipal improve- ments do not extend over the city line. One specially bad feature was the proximity of Delmar racetrack, which was then in full swing. The sport- ing element (which afterwards created conditions such that Governor Folk called out the militia and put the racetrack out of business), took advan- tage of their proximity to the city limits. They put up all sorts of gam- bling places and dives just over the line into the county. These were right at our front door. No doubt this was one of the reasons why the land could be bought so cheap. I found, however, on looking up the matter, that there would be a rem- edy for these conditions in the incorporation of a new city. St. Louis is one of the two cities in the United States that is not in any county. There is a provision of the Missouri law that one city cannot be incorporated within two miles of any other city in any county. But St. Louis, not being in a county, the condition was such that if it ever became desirable to in- corporate a new city just outside St. Louis, this could be done. This fact 21G THE SIEGE OF UNIVERSITY CITY seems to have been overlooked. No one else had thought about it. This tract was really more valuable than had been thought. About this time I began to work out the idea of a model city which should be a real "City BeautifuL" The thought I had in mind and that I was working on was this: Having acquired this property I would lay it out under one great engineering plan as the most beautiful residence section conceivable. When it had acquired enough population, I would incorporate it as a separate city. I would be the mayor. Then, having the municipal power, I could always protect it. If anybody should erect a soap factory, for instance, adjoining our residence section, on which we were spending enormous sums for improvements, we could condemn that prop- erty, or, if it was within three miles of the municipal centre we could make it a city park. For it is often the case with such a plan that somebody gets in the middle and tries to hold it up, hoping to be bought out. Then, if we could not deal with such obstructionists as interfering with our pub- lishing plant, we could handle them as city officials. The keerij far-seeing glance which Lewis thus shot into the very heart of the complex conditions destined to determine the real estate development of a great city, is among the most characteristic and representative acts of his entire career. A study of the real- estate map of St. Louis at the present time proves the soundness of his judgment. A glance at the views, shown elsewhere, of the resi- dence property built up in what were then vacant fields between University Heights and St. Louis shows the accuracy with which Lewis had estimated the drift of events. In this connection he says: When we went out there we were almost the sole inhabitants. I remem- ber one other house out there; possibly there were two others. To the east of us were Park View and Washington Heights. These at that time were being graded. There were practically no houses in sight, perhaps a half dozen all told. As far as the eye could see was vacant land. Tliere is on that same area today, I should judge, about iifteen hundred houses. It is the finest residence section in St. Louis. THE FIRST EIGHTY-FIVE ACRES. The manner in which this purchase was made was thus recounted by Wm. H. Lee, President of the Merchants-Laclede National Bank since its incorporation in 1885 before the Ashbrook Committee: The Merchants-Laclede National Banlc, with two of its directors, Mr. Paramore and Mr. Conzelmann, had each acquired one-third interest in a piece of land located in what is now University City, then owned by the Bonhomme Land Company. This is the plat on which the octagon building of the Woman's Magazine is situated. This land was taken for a debt on the part of the corporation known as tlie Bonhomme Land Company. The corporation had been sold out under a deed of trust. All the parties inter- ested were given an opportunity to get in. It was finally bid in by these three interests. Tlien it was sold tlirough two gentlemen, Messrs. Hoskins and Camp, to a Mr. Coakley, who it afterwards appeared was acting as agent for Mr. Lewis. The sale on behalf of tlie bank was made by Mr. Paramore with my consent and that of Mr. Conzehnann, and as I thought to Messrs. Hoslvins and Camp. Two days afterwards these men came to my office and paid the bank ten thousand in cash. They also gave two notes, both made by Mr. Coakley. One was for one hundred and twenty thous- and dollars, under date of October 6, 1902, due in five years and bearing interest at S per cent. The second was for forty thousand dollars, due in three years with interest at 8 per cent. The property was thus mortgaged for one hundred and sixty thousand dollars. It sold for one hundred and THE DREYFUS CASE OF AMERICA 217 seventy thousand dollars, of which ten thousand was paid in *cash. I have no knowledge of an amount of two hundred thousand dollars having been loaned. My knowledge extends only to the amount of one hundred and seventy thousand dollars. The way the transaction was managed was this: The property at University City had been sold under the original deed of trust. The bank took the land for debt. This debt had to be paid off. The three parties to the transaction were the bank, Mr. Paramore, and Mr. Conzelmann. Each put up twenty thousand dollars, making sixty thousand dollars in all, to pay off the debt. Then new deeds of trust were made for the one hundred and twenty thousand dollars and forty thousand dollars of the purchase price. The deeds were owned jointly by all of us, one-third each. They were held by the owners who put up the sixty thousand dollars to clear the original title. Lewis tlius secured title to a piece of property which had recently been picked up by the owners for a debt of sixty thousand dollars. He assumed an obligation on it of two hiuidred thousand dollars, of wliich only ten thousand dollars appears to have actually changed hands. He then incorporated the same tract for a million dollars. This deal is an instance of Lewis' financial methods which has been severely criticized by many conservative people. Others deem it perhaps the most conspicuous instance of practical wisdom that he ever exhibited. Let us see what considerations are involved. HOW THE UNIVERSITY HEIGHTS COMPANY WAS FORMED. Even apart from the ethical question of Lewis' good faith, this transaction occupies a very central position in our story. This land was afterwards the principal security for certain loans of the Peo- ple's United States Bank which were called in question. For all these reasons it is extremely important that the true nature of this series of transactions be clearly grasped. This is what Lewis has to say about it: Tlie purchase of the original tract of eighty-five acres led to the forma- tion of a real-estate company. The two companies that figure in the narrative are therefore the University Heights Realty and Development Company, which held the real estate property, and the Development and Investment Company, which was the promoting and holding company for the real estate enterprise. The University JHeigtts Company was char- tered in October, 1903, with a capital of one million dollars, in order to provide a corporation through which to carry out the necessary improve- ments. *Lewis testifies that the total sum paid Messrs. Hoskins and Camp was $200,000. The part played by the Development and Investment Company in this transaction is wit- nessed by an agreement made on the 5th of August, 1902, between Messrs. Hoskins and Camp and that concern, whereby it agrees to purchase the 85-acre tract of land, imme- diately west of Delmar Garden, from them for the sum of $200,000. Payment was to be made in the form of a mortgage for $115,000 at 5% per annum. The balance was to be paid in the five-year certificates of the Development and Investment Company at the rate of 8% per annum on the sum of $55,000, and 6% on the sum of $30,000. A further bonus of $15,000 in certificates was payable to the vendors in the event that the profits of the Development and Investment Company exceeded $100,000 on the land. The equity in the land was pledged as security for the certificates. The manner in which Coakley was employed in the transaction and the exact na- ture of the modifications made between this agreement and the deal finally carried into effect, is not entirely clear. But that Messrs. Hoskins and Camp deem the above agree- ment to have been carried into effect in substance, is witnessed by their endorsements upon the original document fallowing how their claim for an equity under this agree- ment has been adjusted from time to time. 218 THE SIEGE OF UNIVERSITY CITY The way in which it was done was this: I first borrowed two hundred thousand dollars to acquire the acreage. I then went to the National Bank of Commerce stating what I wanted to do. They loaned me, or gave mc credit for, one million dollars- I had three or four other gentlemen join with me in making the notes, but it was practically a loan to me. They simply endorsed it as an accommodation. There was no compensation paid to them. The note was paid the same day, and the transaction closed. The men came out clear of obligation, released from their investment. The reason it is clear in my mind is that I found recently among some old papers that milhon-dollar check. I then incorporated the University Heights Bealty and Development Company paying this million dollars into its capital. Nobody was interested in the transaction except ourselves. The law of Missouri did not require the payment of the capital stock in a corporation in cash, but in cash or equivalent value. There was not at the time any standard of the values of this land. The mere fact of our pur- chase and the severe restrictions that we put upon it, greatly enhanced its value. But still our attorneys ad\'ised us to comply with every technical point by buying for cash and paying the cash; which we did. THE DIVISION AJTD SALE OF STOCK. The authorized capital stock of the company was one million dollars, three hundred thousand doOars preferred and seven hundred thousand dollars common. The preferred stock was guaranteed six per cent interest. It was offered in the St. Louis newspapers with a description of the prop- erty, and a statement of what we were going to do, and of the fact thst I held the bulk of the common stock. It was, one might say, a personal advertisement. This preferred stock was held in the treasury for sale, and about one hundred and twenty thousand dollars worth of it was sold at par to the local public. It was almost all taken up by wealthy men in St. Louis and St. Louis county, or among my well-to-do friends and busi- ness associates. As this money came in it was placed in the treasury and used exclusively to develop the estate. The common stock was nearly all held by me, with Mrs. Lewis and one or two others, as required by law. It was not sold to the public but held by the Development and Investment Company. I did not put any of the common stock on the market. The total actual price paid on all the lands embraced in the LTniversity Heights holdings was close on four hundred thousand dollars. The total improvements would represent about two hundred and fifty thousand dol- lars, in sewers, sidewalks, gutters, gas and water mains. It is completely improved as the highest class of residence propert}'. THIS DEAL UNDER THE PROBE. The propriety of the above transaction was called in question before the Ashbrook Investigating Committee while ex-Congress- man Nathan Frank was on the stand. Mr. Frank is a local trustee and agent for St. Louis and vicinit}' of the Metropolitan Life Insur- ance Company of New York, and one of the most eminent corpo- ration lawyers in the West. The witness testified in reply to ques- tions of Congressman Austin, substantially as follows : Under the former law of Missouri in reference to incorporated com- panies, which was in effect at that time, at least one-half tlie capital stock must be paid in actual cash. But the Supreme Court of Missouri has held that "lawful money" means property, and that in paying for the shares of a corporation you could put in property at an honest fair valuation. Recently, the law has been made much more explicit. At this point ensued the following colloquy: THE DREYFUS CASE OF AMERICA 219 Ms. IjEwis. I want to ask you a few questions, Mr. Frank, as this mat- ter has frequently been brought up and you undoubtedly could qualify to settle it. Suppose you purchased eighty-flve acres of real estate which, in your judgment and that of competent experts, was destined to become the future residence centre of St. Louis, for two hundred thousand dollars. Suppose you then incorporated a company for a million dollars, of which the preferred capital stock would go into the treasury to be sold for the improvement of the land itself, thereby enhancing its value, and j'ou, as the purchaser of the land, took only the common stock representing its potential or future increment, would you consider that you were defrauding any- body, or that capitalizing it at a million dollars was an illegitimate transaction? Mb. Frank. Certainly not. Mr. Lewis. You would consider that an entirely legitimate transaction? Mr. Frank. That is done all the time, in the improvement of unim- proved property, here and elsewhere. Mr. Lewis. That is your understanding as to what was done in the University City matter? Mr. Frank. I think so. Mr. Austin. I ask whether that is in strict compliance with the law? Mr. Frank. That is undoubtedly a hard question to answer. The Chairman. What is your opinion judging by this inquiry? Mr. Frank. I would not base any charge of real fraud on that. It is not customary to charge fraud for that sort of thing. Mr. McCoy. Has it come under your observation, in the course of your real estate experience, that sometimes, if a man, or set of men, purchase a large tract of land, there are immediately other people in the community V'ho say to themselves, "Why, we ouglit to have got in on that," and who are immediately willing to pay a higher price for that land? Mr. Frank. Undoubtedly, because they get the judgment of these other men, and act on it; they follow their judgment. Mr. Redfield. Are you familiar with real estate operations on Long Island and Staten Island? Mk. Frank. Somewhat. Mr. Redfield. Is it not a fact, Jlr. Frank, that frequently a very large block, as it is termed, of real estate taken by one or a group of strong holders immediately, without any further action, becomes at once very valuable? Mr. Frank. Undoubtedly. Mr. Redfieed. Isn't the fact that you have just stated in response to my question, the usual and normal result? Mr. Fhaxjc. Certainly. Mr. Redfield. Is it not a fact — I am now going to ask you to be very careful to ansv.'er this, as you have all the other questions — is it not a fact, that that is the usual basis upon which large and conservative operators proceed ? Me. Frank. Yes ! I think that can be demonstrated in this city — not only with respect to large blocks of suburban property, but with respect to large holdings of city property as well. Any question as to Lewis' good faith in this transaction is thus seen to be fully covered by his withholding the common stock from the market, and offering for sale only so much of the preferred stock as was necessary to develop the property and thereby enhance its value. The iinal test of his judgment as to the future value of the land as bearing upon the sum for which the company should be incorporated was settled by the event. Within two years this tract was appraised by the foremost real-estate experts of St. Louis at 220 THE SIEGE OF UNIVERSITY CITY one million dollai-s and upwards. Actual sales at a rate which would exceed that valuation had then been made to the amount of more tlian double the total of tJie original purchase. The longer this whole affair has been tried out in the crucible of criticism, the more clearly the gold of Lewis' sound practical judgment is separated from the dross of bias, prejudice and mere opinion of his critics. In real estate values it is time that tells. Time has shown that the University Heights Realty and Development Company was under, rather than over-capitalized, and that no one by any possibility could have been injured or defrauded by the extent or manner of its capitalization. As to the way the financial end was handled through the Mer- chants-Laclede Bank and the National Bank of Commerce, Lewis appears to have acted upon the advice of men who at that time were far more experienced than himself in transactions of such magni- tude. The deal with the Merchants-Laclede Bank for the original purchase was handled by Messrs. Hoskins and Camp. The legal formalities of the incorporation of the University Heights Com- pany involving the passing in and out of the million-dollar check, were performed under the advice of attorneys and with the consent and approval of the authorities of the National Bank of Commerce, then, as now, one of the foremost banking institutions of St. Louis. The cashier of this bank, jMr. John A. Lewis, who shortly after the incorporation of the Universit}^ Heights Company became a mem- ber of its board of directors, when examined on this transaction by the Ashbrook Committee, said: On looldng this matter up I found on our city ledger a deposit made on November 3, 1902, for one million dollars to the credit of the University Heights Realty and Devolpment Company. There was another deposit of even date to the credit of the Development and Investment Company of the same amount. I found also, on the same date, two debits of like sums against the two concerns. Presumably, the two companies drew their checks reciprocally for one million dollars, and thus the account was cancelled and closed. Three notes in the sum of three hundred and thirty-three thou- sand, three hundred and odd dollars each, were also turned in by Mr. John A. Lewis to the National Bank of Commerce as its cashier or assistant casliier, and passed to the credit of the University Heights Company in connection with its incorporation. These notes represented the million dollars against which the check of that con- cern was drawn. The whole affair, in short, was a paper trans- action made for the purpose of technical compliance with the law, by the payment of legal money. But the fact that this was done through a leading St. Louis bank, by its advice and with its con- sent, is in itself assurance that it was in no wise fraudulent. lewis' home at university city. Lewis' mind was quick to grasp the fact that in his original pur- chase he held the key to the whole of the city's westv/ard growth. As Lewis aptly puts it, University Citv is located like a cork in a THE DEEYFUS CASE OF AMERICA 221 bottle. The city of St. Louis^ being confined by the horseshoe bend of the river, its only possible growth is westward parallel to Forest Park, and this growth must of necessity enhance all real-estate values in that quarter. Lewis, therefore, determined to locate his own home on the newly acquired property, and to interest himself in the future development of the entire region as a separate little city, with himself as mayor, and with his home in the centre. He thus tells how he selected and acquired the site for his home: On one corner of the first tract of approximately eighty-five acres which we purchased, was located a very large spring. This was surrounded by a kind of swamp, so that in figuring the first values of the property that piece was practically eliminated. I accepted that piece as a gratuity from the University Heights Company as consideration for my negotiating the purchase by the Lewis Publishing Company of the corner lot where the Magazine Building now stands and for other services. It could not have been placed upon the market at a fair valuation witliout expensive grading, but I took it as it was, and made it the location of my home, landscaping and beautifying it. The spring is now made into an attractive swimming pool. The overflow floods the lowest part of the ground and that has been turned into a fish-pond. Mr. Frank, under examination by Lewis, also testified as to his recollection of this locality. He said: I recall the piece in the southwest corner of the original tract. It con- tained a large spring, surrounded by a swamp. There used to be an old well and a dump there. In my judgment it was an absolutely worthless piece of property. I think it was the worst piece there, and you have made it the most attractive. MILLIONS IN OPTIONS. Lewis, after making the original iDurchase, and deciding to locate his proposed new building and his own residence upon the property, concluded to extend his real-estate interests as widely as possible. He thus describes the up-building of his real estate interests: I took an option on every piece of land in the neighborhood, and gradu- ally acquired a total of two thousand, six hundred acres under options, .Some of them running three, four, and five years. I agreed to carry the interest and taxes in the belief that they would be covered many times over by the added increment in value. This included all of the surrounding land. The total amount called for, under these options, to acquire abso- lute ownership, according to my recollection, was about four million dol- lars. A recent appraisal of these same properties shows a present value of nearly thirty million doUars. This is partly in St. Louis and partly in University City. A great deal of it is already built up with superb resi- dences. The increase in value became very rapid when it was known that the World's Fair was going to be located right adjoining. The property was doubling and doubling in value. As the land was improved it quickly began to be sought after. In a year or two we had sold off nearly half of Section One at various prices which amounted in all to eight hundred thousand dollars. And we still had one-half of this section left. This con- firmed me in my view of the value of the land. As fast as the University Heights Company developed the land which it had purchased and placed it on the market, the money was employed to take on the other properties which I had already purchased personally through the Development and Investment Company, or had under option. I then had Sections Two and Three under option. I sold them to the company at an advance on my option, but at the value appraised by reputable experts. I did not take 222 THE SIEGE OF UNIVERSITY CITY the money, but took equivalent holdings in the University Heights Com- pany and placed them in the Development and Investment Company. My own profit I made in my interest in the common stock of the former con- cern. In other words, instead of having a private personal ownership, I had a proportionate holding in the realty company. These were then undeveloped — just acreage properties. The tract on the opposite side of Delraar, north of the first section purchased, is known as Section Two; west of that, on the south side of Delmar, is Section Three. Those three properties were all owned outriglit by the University Heights Company. This land was all paid for in cash. We carried some loan on them, and afterwards borrowed considerably on them, but they were th? property of the company with clear title. Then, west of Section One is Section Four. Beyond that Sections Five, Six and Seven. Those were my personal property. I took what earnings and profits I was making per- sonally and bought land there, paying as little down for it as I had to, and getting a part purchase mortgage for a long period on the balance. I knew that I would have to carry it four or five j'eavs before it came on the market. It was simply a question of interest and taxes, against incre- ment of value. The land of the University Heights Company doubled in value within a year or two. What we had sold brought in eight hundred thousand dol- lars. This was not all paid in cash. A sum was ]iaid down and so mucli regularly thereafter. What we had left in Section One was worth as much again. This, added to the other sections, made a total value of something like three millions dollars. This was not counting my own holdings. 1 began to have the idea that T had a pretty good tiling. I then proceeded to dcvelo]i and improve the University Heights prop- erty, laying it all out ))eautifully with winding boulevards and the highest class of improvements of all kinds. The nione_v from the sale of the pre- ferred stock was used as it came in, to lay out the sewer systems, boule- vards and other improvement work. I had expert landscape gardeners from Boston to assist our architects in laying out the boulevards. I planned bigger and more beautiful things — a model city. In the centre I erected my own central executive office in the octagon tower known as the Woman's Magazine Building, and another structure for the Magazine printing plant. I laid out the space in front with lawns, and set apart a central campus for a university. The rest of the section was laid out in roads and boule- vards as the most beautiful residence estate in America. All the lots were restricted. Special localities were reserved for churches, schools, and libra- ries. We had plenty of money for making improvements. We wanted to make on University Heights the model city of the world. We spent more than one million dollars in improvements and build- ings on Section One alone. Water was brought more than twenty miles through the mains of the St. Louis County Water Company. A postofiice was established in the Magazine Building. AVe had our own telephone ex- change. Houses began to go up, costing from five thousand to fifty thou- sand dollars each. Each home was surrounded by trees, shrubs, and flowers. Among the oaks at the crest of the Heights was erected the fine and costly home of Mr. Jackson Johnson, a wealthy citizen of St. Louis. It became part of our plan that the government of this residence park be in the hands of the residents themselves through their own committees. There was one corner of this estate outside the St. Louis limits which was at that time covered with low class inns and saloons or dives. Fights occurred, and one night three people were killed in one. One of our first undertakings was to clear these away. Opposite was the race track, and it was then my idea to remove the race track also, but shortly afterwards the racing was suppressed by law, and we had no further trouble from that source, THE DREYFUS CASE OF AMERICA 228 A brief summary of this transaction, and of Lewis' expectations as to the future, is found in a letter written by him under date of January 7, 1903, to Wm. H. Gorse, of the Missouri Trust Com- pany of St. Louis, which will be of interest here. He said: In order to secure proper facilities for my publishing business, which now requires a very large plant, I have purchased the eighty-five acres of land directly west of Delmar Garden on Delmar Boulevard. I was unable to get the corner lot which I wished, without purchasing the entire tract. In order to handle the proposition I organized the University Heights Realty and Development Company with a capital of one million dollars. This capital was fully paid in cash, and every requirement of the law was very carefully complied with. Tlie company then purchased the land. Of this capital three hundred thousand dollars is preferred stock bearing six per cent cumulative interest. The balance of seven hundred thousand dol> lars is common stock. I placed a mortgage of two hundred thousand dollars on the land, of which I have today paid oif ten thousand dollars. I brought the best engineer in the country from Boston and had him lay out the land into the finest private residence park in the West. All the surveys are now completed and all the contracts are arranged, ready for the construction of the streets and boulevards. We expect to have the property on the market by the spring months. I then placed the preferred stock on the market for sale, advertising it extensively in the public prints. I have already received subscriptions for about one-half of it. The balance is being very rapidly taken up. I have arranged with the National Bank of Commerce to act as trustee, so that when the subscription is complete the entire three hundred thousand dol- lars will be in their hands. They will then pay oif the mortgage, so that there will be no encumbrance on the land, and there will remain one hun- dred thousand in cash to pay for the improvements. Under our plan there are thirty thousand front feet of resi- dence lots available for sale. We have just been offered a contract by responsible parties to sell the land out for us at auction under bond, so as to net us an average of thirty-five dollars per front foot, two hundred feet deep. On this basis the sale of ten per cent of this land in building lots would retire the preferred stock, thus reducing the capital to seven hundred thousand dollars, of which I will own six hundred thousand dol- lars. The property being outside the city limits has only county taxes; and while it may take me eight or ten years to work off all this land, yet at the same time under our schedule of prices, when it has been sold, it will have netted us a total of three million dollars and a profit of over two millions. WAX MODEL OF THE CITY BEAUTIFUL. Those who characterize Lewis as a dreamer would do well to con- sider the insight by which he thus penetrated the complex real es- tate conditions of St. Louis, and arrived unerringly at the true key to its future development. They should also study the process by which he confirmed his conclusion. They should think over and understand his skilful method of financing his plans. Any who may still suppose that Lewis' real estate operations were mere specula- tions and that the resulting increments of value were the result of luck and chance, without any special work on his part, should pon- der well the part played by Lewis personally in the actual planning of a model city. Shortly after writing the above quoted letter in February, 1903, Lewis employed a local expert to make a complete survey, with full 224 THE SIEGE OF UNIVERSITY CITY computations, measurements and maps, of his newly purcliased property. This included all the elevations and other topographical features. Then, with his own hand, he transferred the whole to scale upon an enormous drawing board specially prepared for this purpose. He iixed the elevations by means of pins driven into the board at the right depth and proper intervals. He then modeled the topography of the entire tract in true relief with wax. Every elevation and depression was accurately molded. All the existing cultural features were shown. Every characteristic of the property was reproduced in miniature. Lewis spent many hours experimenting upon this model. He was able to try out all possible forms of landscape engineering. A mass of wax removed from an elevation, when squared up and meas- ured to scale represented a corresponding number of cubic yards of earth to be removed. The same mass could then be applied to a nearby depression. This would show the proportionate level of the hollow which the earth removed from the elevation would fill. Lewis' instructions to his engineers and contractors were thus based, not upon guesswork, but upon the most careful and exhaustive ex- periment. When the engineers had completed their pint of the streets and boulevards under his supervision, he modeled tliese accurately in the wax. He tlien put in some little tubes reduced to scale in pro- portion to the dimensions of the proposed sewer pipes, and by means of a gardener's watering pot and sprinkler he produced miniature rainstorms. By using measured quantities of water he reproduced in this way the amount of rainfall of all ordinary kinds of storms according to local weather reports. He also tried the effect of anr possible surplus of rainfall from a spring freshet to a cloudburst. All these conditions be carefully observed. The net results of this study was a high degree of intelligent supervision of the work of the contractors and landscape engineers. This facile adaptation of his natural aptitude for mechanical devices and his inventive skill to new problems, is highly characteristic of Lewis, and accounts in no small measure for his astonishing rise to affluence. THE inspectors' INVESTIGATION AND REPORT. The remaining liistory of University Heights as a real-estate sub- division prior to Lewis' troubles with the Government, was sketched by him in response to the demands of postoffiee inspectors during their investigation in the spring of 1905. After rehearsing the facts as to the organization of the company, Lewis asserted that nearly three miles of boulevards, sidewalks, sewers, and water- mains had by that time been jjut in and paid for. He added that improvements in the shape of residences and other permanent build- ings to the extent of nearly one million dollars had been erected. Of the entire three hundred thousand dollars' worth of preferred stock placed upon the market, only about seventy-two thousand dol- lars' worth was outstanding. All the transactions of the corporation THE DREYFUS CASE OF AMERICA 225 from the beginning had been under the direct supervision of the National Bank of Commerce. Every dollar received from the pre- ferred stock was paid directly to that institution as trustee, and by it disbursed on the contractors' vouchers against permanent improve- ments on the property. Lewis continues : On January 21, 1905, at a meeting held pursuant to legal call of the stockholders and directors, it was voted to purchase the additional land lyino; south of the original purchase toward the magnificent buildings of Washington University, and thence ^^'est\vard, a tract of fifty-seven acres. This land is now being laid out to correspond to the original purchase. The whole wiU constitute a great private residence tract. At a meeting of the directors and stockholders it was voted to make an issue of ten-year bonds at five per cent to the extent of seven hundred and fifty thousand dollars. These bonds will cover all the land and im- provements of the company, except the tract occupied by the Woman's Magazine plant and that occupied by the private residence of E. G. Lewis. These bonds are based on a valuation of twenty-four dollars per front foot. They allow a fund of nearly one hundred thousand doUars to be set aside for the completion of the improvements. Sufficient funds are also set aside to pay the first year's interest. The company will then have a frontage of thirty-one thousand feet available for fine residences. Already four residences costing from twelve thousand dollars to one hundred and twenty thousand dollars each have been completed. Another is in construc- tion. Twelve more are under contract. The company is holding its land at prices ranging from thirty-five to one hundred dollars per front foot and the demand is good. Under this bond issue the company will retire the preferred stock, take up all encum- brances and mortgages and have in the treasury in the neighborhood of one hundred thousand dollars to complete improvements. The investors who purchase the preferred stock will have received their money back with six per cent per annmn since the date of their investment. They will retain as an additional profit their twenty-five per cent of the common stock given them as bonus. Within the life of the bond issue we expect the land of the company to average one hundred doUars per front foot. A low valuation of it at tlie present time would be fifty dollars per front foot throughout. The land of the University Heights Company within ten years should average one hundred dollars per front foot. Its profits would then exceed two millions. This would be an average yearly net income for the ten years of two hundred thousand dollars on its investment. I do not believe that these figures are overstated, as they would be corroborated by the best real-estate men of St. Louis. Bv postoffice tradition Lewis is presumed to be guilty of fraudu- lent intent in all of his various undertakings. Following this in- vestigation Inspectors VV. T. Sullivan and James L. Stice made a report to Inspector-in-Charge Fulton under date of June 2, 1905, recommending that "E. G. Lewis and the University Heights Realty' and Development Company be cited to show cause why a fraud order should, not issue against them." After rehearsing the facts as to the organization of the company, and the method by which it was financed, they insert Lewis' state- ment of its assets and liabilities. Commenting upon his estimate of two and a half million dollars as the actual value of the thirty- one thousand, front feet remaining, they assert that on this basis it would be necessary to obtain nearly one hundred dollars per front foot for the property. A simple division will show what is the exact 226 THE SIEGE OF UNIVERSITY CITY figure tliey should have stated, namely, eighty dollars. The inspec- tors, in other words, took upon themselves to exaggerate Lewis' own roseate expectations by twenty-iive per cent. Then they say: While we do not pretend to be experts on real estate values, yet we do own St. Louis property. Our observation and experience causes us to express the opinion thut when the expenses of marlieting this property is deducted, it will not average fifty dollars per front foot. The inspectors then comment upon the proposed bond issue of seven hundred and fifty thousand dollars. The intent of this was to retire the preferred stock held by the Bank of Commerce as trustee, and consolidate all the indebtedness of the company. They express the opinion that this transaction was regrettable. They remark that "as a legitimate venture it would have been more safely handled if the Bank of Commerce, a reliable institution, had entire control." They then assert that, in their opinion, Lewis "holding a majority of the stock, can now manipulate it as he desires." They assert their opinion that "when the need of money again appears a new bond issue will undoubtedly be put on the market by the aid of the Woman's Magazine and Woman's Farm Journal." The in- sjaectors, it v/ill be observed, have no doubts. After commenting upon two transactions between the University Heights Company and People's Bank (which they omit to state were necessary steps in connection with the proposed bond issue) they arrive at the fol- lowing extraordinary conclusion: This company is considered by us to be the only legitimate proposition jiromoted by Mr. Lewis, and according to the above statement it is very doubtful if the stock can ever be taken up at par. . . . This concern is, therefore, one of the numerous devices promoted with the money of others, and one of the ramifications in his endless chain plan of robbing Peter to pay Paul, but not at any time losing sight of the interest of Lewis. in itself, separated from the management of Lewis, we would not feel justified in a drastic recommendation; but with his management, and the fact that by the time the improvements are completed we believe the capital will be so seriously impaired that the further use of the mails in the sale of stock will certainly result in fraud, in connection with his other schemes, we recommend that E. G. Lewis and the LTniversity Heights Realty and Development Company be cited to show cause why a fraud order should not issue against them. Here the right is assumed, as inherent in the function of post- office inspectors, to sit in judgment upon the probable outcome of commercial ventures, to decide upon real estate values, and to set up their personal opinion in contradiction to the mature judgment of experts who have made a special and exhaustive study of the subject, comment on these propositions would seem to be unneces- sary. The history of the University Heights Company will come up for further consideration in connection with the story of the People's United States Bank. We must now take up the story of World's Fair Days at St. Louis. CHAPTER X. WORLD'S FAIR DAYS. Organization of the Lewis Publishing Company — Final Pur- chase OF THE RiCHARZ PrESPROOMS FINANCIAL FaCTS AND Prospects — Laying the Cornerstone — Camp Lewis — Popularity of the Encampment — The World's Fair Contest Company — William Jennings Bryan Objects — Indictments Found and Quashed — Settlement of the Contest — The Postoffice Inspectors' Report — The Bachelor Pneumatic Tube Company — California Vine- yards Company and Others. Lewis is first of aU a publisher. This is the true key to his life- story. All his other activities either lead to or grow out of the Winner and the Woman's Magazine. Once this fact is grasped, every incident in his career can be clearly seen in its true value and relation. All his other efforts are intended to promote the cir- culation of his papers by giving new advantages to his readers or else they come in by way of speculation, or investment of surplus profits. All are designed to extend the influence and enhance the value of the Woman's Magazine and its sister publications. The origin of his big real estate interests is a good example. They all grew out of his effort to find a good site for the new home of the Woman's Magazine. His first thought was to get out of town. His second to be near the World's Fair. He picked out the tract formerly owned by the Bonhomme Land Company for the double reason that it was across the city limits in St. Louis County and, also, just across the fields from the World's Fair Grounds in Forest Park. The fact that he was unable to buy this coveted location without acquiring the entire tract of eighty-five acres was what caused him to go far more deeply into the real-estate business than he first intended. All of his early promotions may, therefore, be regarded as merely preliminary to the promotion of the Lewis Pub- lishing Company, which in turn gave rise to the People's Bank. These are the two largest and most characteristic of the Lewis en- terprises and the two in which the interest of this narrative centres. The project for the consolidation of all his various publishing in- terests into one large company seems to have taken definite shape in Lewis' mind soon after the first announcement that the World's Fair of 1904 was to be held in St. Louis. This plan had been dis- cussed quite openly before his rupture and settlement with Nichols in the spring of 1902. It was objected to by that young man on the ground that there were no funds with which to finance it. "We 227 228 THE SIEGE OF UNIVERSITY CITY hadn't enough to buy one acre," said Nichols, "much more fifteen, and put up a big building." Yet, no sooner had the Mail Order Publishing Company been reorganized, and a new secretary elected to replace the dubious Nichols, than Lewis took steps to realize his grand project. The site for the new building was purchased, as we have seen, in October, 1902, for a moderate sum considering its future value. The deal was financed without difficulty. The Uni- versity Heights Company was next chartered, organized and launched. Lewis then made a private arrangement with his friend, Kramer, whereby the latter endorsed Lewis' paper to an extent that would enable him to procure, at the National Bank of Commerce, all the ready cash that he needed to pay his contractors for the new big building. Architects were employed to design the plans. Affairs were soon in train to break ground as soon as the snows of yester- year should melt in the spring of 1903 and there was assurance of seasonable weather. THE LEWIS PUBLISHING COMPANY. The business of publishing the Woman's Magazine and Woman's Farm .lournal was fast becoming a civic affair. Far more people knew of the city of St. Louis through the medium of Lewis and his papers and projects, than by anj' other means save the World's Fair alone. St. Louis, for many people in America, meant E. G. Lewis. Though less known at home than elsewhere, his plans began to bulk somewhat largely also in the eyes of the local public. When, therefore, Lewis conceived the idea of associating with him in his enterprise many of the chief representative business men and bank- ers of St. Louis, he had no great difficulty in securing the co-opera- tion of a large number. Some, indeed, had already joined his other enterprises. One of them, Mr. McMillan, president of the St. Louis Union Trust Company, was his first backer, had lent him his first five hundred dollars, and had watched his projects with growing interest. Many had already benefited either financially or by adver- tisement. When, therefore, in the fall of 1902 and all through the ensuing winter, Lewis undertook a personal canvass on off days from his editorial chair, for subscriptions to the preferred stock of the million-dollar Lewis Publishing Company, soon to be incorporated, he was received and listened to willingly. We here get another glimpse into the systematic and practical nature of his methods. He first prepared a list of the leading banks and representative business enterprises of St. Louis. He then picked out the men most active and prominent in their management. These men he personally visited and invited to join him as stock- holders in his projected enterprise. He set apart for this purpose the entire preferred stock of two hundred thousand dollars. He then specifically limited the subscribers, with a few exceptions, to the same precise amount, two thousand, five hundred dollars, this being not too large nor yet too small for the sort of men he desired. THE DREYFUS CASE OF AMERICA 229 He was thus able to secure as stockholders a list of nearly one hun- dred representative St. Louisans. The stock was ofFered at par, and the amount which he realized even before the company was organized, was of substantial value in financing the construction and equipment of the new building, and in paying for the removal thither of his mechanical plant. Lewis' object was, however, not solely a financial one. It was largely to gain a moral effect. He meant to have behind him the prestige of a body of stockholders of highest local repute. He also coveted the active co-operation of individuals so energetic and so well con- nected as to push forward the financial and other interests of his concern. Lewis was, in fact, at that time acting as a sort of gen- eral advertising manager to the whole city. He was creating inter- est in St. Louis in every direction. It was only natural that promi- nent citizens should wish to help his enterprise, and so they did. Lewis' offer to his prospective stockholders was flattering and liberal. The stock was sold at par. He first outlined fully his pro- ject and explained that the common stock would be held by himself and his immediate associates. He pointed out that only the pre- ferred stock would be issued to the city. He then frankly acknowl- edged that his obj ect was not so much to secure the additional cash investment, as the moral influence of the names of the subscribers. So he accepted many, if not all, of the subscriptions upon the dis- tinct understanding that if, for any reason, the subscriber desired to be relieved of his investment, he, Lewis, would personally repur- chase the stock at face value. Many of the subscribers gave their notes for the amount. Some of these notes were, by agreement, made non-negotiable. They were payable only to Lewis, and could not be discounted by him or sold to others. In a few cases he agreed that the note should be taken up only by indorsing the dividends upon it until the full amount had been earned by the stock itself. The ma- jority, however, v/ere paid in cash. Lewis, in every instance of rec- ord, seems to have complied faithfully and honorably with the terms of his agreement. A few subscriptions were cancelled and taken up by Lewis. But, for the most part, the group of men represented by this preliminary canvass continued as his stockholders through- out the stormy period which followed, and still remain on record as members of the Lewis Publishing Company. THE ORIGINAL STOCK SUBSCRIPTIONS. The autograph signatures on the original subscription agreement are reproduced on another page. This list, to a local reader, reads like a page out of the Blue Book of socially and financially promi- nent St. Louisans. A large proportion of the chief banks and busi- ness enterprises of St. Louis are represented by their responsible heads, or active managers. The only possible conclusion which can be drawn by a candid investigator is that Lewis and his enterprises at that time were thought of highly, and that his project was cur- rently regarded as eminently creditable and indeed as reflecting great 230 THE SIEGE OF UNIVERSITY CITY honor on the city of St. Louis. Lewis thus tells the story of this enterprise, in his testimony before the Ashbrook Committee: Early in 1903 the Development and Investment Company owned the controlling interest in the stock of three great concerns — the Mail Order Publishing Company, publishers of the Woman's Magazine, capital fifty thousand dollars; the Farm Journal Publishing Company, publishers of the Woman's Farm Journal, capital twenty-five thousand dollars; and the Richarz Pressrooms, where these papers were published, capital twenty-five thousand dollars. Each of these corporations had long grown out of all proportion to their original capitalization. To consolidate them it was necessary to purchase the interests of the small stockholders. This was done through the Development Company, which put up the necessary money and bought up all outside stockholders. Many of them made a small fortune from their holdings. The debts of all three concerns were paid by the Development Company. A new corporation was then formed, known as the Lewis Publishing Compan}'', with a capital of one million, two hundred thousand dollars. This publishing company having formed itself into one of the largest of its Isind in the world, it was thought desirable that the foremost men of .St. Eouis should be brought into association with it. We accomplished this by making two hundred thousand dollars of this capital preferred stock. This we sold only to such men as would bring credit and give standing to the enterprise. The Development Company received prac- tically eight liundred thousand dollars of the capital stock of the new corporation. The two hundred thousand dollars in cash realized on the preferred stock went into the treasury. This was to be retired at the end of live years. Then the Development Company would own eight-tenths of this great publisliing business, with its half million dollar plant free of loan or mortgage. For, in reorganizing the three old companies in one new one, we provided that at the end of five years we could call in the preferred stock at a fixed price. The readiness and kindly spirit with which St. l^ouis' best citizens purchased this stock was the most gratifying thing in tlie history of these publications. It showed that a prophet is sometimes not without honor in his own country. The best men of St. Louis recognized our great publishing business as one which would be a credit to any city in the world. As the propriety of capitalizing the assets of the three former enterprises, amounting collectively to no more than one hundred thousand dollars, at twelve and a half times that sum, has been called in question, the steps taken by the Development and Invest- ment Company in this promotion may be briefly mentioned. Lewis' own statement is this: The three properties had largely outgrown their original capitalization. Their collective value was far in excess of a million dollars. I, therefore, in IflOa incorporated the Lewis Publishing Company with a capital of one million, two hundred thousand dollars to take over these three growing concerns. I personally solicited the subscriptions to the stock among friends and acquaintances in St. Louis. I stated what I proposed to do, going into full particulars, and asked if they would like to join with me. This was the preferred stock. The common stock in great part I owned myself. No stock of any kind was offered at public sale. FINAL PURCHASE OP THE RICHARZ PRESSROOMS. In a letter to the Missouri Trust Company at this time, Lewis makes a statement as to the value of his publication business. He shows total assets in round figures of four hundred and fifty thous- 'First factory rented and equipped by the Development & Investment Company at 496! Suburban Track, SI. Louis. Occupied from November I, irjoi. to August I, iwo. The early experiments on the Lewi.t Addresslni; Machine, the Telephone Con- troller and the manufacture of paper corks were made here "Plant of the Untied Stales Fiber Stopper Company, University City. Erected 1009 ^,ru-,« /„/,..„ ,■„ !„n in the r.iilrd Slatrs Fiber SlopM' Company's plant at V„ircrsity hMaclum- sli„t<. -Lal.;t „u,J,-ls „[ cork machines THE DREYFUS CASE OF AMERICA 233 and dollars; liabilities of one hundred and fifty thousand dollars, including capital stock, or a net surplus of three hundred thousand dollars. The total cost of publishing the Woman's Magazine for one year was estimated at one hundred and eighty thousand dollars. The total revenue based upon advertising contracts in hand, subscription revenue at the present rate and current business running without contract, was stated as in excess of four hundred thousand dollars. Hence the profit for the ensuing year was esti- mated at two hundred thousand dollars and upwards. Commenting on this condition of aiFairs, Lewis says: In making up our statements, the most valuable part of our property, namely, the franchise, has not been taken into consideration. You could probably duplicate the plant of a paper like the St. Louis Globe-Democrat for one hundred thousand dollars; but you could not purchase the paper Itself for one and a half millions. Their franchise is just the same as any other part of their assets. It would not be placing too high a figure on the franchise of the Woman's Magazine to value it at three-quarters of a million dollars. AVe also own the Woman's Farm Journal, a separate corporation, which cost us fifteen t.housand dollars a year and a half ago. It was then eleven years old, but had only about sixty thousand subscribers. We have run the paid subscriptions up to a quarter of a million. The advertising rate has increased from twenty-five cents to one dollar a line. The Farm Journal Is now clearing about one thousand, five hundred dollars a month, and is picking up very rapidly. Its franchise value is, therefore, considerable. Upon this statement he requested a line of discount of fifty thousand dollars for the purpose of acquiring the plant of the Richarz Pressrooms. This arrangement appears to have been con- summated, for we find him in February of 1903 negotiating with Richarz for the purpose of buying out the latter's remaining inter- est. A deal was closed under date of February 9, whereby Richarz sold to the Development and Investment Company his entire inter- est in the Richarz Pressrooms (including all stock which the Devel- opment Company did not own at that time) for a total sum of fifty thousand dollars. Of this, thirty thousand dollars was paid in cash. The remainder was assumed by the purchaser in the form of obliga- tions of the Pressrooms Company. All the obligations of Lewis and his enterprises to the Richarz Pressrooms were cancelled. The re- maining bills receivable of the Pressrooms Company became the property of Richarz individually. Richarz was then given a five year contract as pressroom man- ager at a salary of three thousand, six hundred dollars per annum. A majority of the capital stock of the Mail Order Publishing Com- pany and Farm Journal Company was already in possession of the Development and Investment Company, so no practical difficulties were had in those quarters. The minority stockholders of these concerns after sundry negotiations formally authorized Lewis to vote their stock in the event of the formation of a new company. They agreed to accept in full payment an equivalent amount of 231 THE SIEGE OF UNIVERSITY CITY stock in the new Lewis Publishing Company, about to be incor- porated. FINANCIAL FACTS AND PROSPECTS. About this time Lewis, in course of a statement to the Missouri Trust Company as of May 16, 1903, sliowed total assets, including stocks of the Lewis Publishing Company, University Heights Com- pany, the Controller Company and the Farm Journal Company, at par in excess of two millions of dollars, as against a total liability of twenty-eight thousand dollars. He stated at this time: The Lewis Publishing Company is now in process of formation. The charter has been granted and the entire details will probably be completed this coming week. The new company will start without any indebtedness or liability. It will have about two hundred and tliirty thousand dollars in casli in bank. Its assets in machinery, type and fixtures will amount to nearly two hundred thousand dollars more. We are now erecting the largest and finest publishing plant in the world in University Heights. This will be completed by the fall of this year without any indebtedness attachea to it. At the present time, the earnings of the two publications and pressrooms are about a quarter of a million dollars a year, net profit. These earnings will be increased at the end of ninety days, owing to a fifty per cent increase in our advertising rate. The preferred stock is being taken up by the foremost men in St. Ixjuis. yVbout one hundred and twenty thousand dollars has already been subscribed. The balance would be taken by the present subscribers, except that, in order to enlist as large a number of prominent men as possible in the enteri^rise, I have limited the amount held by any one member to two thousand, five hundred dollars. Lewis discusses further the status of the Lewis Publishing Com- pany under date of August 5 in a letter to the Germania Trust Com- pany with whom he was then negotiating an additional line of dis- count: The Lewis Publishing Company is a consolidation of three previous properties. One of these — the Mail Order Publishing Company — was pub- lisher of the Woman's Magazine, tlie largest publication in the world. This has a circulation now exceeding one million, four hundred thousand copies of each issue and increasing at the rate of from sixty to ninety thousand new subscribers per month. Another was publisher of the Woman's Farm Journal, having a circulation of five hundred thousand copies each month. The third was the Richarz Pressrooms, the finest publtshing plant in St. Louis, where these papers are printed. The Lewis Publishing Company has no indebtedness of any sort. It has one hundred and seventy thousand dollars due it from subscriptions to its preferred stock. It has assets of about two hundred thousand dollars in machinery, paper stock and fixtures. Its present earnings are at the rate of a quarter of a million dollars per year, net. We are building the finest publishing plant in the world, here in St. Louis, at a cost of about two hundred thousand dollars. We are paying cash each week for the work as done and for all material delivered. AVe have ordered and building for us fifty thousand dollars' worth of additional machinery, to be delivered between now and the last of September. Beginning with the October number, the advertising rate of the Woman's Magazine and of the Woman's Farm Journal is increased by fifty per cent. The rate for the Woman's Magazine will then be four thousand, two hundred dollars per page: each issue. We now have in hand valid contracts for advertising sufficient to fill from thirty-two to forty pages per issue at that rate. The cover pages are sold in advance for nine months. One adver- THE DREYFUS CASE OF AMERICA 235 tiser has just closed a contract with us for half a page per issue for twelve issues at a cost of thirty thousand dollars. The growth of the circulation of this magazine, extending all over North America and to foreign countries, is almost inconceivable. An advertisement in it is immediately placed in a million and a half homes and presumably before seven or eight millions cf readers. A publication is enabled to advance its rate as it grows in reputation and standing, whereas a merchant must double his stock to aouble his business. We have coming here as guests during the World's Fair the foremost publishers of Europe and the largest advertisers in the world. The build- ing and equipment of our new plant means, therefore, more to us Ave times over than its cost. To have all in readiness, we are now worliing a double shift of men and have applied to the labor unions for permission to operate a sixteen-hour day. All the facilities of St. Louis could not add an additional eight pages to an issue of our paper, requiring as it does about ten carloads of paper to produce an issue. If we are able to get into our yjlant in time to print the October number, it will make a differ- ence in our net income of nearly twenty thousand dollars on that single issue. Our new plant will have a capacity of two million forty-page magazines, completely printed, stitched and folded, in eight days. We believe that we will come out of the World's Fair year as the foremost publication in the v/orJd. This means enormous earnings. There is no reason in the world why the Lewis Publishing Company should not in time earn from six hundred to eight hundred thousand dollars a year, net. With proper publicity and the standing which our great building will give us, and the effect of the World's Fair in bringing us in contact with hundreds of thousands of people all over the country, and particularly the foremost advertisers in the world, we should be able to command nearly double our present advertising rate. As an illustration, we hand you a letter herewith, from one of our largest advertisers, stating that he hopes to see us charge ten dollars a line. This is in the face of the fact that we have just raised his advertising rate from four to six dollars a line. We believe that the day has come for a great national publication with enormous power and influence, and with corresponding earning pov/er. We are, therefore, building and equipping a plant, the like of which does not exist, to realize this idea. Lewis then called attention to the fact that the Delineator of New York with less than one-third the circulation of the Woman's Magazine was capitalized at twelve millions of dollars and paid seven per cent. He further asserted that the Ladies' Home Journal had earned a "cold million a year" for the past two years. He said that the results secured by advertisers was the key to these enormous earnings and that the past year had demonstrated that in value of advertising the Woman's Magazine was equal to the leading maga- zines in America. After summarizing the lines of discount of the old corporations, he stated that their indebtedness having been cleared up, he desired to form a connection with a first-class bank, with a view to carrying out certain plans which had been carefully studied and tested during the preceeding four years. He based his request for a line of discount for the Lewis Publishing Com- pany up to one hundred thousand dollars on these facts and con- cluded with the following assertion: Since we have been in business here the banks have held a total of a million and a quarter dollars of our paper. We have never renewed or extended a note in the entire four years of our business. We refer you 236 THE SIEGE OF UNIVERSITY CITY to the National Bank of Commerce, the American Exchange Bank and the St. Louis Union Trust Company as to the truth of tliis assertion. Such was the status of the afFairs of the Lewis Publishing Com- pany when the time arrived for the laying of the cornerstone of its new building in August, 1903. LAYING THE CORNERSTONE. Seven years later, on the occasion of a convention representing over one hundred publishers of popular periodicals known as the Class "A" publications associated with the American Woman's League, Ex-Governor David R. Francis of Missouri, recalled his connection with Lewis of the early days in the following language: Mr. Lewis says that I am the dedicator-in-chief of his buildings. I want to tell you in a few words the beginning of our acquaintance. My office as I'resident of the Louisiana Purchase Exposition Company was within sight of this spot. One day, tlie year before the World's Fair, he sent in his card to me. I was very busy. I had been so closely engaged that I really did not know of his enterprise. He told me that he was going to erect a five-story building and wanted me to lay the cornerstone. I said, "What is it for?" He replied, "The publishing plant of the Woman's Magazine." I said, "Have you got your money?" He answered, "Yes." "Where are you gomg to erect it?" He said, "Come to the window and I'll show you." He pointed out this spot from my oiBce window. "But," said I, "there is no building there." He replied, "I am going to lay tlie cornerstone within three weeks. I will have the building up before the World's Fair." He then showed me a circular containing the names of his directors, among them a number of men whom I knev/. To make a long story short, I said, "Mr. I>ewis, whatever I do in my official capacity as President of the M'^orlds' Fair, I must account for to the directors, to the stockholders and to the conjmunity. I do not even Icnow that you are going to put up your building." "Well," he replied, "how can I convince you?" "I don't know," said I, "except by putting-up one story and leaving the place for the corner- stone vacant. When you have done that, I will lay the cornerstone." I thought he might take offense at that. But he only said, "I'll do it." About two or three months later Mr. Lewis paid me another visit and said, "Well, I've got that first story up. Everything is in shape, and I want you to come over and lay the cornerstone tomorrow." I came and laid the cornerstone. He had complied with the conditions as I never knew another man to do before under the circumstances, and he has done the same with every one of his buildings. The following account of this occasion was published by Lewis in the annual statement of the Development and Investment Com- pany for the year 1903. "On August 28, 1903, the cornerstone of the new publishing plant of the new Lewis Publishing Company was laid by Governor D. R. Francis, President of the Louisiana Purchase Exposition Company, in the presence of a large gathering of spectators. The day was beautiful and about the building were gathered hundreds of the prominent men and women of St. Louis. As the great stone fell into place the sun burst out in a flood of sun- shine, which seemed to augur the success of the undertaking. Special cars were run for the accommodation of visitors and full accounts were given in the St. Louis press." Among the guests at the cere- mony were Sir Alexandrovsky, Chamberlain to His Majesty the Czar of Russia; Baron Korff; W. B. Stevens, Secretary of the ^Patents of iJie Controller Conipany of America ^Certificate of bronze medal on telephone pay stations of the Controller Company of America, presented by the Louisiana Purchase Exposition Company THE DREYFUS CASE OF AMERICA 239 World's Fair; Major H. L. Kramer, proprietor of "Cascarets"; Mr. L. E. Asher of Sears, Roebuck & Co. of Chicago, and many of the most prominent men of St. Louis. The speech of Governor Francis was as follows: Mr. President, Ladies and Gentlemen: The interesting and significant character of the ceremony of laying the cornerstone of this building can be understood when you are told that upon this spot is being erected what will be the largest publishing house' in the world. I am not only glad, therefore, but I feel honored to be permitted to participate in the auspicious beginning of so worthy an enterprise. All credit to the man who has con- ceited this great undertaking! Credit to his colleagues and to all asso- ciated with him! St. Louis is attracting the attention of the world. From now on we shall take pleasure in pointing to this enterprise as one of the indications of the energy and public spirit of a St. Louisan, assisted and encouraged not only by his co-worliers, but by the patronage of a million and a half of subscribers throughout the United States and Canada, who read one of his publications. This is another evidence of the progressive spirit that has taken hold of tlie people of St. Louis. We hardly realize how promi- nent we are at this time in the eyes of every country on the globe. The question with us is: Shall we prove equal to our responsibilities? St. Louis is on trial and if the people of this city are inspired by the same spirit that moves Mr. Lewis and his colleagues, St. Louis will continue to be prominent in the eyes of the world during at least the life of the present generation. This auspicious beginning will soon reach a successful consummation, and before the beginning of another calendar year there will have been erected upon this eligible site a publishing house that will yield the palm to none in its equipment or in its external appearance. Near here, I am told, also assured, will be erected a commodious hotel for the accommo- dation of the hundreds of thousands of visitors who will come to St. Louis in 15)04. Speaking for myself, individually, and speaking to the extent that I am authorized to represent the Exposition, I desire to say that we wish this enterprise all success, and I am sure that sentiment will be applauded by the people of St. Louis, by the people of the Louisiana Purchase, and not only by those, but by the millions of readers of the Woman's Magazine tliat will be issued from this great publishing house. Let us all wish it imbounded success, and let us hope that with the co- operation and encouragement of tlie people of this country, and with tlie favor of Divine Providence, all of the fondest hopes of its originators may be realized. The work on the new building progressed rapidly and by January 1, 1904, the pressrooms were in full operation, rattling off their millions. The central office building was also practically completed. The business of the Lewis Publishing Company, on the eve of the M'^orld's Fair, showed gross earnings of approximately a million dollars per annum, and a net profit at the rate of a quarter of a million dollars a year. The publishing plant was built for cash, in Lewis' phrase, "without mortgage or lien," although the cash paid to the builders during the progress of the work was not wholly that of the Lewis Publishing Company itself, but was (in part) raised by Lewis personally with the assistance of Kramer, and had of course eventually to be repaid out of the earnings of the concern. Lewis' dream of erecting a model publishing plant amidst ideal furroundings outside St. Louis thus became a reality. 240 THE SIEGE OF UNIVERSITY CITY Camp Lewis was an advertising promotion scheme of the Woman's Magazine. It was not a business venture for profit. It does not properly belong among the enterprises promoted by the Develop- ment and Investment Compan}^. It has, however, been frequently mentioned as such, and may be referred to in this place as a pendant to the story of the origin of the Lewis Publishing Company, and as one of its first and most spectacular achievements. Lewis' own story of this tent episode was thus picturesquely described to the Ashbrook Committee: CAMP LEWIS. At the time of the .St. Louis World's Fair, I think, possibly, our insti- tution was the best known in America, because of the enormous circula- fion of our publications. As soon as it was decided to hold the Fair along- side our buildings I became aware that we should have to take care in some way of the tens of thousands of our subscribers who were coming to the World's Fair. I, therefore, arranged with an ex-army officer. Colonel ISuzzacott, to erect a great tent city to be called Camp Lewis, to accom- modate three or four thousand people at a time. The plan was to have little tents with board floors, electric lights, hot and cold water; also a commissary tent and hospital tents. During the World's Fair we took care of about eighty thousand of our readers in that tent city, charging them tlie cost. In fact, we did not quite charge them the cost, because I paid a bonus of five cents a meal to the caterer to give them a little extra and better service. I knew that a subscriber who came there to the tent city and got a bad cup of coffee might discontinue his subscription. Camp Lewis was not a stock company for profit. It was an expense, and cost us six1y or seventy tliousand dollars. No one was wronged or defrauded. In fact, those who were our guests there have been our best friends since. People could obtain accommodation in Camp Lewis during the Fair for much less cost than equally good accommodation elsewhere in the city or environs. The camp was beautifully kept, under military order. In passing through one day I noticed a very portly gentleman sitting in front of one of the tents reading the paper, and recognized him as Mr. August Frank of St. Louis, a very wealthy citizen and a personal friend. I asked him what he was doing in our camp, at my expense. He said it was so much nicer than his apartment at the Southern Hotel that he had moved out. I had him run out of camp that evening. The whole affair was to take care of our readers. Colonel ISuzzacott, who had charge of Camp Lewis, was an ai'my officer of twentj' years' experience in camp life and head of one of the largest army contracting firms in the world. In every army of this Nation and of Europe the name Buzzacott on camp equipment is a guarantee of comfort and convenience. The colonel had a reputation of his own, and refused to undertake the ontfittings and management of the camp unless given a free hand. His estimate of the cost, with cozy tents, iron beds with springs and mattresses, electric lights, comfortable chairs, baths, nursery tent, recreation tent, hos])ital tent, great dining tent, Iiarber shops, reading rooms, allowing for two hundred residence tents, was ten thousand dollars. To this was added board M'alks, plumbing and other conveniences, and before it was finished it cost over twenty-five thousand dollars for outfit alone. The camp was under military management. Colonel Buzzacott was in personal charge. John Thompson, the famous caterer of Chicago, provided the best of meals. A physician was in attendance with the hospital tent, and trained nurses at his disposal. Nurses were provided for the baby tent, where small children could he left in their charge, A smoking tent THE DREYFUS CASE OF AMERICA 241 and shower baths were free to guests. Every tent had raised floor and electric liglits. Broad board wallas were laid. About each tent was a la%vn of well-kept grass and flower beds. In the centre was a campfire, lighting up the camp at night with cheerful glow, for no camp is complete without a campfire. About this fire frolicking parties were held to the strains of music. No intoxicants were permitted. Meals were given at twenty-five cents, and fifty cents for full dinner. The original negotiations and agreements betvceen the Lewis Publishing Company and F. H. Buzzacott, contractor to the United States Government, bearing date of March 12, 1912, are still pre- served. Every detail of the proposed encampment is set forth with the careful forethought and particularity of the experienced army contractor. Even the proposed bills of fare were detailed in ad- vance. One would judge from these that the meals furnished must have been good arguments for the renewal of Woman's Magazine subscriptions. The correspondence of Colonel Buzzacott during this period with his army associates shows he took great pride in Camp Lewis. His judgment is confirmed by the following letter from Lieutenant- General Nelson A. Miles, Commander of the United States Army. This was written to Colonel Buzzacott under date of July 19, 1904, following General Miles' review of the encampment: I desire to express the pleasure I experienced yesterday in visiting the Lewis Camp under your control. You have exercised your usual energy and skill in the establishment of this large, commodious and beautiful encampment. It is not only most comfortable, but picturesque, and from my personal inspection appears healthful. Every department seems per- fect in design and management. I congratulate you on your success. POPULARITY OF THE ENCAMPMENT. Camp Lewis was generously advertised in both of the Lewis pub- lications and by means of an attractive booklet designed to answer inquiries received by mail. The obvious advantages of its imme- diate proximity to the World's Fair grounds, the picturesque beauty and healthfulness of the site and the outdoor life under military regulations nearly akin to those of soldiers in the field, appealed to Lewis' readers and the public. Rooms and meals were furnished at a much lower cost than the prevailing high prices. This policy coupled with frequent impossibility of securing quarters in St. Louis hotels and houses during the height of the World's Fair season, contributed to the popularity of Camp Lewis. Preference was given to inquirers who answered advertisements in the Woman's Magazine and the Woman's Farm Journal. All this helped to strengthen the bond of confidence and esteem be- tween the Woman's Magazine and its readers. Many intending visitors to the World's Fair from rural neighborhoods looked for- ward with dread to the difficulties of finding their way in so large a city as St. Louis. All sorts of questions were asked and all were patiently answered by personal letter. The success of every mail order house in fact depends largely on this jDersonal note. Lewis 242 THE ,SIEGE OF UNIVEESITY CITY has always struck it instinctively. But Camp Lewis gave him a unique opportunity to act as host to his patrons and he was quick to seize upon and take full advantage of it. As the needs of the situation developed, Lewis took active steps to meet them and smooth away every obstacle. Badges were pro- vided and sent by mail whereby incoming guests could be recog- nized by agents stationed for that purpose on the arrival platforms at the Union Station, St. Louis. Other agents were placed at the end of the street car lines adjacent to the tent city. Visitors thus met and warmly welcomed by representatives of the Woman's Maga- zine, were made to feel at home upon the very threshold of their visit to a crowded city. This impression of friendliness and fore- thought was strengthened and confirmed by each succeeding day of comfort and entertainment, passed in the cozy white tents perched snugly upon the hillside in view of the World's Fair buildings and under the shadow of the newly erected octagon tower. The main entrance to the Fair Grounds was but a short walk from Camp Lewis. A pathway was quickly trodden thither across the open fields, now one of the most attractive residence sections in .St. Louis. Comfortable omnibuses plied busily to and fro. The entire spectacle of the swarming crowds in the brilliant sunlight amid the white buildings and rows of tents, with Lewis' tower, as gay with bunting as one of the main sights of the Fair itself, must have been one of absorbing interest. Lewis estimates the total attendance at the camp during the sum- mer at approximately eighty thousand peojile. The majority of these responded to the captivating invitation in his magazines. The whole affair had the effect of a stupendous advertisement for the Woman's Magazine. The octagonal tower and white tented "City on the Hill" in plain view of the Fair Grounds, attracted the eyes of the entire concourse of sight-seers. The guests at Camp Lewis not only brought with them to the grounds to the Woman's Maga- zine building, a host of new friends and acquaintances. Their comings and goings led the crowds to follow. Especially on Sun- day, when the Fair Grounds were closed to visitors, the premises of the Lewis Publishing Company were thronged with a multitude of curiosity seekers. The entresol of the Woman's Magazine build- ing, and the central marble stairway surmounted by the mezzanine floor and gallery, were literally packed tight with sight-seers from mid-day until a late hour every Sunday. The homeliness and kindliness fostered by Camp Lewis between the little Woman's Magazine and its readers unquestionably ac- counted in no small degree for the pertinacity 'svith which Lewis' following has clung to him throughout the long years of trial. What this encampment should have meant to the Woman's Magazine by way of additional subscription and advertising revenue, resulting from good will and recommendation by word of mouth, can only be guessed. But that it was much can be told from the sequel. The THE DREYFUS CASE OF AMERICA 243 whole atmosphere of this city of tents may be taken as represent- ing the finest expression of that mutual confidence and esteem which existed between him and his followers before the taint of suspicion fell upon his enterprises, like a devastating blight, or the scorching breath from the j aws of some monstrous Chimera. The memory of Camp Lewis still lingers in the minds of many thousands of visi- tors to the World's Fair as among their most pleasant recollections. But to no one does the thought of that tent city bring such mingled emotions of joy and sorrow as it does to Lewis himself. THE world's fair CONTEST COMPANY. One additional promotion of the Development and Investment Company remains to be described. This is the really famous World's Fair Contest Company, the only instance among Lewis' many ventures that is known to have occasioned him regret. Yet this concern was probably the most profitable single financial ven- ture which Lewis or the Development and Investment Company ever engaged in. This is how Lewis tells the story: If there is any of these enterprises of whicK I have a sense of regret, it is the World's Fair Contest Companv. Not that this was not legitimate in every way, but it went against the grain with nie. This is the way it happened: About the time they were constructing the buildings and getting things in readiness to hold the World's Fair at St. Louis, some of the directors of the Louisiana Purchase Ey.position Company came to me and asked if I couldn't work out some plan for widely advertising the Fair. I said I would sec if I couldn't think up something. At that time different guessing contests were being run all over the United States. The Postoffice De- partment had made certain rulings as to which were lotteries and which were not. The differentiation was so finely drawn that I have never been quite able to figure it out yet. But, anyhow, they had held that these guessing contests were not lotteries. After looking into the proposition, I said to the directors, "I will tell you how you can arouse interest in the World's Fair that will be of national extent. The human animal is so constituted that he lilces to bet a little. If you can get up a contest on what will be the attendance of the World's Fair and carry it to within a week or two of the close, you will have a continuity of interest. Every day the attendance will be closely watched to enable the contestants to make a better judgment as to what the total v.-ill be. You can then publish statistics and other information, and the newspapers throughout the whole country will be compelled every day to publish them." I said, "This will be of great value to you as an advertisement, provided you make the purse big enough. If you offer only ten thousand or even fifteen thousand dollars the public will not pay much attention. You must make it something that will compel the whole United States to sit up and look at it." They were taken with the idea, but didn't just like to put up the money. PHIZES AUD pnoriTs. I said, "Well, as my contribution, J %vill take the chance myself." I then went over to one of the banks and iDorrowed seventy-five thousand dollars on my note. I took the cash and deposited it in one of the trust com- panies. Then I offered a first prize of twenty-five thousand dollars. The other prizes were graded down for those who estimated nearest to the total attendance. I will state in this connection a remarkable incident. One man estimated the attendance exactly. He got the twenty-five thousand dollars. 244 THE SIEGE OF UNIVERSITY CITY To make it a little more interesting, I added another ten thousand, making eighty-five thousand dollars, all told. This extra purse was for the one who came nearest to estimating the attendance during the early part of the Fair. The contest excited a great deal of interest, but, of course, I took a chance on whether I would get back that eighty-five thousand dollars or not. There were no stockholders in that, I believe, besides myself, except nominal ones as required by law to form a corporation. There was no loss to anyjne except, of course, that those who sent in their estimates put up their money. The estimate coupons were usually sold in connection with newspaper subscriptions, so they had the papers for their money. We sold them to newspapers and magazines, and they used them in connection with subscription schemes of their own. In addition we sold some coupons direct. But the great bulk was sold through periodicals. I do not remember what the profit was. There were eighty-five thousand dollars in prizes, and the expense of handling it was very heavy. It is hard to estimate the profit. I should say, perhaps, eighty-five thousand dollars profit, all told. The coupons cost twenty-five cents each. What was put up by those who did not win the prizes was lost. Any such loss refers, of course, solely to the person making the estimate. The total cost, includ- ing all the expense of advertising and handling, was considerable. The consideration given was the opportunity to win the purse. There was no actual loss in a business sense. In my judgment, those things are purely and simply lotteries, like church fairs and things of that kind. The whole thing was objectionable as an appeal to the gambling spirit of the Nation. Each contestant in return for his money got the excitement and, in most cases, a subscription to a periodical also. Where there was no subscription given he got just the same as if he had paid to go to a show. He got a run for his money. LEWIS REORETS THE CONTEST. This enterprise did not match up with the other things which I was doing. Something came to my attention the first week, which soured me on the whole affair. I would have stopped it then if 1 could. I saw a letter in the mail from some woman enclosing an amount of three, four or five dollars for a number of estimates in the contest. She expressed the hope that she would win a purse and stated what it would mean to her if she did. In a flash I had a mental picture of the chance she had of winning that purse — one in a million. It was not a fair proposition. I have no hesitation in proposing a business venture, I don't care how much risk there is in it. to men of intelligence, of means and of sound mind, and of saying: "Here is the proposition. If we succeed, we may make a thou- sand per cent; if not, we shall lose what we put into it. If tou fellows want to go in, all right." Then, whether they go in for one or one hundred thousand dollars, is their business. But this contest was totally different. At the same time, it probably did more for the attendance of the World's Fair than any other advertisement. I would have stopped the World's Fair Contest Company witliin two weeks after it had started if I could have done so. But I had the money up, had issued the coupons and couldn't stop it. The scheme was submitted to the postoffice and was approved by them. The postoffice then permitted these contests. The Buffalo Fair did the same thing. Similar contests were going on continuously in the newspapers. A large number of the best newspapers in the United States participated in this contest. In fact, my plan was to have the newspapers all over the United States go in on it, and thus give the Fair imlimited publicity every day. The directors of the World's Fair not only considered the scheme good, but looked on it as the most favorable advertising plan in connection with the entire exposi- tion. They were very much interested in it. There was no general con- THE DREYFUS CASE OF AMERICA 245 demnation of the plan in the newspapers. On the contrary, most of them were using it. The scheme was not advertised in my own magazine more than in others. We already had our coupons and that made our profit. Of course, we had first to recover the amoimt of the prizes and expenses. The attorney- general held that the contest was not a lottery. It lacked the element of chance; because the problem could be worked out fairly closely hy general averages and by consideration of the extent of the advertising, and so on. As upholding that contention it was remarkable how close a great number of estimates came to tlie actual total attendance. The courts passed upon the matter and held that the estimates were so close as to prove it was not a gambling scheme. The contestants were allowed to withhold their esti- mates until within two weeks of the close of the Fair. There was litigation afterwards between contestants. The capital prize was claimed by two different persons. We decided, therefore, to have the purse awarded by a committee. The judges had been named in the literature. They were representative business men of St. Louis. But when the litigation arose we paid the money into court and let the court decide. WILLIAM JENNINGS BRYAN OBJECTS. The World's Fair Contest Company immediately provoked serious criticism, of which the following open letter by William Jennings Bryan to Postmaster-General Payne, Washington, D. C, reprinted from The Commoner of July 17, 1903, may be taken as an illus- tration : Dear Sir: I enclose a circular sent out by a St. Louis company which is conducting a guessing contest based upon the number of admittances to the Louisiana Purchase Exposition. You will see that the sum of seventy- five thousand dollars is oifered in prizes, the estimates being sold for twenty-five cents each, or five for a doUar. The company is soliciting the aid of newspapers throughout the country to advertise the contest. It is apparent from the advertisement that this is even more demoralizing than the ordinary lottery, because the low price of the ticket and the large capital prizes promised are more alluring to those who are susceptible to the temptations offered by a lottery. It is also less fair than the ordinary lottery, because the contestant has no way of knowing how many com- petitors he has. In the public lottery the prizes usually bear a fixed and known proportion to the amount received for tickets, but in this case the company may talie in ten or a hundred times the amount paid out in prizes. The concluding paragraph of the advertisement discloses the gambling character of the institution. It reads as follows: "A good investment. Better than stocks and bonds. We are receiving from shrewd business men from the large trading centres, monthly orders for certificates, they claiming that the investment is safer and the possi- bility of large gain greater than investment in bonds, life insurance or any of the speculative stocks offered on the boards of trade in the various com- mercial centres. Most of them purchase certificates systematically — that is, send in e\'ery month for from one to five dollars' worth. Almost everyone can economize a few cents a day, and the funds thus saved can be invested in certifijates and, with a hundred or more certificates in your possession, you are likely to wake up some morning and find yourself the lucky pos- sessor of an independent fortune. It hardly seems reasonable that with a hundred certificates one could miss ALL of the 1,889 prizes." Please let me know whether the Department has issued any order on the subject, and whether or not such a contest is regarded as a violation of the anti-lottery laws. 246 THE SIEGE OF UNIVERSITY CITY The reply to the above was a letter over the signature of C. H. Robb, assistant attornej'-general for the Postoffice Department, dated June 23^ 1903, which is in substance as follows: It is unquestionable that the effect upon the public of these so-called guessing contests, considering the elaborate plan upon which they are offered, the very large prizes, etc., is almost as pernicious as that of ordinary lotteries, and it is the disposition of the Postoffice Department to scrutinize very carefully all such schemes and to deny them the use of the United States mails where authority of law can be found. In all such cases the Department must be governed by decisions of the Federal Courts and opinions of law officers of the Government. From sundry legal opinions quoted, the conclusion is reached that the scheme is "beyond the reach" of the PostofHce Department; that is, in other words, legal, "unless it shall develop that fraud is being practiced in its operation." INDICTMENTS FOUND AND QUASHED. Notwithstanding tliat one of the opinions affirming the legality of such contests was that of Attorney-General Knox in connection with the Pan-American Exposition at Buffalo, Assistant Circuit- Attorney W. S. Hancock of St. Louis attempted to put the World's Fair Contest Comjoany out of business. Lewis thus refers to this incident: Toward the close of the contest the assistant circuit attorney saw fit to secure an indictment agahist the promoters, as well as against the pro- moters of a similar conte.5t conducted by the St. I.ouis Daily Star. This indictment was quashed. A new information was fdcd by the same officer. That was quashed. He then brought still another indictment. That was also quashed by the courts. All were dismissed entirely on the merits of the case. This persecution on the part of a local officer brought the contest into disorder and resulted in great damage and loss to those associated with it. SETTLEMENT OF THE CONTEST. Lewis requested permission of the grand jury to appear before that body and submit to it the above facts and legal opinions, but was refused. The officers and directors of the World's Fair Contest Company were indicted. A very careful review of the law and judicial precedents on the subject was then made by counsel for the company who expressed the following conclusion: The substance of the leading decisions in England and America is that where a contest of estimates contemplates the exercise of the intellectual factors, or calculation, judgment, skill or experience of the competitors, and not mere chance alone, tlie project is not a lottery. Your project obviously involved such a problem. It can not be regarded as a lottery in any aspect, according to the decisions above cited. The estimates which your patrons will furnish involve not merely careful calculation of proba- bilities, but they conduce to a widespread study of such subjects and of the hisiory of all of the great World's Fairs'. Tliese features broadly differentiate your project from one where mei-e chance determines the issue. We conclude that your ])roiect is not a lottery. We coincide with the official decision of the learned and eminent counsel of the United States Postoffice Department on that subject, as applied to this very company and to this kind of contest. I 8 o '~' X' 5 "^ r r; s s' - 1=1 ■a - = o ■^ S K > O = -•S 2 T = V =: a s THE DREYFUS CASE OF AMERICA 249 The effect of this brief was apparently conclusive that a con- viction could not be sustained. The indictments were quashed and the contest suffered to go on. A four-page newspaper supplement under date of March 30, 1905, still preserved by Lewis, contains a list of the names and addresses of the winners. It bears the fol- lowing statement: Many urgent efforts have been made to obtain from the Louisiana PurcJiase Exposition Company the paid attendance at the World's Fair in a form that was not subject to revision. It was the latter part of February before the secretary gave us a final statement of the paid attendance. Immediately, the Missouri-Lincoln Trust Company was authorized to turn over to the judges the coupons of estimators which had been locked up in their safety deposit vaults. The judges at once undertook the enormous labor of making the awards, and on March 30 gave us the list of awards and names of the successful contestants. Winning certificates should at once be forwarded to the Missouri-Lincoln Trust Company through any bank or banlcer or express company. The capital prize of twenty-five thou- sand dollars and the special prize of five thousand, five hundred dollars for nearest correct estimate made between January 1, 1904, and May 1, 1904, being in dispute among several claimants, will be paid into court to the account of the rightful claimant or claimants as soon as the proper court order can be obtained. Following is a reproduction of the letter of the judges with their signatures : St. Louis, Mo., March 30, 1905. World's Fair Contest Company, St. Louis, Mo. Gentlemen; We, the undersigned committee, appointed by you to ascer- tain the successful contestants in the World's Fair contest, beg to report that we have carefully examined the coupons deposited by you in the vaults of the Missouri-Ijincoln Trust Company, and hand you herewith a list of names and addresses of the successful contestants; together with their estimate and the amount of the prize to be awarded. The examination of coupons ^'as conducted under the personal super- vision of the committee, one or more members being in constant attend- ance each day from the time the vault was opened by the Missouri-Lincoln Trust Company until closed. Every possible precaution was used by the committee to insure absolute fairness in the awards. (Signed) LON V. STEPHENS, Chairman. F. J. CARLISLE. CONRAD BUDKE. G. A. WURDEMAN. The World's Fair Contest produced an enormous volume of cor- respondence, including not a few protests and controversies of vari- ous kinds. The delay in settlement accentuated these difficulties, and added to Lewis' regret over the entire affair. THE POSTOFFICE INSPECTORS' REPORT. A statement of the operations of the company was submitted to the postoffice inspectors in the spring of 1905, shortly before the awards were made and the contest finally closed. Not content with this statement, the inspectors submitted a list of thirteen questions demanding supplementary information. Lewis responded fully and submitted a complete list of some three hundred co-operating news- 250 THE SIEGE OF UNIVERSITY CITY papers and magazines. He also supplied a list of the awards and the names and addresses of the winners. The inspectors' report, under date of June 5, 1905, states that the case had been investigated by Inspector J. D. Sullivan in Octo- ber, 1903, who recommended that the inquiry be closed because of the ruling of previous attorneys-general that such a guessing con- test was not a lottery. Subsequently, the PostofRce Department found a way to decide that such contests were a violation of the Postal Laws and Regulations. The case was then re-opened and again assigned to Inspector Sullivan who reported the facts to the United States attorney. But no action was taken. After rehearsing the history of the concern, the inspectors' report proceeds to comment ujJon the committee of awards in the follow- ing language: None of the Committee of Awards are connected with any of Lewis' enterprises, except that Lon V. Stephens and F. J. Carlisle are banli stock- holders. The re]5utation of each member of this committee may be called good. Conrad 13udke is connected with Nelson Chesman Company, an advertising firm that has freely patronized Lewis' publications. He is very friendly. Judge G. A. Wurdeman was formerly pi-obate judge of St. Louis county. Carlisle recently had an arrangement with Lewis by which he was to join Lewis and his associates in buying the St. Louis Star, an evening paper. He informed us today that he had arranged with Lewis to borrow $b6,666.66 on his individual note unsecured, to pay on this purchase. Car- lisle is said to be worth not exceeding five thousand dollars, so that very friendly relations exist between hira and Lewis. After commenting further upon the settlement of the contest the inspectors express the following conclusions : As this contest company is now dead, so far as using the mails is con- cerned, and as Mr. Lewis submitted the plan of this company to the assis- tant attorney-general for the Postoffice Department and received assur- ance that liis plan was not a lottery, and that his literature, when amended as suggested, was permissible to be sent through the mails, and many newspapers whicli were carrying advertisements for the World's Fair Con- test Company were informed that the advertisements were legitimately sent through the mails, and afterwards, when the Postoffice Department made a ruling that similar guessing contests were a lottery, an exception was made of all contests in progress where no fraud in conducting same could be shown, we are of opinion tliat no jury could be now found that would convict Lewis or anyone connected with the company of circulating lottery matter through the mails, under the circumstances; but the matter having been sulimitted to the United States attorney for an opinion, we think due courtesy to him calls us to hold the case open until he has ex- pressed an opinion. We, therefore, submit this report for consideration in connection with our recommendations in cases Nos. 39640-C and 52586-C for a fraud order against the People's United States Bank, as indicating something of the character of E. G. Lewis, who was president of thig company and now president of the bank. This company and the Lewis Publishing Company are the only concerns among the many enterprises owned, controlled and managed by E. G. Lewis that made any profit during the year 1904, and we think that success in a lottery enterprise does not commend him as a bank manager. An official memorandum by E. W. Lawrence, an assistant in the office of the assistant attorney-general for the Postoffice Department, THE DREYFUS CASE OF AMERICA 251 was served on Lewis under date of May 25, 1905, containing a list of the enterprises with which he was alleged to have been identified during the past ten years. This list included three other schemes which have not been mentioned. One of these was an electric railroad company, unnamed. Lewis was never identified with such a scheme, never proposed, promoted, or invested in an electric railroad, and states that he is wholly at a loss to know how the inspectors got hold of this particular idea. In the course of his investigation by the Congressional Committee this colloquy took place: Mr. Austin. Did you finish about the electrical railroad company? Mr. Lewis. I will have to leave that to the postoffice inspectors. In looking- back over my mental catalogue I cannot find any electric railroads. I may have one concealed about me somewhere, but I do not recall it. THE BACHELOR PNEUMATIC TUBE COJIPANY, CALIFORNIA VINEYARDS COMPANY AND OTHERS. The other two schemes with which Lewis was said to be identified were the Bachelor Pneumatic Tube Company and the California Vineyards Company. As to the first of these, Lewis acted as agent for a friend in procuring a Missouri charter; as to the second, he was merely an investor. The official memorandum of the Depart- ment sums up its list with the following sentence: "Many of the above named schemes have been failures; the practices of Lewis in conducting them have been questionable and some of the schemes were fraudulent." The accuracy of these conclusions may now be judged by the reader himself. They are on a par with the allega- tion that Lewis was identified with an electrical railroad or with the California Vineyards Company or with the Bachelor Pneumatic Tube Company. As to these concerns Lewis says: The Bachelor Pneumatic Tube Company was not my company. John MnlhoUand, the president, is a personal friend of mine. He came to St. Louis preparatory to bidding on the transit of the mail in St. Louis. To secure the contract he had to form a company in Missouri. Before he could complete his arrangements in St. Louis, he was telephoned for to eoiue back to New York. He then asked me to take out the charter of a small Missouri company for him. The stock was a few thousand dollars. He asked me to put up the money to secure the charter and said he would send me his check for the amount on his return. He did so, and then took over the corporation and elected the proper ofScers. Bachelor was the name of the inventor. I was not interested as a stock- holder, or in any other way. I simply secured the charter and he re- imbursed me for the expense. I did not sell any stock, or advertise it, or have any financial interest in it. I never heard of it again. Of course, I have heard of Mr. Mulholland again. He is one of the stockholders in the Lewis Publishing Company and is still a personal friend. I believe that concern is putting in the same pneumatic tubes in London. The California Vineyards Company was a company for the development of the Tokay grape business in California, in which I took some shares. I did not organize the company. Mr. W. H. Verity of St. Louis, a success- ful business man, went to California and became interested in the grape business. He came back to St. Louis and called on me, among others, and got me to invest three or four thousand dollars in a company to purchase several hundred acres of Tokay grape land out there. 252 THE SIEGE OF UNIVERSITY CITY Before doing so, I consulted Mr. John A. Lewis, cashier of the National Bank of Commerce, who was a friend but not a relative of mine. He v/rote to banks in California and had them inquire carefully and send him an exhausth'e report. On this report, which was excellent, a number of us put money Into it. I believe It has proved very successful. I know I got my money back. In addition, I sold the eight bonds I had, each representing an acre, at what was considered a great sacrifice, as I was then in desperate need of money, for four thousand cash. We had several full-page advertisements in our magazine for the sale of bonds, each bond representing an acre of land. A trust company held the title to the land until the vines came into bearing. The division was to be after so many years. I understand it has worked prosperously. The only interest I had were those eight bonds and I believe a thousand dollars of the stock. I did this for Mr. Verity, just as others were doing the like for me. I inquired into it, found it good, and put in a few thousand dollars. I allowed Mr. Verity to use my name as having done so. I believe he used my name as one of the directors. I do not recall any editorial endorsement of it, as that was against the policy of the paper, unless it was our own enterprise, for which we took respon- sibility, and such was not the case. In addition to the above concerns, Lewis occasionally bought a small block of stock in a speculative scheme in which a friend or acquaintance happened to be interested. Among such investments were a few shares of the Becky Sharp and the Sempire Oil Com- panies, respectively. These two concerns are elsewhere listed among the "false and fraudulent schemes" which he promoted. These facts are mentioned only to show witli what care the candid reader must discriminate between the facts of record as to Lewis' career and the great mass of apocryphal legends with which the inspectors and the newspaper paragraphers have industriously embroidered it. The story of Lewis' activities as promoter is summed up in the merger or holding company, which he created as a means of financ- ing his various enterprises. This concern was also designed in the event of his de.ith to take charge of and manage his estate. Lewis, therefore, made over to it all of his stock holdings in his own enter- prises together with the stock and bonds which from time to time he purchased for investment. This concern thus became the prin- cipal financial instrument employed by Lewis in building up his credit. This process we are next to consider, HAP- ■■■&■ ijiavoBit^ci't! (^Oy ^ilap of Vnwcrsity Cily Hlap of St. Louis. The shujed section slio-u^s the pro/'crty included in the University City Improvement Plan v^rt- »i. Louis. Mj. fUrr-l " 1 tCbc ^CKlopment an6 Hiiaegtmcnt Co. l,O'0o. o^n —^^-^^^■^— Dolliirs. The D#veloKfctieDt and Inveslmeni Co Sx Louis. X<^i^ ^190J?^ No._ The National Bank of Commehce in St.Louis R\i" TO THE Order of J ^^ DOLLABS ^^^^'^'^'^^^- -"-Tatf t*tiiifi 'y,yi,u w/^^ /^/ j/f^f?>r ^•/i'^/r^y///^ ■■.^^^.■ij::ir>j^t^cizizr:^.-..--.-.r.j|^^- -CVi_,i£tt/ ^ J/i^/y/r ' ' ' '^Irt 1 i t ■ rgJM fci Aa_ lXsi^AA.a^^ ^y^y z^" i! ^P^WW.'V,'mim,w^ y^J T j v -.Tg ; n. i ^ w y t ^ j- 1 i j i nju T t m .1 . J ;ji ujig n iii m i .L> 1 Facsimile of check for $r.ooo.ono sii^yia/ hv E. G. Lc.cis. .'Uso other eowwerc Pater cwployci/ ,n Ihc ovynnization of the i'ravcrsily Heights Realtv iUiJ De-eeloh},u Co>}tj\iiiy . i\ o'eeiiihcr i, jijo:^ CHAPTER XI. IS CREDIT A DISCREDIT? Commercial Agency Reports — E. G. Lewis Capitalized — Origin OF THE Development Company — Dividend and Profit- Sharing Certificates — How Funds Were Raised — Earn- ings AND Dividends — The Question of Good Faith — The Inspectors' Report — A Million Dollar Credit. "I am accused by the inspectors of doing business on credit," exclaimed Lewis on one occasion, "as if having credit was a discredit. I had a total baniiing credit of over a million dollars at the time the first of these attacks was made. How did I get that credit? I was not born with it. I got it, because the banks of St. Louis, Chicago and other cities had handled about two million dollars of my commercial paper, and I had always paid my notes when they fell due." Most business men will agree with Lewis that the building up of a line of credit in the brief span of five years from nothing to a total of one million dollars is by no means the least of his spectac- ular achievements. For the inspectors assert that shortly before Lewis and Nichols started the Winner Magazine in 1899, they owed nothing, for the reason that their credit was "below tolera- tion." How then did Lewis acquire the credit which enabled him to finance the magazines, the inventions, the real-estate deals, the great buildings, the model city, and many other ventures, the story of which has now been laid before the reader? commercial agency reports. The reports of the great commercial agencies are like the read- ings of a kind of business thermometer. They register the rise and fall of the credit of business men, and record the opinions of experts as to their financial status. The inspectors were quite correct in saying that Lewis had no credit at the time he started the Winner Magazine. This is shown by the following extract from a report of one of the great commercial agencies, dated Februarj^, 1899: Edward Gardner Lewis is married, aged about thirty years. He claims to own his residence at 769 Euclid avenue, worth about six thousand, five hundred dollars, and encumbered for three thousand, five hundred dollars in his own and his wife's name. He also claims ten thousand dollars' worth of stock, and three thousand dollars first mortgage bonds in the Hunyadi Salts Company. He says that he owes borrowed money and notes out- standing in Connecticut, and can not state his debts, but that they are considerable. He was formerly a salesman for the Moffett-West Drug Company, and was said to be shrewd, energetic and of good habits. He was later one of Lewis & Leonard under the style of the Diamond Candy Company on Main street, who failed. He was president of the Hunyadi Salts Company. Their affairs are in litigation, and his interest is deemed of little value. He is president of the Progressive Watch Company in the 266 THE SIEGE OF UNIVERSITY CITY Ozark building. They have seyeral schemes which bring them profit with but little outlay. Lewis is also salesman for Nelson Chesman & Co., an advertising agency. We hear nothing against him personally, but he is not thought desirable for credit. He is believed to be largely in debt, and worth nothing available to creditors. A more unpromising basis on whicli to rear a towering financial structure would be difficult to imagine. Yet, less than two years later, the same commercial agency records the fact that Lewis had at last laid hold of the first rungs of the commercial ladder, and was mounting rapidly. At the risk of some slight repetition oi events with which the reader is familiar, we add this review of Lewis' progress as showing the impression he was then making in the best informed commercial circles. Lewis is now about thirty-two years of age. For years he was in the employ of various drug houses here and elsewhere, but for some time past has been operating on his own account under various styles. Some few years ago he organized the Hunyadi Salts Company, of which he was chief owner. He is understood to have placed the business on a paying basis; but on account of injunction proceedings instituted against the company to restrain it from using the style adopted, the business ran down. He is understood to have lost about all his means. After several otlier ventures, he organized with others the Mail Order Publishing Company. He became president and manager, but on account of old matters holding over him, he holds only a nominal amount of shares. The company publishes the monthly journal called the "Winner," subscription price ten cents per year. This has met with pronounced success. It claims a circulation of four hundred thousand copies, is well patronized by advertisers, and has proved a source of large revenue to its owners. Later on he invested in what has since become known as the telephone coin controller and Lewis addressing ma- chine. In June, 1901, he organized the Developnient and Investment Company imder the laws of Missouri, of which he and his wife are sole owners. The object of this company was to take over the controlling interests in his publishing business and other enterprises. He was elected president and treasurer of the company. These offices he still holds. He is reported as possessed of more than ordinary ability. He is very ingenious and energetic, and has succeeded in associating with him some prominent and wealthy citizens, who are of the opinion that he has a very bright future. The affairs in which he is identified are increasing in volume continually. So 'far he has proved equal to the task of taking care of them. His financial responsibility is thought to rest entirely with the various businesses above enumerated. The passing of another year added these items to the reports of the commercial agencies which, as all business men know, lie at the basis of financial credit: Lewis is not engaged in any business. Individually, though he is president and principal owner of the Development and Investment Company, presi- dent and treasurer of the Lewis Publishing Company, president of the Controller Company of America and Interested In several other corpora- tions, in aU of which he is very active. He owns a controlling interest in all of these companies, which is vested in the Development and Investment Company, a Missouri corporation, capitalized at one hundred thousand dollars, full paid, with a large surplus. Individually, he owns his resi- dence at 769 Euclid avenue, worth about eight thousand doUars. He gener- ally carries a balance of from five thousand to ten thousand to his credit in bank. THE DREYFUS CASE OF AMERICA 257 He began business here some years since on a very modest capital. He has displayed unusual ability and application, and has met with more than ordinary success. He is founder of the Lewis Publishing Company, in which his largest interests centre. From this he is understood to receive very large profits. The University Heights Company is also regarded as a valuable asset. The other corporations have as yet not been placed on a paying basis. They are being financed by capital obtained on the paper of the Development and Investment Company. In his various enterprises Mr. Lewis has enlisted the aid and influence of many of the most prominent and influential citizens of this community. He is well spoken of by his bankers, where he has been able to secure accommodations in sums ranging from twenty-five thousand to one hundred thousand dollars. These he has taken care of satisfactorily. His success has been obtained during the past four years. Well-posted authorities do not hesitate to proclaim him ingenious, and of unusual executive ability. E. G. LEWIS CAPITALIZED. Such is the contemporary account of the stages by which Lewis line of credit was built up. His chief financial instrument was the Development and Investment Company, which he organized in June of 1901. It is the story of that concern with which the pres- ent chapter has to do. This is his own story: 1 was then actively engaged in a number of different enterprises in St. Louis. In some of them I bore the relation of a guarantor to those who became associated with me. I made myself personally responsible for the outcome. But, in another class of enterprises, I simply went in with other men on an equal footing. We all took the same chances. My judg- ment in the promotion of new enterprises began to be somewhat considered. 1 was invited to become director in one company after another. I was ofl'ered considerable interests in different concerns for the use of my name. I stood well in the commimity at that time, and had built up a considerable banking and mercantile credit. I was at that time a heavy borrower. I was indebted to my banks for immense sums, utilized in building up my various enterprises. Whenever I could borrow a large sum at six per cent, and make fifteen or twenty per cent on it, I did so. OBIGIN OF THE DEVELOPMENT COMPANY. The question frequently came up with men like Major Kramer and others: "Lewis, you are in a number of enterprises. If you dropped dead one night there would be chaos. Why do you not execute some sort of a trust agreement to take up all your interests and hold them intact, so as to carry them on in the event of your sudden death?" Another reason why I started the Development Company grew out of an incident which happened while I was financing the Winner Magazine. I started that paper with a capital of $1.25, a right idea and the determina- tion to make it the greatest magazine in the world. With little credit and no capital I soon met the usual problem of ready money. I had to sell a one-fifth interest to Mr. McMUlan of the St. Louis Union Trust Company for five hundred doUars. This sum was enough to give me a good start. Three months later I went to the banker and told him I wanted to buy out his fifth share of my paper. I said frankly that in my opinion hia fifth share would in a few years be worth a fortune, but that I would give him five thousand dollars for it. He decided to take me up. I raised the money and paid him out. This was one thousand per cent bonus on five hundred dollars in three months. This set me thinking. I thought in future I ought to be able to finance my enterprises myself. 258 THE SIEGE OF UNIVERSITY CITY With these thoughts in mind, I evolved a holding company, which I called the Development and Investment Company, representing practically myself Incorporated. This concern was to hold all of my interests in the different enterprises. It was thus practically a controlling company over them alL I then arranged with several prominent men, including Major Kramer, L. B. Tebbetts and others, to become the trustees in such a way that, in the event of my sudden death, they would have become the actual directors of the company with full control of aU these properties. They would, there- fore, have been in position to conserve and hold them together without any disturbance of their relations, and to carry out all my obligations. This plan was adopted to avoid trying to write a will which would cover and protect everything in the event of my sudden death. The Development and Investment Company absolutely controlled all the other enterprises as the owner of a majority of their stock. It was, there- fore, secured by their combined assets. With me were associated strong and able men as officers and directors. During my life they assisted and advised me. In the event of my death another president would be elected, and a fund of four hundred thousand dollars in cash would come into the treasury from my life insurance, to offset any bad effects my death might have. The Development and Investment Company was, therefore, organized under the laws of Missouri in June, 1901. The capital stock was five hun- dred thousand dollars, but the assets were many times this. I held all the stock except one or two shares issued to Mrs. Lewis and someone else to comply with the law. I executed a trust deed on my stock so that in the event of my death the trustees would become directors and step in for the benefit of the stockholders. This was independent of the organization of the company, and supplementary to it. HOW FUNDS WERE RAISED. The organization of this company put a new status to all that I was doing. 1 was no longer an individual! I became a corporate being, all concerned Icnowing, however, that I was practically the entire corporation. As an illustration, I could issue a note or bond in this Development Com- pany for five or ten years, whereas I could only borrow as an individual for periods ranging from one to six months. In my activities I had found that a large part of my time was taken up in looking after my loans and their renewals. I was now able to get the money for a longer period and at more reasonable rates of interest, and to avoid the payment of com- missions to secure loans. All this I felt that I was entitled to do. The company at first issued these notes to men like Major Kramer and other friends and associates of mine. They took large amounts, because the notes were made at first with a high rate of interest and for a long period of time. First, they were for twelve per cent. This was not unusual then. I have paid more than twelve per cent many times since to some of the banking institutions of the West. This was on time loans. The usual process in sucli cases is to pay the legal rate of interest, together with a commission to someone for investigating and recommending the loan. The legal rate of interest in Missouri was at first eight per cent. Then it was reduced to six per cent. Now it is five per cent. I paid on the notes of the Development and Investment Company at the rate of twelve per cent for about a year. Then I was able to reduce it. I afterwards reduced it again and again. The safer the enterprise became and the more estab- lished, the lower the rate I could borrow at. That stands to reason. Large amounts were purchased by my friends. This gave me a new money resource. The note, in addition to its interest, had a profit-sharing feature. It participated in the earnings of the stocks which were its assets. A state- ment was made from time to time to tlie investors as to what were the assets of the institution and what stocks it was to hold. My recollection is THE DREYFUS CASE OF AMERICA 259 that I transferred practically all my properties and holdings to the Devel- opment Company. As far as I can recall, I left out nothing but my per- sonal and private property, like my watch and clothes. There were some interests of a personal nature which did not enter, as for instance my own home, which was built and owned by Mrs. Lewis. Everything that I held in the way of business investment went to the company. I transferred to it all my stock in the Winner Magazine, the Woman's Farm Journal and the Richarz Pressrooms. I assigned all my patents. I promoted the Lewis Publishing Company through this concern, and then assigned to it all my stockholdings in that, although I afterwards acquired considerable interest In the Lewis Publishing Company in addition. All this property, there- fore, stood as security for the notes ; but, whenever I was requested to do so, I endorsed the notes as well as signing them as president of the com- pany. I did not endorse every note because, for instance, Major Kramer and other personal friends and associates did not ask me to do so. This Development and Investment Company went on for seven or eight years. The salary which I received individually from the various corpora- tions did not go into the Development Company; but it received the earn- ings of the stock and of the interests which they represented. This was specifically set forth. I drew a salary from the Development Company as its president. DIVIDEND AND PROFIT-SHARING CERTIFICATES. In addition to the notes of the Development and Investment Company taken by Lewis' friends and associates, he issued after its organization in June, 1901, during the remainder of that year, and also during the first six months of 1902, two forms of securities. One of these was a guaranteed dividend, the other a profit-sharing certificate. Both matured in two years from the date of issue. In- terest on the first of these was payable monthly at the rate of one per cent of its face amount. The principal was payable at maturity. The right was reserved to the directors to call in the certificates on payment of principal and interest. The investor also retained the privilege of withdrawing his investment within thirty days after demand, less dividends previously earned. In the language of this document "the side which demands the cancellation of the certificate before maturity loses the dividends." No interest was guaranteed upon the profit-sharing certificate. The holder was entitled instead to share in the profits of the con- cern "on all its investment properties, in proportion to the profits accruing on all outstanding certificates, and in the increment in value of all said investment properties as evidenced by their in- crease in valuation between the date of its issue and the date of its maturity." The cash profits were said to be payable monthly; the increments in value, at maturity or cancellation of the certificates. The same rights were reserved to the directors and the investors respectively, of calling in the certificates and refunding the invest- ment, or withdrawing it on thirty days' notice, as in the case of the other issue. Applications for between four and five hundred of these certifi- cates are still on file in Lewis' vault, chiefly from small investors, ranging from sums of ten dollars upwards. Many are in the hun- dreds ; a few, in the thousands of dollars. The dates of issue range 260 THE SIEGE OF UNIVERSITY CITY from July, 1901, to July, 1902. The vouchers are numbered ser- ially. They appear to constitute nearly, if not quite, an entire issue. With them are filed the receipts of the investors for divi- dends and accrued profits. According to these the guaranteed in- terest at the rate of one per cent per month appears to have been promptly paid. A dividend on the profit-sharing certificates was paid in January, 1902, for the period from the beginning of the concern in June, 1901, to the end of the year, at the rate of two sind a half per cent each month, or thirty per cent per annum. Vouchers are on file sho^ving the paj'ment of the guaranteed rate of interest during the early part of the year 1902, and also of divi- .iends on profit-sharing certificates at the rate of three per cent per month, or forty-eight per cent per annum. EARNINGS AND DIVIDENDS. The assets of the Development and Investment Company during this period consisted of Lewis' holdings in the Mail Order Publish- ing Company, the Farm Journal Company, the Richarz Pressrooms Company and the undeveloped patents of the addressing machine, the steam trap and the telephone controller. Hence the above divi- dends, if earned, must have been represented by dividends on the stocks of the three going concerns, or by the sale of stock in them, or in one or more of the undeveloped enterprises. Lewis' break with Nichols, it will be remembered, occurred in May of 1902. The latter asserts as one of the grounds of his will- ingness to separate from Lewis, that the dividends paid by the Development and Investment Company, of which he was secretary for something over a year, were fraudulent. He says that they were paid out of alleged profits made by other companies when, in fact, there had been no profits. Nichols, however, admits that he was not well enough acquainted with the business to even under- stand the nature of its securities. He further asserts that the De- velopment and Investment Companj', although designed to be a holding company, never held the stocks of other corporations as long as he was with them. In view of the fact that Nichols' signa- ture actually appears upon a large number of certificates of stock transferred to the Development and Investment Company by Lewis in these same enterprises, Nichols' testimony on this head would appear to be wholly without value. Nichols further says: Lewis also had half a dozen things in mind. Among these was the scheme of the University Heights Company. I did not like that. I told him that it was not proper and not right, and that I really didn't care to go into it. He also had on foot the proposition of putting up a great big building, as he afterwards did. I could not see where he could' get the ready money with which to put up such a building. All this made me timid about staying with him. I was afraid Lewis would get into trouble on account of his Development and Investment Company. The truth appears to be that Nichols was so much absorbed with the detail of the work of the Winner Magazine that he paid com- paratively little attention to Lewis' outside ventures. Nichols THE DREYFUS CASE OF AMERICA 261 admits that he was not familiar with accounts and that, though all the books were open to him, he could not even tell whether or not the company was making money. His personal interest appears to have been confined to the Winner, and to his salary. His obj ectians to Lewis' other enterprises seem to have been in large part due to a belief that they were absorbing Lewis' time, funds, and energy, to the disadvantage of the publication business. Nichols, with more modest ambitions, would have been content to let well enough alone. Nichols, in short, failed to grasp the true functions of the De- velopment and Investment Company, either as a holding company for Lewis' going concerns (such as the Mail Order Publishing Com- pany, the Farm Journal Publishing Company, and the Richarz Pressrooms Company) ; or as fiscal agent for the promotion of new enterprises. Yet his opinions were accepted by the inspectors and became the standard by which Lewis was later judged. It is there- fore important both that the facts should be clearly understood and that Nichols' limited conception of the nature and extent of Lewis' various schemes should be fully realized. A going concern must first meet its current obligations and in- terest on its secured indebtedness, if any, before it can pay divi- dends upon its stock. Such dividends must then be formally voted by its board of directors, in accordance with the rules prescribed by its articles of association and by-laws, and by the statutes of the state under which it is incorporated. None of the going concerns, stocks of which were held by the Development and Investment Com- pany, declared such dividends during the years 1901 and 1902. Hence, no such earnings on their stocks held by the Deveh)pment and Investment Company were available during the period when it was offering its own guaranteed dividend and profit-sharing certifi- cates to the public and paying on them interest and dividends rang- ing from twelve to forty-eight per cent per annum. What Nichols appears to have overlooked, or failed wholly to imderstand, is that the Development Company as a holding com- pany for the stocks of going concerns, and as fiscal agent in the promotion of new enterprises, not only had the right to sell the stock of either class, and use the proceeds for the purpose of hiring more money with which to finance them, but that such was the precise purpose for which it was incorporated ! The usual custom in promoting a new enterprise is for the pro- moter to secure enough subscriptions to the stock to provide the nec- essary working capital, and to receive in return for his services gome proportion of the capital stock as a bonus. Lewis, as a promoter of new enterprises, instead of accepting a portion of the stock for himself as an individual, turned his promoter's stock bonus in each case over to the Development and Investment Company. For this was, in effect, himself under another name. This concern could then borrow money and issue its notes upon the security of the stocks ■which it held as assets. When the time came to pay interest upon 262 THE SIEGE OF UNIVERSITY CITY its notes it could, if there had been no dividends declared upon the stocks which it controlled, sell those stocks themselves and pay its own interest charges. Or, it could declare dividends to its own stockholders out of the proceeds. THE QUESTION OP GOOD FAITH. Had Lewis organized the Development and Investment Company only for the purpose of financing new enterprises, he would be open to the gravest criticism. This very method of organizing a holding company to act as fiscal agent for new promotions, and of thus in effect financing one concern out of the sales of stock of another, or of a whole group of speculative enterprises, has long been a favorite method of illegitimate promoters. The scheme is perfectly legal. If conducted in good faith, and without misrepresentation, it is im- pregnable against attack in the courts. Its essential difficulty lies in the fact that the costs of such a holding company, including the salaries of its officers and other expenses of promotion, are usually excessive. They often eat up the funds that ought properly to be devoted to the actual development of the various projects. The assets of holding companies of this type, operated by illegitimate promoters, are usually of a wholly speculative nature. Experience has shown that a majority of all speculative propositions fail. Great success is always very exceptional. The lack of a single strong, profitable enterprise as the backbone of such a holding company must eventually bring it to the ground. Lewis' good faith in connection with the Development and In- vestment Companj' is perfectly apparent from the fact that he as- signed to it his live and tangible assets. These included the Win- ner, The Woman's Farm Journal and the Richarz Pressrooms. All were profitable and valuable properties. The fact that these con- cerns did not declare dividends during this period is rather to be taken as evidence in their favor than the contrary. It indicates the policy of the management to re-invest the earnings as working capi- tal in the development of future business. All the facts surround- ing these properties prove conclusively that they possessed excep- tional earning power. They were so rated by expert commercial opinion. The Development and Investment Company was free to sell the stocks which it held in any of these enterprises, or hypothecate them for loans, or borrow upon its own notes of banks or individuals, or otherwise raise money in any way it legitimately could, with which to meet the interest upon its guaranteed dividend certificates. It could also declare dividends from any funds in its possession, if it could show an excess of assets over liabilities upon such fair valua- tion as its directors might choose to place upon the stocks in its pos- session. Whether Lewis could really afford to pay out twelve per cent and upwards for money, or whether his motive in making such pay- ments was not rather to stimulate still further sales of the cer- THE DREYFUS CASE OF AMERICA 263 tificates of the Development and Investment Company, is perhaps an open question. But that the investors were amply secured by the assets of the company, that such interests and dividends were in fact paid for a considerable time, and that the Development and Investment Company was within its legal rights in so doing, seem facts beyond dispute. Lewis took advantage of his option to retire a large portion of the first issue of the certificates of the Development Company be- fore maturity. All were promptly paid when due. These facts would seem to dispose of the contention which has been voiced so often in more recent years, notably by an Eastern agricultural pub- lication, that Lewis' intent at all times has been to obtain the money of country people for his schemes without any thought of ever re- turning any of it to the investor. The allegation has been boldly made that Lewis never has met promptly any of his obligations. The untruth of such a statement is clearly proved by vouchers still in his possession, which have been carefully inspected by the present writer. Lewis, on June 1, 1902, at the end of the first fiscal year of the Development and Investment Company (in course of a financial statement) claims personal assets at their face value in excess of one hundred and fifty thousand dollars. These include at par the stocks of the Mail Order Publishing Company, the Farm Journal Com- pany, the Controller Company of America, and the Allen Steam Trap and Separator Company, together with sundry other holdings. He asserts that the last sale of stock of the Mail Order Publishing Company was at four hundred per cent over par, making his hold- ings of that stock alone worth one hundred and twenty thousand dollars. He says: The net profits of the Winner Magazine for the next twelve months, based on the present business and the contracts In hand, should exceed one hundred thousand dollars, or twice its capitalization. A fair estimate of the value of this publication is five hundred thousand dollars. Mj hold- ings are three-fifths of the whole. Lewis further says that "other assets of a valuable sort, includ- ing the stock of the Lewis Addressing Machine Company, are with- held as not yet far enough developed to have a stable valuation." Any presumption that Lewis would have risked his valuable hold- ings in the Winner and the Woman's Farm Journal as security for the notes of the Development and Investment Company, if that concern had not been organized in good faith for what he deemed legitimate purposes, is, in view of all the circumstances, quite pre- posterous. Every ascertainable fact as to the status of his affairs during the year 1902, when the Development and Investment Com- pany was paying dividends at the rate of forty-eight per cent, indicates rather that Lewis was simply intoxicated by the amazing prosperity of his enterprises, and possessed an unlimited confidence in many new schemes which he then had on foot. All this, it must be remembered, was prior to the purchase of the eighty-five acres 264 THE SIEGE OF UNIVERSITY CITY of valuable land outside St. Louis^ in what is now University City, which afterwards led to his extensive real-estate and building pro- jects, and the consequent criticism thereupon. Whether or not Lewis would have been successful in developing any of his mechanical devices if the prosperity of his main business as publisher had been uniBterrupted, is, of course, open to conjec- ture. But even had they all failed, the losses would have fallen exclusively upon the stockholders. They were wealthy men, abund- antly capable of forming their own judgment as to business affairs, who went into these various projects with their eyes wide open. The sole exception was a small amount of stock in the Fibre Stop- per Company. This, as we have seen, was, as far as possible, repur- chased. Lewis' own losses would have fallen upon the Development and Investment Company; but the holders of the securities of that concern would not have been greatly affected, because they were abundantly secured by its ownership of a controlling interest in his publication and real estate interests. Lewis' judgment as to these enterprises, or his wisdom in distracting his energies from his pub- lishing enterprise to so many other concerns, may, of course, be called in question by business men. But at all events these enter- prises show a marked improvement in the character of his under- takings over his early ventures in the field of proprietary articles. They also clearly indicate the character of the men who had become his close friends and intimate business associates at this period. THE inspectors' REPORT. The entire history of the Development and Investment Company and its various promotions, from the time of its organization up to the opening of the "Siege" of University City in the spring of 3 905, has now been fully outlined. Tlie steam trap was practically abandoned. The addressing machine project was in abeyance. The fibre stopper project was in course of active development. The telephone controller had been placed upon the market, and its pros- pects were then exceptionally bright. The University Heights Company was booming. The Lewis Publishing Company was in a highly prosperous condition. Such were Lewis' obligations and such his resources when the Development and Investment Company as a whole was investigated by the inspectors. A statement of the De- velopment and Investment Company was submitted to them as of March 14, 1905, together with a brief resume of the facts already familiar to the reader. On receipt of this communication Inspector-in-Charge Fulton, on March 28, 1905, submitted a list of twenty-two questions, inquiring with minute particularity into the details of the company's busi ness. Lewis responded with a four-page communication furnishing the information requested as best he could, in so far as he deemed the inquiries pertinent to postoffice business. The result was a re- port under date of June 1, 1905, by Inspectors W. T. Sullivan and THE DREYFUS CASE OF AMERICA 265 J. L. Slice to Inspector-in-Charge Fulton at St. Louis, incorporating Lewis' statement* and commenting in part as follows: In a general way, this company was originally planned as a part of a bond-selling proposition. These bonds were offered to the public at par with six per cent guaranteed interest. For a time, eight per cent was guaranteed. The value of these bonds as an investment depends upon the assets of the company and their individual earning power. * * » It is our belief that the Development and Investment Company was organized by Lewis as a part of a scheme to defraud the public, and that the original plan was superseded by the People's United States Bank, which we have already shown has resulted in fraud and misuse of funds, and that these results were obtained principally through the aid of the Woman's Magazine and the Woman's Farm Journal, by reason of the second-class privilege of mailing at the pound rate. We transmit here- with some of the advertising matter appearing in these magazines, exploit- ing the sale of stocks and bonds composing the assets of the Development and Investment Company, and invite your attention to the untrue repre- sentations made, and which (sic), by comparison with the real facts, establish in our minds that the Development and Investment Company was devised by Lewis with intent to defraud the public through the sale of valueless stock, and that the salaries paid to himself and F. J. Cabot have not been earned by the company, nor has the interest paid prior to the year 1904 been earned, but paid from the sales of new stock. We recommend that E. G. Lewis and F. J. Cabot, officers, and the Devel- opment and Investment Company be required to show cause why a fraud order should not be issued against them, and the reference of this report to the honorable assistant attorney-general for the PostofBce Department and the honorable third assistant postmaster-general for their consideration in connection with other cases. Such was the report and recommendation of the inspectors as to the net results of Lewis' labors, which, as we have seen, had the approval of the great commercial agencies, of many prominent busi- ness men and bankers of St. Louis, and of the banking institutions from which his million dollar line of credit was obtained. •This statement was as follows: ASSETS. Preferred stock, I.ewis Publisliing Company 34,500.00 Common stock, Lewis Publishing Company 710,000.00 Stock, U. S. Fibre Stopper Company 567,886.00 Preferred stock. University Heights R. & D. Company , 10.580,00 Common stock, University Heights R. & D. Company, 537,594.00 Other stocks and bonds at par or better, paying dividends 45,643.75 Other stocks, good, not dividend paying. Controller Co. of America 64,643.75 Stocks, uncertain value 84,450.00 Demand loans 142,139.45 Time loans 29,000.74 Cash 5,147.06 Insurance on life of E. G. Lewis 380,000.00 Real estate account in suspense 117,848.75 $2,728,935.99 WAEILITIES. Bonds, 3-4 years, 6 per cent 165,500.00 Bonds, 3-4 years, S per cent - 131,600.00 Pass book accounts 19,607.49 Accounts payable, stock and bond purchases 77j455.48 Bills payable, 2-3 years, land purchases 117,848.75 Capital stock 500,000.00 By balance, surplus 1,716,924.27 $2,728,935.99 266 THE SIEGE OF UNIVERSITY CITY The principal source of the inspectors' information as to the early history of this concern appears to have been the unverified opinion of Howard Nichols. About the only other source of infor- mation which they have placed on record is the statement made to them by Lewis himself. This they totally discredited. They seem ever to have arrived at their decisions by reading between the lines of Lewis' written statements^ and by a process of analysis and a series of inferences of their own. The facts as to the various busi- nesses that made up the assets of the Development Company at this time having been set forth above, the reader may form his own con- clusions as to the wisdom of the inspectors' recommendation. Hap- pily, it was disregarded by the Postoffice Department itself. No fraud order was ever issued against the Development Company. They were not even cited to show cause why a fraud order should not be issued against them. A MILLION DOLLAR CREDIT. We may now sum up the tale of Lewis' million dollar credit by the following extract from his testimony at the Ashbrook Hearings: The Development and Investment Company was the end of the building- up process of my credit. As has been shown, I started the publishing of the Winner Magazine practically without capital. I obtained subscribers by means of the endless chain. But this involved the obligation of issuing the paper. The first year or two the question of finance was a very hard puzzle. The first relief I recall was in this way: The officers of the Na- tional Bank of Commerce sent for me. When I called they asked me where I was banking. I told them I was depositing in such a place, but that I had not really begun to bank as yet. They asked me why I did not do business with a real bank. I said I would be glad to; that I was from Missouri and would be pleased to be shown. Then they asked me what kind of a line of discount I wanted. They had invited me, and I did not hesitate to tell them. I think it was up to one hundred thousand dollars that I mentioned — something like that — it might have been fifty thousand dollars. They told me to come back the next day, and when 1 came they said, "You get it." They had inquired carefully in the meantime, and had evidently been observing my business operations for some time past, as they seemed to know almost as much about my business as I did myself. I asked them if it was really true that I could get the money, if it was a real discount; because I would like to borrow it for six months to begin with. I did not want to come back every week to renew it. They said they would make the first discount for six months. I said, "All right; give me a blank note." They did so, and I filled it up and handed it back. I wanted to see if it was really so. They discounted the note and placed the amount to my credit. The first entry in my pass book with the National Bank of Com- merce is a discount for six months of that note. I then began to realize for the first time in my life that without capital there was a land of capital which was much more valuable than the actual cash, namely credit, or a good name. I was, therefore, very careful to meet every obligation on the very day, not renewing anything, but paying one hundred cents on the dollar. Even though at the time I was walking down town and back to save carfare, and going without lunch, if I had a note at a bank, when that note became due, instead of going in and asking for its renewal, I paid it. Tlien, perhaps, a few days afterward I went back and borrowed more. That was legitimate. The banks like that manner of THE DREYFUS CASE OF AMERICA 267 dealing. It showed the bank my ability to clean up quite square. AU banks like to see all their money in once in a while. Gradually, I built up a growing credit with the banks. Business men and bankers began to be interested in me. I was a young man, pushing everything ahead, and in the thick of everything that turned up. One bank after another asked for my business. They usually got a part of it, though I would not tell them it was only a part. I began to build up two parallel lines of credit. One was a banking credit in St. Louis on my different companies' paper with my endorsement, or on my own paper; the other was a parallel line outside St. Louis, in Chicago, New Orleans, Lafay- ette, Fort Wayne and New York. And for this reason: 1 saw myself becoming engaged in larger and larger enterprises, reach- ing out and touching other men's interests. I knew that, sooner or later, I would be coming in conflict with the interests of these rich and powerful men with whom I was beginning to get acquainted and do business; and that some day I might find all my loans called in, and be unable to turn around. So I arranged an outside line of credit in other cities. I handled it this way: If I was borrowing from the local bank this month, then I was letting the outside banks rest a little and carrying a pretty heavy deposit with them. Next month I would clean up my local banks, paying all back, and lean on the outside banks a while. In this way I had parallel lines of credit. Then I kept that credit clean, by meeting every obligation. None of the stock of my enterprises was offered publicly; it was all taken by wealthy men. In St. Louis at that time there was a great deal of money. Men were making money rapidly. The general spirit was such that if a man was making good, seemed successful and had ideas which ther approved of, they would back him to almost any limit. I was becom- ing well acquainted then with the wealthy, active and aggressive business men of St. Louis. When some proposition for promoting an invention or otlier enterprise would come up, I took one of two different attitudes in regard to it. Either I invited my friends and my associates to come into it. with the representation that I would be personally responsible, and if we lost, would make good their investment and let them out whole; or I would put it up to them to exercise their own judgment. They were independent business men of means. If they decided a thing was good, and it after- wards turned out badly, they then took their own losses. My total line of credit, including the paper of my various enterprises with my endorsement, and my own paper, at the close of the World's Fair was in excess of a million dollars. I regarded my equities in my holdings as worth between one and two millions of dollars at present values; and believed that they had a prospective value of a great deal more. In other words, I considered myself at that time easily a millionaire. We are now on the eve of the Siege of University City. The interest from novr on centres almost exclusively in the two best be- loved children of Lewis' brain, the Woman's Magazine and the Peo- ple's Bank, both of which we shall see done to death in the tragic sequel. As no one else can conceive the ideal phases of these two gigantic projects so vividly as they, presented themselves to the eye of Lewis' imagination, the reader will gain the clearest impression of the central facts of this story if Lewis is allowed to introduce these for himself as he conceived them. The two succeeding chap- ters will, therefore, be devoted respectively to carefully compiled accounts from various published and authentic sources of Lewis' own stories of the Woman's Magazine, and the People's Bank. CHAPTER XII. THE RISE OF THE WOMAN'S MAGAZINE. Lewis' Own Story — Business Policies — Mutual Confidence — World's Fair Guests — Influence of the New Home — Lewis Before Madden — The Editorial End — The In- vestment IN Plant — The Question of Nominal Rate — The Ten-Cent-a-Year Price — Getting New Subscrib- ers — Handling the Subscription Lists — The Double- Spread in the St. Louis Republic — A Visit to the Octa- gon Tower — The Magazine Press Building. The Woman's Magazine was started about four years ago with a capital of a dollar and twenty-five cents and a right idea, namely, that a magazine well edited, well illustrated and well printed, at the low price of ten cents a year would sweep the country. About sixty days after the start, a one- fifth interest in it was sold to N. A. McMillan for five hundred dollars. Two months later we paid him five thousand dollars in cash to get it back. He has just paid us five thousand dollars for a one two-hundredth interest. The growth of the magazine has been so rapid that it has required super-human efforts to get together the necessary mechanical equipment for producing it. It has been the most remarkable phenomenon in the publishing world. So Lewis portrays, in a letter to his bankers in the fall of 1904, and elsewhere in his promotion literature of that period, the rise of the Woman's Magazine, the great central symbol of achievement in his own mind, about which all his dreams and projects clustered, and the gigantic success of which appeared to him to augur the feasibility of each new endeavor. This story has been often dwelt upon by Lewis by way of descrip- tion and analysis. Among the chief of these occasions are first, the use of this story as the basis of the promotion literature of the Peo- ple's United States Bank; and, second, the hearing at Washington before the third assistant postmaster-general in defense of the very life of this, his first-born child. Upon both these occasions Lewis was wrought to a high pitch of nervous exaltation. Both accounts are vibrant with strong emotional feeling. They may be taken not only as affording an insight into the reaction of Le%vis' mind in the upbuilding of his principal publication, but also as characteristic of his mode of expression in its happiest vein. The difference in Lewis' viewpoint under these widely different circumstances justifies the reproduction in substance of both versions of his story. Omis- sions have been made to avoid duplication where the two accounts are closely parallel. lewis' own story. The paragraphs that follow are taken from the introduction to the principal prospectus of the People's Bank, entitled "Banking 268 THE DREYFUS CASE OF AMERICA 269 by Mail," a bulky pamphlet issued by Lewis in the fall of 1904. They form a good example of his colloquial style when taking the public into his inmost confidence. Only by a proper appreciation of this and of Lewis' similar outpourings in the columns of the Woman's Magazine, in circular letters, and in personal contacts with his readers, can the secret of his enormous personal following, and consequent ability to project and realize great undertakings, be fully grasped. A little over five years ago I started the Woman's Magazine. The Idea in mr mind was, that If a magazine could be produced at ten cents a year (which was no more of a drop in price under modern conditions than the reduction from five cents to a penny in the daily newspaper), and this magazine could be beautifully printed, well illustrated, and carefully edited, it would sweep the country. The fact that it was ten cents a year did not mean a cheapness in the magazine itself, but an advance step in journal- ism, tor such a magazine to be successful, its circulation must of neces- sity be enormous. Its production must be carried on in the most economical manner. The most modern machinery and the most perfect equipment must be supplied. The great quantity in which all materials could be purchased would then of itself insure the lowest obtainable prices. My idea was that if a kind of circulation could be gained for such a magazine sufficient in value to justify an advertising rate in proportion to its enormous volume, it would become not only one of the most profit- able publications in existence, but also one of the most powerful. The aver- age woman loves a bargain. There are a hundred magazines at a dollar a year, any one of which is almost as good as another. There is only one magazine at ten cents a year. The average man will purchase a magazine on the news-stand occasionally, provided it catches his eye; but it takes a woman to subscribe for it, to look for it every month, and to read it closely when she gets it. BUSINESS POLICIES. Now, the development of such a magazine must be along very carefully laid lines. Kirst of all, it must establish in the minds of its readers, the most implicit confidence in its publishers. It must be clean and sweet. At no matter what cost, it must stand for the protection of its readers as to everything contained within its columns. A monthly visitor in a million homes, read by the mother and her children, its whole make up must be such as to make it welcome. A magazine sold on the news-stands depends, to a large extent, for its circulation, on catching the eye. Beautifully colored covers, finely enameled paper stock, magnificent illustrations, and articles by people with high sounding titles, become a necessity to such a publica- tion, because it must compete with hundreds of other magazines in open sale. It never comes in contact with the bulk of its readers in a direct way. One of the largest monthly magazines in the United States recently is- sued a statement of the nature of its circulation of nearly a half-million copies, showing that less than 6 per cent went to paid-in-advance subscrib- ers. The other 94. per cent was purchased from the news-stands by un- known people. They never came into any intimate relation with the publish- ers at all. Such a magazine practically secures no franchise. It has no hold on its readers, and is a mouth-to-mouth, a hand-to-hand proposition. My idea was that by reducing the price of my magazine to ten cents, and not putting it on the news-stands at all, but depending altogether on paid-in- advance subscriptions, it would be brought into a personal, intimate relation with its readers, such as no other magazine ever had. It would know them all by name, would be in constant communication with them by mail, and would build up a franchise such as no publication ever had before. Fubiications today are, to a very large extent, supported by their ad- 270 TliE SIEGE OF UNIVERSITY CITY vertising revenue. Not one per cent of all existing publications could con- tinue in their present form without their advertising income. This Is to the benefit of the reader, for it enables the publisher to give a magazine which actually costs two or three times what the reader i>ays for it. The telegraph news in a daily paper costs more than the publishers receive for the whole paper. The magazine published at one dollar per year spends an average of fifty cents on the dollar to secure its subscribers, or to effect its sale on the news-stands. Then it must deliver more than a dollar's worth in costly presswork on the highest grade of paper, in order that it may retain its standing in competition with the other news-stand publications. In such a magazine as 1 contemplated, this feature would be entirely eliminated. The greatest problem in all publications is that of subscriptions. Pub- lishers often pay two dollars to secure a new subscriber at one dollar. At ten cents a year, this problem of subscription was entirely eliminated. In fact, as developments have shown, our great problem is to hold down our subscriptions, which are now increasing at the rate of from sixty to ninety thousand a month. Next after the question of circulation comes that of advertising. A stand- ing notice was kept by us in every issue of the Woman's Magazine that while we could not undertake to adjust mere differences of opinion between our readers and our advertisers, yet we would make good in cash to any reader any loss sustained through being defrauded by any announcement in its columns. This necessitated the most careful supervision and entailed on us an enormous loss, through being obliged to refuse tens of thousands of dollars of advertising ofl'ered us. I venture to state that no daily or Sunday newspaper today would dare to print such a notice in its columns. If you think they would, take up your Sunday newspaper and read the advertisements. We probably refused, on this account, more advertising than we accepted. I will not here attempt to go over the early struggles of the publishing of the Woman's Magazine. Suffice it to say that I lived through it, and am now enjoying the fruits. You don't want a man who has walked over Niagara Falls on a tight rope to sit down and try to tell you how he got over there. It is enough that he reached the land on the other side. I knew that my theories were right. My confidence in them and in my ability to carry them through; the noble support and assistance of many- kind friends who stood by me through thick and thin; and the able labors of my associates, liave produced the result. The Woman's Magazine today has the largest circulation of any publication in the world — in fact, al- most double that of any other existing publication. It reaches every tenth home in tlie United States and Canada. It requires 15 carloads of paper to produce a single issue, and 8,000 pounds of printing ink to print it. Four hundred and eigiity people are employed in its production. It owns the largest, most beautiful and costly publishing plant in the world, built at a cost of $600,000 in cash, without mortgage or lien. It has the confidence of probably ten millions of readers. It has carried through, from time to time, enterprises tending to increase this confidence, which were, each of them, in themselves a large undertaking. THE ADVEKTISINO END. My theory in regard to thd advertising end of the paper was, that as a publication must derive its profits from its advertising columns, the more it received from its advertising space, the better paper it could give to its readers. And yet the more money it would make. Because, the better the paper, the more carefully it would be read. And the more carefully it was read, the better the results to the advertiser. Like a snow ball, it would roll up of its own accord. The main principle involved in the advertising feature was the obtaining of an enormous circulation. The Woman's Maga- zine equals today the combined circulation of over twenty thousand average ^Omnibus which conveyed guests of Camp Lewis to and from the Worlds Fair "Camp Lewis, showing in the background the grounds and buildings of the Louisiana Purchase Exposition i = 5? = 7=5 52-3 c ^ ^ ~ a o 2 = '^■~ o g4 8 THE DREYFUS CASE OF AMERICA 273 newspapers. The combined advertising rates of these newspapers would be seven or eight times that charged by the Woman's Magazine. Arguing that the advertiser did not advertise "for his health," but be- cause he wanted results, I almost immediately went into an enormous ad- vertising campaign, I inserted full pages in all the other newspapers and magazines of any standing in the United States, announcing the plan and scope of the Woman's Magazine, and telling that its subscription price was only ten cents a year. Tlie theory on which this was done, was that out of a given number of readers, but a small proportion were what might be called advertisement answerers. In order to reach this small proportion, the advertiser must pay for the entire circulation. If I could draw together in the Woman's Magazine circulation, the small percentage from each of the other magazines and publications wlio were advertisement answerers, then practically tlie whole of my circulation would be such as was most desir- able to tlie advertiser and most profitable to him. One woman would be of a disposition such as would malie her sit down and answer an advertise- ment. Another would never answer an advertisement in the course of her life. The problem was to get the one and eliminate the other. In all other publications they are mixed. I kept my announcements standing in the other publications, at an expenditure of nearly a quarter of a million dollars, until they would no longer produce results. One well known Eastern magazine with a circulation of 100,000 subscribers, contributed through my announce- ment over 80,000 subscribers to my list. This 80,000, on a fair basis of rea- soning, was the entire circulation of that magazine which was worth hav- ing, from the advertiser's point of view. By this advertising campaign, we secured in the neighborhood of a million subscribers. The advertisers of the United States who use publications of general circulation do so with what are called the "keyed" advertisements. There is some key in their address, such as "Department B" or a change in an initial of the firm, such as .John A. Smith, John B. Smith and John C. Smith. Each different publication is given a different 'key. Thus they can tell exactly what they dei'ive from a given advertisement as compared with its cost. The old method was to advertise blindly, trust to a kind Provi- dence for results, and believe the circulation liar as to what was given in the way of circulation. This has gone out of vogue. Today the great ad- vertiser knows almost to a dollar the results of his advertising, provided he is after direct results. I also adopted the theory that an advertiser was just as much entitled to linow what he was getting in the way of quantity and quality of circula- tion, as any merchant when purchasing goods. In place of the usual circu- lation lies, I printed each month in the columns of the Magazine itself, an exact statement over the signature of the United States postmaster, of exactly how many copies of the previous issue had been mailed. This was made possible because our entire edition goes out through the mails, and as the Government is paid a certain amount for each pound, the number of copies mailed can be figured out exactly. This is very different from the sale of a magazine on the news-stand, where the number of returned unsold copies is seldom brought to the attention of the advertiser. In fact, the whole basis and foundation of the Woman's Magazine was absolute good faith with its readers and with its advertisers. If we made a promise, we kept it; whether it was with a ten-cent subscriber or with a ten thousand- dollar advertiser. If we owed a bank ten thousand dollars, when it was due we did not go in with eight of it and ask them to renew the other two. but we paid the whole ten. The next day, possibly, we went back and borrowed fifteen thousand, but that was up to them. A credit was thus built up which was better than the possession of the actual capital. The result of all this is that while two million, two hundred thousand peo- ple now pay me ten cents a year for my publications, amounting to a total of $220,000, yet the fact that I have combined, under one system, this vast 274 THE SIEGE OF UNIVERSITY CITY number of people who can be reached through these mediums, enables me to derive an income in excess of a million dollars a year from the advertising columns. Had I a single man or woman paying me $220,000 a year, I could not get any revenue from the advertising columns. The return to the reader is in proportion, because I am able to spend even twenty-five or thirty cents per year on the production of the Magazine which I sell to him for ten cents. MUTUAL CONFIDEKCE. From the very start, we cultivated the closest and most intimate rela- tions with our readers. If the baby was sick, we heard about it. If the old cow died, we got the first news. We did not offer our Magazine for sale on the news-stands. We did not desire the circulation in the great cities, nor did we wish to come in competition with the high priced magazines on the news-stands in the endeavor to catch the eye. What we wanted was our readers' hearts and confidence. As the Magazine grew, this intimate rela- tion between myself and my readers grew stronger. I soon found that each of them felt a personal, warm interest in the success of the paper. I will say, frankly, that to the encouragement and the expressions of confi- dence and faith of ten thousand women, unknown to me otherwise than through their letters, I owe more than to any other source, the inspiration that has made possible the success of this paper. Following out our plan to establish the most implicit confidence in the minds of our readers, we time and again refunded large amounts of money in small sums each, to a great number of readers who felt that they had been mistreated by sorac advertiser in the paper. A few years ago we in- serted the advertisement in our columns of a Beaumont oil company. At that time, every indication was that this company would be enormously successful. The men at the head of it were of first-class standing. Yet the conditions in the oil field developed so that the concern fizzled out. I personally have taken up from my readers, and paid out of my own pocket, a great deal of the stock that was purchased by them in this oil company through the announcement in our columns. That was another bond. All of these people felt that they were contributing personally to the success of this Magazine. They worked for it ; they told their friends about it. They sent us thousands and thousands of subscriptions. They knew that I started with nothing, and they knew that, as we became successful, they shared in that success by receiving a better and better paper. No other form of human industry is so vitally dependent on confidence as a publica- tion. Let its readers lose confidence in it or its publishers, and it is dead. The stronger their confidence, the more powerful it becomes. A publication deals in human thought. This is its only form of merchandise. It has space in its columns to sell, nothing more. If its readers lose confidence that space is valueless. No paper can trick its readers and live. Whether it does so directly by catch-penny schemes of its own, or permits fraudulent and tricky advertisements to appear in its columns, makes no difference: the result is the same. world's fair guests. During the present year, the great World's Fair is being held in St. Louis. Tens of thousands of our readers each week are visiting our build- ing and coming into personal contact with this institution. "They find it the largest and most beautiful publishing plant in the world. They find the best citizens of St. X.ouis associated with it. They know that President B'rancis of the World's Fair laid its cornerstone. They know that each week parties of prominent men and women from all over the world visit us to inspect this plant, that it is one of the sights of the city; and, furthermore, that we have built for them, on the eighty-five acres of beautiful grounds surrounding the building, what is undoubtedly one of the most complete and costly encampments that has ever been constructed. This great 6itj of tents cost us over thirty thousand dollars. Our posi- THE DREYFUS CASE OF AMERICA 275 tion in it is very different from tiiat of tlie speculator who has built a cheap hotel. He never expects to see or hear from his guests again. But if one of our readers stopping in our encampment got a poor cup of coffee, we would probably hear fi-om it each time she renewed her subscription for the next twenty years. This camp is a perfect little city of homes. It is under the strictest mili- tary supervision. It has accommodations for five thousand guests at one time. Each little tent has its electric lights, its iron beds, its board floor and every convenience and comfort of a great hotel. Shower baths, nursery tents, hospital tents, recreation tents, a military band and everything that we can devise, have been installed for the comfort and convenience of our guests. They are coming here, and have been coming here for months past, feeling that they are our personal guests. We charge them fifty cents per day, but we are establishing in the minds and in the homes of tens of thou- sands of families of this country, a personal intimate relation, such as no publication in the world ever had or will get. They have been here and have seen it. The publishing plant of which we have told them so much, and which they helped to build, was greater and grander and more beau- tiful than they dreamed. Everything that we have said to them and every- thing we have told them about for years past, they find to be so. This is being radiated back into the remotest corners of the United States and Canada, and this institution is gaining a grasp on the minds and hearts of two millions of families which nothing can ever shake. The result, from a business point of view, is enormous profit to the concern. INFLTJENCE OF THE NEW HOME. About a year ago, the proposition had reached a point where I felt the necessity of associating with it, a large body of men of such standing and caliber as to give it the proper prestige, not only with its readers, but in the commercial world. To the mind of the average man, the fact that the paper was ten cents a year put it down as a cheap proposition. Because of this, I organized the Lewis Publishing Company with a capital of one million, two hundred thousand dollars. A million of this was common stock, of which I hold the majority. Two hundred thousand dollars of it was pre- ferred stock, which retires at the end of five years. This two hundred thou- sand dollars of preferred stock was offered privately to the foremost citi- zens of St. Louis and Chicago. They expressed their confidence in my abil- ity and methods by subscribing immediately. I do not think that any single institution in America has associated with it such a high-class body of men as the Lewis Publishing Company has today. I then built our present plant. In building it, I designed it so as to give to our employees every convenience and every comfort that could be devised. We deal in human thought as our merchandise. There is no such thing as the July issue of the Woman's Magazine until it is created by the minds of those connected with it. If I had a stock of hardware or dry goods, this feature would not enter in. I spent over one hundred thousand dollars in the decorations on the building. It is today the most beautiful structure in America and one of the most beautiful in the world. I built an enormous conservatory, so that during the winter months every little employee could have a nosegay on her desk. We try to make them all feel that we are the best friends that they have in the world. We try to make them feel that, if they would come to us honestly and fairly, we would bear their burdens, in order that their minds might be concentrated only on the work in hand. The merit system was put in force throughout the entire institution so that the little girl, writing wrappers, might be thinking about her spring bonnet, but the way she could get it was by detecting errors in the subscription list. For each error found she received a penny. The man running a twenty thousand dollar printing press might, through misfortune, become financially dis- tressed. His mind on his three hundred dollar debt might cost me a twenty 276 THE SIEGE OF UNIVERSITY CITY thousand dollar press. I prefer to take the debt myself, on the basis that if he is a white man, he will give me one thousand per cent interest in addi- tional efficiency by having his mind relieved of his own troubles. If he turns out a bad dog, I will collect the debt, if I follow him across the river Styx to do it. This institution, built up on these lines, has become one great perfect machine without a note of discord in it. All of the little jealousies that usu- ally arise in such an institution have been eliminated. A man who carries a stop watch soon finds the pace too swift for him. I would today consider this great industry an absolute failure without the love and confidence of its four hundred and eighty employees. This and the beautiful building are reflected into two million homes. The seventeen thousand dollar stairway which the advertising manager climbs to his office each morning, impresses on his mind the standing and dignity of the institution and enables him to turn down a questionable advertisement with easy grace. It would not match the staircase. Our advertising rate is the highest in the world. Nearly five thousand dollars for a single page for a single issue, or sixty thousand dollars for a single page for a year. Yet this advertising space is sold for a year in ad- vance. There are at the present time over a million dollars of advertising copy and orders in the house for the ensuing twelve months. We have means of knowing just how profitable to the advertiser the space is, and as a matter of business we keep our advertising rate reasonably within the profit line. We have raised our advertising rate from one dollar and twen- ty-five cents a line to six. dollars a line. Instead of losing business, our space is sold now for a year in advance. This fall we shall increase the size of the paper to thirty-two pages, and give our readers for ten cents a year such a publication as they never before were able to buy for less than a dollar. The effect on our readers and on the publication's franchises can rcadilj' be grasped. Ne-\'er again will any publication have such an opportunity as is now open to this one. They cannot hold a World's Fair in order to get their readers into their establishment and bring them in personal contact ; and if they could, not one publication in a thousand knows who its readers are. The cheapness in price of this paper does not imply a cheapness in grade of circulation. Our circulation was gained originally from the highest- priced publications in existence. AVe state as a fact, and not a theory — a fact which has been demonstrated a thousand times in this office — that no publication in existence, provided it has a large general circulation, reaches a better class of people on the average, so far as intelligence and respon- sibility and wealth are concerned, than the AVoman's Magazine. LEWIS BEFORE MADDEN. Lewis refers to the second occasion of earnest self-examination and severe analysis as to his motives and pnrposes in the upbuild- ing of the AVoman's Magazine, in an editorial in the August, 1905, issue from which the following is excerpted: On the 17th of last month the publishers of this Magazine were cited to appear at Washington and show cause wliy it should not be deprived of its second-class privilege, on the charge that it was published at a "nominal rate" and "primarily for advertising." I went in person to make my de- fense of this iittle magazine which we have tried so hard to make carry a little more sunshine, instruction and entertainment into nearly two million homes. Over a million of you, my readers, have visited the great plant which was built for the production of this magazine at the lowest possible price, so that in every home in America it should find a welcome. AVe shall see what we shall see. My defense of this magazine, before the Depart- ment, was taken down in shorthand, and I expect to publish it. ^HoH. David R. Francis, ex-Coz-cnwr of Missouri, laying the corner stone of the Woman's Magazine Building in May 1903. Mr. Francis was at this time president of the Louisiana Purchase Exposition Company ^Governor of Wyoming and his staff. This party called at the office of the Woman's Magazine, while in St. Louis as visitors at the World's Fau , to claim a prize of one hundred dollars offered by Lewis to anyone who could name a postoffice in the United States, serving fifty families, where the Woman's Magazine did not have one or more subscribers. This incident is related in the text Lewis iiisfcctiiig the gromnts aiul plant of the Lewis Puh- A'olalile siiesis of Mr. lisliliig Company ^Lienteuanf General Kelson 0. lillles on llie oeeaslon of his n-eiew of Canif^ I C7ei^■ in 1004. -From left lo right. Thomas Z. Higsden, sometime candidate for /'resident on ll:e Independence Leagne ticket. Mrs. E. G. Lezvis. iniliam Randolph Hearst Mn Hears! B. G. Lewis THE DREYFUS CASE OF AMERICA 279 This intention was never carried out. Lewis' defense was never published. We here reproduce its substance, anticipating the occas- ion on which it was delivered only to enable the reader to form a complete conception of Lewis' attitude toward his past achievements and future policies as publisher, before we plunge into the thick of the Siege. It must not be supposed, however, that what is here pub- lished in the form of a complete address was actually thus spoken. The words and sentences, as well as the ideas, are those of Lewis. They are here merely thrown together in orderly arrangement for the sake of clarity, and for the ease and convenience of the reader. Lewis is here addressing Third Assistant Postmaster-General Mad- den, in his office at the Postoffice Building, at Washington. He said. General Madden, you will remember that I called upon you soon after I founded the Winner. I told you then about my plans as publisher of that paper. I stated that I intended to publish the greatest magazine in America. It was to be clean and honest. It was to be a straight business proposition, and not a mere advertising sheet. I came into a field occupied by a hundred so-called mail order papers sent broadcast over the land with little or no pretense of a legitimate mail- ing list. Their subscriptions, if they had any, were procured by offering gold watches, or a house and lot as a premium. I commenced to get out a clean, well printed, carefully edited, honest magazine. These men came to me and said, "You fool, what are you doing, you will ruin the business. You are printing your magazine on high-grade paper with fine illustrations. You are editing it carefully. You wiU go broke, and put us all out of business." I disregarded their advice and have kept steadily on ray policy to this hour. It has proved to be a policy of constant progression. This magazine stands today as the best example in existence of what the second-class law was passed for, namely, the distribution to the masses of the people of good, clean literature at a low price. We are not only realizing the spirit of that law. We are doing more to help the Postoffice to overcome abuses than any other force in America. We are even willing to come out and agree that the postage rate be raised. We want it increased, provided the others have to pay it too. THE EDITORIAL END. The Woman's Magazine, now, after nearly four years, visits nearly two million homes every month. They know it and love it. It talks to them in a language they understand. We talk to them heart to heart. We know how they think and feel. I will tell you that the average woman, no mat- ter whether she is the wife of a millionaire or a coalheaver, is a woman just the same. She doesn't care to read about the Venezuelan question by Grover Cleveland. What she wants to know is : What is the matter with the baby's teeth? The Woman's Magazine is published for the purpose of tell- ing women what they want to know. Last January I picked up one of the high-class magazines which had in it a recipe for preserving strawberries, which grow in June. Do you suppose a woman will keep that paper from January until June in order to know how to preserve strawberries? If you pick up a June number of the Woman's Magazine, you will find the straw- berry article in strawberry time. If a woman goes into her garden in June, and finds insects on the roses, she doesn't have to look in the January num- ber to find what they are, and how to kill them. She finds it in the June number. We edit this paper carefully for our class of readers. If there is a cook- 280 THE SIEGE OF UNIVERSITY CITY ing recipe to be printed, we do not print it as it stands, with high-priced spices and such things as few of our readers can obtain. We revise it care- fully and use ordinary things that are found in every kitchen. We pay the price for the best articles suited to our readers that we can obtain. We employ specitil correspondents. "VVe sent one of them to the President's inauguration, and later to the inaugural ball. We also sent along our own photogTapher to take in detail views of the families of the ambassadors of tlie many nations. Then we told the story in our own words, in the way that our two million readers would appreciate it. What they wanted to know was the kind of dresses that the ladies wore, especially what the Fresident'.s wife had on. We also talie up public affairs. I have arranged with Governor Taft for an article on the Philippines. We present that in such a way that two million people throughout the country who do not read metropolitan papers, can get the substance' of it. This Magazine is published for its readers. It tells them things they want to learn. It makes life a little brighter and happier for them. It puts sunshine into a couple of million homes. I will tell you that at this moment there are more people reading the AVoman's Magazine than all of the high-class magazines put together. If you will take it into your own home, and lay it beside the costly publica- tions of today on your library table, the women of your family v.'ill perhaps take up the high-class magazine and glance at its fancy illustrations a little while, .\fterwards, you will find them all reading the Woman's Magazine. Why can we get six dollars a line from advertisers? Because this Maga- zine is published for its readers, and the readers know it. Advertising with us is of secondary consideration. We make a paper that the people want. That is why we get subscribers. We laugh at the problem of subscrip- tions. We have them by the million. Our two papers together go to nearly two million people. The families read them, too. So that probably five million people see these two papers. The editor of the Petit Parisien came over here to our AVorld's Fair. He spent a good deal of his time in the Woman's Magazine Building instead of seeing the Fair. "Why," said he, "this institution could only be built in America. Here is the most typical Americiin thing I have seen since I came to this country." Such men know what this paper means. The Woman's Magazine succeeded the Winner. There was no other change except in name. That was in September, 1903. W^hen the circula- tion had reached a point such that all idea of its being of a chimerical or fictitious nature had been dismissed from the minds of careful and conser- vative business men, 1 organized the Lewis Publishing Company. That was in June, 1903. I brought into that company as original subscribers, nearly one hundred leading business men and bankers of St. Louis. They probably represent the ownership of a hundred millions of the vested inter- ests of that citjf. They put into this company nearly two hundred thousand dollars cash. We tiien built, near St. Louis, one of the greatest publishing plants in the world. .Such a building as ours alone costs nearly half a million, an immense sum of money. The printing machinery cost nearly two hundred thousand more. Our own vested interest is now, therefore, up- wards of a million dollars. This is entirely dependent on the publishing of these two papers. The company is restricted to that purpose by its charter. The whole plant was designed and equipped to that end. It can be used for nothing else. It stands out in the country by itself. It is not in a business block down- town, of which the papers occupy the basement while the rest of the build- ing is rented as offices. Tliere are five hundred people employed in the production of these two publications. Our earning power is now about one million dollars a year. This consists of about one hundred and fifty thou- sand dollars in subscriptions, and the rest in advertising, I also bought THE DREYFUS CASE OF AMERICA 281 eighty-five acres of land surrounding the site of the building, partly for the Publishing Company and partly for an investment. I had to buy it in order to get the corner 1 wanted as a building site. Then followed the homes in which we and our employees expect to live. That is now one of the finest residence districts in St. Louis. The Woman's Magazine is not published primarily for advertising; nor is it sold at a nominal rate, within the meaning of the law, any more than all other publications are. The effect of taking away from us the second- class privilege could only be told by actual demonstration. It would de- pend upon why it was done. If it was taken away because I had done wrong myself, or because I had not been honest, I think it would de- stroy the magazine. If it was taken away for any other reason, I do not think that would necessarily happen. The loss of the second-class privi- lege might make it unprofitable to the stockholders, it might cause us to discharge some of our force, it might compel us to reduce the paper in size and quality. I can not tell until I am up against it. 1 am now trying to give my readers the greatest value editorially, and in paper, press work, and illustrations, that I possibly can and pay my stockholders six per cent. My attitude before my subscribers has always been that I don't care personally whether I have anything out of the Magazine or not. I have enough to eat and drink, and an automobile which 1 can ride in, when I can find the time between my office hours, which are usually from eight o'clock until four the following morning. I do not get time to eat. I would get out the magazine, and pay full first-class post- age rates until the last dollar I had was exhausted, if I had to. The loss of the second-class privilege would mean the payment by us on our two publications of probably half a million a year more than all other publica- tions pay. That is not fair competition. I do not think any fair-minded man can believe that the Woman's Maga- zine is published financially for the promotion of my other schemes. Ra- ther, it is the other way about. You will find my other schemes have grown out of and centre around the magazine. I have worked hard in the past to earn enough money to carry on the Woman's Magazine. Now it has reached a point where it will carry itself. Night after night, for five years, 1 have thought o\'er it until today the Woman's Magazine is more to me than all the rest of the world. You can not destroy it. The grip of that paper in a million homes in America was never equaled since publications began. That grip has been gained on the hearts of those people. We have given them fine thoughts, and they believe in us. No one can shake that belief. THE QUESTION OF NOMINAL RATE. The question of what is a nominal subscription price is one that vitally affects the Woman's Magazine. The Magazine is published at ten cents a year for twelve copies, less than one cent a copy. That seems nominal. But what was nominal a few years ago is not so in this day of modern manufacturing facilities. A few years ago the newspapers sold at five cents a copy. Now, they are a penny apiece. Magazines were formerly thirty- five cents a month. When Munsey cut his price to ten cents a copy, the publishers thought him a lunatic. But Munsey's, under the progress that has been made in printing and paper making, is no more nominal at ten cents today, than was Harper's Magazine at thirty-five cents five or ten years ago. I have presses and machines in my establishment that have been built at a cost of nearly two hundred thousand dollars, especiaDy for the production of the magazine — machines that show almost human intelligence. They can turn out two hundred thousand copies a day, which is more than men used to print in a hundred days, twenty-five years ago. As a publisher, I am able to take advantage of the progress in the production of machinery, and all other things that go into the making of the paper. Therefore, I can sell it 282 THE SIEGE OF UNIVERSITY CITY at ten cents a rear, and make a profit. Mind, you can not separate the advertising from the subscription revenue. You can not take a newspaper or magazine, and cut it in half and say, this side is definite revenue; the other is not. It is all one. You must put the two sides together. You can not separate subscriptions and advertising in any publication, if it is to continue. I do not think there are five publications in America that could continue without their advertising. Through the facilities tliat I have been able to get together, I have been able to publish a magazine for ten cents a year. As a straight business proposition it is more profitable at that rate than the Ladies' Home Jour- nal for the same circulation at one dollar a year. It certainly costs them twenty times what it costs me to print. They give for one dollar, sixty pages printed on enamel paper in colors; but they do not even get the dol- lar. They sell largely through news-agents and subscription canvassers; and through such sales they do not get more than one-half the dollar. I get the whole ten cents — with the exception of club raisers, to whom we allow a small commission. The whole ten cents in most cases is sent direct to our office by mail without any cost of collection. The question of what is a nominal rate is thus seen to be one of propor- tion to cost of production and sales, while advertising revenue depends upon the volume of circulation. What would have been nominal a few years ago, is nominal no longer. It is a manufacturing proposition. That is where our new speciallj' equipped plant comes in. If our rate is too low, tell us, and we will alter it. Many of the weekly newspapers sell for twen- ty-five cents a year, and give fifty-two copies. That is one-half cent a copy. AVe get a cent a copy for the Woman's Magazine and the same for the Woman's Farm Journal. If ten cents is too low, we will make it twenty- five cents. I will present the fact to our readers, and charge higher. At present I am before them on the basis that I am willing to give them fifteen cents a year out of my own profits. If I am not allowed to do this, I am quite willing to take the other fifteen cents myself. THE TEJSr-CENTS-A-YEAR PRICE. We fixed our price at ten cents for the following reasons: The problem of securing subscriptions is what has strewn the publishing world with wrecks. It is one of the hardest things in the world to get sub- scription circulation wliich is the most profitable kind for advertisers. The average pviblisher starts a magazine and tries to force down the throats of the people what he thinks they oiiglit to read, instead of giving them what they know they want to read. }\Iy idea was to offer the people what they want, at such a bargain in price as practically to eliminate all difficulty of securing subscriptions and all cost of sale. The mere fact of sending the Woman's Magazine into women's homes is such a l)argain in itself — and you know a woman dearly loves a bargain — that she usually sends back her ten cents without more urging. All friction is thus taken out of the deal. A woman will often spend eight cents to register her ten cents, in order to be sure of getting the Woman's Magazine. Our low price takes us out of the stress of competition. A publication at one dollar a year is competing with a great number of rivals. It becomes a problem wliich one will spend the most money on their paper to get the dollar, dne comes out with five colors on the cover. The other one then thinks it has to come out with seven colors. They print on heavy enamel paper, use costly colored inks, and pay high-priced artists for beautiful illustrations to attract tlie eye of the buyer. They constantly increase their expense in every way to get business away from their rivals. Now, by reducing the price to ten cents a year, we practically eliminate all that. Ours is a twenty-five page magazine instead of sixty, as is the Ladies' Home Journal. It is printed on much cheaper paper and less ex- pensively; but for ten cents it is a greater bargain. There can be no ques- THE DREYFUS CASE OF AMERICA 283 tion about that. There is no paper a woman can get at such a price that is so full of good, clean reading, and of editorial comment. We give the reader the benefit of the bargain in price, instead of spending so much to merely attract the eye. We have practically eliminated the cost of sale. We have cut out the news-stand sales to a large extent. We have cut out the expense of great agency organizations. We have eliminated all those features that make circulation getting such a diflScult problem. The ten cents we receive, therefore, is really greater in proportion to the cost of the publication than the fraction of the dollar the high priced magazine receives from the news company, or any other source. HANDLING THE SUBSCRIPTION" LIST. The way we increase our circulation is this: We advertise the Woman's Magazine in other publications, and by various other means. We have built up a good part of our subscription by advertising in other leading publica- tions in America, and telling interesting things about the magazine. We tell the prospective subscribers that after they have received the first two copies, if they would rather have the ten cents back, they can stop the maga- zine, and we will return the money. People see the magazine in other peo- ple's homes. It always strikes them as a great bargain. That is another way we increase. Then we send o\it sample copies. We secure a list of names and ad- dresses from some concern like the Richardson Silk Company, to whom thousands of women write about silks and the like. We buy the names from them, and check them up to eliminate the names of our subscribers. We then send them sample copies about three times a year. We are very careful in the use of these names, because they are valuable to us. We pay for this list from five dollars to seven dollars per thousand. We get these names from every leading business house in America. People who would not in many cases sell them to any other publisher in the United States will sell to us. They know we will deal with them honestly, the same as we deal with our readers. We have never sold such a list of names, or let any one have them after we got through with them. We mark the copies sent to them plainly, ■'.Sample Copy." They arc oftentimes our first introduction to prospective readers. The houses from which we secure these names are among the leading advertisers in the country. They may or may not be advertising with us. There is no connection whatever. We never give advertising in exchange for these lists. If we vi^ant a list, we ask for it, and pay cash. If the advertiser wants to buy space, he pays cash to us. We do not mix the two. AVe procure only the names of women customers. With men it is diflerent from women. Not once out of a thousand times will a man sub- scribe for a paper, even if he has been intending to for a year. But a woman, if you call her attention to a new paper once or twice, will often send in her money. Our subscribers have very often seen the magazine only once. Because of all this, the subscription to the Woman's Magazine is steadily growing. We have offered for over a year one hundred dollars to any one who can name a single town or postoffice in the United States where wc have no subscriber. No one has received the prize. The governor of \\^yoming and his staff, when they were here at the World's Fair, thought they had got hold of one, and came over to get the prize. They named a little far-away postoffice. We looked it up and found that we had one subscriber. You could have heard them laugh a mile off. The town was a cross-roads mining village, forty miles from a railroad. It consisted of one general store, kept by a man and his wife. We had the man's wife on our list. She was the only woman in the town. When a thing grows to such proportions, the whole people become interested. We are putting our paper today into one home out of every ten in the whole of America. The proportion of sample copies sent during the year is determined by the law on the subject. The number sent out each issue is determined by our 284 THE SIEGE OF UNIVERSITY CITY guaranteed advertisers. We guarantee a circulation of a million and a lialf. If the~expiration during one month is heavy and the renewals light, we send out more sample copies to maintain that circulation. HAIfDLING THE SUBSCRIPTION LIST. We maintain our guaranteed circulation, not only on our expectation of increase, but on our experience of what tlie average growth will be. We know if we give a better issue each month than the month before, the re- newals will increase in proportion. Our policy is to always give the very best we know, and the greatest value we possibly can. With such a vast circulation, the mere item of handling the subscription lists is a very large expense. The mind does not easily understand what is meant by a million. It takes many carloads of paper and tons of ink to produce each issue. The mere changing of addresses requires the work of eight girls, giving all tlieir time. A mailing list composed of women, is much more difficult to handle than an equal list of men, because of the single item of changes caused by marriage. Then, there are changes on account of removal, death, and the like. All these items cause work and cost thousands of dollars. We do not carry a subscriber beyond the paid-in-advance subscription period. When a subscription expires, the paper is wrapped in a green or blue cover. That is the end of tlie subscriber unless he renews. When a person has receixed it for a year and does not renew, it is because she docs not want it. It would be useless to trj^ to get her to read it. The woman that is dead or won't renc^v, we don't -svant on the list. We would rather have another live one. The process of eliminating goes on all along. There are always new ones coming in who like the paper, stick to it, and would not be without it. These far exceed the number who drop out be- cause of death or failure to renew. THE ADVERTISING POLICY. About advertising. If you look at our magazine month after month, you will find we have largely restricted the class of advertising, until today it ranks with the highest priced magazines. I have just picked up Printers' Ink of June 14, 1905, the publishers' technical journal. It has an article to the effect that the Woman's IHagazine is considered one of the standard publications of America, and stands almost alone in guaranteeing its read- ers against loss from fraud in advertising. We have set such a standard today that we are making the other papers come up to it. We don't class ourselves with the mail order pajiers or journals. W^e are not so classed by the advertising fraternity. We rank with the Ladies' Home Journal and the Woman's Home Companion. That is where you can find the Woman's Magazine today. We publish in every issue an absolute guarantee to subscribers. If any reader of this magazine is defrauded through any announcement in its col- umns, the publisher M-ill mal-ie good the loss in cash. This announcement has stood for four years. There is onh' one other paper in the country that stands with us in this respect — the Farm Journal of Philadelphia. We have followed this advertising policy to such an extent that it has some- times crippled me financially. We will not insert some of the copy that some of the high-class magazines carry. And I will tell you that no news- paper could live if the rules enforced in the AVoman's Magazine were ap- plied to them. Take any newspaper, and see where they would land if they gnaranleed their subscribers, and agreed to make good any loss in cash. They can not do that and live. This policy has been followed by us from start to finish. As we grew stronger, out went the less desirable advertising from our columns. As we grew a little stronger, out went more, until today the columns of the Woman's Magazine will compare favorably with any other high-class maga- zine in America. As far as we could, we have eliminated from our col- umns, not only objectionable advertising from the postofflce point of view, THE DREYFUS CASE OF AMERICA 285 but that which was objectionable from our own point of view. We send out a circular to all our agents and prospective advertisers entitled, "Ad- vertising We Will Not Accept." This defines our position very clearly. We require that all copy be submitted to us for our approval before it is inserted. We also require to see the copy of the follow-up literature and printed matter which advertisers propose to send to the public. Then we follow the matter into the homes. We invite our readers to write us if they have any complaint to offer. Our readers know that every advertisement is endorsed by our guarantee, and that if any one is defrauded, the publisher of the Woman's Magazine will make good the loss in cash. Our last restriction was to cut out entirely all medical advertising. Some time ago I received a check from the Pinkham Medical Company for ten thousand dollars. I stipulated that I should approve the copy, and required payment in advance to be sure I had the right. They agreed. A year later we decided to cut out that class of advertising, and I refunded them over six thousand dollars. I venture to say this magazine refuses more adver- tising in a year than any other in America ; and on higher grounds. In fact, 1 believe we turn down directlj^ and indirectly more advertising which we might have, if we wanted it, than we accept. An example is that of Dr. Kurtz. His advertisement appeared in our columns and we had several complaints. He could not satisfy us that he honestly fulfilled his contract with the people. We, therefore, refused business from Dr. Kurtz, amount- ing to over fifteen thousand dollars. He tried through every agency in the country to force his business in our columns, but we refused it on this basis alone. Lord & Thomas of Chicago, one of the greatest agencies in America, sent us at one time, an order for four full pages from the Cash Buyers' Union, amounting to over sixteen thousand dollars. We refused it on the basis that no advertiser could use the magazine as a business cata- logue. That is the stand we have taken and we have stood by it honestly. You must not suppose that I did not need that sixteen thousand. It was iust as good as gold, and was inserted in nearly every magazine in America to the extent cf eight and twelve, and in some cases even fourteen pages. We would not accept four, nor three, nor two. We held them to a single page or nothing. I needed that money, but it conflicted with our advertising policy. It is such things that go to make a good paper. For, if a paper does not have the confidence of its readers, legitimate advertising can not be drawn into it. The result is, we are getting more and more of good advertising every issue- One advertising agency informs us that its contracts and orders "for the Woman's Magazine and Woman's Farm Jour- nal for this fall and winter exceed the business of any other publication in their office. 'J'hat tells the tale. It shows this paper has dealt honestly with the people. It shows they want the paper, and that when they get it, they will read it. Otherwise, space in it would be worthless. The purpose of advertising in the AVoraan's Magazine is to enable us to publish a paper for the masses at a low price. The benefit of the advertise- ment goes to the reader. "We give him a magazine, such as he could not get otherwise, at many times the price. He gets the benefit of our advertising revenue. A large proportion of our own profits has also been spent for the benefit of our readers. For instance, we took care of eighty thousand people among our subscribers who came to St. Louis during the World's Fair as our guests in a great encampment. The proportion devoted to the text as compared to advertising, varies considerably during the year. In the summer months the reading matter is twice that of the heavy winter months. In the crowded winter season it will run half and half. We restrict each issue by departments. We never try to get advertisements on those pages which are of greatest interest. We do not attempt to advertise on those pages at all. The large volume of advertising which we carry should not be regarded as a reproach. On the contrary, it is in itself the best evidence that the papers are acceptable 286 THE SIEGE OF UNIVERSITY CITY to the readers. Advertisers want results. But these come only if the people read the magazines from cover to cover, see in its columns only what they believe in, and have confidence in every word they read. THE SPIRIT OF THE MAGAZINE. When the second-class law was passed, by which periodicals useful to the public could be sent through the mails at one cent a pound, great emphasis was laid upon the intent of Congress to encourage and even subsidize (if you care to call it so) the distribution of good literature to the masses of the people at a low price. The second-class rate was not intended to be limited to a few of the high-priced magazines. The law was meant to apply equally or even principally to the low-priced magazines. I have brought out a paper which comes the nearest to representing the real purpose of that law of any Ijublication in America. The Woman's Magazine is clean, honest, well printed, carefully edited, and full of interesting and useful matter. The rule that applies from the dome of our establishment to the cellar, is a rule that stamps it as an honest paper. We have one desire: To comply with the law. We have one wish: To do what is right. We are trying to do this to the best of our ability and understanding. AVHenever we are wrong and so informed, we try to put the matter right. We have now traced the evolution of the Woman's Magazine from its inception as the "Winner" to the pinnacle of its fortunes. We have looked at it through the eyes of its founder. We have seen it presented by him from the viewpoints of his relation with his read- ers upon the one hand, and with the public authorities and his brother publishers upon the other. To complete the picture, it needs only that we should view the whole from the standpoint of the com- munity which was the scene of its activity, and in which it played so conspicuous a part. THE "double spread" IN THE ST. LOUIS REPUBLIC. During the World's Fair, by arrangement with the St. Louis Re- public, a mammoth illustrated feature article, covering two full newspaper pages — known in newspaper parlance as a "double spread" — was devoted to Lewis and his enterprises. The text of this article may be taken as an expression of Lewis' own views, since there is internal evidence that the reporter of the Republic was fur- nished information by Lewis in the form of printed literature and through personal interviews. The appearance of such an article, however, in a reputable newspaper is equivalent to an endorsement and approval of its contents. Certainly, it is conclusive as to the general state of public sentiment and opinion at the time. For no reputable newspaper, such as the St. Louis Republic, would know- ingly hazard the good opinion of its readers. "The Republic's story may, therefore, be fairly regarded as a summary of the impressions of the citizens of St. Louis as to the Woman's Magazine and its founder during the summer of the World's Fair at St. Louis. This marks the hey-day of Lewis' prosperity. This was the pos- ture of his affairs at the holidays in 1904, when Howard Nichols testified that the contrast between his own abject poverty and Lewis' good fortune impelled him to tin-n informer, and write his cele- brated letter of denunciation. The Republic says: '^Wives of the Japanese Commissioners with Afrs. Lewis and friends '^Japanese Imperial Commissioners headed by Baron Okuma, with rx-Govcrnor David R. Francis and party of notable St. Louisans. Guests of E. G. Lewis at luncheon in the IVovian's Magazine Building, November jS, i(;oq ^Chinese Worlds Fair Commissioners, guests of the Lewis Publishing Company Dcheahoiis of ic'Wi-n's argaiihuliovs, giicsis of the Lo-^'ls Publishing Com/>aii,v ^Daughlc,-., of Iho .Uncncu, ConfcJcnicy -Missouri FoJorulio,, of ll'omcn's Clubs 3P. E. O. Society THE DREYFUS CASE OF AMERICA 289 On the night of April 30, 1904, after the dedication ceremonies opening the World's Fair, a great light suddenly burst out in the sky, sweeping from north to south and east to west in a blazing, blinding beam of seven feet in diameter, the reflection of which was seen as far away as Kansas City, nearly three hundred miles. Everyone in St. Louis wondered what it could be, and where it came from. It seemed to start from a high point in the West End of the city; and only a few of the initiated knew it was the great searchlight on top of the dome of the Woman's Magazine building on University Heights. Since then it has swept the sky nightly. This light is the crowning glory of the most beautiful building in St. Louis, which in turn is the home of what is probably the most wonderful enterprise in the world. The light itself is by far the largest and most powerful searchlight in the world, having been built at a cost of twelve thousand dollars, and requiring nearly a year to construct. It marked the final completion of a building which probably has few equals in the world, and which is a source of pride to St. Louis and its people, not alone because of the beauty and magnificence of the building itself, but because it contains an enterprise known all over the world, and one with which most of the very best people of our city are now identified and are very proud of. This great building is open to visitors day and night. ORIOIir OF THE woman's MAGAZINE. Twenty years ago, a young boy of fourteen started to publish a paper. It was to be a magazine for the great mass of the people. It lived a week, (it was a weekly) . It cost the youth his billy goat and several other valued assets, but it went into honorable liquidation and the bills were paid. The paper died, but the idea lived on in the boy's mind. Three years in college and twelve years of hard work in the endeavor to accumulate enough to start that paper again, and start it right, finally resulted through misfor- tune in his arriving at about where he had started, so far as capital was concerned; but, with a wide and general fund of experience in business methods and finance, and the idea still firmly fixed in his mind of publish- ing "the greatest magazine the world ever saw." At this point the bull was taken by the horns, and the magazine launched with a cash capital of one dollar and twenty-five cents on what proved to be the most remarkable career any publication has ever had. Today, five years from its birth, The Woman's Magazine has a paid subscription list of one million, six hun- dred thousand subscribers, reaching one out of every ten homes in America, each issue, employs five hundred people in its production, owns the finest and largest publishing plant in the world, built for spot cash at a cost of over half a million dollars; requires fifteen carloads of paper to produce it and eight tons of printing ink to print it; has its own postoffice and mail cars: pays into the United States Postoffice Department a quarter of a million dollars in postage per year; has a companion magazine. The Woman's Farm Journal, with a circulation of six hundred thousand copies each is- sue; reaches every postoffice in the United States and Canada; receives a daily mail of from ten thousand to thirteen thousand letters; earns for its publisher over a quarter million dollars per annum, net, and has a capital of a million and a quarter dollars. Yet, the subscription price of this magazine is ten cents per year, or two dollars for life. It all sounds like a fairy tale, but there in the West End of St. Louis, in one of the best residence districts, stands the great building, surrounded by eighty-five acres of beautiful grounds, laid out into a grand residence park, in which the officers of the publication are building their homes and where "Camp Lewis" has suddenly appeared, with its thousand snowy-white tents, electric lights, and all the comforts of home, ready to care for the thousands of readers of the Woman's Magazine and Farm Journal who shall visit our great F,xposition. It all shows what a man can do if he will only go at it right, do it right, and keep at it. There is one thing, however, that is not 290 THE SIEGE OF UNIVERSITY CITY generally understood, which has caused this great industry, now a public enterprise in scope, to be almost unknown to the people of St. Louis, its home. By a curious construction of the postal laws, a monthly magazine cannot circulate in the city in which it is published, excepting at great loss to the publishers, as the postage on the Woman's Magazine to a subscriber in St. Louis would be just sixteen times as much as to a subscriber in the Philippine Islands, or any part of North America. A Visit to the octagon toweb. Forming, as it does, one of the proudest features of St. Louis, a full knowledge of this wonderful establishment should be had by every St. Liouisian, in order that visiting friends from a distance may not know more about the largest publication in the world than the people in its own city. Taking the Delmar Garden car, the representative of the Republic reached the entrance grounds of the great octagonal building, which stands on a high hill over-looking the World's Fair, and which is now a landmark from all parts of the West End. Beautiful walks lead up to a grand en- trance, on each side of which stand enormous carved stone lions ten feet in height. The office building proper is octagonal in shape, built of cut stone, terra cotta, brick and steel, eighty-five feet in diameter by one hun- dred and thirty-five feet in height, and crowned by an immense dome of copper, about which are perched sixteen carved Cupids, each ten feet high and weighing two and one-half tons. The ground floor is open like the in- terior of a great bank, and, in fact, was designed for a great bank, which is to do business through the mails exclusively with the two million fami- lies which read the magazine. The floor is in mosaics, and about the grand central staircase, the bank fixtures, of marble, hardwoods and bronze, are grouped. In the centre o"f this floor rises what is probably the most beau- tiful stair in America, built of white Italian marble and bronze, at a cost of seventeen thousand dollars. On the second floor a balcony surrounds the central stair well, upheld by eight great marble pillars. This balcony is faced to the ceiling with beautiful marbles, while on the ceiling itself are superb mural paintings by one of the foremost artists of America. About this balcony are the editorial and executive offices, finished in hardwoods and beautifully deco- rated. At the head of the stair is the president's office, probably the most beautifully furnished office in the city. Behind the president's desk sits a young man of thirty-four, slightly gray about the temples, of medium height and slender build, quick and active, with vitality and force in every move- ment, but quiet and gentle spoken. This is E. G. Lewis, the creator of The Woman's Magazine, president of the Lewis Publishing Company, with a million and a quarter dollars capital; of the University Heights Realty Company, with a million dollars capital; and a director and officer in several companies, with several other millions capital. He is the same person who, twenty years ago, sold his billy goat to start his first paper. He lives in a quiet little home on Euclid avenue, which he bought on the installment plan some years ago, and, so far as I can learn, has one chief ambition, to publish "the greatest magazine the world ever saw," treat everyone honestly and fairly, make his employees love him, and spend his spare moments with his wife, who is also the second vice-president of the company. He says that when he dies he wants to be buried right under the centre of his great domed building, and that he carries half a million dollars life insurance, so that every promise and pledge made in life may be carried out in the event of his sudden death. If he lives, he will carry them out himself, for that is his record. No man in St. Louis holds m.ore firmly the confidence of the bankers and business men of our city. No other corporation or enterprise ever before had so many of our foremost citizens, bankers, merchants and professional men associated with it as has the Lewis Publishing Company, making one case at least, where a prophet has been honored in his own city. It is related of Mr. Lewis, as an illustration of the spirit and grit that has THE DREYFUS CASE OF AMERICA 291 enabled liim to build up such a business, that in the days of the early strug- gles with his magazine he once spent five consecutive days and nights on the trains between Chicago and St. Louis in order to protect his "promise to pay" a certain obligation, rather than go to the party who held it and ask for an extension of time. Leaving the editorial floor, one passes up to the third floor, on which are located the composing room, artists' studio, filingrooms, where the millions of letters are all kept carefully filed for instant reference; the mailing- room, where the outgoing correspondence is folded, put in Its envelopes and stamped (for even this simple process requires the work of twenty girls), and the barbershop. On the fourth floor is located the great sub- scription room, where one hundred and eighty young women care for the vast detail of the subscription list, numbering over two million subscrib- ers. Here every subscriber's name is carefully kept in cash files, and eight young ladies occupy all their time in making the changes in address made necessary each day by the moving about of the two million subscribers. If one family o\it of a thousand moves each month, this means two thousand changes to be made each month in the subscription files. The light and ventilation in tliis room are perfect, and every possible comfort and con- venience is provided. On the fifth floor a grand banquet hall, occupying the entire floor, is being finished off with a domed ceiling, thirty feet in height. THE jrAGAZlS'E PRESS BUILDING. Ascending to the observation platform at the top of the great dome, all St. Louis can be seen from this, by far, the highest building in the city. Directly to the east the finest residence district of the city reaches almost to the corner of tlie grounds, while to the south, Washington University and the World's Fair grounds seem so close one could almost jump off into them. Descending to the basement, one passes through a short tunnel into a great palmhouse and conservatory, one hundred feet in width, now being filled with the choicest plants ; then, down a stair to a grand balcony, over- looking the largest and most complete pressrooms in the world, two hun- dred and seventy-five feet in length by one hundred feet in width. Here visitors can sit and watch the wonderful process of producing two million completely printed and bound copies of the two publications owned by the company. This is done in eight days' time each month. On one side is a row of nine great presses. On the other are eight great folding and binding machines. Against the wall, at the west, are the massive cutting machines, which trim the edges. In the middle stand seven Government mailcars in line waiting for the two hundred tons of magazines that go out to all quarters of the globe each issue. Not a shaft or belt is in sight. Each machine is run by hidden motors, receiving their power from the great noiseless engines at the far end. Throughout both buildings every con- venience and comfort for the employees has been provided, even to the piping of drinking water from a spring half a mUe away, so as to flow out in little marble fountains in each room. "It is not generally known," said Mr. Lewis, "that over seventy-five per cent of the population of this country resides in the small towns, villages and rural districts, and that over eighty per cent of the wealth of this country is held by these same people. There are today hundreds of beautiful maga- zines printed for and sold on the news-stands of the great cities, but they utterly fail to reach the great seventy-five per cent. They aim at the high- est in art, presswork and illustration, in order that they may command a ready sale in competition on the stands, they depending on catching the eye for their sale. "We believed that a carefully edited, well printed, well illustrated maga- zine at a low price, and with reading matter that would enter into the daily lives of the great mass of women would catch and hold their hearts. It is 292 THE SIEGE OF UNIVERSITY CITY not what the price of the magazine is that really counts. The woman who writes us a letter enclosing ten cents for her subscription, and then regis- ters the letter at a cost of eight cents, is sending for it because she wants to read it. We try first of all to give our readers what they want to read, and not what we think would make the most high-toned paper. A pattern of a stock collar that any woman could make out of a handkerchief comes nearer bringing results than an illustration of a superb piece of fancy work that only a Japanese artist could make. "It must be a relief to the average woman who has gazed at the illustra- tions of Vanderbilt's and Astor's homes to pick up the Woman's Magazine, get back to earth and learn how she can take a common drygoods box and make a dresser for the servants' room out of it at a cost of fifty cents. Even as to fiction, we have all copy read by several different women read- ers of various temperaments, in order that the stories they select may strike the general average of womankind. Our guarantee to our readers to refund to them any loss they may ever sustain by answering a fraudulent advertisement in our columns, gives confidence in our advertisers; and we never fool our readers with catch-penny schemes. "I would rather be the president of the Woman's Magazine, and hold the trust and confidence of its two million families of readers, than to be the President of the United States. No man on earth could sit at my desk and read the thousands of trusting, encouraging letters that I do, and ever do those people a wilful wrong. To tens of thousands of them I, as the head of this paper, am the confidant and adviser in distress, or in business matters extending outside of their own immediate circles. "The beauty of this great building must reflect itself into the contents of the magazine and the lives of our employees, and impress on each that they are a part of a great organization dealing in and creating the thoughts of two million minds — an organization probably more powerful for good or evil than any other single enterprise in the country. The mere getting of dollars must take a back seat in the face of such a condition. I have no- ticed time and again the remarkable broadening out of the views of life held by the people about me, as they grow into positions of responsibility where they come in contact with the great thought force of these two millions of minds. "It cannot be understood by an outsider; when mentioning the value of such a franchise, I am frequently asked how much our types and presses are worth ! They and this great building are but the smaller details visible to the eye, of a power that is growing as no power ever grew before, by the good wishes, confidence and co-operation of two million well-to-do and intelligent American families." As he spoke the burning of passion seemed to turn the modest young man into the great galvanizing battery of force and action that has created and drives forward the largest publication in the world. The hard struggle in life that Mr. Lewis has gone through seems to have deeply imbued him with a desire to help the great mass of people of moderate means who seldom have an opportunity to help themselves. The piling up of a great fortune for himself does not figure in his plans; for, as he says, "I can't take it with me; but I can take the love and respect of my two million readers." ^^^^^^Bki^k^ P ^ d 1 1 li -*.*' // 1 If i \ f T ; 1 - ' "'^ ' ' ' ■:i\ ,■ ■ *-<^ J\ P .' i',,. 1 1 - ^1 1 1 ;i T-Singlc day's incoming mail of tlie Lcivu Publishing Company during a busy season ^Average daily outgoing mail sacked for transmission to the St. Louis Postofticc SUBSCRIPTION AOHEE)0!WT. I hnrety autaorlte for the niunber of shares of the 6lx(fi/J) per cent omulatlva preferred stock of "T)ie Lewis Piibllahlng Company", (a corporation to ha formed) which are set opposite ray name to this sutaorlptlon agreement. And I hereby agree to pay said conpany therefor one hundred ($100.00) dollars per share, when, and as called ror hy the proper officers of said company. The par Talue of aalri atook Is to he $100.00 (one hundred dollars) per share. A- f-Z-i ?^i,,^ '■^I /SVO. Fhotog}-ophic rcprodiictiou (grcoily reduced) of the original subscription agreement for the preferred stock of the Lewis Publishing Company. Lewis personally can- z'Qssed the representative business men of St. Louis at the organicaiion of the Lewis Publishing Company in iqo^ and secured their autograph signatures to the above docu- ment. In addition to a large number of representative St. Louis bankers and business men, this list includes the names of several of Lewis' wealthy out-of-town backers. The relations of these various persons to Lewis and his enterprises are fully developed in the accompanying text CHAPTER XIII. BANKING BY MAIL. The Official Prospectus — Origin of the Bank — The Mail , , Order Business — Difficulty of Remitting Small Sums — Advantage of a Mail Bank — The Letter to a Million People — The Public Response — Lewis' Own Story — The Question of Motive. The Woman's Magazine was the mother of the People's United States Bank, Lewis' most renowned, and perhaps, withal, the most potential of his achievements. No one, other than himself, could portray this child of his imagination with the warm and vivid color- ing in which it glowed before the eye of his creative fancy. The conception of the bank has been often traced by him from its first germ — the difficulty experienced by his customers in remitting their dimes to the Winner and the Woman's Magazine — to its full fruition as a two and a half million dollar enterprise. All the stages of this development were clearly indicated in circular letters, prospectuses, and articles in the Woman's Magazine. Through these the evolu- tion of the project may be observed and studied. The whole conception appears to have taken on its final and definite form in Lewis' mind during the summer of the World's Fair. The great concourse of people gathered as sightseers from all over the world, brought to the Woman's Magazine, as we have seen, an extraordinary number of its readers. Among them were many bankers, both from cities, and from country towns and rural dis- tricts. All had been acquainted with the bank project through Lewis' articles in the Woman's Magazine. Many had been in cor- respondence with him on the subject. Each day during the World's Fair, therefore, witnessed a constant succession of interviews be- tween Lewis and a multitude of interested callers. So incessant in fact became these demands that Lewis was compelled to arrange group meetings, and deliver his views in an address followed by informal discussion. Such meetings took place in the Woman's Magazine Building at frequent intervals during the summer of 1904. Lewis was also called upon to present his banking project to groups of bankers and other interested persons in Kansas City, Chicago, and other cities. Representative bankers of St. Louis were in almost constant conference with him on the subject. Lewis felt that a combination of circumstances so exceptional, could only happen once in a lifetime. He, therefore, laid aside all other work as much as possible and devoted his time to what he be- lieved to be the solution of a great political and economic problem. 295 296 THE SIEGE OF UNIVERSITY CITY Finally, as the summer drew to a close, the full orbed conception of the People's Bank swam dazzlingly before his mental vision. In August, 1905, after a series of earnest conferences, the impulse seized him while at a white heat of creative activity to project the whole scheme on paper, and thus, once for all, clarify it in his own mind, and lay it definitely before the public. From early morning, until late that night, without any break except for luncheon, he paced back and forth in his sanctum at the head of the grand stair- way in the octagonal tower, dictating continuously in vivid word pictures and striking imagery, the details of his great conception. Thus the subject-matter of his principal prospectus, "Banking by Mail," took shape. Over a million copies of the large pamphlet, the size of an extra issue of the Woman's Magazine, were printed, and distributed among his readers. Copies were mailed to every bank in St. Louis, with a request to investigate the project and offer suggestions which might enable the proposed institution to co-operate helpfully with the local banks. Copies were also mailed to all other banking in- stitutions of the United States. This prospectus was in short the instrument used by Lewis in building up the enormous subscription list to the stock of the People's Bank, which in the end exceeded the proposed capitalization of five million dollars; and more than one-half of which was actually ]pa.id in. The text of this pamphlet thus possesses a double interest. Not only is it the clearest and most cogent presentation of what the People's Bank was designed to be. It also has value as an histori- cal document. For Lewis, as we shall see, upon his defense on the charge that the People's Bank was organized as a scheme to defraud, v/as permitted to read this pamphlet in its entirety to the jury. He was not only acquitted, but he alleges that members of the jury waited upon him afterwards, and expressed regret that they had not been among the investors of the bank. At the head of the first page occurred the following paragraphs in boldfaced Gothic type, under the caption, "Introduction." Par- ticular attention has been directed by Lewis' attorneys to the fol- lowing sentence: "It is, of course, understood that such modifica- tions as may be found necessary for best accomplishing the end desired, will be made under the advice of skilful bankers, but the plan as outlined here is essentially the one I intend to carry through." Does the language employed here and throughout this pamplilet bear the ear-marks of conscious fraud.'' Or, is it simply the mode of address best adapted to the comprehension of the masses to whom it was dispatched? This issue is raised by the charges afterwards made that the People's Bank was designed by Lewis as a fraudulent scheme. With this thought kept closely in mind, the reader will be in a position to appraise for himself these official utterances of Lewis as its promoter. THE DREYFUS CASE OF AMERICA 297 INTEODUCTION. In the following pages I have endeavored to give a clear insight into the purpose, plan of organization, and method of operation of the proposed Mail Bank. First, as comparatively few could have much knowledge of the inner workings of a great magazine, I have dealt with the causes that lead up to my undertaking the great labor of such an organization. It is, of course, understood that such modifications as may be found necessary for best accomplishing the end desired, will be made under the advice of skil- ful bankers, but the plan as outlined here is essentially the one that I in- tend to carry through. The division of the stock into one dollar parts (one one-hundredth of a share), the certified check system, the savings accounts, the re-deposit system, and the mail remittance system are all details of a plan which, in its completeness, will mean one of the strongest, most re- sourceful, and profitable banking institutions in America. It will be the PEOPLE'S bank. The whole plan has been the result of years of careful study of conditions which have grown up in this country unheeded by any bank. No new idea, which tends to alter old customs, can escape adverse criti- cism. Had I called together all the publishers in the world five years ago, and asked their advice about publishing a ten-cent per year magazine, hardly one would have encouraged me. In the plan of our bank I have avoided creating new and untried forms, as far as possible, but have adapted the usual and customary forms, such as the certified check, to the new condition of things. I urgently desire the fair criticism and advice of able bankers on the plan. The reception of my idea by the public at large has been such as to establish beyond question the opportunities that are open to such a bank, and the national need for it. Over fifty thousand sub- scriptions to the capital stock have already been sent me, of which over one thousand are from bankers in all parts of the country. I am in monthly contact with over two million families, and have already established an or- ganization that has the confidence and good-will of probably ten million people. The great mail order houses, doing hundreds of millions of dollars of business through the mails, have not only welcomed my plan, but many of the largest of them have offered to advise fully their hundreds of thousands of customers about our bank, and to urge the use of our certified check sys- tem through notices kept standing in their merchandise catalogues. I pre- dict the highest price for the stock of the People's Mail Bank ever reached by any bank stock. If the prosperitj^ safety and convenience of hundreds oif thousands of homes can be added to. even a little, by this bank, it will stand as one of the noblest institutions in America. Immediately beneath this resounding introduction occurred the fonowing paragraph, which, in both style and substance, forms a good example of the mode of talking to his readers by which Lewis won their confidence, but which is challenged by his critics as ob- viously bombastic and insincere. I am personally investing practically every dollar I have in the stock of this bank. The very life of my great publishing business, now earning over a quarter of a million dollars net profit per year, is staked on this propo- sition. For if the bank did not prove the success I predict, I would lose the confidence of my two million readers. So I have more at stake than all the other stockholders in the bank combined. My great magazine is dearer to me than life itself. It is the creature of my brain, and has been reared in the ceaseless labor, night and day, of five of the best years of ray life. I would rather be president of The Woman's Magazine and The People's Mail Bank than President of the United States. I pledge all the manhood and strength and courage there is in me to The People's Mail Bank. 298 THE SIEGE OF UNIVERSITY CITY The liraitations of space forbid a reproduction of the whole of this prospectus. What follows, therefore, has been condensed in Lewis' own words and with fidelity to the spirit of the original, but with considerable omissions. The net effect is to give in brief com- pass the substance of the argument and appeal by which, in the course of a few months, he secured subscriptions in excess of five million dollars. ORIGIN OF THE BANK. Early in the life of the Woman's Magazine, as the confidence between the reader and tfie publisher grew, a new feature developed. I began to receive sums of money, some of them very large, from out-of-the-way places, all over the United States and Canada. These I was asked to keep until called for, because th'e sender had no safe place to put them. The nearest bank was perliaps twenty or thirty miles away. The owner of these sums, ranging from a few hundred to several thousand dollars, either distrusted this little local bank, or feared that others would know too much about his business. Most men and women in small communities, while they might otherwise be willing to do business with local banks, do not want their friends and neighbors to know how much they have, nor where it is de- posited. This feature is developed to the extreme in the remote rural dis- tricts. Most savings accounts are from women, but the average woman does not want even her own family to know much about her finances. I became in time the centre of the confidence of a million people. They would send me a map of their yard, showing me where they had buried their money, saying how much it was, and telling me what to do in case of their death. They would write that outside their own circle of friends there was no other man in whom they could trust. This feature grew almost as rapidly as the paper itself. At one time I had almost a quarter of a million dollars of this sort. It became necessary to originate some system of handling this money, and some form to limit my responsibility. The people did not want to spend their money. They wanted to know that it was safe, and that they could get it in time of distress. In the meantime, my reflection on the thoughts of a million souls had developed in my mind the idea of the People's Bank into what, I thinlc, will be one of the grandest institu- tions in America. About this time I organized the Lewis Publishing Company with a capital of one million, two hundred thousand dollars. The two hundred thousand dollars is in preferred stock retiring at the end of five years. This was taken privately by the foremost citizens of St. Louis. I spent over a hun- dred thousand dollars in the decorations of the buildings. It is today the most beautiful publishing plant in America. The institution of the Lewis Publishing Company became a perfect machine working without discord. I enjoyed the love and confidence of its four hundred and eighty-odd em- ployees. This beautiful life and the atmosphere created by these beautiful buildings, were reflected into a million homes. I had a staff of people in intimate contact, by means of letters and through the magazine, with all this scattered mass of people. We gave advice and help to the country people, and shared their hopes and fears. One thing that struck me after the magazine had become successful, was the fact that while eighty per cent of the wealth of the Nation was held by the people in the rural dis- tricts, yet those people had no great central banking institution with which they could deal. They had no one to whom they could refer for informa- tion and advice on their investments. There is no way for the man forty miles back in the woods to know which business concern is honest and which is not. He has no one to advise him, in whom he has confidence, or who is competent to do so. He naturally turns to the editor of his monthly THE DREYFUS CASE OF AMERICA 299 magazine. The relations of a publisher with his readers are, therefore, in many respects similar to those of a father with his family. THE MAIL ORDER BUSINESS. Another point was the large increase of mail orders, and the lack of easy means of payment. In the past eighteen years there has grown up in this country what is known as the mail order business. This consists of great general and specialized merchandizing houses, located in the large cities, but dealing with hundreds of thousands of people located in the rural dis- tricts, through the mail, for the purchase of all the comforts and necessities and luxuries of life. The nearest store keeps canned goods, calico, rubber boots and slmilai staples; but, if the people want comforts and luxuries they must get these from the mail order houses. These send out large illustrated catalogues, and not being under the necessity of maintaining great establishments on the prominent thoroughfares, are able to sell to the people in the country at closer prices than even the people in the city can obtain. These mail order houses, dealing with hundreds of thousands of customers, often take the entire output of great factories. They can thus supply each of their cus- tomers at lower cost than if he lived in the biggest city. So great has this business become that two houses alone — Sears, Roebuck & Co., and Mont- gomery, Ward & Co., both of Chicago — last year did over fifty millions of dollars' worth of business through the mail. The total, in 1903, exceeded one billion dollars in this country alone. Every dollar of this was sent through the mail. And yet in this country, today, there is no form of postal remittance that is either convenient or safe. No bank has grown into ex- istence that cares for this class of business. The presidents of the usual banks do not know much about the mail order business, and yet it amounts in all to hundreds of millions of dollars a year. DIFFICULTY OF REMITTING S3IALL SUMS. The remittance of small amounts by mail is not easy. If, tonight, I de- sire to remit six dollars and a half to a concern in New York, although I am living in the fourth largest city in the United States, I should have to go downtown and buy a postoffice money order or a certified check. Think of the man or woman who would have to go forty miles through woods to his postoffice, perhaps through a snow storm, to get a postoffice order to pay for some goods he might wish to order through the mail. One of the greatest difficulties of the mail order merchants is this very thing. They receive tens of thousands of dollars' worth of postage stamps. They receive also great sums in currency. The loss of currency through the mail is an enormous item. They receive also thousands of letters in which the writer says she will send an order for goods on Saturday when her husband goes to town so that he can buy a postoffice or express money order. All these letters would be saved if there were any convenient means of sending small amounts of money. Seventy per cent of the postoffices of this country do not issue money orders at all, yet nearly eighty per cent of the wealth is held by the people in these rural districts. This money is not in any bank. Further, there is no "bSnk yet in existence that can get it. If a great bank of Chicago or New York attempted to get this saved-up money, they would have no knowledge or training that would fit them for dealing with these people. The banks could not handle the business. The rural people never heard of these banks. Even should the banks get it, they could not hold the connection unless the depositors heard from them at regular intervals. If the depositors did not hear from them every month or two, they would be inclined to draw out their money. No bank with a hundred thousand depositors could write a letter every week or month to all its customers. There must be some medium of constant communication. This medium is provided by a great publication such as a monthly magazine. 300 THE SIEGE OF UNIVERSITY CITY Then the gretit banks open at nine and close at three. The woman who wants to deposit ten dollars must lose a morning and spend the interest of a year in carfare going to and fro. When she reaches the bank the man beside her wants to deposit ten thousand dollars. The clerk impatiently takes her book, enters her ten dollars, and thrusts it back at her. She takes a look at the marble pillars, thinks how poor and mean she is, and goes out feeling embarrassed and even ashamed. Under the mail order system she deposits her money through her local postoffice, unknown to any one, and by return mail her book comes with a letter from the president of the bank thanking her for her deposit, and telling her she is one of the people wlio are adding to the prosperity of the Nation. ADVANTAGE OF A MAIL BANK. Then, too, no great bank witli its present organization could handle over its counters the accounts of hundreds of thousands of people from the country, each account so small, in itself, as hardly to be worth the having. They would require hundreds of paying and receiving tellers, and a bank- ing hall covering several blocks. The mere process of handling these small sums of money would eat them up in expenses. Further, every city bank that attempts to take small accounts is subject to the danger of a run. The greater the number of small accounts the greater is this peril. The man with a hundred thousand dollars is not going to stand ail day at the bank and increase the panic. But the woman with ten dollars in it, whicli is her all, will not only do so, but will bring other frightened women of the neighborhood. I^et but a woman faint in front of a banif, and let a crowd collect, and she be carried in, and by nightfall that bank may have a run on it. That means a thousand people at its win- dows. Then any statement by one, no matter how absurd, is echoed to the other nine hundred and ninety-nine. The next thing is a long notice in the evening papers. A panic is only made when a whole crowd gets fright- ened. Now, by a mail banking system, such a condition is a physical im- possibility. One man cannot communicate his fright to another. There might be a "run" from ten thousand people, and no one would know of it. The bank could take its time and meet it by drawing gradually on its re- sources. Such a bank could do business with the whole country. It would be equally accessible to the man in the logging camp, and the woman in the tenement. Its accounts, small in themselves, in the aggregate would be enormous. The postal hanlc of England has two hundred seventy-four mil- lions of dollars in deposits. The Bank of England has borrowed from this postal bank from time to time over seven hundred million dollars. Yet, its average account is only fourteen dollars. The Bank of France has three hundred millions in deposits, yet its average account is but thirty dollars. Such a bank in time of stress would be a great equalizing force. In case of a national panic, the Uttle local banks are the first to feel it. The depositors wonder how their president stands, and quietly begin to with- draw their money, and hide it in socks .and pots. This is no reflection on the local banks. I'hey are a part of the backbone of the financial system. But the rural people cannot trust their local banks as they could a great central institution. This bank of ours will not interfere with the local banks. Rather will it be a source of strength in times of panic, through ts ability to supply funds at reasonable rates, and on long time and good security. We will use the local banks as agents in placing bond issues. Our certified checks will i)rovide for them a profitable form of exchange. WOULD BRING HOARDINGS INTO CIRCULATION. There is not today in this country any great banking institution with enormous capital and resources in which the people of the country feel confidence, and to which they will send their money. Let such an institution be once started, and it would be the recipient of enormous sums of the savings and hoardings of the moderately well-to-do. It could put this THE DREYFUS CASE OF AMERICA 301 money back into circulation and substitute certificates of deposit in the socks and old pots, instead of actual currency. More money is saved up to put into the banks than they ever receive. Probably only one-third of the total currency is in the banks. Allow one- third as being in circulation. The remaining one-third of this country's money is hidden in socks, pots, drawers and fireplaces. Most of the money that this mail bank that I am organizing will get, is not today in any other bank. No other bank can get it. It is the one-third, hidden away and withdrawn from circulation, that I am after; and no other institution in America besides this one is so situated as to be able to draw it out. I am not speaking on theory, but on actual existing conditions. 1 first began presenting the features of this mail bank to my readers in a circular letter under a one-cent stamp. What was the result? Over forty thousand of them immediately sent in their subscription to its capital stock. These forty thousand, according to their letters, were ready to deposit an average of three hundred dollars each. This means that practi- cally twelve million dollars, or two and a half times the proposed capital of the bank, is at this moment waiting and available as deposits. I believe that a great bank, owned by the people, paying its earnings to the people, standing like the rock of Gibraltar between the people and the unscrupulous stock speculators and swindling schemers who hold out hopes of sudden riches; a bank, with a hundred thousand families owning stock purchased at par; a bank, with half a million small depositors; a bank, which no man or clique of men could ever gain control of for their private ends; a bank that was so far from the control of any body of wealthy spcciilators, so fearless and so strong that it would stand as coun- sellor and advisor for the vast number of people who, having now no such institution, are taken in and defrauded in a thousand schemes, would be- come the most powerful financial organization in the world. Such a bank must be equally accessible to the man or woman a thousand miles away as to the one near by. It must transact its business through the mail. A LETTER TO A MILLION PEOPLE. The nature and substance of Lewis' appeal to his readers will be more clearly grasped if we insert at this point a copy of his first circular letter on the bank. He sent out more than a million of these to his readers on the letterhead of The Lewis Publishing Com- pany during April and Ma}' of 1901. With this letter the practical organization of the bank may be said to have begun. It must be remembered that this is a part of the "literature" on which the charges of fraud by the postoffice are based. About four years ago, I started the Woman's Magazine with a few hundred dollars capital. It is today the largest magazine in the world, hav- ing a million and a half subscribers. It employs three hundred people, does a business of a million dollars a year and is earning for its stockholders a profit of over a quarter of a million dollars a year. Most of the foremost bankers and business men in St. Louis are interested in it now. Had you come in with me four years ago at the start, with only five dollars, you would today be worth five thousand and have an income of one thousand dollars a year. This wonderful growth has been due to one fact — the co-ope- ration and assistance of a vast number of people, each contributing ten cents a year, yet all combined, making an enormous sum of money. I am about to undertake a new enterprise which I have been studying over for a number of years. As you know, the great banks and trust com- panies of this country, with their millions of dollars of surplus profits and their enormous dividends paid to their stockholders each year, are owned and controlled by a few wealthy men. These banks, with their great de- posits, have become an enormous power in this country, enabling those at 302 THE SIEGE OF UNIVERSITY CITY the head of them to cany out and finance great enterprises, and to earn enormous jjrotits for them. I believe that, with the help of my readers, 1 can organize one of the greatest banks and trust companies in the world, doing its business entirely by mail, and becoming one of the greatest pow- ers in the country. iVs an illustration of this, if each one of my readers were to contribute the small sum of fifty dollars to the capitalization of this trust company and bank, it would be the most powerful bank in the world today, with a capital of one hundred million doUars. My plan is this: In a few days I shall organize the Woman's Magazine Fostal Bank and Trust Co. I have asked five of our foremost bankers in the city of St. Louis to act with me as the board of directors in the man- agement of this institution. I want each one of my readers to become a stockholder in this great bank and trust company to the extent of at least one dollar, which is about the sum I started with myself a few years ago. For every dollar that my readers put into this bank as capital, I will put in one dollar myself to the full extent of my own private fortune. In this way, I expect to organize a trust company and bank which will become one of the most powerful factors in the financial world and which will be owned by my readers and myself equally. This bank will carry on its business entirely by mail, so that those in small towns and rural districts who wish to deposit with the bank, can do so by mail or draw tlieir money by mail more conveniently than they could with the nearest local bank. We ha\e worked out a wonderful system for this and have applied for patents on it, so that no others can take advan- tage of it. The greatest bankers in the city of St. Louis, who are among the most substantial and experienced bankers in the world, will be on the board of directors with me and assist in the management of this institution; but, from start to finish, it will be a bank of the people, for the people, and a means whereby the man or woman with a single dollar invested in its capital stock becomes a part owner of the bank and will share in the profits and earnings of this great financial institution. Its depositors will be spread over the world wherever the Woman's Magazine and Woman's Farm Journal go. The ordinary bank must compete with a dozen other banks in its own town of a small population, while we have two million families who are sub- scribers to our papers and their ten million friends, giving the proposed bank and trust company the greatest resources of any bank in the world. Such an institution owned by our own readers would become one of the greatest powers in the world today— a power with wliich even the Govern- ment would have to reckon in the floating of its bonds. I want you as one of my readers to join v.'ith me in this great enter- prise to the extent of at least one dollar. If you have friends or children, send a dollar for each of them, or you can send as much more as you wish. One share of stock will be issued to you in this great bank and trust company for each dollar that you send. It will be organized under the laws of the State of 'Missouri, which are the strictest in the country. It will have the advantage of the judgment and advice in its affairs of the foremost bankers of St. Louis. Its capital becomes a bulwark and safe- guard, its stock can not be assessed; and I promise you that, if it is within the possibilities of a human being to do so, that I will make this great bank and trust company as successful and profitable to you as my great publishing company has been to those who joined me in it. Your few dol- lars invested in the stocI< of this company may in a few years from now have done for you what a fc\v dollars invested with me at the start have done for my stocklioldcrs In the publisliing company — made them well-to-do. I believe that I am offering you the opportunity of your life. I would rather have one dollar each from my readers than a large sum from any one person. The capital for this bank lias been offered me by several great bankers in St. Louis; but I want my readers to join with me In this THE DREYFUS CASE OF AMERICA 303 proposition. I want at least a single dollar from each of them, and I want every one of them to come in with me ; and if you wish, you may, as I have said, put in a dollar for each of your children or relatives, or as much more as you please for yourself. I expect to have all the details of the organization of this great bank and trust company complete m a few days, so that it is necessary for you to answer as quickly as possible if you wish to join with me. Furthermore, I have worked out a plan whereby, as soon as this great bank and trust com- pany is organized, each of its stockholders, even though they own but a single dollar's worth of the stock, will become our permanent representative and agent in their own place of residence, and by my plan, of which I will tell you as soon as the bank is formed, you will be able to accumulate a nice little bank account of your own through representing the bank in your community. Do not lay this aside, as I shall not make the offer to you twice. If you wish to join with me in this great enterprise, sit doAvn at once and fill in the blank that I enclose, and send it back to me by return mail. As soon as the bank is organized, the stock will be properly registered and issued to you. Very truly yours, E. G. Lewis, President of The Lewis Publishing Company. This is the first and only time people of moderate means have ever had an opportunity to secure an interest in a bank. THE PUBLIC RESPONSE. The response, to the above circular was immediate and overvs'helm- ing. Each mail brought Lewis from five hundred to a thousand sub- scriptions to the capital stock of the bank. He soon realized that a capital stock of one hundred thousand^ or even five hundred thou- sand dollars, would be very largely over-subscribed. He, there- fore, determined to increase the proposed capitalization to the total sum of five million dollars. In brief, this initial promotion effort, owing to the enormous circulation of the circulars and magazines, was a huge success. Returning once more to the introductory article from "Banking by Mail," Lewis comments upon the response to this first circular- ization of his readers in the following manner: Probably no other man ever went through quite such an experience as I did during the three months from April to June, 1901. To spend years carefully studying out the plans of a bank organization, and then present it to the public in a few letters and in the magazine; and see it caught up like a whirlwind, responded to from every part of the Nation by entire strangers, from the most prominent bank officials to tlie poorest laborer in the camps; to read the expressions of confidence and trust and good-will of a million families, would make any man pledge his life and ability to carry through tlie project to the end. At first, it was like the rustling of the wind in my ears. My own thoughts developed by imperceptible degrees through the suggestions and letters of a million people. Then came the actual proving of the proposition, and the request for subscriptions. Then, like the roar of the ocean, came the re- sponse from every quarter of the Nation. These people told me how much money they had for deposit when they sent in their subscriptions to the stock in the bank. Judging from what they say, I can easily predict that within a few years, our bank will have over a hundred million dollars in deposits. If I had made the prediction five years ago, with nothing back of me, I would not be entitled to any 304 THE SIEGE OF UNIVERSITY CITY credence. But as, during these five years I have built up on similar lines, the largest and most profitable publishing business in the world, and have erected and paid for the finest and costliest publishing plant in the world, as the result of the publishing business; and as I am today in daily inter- course with the two million families, knowing their thoughts and wliat they want, I am entitled to a reasonable belief that my statements are likely to be correct. I have personally read and answered during the last few weeks, over twenty thousand letters on the bank, from every conceivable kind of man and woman, from metropolitan bank presidents to coalheavers in the mines. 1 know what I am talking about, not from theory, but from actual contact with the thought of the people in the country. At first my theories were laughed at by big bankers. They said, "The people won't send their money." It is very true that the people would not send their money to them ; because they have never heard of them and their banks before. The great population of this country has been taught to be- lieve that the wealthy men, the captains of industry, the high financier, the stock-broker, and the banker are their arch enemies; that the millions of their wealth are drawn from the blood-money of the poor. To a certain ex- lent this has been true. Accumulated money breeds selfishness. The man who gains great wealth thinks he has got it by his own endeavors, and owns it for the satisfaction of his pleasures. The banker gains large sums by interest, owns his lovely home, travels, enjoys life; but he does not touch the heart of his subscribers and depositors. He has no sense of responsi- bility as the trustee to the people for all this money of which he has com- mand, which has been wrung from the toil of a million laboring people. He thinks he himself created this wealth that he controls. But let him sit down and read through twenty thousand letters from these people. I teU you he would gain a vie^vpoint he never had before. Immediately following this introductory article, the substance of which has been reproduced in the foregoing pages, occurs a second article, dealing with the practical organization of the proposed in- stitution under the title of "A People's Mail Bank." These are the opening paragraphs: I propose to organize the People's Mail Order Bank. The capital of this bank is expected to be five millions of dollars in cash. This capital, as far as practicable, will be invested in Government bonds or equally good securi- ties, sacrificing the interest rate for absolute security. I have in my pub- lishing business a great training school for this bank. We handle here two million people once a month, twelve times a year, for ten cents a year each. The people employed here are especially fitted by training and knowledge for the handling of the business of a great mail bank. This mail bank is not expected to do business over the counter. It will neither receive de- posits nor pay money except through the mails. The capital stock of the bank is being subscribed by tens of thousands of people, scattered through practically every town and city on the North American continent, the great )ulk of whom are the patrons and readers of the Woman's Magazine. I shall have associated with me on the Board of Directors, seven of the strongest, ablest men that I can get. These men I have selected because, while they have made independent fortunes — have made them legitimately and honestly by a life's labor — they are so situated that they are free from the pull and the intrigue that their position would naturally bring against them. They have a life record of honesty and fair dealing which makes their standing in the community one that cannot be questioned. Next to the Board of Directors will be the financial or advisory board, composed of experienced bankers and business men. The loaning of the funcb of the bank will then be done by its proper ofiBicers, with the advice and counsel of this Advisory Board. THE DREYFUS CASE OF AMERICA 305 Then comes a description of the practical operations of the bank, including its two classes of deposits, namely, by the certified check system, and in the form of time or savings deposits. A description of the process of depositing by mail and the details of the practical operation of the bank, were also given. Considerable space was devoted to answering a series of questions culled from the letters of subscribers. The prospectus concluded with a reproduction of sundry letters commendatory of the bank project from the group of men who were most prominently identified with Lewis as his backers and advisers. These were men who, by association with him in his various projects, and by practical experience in their own more or less closely related lines of effort, were in a position to grasp most clearly the scope and value of his scheme. The tone of these communications was such as to inspire the most unqualified confi- dence in Lewis' undertaking. After the publication of "Banking by Mail," Lewis continued to develop the various phases of his project in great detail in the col- umns of the Woman's Magazine. He ran a series of monthly arti- cles in the issues from vSeptember, 1904, to April, 1905, inclusive. Then he got out a monthly house organ called "The Bank Reporter." Three issues of this were published during the months of April, May, and June, 1905. The total volume of promotion literature on the People's Bank, which flowed from Lewis' facile pen, would far more than fill the present volume. Any further attempt to set forth his representations to his subscribers by means of extracts from his writings would be rather misleading than helpful. Their true sig- nificance is no longer felt when they are taken from their original context and shown in other than their true relations. The garbling of such excerpts in the reports of the postofBce inspectors and in official charges and ex parte statements against Lewis, has been a subject of earnest protest by his attorneys, and of his own severest criticisms. A just appreciation of the total effect of the whole vol- ume of literature employed in the promotion of the People's Bank is not to be had from a series of excerpts, no matter how judicial the temper or intelligent the caution with which they are selected. The true effect can only be conveyed by reading them again in chronological order or by some sort of summary review. Lewis has twice been called upon at momentous crises in his career to summarize briefly his conception of the People's Bank. The first occasion was at his defense in the Federal court; the second was before the Congressional inquisitors. The following paragraphs have been carefully compiled from his testimony upon these occas- ions, and may be taken as ofi"ering, in brief compass, perhaps the clearest view that has yet been presented of the inception of the People's Bank, and of its principal features. I became very much impressed during the early history of my publish- ing business with the condition as to small remittances in this country. We would have sometimes as high as forty thousand dollars' worth of postage stamps pUed up pn us. There was no market for them except at a heavy 306 THE SIEGE OF UNIVERSITY CITY loss. We could not keep them, because thej would stick together. This attracted my attention to the need of better facilities. I went to one of the banks, and inquired if they would store postage stamps in their vaults, and practically allow me to use them as representing currency. I arranged with them to accept postage stamps as collateral up to about ninety per cent. The following morning I drove up to that bank with a cab load of postage stamps amounting, I think, to about thirtj'-eight thousand dollars. They probably never had seen so many postage stamps before. They would accept only ten thousand dollars' worth at that time. The heavy loss of small currency remittances, due probably to the cur- rency wearing through the envelope and falling out, was another condition that came to my knowledge. Incessant complaints came from subscribers, from advertisers and from their customers, that small currency remittances often failed to reach their destination. The postofRce money order is the most convenient and popular form for small remittances. But, sixty-odd per cent of the postofKces in the United States did not then issue money orders; whereas, about sixty per cent of the entire population lived in the open country, and in tillages and towns of less than three thousand population. Even in large cities it is often in- convenient to go to one of the branch postofBces or the central postoffice to buy a money order. Almost two-thirds of the population of the United States, holding the great bulk of the wealth of tlie country, was thus not only without hanking facihties, but even without adequate facilities of any sort for making small remittances. C0N3UXTATI0NS WITH BANKERS. I became very much interested in tlie situation of the rural population of the United States, as I have said, because of the lack of some suitable system of making small remittances, and the total absence of banking facili- ties. We came intimately into contact witli these actual operations. Finally, I went down to the National Bank of Commerce, and put the proposition up to them. I had a number of long conversations with Mr. John A. Lewis, Mr. Ed- wards, and Mr. Cowan. I said in substance: "You fellows in the banking business must get your heads together pretty soon, and either let a postal banl< law go through, or else establish some means for making small remit- tances, and drawing back into circulation the currency that is going back into the rural districts in a constant flow. That currency stays there, and does not come back into circulation; just as gold goes from England to India and never returns. Unless you do something of that sort pretty soon, some day you will have to cash up on these billion dollar security proposi- tions that are running your printing presses over night, and then you will find that the bulk of the actual real money is way back in the rural dis- tricts where you cannot lay your hands on it. That is tlie only thing which will count then. The lack of it will cause your securities to go down to the level of the real cash that you have." That appealed to them. I then took them up to my office, and showed them the enormous mass of remittances and the letters from people who said that they had no banking' facilities. A man would write me, for example, and say, "I have two thou- sand dollars on hand in currency, because I have no banking facilities at all. I keep a little country store, and there is no place for me to bank the money." These bankers asked me what I would suggest. I replied in sub- stance, "I do not believe there will be a postal savings bank in the United States in the next twenty j-ears, because the express companies and the hankers will knock it out. Why not organize a mail bank? Why not get that money into St. Louis, and make this the greatest national banking cen- tre in America? The money can be deposited in your banks. You can carry on the necessary system of credit, and if you lend it and lose it you will have to make it good to this central bank, because it will be simply a depositor with you. The mail bank can afford to take a very low rate of THE DREYFUS CASE OF AMERICA 307 interest from you, because it will have very little chance of loss. Your capitalization and surplus will protect it. It will have no operating expenses except its mail. A few clerks in one room will Iiandle the whole proposi- tion. The mail bank wiU not have to maintain a separate credit organiza- tion. It can refer borrowers to the depository banks to find out whether their credit is good, and if the depository banks make bad loans that will be their lookout.'" They said in substance, "Why can we not keep this proposition right in the National Bank of Commerce? Our bank is big enough to handle any proposition. We will be occupying, in a comparatively short time, the great new building which we are putting up. We will then take that up with you, Lewis, and will probably go into it along those lines." I studied the thing over, and concluded if I waited for them to go into it, somebody else would do the same thing elsewhere, and St. Louis would not become the banking centre. ST. LOUIS TO BE A BANKING CENTRE. I felt that St. Louis was logically and in every other way the place for such an institution, because approximately eighty-five per cent of all the rural routes in the United States start within a radius of five hundred miles from St. Louis; and within that radius customers could do business in St. Louis by mail almost as conveniently as if they lived in the city. Within that circle of five hundred miles is the greatest empire in the world. The currency is there. I showed these men from the last statements of the Government itself that the United States Treasury and all the banks and financial institu- tions in America could only account for one billion, out of a currency of three billion of currency. AVhere is the other two billion. Not in the pockets of the city men, because the average city man finds so many ways to spend his money before he gets home at night that he is usually in debt instead of having a surplus. Probably ninety per cent of the thousand clerks of the National Bank of Commerce itself, for example, get less than one thou- sand dollars a year. The cost of living in St. Louis, paying carfare coming and going, the cost of dressing as they have to dress, and everything of that sort, is such that they do not have their per capita of cash in their pockets. Conditions in the rural districts are different. The man who sells his crop, and cleans up five hundred or a thousand dollars, has that sum in cash. The truth of my conclusion was proved when the People's United States Bank got into operation. Practically ninety per cent of all its re- ceipts came in the form of currency. St. Louis drew upon a larger and more prosperous rural population than any other city; and I wanted to see this plan worked out right there under the most favorable conditions. Later, I requested each of the leading banks of St. Louis to appoint one of their directors to make an exhaustive investigation into this plan, and make any suggestions they saw fit. I further requested that they each select one of their directors to become a director of the People's United States Bank, thus placing the directorship and control of this bank in the hands of the united banks of the city of St. Louis. The matter was taken up by a number of banks and many of these bankers were at my building con- ferring with me incessantly. Sometimes, the conferences would last late into the night. The understanding and agreement was general that these plans were to be carried out. Ex-Governor David R. Francis afterwards testified on the witness stand, at the trial of the charges against me that the bank was a scheme to defraud, that he had been invited to become one of the directors himself, but was deterred by the belief that I would not be permitted by rival interests to carry out my plans. During our con- ferences on the appointment of the first board of directors and the advis- ory board back of that drawn from the five re-depository banks, I found great difficulty in getting together such a board as I wanted, unless I would agree to confine the deposits to those particular banks. Every 308 THE SIEGE OF UNIVERSITY CITY banker with whom I took up the matter of becoming a director or member of the advisory board demanded that his bank should be one of the five re-depository banks. The subject was being threshed out and resulted in almost incessant conferences. At this time, such a thing as an attack on the bank was in nobody's mind at all, although we realized that we were arousing a great deal of interest and criticism, most of it favorable — some of it adverse. OPINIONS OF BANKEBS. During these conferences I stated distinctly to the bankers of St. Louis that it was not my desire or intention to become a banker j that my am- bition was to become the greatest publisher in the world. I told them I was going to create this bank, and I then and there asked them one and all to join with me in its creation. Meantime, I had been telling about this plan at great length in my publications, and enlarging upon it. The idea grew in my mind. As I talked with bankers throughout the country, and with business men of large means and responsibility, I finally came to believe that I had conceived the greatest banking institution in this Nation. There was no doubt in my mind of it, and I do not believe there was any doubt in the minds of any one associated with me. I talked over this project, not only with the National Bank of Com- merce, but with practically every banker in St. Louis. Then I went to Chicago and talked it over there. I also had many personal interviews with leading bankers from other cities pretty much all over the country. The features of the proposed bank were afterwards carefully discussed with representative bankers from Maine to California. The paying banks associated with the People's United States Bank, which were among the leading banks in America, made themselves fully cognizant of all the de- tails of our plans, because their connection was practically an endorse- ment of the plan to the public. Van Cleave of the Park-National Bank of New York wrote a letter stating that we had undoubtedly worked out a most wonderful proposition. Childberg, president of the Scandinavian- American National Bank of Seattle, Washington, came to St. Louis, and spent several days with me. He said, "That certificate of deposit looks good to me," and, when he went back to Seattle, he adopted it for his bank. I had a letter from Comptroller of the Currency Ridgley, inquiring about the plan, and in my reply I discussed with him very fully its different phases. After the bank was attacked, an inters'iew with him was pub- lished in the Eastern papers. He said he had gone all over the plan, and did not see anything the matter with it. The published statement was extremely favorable; though I did not have a personal interview with him aboiit the matter. There was never a feature of that bank from its be- ginning to the day of its death, which was not carefully taken up and exhaustively gone into with the best advisers that I could find. I made only one mistake. I did not advise with the postoffice inspectors. At the outset of this design I informed myself quite thoroughly about the history of postal banks. I read the official reports of our own Gov- ernment officials in regard to them. I read quite thoroughly of the Postal Bank of England, and of the Mont de Piete of France, a great govern- ment institution, one of the princijial features of which was embodied in our bank. I also went over, quite thoroughly, the history of the efforts to have a postal bank in this country. I first took up the question of the title of the People's United States Bank with the Postoffice Department, about January, 1904. I mailed them literature taking the name first of the Postal Bank. They objected that such a title might be misunderstood. Senator Beveridge took up the name of the People's Bank with them for us, but the use of the word "Postal" or "Mail" was found to be objectionable to the Department. I finally THE DREYFUS CASE OF AMERICA 809 adopted the title of the People's United States Bank with their approval and consent. The first advantage of a postal banlc, as distinguished from a bank of ordinary character, was to bring into circulation a class of deposits which was not in circulation, and could not be reached in any other way. I had seen in my own business the gradual retirement to rural districts of the actual currency of the Nation. The farmer had become more prosperous for the previous ten years, and had taken out of circulation more money each year. The average man in the rural districts had no banking facili- ties, and when he received a few hundred dollars, it was hoarded and with- drawn from circulation. My investigation showed me that the per capita of national wealth was twenty-four or twenty-five dollars. The great cor- porations were doubling and quadruplicating their capitalization, and if the currency could not be kept in circulation there must come a time when there would not be sufficient circulating medium to enable them to cash up. The purpose of this bank was to bring into circulation this hidden money. The rural free delivery had developed in the previous ten years from nothing, until it served some forty million people. All this made pos- sible the operation of such a bank. A NATIONAL CLEAEINO HOUSE. Another function of our mail bank was to eliminate the item of ex- change on small remittances. Most of the machinery with which we do business nowadays, when you get right down to it, is inherited, more or less modified, from three to ten previous generations. Exchange is largely a relic from the old days when they transmitted the actual currency. I remember when I used to have to pay exchange right in St. Louis on my check in that town if it went to another bank there. The theory of that was that they really had to transmit the currency. After awhile they woke up and organized a clearing house, so that the bankers of St. Louis today, instead of carting around a wagonload of money every day to clear their exchanges, simply send a representative from each bank to meet together and strike a balance. They do not move the currency at all, and the same thing is done by means of a clearing house in all large cities. Only the differences are transmitted, which may not be ten per cent. The exchange charge, however, has been kept on in the country. Over a billion dollars, according to the best statistics I have been able to find, passes annually through the United States mails. About four hundred million dollars each is remitted in express orders, postoffice orders, and currency, on aU of which exchange is charged. Almost every penny of that tremendous tribute is paid by the sender of small remittances. There is a charge for the express order or the postoffice money order, and if a bank check Is used, there is exchange on that. The result of that is that the man in the country desiring to remit, either buys a money order, or uses a small check and has to pay a premium on that. One of the principal features of the ]X)stal bank was simply doing for the United States what is thus being done in every city of the United States. The thought struck me that the problem could be solved for the whole United States in exactly the same way that the banks had solved it in the city. I proposed by means of one central bank for these small remit- tances to strike a balance for the population of the United States, whether it was from East, West, North or South, anj-where the population existed. I simply constituted the People's United States Bank the clearing Douse. We divided the country into five territories. The East, the Central North- west, the Southwest, and the extreme West, with New York, Chicago, New Orleans and San Francisco as the paying centres, respectively, and, of course, the People's United States Bank as paying centre for the Middle West, at St. Louis. We established in each of those five districts a paying bank upon which our certified checks were drawn. In New York, the Park- National Bank; in Chicago, the First National; in San Francisco, the Bank 310 THE SIEGE OF UNIVERSITY CITY of California; in New Orleans, the Hibernian Trust Company, and in St. Louis, our bank- Afterwards, we made the Scandinavian-American Bank of Seattle one of our paying banics, because I made connections all the way up to Nome, Alaska, We sent dog-sled loads of these certified checks up to the miners in Alaska, because they did not want to carry tlieir gold dust anund. Those money orders froze lip and stayed there all winter. Mianlime, the money was earning inloiTst. That was the theory. We carried a balance at each of the paying banks to cover our certified checks, they agreeing to pay us two per cent interest. The cheeks being drawn on any one of those five I)anks in the five great money centres, were exchanged at those points without charge. I figured that less than ten per cent of actual currency would carry the business, and that I could draw interest on ninety per cent of that money all the time, because that proportion of the checks would be in transit. That was practically what happened. There might be fifty million dollars' worth of these checks out- standing, but there would be fifty million dollars cash deposited to the credit of the People's United States Bank in these paying and issuing banks, or the checks could not be outstanding. Meantime, my bank would be drawing two per cent interest on the daily balances. Suppose, by any misadventure, our paying balance in New York was but a hundred thousand dollars, and all the checks in the United States happened to concentrate on New York, and call for two hundred thousand from the New York bank. After paying to the limit of their balance they could bundle up the rest, look over the exchange rates and transmit them to the other paying banks wherever they could make a little money by ex- change. That took care of overdrafts on the paying bank. If we overdrew our balance in the New York bank, because of an excessive number of checks coming there at any time, they could forward the excess to the Chicago bank as Chicago exchange, or could use them as exchange on San Francisco, or New Orleans. Tlie checks were sometimes not charged to us in the actual operation of the bank for ten days or two weeks after they reached our paying banks. They often went clear across the conti- nent. Meantime, we were drawing interest. The longer tliey stayed out, the better. THE CERTIFIED CHECK SYSTEM. When I first thought of the certified check system, I worked out a much more complicated check than was afterwards used. This check was de- signed, if possible, to prevent anyone else from using that particular form. On taking up the matter of obtaining a patent for it, I caused a prelim- inary search to be made, and found there were a dozen or more patents practically knocking out the form I had first intended to adopt. So that proposition was abandoned, and never mentioned again in any of our lit- erature, until it was brought up as one of the charges in the indictment against me alleging that as a part of a scheme to defraud. The check that was finally worked out was very simple. It did not need any red tape like tlie registration of money orders. I just had a slip made which read: "People's United States Bank. Not good over ten dol- lars. Payable First National Bank, Chicago; Park-National Bank, New York; Hibernian Trust Company, New Orleans; Bank of California, San Francisco; Scandinavian-American Bank, Seattle, Washington," or our- selves. Then there was a blank left for the name of the payee, and the amount. AVhen those orders came into St. Louis they cleared at the National Bank of Commerce. I did not even take the trouble to go into the clear- ing-house with them. I did not have to. Our check was good anywhere in the United States, because drawn upon the exchange centres. If used in the South it would go to New Orleans, and be paid without exchange charges. If remitted into the East it would be cleared at any New York bank without charge, and so on. I had established a universal exchange. Interior Woman's Maga^Ave Building ^Balcony, Me::~anine Aoor -Entrance and grand stairway, main floor ^Exterior of the conservatory of the Lczvis Publishing Company as seen by visitors diiniig the U orliJs Fair ^Interior of same sliozi-iiig culraucc to niagacine f^rcss rooms THE DREYFUS CASE OF AMERICA 318 I had reduced the money-order system practically to the cost of printing the checks, sending them out, and counting them when they came in. All the machinery of correspondence and transfer was handled by the other banks. In addition to that, they paid us interest on the money. We were also arranging with Canadian banks to extend the system to Canada, and with foreign banks to extend the system throughout Europe. Ultimately, this certified check system would have been a universal international sys- tem. The American Bankers' Association adopted this identical system about two years after the destruction of the People's United States Bank, copying it bodily from our checks, and have widely advertised it as their so-called Traveler's Checks. This particular check was what we called the direct system. Farmers, merchants, and others, in rural districts and towns of a few thousand in- habitants, who had no banking facilities, might have their currency de- stroyed by fire or lose their money, or be robbed. To prevent all this they could send us, say, two thousand dollars in currency, and receive in return two hundred checks, each good for not more than ten dollars. We did not seek large mercantile remittances. AVe catered to the small remittances, because that is where the difficulty is. These checks were not good until filled in and endorsed by the owner. He thus had his money in such shape that he could remit to any part of America, without exchange charges, to pay his bills. Or, he could supply his neighbors with money orders. If the check was burned up or otherwise destroyed or lost, he would not lose his money. We simply required him to give a bond for a reasonable time. By filling in the amount he wanted it payable for, and endorsing it on the back, he had a money order good anywhere in the United States, with- out exchange charges. When he used one of these checks for six dollars and a half, and that check came in and was charged to his account, there would be a balance in his favor of three dollars and a half, becuse we had certified to a check for ten dollars. When the total credits of that kind amounted to ten dollars, he would be entitled to another check. He could use all the checks the first month, or not use them for one or two years. It was immaterial to us. When they all came in, he was entitled to ad- ditional checks to the amount of his balance, whatever it might be. So that a storekeeper who, we will say, lived in a small village, sent in two thousand dollars, and received our checks, had his money in such form that he could use it anywhere in the United States for remittances or to supply his neighbors with money orders. He could use it locally by mak- ing it payable to bearer or cash. If it was burned or lost, he could have replaced it. If stolen, it would be a difficult thing for anybody to use. It was not like currency. It required endorsement, and carried the pen- alties of forgery. Now, that is what we called the direct system. The certified check system directly affected the express companies. It knocked out the express money order; for it earned a profit for the Peo- ple's Bank without any charge for the remittance. It was also in com- petition with the postoffice money orders, along with the express and tele- graph money orders, and bank drafts. That brings up the other branch of that same remittance system: the establishing of agency banks through- out the United States wherever there were banks in the small towns and villages. I believe at that time there were banks in some fourteen thousand towns and cities in the United States, and some sixty thousand towns and villages had no banking facilities at all. We gave the small banks the agency for our certified check system without charge. That gave them a great advantage over the express office, because these banks hung up our sign "Money Orders Without Charge Here;" whereas, the express company sign meant money orders at so much apiece. That gave the bank a legitimate I)usiness advantage. We pointed out that the people who bought express money orders became accustomed to go into the express company's ofiice to do business, and that the express 314 THE SIEGE OF UNIVERSITY CITY company Imtnediately sent the money out of town. But when express orders came into town they were cashed at the bank and the express of- fice was thus practically carrying on its whole money order business on the bank's money. I do not believe anybody has ever seen a very close calculation of the total business of the express companies. I do not believe the inside of it has ever been told. But, as nearly as I can figure it out, the express com- panies have approximately four hundred millions of the people's money all the time, on their money order system. They are charging exchange, and the banks are cashing the money orders. They are also charging for the operation of remitting. Then they are making the interest on the money. That has been noticeable in the twenty-five million dollar divi- dends which have been declared once in a while; whereas, there has been a deficit in the postoiiice. We showed the agency banks that the sale of our money orders would bring people into their bank, and make them accustomed to doing busi- ness there, instead of out of town through the express companies, and that the first thing they knew those people would go back and dig up the wad of savings that they had hidden out in tlie woodshed, or in an old kettle somewhere, and place it in that bank. The privilege of selling those money orders would have been worth something, but the banks did not have to pay anything for it. They would simply sell those checks in any desired amount, fill them up with the name and amount, detach and stamp them with the bank's counter-signature, and hand them over in exchange for the money. The agency bank agreed to accept the money on deposit to our credit at three per cent interest. They further agreed that they would remit any part of our balance to the paying bank in their section without charge on demand. Meantime, they had the use of that money, whereas the ex- press companies would have sent it right out of town the same day. The agency banks had the use of our balance, and could build it up as big as they wanted to at three per cent, thus keeping the money in their own town, and getting these people to do business with them. The sole con- ditions were that they must pay three per cent, and transfer the money without charge to the exciiange bank on demand. That was part of the contract. Furthermore, they had to report to us weekly on tliose checks. T)iey could not deceive us, because, when the checks came back from the paying banks, the dates and the amounts were there to show. They had to credit us with the deposit the time they received it, because the check bore that date. It was ordinaiy and simple as it could be. We merely supplied them with a new book of checks whenever the old book had been used up, and they returned to us the stubs to be checked up against the returned checks. The persons who got checks on the local bank did not have to tell the banker their business, or what they were going to use the checks for, as they would have had to do with the money order. The checks were made out to their order, and they could keep the money in that shape if they pleased, and remit it. It made a universal system of remittance through- out the United States. The small banlis, from Maine to California, grasped that very quickly, and we received a large number of commendatory letters on that system. It was a perfect system of equalization, because we really never had to transmit the currency. We struck a balance between the East, West, North and South. It was only the difference that had to be transmitted. In case of overdraft, a New York bank would issue checks on the Chicago bank, or the Chicago bank would send the checks on to San Francisco. The check moved, but the money did not move. The source of profit to this bank grew out of the fact that on a fair average eighty per cent of the money would always be drawing interest. THE DREYFUS CASE OF AMERICA 315 On a million dollars of these checks outstanding, at least eight hundred thousand dollars would be drawing interest, either at three per cent at the issuing banks, or two per cent at the paying banks. On a sale of one hundred millions of these checks, our interest would average, say, two and a half per cent, on eighty millions. The profit tq the bank would have been ahnost as much as on the capital of the bank, and would have come from the interest on money, while the check was in transit without charge to the remitter. This plan was in operation all over the United States at the time the bank was struck down. Many certified checks were outstanding. That business was accumulating very rapidly. The fact that it was profitable is shown, because it has been taken up all over the United States by other banks. The People's United States Bank put the actual currency into circulation because a person buying one of our checks would receive a certificate for the currency. His deposit was put in the paying bank and thus got into circulation. PBOriT-SHARINO DEPOSIT STSTEM. Another feature of the bank was our profit-sharing certificates of de- posit. We did not want, and would not take, an ordinary mercantile check- ing account. This bank was designed to supplement, and not to compete with, the ordinary bank. The only two classes of deposits that we had were the certified check, and the profit-sharing certificate. In our prospectus "Banking by Mail," we proposed to buy bond issues, and resell them to our numerous clientele aU over the country; but on advising with bankers, particularly Mr. Perry Jay of the Old Colony Trust Company, we concluded that we could not hope to do that kind of business successfully. We, th^!refore, changed to the certificate of deposit plan by which the People's United States Bank would purchase bonds and retain them, but would issue ag.-iinst thejn certificates of deposit to the parties desiring to invest their savings. Hence, the People's United States Bank never had but one thing to sell other than its certified checks, and that was this certificate of dt'ijosit backed by its entire assets, including its capital. That would enable us to purchase large bond issues, because the certificates of deposit would run from one to ten years. With its sav- ings deposits tied up on such long terms this bank would be in a position to buy bond issues. On the other hand, if a bond issue for any reason was not successful, and the very best bankers in the world sometimes get stuck on bonds, the loss would fall on the bank and the savings depositor would not lose one dollar until the entire capital of the bank was wiped out. Those certificates of deposit, instead of bearing a stated rate of interest, participated pro rata in the profits. I believed that, as the depository of enormous cash deposits tied up on long time certificates of deposit with- out any guaranteed rate of interest, when the day of reckoning came, our bank could buy and sell all the rest of them put together. It had the money without any guaranteed rate of interest and had it for long periods of time. The average period of time for which these certificates of deposit were taken out was in excess of seven years. Jfi practice, we would not decline to cash a certificate of deposit if a customer needed the money, but in case of a financial panic the bank would have had that right. I figured that a great panic would be the very time in which the bank would make its money. Other banks would be drained of every dollar, but here was a bank with deposits tied up for a fixed period of time that could come to the assistance of others. We could have come to the assistance of our paying and agency banks by letting our funds remain with them, instead of adding to their distress by withdrawing our funds and, nat- urally, we might have received a little higher rate of interest and a few perquisites on the side. The certificate of deposits shared in the earnings of the bank. A plan 316 THE SIEGE OF UNIVERSITY CITY was set forth on its face whereby, if the total deposits, capital and sur- plus were added at the end of the fiscal year, after setting aside a reserve for sinking fund and for taxes, the net earnings were pro ■ rated on the sum total. That would determine the rate of interest which the certificate of deposit would get. That v/as the only kind of deposit that was to get any interest. The remittance deposits and the checking deposits drew no interest, even if they lay there for years. We will say, just for iilustra- tion, that the capital of tlie bank was five million dollars and the surplus three million, and that the certificates of deposit were ten million dollars; but that the certified check system or money order business, which was designed to he the great business of the bank, was twenty millions. That would make thirty-eight millions total capital and deposits of all kinds and surplus. Now, we will say, just for illustration, that it earned ten per cent net, which would be three million, eight hundred thousand dollars. It would look at first as though the stock and surplus would not get a fair deal in this, but you will see how it does. If the earnings were ten per cent net, that percentage on the certificates of deposit would be one mil- lion dollars, or nearly fifty per cent of the capital and surplus as their profits. Yet the depositor would have received a full and fair percentage of the earnings of the bank, viz., the percentage which his deposit bore to the entire amount earned. These profit-sharing certificates of deposit were issued on all savings accounts as soon as they amounted to fifty dollars. They bore on the re- verse side a trust clause so worded as to constitute a trusteeship. The owner could fill in the name of any person he chose and at any time he could cross that name out and fill in another on the line below and sign it. The death of the owner immediately vested the ownership of that certificate of deposit in the last person named in the trust agree- ment. The purpose of this was to enable the beneficiary to collect the money promptly. Ordinarily, if a person who was saving for a member of his family died suddenly, leaving a sum of two hundred or three hundred dollars saved up in a certificate of deposit, it might necessitate the appointment of an executor and other legal proceedings which would eat up a considerable amount of the savings. Furthermore, there would probably be a delay of perhaps months in getting the deposit. On this plan the death of the owner of the certificate immediately vested the ownership in the person last named. That plan has since been adopted by many savings banks. Another feature of this bank in connection with savings deposits was the sending to the savings depositors throughout the United States, par- ticularly in the small towns, a pressed steel bank made in the form of the proposed bank building. The depositor, however, did not get the key to this savings bank. The pass keys to all the hanks in any neighborhood were sent to the local express agent or the local postmaster. AVhenever the bank was fuU, the owner could take it to whoever had the key, and he would unlock the bank and issue a money order for its contents, payable to the People's United States Bank. That scheme has also been adopted and is in use in certain savings banks today. I put it into use throughout the United States in connection with the express companies and postoffices. The money could not be taken out of that bank except by our agent, who issued a money order to us for it, his consideration being the profit on the money order. SAFETY DEPOSIT PLANTS. Another element of the bank was the safety deposit system. The great buUi of these people through the United States had no safe or safety deposit. I worked out a system whereby our customers could rent a safety deposit box of us for a year. The bank sent out a heavy manila envelope containing an extra envelope inside. The customer sealed up in that his insurance papers, mortgages, notes and other valuables and "^^H r P^ 1 ^?r- "^^budE^jTJyjf-^ 1 llh Ml ^^^^lj^jj^^3^ WttKr ■ R 1 ■^ 1 ^ks^m.... 1 1 -> ''''^':^^rt^j l^i/l Jl I^^^Fh ' 4 U — -5 ^ inii^^. Lewis Publishing Coinl'aiiy, Magazine Press Building ^Artists' studio ^PJiotograp-hic studio 1 ::;|p^ Us ' ■ * B 11 ■• fhliili:':.^.^-:-;: _:;':"|fe;:; WBBJ^^^^m ■W ^^ ;^ '%w5l>' ..y^ fiv ^HUB ""•"■^MB ^^pBH^g Wr^ Bi^^"' lOffitv o/^ Col J. McCarthy, Advertising Manager. Letvis Publishing Coml^any, ]\Ie3 zanmc floor, IV omen's Magazitie Building "^Oflicc of accounting department, ground floor THE DREYFUS CASE OF AMERICA 319 sent it by registered mail to the bank. The registry receipt of the United States postoffice returned was the customer's receipt for it. The envelopes were filed under the number of the registry receipt issued by the Govern- ment itself. A customer wanting to get the contents of an envelope would send in his registry receipt and we would return the envelopes by registered mail, deliverable only to the addressee. The bank never opened the envelopes. The customer opened them, took out whatever he wanted to examine, sealed up the remaining papers in the inner envelope and returned it to the bank. Under that plan an ordinary safety deposit box which would earn under the usual plan not over two to five dollars, would earn us twenty to thirty dollars a year, because it would hold ten to fifteen of these envelopes. COLLATERAL LOAN FEATURE. Then came the collateral loan feature. I proposed and carried out a collateral loan system parallel to that of the Mont de Pi6te of France. Any customer of the bank who was in distress could send to the bank by registered mail either bullion, valuables, jewelry, heirlooms, or any- thing of that sort. They would be appraised for their bullion value. AVe had special appraisers in the city of St. Louis, W. M. Gill and Mer- mod-Jaccard, who agreed to take for cash these articles at their ap- praisal. The bank then loaned sixty per cent or eighty per cent of their appraised value for from one to two years' time at eight per cent. When valuables on which a loan was asked of, say, one hundred dollars, had been received and appraised, and after the loan was made, we issued a draft for the one hundred dollars attached to a note citing the collat- eral. The customer had to sign the note in order to cash the draft. When that came back through the clearance it was filed with the col- lateral and completed the record. We agreed that if the interest was not paid at the end of the two years we would carry it at least a year longer before selling. We allowed a sufiicient margin in making the appraisal to cover any such interest. The bank loaned its savings funds on this plan on gold bullion at a safe percentage of its own appraisal, at eight per cent per annum interest. It gave to the people through the entire United States the same accommodation as the people of France have in the Mont de Pi6te, where the loans amount, I believe, to seven hundred million dollars. We thought that any one having personal collateral and desiring a small loan was just as much entitled to it as though it was a brown stone house, and instead of having to go to a pawnshop or a local note shark to make that loan, he could transmit that collateral to our bank by registered mail or express. At the end of two years, if the loan was not paid, this collateral belonged to the bank, and could be melted up as bullion or sold at auction, as is done in the bank referred to in France. Our security was the best and the rate of interest very high. But it was an infinitesimal part of what that person would have had to pay in a pawnshop. This was not restricted at all. Anybody could borrow of this bank in sums from fifty dollars up, and this plan, although but a short time in operation, was becoming rapidly successful. Small loans were being applied for from various parts of the United States. I will state frankly, that that particular feature of the bank was incorporated into it, because of the fact that early in the building up of the Woman's Magazine and the Winner Magazine I reached a point where I had exhausted my available cash resources; so I took Mrs. Lewis's jewels, and what valuables of that sort I had, and went down to the corner of Eighth and Pine streets, in St. Louis, and stood on the opposite corner there for perhaps half an hour looking up and down the street to see if anybody I knew was in sight. Then I butted into the pawnshop there and borrowed the necessary money on them. I do not believe I will ever forget that sensation, I was just as much entitled to borrow 320 THE SIEGE OF UNIVERSITY CITY that money from any bank in America as I was entitled to borrow hun- dreds of thousands from those same banks on much less secure collateral later. So I determined, when I organized this bank, which Was primarily designed to be a bank of and for the people, exactly suited in its features to the popular needs and requirements, that these features should h6 incorporated in it, and they were. The Provident Loan Company of New York is established along the same lines. That feature gave this bank an enormous outlet for its money. It was very widely availed of all over the United States. In fact, it grew to be an immense department. We had a vault that we filled with gold, jewels, heirlooms, diamonds, etc., on which we had loaned a percentage of the actual appraisal, as made for us by assayers and experts. Those loans were secured practically by gold bullion at eight per cent interest per annum — absolutely secured. I was somewhat criticized by some of the bankers in St. Louis for that feature. My reply to that criticism was that if they would lay out on a table the collateral behind their loans in their banks, I would lay this gold bullion collateral alongside of it, and let anybody judge as to which was the most secure. Such in part were Lewis' views as to the conditions which in his opinion seemed to call for a popular mail banking institution, and such were his aims and purposes in that behalf. This chapter may be properly brought to a close by one of his characteristic utter- ances in the Woman's Magazine, touching the motives which actuated him in embarking on this undertaking. THE QUESTION OP MOTIVE. Was Lewis sincere in the belief that he could accomplish his de- sign.'' Did he actually suppose that he could fulfill the expectations rising, logically, from his promotion literature? Was the project feasible? Could the problem have been worked out in due course to the mutual satisfaction of Lewis and those who became asso- ciated with him in this undertaking? All of these are questions, the answer to which must be deduced not only from due considera- tion of the nature of the scheme itself, but also by taking into account the history of all his manifold activities. These questions do not admit of off-hand answers. Whoever seeks to conscientiously arrive at a true insight must proceed most carefully. He must at all times keep himself on guard lest from any quarter some precon- ception, some prejudice or some bias should enter in. The following chapter will take up the actual history of the People's Bank chiefly upon the basis of its official minutes. Then the narrative plunges directly into the storm-centre of the ensuing controversy. TThe fol- lowing is Lewis' version of his own motives: I have been asked many times why I am founding the People's Bank. I will answer this way: I have the largest publication in the world. I have the finest printing plant in the world. I have an annual income of a quarter of a million dollars. I have the dearest wife, the most beau- tiful home, the best of friends, the most noble parents any man ever had. I have worked and fought for it all. I cannot take any of it with me when I die. I can only eat one meal at a time. One overcoat is all I can wear if I had fifty million dollars. I have aU a man could reason- ably want. But to me the greatest happiness on earth is working out the details of a great undertaking, and the bank is certainly that. THE DREYFUS CASE OF AMERICA 321 I would rather sit here night after night and read the letters I receive, than sail the southern seas in the biggest yacht in the world. Every man must get his own happiness from inside himself. He can only get it in one way, and that is by doing what he thinlcs and Icnows to be right. Every one of us has been put here for a purpose. He must find that pur- pose, and on the way he must use his opportunities to do good and develop his own character and help others. On this he will be judged. Exceptional opportunities give rise to exceptional deeds. I have been given such opportunities in being able not only to plan, but to carry into practice my plans, for a great publication, for a great publishing plant, for a beautiful city. Great blessings have been showered upon me. I have the love, trust and confidence of almost a whole nation of men and women. Now I have the opportunity to do something for them in the establishment of the People's Bank that shall afford comfort, conven- ience and safety to hundreds of thousands of homes. I have enough money and to spare. Shall I turn and gorge myself with physical pleasures and live the rest of my life regretting the results? Or shall I do this thing that my conscience tells me has been placed in my hands to do for my fellow men and women? Shall I take my quarter of a million dollars a year and become a lazy, useless beast, a curse to myself and to others? Or shall I go on to still greater achievements and gain the love, respect and confidence of two million families, by giving them greater facilities? I shall not suffer in so doing. This bank associated with my beloved magazine will so strengthen it that its income from advertising will double. Shall I use my money on myself alone, lose the respect and good wishes of my readers, and thus destroy even my magazine? Or, shall I make both myself and them more powerful and profitable by using this increased income to give better and better things? Shall I hold and keep the respect of my five hundred employees? Or shall I become a laughing stock to them all? In a word, shall I make and keep myself a man, clean and strong by the reflection of the good wishes, love and respect of my two million readers, or shall I be like a dog? Do you think that I woiild exchange the twenty thousand letters I have received in the past two weeks for twenty thousand silver dollars, that would not add a speck to my happiness and usefulness? What would you do if you were in my place? I tell you, I would rather be president of the People's Bank than President of the United States. CHAPTER XIV. THE POST-DISPATCH EXTRA. The Story of Curtis Betts — Get The Story — The Citation Is Received — Details of Report Asking Fraud Order — The Siege Begins — The P.-D. Follow-Up Campaign — -Swang- er's Famous Demands — Lewis' Call To Arms — The First War News — Alignment for Battle. To All Agents: This issue of the Post-Dispatch contains one of the most astounding news stories of the decade. The people directly interested in the PEOPLE'S BANK are not confined to St. Louis, but live in all parts of America. It is not improbable that many people in your own town have sent money to this in- stitution. There will consequently be a great demand for this issue of the Post-Dispatch which presents the great news story exclusively. The demand for today's paper will continue for some time after this date. Push your sales. St. Lotjia Post-Dispatch. On May 31, 1905, the above notice was printed bj' the St. Louis Post-Dispatch in the form of a hand bill and distributed widely to news agents throughout the Central West. In that issue the secret confidential Government report of the postoffice inspectors upon the People's United States Bank, recommending the issuance of a fraud order against Lewis and the bank, was published to the world. This is a mighty effect to be produced by the pen of a ready writer. This is a vast turmoil to be brought upon lawyers, judges, congressmen, senators, and the President himself, amid a whirl of popular indignation and fury. Yet, all this was set in motion by the tap-tap of a typewriter in the small hours of a May-day morn- ing. The great bank upon which Lewis and his friends had set their hearts and hopes was lightly sacrificed by a smart news-gath- ering reporter for the sake of a good story to be spread upon the pages of a sensation-loving newspaper; and thrown out by its newsies broadcast over the land. How was it that the Post-Dispatch reporter obtained access to the sacred report of the United States postoffice inspector? Was it by allowable keenness.'' Or, was it by unjustifiable trickery? Or, was it perhaps, by the dishonest connivance of a Government offi- cial, for some effect that he or his superiors wished to produce? These documents, the inspectors' reports on the good faith of pri- vate enterprises, are regularly regarded as inviolable. They are sometimes withheld even from Congress, upon the ground that they 322 THE DREYFUS CASE OF AMERICA 323 are privileged; that their disclosure would be contrary to public policy. The St. Louis inspectors in the examination soon afterwards demanded by Lewis, and directed by the chief inspector at Wash- ington, denied under oath all knowledge as to how this leak occurred. The inspector. Col. W. T. Sullivan, who was directly responsible for its wording and safe-keeping, was either away, or was excused, or evaded the questions under oath, but stated positively that he had no personal knowledge of how the copy of the report had been obtained. He has since died. Betts refused to answer all questions. He said the way he got that report was his business. Many were the guesses. But the incident was finally set down as one of the unsolved mysteries of journalism. Lewis' libel-suit against the Post-Dispatch closed the mouth of its employees. The secret was apparently destined to be kept forever. But Congress deemed otherwise. The United States House of Representatives' Committee on Expenditures in the Postoffice Depart- ment was in session on the morning of November 17, 1911, at the Hotel Jefferson, one of the largest and best hostelries in St. Louis. The Red Room on the first floor above the ground was crowded with witnesses, lawyers, spectators. The committee sat in solemn state around the long table, the chairman at the head. To the right, in the middle, Lewis leaned forward, expectant, or whispered to Gen- eral Madden on his left. An empty chair stood at the further end for witnesses still to be examined. Hon. William Ashbrook of Ohio, a man of noble presence, tall, erect, with large, clear face and oj'cn brow, rose slowly to his feet about ten a. m. and pro- nounced the name of the next witness; "Curtis Betts." A hush fell on the crowded courtroom. Silence was broken only by the stir caused by the entrance of the man whose hand had been more instrumental than any other in striking down the People's Bank from a brilliant anticipation and an almost accomplished hope, into absolute and apparently irretrievable ruin. The moment, then, when Betts ivas sworn with uplifted hand as a witness to tell the truth, the whole truth and nothing but the truth, was tense with dramatic interest. Was his six years' silence at last to be broken? Or, would he still refuse to testify, and thus compel a summons before the bar of the House of Representatives, or perhaps the exercise of punitive measures to bring forth his testimony? Would the committee decide to proceed to these lengths to get the truth, in the event of the witness's continued silence? THE STORY OP CURTIS BETTS. The momentary pause, when the witness, after having been sworn, settled himself back in his chair and made ready for the first in- quiry, was breathless with the anticipated interest. This, indeed, may yet stand out as among the deciding moments in the lives of men and nations, such as the confession of the writing of the infamous "Bordereau" by Esterhazy in the Dreyfus case, or the confession of forgery by Pigott in the Parnell affair. Almost as 324 THE SIEGE OF UNIVERSITY CITY great was it, in its way, as the moment in which Washington decided to fight, or Jefferson to frame his famous constitution. At the Hotel Jefferson, the Congress of the United States had determined to obtain the truth as between the postoffice and the People's Bank. A vital fact was in the brain of Curtis Betts; in his memory. It was on the tip of his tongue. Would it come forth? Would he disclose the real secret.'' On whom would he fix the blame? Slowly, yet fully, like the first clear streak of dawn, after a long dark night, the light of truth penetrated into the heart of this much vexed controversy, when, with every appearance of frankness and candor, Betts, in a clear, controlled voice told the following simple, yet amazing story. My name is Curtis A. Betts. I reside at Richmond, Missouri, where I am publisher of a newspaper. I was connected with the Post-Dispatch for a little over seven years, and was in its employ when the so-called exposures of the Lewis enterprises came out. I obtained the information, and wrote the article which was first published in the Post-Dispatch. A newspaper man never likes to tell how he secured information. But I will say that I obtained what I understood to be a copy of the postoffice inspectors' report. I based the article on that. I first saw the report in the hands of Inspector W. T. Sullivan. I had been working on him as well as other inspectors for several days to get a copy of that report. They had repeatedly refused to let me see it. I was doing everything in my power to get it. One day when I went into the office, I was told that Inspector-in-Charge Fulton was out of town. I then asked Inspector .Stice, as I had done before, to let me see the report. He refused. Inspector Sullivan was temporarily in charge. He was sitting in Fulton's office. I went in there and again asked him for a copy of the report. Again he told me he could not let me have it. I then said, "Fulton has gone to AVashington with the report, hasn't he?" Sullivan replied that he had. I said, "Well, I guess you have a copy of it here, haven't you?" He replied, "Yes." Then he pulled open a drawer of his desk and held up a document. He put it back in the drawer, which was closed about half way; and then said, "Excuse me, I have to go into the other room a moment." I did not think I was stealing the report when I took it out of the drawer, kept it a few hours and then returned it to the same place. I think I got that information in an entirely proper way. If I had not thought that Colonel Sullivan intended me to have it, by his actions and by everything that occurred there that day, I would not have taken it. It was my understanding that he left the room for that purpose. I could not con- strue it in any other way. My recollection is that it was not necessary to open the drawer. He had not closed it. He may have shoved the drawer up a little. But it was not anywhere near closed. I remember that. It was not necessary for me to touch the drawer to get out the report. This is the first time that I have disclosed the facts to anybody who was investigating this case. I have told one or two people. When the postoffice authorities inquired, I simply refused to talk. I had a number of conferences with Inspector Sullivan after that, but I never mentioned to him that I had got the report, nor did he ever ask the question. My understanding was that he knew I had taken it and kept it until the following morning, and that it was done with his knowledge and consent. My interpretation was that when Sullivan pulled it out and showed it to me, then put it in the drawer and said, "Excuse me, I have to go out of the room," his action was intended as sufficient notice. I think he did that deliberately, and left the room for no other purpose than to give me THE DREYFUS CASE OF AMERICA 325 that opportunity. I thought so at that time, and I think so today. I had told the inspectors frequently that, if I could get the report, nobody should ever know how I got it. .Sullivan afterwards cautioned me not to divulge the source of my information. I thanked him for giving me the opportunity to publish it, and he said in substance, "I used to be one of the boys myself. I am an old newspaper man. When I can help them, I am very glad to do it." I immediately took the report down to the Post-Dispatch office and made a copy of it. I think it was then about 2:30 in the afternoon. I worked at the typewriter until one or two o'clock in the morning. I took my copy to write my story, by clipping from it and pasting the clippings where I wanted them. The following morning, as soon as the inspectors' office was open, I went in and put the report back in the drawer. No one was present at the time. I then delivered my story to Mr. Bovard, the city editor. I told him it was a confidential secret report of the postoffice inspectors. My recollection is that it was so stated in the article. He knew I had been trying to get it for a long time. Here occurred this colloquy: Mr. Lewis: Aside from any news value, knowing that this was a secret and confidential report and had l)een obtained consequently in some dubious manner, in your judgment, was it his duty as a matter of honor to have directed you to return it where you got it without printing it? Mb. Betts: I don't know. Mr. Lewis: In other words, it was stolen goods? Mb. Betts: I want to make a statement to this committee. I was con- nected with the Post-Dispatch for a long time, and Mr. Lewis has pending against the Post-Dispatch a damage suit — Mr. Lewis: I am not going to use your evidence. Mr. Betts: For a large amount of money. Mr. McCot: Don't make any pledge about not using it, Mr. Lewis; you are entitled to it. Ma. Lewis: Then, if I am, I am going after it, gentlemen. "get the sioet." Mr. Betts then continued: About the only order there ever was in the Post-Dispatch office was "Get the story !" When I told Mr. Bovard that the postoffice inspectors were in- vestigating these enterprises, he said, "Get the story." I couldn't do that unless I got the report. That was what 1 was working for. I told him that if I could get a copy of the report that would be the whole story. All he said was, "Then get the story." My story was then set in type. The next day or so I read the proof. The article stood in type in the Post-Dispatch office for something over a week. It came out, finaJly, as a news article. My understanding of the rea- son it was not previously published is that the office did not consider it proper for publication as a news-item until some action had been taken at Washington. I was sent down to Washington and remained about a week in an effort to learn whether Lewis had been cited to show cause why a fraud order should not be issued. Mr. Fulton was there. My recollection is that I found him in the chief inspector's office. I asked if he could step back with me into the private room and talk with me a minute, and we went back. I said, "Mr. Fulton, I have seen a copy of the Lewis report. It is hard to find out anything. I want to know whether a citation has been issued." He replied, "I can't tell you. You know it would be suicidal for me to discuss it." I afterwards told him that we had a copy of the report, and were going to print it, but had not yet done so. Me. Lewis: Did Mr. Fulton, as the inspector-in-charge, knowing that you had a full copy of this report, and that it was a secret report, make 326 THE SIEGE OF UNIVERSITY CITY any effort to prevent its publication by the Post-Dispatch, to your knowl- edge? Mr. Betts: As far as I know, he did not. I don't recall. I don't know of anything that he did. Mr. Lev/is: Mr. Fulton was inspector-in-charge. Knowing that this was a secret report, and having been informed by you that you had obtained it, dnd consequently knowing that you must have obtained it in some round- about way — I don't know whether I am making it too broad — knowing, as you would know, being a man of intelligence, the terribly destructive power that such a report in the hands of a newspaper would have against perhaps an innocent party, if it is published, and knowing the whole menace and threat of that thing, and being informed three days before it came out that you had it and that it was in the hands of the Post-Dispatch — yet, as far as you know, he made no effort whatsoever to prevent the Post-Dispatch from publishing it? Mn. Betts: I don't know of any. Mr. Lewis: You never heard of any? Mr. Betts: No. My recollection is that I got back to St. Louis on a Sunday evening. On Monday, I told them at the office I was satisfied that a citation had been issued, but had not absolutely heard of it. I told them Fulton had returned, and I did not think he would come back unless a citation had been issued. I said that if I was in their place I would go ahead and print the story. It was printed on Wednesday, three days after I got back from Washing- ton. The citation liad been issued at that time, but I didn't know it. I supposed that they were going on my judgment, but I had no knowledge at all. The article came out as a special extra. As soon as it was on the street I was given a copy of the paper and told to go out and interview Lewis and see if he would make any statement. I did so, and was sitting in Lewis' office when Postmaster Wyman's secretary came in with the citation and gave it to Lewis. After that I worked on the story continuously, but only wrote parts of it. There was a great deal printed. There were several of the Post-Dispatcli men busy on the case. Let us now see what was this story, based upon a secret report obtained, conveyed, filched, purloined, borrowed to replace, stolen for the time, thieved, provided by connivance — whatever phrase one uses cannot be made too strong. Did Betts steal the report against the will of the inspector? Did Sullivan give the reporter his chance to take the paper out of laxity and by way of simple good fellowship ? Or, as the local rumor runs, was this part of a plan of the postoffice inspectors at St. Louis to ensure that Wash- ington should obey their desires, and finish the job of smashing Lewis ? What shall be said as to the nature of the action of taking this report for publication. Was such a reporter's trick allowable? Has a newspaper editor the right to get confidential information in any way he can, and publish it unmindful of consequences? May a Government inspector use his own discretion as to when he shall allow a newspaper to take or get a copy of his report. Is it a repu- table tiling to accept and print such a report, on the part of such a newspaper as the Post-Dispatch, which, by its considerable circula- tion, may very well be thought of as representing the opinions of the people of St. Louis? It might be thought that such a trifling affair as taking a document out of an inspector's drawer, reading Equipment of She wagaciuc plant of the Lczvis Publishing Company, Magazine Press Building ^Maga.zinc composing room -Engraving department ^Elcctrotyping department p.ijuif'iiicul of I he LcTvis Pithlishiiii:: C('jii/>a?i_v, vwiiaziuc f'laut. Magacinc Press Building ^Battery of Dexter Foldiu-^ Mnehiins -Feflery cf Kidder Rotary Printing Presses THE DREYFUS CASE OF AMERICA 329 it, copying it, and replacing it next morning, was entirely justi- fiable under the general order "Get the Story." It might be thought that an inspector is not too careless when he leaves confi- dential reports in open drawers for friendly reporters to take out. It might be further thought that the publication, under such circum- stances, of a story that would discredit a man's reputation, destroy his business and eventually involve losses running into the millions of dollars, was entirely allowable on the part of such an editor, reporter, inspector, and their superiors, or whoever was responsible for the issuance of the secret report. But what do the members of Congress, who are accustomed to deal with matters of confidential nature, and with reporters who seek information, think of such an action? Betts, asked if he did not know that the publication of his story would bring disaster upon the bank, replied that neither he nor the managing editor gave that question any consideration. Congressman Alexander then uttered these words which would seem caustic enough to bite through even the callous hide of yellow journalism and burn down deeply enough to reach the editorial conscience underneath. "If the Washington correspondents of newspapers used such methods," said he, "their necks would be broken, and they would be thrown bodily from the Capitol Building." THE CITATION IS RECEIVED. What did this editor and reporter next do? Having set fire to a man's house, they went out to ask him how he liked it. Betts testifies that as soon as the Post-Dispatch article was on the street, his editor handed him a copy and instructed him to go out to University City to interview Lewis, and get his story, presumably for the later evening issue. Betts states, dramatically enough, that the citation (to appear at a future hearing), which had been sent on from Washington, was actually delivered into Lewis' hands by the messenger of the St. Louis postmaster, while he was present in Lewis' office. The news that the citation was issued thus became public and flew all over the country. Mark, not the news of a fraud order, but only of a citation to appear to show good cause why such an order should not be issued. But people did not dis- tinguish between them. Citation, fraud order; the two words pro- duce much the same effect on the common mind, though there is all the difference in the world between investigating a man and pub- licly stigmatizing him as a fraud. The fact, however, that a cita- tion had been issued was now made known by Betts. It was men- tioned in the St. Louis papers of June 1, 1905. It was public property. It was telegraphed all over the country, "Citation issued to Lewis to appear at Washington." The combined effect of all this publicity was instantaneous. Whoever it was that desired to force the issue certainly succeeded. For the whole superstructure of modern business rests upon a basis of confidence. When confidence is lost, all is lost. The reputation 330 THE SIEGE OF UNIVERSITY CITY of a bankj and all banking credit either of men or of corporations is most sensitive. One breath of scandal is as fatal to credit as the first chilling frosts of autumn are to grass and flowers. The credit which Lewis had built up, by incredible exertion, careful experiment and sagacious forethought, within the preceding few years to a total over a million dollars, disappeared, like the wonder- ful palace of Aladdin, in a single night. If his loans had not been consolidated in the People's Bank, they would have been called in, and he helpless. All negotiations connected with his various pro- jects were abruptly broken off. Fair weather friends deserted him. Even those who were most loyal and confident of his honest intent and personal integrity, found it expedient to dissemble and to make their appointments so as to see him at his home after business hours. DETAILS OF REPORT ASKING FRAUD ORDER. The reader of this story of the Siege is now in a position, just as were the people of St. Louis in 1905, to realize to the full the exact significance and probable actual effect of this celebrated "Extra." The charges against Lewis, upon which the fraud order was afterwards issued, have nowhere been set forth more clearly or in briefer compass than when they were first published to the world by Betts when he was told to "get the story." The main part of this article is given below. It was taken from a copy of the Post-Dispatch of that date, now yellowing with years, but not half so yellow as the original, jaundiced with sensationalism, with envy, with greed for gain, and with fear of an ambitious and powerful rival. This article was the basis of the libel suit brought by Lewis against the Post-Dispatch for damages to the extent of $750,000. This suit was held up three years, in the hands of Judge Smith McPherson (of whom more hereafter) on a question of jurisdiction. On the very eve of the Ashbrook Congressional in- quiry it was remanded for trial in the State Courts of Missouri. Betts was not examined at this trial. The management of the Post-Dispatch was evidently fearful of the effect of his story upon the jury. The court instructed the jury that a newspaper has a right to print the news regardless of its effects. The jury there- upon found in favor of the defendant newspaper. We will now introduce, in large part, the story itself, so that the reader may judge for himself as to its character and the propriety of its publi- cation. A reproduction of pages one and four of this issue of the Post- Dispatch appears elsewhere in this book, reduced in size, and on this the main headings can be deciphered. The principal article, save for unnecessary details and repetitions omitted, is as follows: Detaiis of Report Asking Fraud Order. Br Curtis A. Betts, A Staff Correspondent of the Post-Dispatch. Washington, May 31.— Assistant Attorney-General Goodwin has under consideration a voluminous report from the Postoffice Department, which THE DREYFUS CASE OE AMERICA 381 recommends that a fraud order be issued against the People's United States Bank of St. Louis, prohibiting it from using the mails. The bank was organized by Edward G. Lewis, who is its president, and who is also presi- dent of the Woman's Magazine of St. Louis. No action has yet been taken by the attorney-general's olfice. The report was received from Chief Post- ofBce Inspector W. J. Vickery, to whom it was sent by Inspectors Fulton, Sullivan and Stice of St. Louis, the inspectors who made the investigation of the bank. The report also states that the case will be laid before United States District Attorney Dyer at St. Louis for presentation to the Federal Grand Jury. The inspectors say in their reports that some of the other companies or- ganized by Lewis were in debt; hence, the necessity of organizing a bank, in order to have ready cash from which to supply the needs of these com- panies. The bank has been under investigation by R. M. Fulton, post- oifice inspector-in-charge at St. Louis and Inspectors W. T. Sullivan and J. L. Stice since March 1. While this investigation has not yet been finally closed, the inspectors have submitted to the assistant attorney-general for the Postoffice Department here a report, on which they ask that Lewis be cited to appear and show cause why a fraud order should not be issued against him. As reasons for the issuance of a fraud order, the inspectors allege that Lewis "obtained money and subscriptions for stock in the bank by exag- geration and misrepresentation of the security, safety and profits to accrue to the subscribers of stock, promising to put in his own funds, dollar for dollar for every subscriber, and then organized the bank so that Edward G. Lewis could and would control it without the voice of the stockholders, and use the funds subscribed, or a large portion of them, for his own purposes and benefits." It is alleged that Lewis drew salary from the bank as its president from July, 1904, while the bank was not legally in existence, until No- vember 14, 1904, and that he had no right to draw salary until that time. That Lewis' representations that the capital stock of the bank would be worth several times par the day the bank opened were untrue. That it is not true that the profits of this bank are so much greater and the expense of operating so much less than other banks, as Lewis repre- sented. That Lewis represented that the profits from a certain certified check system alone would amount to nearly a quarter of a million dollars a year, and that this is not true. That it is not true that Lewis subscribed for and took dollar for dollar of capital stock with other subscribers, or that he took a million dollars in stock in his own name; or that he paid in a single dollar out of his own funds for capital stock; or that his capital stock would go to increase the reserve of the bank and, in consequence, enhance the value of the stock of other subscribers, as it is alleged he represented. That it is not true that the officers and directors of the bank are pre- vented from loaning or borrowing the funds of the bank, but that they had loaned and borrowed $411,203.18 up to March 15, 1905, when the capi- tal stock amounted to only half a million. That it is not true that the capital stock of the bank was intended to be invested in Government or State bonds or gilt-edged securities. That it is not true that the loans of the bank were passed on or guar- anteed by any other bank. That it is not true that the Woman's Magazine and Woman's Farm Journal were built up on a capital of $1.25, and that it is also not true that the Woman's Magazine building was built at a cost of a half million dol- lars "without mortgage. Uen or loan," and the advertisement of the suc- cess of those two papers as evidence that the bank would prove successful, is misleading and a misrepresentation of existing facts. 332 THE SIEGE OF UNIVERSITY CITY That it is not true that the board of directors is composed of men selected because they had demonstrated ability, built up large enterprises and amassed comfortable fortunes; that the board of directors was not elected according to the laws of Missouri, but was and is the sole selection of E. G. Lewis out of his employees of the Lewis Publishing Company. That the voice of the stockholder is silenced and has no part in the con- duct, control or management of the bank. That it is not true that the great profits which Lewis described in lit- erature sent through the mails, would accrue to the bank, or could possibly accrue, and that Lewis knew this to be a fact. Regarding the allegation that Lewis and concerns in which he is finan- cially interested, borrowed money from the bank in excess of the amount permitted by law, it is alleged that his books show such loans amounting to $4.11,303.18. At the time this money was borrowed, it is alleged, the paid in, capital stock of the bank was only five hundred thousand dollars, and that the amount alleged to have been borrowed, $41 1,203.18, is greatly in excess of the State law, which provides: "No officer or director of the bank shall be permitted to borrow of the bank in excess of ten per cent of the capital and surplus, without the con- sent of a majority of the other directors being first obtained at a regular meeting and made a matter of record » * * and no bank shall lend its money to any individual or company, directly or indirectly, or permit them to become indebted or liable to it to an amount exceeding twenty-five per cent of its capital stock actually paid in." The note for $146,375.63 for expenses of promotion and advertising, is signed by E. G. Lewis, E. W. Thompson, F. J. Cabot, A. I^. Coakley and G. A. Arbog-ast, the five directors of the People's United States Bank. That Lewis stated the bank stock would be worth several times par the day the bank opened is seen in the May, 1904', edition of the Woman's Mag- azine, in which was stated: "Subscriptions to stock have poured in by tens of thousands of dollars. * * * Our bank will open with over one hundred thousand stockholders and depositors. * * * Stock will advance to several times par the day the charter is granted." * * * Regarding the profits to accrue from the certified check system, Lewis says in the July, 1904, issue of the Woman's Magazine, in an article cov- eiing two pages: "From certified check system the earnings will be nearly a quarter of a million dollars per year without having to pay any interest on it." Regarding his agreement to put in dollar for dollar with the other sub- scribers to the stock, Lewis said in the May, 1904., issue of the Woman's Magazine: "I ask you to join me with from one dollar to five hundred dollars. I have pledged to put up dollar for doUar with you to the utmost limits of my private fortune. I would rather be president of the Woman's Magazine and the Postal Bank than president of the United States." Regarding his subscriptions to stock and his profits going into the re- serve fund, Lewis stated in the July, 1904, Woman's Magazine: "I am arranging to turn nearly everything I have into cash, outside of my stock- holdings in my present publishing business, and expect to subscribe for at least one million dollars of the stock of our bank. I must pay cash, ex- actly the same as you do for my stock, as there is no "promoter's stock" in this l5ank, but when it opens its doors there will be a dollar in cash in the vaults for every dollar of capital stock, and every dollar of my profit will go to increase the reserve in the bank each year." As to the privilege of officers and directors borrowing from the bank, Lewis said in the July, 1904, Woman's Magazine: "Our bank will not be a private bank, but a State or National bank. Its stockholders cannot be assessed or become liable. The oiiicers and directors cannot borrow or use Transportation equipment of the Lewis Publishing Company during the prosperous years of 1^/04 and igoj ^Electric mail trucks ^Private cdr "Mabel'' ^Daily scene loading the mail car ^Private mail car L^.al Athletic organizations of employes a)id equipment provided by the Lewis Pnbltslnug Company during its periodr.of prosperity ^Seniof base-ball team "Base-ball park, built in the spring of igo^ ^Junior team THE DREYFUS CASE OF AMERICA 336 a dollar of its funds. I, who am arranging my personal affairs so as to take and pay for a million dollars of the stock myself, and who will be its president, could not lend myself a single dollar of the bank's funds. In addition to this, I am pledging my own great stockholdings to you for your additional safety and profit. Every dollar that my stock earns goes into the reserve of the bank, adding to the value of your stock." Regarding the investment of the capital stock of the bank in Government or State bonds, or gilt-edged securities, Lewis said, on page 11 of "Bank- ing by Mail": "The entire capital of this bank will be invested in Gov- ernment bonds or other gilt-edged securities." Regarding his plan of having other banks pass upon and guarantee all loans, Lewis said, in the September, 1904, Woman's Magazine: "By our system its loans are passed on and the greatest part of them, as I will explain, are guaranteed and secured by other banks with the best collat- eral." Concerning the success of his pubUcation, Lewis, under a picture of the Woman's Magazine Building on the cover of "Banking by Mail," said: "Great office building of the Woman's Magazine and Woman's Farm Jour- nal (Lewis Publishing Company) erected for cash, without mortgage or lien, at a cost of over a half million dollars, in five years, from the start of $1.25, showing what can be done if enough people combine to do it even at 10 cents per year, each." Regarding his selection of a board of directors, Lewis said, on page 11 of "Banking by Mail": "I shall have associated with me on the board of directors seven of the strongest, ablest men that I can get. These men I have selected because, while they have made independent fortunes — have made them legitimately and honestly by a life's labor — they are so situated that they are free from the pull and intrigue that their position would naturally bring against them, but have a life record of honesty and fair dealing which makes their standing in the community one that cannot be questioned." On the same subject Lewis said, in the July, 1904, Woman's Magazine: "The board of directors will be composed of men selected, not because of their banking experience or their connection with other banks or trust com- panies, but largely because they have no such experience or entanglements. I am selecting seven strong men who have demonstrated abilities, built up large enterprises, amassed considerable fortunes, etc." Postoffice inspectors allege that the men composing the board of direc- tors are as follows: Edward G. Lewis, president of Woman's Magazine, or Lewis Publishing Company, salary $15,000 a year; Frank J. Cabot, editor of Woman's Magazine, salary $4,000 a year, and editor of Woman's Farm Journal, at salary of $2,000 a year; Augustine P. Coakley, adver- tising manager of Lewis Publishing Company; Eugene W. Thompson and Guy A. Arbogast, employees of Lewis Publishing Company. As evidence that the voice of the stockholder is silent and has no part in the management of the bank, the inspectors incorporated in tlieir report the following contract of waiver and proxy, which, it is stated, every stock- holder signed: "This memorandum witnesseth that, in consideration of the transfer to the undersigned by Edward G. Lewis, president of the People's United States Bank of * * * shares of the capital stock of said banli (amount- ing to the par value of $ ), I hereby authorize him to receipt for me and in my name on the books of said bank for the certificates for my said shares; and in consideration of his services in the organization of said bank and of his acceptance hereof, I hereby request and appoint said E. G. Lewis to act as proxy to vote and represent my said stock at aU meetings of stockholders of said bank in event I be not personally present; and upon his acceptance of this proxy the same shall remain in force until revoked by me after three years from this date, by written notice to said bank, but 336 THE SIEGE OF UNIVERSITY CITY before any revocation it is agreed that said Lewis shall first have tho option (upon ten days' written notice to him) to purchase said stock of me or my legal representatives, at its fair market value at the time, and I hereby ratify the proceedings taken for incorporation and operation of said bank, and for the increase of its stock, and hereby waive any right to subscribe for any increase of stock, unless with the written assent of said Lewis, and I request said Lewis to cause to be forwarded to me the official certificate for my said stock, and upon his acceptance of the duties of proxy as aforesaid, and due consignment of said certificate by mail to me, this memorandum shall become effective, and not otherwise. In attestation, witness my signature, the date first aforesaid." In the December, 1904, number of the Woman's Magazine Lewis gave as the five means by which the bank would make money: (1) The certified check system; (2) the profit-sharing time certificates; (3) the legal de- partment, by which all patrons get advice for two dollars; (4) safety de- posit vaults at two dollars per year; (5) trust department, whereby the bank acts as trustee and executor for wills and estates. According to the postoffice inspectors' examination, the books show the subscriptions to the capital stock on March 15, 1905, to have been $2,114,- 926.67. In the February, 1905, issue of the Woman's Magazine, under date of January 3, Lewis said: "Today, ten days after the closing of the sub- scription books (December 24) I am just staggering out from under an avalanche of subscriptions, by mail and telegraph, that came in the last few days before closing the books. Already over ninety thousand individ- ual subscriptions to the capital stock of the bank have been recorded. The entire five million is subscribed, and what the total subscription will amount to, I cannot yet tell. "The legal advisers of the bank have advised us that the regular legal notice of the increase of the capital to the five million dollars be advertised in the local papers for sixty days, instead of incorporating a waiver of notice as was originally planned. This delays the delivery of the stock certificates until after March 4, although they are now being made out. * * * On March 4, the meeting is to be held to formally increase the capital. In the meantime, as fast as they can be handled, the formal re- ceipts will be called in and the stock certificates made out in their place. All stock certificates will bear the same date. "I beg of those of you who receive this stock to hold it tight. I believe in a few years it will have become the most sought after and highest priced stock in America. Already premiums of two for one (two dollars for one dollar) have been freely offered for large blocks of it. Shortly after March -L, it will be regularly listed in the Stock Exchange. Remember, all this stock is in your hands. No man or woman will have over five hun- dred dollars' worth of it unless they obtain it by deliberate falsehood. I have pledged my fortune, my great publishing business, and the best years of my life to come, to the success of this bank. It is in your hands. No man could read tlie thousands upon thousands of letters breathing confi- dence and good wishes that I have received from you and not be a bigger, broader and better man for it. That is my profit and the only profit I want. "On December 24, the subscription books closed with about ninety thou- sand subscribers to the stock in my hands. Be patient. I have carried through in the past few months the organization of one of the greatest cor- porations in the world. I have sent out over three million letters I have personally answered tens of thousands more. * * * I do not think there is any doubt but that we will have nearly, if not fully, one hundred thou- sand stockholders when the mail is all opened. "I have subscribed for two million dollars of the stock of our bank my- self, mstead of alloting it on the large lists of whole wealthy families One million dollars of the stock I intend to retain and so trustee it that its THE DREYFUS CASE OF AMERICA 337 earnings shall go into the reserve of the bank each year, in order to more rapidlj double the value of the stock of other stockholders, and so that it will forever remain as a barrier to any man or body of men vifho, attracted by the wealth and prosperity of our bank at some future day, should try to buy up enough of the stock to give them a large vote in its affairs. * * * With my million dollars of the stock trusteed, and in the event of my death, voted liy the other stockholders, that would be practically impos- sible. Now, the other million dollars of my subscription, I have divided into two parts of a half million dollars each. One part I shall allot and sell at par to those of you who could not subscribe for and pay for it all at once. * * * The other half million dollars I shall hold to be placed exclusively with the oiiicers of other banks and with strong men who can be a source of assistance, counsel and mutual benefit to our bank." THE SIEGE BEGINS. Belts' story was in tbe nature of a bombshell thrown into a be- sieged city. Its devastating effect upon the growing industries, whose development^ filled with hopeful enthusiasm, makes this story of the Siege one of absorbing, practical interest, may now be realized. The condition of public alarm was, it is true, not yet as pronounced in St. Louis and all over the country as it finally became after the actual issuance of the fraud order, which was to the Siege as the final cutting off of all communications by the closure of the enemy's lines. But the air was thick with rumors. Suspicion was so strong that bankers and responsible business men felt it incumbent on them in justice to their own stockholders and creditors, not to have any- thing further to do with the notorious E. G. Lewis. They could no longer, as they had been formerly glad to do, allow their names to be associated with the newly formed People's Bank, or Lewis' other enterprises. In cafes and clubs, on the street corners, and in bank parlors, men read this article with absolute amazement and horror. News of an actual war could hardly have stirred them more, and the effect was similar. Those dealing with him stopped. Among the numerous projects which he had undertaken and partly carried out, and which fell through at this juncture, were these: The purchase of the St. Louis Star, which was to have been con- summated the very next day, June 1, was frustrated; a loan of two hundred thousand dollars that had actually been passed to the credit of Lewis by the Missouri-Lincoln Trust Company, was refused. The proposed bond issue of seven hundred and fifty thousand dollars, by whicli Lewis was intending to consolidate his entire real-estate interests and pay part of his million dollars to the capital of the bank, could not be consummated. A further loan of one hundred thousand dollars from the Royal Trust Com- pany of Chicago fell through. All the negotiations looking to the co-operation of the banks and bankers of St. Louis in the forma- tion of an advisory board of fifteen for the People's Bank were stopped. The further co-operation of bankers in the smaller cities could be had no longer. The manufacture of children's steel safes and many similar details of business were abruptly interrupted. All 338 THE SIEGE OF UNIVERSITY CITY these and many similar effects resulted from the terrific scandal of Betts' article. It is perfectly true to say that a similar interruption to business would have occurred anyhow on the issuance of the fraud order. But a fraud order is not ordinarily issued until after a hearing following a citation to appear. Lewis had no chance to appear. The report was published. The disaster to his credit occurred. All this took place without warning. The whole was caused by the public issue of a confidential Government report through the care- lessness or connivance of a postoffice inspector. The scenes attending the investigation of University City by the Federal and State authorities, and the interplay of personalities in the numerous skirmishes and legal battles that next followed, still live in the memories of many St. Louisans, and in the great scrap- books of clippings from the St. Louis newspapers of those days that have been stowed away in Lewis' private vault. The story was a spectacular one. The interests involved were enormous, nation-wide. A fight was on in which great personalities were engaged. The air was thick with rumors as to further govern- mental action. Nobody seemed to know just what was behind the thunderous attack on Lewis and his enterprises, but everybody be- lieved that it must be something which did not appear upon the surface. Fraud ! the word itself was a mystery. The case was a mystery. The public loves a mystery. So the newspapers made much mystery about it. Talk about Lewis and the People's Bank was in every mouth. THE P-D FOLLOW-UP CAMPAIGN. The Post-Dispatch, evidently animated by the same motives which prompted its first publication, now strengthened by the necessity for self-justification, followed up its "scoop" with a vigorous and insist- ent campaign of denunciation. The St. Louis Star-Chronicle, which was to have passed into Le^vis' entire control with a view to its development as a strong rival of the great St. Louis paper, sprang to his defense. The other local newspapers strove to keep a neu- tral impartiality. Among weekly publications, the Mirror, rejoicing at the destruction it had helped to cause, joined the hue and cry of the Post-Dispatch. The Censor came out vigorously in Lewis' behalf. Wetmore's Weekly also took up the cudgels for Lewis, par- ticularly against Swanger and the State administration. All these publications will hereafter be drawn upon for picturesque incident and local color which will assist the imagination to reconstruct the state of public sentiment and opinion. The Post-Dispatch of June 1, 1905, ran a four-column story, ac- companied by a five-column "panoramic" view of University Heights, with heading thus: "State to Name Temporary Cashier for Lewis' Bank: President of $2,500,000 Mail Order Institution Proposes Such Course Pending Investigation: Conferences with Secretary Swanger and Others On, to Determine Further Course of Action: THE DREYFUS CASE OF AMERICA 38& Other Bankers Expected Are Not Present: Cited to Show Why- Fraud Order Should Not Issue." The opening paragraphs read thus: President E. G. Lewis, of the five million dollar People's United States Bank, today proposed to Secretary of State Swanger and State Bank- Examiner Cook that they name a temporary cashier to look after the finances of the bank until the investigation is concluded by the State De- partment. The proposition was made by Lewis at a conference of the State officials at the Southern Hotel, beginning at 13:15 p. m. today. Certain bankers who were expected to be present could not come and it was feared that the meeting would fall through. At noon, Lewis himself arrived and met Swanger and Cook in the lobby. They proceeded to Swanger's room. It would seem by the requirements laid down for President Lewis in the letter of the secretary of state of May 1, that Lewis must raise about half a million dollars. Loans aggregat- ing $411,000 by the bank to Lewis, endorsed by officials, directors and cor- porations controlled by him, now classed as cash assets of the bank, must be taken up and paid at once by requirement of Secretary Swanger. Mr. Swanger said later that he had taken charge of all of the assets of the bank and that he held the keys to the safe where all the bank's money and cer- tificates are kept. WhUe the State of Missouri was acting through Secretary of State Swanger, the U. S. Government moved also. Late Wednesday afternoon, a citation to appear, either by mail or in person, on June 16, and show cause, to the assistant attorney-general, why the fraud order should not be issued against him prohibiting the use of the mails to his bank, was served on Mr. Lewis. Apparently at the time of writing this article the fact that instead of complying with the requirements of the secretary of state and attempting to raise half a million dollars in the face of the "con- certed action" against him, Lewis had picked up the gage of battle and increased the loans of the People's United States Bank to him- self and his enterprises to the amount of nearly half a million dol- lars additional, was still unknown in the office of the Post-Dispatch. Under the caption — "Prominent St. Louisans Withdraw from Bank," the Post-Dispatch proceeds to recite alleged interviews mth certain of the incorporators ptirporting to be a repudiation of all responsibility in the premises. Under the caption," Further De- tails of Postoffice Investigation of Lewis' Bank," dated "Special to the Post-Dispatch, Washington, June 1," but obviously drawn from the inspectors' report procured by Betts from Sullivan, emphasis is laid upon an alleged fraudulent dividend of two per cent. This was based upon the circumstance that Miss F. Ellen Ayars of New Richmond, Minn., subscribed $1.00 for the stock of the bank on September 17, 1904, and received on March 2, 1905, a passbook with a credit of one cent dividend upon one dollar remittance for stock. From this fact, the following conclusion was drawn: He was, therefore, paying a dividend of about two per cent per annum at a time when the bank had not earned a dividend and was practically insolvent from the misuse of funds from capital stock. Under the caption, "Says He Drew Salary," this occurs: In support of the inspectors' statement that Lewis drew a salary from the bank at a time when the bank was not in existence, and when it was 340 THE SIEGE OF UNIVERSITY CITY alleged he had no right to draw salary as president, the report enumerates amounts alleged to have been drawn by him for the different months, totaling $16,598.55. swanger's famous demands. Under the heading, "Proxies Create Suspicion and Constitute Dangerous Power," is printed a letter which certainly was not pub- lic property, and which could hardly have fallen into the hands of the Post-Dispatch for publication, except by the authority of one of the public functionaries concerned. The publication of this and other official documents in the Post-Dispatch, without protest by either the State or Federal authorities, would seem to admit that newspaper definitely to the rank of their semi-official organ. As this letter occupies a prominent place among the official allegations of misconduct upon Lewis' part, this entire article will be quoted: Following is the letter, under date of May 19, received by Lewis from Secretary of State Swanger, following the examination of the People's United States Bank by State Bank-Examiners Cook and Nichols: The examination of your bank, commenced on April 3, has progressed sufficiently to justify me in making the following observations: Subscrip- tions to the capital stock of your bank were secured largely through ad- vertisements made in the Woman's Magazine and Woman's Farm Journal, two journals under your control, over your signature. The plans of or- ganization and the manner of conducting the business were fully set out in these communications. On account of the large number of your stock- holders, located in almost every state of the Union, and their small hold- ings, this department insists that all these promises be made good and believes absolute good faith on your part is necessary for the success of the bank. We believe some of these promises have been openly violated and other implied promises have not been kept. In so far as these promises are not at variance with good banking, this department will insist that they be kept, even though the banking laws of our State are not being vio- lated. Fairness dictates that the allotment of stock to subscribers be made in the order in which their subscriptions were received; and, furthermore, that those taking stock on the installment plan are as much entitled to their allotment of stock, and in the order tlieir subscriptions were received, as are those that paid in cash; and, above all, no discrimination sliould be made in the allotment on account of the signing or not signing of the proxies sent out by you at the time you advised the subscribers that the stock had been alloted to them. These proxies contain provisions which look very suspicious and caused a number of subscribers to complain to this depart- ment. Proxies were intended to subserve the interests of the stockholders. When sought by an officer of the corporation they create a suspicion, and when largely obtained, they place in his hands "a very dangerous power. The obtaining of these proxies in large numbers in their present form we beheve to be against pulilic policy, and if the wishes of this department were consulted, these proxies would all be returned to the stockholders. The manner of organization puts into your hands the selection of the officers and board of directors. The law places the management of the bank's affairs in the hands of the board of directors. The present board is composed of the officers of the Lewis Publisliing Company, employees of your's, thus placing the entire management virtually in you. These gentle- men were to have been the executive officers; and seven other men, whose qualifications were fully set out in your literature, were to be selected as the board of directors. Your bank has now been in operation six months and this board lias not been named. The interests of stockholders and de- THE DREYFUS CASE OF AMERICA 841 positors demand that these directors be named and the management of the affairs of the bank vested in them. The success of the bank depends so largely upon the character of men selected to be directors, that I ask that the list of gentlemen so selected be submitted to this department be- fore their appointments are made. You set out to the general public in your literature the lines along which the business of the bank would be conducted. I will not undertake to pass upon these features, but will leave them for further consideration, and to be worked out by your officers and directors. But you made pledges to the people that certain things would not be done, that I hold should now be kept. They are within your power to keep, and the keeping of them would in no way affect the solvency of the bank. On the contrary, these pledges no doubt gave the people confidence in your plans, and are known to the general public to point to the rocks against which nine-tenths of our banks have been wreclced. I have especially in mind your loans to officers and directors and to firms and corporations in which officers and directors are interested. Of the $321,000 of loans held by your bank on the day of examination a large portion were of this class of loans. These loans may all be good, but are in such gross violation of your pledges to the people that I insist they should be taken up with as little delay as possible. You exceeded your charter rights when you invested the funds of the bank in the various stocks of other corporations. Such stocks as you now hold should be disposed of without exception, as soon as it can be done. I might say in this connection that it is outside of the banking business and your charter powers to deal in stocks. I speak of this because I no- ticed a tendency on the part of yourself and associates to be promoters and use the funds and good offices of the bank in that direction. This business must be kept separate and apart from the banking business. In fact, your connection with this bank and the connection of any of your associates in the management of this bank, demand that each of you sever Tour connection with all outside enterprises that are in the least specu- lative. I found in checking over the cash account, $5,945.95 in drafts on the Missouri-Lincoln Trust Company, made by the Development and Invest- ment Company, of which E. G. Lewis is president. Upon inquiry at the Missouri-Lincoln Trust Company, I found that the Development and In- vestment Company had but $981.38 to its credit. The carrying of these drafts is irregular. I am not ready to take up with you the large promotion expenses which are now carried in the note of $146,375.68, but will leave this also for fur- ther consideration and to be taken up in person with you and your board of directors. I am satisfied a large part of this cannot be charged up against the bank. I want to know definitely who the stockholders of the People's United States Bank are, where they reside, and the amount of stock held by each. The books of the bank should show these facts and this department is en- titled to the information. I do not wish to impose upon you the labor necessary to prepare this list of stockholders. But I do want the books of the bank to show definitely and specifically who the stockholders are, their residence, and the amount of stock held by each, so that my exam'- iners may check this account. If the bank's books do not show these facts, I would thank you to have such information properly set out upon the books of the bank and with as little delay as possible. When the above is done and you have completed your issuance of certificates of stock to those to whom was aUoted the $1,500,000 increase, I wiU thank you to advise this department. My examination discloses the fact that you, for yourself, took only a small part of the original stock, but took it largely for others. This ori- ginal stock is only half-paid, and those for whom you took the stock under- 34.2 THE SIEGE OF UNIVERSITY CITY stood it was to be fully paid and nonassessable. The original stock not being fully paid, is subject to assessment, and for this reason the State is entitled to know who the original stockholders are. The facts are, how- ever, that at the time you took out the original charter of $1,000,000, you had received from subscribers, and should have had on hands, sufficient funds to have paid this original stock in full. These being the facts, this department insists that this original stock be paid in full and the stock be alloted to those who were subscribers at the time the charter was taken out. I will, however, concede to you your right to take for yourself such part of this original stock as you may choose to take, or may have taken, and concede to you your privilege to pay in full or one-half, but I do in- sist that the funds placed in your hands by subscribers be used to purchase only fully-paid stock. You may think I assume too much in this matter, but I assure you it is only my desire to see that everybody interested gets a "square deal." Those whom you represent are so scattered, their interests so small, and Iheir means of knowing the facts so hampered, that, the responsibility being placed on this department by yourself, I assume to take notice of facts and conditions that are ordinarily left to be worked out between the parties themselves. Please have prepared and send me a copy of your daily statement at close of business May 18, and a list of your notes, stocks and bonds, also the amount to the credit of E. G. Lewis special and E. G. Lewis col- lection. I will visit your institution again in the near future with a view of completing this examination. THE FIRST WAR NEWS. The following highly significant paragraph occurs in a special dispatch to the Globe-Democrat from its Washington correspondent under date of May .31: It was learned at the treasury department that repeated efforts have been made by interested persons to start an investigation of the People's United States Bank through that department. The matter was placed before Mr. Ridgeley, comptroller of the currency, and later reached the secretary of the treasury. Mr. Lewis sent on copies of all literature he had circulated in connection with the banking enterprises, and the comptroller said he could see nothing that was not legitimate about the representations made. The documents and papers of the treasury depart- ment are always available for the Postoffice Department and the Lewis papers might have been sent over to the latter on request. That department of the Administration, in other words, best qual- ified to give judgment on all matters pertaining to banks and bank- ing could see no grounds for action against the People's Bank. The front page of the regular edition of the Post-Dispatch of June 2, 1905, was graced by the cartoon shown elsewhere, depicting Lewis and Cabot, wherein it will appear that the cartoonist was not insensible to editorial suggestion. The principal news item runs as follows : E. G. Lewis, President of the People's United States Bank, on leaving a conference with Secretary of State Swanger, Assistant Attorney-General Kennish and State Bank-Examiner Cook, which began at the South- ern Hotel at 10:45 this morning, stated to a Post-Dispatch reporter that a new board of directors for the bank would be elected. Lewis was accompanied by H. S. Priest and Shepard Barclay, his attorneys. Attorney-General Hadley has been called in by the secretary of state who telegraphed him immediately after the conference closed. It is un- derstood that Lewis opposed Swanger's demand that he take up the loans THE DREYFUS CASE OF AMERICA 343 made by the bank to himself and raised questions of law. This drew the attorney-general into the conference. From another source it was learned that a formal meeting of the board of directors, attended by the state officials, will be held Friday afternoon at the Woman's Magazine Building. A new board containing at least three representative St. Louis business men approved by the secretary of state will then be elected. Asked if he had submitted a list of names for the secretary of state's approval, Lewis said he had. Asked regarding Swanger's requirements, he said the new board of directors would attend to that. ALIGNMENT FOR BATTLE. The remainder of the story was taken up chiefly by alleged in- terviews with St. Louis bankers purporting to criticise the People's United States Bank, and, with few exceptions, repudiating all re- sponsibility for and relations with that institution. Among the critics of the bank were mentioned August Schlafly, president, and Dr. Pinckney French, vice-president and treasurer of the Missouri- Lincoln Trust Company. This institution had previously passed a loan of two hundred thousand dollars to Lewis' credit. It had agreed to purchase his proposed bond issue of seven hundred and fifty thousand dollars. At that time approximately seven hundred thousand dollars of the bank's funds were on deposit in its vaults. Both Schlafly and French had been incorporators of the bank. Both were personally friendly to Lewis. But in the then existing state of public opinion neither could aff'ord to disregard the interests of the institution for which they were primarily responsible. H. A. Forman, president of the Fourth National Bank, volun- teered a statement that he had been asked to become a director of the People's United States Bank, but had declined. John D. Davis, president of the Mississippi Valley Trust Company, said that none of the officers or directors of that institution had any connection with the People's United States Bank. Four other downtown banks and trust companies refused to make any statement upon the prin- ciple that the names of depositors could not be disclosed. George H. Augustine, vice-president of the Carleton Dry Goods Company; Theodore F. Meyer, vice-president of the Meyer Brothers Drug Company, and Porter White, declined to express any opinions. James F. Coyle, of Coyle & Sargeant, who afterwards with Mr. Meyer became a member of the reorganized board of directors was quoted thus: I have been in Chicago three days. I know practically nothing about the matter, except what I saw in this morning's papers. I am a stock- holder in the bank, however, and expect to remain one. I was one of the original signers of the charter and took five hundred dollars' worth of stock, which is the full limit that anyone could sign for. I do not believe p.nything Is wrong about the bank. I think when the investigation is through everything will be found all right. I have great faith in Lewis. I think he is an honest man and that he will do whatever the State advises. With this clash of conflicting voices amid the confusion and smoke of battle and one man's voice vigorously lifted to vouch for Lewis' honor and integrity, this chapter may fitly close. The battle, however, had only just begun. CHAPTER XV. INVESTIGATION BY YELLOW JOURNALISM. The Post-Dispatch vs. Swanger — A Hitch in the "Concerted Action" Program — Forcing Swanger's Hand — The Re- organized Directorate — The Attorney-General's Opin- ion. St. Louis, May 31, 1905. Chief Postoffice Inspector, Washington, D. C. Secretary of State Swanger here today. Greatly exercised over Lewis matter. He has been criticised for failure to act, and recently ordered Lewis to restore the $400,000 withdrawn from bank, to cancel forged* proxies, to account for all subscriptions received, to make good all ma- terial representations, and to select representative body of directors sub- ject to approval secretary of state. Should money not be returned today Swanger may take charge of bank. At secretary's request I have asked postmaster to withhold delivery of citation until 4 o'clock this afternoon sharp, purpose of facilitating collection of shortage. Situation quite acute on account of its importance and because Woman's Magazine now receiving second-class privileges largely by sufferance of Department is, and has been, the vehicle for promotion of bank and for Lewis schemes. I suggest concerted action part of assistant attorney and third assistant on reports of 16th instant. Please take up with proper officers. Fulton, Inspector-in-Charge. Such is the famous "concerted action" telegram dispatched by Robert M. Fulton, inspector-in-charge at St. Louis, to Chief Post- office Inspector Vickery at Washington the very day that the Post- Dispatch published its celebrated extra. Its purpose was to hurry action by the Department. It closes with the suggestion for con- certed action by Goodwin and Madden on both the postoffice in- spectors' reports, recommending a fraud order against the bank and the withdrawal of the second-class privilege from the two mag- azines. Commenting on this telegram. Madden remarks: Observe its air of assurance. Plainly the man who composed and signed it had little doubt that the recommendations in the two reports which he referred to would be adopted. The policy of "concerted action" thus plainly avowed by Fulton brings up the question as to what part his personality and opinions played, both in the inception and during the continuance of the Siege. On the Kansas-Bristow-Anti-Dice theory, Fulton was the arch-conspirator. It was he whose name was associated with that of Vickery in the report quoted by Bristow when Lewis was pilloried as a "get-rich-quick" man and violator of the law. It was Fulton who was said by the friends of Dice to have been associated with 'Evidently an error in transmission. The word intended is presumably "forced." 344 THE DREYFUS CASE OF AMERICA 845 him by Bristow as the latter's confidential representative. It was Fulton who was advanced by Bristow over the heads of experienced and capable inspectors preceding him by long years of faithful and efficient service. It was Fulton who was placed by Bristow in charge of important special investigations, and who was associated with Bristow, himself, in the investigation of the Postoffice Depart- ment in Washington. And, upon the death of Dice, it was Fulton who succeeded to the vacant place and thus inherited the complaints against Lewis and his enterprises, which had been made up in Washington and submitted to Dice for examination during the pe- riod when the latter and some of his associates were investors in the Lewis enterprises. Fulton, therefore, did not take up the Lewis case with an open mind. He came to it as part and parcel of an old and bitter feud between the friends of Dice and those of Bris- tow. Let us see whether or not his official conduct bears any evi- dence of bias or prejudice against Lewis. The "concerted action" telegram was, of course, a confidential and privileged communication. Neither the fact that it had been sent nor its contents were known to Lewis or the public at the time. The full story of this most remarkable message belongs more properly to the attack on the Woman's Magazine. For Third Assistant Madden testi- fies that it was this which first suggested to him the possibility of a conspiracy within the Postoffice Department to put Lewis out of busi- ness. Just now our attention must be confined to what was known to the public at St. Louis. We are especially concerned with the cam- paign of the Post-Dispatch to bring about official action by Secretary of State Swanger. Observe from this point of view, that Fulton's policy of concerted action embraced the banking department of the State of Missouri as well as the bureaus of the assistant attorney and third assistant at Washington. Note the intimacy of Fulton's work- ing relation with Swanger. "Swanger has been criticized," says Fulton, "for failure to act." By whom ? Evidently by the Post- Dispatch. "At the secretary's request," says Fulton, "I have asked postmaster to withhold delivery of citation until 4 o'clock this after- noon sharp, purpose of facilitating collection of shortage." What shortage? Evidently the Carlisle note, which was then in process of collection, as this was the only shortage which the secretary of state is known to have made any effort to collect as of this date. This single message thus links the name of Fulton with those of Swanger, Wyman (postmaster at St. Louis), Vickery, Goodwin and Madden. It reveals him as the central spider, industriously weaving the net in which Lewis and his affairs were afterward entangled. Nor is Fulton's concerted action telegram more significant in what it says than in what it omits to say. Not one word does it contain as to the Post-Dispatch extra. Not one word as to the purchase of the St. Louis Star. Not one word as to the Carlisle check, the collec- tion of which the secretary of state was so desirous of preventing. A conspiracy consists in two or more persons getting their heads 346 THE SIEGE OF UNIVERSITY CITY together to commit a legal wrong. Was this telegram dispatched from St. Louis before or after the Post-Dispatch extra appeared upon the streets.? Did Fulton know that the inspectors' report had been or would be published that same day? Must we account for the "concerted action" telegram having been flashed to Washington just as the Post-Dispatch extra was flung upon the streets and when Swanger was in town greatly exercised on account of criticisms by that newspaper, as a mere coincidence? Or would such a theory strain credulity to the breaking point? Did Fulton, Swanger, Betts, Bovard, Dunlop or Johns (the last four all of the Post-Dispatch), or any of them, have their heads together on the morning of May 31 to prevent the consummation by Lewis of the purchase of the St. Louis Star, and if necessary to that end to wreck the People's Bank? Was such activity and agreement among them, if any such took place, designed to further an act wrongful in morals or in law? And, if so, did the conspirators accomplish their design ? Such are the ques- tions which we are to consider in the present chapter. THE POST-DISPATCH VS. SWANGER. A public assault on a solvent bank, like that made by the Post-Dis- patch in its "great scoop," set forth in the preceding chapter, is a serious business. That newspaper had felt itself forced to strike on May 31, because Lewis' deal for the purchase of the St. Louis Star was to have been consummated next day. Betts says frankly that this action was taken before he even knew with certainty that a citation would be issued. Hard upon the heels of the story, the citation came. But this was not in itself enough to justify an attack upon a solvent institution. Outraged public sentiment and a suit for libel in heavy damages confronted the management unless their on- slaught was followed by some official action. Hence, the manage- ment of the Post-Dispatch now unlimbered its guns and followed its first charge with an insistent and persistent campaign of denuncia- tion. The strategic point of attack at the moment was the State banking department of which Secretary of State Swanger was the head. The Post-Dispatch probably expected to find him a willing ally. They had lent him powerful support during the campaign by which he had been newly elected to his office. Indeed, in the opinion of well in- formed political observers, they had decisively influenced his elec- tion. Not only a natural sense of gratitude for past favors, but an equally lively expectation of favors to come, might well have been thought by the managers of that newspaper to promise them almost any sort of aid that the secretary of state could give. A totally unexpected obstacle was interposed, however, when it be- came known that the cash assets of the bank were several times the total amount of its deposits and that its loans were abundantly se- cured. The Post-Dispatch and its allies were thrown into a quan- dary. The secretary of state was forced to admit that the bank was THE DREYFUS CASE OF AMERICA 347 solvent and that, tlierefore, under the State law he had no legal right to force a receivership. His power was strictly limited. He had the right to make certain demands upon the bank as to the details of its practical operations. But should its officers and directors refuse to comply, his only recourse was to advise the attorney-general of all the circumstances in order that the latter might bring the matter into court. Thus, however willing Swanger might have been to co-oper- ate with the Federal authorities, to repay the political friendship of an influential newspaper, or to secure for a personal friend a fat re- ceivership, there were no tenable legal grounds upon which the seiz- ure of the bank could be sustained. The position of the State authorities of Missouri during the period prior to the issuance of the fraud order was thus a most uncomfort- able one. The examination of the bank's affairs proved that it was solvent, and that there had been no serious violation of the State banking laws. The conference of the secretary of state and the at- torney-general with Lewis and his counsel on June 1, showed clearly that there was no good reason why the demands of the banking de- partment could not be complied with, or why in that case it should be interfered with further. This natural and easy solution of the problem, however, did not suit the necessities of the Post-Dispatch. The People's Bank as a going concern, backed by the approval of the State banking depart- ment and with assets of some three million dollars, would be in a position to exact and enforce heavy damages if it should turn out that the recommendations of the postoffice inspectors could not be sustained at Washington, and if no fraud order was issued. Hence, the urgency of the Post-Dispatch to force from the State authorities an oflicial seizure of the bank which would afford them some color of justification. With Lewis and his counsel, upon the one hand, sup- ported by an influential section of the press, and, upon the other, the Post-Dispatch, to which he was so deeply indebted, the secretary of stale felt himself forced to temporize. In the end he sought to shift the responsibility to the Federal authorities, by saying that he could take no action unless a fraud order was issued at Washington. The contest between the officers of the bank and the Post-Dispatch over the action of the secretary of state, was as we shall see, a drawn battle. The utmost point to which Swanger could be driven was a definite promise that, in the event of a fraud order the State depart- ment would seize the bank. A HITCH IN THE "CONCERTED ACTION" PROGRAM. No one in the light of what followed can reasonably doubt that at this time Fulton and the inspectors associated with him in St. Louis had definitely made up their minds that Lewis must be smashed and p\it entirely out of business. The Post-Dispatch was bringing to bear its influence in their support. All that seemed lacking to Ful- ton's policy of "concerted action" to wipe out Lewis and his enter- prises, was the whole-hearted co-operation of the secretary of state 348 THE SIEGE OF UNIVERSITY CITY and favorable action on the inspectors' recommendations at Wash- ington. The first hitch in the "concerted action" program was the appar- ent willingness of the secretary of state to negotiate for an armistice under a flag of truce. For the St. Louis Republic on June 2 indi- cated that the conference, which had been held between the State authorities and the officers of the bank on June 1 promised to result in its continued operation. Judge Selden P. Spencer was said to have been present as an associate of the secretary of state. Major H. L. Kramer, vice-president of the People's Bank, had accom- panied Lewis. It was asserted that the conference had no relations to the investigation and citation of the bank's president by the Federal authorities. The two examinations were said to be entirely indepen- dent. The investigation of the banking department, it was said, would doubtless be closed by the agreement on the part of the bank to comply with the directions of the secretary of state. In this case the latter would interpose no bar to the bank's future operations. It would seem, therefore, that at this time the secretary of state could find no grounds for the drastic course of action he afterward adopted. Let us see what pressure was brought to bear upon him to force his hand. The final edition of the Post-Dispatch on June 2 contains the following news item: After a three hours' conference concluded at 1:45 p. m. Fridaj, it was announced by the secretary of state that he had accepted three new directors of the bank named by Lewis and these men would probably be elected. Mr. Swanger said: "I have accepted three names among those submitted to me by Mr. Lev/is as men who would be satisfactory directors of the People's United States Bank. I can not identify them for the reason that they have not yet notified me of their acceptance, although they have been informed of their selection. As soon as we hear from them, provided they are willing to serve, we will proceed to the Woman's Maga- zine and hold the formal election. The State has not receded from any of the demands made of Mr. Lewis. What we regard as the most Important thing has been accomplished. That is the installment of a board of directors, a majority of whom possess busi- ness qualifications sufficienT to assure the safe and sound operation of a bank. These directors will be expected by the department to carry out the requirements heretofore laid down. It will require, probably, two or three weeks to reorganize the bank. The state department will continue to observe its affairs so that the interest of each stockholder will be safely guarded. The St. Louis World of the same date ran an article under the fol- lowing headlines: "People's Bank Reorganization Complete: Sec- retary of State Swanger Withdraws All Objection to the Continu- ance in Business of the Lewis Financial Institution: Say All Re- quirements Have Been Met: Assets Are Returned to the Bank: James F. Coyle and Theodore F. Meyer Are the Newly Elected directors." The World states that the above result was arrived at after a final meeting in the Woman's Magazine Building, during which the reorganization was eif ected. This article is further headed by the famous letter of June 2 from the secretary of state to the THE DREYFUS CASE OF AMERICA 849 directors of the bank, of which we shall hear much hereafter. Swan- ger then wrote: The steps jou have taken in the reorganization of the directorate of the People's United States Bank bj the election of Theodore F. Meyer and James F. Coyle as members of the board, give me assurance that the direc- torate of this bank will be composed of men who will be a guarantee for the safe conduct of its business and who are satisfactory to this depart- ment. Your agreement to conform with all the requirements of the de- partment justifies me in withdrawing any objection to the bank's operation at this time and I am glad to say that the bank is now In operation for the conduct of all its business, and that I have full confidence that the sug- gestions of the department will be fully complied with. There was some appearance here that the structure of the bank would be saved. But Swanger did not yet realize how far the attack had gone, nor the lengths to which the opponents of the bank were prepared to go. For the moment, all seemed well. Three of the members of the old board of directors were said to have submitted their resignations. Two successors, Messrs. Coyle and Meyer, had been elected. Messrs. Lewis and Cabot held over. The four direc- tors were to elect a fifth. They had agreed upon Jackson Johnson, president of the Roberts- Johnson & Rand Shoe Company, who had the acceptance of the office under consideration. The same journal contains the following editorial entitled "Banks and Yellow Jour- nalism" : Partly as a result of the rivalry between two evening papers, St. Louis just now is experiencing a miniature banking sensation. Whatever may be the merits or demerits of the People's United States Bank scheme, Mr. Lewis' institution would have received little more than passing mention had not the report become current that he was negotiat- ing for the purchase of the St. Louis Star and intended to spend consider- able money with a view to placing it ahead of the Post-Dispatch as a lead- ing evening paper. When this rumor reached the ears of the gentlemen in control of the Post-Dispatch, they forthwith proceeded to do every- thing in their power to discredit Mr. Lewis and all his enterprises. That they have in part succeeded in their design is obvious. The fact that the Post-Dispatch has seen fit to relegate the news of the Spanish war to its market page while it fills its first page and four or five other pages with a highly colored account of the Lewis bank and its developments, tells its own story. It shows that, irrespective of the news value of the item, the Post-Dispatch is determined, if possible, to create a financial furore that will wreck the People's United States Bank and put E. G. Lewis in a position where he will hardly be able to negotiate for the purchase of a rival evening newspaper. Further evidence of the enmity of the Post-Dispatch is found in the manner in which the news of the adjustment of the bank's af- fairs above narrated was handled in their June 3 issue. The first column of page one is headed as follows: Sues Lewis Company for Guessing Contest Prize: M. Logan Guthrie of Fulton, Claims to Have Correctly Estimated World's Fair Attendance: Asks $30,500 and Injunction: Indictments Against Officers Quashed: Secre- tary of State Swanger Says That All Conditions He Named Will Be Met; Directors Promise to Carry Out His Instructions. The casual reader would be left in doubt by the above headlines as to whether the officers of the bank had beeu indicted or whether 850 THE SIEGE OF UNIVERSITY CITY the approval of the secretary of state was predicated of the guess- ing contest. The circumstances of this suit and these indictments have been already narrated in connection with the World's Fair Con- test Company. The Guthrie suit (a controversy over one of the prizes), chanced to occur at this moment. It was thus given a leading position in the Post-Dispatch wholly disproportionate to its news value. The indictments voted by the St. Louis grand jury in the previous December on a charge of setting up and maintaining a lot- tery, were then "played up" for nearly half a column. Next in order came a sharp jab at the bank headed, "Johnson Says He Probably Will Not Serve As Director." The story opens thus : Jackson Johnson of the Roberts, Johnson & Rand Shoe Company, last night elected a director of the Lewis Bank, today said to a Post-Dispatch reporter: "I have reached a decision that I wUl probably not become a director of the bank." He said further: "I do not understand what au- thority any one had for mixing my name up with the People's United States Bank. I am not a stockholder in It, never was a stockholder in it and had no Interest in it whatever. I positively will not have anything to do with the concern." Then came the real news of the day, namely, the reorganization of the bank. Last of all was tucked away the letter of the secretary of state expressing his approval, together with an interview with Mr. Swanger at Jeiferson City, containing, hidden at its very end, the following significant statement: The bank's statement shows certified checks for more than a million dol- lars, greatly exceeding the deposits and proving that it is completely solvent. The Post-Dispatch, in other words, deliberately gave priority to the suit of the World's Fair Contest Company. The indictments which had been dismissed many months previously as not being based on any law, were dragged in by the ears. The news of the adjust- ment of the bank's affairs to the satisfaction of the state authori- ties was wholly subordinated. A reporter was then dispatched hot foot to Jefferson City to demand of Secretarj^ Swanger an explana- tion for his leniency. FORCING SWANGEr's HAND. Meantime Lewis himself had not been idle. To offset in some slight degree the damaging effect of the inflammatory hot shot of publicity which the bank had sustained, he reprinted the June 2 let- ter of the secretary of state, giving the bank a clean bill of health, in the course of an advertisement in the St. Louis daily papers. The effect of this upon the Post-Dispatch was similar to that of waving a red rag before a bull. The odds and ends of Betts' copy of the in- spectors' report, left over from previous issues were hurriedly gath- ered together and "played up" as injurious news items. Reporters were rushed hither and thither to interview persons formerly con- nected with Lewis and offer them a chance to repudiate him. The secretary of state, the United States Attorney, and the postoffice in- spectors were all interviewed, as to the prospects of further official action. The guns of publicity were double shotted with the ammu- ^First Press Room, erected tn 1903, shovjn in relation la I he il'ouiaii 's Magazine Building "Same building remodeled in the year igog. The upper story was added while the presses upon the lower floor were engaged in printing the Woman's Magazine 5 ^ THE DREYFUS CASE OF AMERICA 358 nition thus amassed and broadside after broadside was poured through the columns of the Post-Dispatch upon the devoted institu- tion. A complete accovmt of this campaign of vilification would greatly exceed the limits of this chapter. The following extracts will give some faint notion of its scope and virulence. A front page column article in the Tuesday evening, June 6, edition is headed "Swanger Letter is Used by Lewis as Advertisement." After calling attention to Lewis' statement, it proceeds: A telegram from Jefferson City to the Post-Dispatch Tuesday stated that Secretary Swanger had completed another letter to Lewis, but did not make public its contents. It was also said that Secretary Swanger and Bank-Examiner Cook would leave Jefferson City Tuesday afternoon for St. Louis to present this letter in person. It is understood to make the same demands as were made in the now famous letter of the secretary of state of May 19, which was not under seal, and which Lewis contended was therefore not official. The letter which Secretary Swanger brings to St. Louis Tuesday night, is under the ofScial seal of the secretary of state. It is understood to be couched in such terms that there can be no further misunderstanding. The investi- gation instituted by postofEce inspectors in St. Louis will be resumed June 16, the date set for the hearing at Washington on the recommendation of St. Louis inspectors that a fraud order be issued to stop the People's United States Bank from using the mails. The front page of the Post-Dispatch of Wednesday evening, June 7, carried a news item, the purport of which is conveyed in the fol- lowing headings: "Dyer Has Report of Investigation of Lewis Bank: Postal Inspectors Furnish Federal District Attorney Their Findings in Two and a Half Million Dollar Mail Order Institution, as Published in Post-Dispatch: They Suggest Laying It Before Fed- eral Grand Jury: Pending Review of the Papers, Col. Dyer Has Not Decided What Course to Pursue." The day following, the other St. Louis newspapers still remain- ing silent, the Post-Dispatch published the cartoon shown elsewhere, showing the face of the secretary of state surrounded by a question mark containing the lettering "What Is He Going To Do About the Lewis Bank?" Upon either side, under the caption "Swanger's Demands Now Twenty Days Old," occurs the following summary of what it was alleged Lewis had to do : Make good advertised promises. AUot stock in order of receipt of sub- scriptions regardless of whether proxies are given Lewis. Select board of directors approved by secretary of state. Take up loans of bank with officers and directors and concerns they are in. Dispose of stock bought with bank funds and keep bank officers' stock dealings separate from bank's business. Stop overdrafts by Lewis Development and Investment Company on cash account. Furnish the State names and addresses of all stockhold- ers and amount of stock held by each. Three-fourths of a column was devoted to a news item entitled "Most of Loans of Lewis' Bank Were to Lewis." Swanger is quoted to the efi'ect, in substance, that at a conference with the directors the preceding evening an agreement had been reached to appoint additional members of the board, and that he would remain in town until the directorate was completed to his satisfaction. The follow- 354 THE SIEGE OF UNIVERSITY CITY ing statement, attributed to the secretary of state, must have been peculiarly gratifying to the management of the Post-Dispatch. This loan was a portion of the purchase price of the St. Louis Star: Frank J. Carlisle made arrangements early last week to borrow over sixty thousand dollars from the bank. This fact we learned after he had received about twenty tiiousand dollars of the money. There was still re- maining over forty thousand dollars of this loan in the bank. We stopped this money going out and insisted on the return of the twenty thousand. All the money was returned. No, I can't say anything about the security for this loan. An interview with the secretary of state published on Friday even- ing, June 9, under the heading "Men Asked Won't Serve as Lewis Bank Directors" clearly shows his attitude of indecision. The fol- lowing statement is attributed to Swanger : Difficulty is being experienced by the present directors in inducing the bankers or business men wanted, to serve on the board. * * * It seems to be the opinion of some persons that I am proceeding too slowly in this matter, but it should be remembered that this is a serious question. It can not be considered in a day. I do not want it to be said, even if I should finally be compelled to take vigorous action, that I have taken snap judgment on the bank or Mr. Lewis. After this board of directors is com- plete my bank-examiner, Mr. Cook, will make an examination of every de- tail of the bank's business. We will then be in possession of all facts and will make our positive demands. REORGANIZED DIRECTORATE. A new phase was placed upon the matter when the Post-Dispatch on Sunday, June 11, published an interview with one of the newly elected directors, James F. Coyle, to the effect that the secretary of state had withdrawn every vital objection to the operation of the bank. Coyle stated specifically that within the last day or two Swang- er had become convinced that the loans to the Lewis enterprises were protected by gilt-edged securities and would not be disturbed. A reporter was immediately dispatched to Jelferson City. A col- umn interview with the secretary of state was secured and published on June 12, 1905, purporting to repudiate Coyle's understanding. This alleged interview notes the progress then made as follows : Two new directors remain to be chosen, but still that is a matter which, of course, concerns the stockholders. The question of approving the direc- tors rests with me. That is to say, I am exercising that privilege in the present case. * * * Since the election of Messrs. Coyle and Meyer, changes are being made to comply with our requirements. Stock certifi- cates are being issued to those who subscribed for stock. A record of them is being kept on the bank books. The capital stock of the bank has now been paid in full. Despite the utmost exertions of the Post-Dispatch the campaign now seemed about to go decisively against them. The Tuesday evening issue of June 13, made the first announce- ment of the final reorganization of the board of directors of the bank with the approval of the secretary of state. The headlines were, ■'Lon V. .Stephens, Director of Lewis Bank: Former Governor and Attorney W. F. Carter Named and Approved to Complete Board by THE DREYFUS CASE OF AMERICA 355 Secretary of State Swanger: Stephens Interested in Other Lewis Concerns: Announcement that Investigation Directed by Bank-Ex- aminer Cook Will Begin At Once: Postal Hearing This Week." At the head of this article, under the caption, "How Lewis Used Steph- ens' Letter as Bank Advertisement," the letter of Governor Steph- ens published in "Banking by Mail" was reprinted. The article proceeds, in an evident attempt to discredit the new appointees, as follows : Former Governor Stephens was one of the judges in Lewis' World's Fair Guessing Contest. This resulted in indictments against the operators, al- though the indictments were later quashed on a technicality. Stephens has also been interested in Lewis' publishing enterprises. He is third vice- president of the Missouri-Lincoln Trust Company. W. F. Carter is a di- rector in the same concern. A conference was held Monday night between President E. G. Lewis, Coyle, Meyer, Cabot, Carter, Judge Shepard Barclay and former Governor Stephens at the AVoman's Magazine Building and this continued several hours. Lewis and Coyle remained with the secretary of state after the others had departed, for the purpose of preparing an answer to a letter from Postoffice Inspector Fulton, who asked a number of questions regard- ing the bank's condition. We here catch a further glimpse of Fulton still tenaciously pursu- ing the policy of "concerted action." The utmost pressure of the State authorities having been withstood by the bank, the power of the Federal Government was now about to be definitely invoked. The St. Louis Daily News commenting editorially on the appoint- ment of Governor Stephens reflected unprejudiced public opinion in St. Louis, as follows: Lon V. Stephens, formerly governor of Missouri, is one of those men who are not influenced for or against a man or a movement because of praise or of condemnation. When the business world looked very dark for E. G. Lewis, Governor Stephens came forward to aid him in meeting his burdens. * * * With the name of Lon V. Stephens on his directorate, Lewis can do what he has advertised to do. It is well that all men are not afraid of rumor. A superficial impression of the posture of affairs at this juncture may be had from the following editorial in the issue of June 13 of Wetmore's Weekly, a local publication in St. Louis of no particular influence, but edited by a former newspaper man and fed from the gossip of the streets : On the morning of May 31 this was the situation: The Post-Dispatch, acting for itself and other interests, had secured copies of the reports made by the postoffice inspectors and the State bank-examiner. They had caused these to be put in type, ready to be used at the opportune moment. The secretary of state for Missouri had been summoned on the scene and was supposed to be ready to use the mailed hand and close up the affairs of the bank that had become so obnoxious to "vested interests." Frank J. Carlisle stood ready to march over to the Star office and take with him the best talent on the Chronicle. Nathan Frank, who controlled the majority of stock in the Star, stood ready to "deliver the goods." As the morning hours lengthened the Post-Dispatch forces learned that the dreaded Lewis would be in the daily publishing business before night- fall, unless they headed him off. A hurried council was called. It was de- 356 THE SIEGE OF UNIVERSITY CITY cided to at once "spring the story," and demand that Secretary of State Swanger act forthwith, to wind up the affairs of the People's Bank. Right here is a little chapter that is shady and which will probably be cleared up in the courts. It is said that Lewis, as president of the bank, and au- thorized thereto by the board of directors, had given Mr. Carlisle a check for part of the loan on Star stock which had been put up as collateral. This check was either paid over to Nathan Frank or was about to be paid. During the momentous morning, some person unfriendly to Lewis carried word to the bank on which the check was drawn, to the effect that the secretary of state had taken possession of the People's Bank and that it would be unwise and probably illegal to honor the paper. The bankers who were so informed acted on the advice. The check was dishonored. The deal for the Star "fell through." Why that "paper" was dishonored is going to be another story. At 2 o'clock that afternoon the Post-Dispatch printed a broadside "roast" of the People's Mail Order Bank and President E. G. Lewis. It published verbatim copies of reports made by Federal inspectors to the Washington office, which reports are supposed to be secret until brought to public notice in a public trial. It also published a letter signed by Secretary of State Swanger, in which several ultimatums were served on the banker-publisher. Later editions told that the secretary of state was in charge of the property and the general impression was given that the People's Bank had been placed in the hands of a receiver and that the brilliant career of E. G. Lewis had been brought to an end. "We did this in the nick of time," they shouted. "Another day and Lewis would have been in the daily newspaper business. Then he could have charged us with jealousy. He could have replied 'a la Lawson' with page advertisements and many people would have believed them. But now he is dead. He is a 'has been.' There is no longer fear of a powerful rival in the newspaper field." The men now associated with Lewis on the directorate of the People's Bank were all well-known business men and bankers of St. Louis. They could out-vote Lewis four to one. Hence there could be no question but that they were in full control. Any further attack upon the bank meant an attack upon these individuals. Popular in- terest now centred in them and they became the target of the news- paper interviewers. The statements given to the press by ex-Gov- ernor Stephens and Attorney W. F. Carter will serve to show the motives with whicli these men took charge of the People's Bank and to make clear their policies and purposes at the time. The Post- Dispatch of June 15, under the caption "Stephens Talks of Lewis' Bank," published this statement: I have been criticized in some quarters for accepting a directorship on the board of directors of the People's United States Bank, while in many more quarters I have been congratulated and thanked for accepting this position. I have done so with a desire simply to help save the value of property which Mr. Lewis has built up, and be of service to the one hun- dred thousand or more persons who have subscribed for stock to this bank. * * * Mr. Lewis has assured me that he is willing to be governed by the recommendations of tlie board and that he will meet our wishes at every point. We could ask nothing more than this, nor could he promise more. It seems to me that in bringing to St. Louis, as Mr. Lewis has done, millions of dollars of investments and in helping to develop this great Southwestern territory, he is entitled to the good-will of our people and our co-operation in his every honorable movement to promote our best inter- ests. Mr, Lewis is not a practical banker. He has incurred expenses in ^Tcmpnrnrx hnnklng room of the Pcoflcs' United Stales Bank in the banquet hall OH the fifth floor of ihc li'oman's Magazine Building "Express shipment of $^oo.oo in gold coin, wrapped in a ilannel shirt and old nezi's- papers and tied with a pair of suspenders. Recereed for deposit by the Peoples' United States Bank J'icu's lakrn on !hc ]\'<'waii's KaiioiKi! Daily BuiliHng, originally designed hy Mr. Lczvis for the Pco^li's I'nifcd Slates Bank, and modeled after an Egyl'tian temple. The ariist, Ralph Cheslcy i.>lt. zva-< sent la Hgypt to copy the ancient decorations. Mr. Lewis' "Sanctum" is niodclcd closely oflcr tlic qneen's room of tlic te))iple ■"jl/r. Lewis' editorial sanclu})i in the north pylon "Hyposfylc liall, interior main tioor THE DREYFUS CASE OF AMERICA 359 promoting the bank, has shown more or less extravagance in its conduct, and has made loans which perhaps he should not have made. But I find no evidence of dishonesty on his part. I believe he has organized an institu- tion in our midst which in course of time, if conservatively and economi- cally managed, will prove helpful to the city, to our people, and may prove a good investment to the stockholders. Mr. Lewis had only about two hundred and fifty thousand dollars of deposits. He has over one million dollars of cash on hand. The deposits therefore could be paid in full within a few moments. The Globe-Democrat of Thursday morning, June 15, prints the following interview attributed to Attornej' W. F. Carter : Regarding the loans to other enterprises with which Mr. Lewis is asso- ciated, we found one of $436,000 to the University Heights Realty and Development Company, and one of $390,000 to the Lewis Publishing Com- pany. Both of these loans, however, are secured by first deeds of trust upon the property of the two companies, the value of which is undoubtedly greater than the amount of the loans. As to the item of $146,000 promo- tion expenses, we found this represented by Mr. Lewis' note which also bears the signature of four other well-known and responsible parties. Furthermore, the note is secured by ample collateral. Secretary of State Swanger has told us that certain items of expense were permissible. We will settle the whole matter as soon as Mr. Lewis returns from Washington. You may state that Mr. Lon V. Stephens and I have personally gone over the assets of the bank. We find it solvent and all its loans amply secured. The St. Louis Republic of the same date says : Former Governor Lon V. Stephens and Attorney W. F. Carter, recently elected directors of the People's United States Bank, after going over the affairs of the institution declared, last night, that tlie condition of the bank is satisfactory. State Bank-Examiner R. M. Cook immediately after the investigation departed for Jefferson City. He said that nothing could be done until it was learned what action the Federal authorities would take. Both publications draw attention to the fact that Mr. Lewis, ac- companied by attorneys. Gen. George H. Shields and Judge Shep- ard Barclay, left St. Louis at noon on Wednesday, June 14, to at- tend the hearing at Washington upon the citation to show cause why a fraud order should not be issued. Postoffice Inspector-in-Charge Robert Fulton, accompanied by Inspectors J. L. Stice and W. T. Sullivan, were also said to have departed upon the same mission. The centre of interest as to the bank affairs was thus shifted to Washington, whither the officers of the bank and their counsel had gone to fight the decisive battle. The battle ground was to be the office of Assistant Attorney-General R. P. Goodwin. Here the in- spectors were lining up with Inspector-in-Charge Fulton at their head. Here was Goodwin nominally to act as umpire, but with what lack of judicial fitness will be seen when it is stated that his own assistant, E. W. Lawrence, was scheduled to appear in behalf of the Government as the captain-general of the prosecuting forces. On the arrival of Lewis and his party at Washington the corre- spondents of the St. Louis dailies and the Associated Press, needless to say, were on the ground eager to get the story of the hearing. But after Lewis at the head of his little band of friends and allies 360 THE SIEGE OF UNIVERSITY CITY had filed into Goodwin's room, the doors were closed. The public and representatives of the press were excluded. The total inability of the newspaper men to obtain information about the hearing proves that if Betts had not obtained the copy of the inspectors' report from Sullivan, the nature of the charges against Lewis, or even the ex- istence of such charges, would not have become known until some six weeks later than they did. Great injury to Lewis and the bank would have been spared. It is possible that without the powerful influence of the Post-Dispatch backed by Joseph Pulitzer and the New York World, to afford them moral support, the authorities at Washington might have hesitated to take a course so drastic. The fraud order itself might have been withheld. The following events culled from the news items of that time trace briefly the sequence of events at Washington. The Post-Dispatch of Friday evening, .June 16, under the title "Hearing Begun on Lewis Bank Fraud Order," published a short news item as follows : Hearing on the report of postoffice inspectors, recommending issuance of fraud order against the People's United States Bank of St. Louis, was begun at 10 a. m. today before Assistant Attorney-General Goodwin in his private office. Besides President Lewis of the bank, H. L. Kramer, vice- president, accompanied by Congressman Landis of Indiana, F. J. Cabot, secretary, and Judge Shepard Barclay and Gen. George H. Shields, at- torneys, appeared for the bank. The hearing is in secret. Congressman Landis Is the only outsider present. Before the beginning of the hearing this morning Lewis refused to make a statement of his defense, saying "I think I have had publicity enough. I must refuse to discuss my defense, but at a later date I will make a statement over my own signature." Judge Barclay said the only defense he would discuss was as to the charge that Lewis had received salary as president of the bank. He said Lewis did not draw a cent of money. "We have vouchers," he said, "to show that the money claimed to have been paid Lewis as salary was paid to employees." The hearing will be com- pleted Saturday. Next day, Saturday, June 17, the Post-Dispatch published a front page column article entitled "Lewis Fraud Order Under Advise- ment." This read in part as follows: The hearing in the case of the People's United States Bank of St. Louis was closed at 1 o'clock Saturday afternoon by the arguments of General Shields, attorney for the defense. Assistant Attorney-General Goodwin has taken the case under advisement. All possible avenues to the escape of information to the hearing have been closed by Goodwin's strict in- structions. The remainder of this story contains speculations so wide of the mark as to prove that there was no actual "leak" of information. The same news item under the caption, "Letter from Swanger" contained the following significant paragraph: Acting Postmaster-General Hitchcock admits that a letter from Secre- tary of State Swanger from Missouri was delivered to postoffice officials one day this week by a St. Louisan, but refuses to give the name of the bearer. Hitchcock says the letter only inquired regarding the hearing now in progress, and contained no statements or recommendations on the part of Swanger. Hitchcock refuses, however, to give the contents of the letter. THE DREYFUS CASE OF AMERICA 361 Judge Selden P. Spencer (appointed receiver of the bank by recommendation of Swanger a few weeks later under circumstances which will appear), acknowledges having been the bearer of a com- munication from the State authorities of Missouri to the Federal authorities at Washington. This may have been the letter above re- ferred to. What verbal messages or representations were conveyed by the St. Louisan in question are not of record. We know that Swanger, after repeated conferences with Fulton, and under the urging of the Post-Dispatch, had publicly announced at St. Louis that if a fraud order was issued bj' the postal authorities he would throw the bank into the hands of a receiver. If, therefore, Spencer, a prominent Republican politician, the intimate friend and asso- ciate of Swanger, was the accredited messenger who appeared at Washington, upon the eve of the hearing with a letter of inquiry from the State authorities of Missouri to tlie Federal authorities at Washington, the theory "concerted action" is immeasurably strength- ened. Wetmore's Weekly of June 27, 1906, with the cheerful audacity of an irresponsible local publication, summarizes the situation and- makes the assertion, "upon the authority of a Washington correspon- dent" that "a damnable outrage has been perpetrated in this mat- ter and circumstantial evidence includes Federal officials in the con- spiracy — a conspiracy to wreck a bank." This article proceeds : Government inspectors were sent to St. Louis and began work on Lewis' books. State banking examiners did likewise. The Post-Dispatch, elected as a medium for influencing public opinion, cleared its decks for action. Right here is where the dirtiest work of all was done. The report of the Federal officials, supposed to be of a confidential nature and meant only for the eyes of the Department chiefs in Washington, was given to the Post-Dispatch in full. That newspaper published to the world this one- sided testimony, which alleged fraud of the rankest kind, without giving Mr. Lewis a chance to reply. The blow was a terrific one. A similar attack on any downtown bank in St. Louis would have caused a panic and a suspension of business, probably a failure. * * * Those who had Mr. Lewis' undoing at heart were certain that the onslaught would over- whelm him. They had even agreed on a receiver to take charge of his University Heights property, another to take charge of the Woman's Maga- zine, and had even planned what to do with the magnificent Woman's Magazine Building. There is a man walking the streets of St. Louis today who, a month ago, pictured himself sitting in Lewis' chair and transacting the business of the several corporations at Lewis' handsome desk. After commenting upon the fact that the inspectors' reports, which had been given in full to the Post-rDispatch, were not disclosed dur- ing the hearing at Washington, the editorial continues : AVhy does not some daily newspaper take up the case and paint it in all of its black colors? You can imagine the pages of "red hot stuff" which would be published were a similar attack made on the National Bank of Commerce, or any downtown institution. I'll tell you why the daily papers are silent (except when they can aid in the opposite direction) ; they still fear that Lewis will start a real live newspaper in this city and punch holes in their bank accounts. 362 THE SIEGE OF UNIVERSITY CITY The storm of publicity which had beaten fiercely upon the devoted bank during the first three weeks of June^ now seemed to have passed away. The skies were clear once more^ except for the cloud of uncertainty still lowering upon the horizon over toward Washing- ton. Certain mutterings as of distant thunder there were^ in the form of rumors of activity upon the part of the State and Federal authorities and of certain influential politicians and spoilsmen, which gave presage of yet another storm. The friends of the bank, how- ever, were of opinion that the tempest was over. At the worst they felt that the reorganized directorate would afford an adequate shel- ter. They believed that any further bad weather the bank might experience, would soon blow over. The charges upon which the citation was issued were thought to have been adequately defended. Upon the whole there seemed to be no present occasion for anxiety as to the bank's affairs. THE attorney-general's OPINION. The first lightning flashes from the clouds at Washington took the form of press dispatches on the evening of July 8 to the effect that the attorney-general's ofiice had filed with the postmaster- general a report that a fraud order against the People's United States Bank and E. G. Lewis, if issued, would have the sanction of legality. The St. Louis Chronicle of that date carried a brief news item dated by Scripps-McRae Press Association, Washington, July 8, to that effect. This was forked lightning, with a vengeance. But it was not yet ready to strike. The Globe-Democrat next morning in a column article headed "Cortelyou Gets Legal Opinion in the E. G. Lewis Case" clearly foreshadowed the event. The lightning was coming nearer. The article ran : Signs indicate tonight that a fraud order wilJ be issued by the post- master-general denying the use of the mails to the People's United States Bank of St. Louis, of which E. G. Lewis is president. The only man who can say positively whether or not it is to be put under the ban is Postmaster-General Cortelyou. Mr. Cortelyou, at midnight, after waiting for hours for reply from St. Louis to a telegram sent during the after- noon, said he could as yet say nothing. He promised a full statement of the case by Monday, if not tomorrow. But what that will be no one but himself knows tonight. Possibly, he does not know himself, unless he has heard from St. Louis. The fact that the opinion of the attorney-general's office had been adverse to the bank was confirmed by Mr. Hoyt, acting attorney-general in the absence of Mr. IMoody. He would, however, make no further comments. Assistant Postmaster Henry Wyman and Postoffice Inspector Fulton met Secretary of State Swanger at the Southern Hotel last night. Mr. Fulton and Mr. Swanger were closeted for some time. j\Ir. Wyman de- clared he had received no information from the Postoffice Department at Washington with regard to the Lewis bank. It is said that in case a fraud order is issued refusing delivery through the mails of letters to the People's Bank, Lewis will at once apply to the Federal court for an injunction. The Post-Dispatch of the same date publishes a front page news item of similar purport containing these significant comments: R. P. Goodwin, assistant attorney-general for the Postoffice Depart- THE DREYFUS CASE OF AMERICA 3G3 ment, decided that there was basis for issuing the order, but upon advice from superiors, submitted the case to Assistant Attorney-General Hoyt of the Department of Justice, who said that it was within "the legal rights of the PostofEce Department to cause the order to be issued. Hoyt did not go into the merits of the case, simply giving an abstract opinion. This was all he was asked for. Postmaster-General Cortelyou has communicated with the postmaster at St. I.ouis and R. M. Fulton, postoffice inspector-in- charge. He is now waiting their reply before he gives out his statement. Under the caption, "Lewis Had No News From Washington/' occurred the following: E. G. Lewis, president of the People's United States Bank, when seen at the AVoman's Magazine Building yesterday, declared he knew nothing whatever of any action against the bank by the postal authorities at Wash- ington. "Secretary of State Swanger was not at the building at any time during the day," Lewis said. "Bank-Examiner R. M. Cook was here; but his visit seemed to be merely a friendly call. In an incidental way he asked me whether I had heard anything from Washington. I answered no." "Did he say anything during his visit about taking charge of the bank?" was asked. "Not on your life," answered Lewis. "When did you hear from Washington last in any regard?" was asked. "I have not heard a word since I left there, about the middle of June, after answering the cita- tion to show cause why a fraud order should not be issued." Under the caption, "Swanger Awaits Official Notice," the follow- ing statement was made: The secretary of state, asked concerning the matter, replied that he had received no official information from Washington and had not been ad- vised of the action by anybody in Jefferson City. He said that he was with- out a hint of the alleged action when he left Jefferson City the previous night. "In case I find that the information is authoritative," he said, "there is but one thing for me to do. I will take charge of the bank and close it. Since this is a mail bank, its being denied the use of the mails would compel it to stop business. I can not say just what action I shall take other than to say I shall assume charge of the bank." Such, then, was the strained position of ail'airs on the evening of Saturday, July 8, 1905, pending the memorable Sunday which the evidence discloses to have been a day of plot and counterplot. On Monday morning, July 10, the long threatened "concerted action" was finally had. The fraud order which had actually been signed the preceding Thursday, then arrived in St. Louis by mail and be- came effective. The Federal authorities impounded the bank's in- coming mail. The State authorities at the same moment seized the bank itself and threw it into the hands of a receiver. We must now suspend for the moment the further reconstruction of those exciting days, as depicted in the columns of the local press. We must postpone the portrayal of the cyclone of publicity which struck the bank upon the notice of the fraud order, as given to the press through the medium of the postmaster-general's celebrated memorandum of Julv 9. For at this point it becomes necessary to retrace our steps and develop the true story of the fraud order itself from documentary sources not at that time available to the public. The next chapters will therefore undertake to set forth the circumstances under which the famous fraud order was actually considered, passed upon, and enacted. CHAPTER XVI. IS ROOSEVELT RESPONSIBLE? Nichols, the Informer — Nichols' Letter to Loeb — Reedt's First Article — "The President Directs Me" — Enter Postmaster-General Wynne — The Investigation is Or- dered — Second Article in The Mirror — The Eve of the Inquiry. Did a letter by Howard Nichols cause President Roosevelt to or- der an investigation of the People's United States Bank.^ The supposition would seem to be unthinkable. Yet the inspectors at- tempt to draw about them the mantle of presidential authority. They seek to shift upon Roosevelt's broad shoulders the onus of the ruin which followed from their own acts. Their contention rests on slender foundation, if, indeed, it is not wholly disingenuous. Roosevelt never shirked the consequences of an investigation which he desired. He fathered Bristow's examination of the postofRce after face-to-face conference with William Allen White and other reputa- ble men. Can he be compelled to adopt, at this late day, the illegiti- mate offspring of Howard Nichols, the informer? Hardly, while Roosevelt is his usual aggressive and vigorous self ! For nothing now fastens the burden of this affair upon Roosevelt personally, unless it be the conventional phrase, "the President directs me," used in a letter of transmittal by his secretary. This inquiry was repeatedly brought to his attention; but there is nothing to show that he took any special interest in it, much less that it was instigated by his personal command. He appears, indeed, to have consistently main- tained the attitude that the Lewis case was none of his affair, but Cortelyou's. NICHOLS, the informer. The records in the office of the postofiice inspectors at St. Louis show sundry complaints against Lewis' enterprises. Such is the case with all large mail order firms. But there does not appear to have been among these, prior to February, 1905, anything to justify the drastic investigation which was then undertaken. The jackets or dockets in which these cases were made up, were only in the nature of fuses as yet unconnected with the powerful explosives that shat- tered the People's Bank. The cause of the explosion which later opened the first breach in the defenses of University City, was a firebrand thrown by the hand of Howard Nichols. Let us see whether the nature of Nichols' information was such that a President of the United States, particularly Theodore Roosevelt, would be likely to 361 THE DREYFUS CASE OF AMERICA 865 dignify it by deliberately making it the occasion of an exhaustive de- partmental inquiry. Nichols, as we have said, having been associated with Lewis as secretary and treasurer of the Mail Order Publishing Company, had been bought out by Lewis and dismissed. He then went into the hair dye trade at St. Louis. Lewis, at the close of the year 1904, after the World's Fair, was at the high tide of his fortunes. On Christ- mas Eve of that year, Nichols, the dismissed treasurer, was making hair dye in a cellar. He was in straightened circumstances. He himself has said: I began to lose mj health. The more I thought of the way Lewis Tiad treated me, the more bitter I became. The night before Christmas, 1904, I went home with twenty-five cents in my pocket. I crept up the stairs, hoping nobody would hear me coming in that late at night. But my wife and mother were in the hall. They had a sheet thrown over a Morris chair. They had been doing the washing for three or four months, and had paid for this chair, sixteen dollars, which they had saved while they were doing the washrng of the clothes — that is, the laundry. I hadn't brought a thing home for Christmas, because I did not have but twenty-flve cents, and I didn't figure on spending any of that even for candy for the children. 1 wrote the letter to Mr. Loeb, secretary to the President, in relation to Mr. Lewis' enterprises, on February 5, 1905, of my own accord. I was inspired by fear of the consequences if Mr. Lewis ever got into trouble on account of his Development and Investment Company. I had been its secretary. I concluded, when the first article in the Mirror came out, that something might be stirred up, and I might be directly concerned. I feared I would be obliged to pay the penalty along with Mr. Lewis if he wore convicted of doing wrong. That was the article headed, "How About the People's United States Bank?" Mr. Reedy's office was across the hall from mine. We usually left the doors open when it was very warm, to allow the circulation of air. From his private office he could see me and I him. I don't remember that Mr. Reedy was ever in my office in his life, or that I was ever in his private office but once or twice. Mr. Reedy knew that Lewis and I had been partners. He used to make remarks about my former partner and how he was getting along. We would meet in the halls. He was generally the one to open up on Lewis. Mr. Reedy met me one morning in the hall — I am not positive about the time — and remarked, — voluntarily, as I remember it, because he gave me some new slang that I did not understand, — "I was out with your partner in his new electric car. It is right easy." I said: "Is that so?" "Yes," he replied, "but his whiskey is bad. He treated me to a lot of Hannis whisliey. That is the tougliest stuff I ever drank. But his place is the finest I ever saw. Say, do you think he can stand the gaff?" I said: "Yes." He replied: "I don't." I said: "Why don't you? What is wrong about itr" He said: "I don't like the looks of things out there. It isn't connected up right. It's going to bust, and a whole lot of things are going to bust with it. I am going to look further." That is the way he would acquire information from me. I didn't know what "to stand the gafif" might mean. When asked if he gave Reedy any of the information which ap- peared in the Mirror, Nichols replied: "I cannot swear to that." Later, he volunteered the following statement: "In fairness to the postoffice people, I wish to say that they, in no way, shape or form. 366 THE SIEGE OF UNIVERSITY CITY influenced me to write the letter which apparently started all the trouble." Whereupon, ensued the following colloquy: The CiiAinMAN: Mr. Nichols, is it not true that it was not so much that you wanted to ease your conscience as it was envy and jealousy of Mr. Lewis, who was then prospering, while you were on your "uppers," that prompted you to write this letter? Mr. Nichols: I was mortally afraid of those steel bars. The Chairmai,': Answer my question. Mr. Nichols: No, sir. I do not believe I have ever envied Mr. Lewis. I do not believe you will find anybody — The Chairman: Why, you said that on a certain Christmas Eve, you had only twenty-five cents in your pocket. You had learned that Mr. Lewis had bought a new automobile; and that he was rolling in luxury and wealth, and jrou did not have means to buy presents for your children. Did you not want this committee to infer that the feelings that overcame you then prompted you to write that letter? Mr. Nichols: No; I said I thought I was a fool for not taking his sev- enty-five dollars a week that he offered me to work for him. The Chairman: And shortly after that you wrote that letter? Me. Nichols: Yes; I believe that letter was written. NICHOLS'' LETTER TO LOEB. Nichols' shifty and evasive answers were evidently not responsive to the chairman's questions, and the former closed his testimony at this point, leaving upon record the obvious inference that the follow- ing communication was penned with malice and in a spirit of re- venge : THE PACIFIC TRADING CO. INCORPORATED UNDER THE IjiWS OP MISSOURI TOILET SPECIALTIES. HOWARD E. NICHOLS, PRESIDENT AND TREASURER. NICHOLS BUILDING, St. Louis, Mo., February 4, 1905. Mr. Loeb, Secretary to the President, Washington, D. C. Dear Sir: Inclosed please find a clipping from a St. Louis paper which really merits attention, not only from the local authorities, but from the national authorities as well. Read it over at your leisure, and you will possibly know to what depart- ment it ought to be referred. In support of what I say, will remark that although this clipping seems to be couched in a rather uncouth manner, yet in the main it is pretty nearly perfect in detail. There is a deep, well-laid plan here to get a lot of people to buy stock in several enterprises, then in deposits in this bank(?) get their own money baclt — maybe. Tlie inside of the thing is very well known to myself, but I am too small a fish in the financial game to even cause a ripple, so have had sense enough to mind my own business and keep still. Now, that the case seems to have excited comment on the outside though, I can add my say-so, no matter whether it does any good or not. In order to carry any point in the exploitation of tlie several schemes — the promoters do not spare money — large sums are paid for seemingly trivial things, and when it comes to advertising, money is laid out lavishly. Think of a magazine selling at ten cents a year, advertising for subscrip- tions, and spending an average of fifty or sixty cents each to get a ten- cent subscriber. While there is a price of six dollars a line quoted for advertising in the same sheet, yet, the advertising agencies quote the same space in some a-G" = „ ^ r"G =. 2 = It, ^ ^ fc. ' t u -^ Q, i^ '- THE DREYFUS CASE OF AMERICA 369 cases as low as four dollars and seventy-five cents — and they make some profit, too. We have had repeated requests regarding the United States People's Bank, Fibre Stopper Company, Development and Investment Company, who oftered forty per cent dividends last year, and about three or four other things, that are all run by the Woman's Magazine management. They all seem to have some kind of stock that they can't seem to real- ize on. The most recent thing is that old W^orld's Fair Contest Company. It has really hurt the city of St. Louis, as people write in and say that they will buy from even us if we will send them the goods and let them pay for them when they get them, giving as an excuse that they are out on account of sending money to that company which sold guesses and never heard a thing more from them. The magazine runs all kinds of mail-order plans of their own in the paper, in the names of their wives, and corporations that they control and pay the bills for. This clipping speaks of Postmaster BaumhofF, Mr. Dice, the inspector — now dead — and Mr. Wynne, in a manner that connects them with it by inference. I do know personally that presents of one kind or another have passed between Jlr. Baumhoff — in the shape of flowers — and the magazine, know that Mr. Dice's son was hired at a salary of seventy-five dollars per month to take the place of a little girl who used to clip ads and paste them on cards so as to send circulars to all advertisers — the girl got six dollars a week. I do know that a real fancy inkwell was sent to Superintendent Machem in February of 1902. I do know that a watch was sent to Mr. Harrison Barrett in 1899, and do know that as late as 1901, any report that was sent from the inspectors' office at St. Louis was read or told verbally before it started for Washing- ton, in regard to the magazine. I know that a Mr. Travers in the third assistant's office wrote some sup- posed lessons in shorthand for the shorthand column in the magazine, and that he was paid for that. The same lessons are easily found in any text- book on shorthand that you pick up. Enormous quantities of papers are mailed, to be sure, yet it takes a thousand thousand to make a million, and then half as many more to make a million and a half; yet, they are now claiming more than that and say that they are all fresh and paid for. There was a tune in 1901 when the Postoffice Department sent special inspectors to investigate the subscription files of the Winner (now Woman's) Magazine, and the trouble was to show them that the paper had the number of subscriptions it claimed. This was done by juggling them through the offices and finally bringing them before cases which they had counted once, but being in a new posi- tion, they counted again, so "the subscription list made good;" but they re- ported adversely on the thing, anyway, so it didn't help out much, and had not Mr. Madden been stopped in his work of cleansing the second-class privileges he would have had the Winner clear out of the mails in a hurry. Now comes the "bank plan." In theory it is beautiful, but in practice it don't look as if it was going to do much more good than to provide money to help the Woman's Magazine along, the same as all of the other schemes have done, and that thing is a losing proposition and always will be. We now have an inspector in St. Louis who is strictly business and can not be fooled. It is to be hoped that he will look closer into the thing, for he has about the smoothest and most resourceful gentleman in St. Louis to deal with in that proposition. I have copies of some of the inspectors' reports at my home. I have an autograph letter, written by Mr. Barrett about the watch, at home. You can find the article written by Mr. Machem, for which the inkwell was 370 THE SIEGE OF UNIVERSITY CITY sent, in the May or June issue of the Winner, 1902. The lessons written about shorthand are in a later issue of the paper. If you think it worth the trouble, and can make a summary of these things, I do not think you will be reprimanded, for calling his, the Presi- dent's, attention to the matter. As stated in the clipping, the names of the supposed backers in the sev- eral enterprises are well and favorably known; in fact, the best money interests in the city have been drawn in, and yet they cannot get a good look at any of the books when they want to do so. Mr. Holden was the inspector — from Philadelphia — who counted the sub- scription list twice and didn't know it, and as confession is good for the soul, will say that the writer is the one who arranged things so that he would do so. But it is a thing I am ashamed of; like hitting a man in the dark. Was personally connected with the thing until May, 1902, when the Development and Investment Company got so raw that I was afraid that I and the rest of the concern in the Winner would land behind the bars. It was a case of rob Peter to pay Paul, and as I argued a little too much for a clean slate I was gently put out of the concern and must say, in a nice, pleasant manner, put out in a perfectly legal way, and in a supposedly satisfactory arrangement. Later, I found that I was in the fix of Mr. Hayseed who had a good brick, but had signed a receipt for it, and couldn't find grounds to get action on. This, of course, may be a big bore to you, but I place such information as I have at your agent's disposal, and if it is not worth considering, shall feel that, at least, if something does go wrong, and a lot of people are minus their savings of years, none of the mud will splatter on me, and I shall have done my part in trying to help clear the matter up. Assuring you of best wishes, I am, Yours truly, Howard E. Nichols, 203 North Tenth street, St. Louis, Mo. Subscribed and sworn to before me, at St. Louis, Mo., this 28th day of March, 1905. R. M. Fulton, Postoffice Inspector-in-Charge. heedy's fihst article. The article clipped from the Mirror of February 2, 1905, was en- titled: "How About the People's United States Bank.''" It bore the signature of William Marion Reedy. This was the first public attack upon the bank. It was immediately called to the attention of Secre- tary Loeb by Nichols ; of the postmaster-general by W. C. Taylor of 4411 West Belle Place, St. Louis, and of Inspector-in-Charge Ful- ton at St. Louis. It thus set in motion the investigation which fol- lowed. These facts seem to demand that it be reprinted in its entirety : HOW ABOUT THE PEOPLe's UNITED STATES BANK? By William Marion Reedy. From various parts of the country the Mirror has received inquiries con- cerning a People's Mail Bank, recently started here under the laws of the State of Missouri. The institution is projected by E. G. Lewis, who runs the Woman's Maga- zine, a ten-cents-a-year mail order publication that claims two million readers. It was this Mr. Lewis who ran the great and widely advertised guessing contest on the World's Fair attendance. H. L. Kramer, who makes a tablet that works whUe you sleep and runs a big mud bath in Indiana, is also in the scheme. There are some others, known and un- known, dead and living. THE DREYFUS CASE OF AMERICA 371 There were, on December 3, eighty-five thousand individual subscriptions to the stock. The charter was granted November 14 to the People's United States Bank. The name of the enterprise has been changed several times in the course of its literary development. A great and characteristic fea- ture of this literary development is Mr. Lewis' frequent pledge of his own personal fortune to the bank, and at one time he offered to put up for stock one doUar for every dollar any subscriber might send in. It is but fair to say that the literature presents many proposed arrangements whereby the stockholders and depositors are to be protected, although some of them are rather confused in phraseology. There are numerous apparent contradictions in the different statements of the project, which Mr. Lewis probably can fully harmonize, and, of course, there is a presumption in favor of the bank in its receipt of a charter from the State. I have looked at a great deal of the concern's literature. It is volumin- ous, involved. It is printed "con" talk. It reads very much like a get- rich-quick scheme. The literature promises a bank greater than aU the banks of Chicago and St. Louis together, offers stock to all and sundry of the two million ten-cents-a-year subscribers to the Woman's Magazine. This is not to be a rich man's bank. It is going to make money "in many ways that no other bank can." I should like to quote a lot of Mr. Lewis' dope, but it is gotten up in such verbose shape that it is practically unin- telligible. It resembles the "patter" of fortune-tellers more than anything else of which I can think. It is fuU of philanthropic palaver. The* pro- moter is full of love for the dear public. It is also a sure winner. He cant lose. He is making more money than he wants. Therefore, he will take the people in — that's what he says. This bank "should be the most powerful and prosperous banlc in the world, and can dictate terms to the great railroads and corporations who must seU their bonds. Some very kind friends, men of wealth, who are joining me hand in hand in the labor of creating our great bank, have of- fered to help me help you secure more of the stock than you could pay for at one time. They receive no interest or profit for doing this, but are placing at my disposal a vast sum of money in order to help each of thousands of you at least a little." Now, if the sentences just quoted are not the very essence of the "bull con" and "the green goods game," I must have put in ten or fifteen years as criminal reporter for no profit of mine whatever. Here's more of the patter: "If you wish to increase your subscription, fill in the inclosed blank, tell- ing me how much more of the stock you wish to secure and just how you can pay for it up to December 1, and I will advance the money to hold it for you. You must pledge me that you are not speculating in the stock, but that you want this increase for yourself or family. I cannot ask my friends to advance this money longer than December 1, and you must act promptly, as the books will be closed and the charter granted in a very short time now, and never in your life again will you have the opportunity that is now open to you. A year from now the possessor of five hundred dollars of the stock of this bank will be practically Independent. It is a security that you can borrow money on at any time or place, at the lowest rate of interest, and it will be a security that will double in value from year to vear and pay a constantly increasing Income. I want you to have as much of the stock as you can, and when I receive the blank back I shall deduct the amount you want from the subscription of some of those who I feel are not entitled to as much as they have subscribed for, advance the money to pay for it for you, and hold it for you until you have paid me for it in the installments that you have promised. You must treat me fairly and not subscribe for more than you honestly know you can pay for, because if I advance the money for you and hold the stock, it prevents someone 372 THE SIEGE OF UNIVERSITY CITY else from having it, and makes me and my friends advance money need- lessly to help you. "Tell your friends who are thinking of joining me in our great bank to send in their subscriptions at once if they do not wish to be too late. Fill in the blank. If possible, increase your subscription or that of your family to the limit and I will help you all I can." If that isn't the epistolary razzle-dazzle for the yap yearning to be done good and brown, I don't know what is. What it seems to say is quite over- powering in its promise. What it does say is nothing at all that anyone can lay hold of. Mr. Lewis appears to be just dying to make money for other people. All he asks is that they turn their money over to him to start this bank. I understand that the money is coming in upon him by the basketful. He has the plans drawn for a bankbuilding that shall resemble an Egyptian temple. It will be on an elevation. An avenue of sphinxes will lead up to it. This building will be just across the road from the beautiful octagonal officebuilding of the Woman's Magazine, out in St. Louis county, an institution that really made itself almost a rival for the World's Fair last summer in the number of visitors. Mr. Lewis is a pleasant-man- nered gentleman, a little nervous, with a mind that is miraculously nim- ble. He deals with millions as if they were pennies. He is the ideal promoter, and his spiel is the most persuasive that I have ever heard, and I've met the best confidence crooks in the country in my day. The People's Mail Bank is to issue its own currency; that is, its receipts are to pass current all over the country. Other banks will take them as if they were National-bank notes. The People's Mail Bank is going to rival the Bank of England. Just how it is going to make money upon its mil- lions of stock, Mr. Lewis does not make plain in his literature. He says he has some big St. Louis bankers with him, and he talks of syndicates of wealthy men in San Francisco, and elsewhere, taking large blocks of stock ; it's such a dead-cinch good thing. Oh ! 'tis a beautiful spiel, but it is all characterized by the most rarified ethereality. I have before me an "installment subscription" blank that is a "bird" for phraseology. The subscriber promises to pay a certain amount to be used by Mr. Lewis, according to his best judgment, towards the organization of such a bank in consideration of his best efforts in effecting such an organi- zation, and of the other subscriptions thereto, and Mr. Lewis is to ad- vance the money and set aside for the subscriber a corresponding number of shares in said bank, to the amount above subscribed by the subscriber, and said stock when issued to the subscriber is to be fully paid and non- assessable, it being understood that Mr. Lewis is to advance the money to pay for the said stock without charging the subscriber any interest or commission, and the subscriber is to pay Mr. Lewis as set forth later, and that Mr. Lewis is authorized to organize and incorporate said bank on such terms, with such directors and under such laws as may be considered by Mr. Lewis best suited to the purposes intended. All of which reads like a "blind pool" agreement more than anything else. All the literature of promotion for the People's Mail Bank is of this general character of vagueness of promise. The literature is all well printed and is most alluring in its golden haziness. However skilled one may be in tracing the least flickering of an idea to its lair in a maze of words, the People's Mail Bank literature baffles him. It all looks like "there's millions in it;" but, subject to careful analysis of anyone compe- tent to follow the intricacies of finance, the result is something to make the judicious banker or business man shake his head in grave dubiety. Mr. Lewis stands well in this city to all appearances. His magazine maintains its own mail cars. Mr. Lewis has a private trolley car to take visitors to his magazine building — and, indeed, his printing and publish- ing plant is a marvel. He has floated a real estate scheme known as Uni- versity Heights on a stock plan. He invented a device to put on the wall Worlds Fair guests of the Lewis Publishing Company '^Officers of the K. C. Mex. & Orient R. R. and English Capitalists ^Officers and Directors of the Missouri-Lincoln Trust Company, and wives directors of the National Bank of Commerce, St, Louis Delegations of editorial men. guests of the LezLas Publishing Company ^Democratic Editors of Missouri 'Missouri Republican Editors ^Soutltern Illinois Editors THE DREYFUS CASE OF AMERICA 875 near your telephone, which prevents anyone using the phone without drop- ping a coin in the slot, and this device is not attached to the telephone at alL He has also a great scheme for manufacturing a patent cork out of a substitute for cork. Mr. Lewis associates with bankers and financial moguls. He had Presi- dent Francis of the World's Fair to preside at the laying of the corner- stone of his magazine building. He uses freely in conversation the names of the best-known capitalists in this city and is altogether very impres- sive, if not convincing, to one who wants to pin talk down to facts. There can be no manner of doubt that he is a tremendous hustler and that he has some powerful alliances in finance. He has had some trouble with the postal authorities in the past. When he started his magazine, he did it by a device which the authorities suppressed, as being in the nature of an "endless chain" scheme. His World's Fair guessing contest was investi- gated, too, though I believe the indictments of other like promoters grow- ing out of the investigation were nolle prosequied. He had a great "pull" with former Postmaster Baimihoff. His relationship with the late Postoffice Inspector Dice was close, and he entertained Postmaster-General Wynne. His World's Fair lottery was not molested. He has had an eventful career of fancy financiering in various parts of the country, having run co-opera- tive watch schemes, candy games, patent medicine plants, etc. He has been in the advertising-agency business, and he started a development and in- vestment company that was a weird wonder for promise. He has been a wizard at the local banks, getting credit with a success that caused people to suspect him of being a hypnotist, and kiting checks in a way to make a Japanese juggler green with envy. He borrowed money from two banks and made them both bid for his deposit on the basis of the credit they would give him, and finally took the two banks' money and deposited it in a third bank that would give him more credit. He carries as much as five hundred thousand in cash deposits, though, it is intimated, not in the name of any of his companies, but in his own name. His bank Is chiefly officered by his employee!. Though he is very chummy, it is said, with big bankers, the name of but one of them appears upon the stationery of his bank. He lives in an atmosphere of stocks and bonds, and a collection of his promotion literature is curious, as showing how his schemes develop from rash proposals that seem to invite official interference to elaborately confusing and mystifying documents, seemingly drawn up by able lawyers aiming to do all that is illegally possible within legal forms. He is a man who has no vices. He sports an automobile or two. He led in a crusade against graft in St. Louis county last summer when he ran Camp Lewis for his magazine and bank subscribers' accommodation on his University Heights ground near the World's Fair. His career of ups and downs, as I have gathered it here and there, is one typical of the plu-perfect faker on a big scale. He has the imagination of a Mulberry Sellers and he can out-talk any man in the United States in the line of fascinating air-castle building. As I have said, according to his own statement, the money has been coming in by the basketful, but the number of moneyed men who have lost money by him in various schemes is quite large. His coin-controller for telephones and his papier-mache cork scheme have left some wise guys with some mighty dead stock on their hands. He has done business here with nearly every big bank in the city, and some of the smaller sort, and the men of money know him quite well. If they have not "turned him up," or down, it may be because they have reason to know that he is going to win out, or it may be because he got into them so deep that they say nothing, in the hope that he may pull them out, or that they don't like to advertise the fact that they have been "easy" to the point almost of being Chadwicked. This is a synopsis of the great Lewis enterprise in its protean phases. It is necessarily superficial, because a detailed recital of the man's story 376 THE SIEGE OF UNIVERSITY CITY would take up the space of four issues of the Mirror, and then some. The man is playing a big game that seems to be on first blush a partially legiti- mized get-rich-quick game. The whole game is based upon the magazine Investment, which may or may not be the mint that it is made to appear in his prospectuses. He is ably advised in a legal way in all he does, and so there is great difficulty in determining offhand the matter of his trustworthiness, concerning which the Mirror has been asked so frequently. His later promotion literature is warier, in better legal form, than his earlier output. The game is so big it should be carefully investigated. It should be investigated by especially appointed postal and State and National bank- examiners, because, as I have heard, Lewis was particularly close to Baura- hoff and Dice when they ran the local postoflice, and he was getting their receipts on enormous payments for mailing his magazine, and when he was running the World's Fair lottery. The inflow upon Lewis of money sub- scriptions to his bank has reached dimensions that will justify an inves- tigation that will investigate to the limit. The men who are interested in local financial affairs are beginning to worry about Lewis and the drag he has on the purses of people in every state in the Union. His game be- gins to wear some of the aspects Of the gigantic business done here two years ago by Arnold & Co., Baldy Ryan, and some other Napoleons of finance, who brought many investors to grief or were themselves involved in disaster. The People's Mail Bank should be carefully looked into, and the high standing of some of Mr. Lewis' friends here in the financial world should be no shield for him. The scheme does not look good or right ; and the closer it is looked into the less evident it seems that the project is one that the authorities should permit to flourish. Mr. Lewis' career as a financier in the past is so vari- colored and exciting that, while it may be that he has evolved something practical and straight out of old experiences fanciful and devious, it is at least only a counsel of caution that his present gigantic undertaking — that of establishing the biggest bank in the world on other people's money — should be subjected to the most rigid inquisition by every city. State, and National authority that may have jurisdiction of it as a whole or in part. This "People's United States Bank" may be all right. I don't say that it is not. All I say is that it should bear investigation. "the president directs me." The follovi'ing official letter of transmittal is self-explanatory: THE WHITE HOUSE WASHINGTON My Dear Mr. Postmaster-General: The President directs me to send to you for investigation the enclosed letter and accompanying clipping from Mr. Howard E. Nichols of St. Louis, Missouri, dated the 4th instant. Very truly yours, Wm. Loeb, Jr., Secretary to the President. How. R. J. Wynne, Postmaster-General. The first phrase of this letter, "The President directs me," would seem on its face to mean that Roosevelt read the enclosures and de- liberately ordered the investigation which ensued. The inspectors point out that Nichols' letter mentioned by name the Bank, the De- velopment and Investment Company, the United States Fibre Stop- per Company, and the World's Fair Contest Company. It hinted that the circulation claimed by the magazines might be fictitious. It charged the corruption of certain postal officials. It linked all the Lewis enterprises as a "deep, M'ell laid plan to get a lot of people THE DREYFUS CASE OF AMERICA 377 to buy stock in several enterprises." The inspectors, therefore, aver that the direct cause of the fraud order against the bank was an in- vestigation set in motion by the President. Inspector Stice inserted into the record on behalf of the Govern- ment, Roosevelt's memorandum of November 24, 1903, transmitting Bristow's report to Congress. He also offered a copious extract from that report headed, "Employment of Landvoight's Son," which has no apparent relevancy to the Lewis case. He also inserted the ex- tract headed, '"E. G. Lewis, St. Louis, Mo.," heretofore reprinted. By way of explanation, he made this statement: Further on in my testimony I will show that this investigation of the Lewis Publishing Company was taken up by direction of the President, in February, 1905. There is no foundation for this assertion, save this brief three- line letter of transmittal. The whole basis of the inspectors' claim is the phrase: "The President directs me." That phrase is well known in official Washington as a mere routine form employed by the President's secretaries in transferring to the various bureaus concerned, letters improperly addressed to the President. Loeb's letter of transmittal expresses no desire on the part of the President that a report of the findings of this investigation be rendered to him- self. No such report was ever requested or submitted. These facts alone would seem to be conclusive that Roosevelt handled this af- fair in a merely routine manner, if, indeed, as is most unlikely, it was ever called to his attention. The inspectors' attempt to justify themselves in this fashion far rather exposes them to the suspicion of cowardice in seeking to shield themselves behind the President's authority, than serves to justify the rigors of their investigation. On even date with Loeb's letter to the postmaster-general, there was received by the latter the following communication from one, Walter C. Taylor of Saint Louis : Dear sir: I enclose an article written by the editor of a local weekly, referring to a scheme controlled by the publishers of the Woman's Maga- zine of St. Louis. I may say that I have no first-hand knowledge of the concern. I have, however, seen its literature, and I agree with Mr. Reedy that the promises made are such as would be considered only by people who were nosing about with an aching to lose their money. This is my impression from an outside view. I do not know that the investigation of the banking end of the scheme comes within the authority of the postal department. Inspector Stice makes this comment: I call the attention of the committee to the fact that the Taylor letter with this clipping was in the hands of the postmaster-general indepen- dently of the Nichols letter and clipping which went to the White House. Thus the clipping was in the hands of both officials at about the same time. The case for investigation of the Lewis Publishing Company, charging them with a scheme to defraud in the promotion of the People's United States Bank, was already in the hands of the inspector-in-charge at St. Louis. * * * That is the way the jacket for that case was made up. Bear in mind that this case was independent of what was going on in Washington, either at the White House or in the office of the postmaster-general, and that Mr. Dice, who had been inspector-in-charge at St. Louis for a number 378 THE SIEGE OF UNIVERSITY CITY of years, died about November and Mr. Fulton had been assigned there, I think, some time in December, 190'1. ENTER POSTMASTER-GENERAL WYNNE. The very first mention of the People's United States Bank in the columns of the Woman's INIagazine occurred in the issue of Feb- ruary, 1904. What complainants there may have been against the mere project of the bank at its earliest announcement, do not appear of record. But all such complaints, if any there were, appear to have been jacketed by the inspectors with miscellaneous complaints against the Lewis Publishing Company. It is recorded there were, all told, fortjr-seven complaints filed prior to February 11, 1905. No investigation was made of these until February 7, 1905, after Mr. Dice's death. The People's United States Bank was incor- porated on November 14, 1904. Three days later Lewis thus ad- dressed the postmaster-general at Washington : You will perhaps recall your trip to St. Louis when I had the pleas- ure of taking you out on a trolley ride to see the site of the new publish- ing plant of the Woman's Magazine. * * * For the past five or six months, 1 have been organizing a great bank to carry on all of its busi- ness by mail. » ♦ * I inclose you herewith a copy of my booklet, "Banking by Mail," which gives considerable detail about it. Some time ago, I received a letter from one of the acting assistant at- torneys-general for the Postoffice Department, advising me that the use of (he name "postal" was misleading, and was evidently used by me in order to mislead people to think that it was a Government institution. I then wrote to him, explaining the exact circumstances. * * * He wrote back that the words, "People's Mail Bank," were equally objectionable. I then took the matter up personally with Postmaster-General Payne on his visit to Chicago, and Mr. Payne informed my associates, — Mr. Wilbur, of the Royal Trust Company, being one of them, — that there could be no legal objection to the word "Mail" in the name of our bank. He said that he saw no reason whatever why we should not use it. He promised that when he reached Washington he would take the matter up officially for me. Un- fortunately, Mr. Payne died soon afterwards without ever having been able to take up the matter and adjust it. We have recently incorporated the bank under the name of the People's United States Banli, with a capital of one million dollars. On December 24, this capital is to be increased to five million dollars, full paid. I in- corporated the bank under the name of the People's United States Bank, in order to demonstrate to the Department our intention and desire to comply with tlieir wishes in every way. Having done this, I now appeal to you for permission to change the name of this bank on December 24 to the People's Mail Bank. Your favorable action in this matter will be greatly appreciated, not only by myself and my associates, but by the two million people who are inter- ested in this institution. I desire to come out in the January issue of the Woman's Magazine and announce to these people that through the kind ef- forts of Postmaster-General Wynne the name of the bank had been changed to the People's Mail Bank with the full consent of the Department. This letter was referred to the Assistant Attorney-General for the Postoffice Department, and on November 23, 1904, the following memorandum, signed by E. W. Lawrence, was sent to the postmaster- general : THE DREYFUS CASE OF AMERICA 379 In connection with the request of Mr. E. G. Lewis, contained in the at- tached letter, that he be permitted to use the name People's Mail Bank for a financial institution which he is about to establish, your attention is called to the statements made concerning Mr. Lewis and his relations with Harri- son J. Barrett, late assistant attorney for the Postoffice Department, to be found on page 37 of the report of the honorable fourth assistant postmaster- general on "The investigation of certain divisions of the Postoffice Depart- ment," dated October 24, 1903. The accuracy of the statement of Mr. Lewis that he was informed by Postmaster-General Payne that the latter "saw no reason whatever" why the name People's Mail Bank should not be used, may be open to question, as the reputation of Mr. Lewis for veracity is not of the best. The bias against Lewis in the Postoffice Department officially re- sulting from Bristow's statement based upon the report of Vickery and Fulton, is here very plainly apparent. Such was the effect of Lewis' present of a gold watch! The prejudice of Lawrence gains additional significance because, as the sequel will show, the duty of preparing the memorandum of charges against Lewis, accompany- ing the citation (to show cause why a fraud order should not be issued,) fell to him. Lawrence was also the man who later repre- sented the Government at the hearings before Goodwin. Wynne must have remembered very well his visit to University City. The private street car "Mabel" of the Lewis Publishing Company had taken himself and a considerable party of St. Louis bankers and business men out to the plant of the Lewis Publishing Company. There they were entertained as Lewis' guests. Wynne's acceptance of Lewis' invitation would seem to indicate that the latter's reputation for veracity in his home city was not such that he was thereby much discredited ! What effect the memorandum of Lawrence may have had upon the postmaster-general's mind can only be conjectured. His reply to Lewis of November 25, 1905, was purely official in both tone and content. He simply pointed out that the policy of the Postoffice Department forbade the employ- ment of the words "postal" or "mail" as part of the name of any bank. He concluded thus: I have no doubt that the designation "People's United States Bank" will answer your purpose quite as fully and well as that which you desire to adopt, and fail to see that the continued enforcement of this measure of public policy will work serious hardship upon you and your associates. THE INVESTIGATION IS ORDERED. Lewis would better have let well enough alone. For the atten- tion of the postmaster-general was thus called forcibly to the bank. Let us see what consequences followed. The first official act took the form of instructions from Fulton, as inspector-in-charge at St. Louis, to Inspectors Stice and Sullivan, bearing date of February 7, ]905. Two cases were turned over to Stice and Sullivan for inves- tigation. Case 20610-C alleged the violation of Section 1617, Postal I-aws and Eegulations of 1902 by the Lewis Publishing Company. Case 3093 1-C alleged the violation of the same section by the Development and Investment Company. The reference to 380 THE SIEGE OF UNIVERSITY CITY this section of the law amounted to a charge that both companies ■were making use of the United States mails in the promotion of schemes to defraud. The attention of the inspectors was called by Fulton to Lewis' initial circular letter inviting subscriptions to the stock of the bank. By a weird exercise of imagination, Fulton sug- gested that the inspectors "look into the question as to whether or not the scheme of the People's United States Bank is one described as a lottery" in the inspectors' confidential book of instructions. He further questions "whether the scheme is one described as fraudulent" elsewhere in that manual. "These suggestions," the letter continues, "are given merely as partial lines of inquiry and not for the purpose of outlining your investigation completely. This should be taken up in such manner as you see fit. With the papers will be found an article from the St. Louis Mirror, February 2, 1905, edited by W. M. Reedy, which was handed me today." The inspector-in-charge does not state by whom the Mirror article was brought to his attention. The next day the following communication, over the signature of Chief Inspector W. J. Vickery, presumably enclosing the complaint of Nichols to Secretary Loeb and that of Taylor to the postmaster- general, was forwarded to Fulton from Washington: The Inclosed papers will explain themselves. I think you have a case covering the matter, but the postmaster-general is anxious to have an imme- diate and thorough investigation made, covering everything to which this letter may lead. I am anxious that you should undertake it personally, but in order to share the responsibility, if you think best, take any one of your inspectors to assist you. Of course, it will not be advisable to take any who may have stock in any of Lewis' enterprises; but follow the case wher- ever it may lead, even if it touches people in Washington. Why was the postmaster-general so anxious to have made "an immediate and thorough investigation covering everything to which this letter may lead"? Possibly (upon the theory of the inspectors) by the President's order. More probably, the allegations of Nichols may have suggested a possible aftermath of Bristow's investigation. Nichols' letter charged specifically the corruption of Barrett and other postoffice officials by Lewis. This portion of Bristow's report had been called to the postmaster-general's attention by Lawrence on November 23 preceding. The circumstances of his trip to St. Louis and of his visit to Lewis' plant had been vividly recalled to Wynne's mind by the correspondence of Lewis touching the pro- posed title for the bank. There appears also of record a letter signed by Third Assistant Madden to Wynne, under date of Janu- ary 21, 1905, which links the name of A. M. Travers, chief clerk in Madden 's office, with that of Lewis through the mediation of Harri- son J. Barrett. What other cause of anxiety the postmaster-general may have had is not of record. It is, of course, conceivable, despite the protestations of Inspector Stice, that Senator Piatt might have interested himself in the case of the People's United States Bank THE DREYFUS CASE OF AMERICA 381 prior to the expiration of Wynne's term of office. The selection of Cortelyou for this and similar purposes may have been agreed upon months earlier. Either Piatt as senator from New York, or Cor- telyou as chairman of the Republican Campaign Committee, could certainly have had the ear of the postmaster-general at any moment. Whether or not the nature of the proposed bank as a rival of the express companies and the Postoffice Department itself in the sale of money orders, and as the pioneer postal bank in America, was the occasion in whole or part of the postmaster-general's "anxiety," and if so, at whose instance, is a question suggested by the cir- cumstances. The reason of the anxiety of Vickery that Fulton undertake the investigation personally is much less dubious. Fulton was the asso- ciate of Vickery in the investigation from which Bristow drew his strictures against Lewis. Doubtless, he saw here an opportunity further to discredit the administration of the late George A. Dice, and also to win for Fulton and himself additional glory. Vickery had the ear of the postmaster-general. He may have thoroughly imbued Wynne with the Bristow-Kansas-anti-Dice theory of the Lewis case. He may also have communicated to Wynne his suspi- cions that all was not right in the office of the third assistant. Alread}', as we know, there was bad blood between the office of the third assistant and the division of the postoffice inspectors. The phrase, "Follow the case, wherever it may lead, even if it touches people in Washington," was evidently intended as a spur to Fulton's ambition. The people in Washington suggested are evidently Madden and his chief clerk, Travers. However all this may have been, the Lewis case was now fairly launched, and the inspectors' service was definitely committed to its prosecution. Fulton acknowledged promptly on February 11 the receipt of Vickery 's "personal communication of the 8th instant, suggesting an investigation of the various concerns promoted by E. G. Lewis of this city." By way of reply, he forwarded a copy of his letter of instructions of February 6 to the inspectors. He stated that it was purposed to extend the investigation to cover the Woman's Jlagazine and other of Lewis' promotions, but that it had not been his intention to do more than supervise the investigation. He says, however, "I will give this case some personal attention, in accord- ance with your instructions." A portion of this letter can be con- sidered more properly in connection with the question of second- class entry, but Fulton proceeds in part as follows: Regarding your request for an immediate investigation covering the Lewis promotions, I desire to state that the stock of the People's United States Bank is not to be issued to subscribers and the bank is not to be completely and distinctly installed until March 4. For this reason, the in- spectors and myself think it unwise to undertake an investigation into the financial responsibility of the bank and other concerns until that time. Meantime, we had contemplated the attempt to secure the co-operation of a state bank-examiner. In view of these facts, it is deemed unwise to begin 882 THE SIEGE OF UNIVERSITY CITY active work until that date, especially in view of the charges that the funds of these various institutions are being "liited" from one to the other as is necessary to make a showing when one of the institutions is attacked. Had Fulton been himself the head of the State banking depart- ment of Missouri, he could not have displayed more sense of power. The zeal of his house was evidently "eating him up." SECOND ARTICLE IN THE MIRROR. The Mirror of February 9_, 1905, contained the following article by Reedy, which was immediately turned over to the inspectors by Fulton : MK. LEWIS AND HIS MAIL BANK SCHEME. Last week's Mirror contained an article, in answer to inquiries from all over the country, setting forth the general haziness, as it seemed to me, of the scheme of Mr. E. G. Lewis' People's United States Bank, duly incor- porated under the laws of the State of Missouri. A cursory glance was taken at the career of Mr. E. G. Lewis and the character of some of his former exploitations. He has floated a number of schemes a short while, and for a short distance. They followed one another quickly. His Woman's Magazine, at ten cents a year, with two millions circulation, and his Woman's Farm Journal of the same character of publication, seem flour- ishing, and it has been through these media he secured the stockholders and depositors in his mail bank. I have read a great deal of the literature of promotion of these schemes in the publications mentioned, and I find it, as I said, extremely hazy and stamped with an insistence upon altruistic pur- pose which, in its over-emphasis, is, to put it mildly, suspicious. Mr. Lewis has been investigated by the postal authorities, but that was at a time when he had a friend in the postoffiee in Inspector Dice, another in the man in the weighing department, another in Postmaster Baumhoff, and a relative of Inspector Dice in his (Lewis') own office employ. There was a time when the reports of inspection of Lewis' business made in the evening were in his hands in the morning before they were sent on to Washington. This was when he ran an endless chain card scheme and when he ran a great AVorld's Fair guessing contest. But Inspector Dice is dead now, and there has been a cleaning out of "the old gang" in the Postal Department. Mr. Lewis has had a clean bill of health and he has been permitted to use the mails to start his bank, and it is not for me to say anything as to how the said clean bill of health may have been obtained. I say no more than that Mr. Lewis' promotion literature seems to promise too sure and too big profits to his stockholders and depositors. I say further, that his stock subscription blanks are framed in such a way as to commit the signer to what looks like going into a blind pool and giving to Lewis authority to use the money subscribed in any way he may see fit to use it in connection with the bank. The subscriber appears to have no re- course against Lewis if anything goes wrong with the bank. I observe that Mr. Lewis freely pledges his personal fortune to the support of the scheme, but whether that fortune will be sufficient to protect the interests of eighty- five thousand stockholders, I don't know. I don't understand that Mr. Lewis has a large personal fortune; and the companies he has put forward seem, in many instances, to be rather heavily incumbered with mortgages and deeds of trust. He may be making all the money he says he is and the property he has acquired through his companies may be worth what he says it is, and all paid for, but there are documents in evidence, I imagine, at Clayton, St. Louis county, which, if examined, might show that hundred thousand dol- lar transactions can by means of draw-downs and come-backs, dwindle to the insignificance of mere fifteen or twenty thousand dollar payments. THE DREYFUS CASE OF AMERICA 383 When the minor employees in a great bank flotation or other scheme are dropped because they ask questions about records they are instructed to make, things don't look right to me. When the analysis of the business of Mr. Lewis shows that while he has a great revenue he has a tremendous expense, and when there are conditions favoring the possibility of one great scheme being called into being to strengthen another, and aU based upon a system of palavering the public into a belief that a man lives and breathes and has his being only to make money for that public, I don't like the looks of it. And when Mirror readers ask me about the general char- acter of the scheme I give them my opinion as plainly as I have been able to formulate one. Mr. Lewis' mail bank may be all right, but its looks on paper made the postal authorities dubious, and some things that I have heard about the postal inspections of Mr. Lewis' schemes in the past lead me to have some doubt either as to the competency or the integrity, at any rate, the infallibility, of the inspectors. This bank scheme of Mr. Lewis is a big one, a very big one. Its carrying out is dependent upon the co-operation of hundreds of thousands of people who are asked to hand over their small savings to Mr. Lewis. How the earnings necessary to support the bank are to be made on these savings is not lucidly set fortli. It seems to me that Mr. Lewis' authority in this banking scheme is such that he might loan the money to himself or some of his companies, with no security other than that personal fortune of his, of which one may be skeptical. One may be skeptical of any bank in which a leading factor is a faith curist who lives by selling cathartic lozenges to a public that cannot be moved l^y faith alone. Mr. Lewis has pretty nearly two pages of "dope" about this bank scheme in the January issue of his Woman's Farm Journal. I have read and reread those two pages with care. I have had them read by a financial expert and a la-svyer for my special benefit. Tlie sum total of my effort to determine just what are the specific guaranties of security for investment or deposit in this People's United States Bank has been only confusion. * * * Mr. Lewis may be another banker like those who dominate money mat- ters in New York or Chicago, or he may be a financier only in a Chad- wickian sense, hypnotized by himself into capacity to hypnotize others out of their hoards. If Rufus J. Lackland, William H. Thompson, Charles H. Huttig, Walker Hill, William H. I-ee, A. A. B. Woerheide, any or all of them — bankers of St. Louis — will read Mr. Lewis' literature about this Peo- ple's United States Bank and tell me that it is a good, safe, sane and sound financial venture, founded on correct principles of banking, I will recommend it as an investment and a depository to the people throughout the country who write the Mirror for information of the character of the undertaking. THE EVE OF THE INQUIRY. The official instructions to Inspectors Stice and Sullivan now appear to have been practically complete. In justice to the inspec- tors, we digest, from the Ashbrook Hearings, this testimony of Stice : I beg to call to the attention of the committee that matters referred to up to this time all occurred prior to the entrance of Mr. Cortelyou into the Postoffice Department. The investigations were ordered by President Roosevelt and Postmaster-General Wynne. They were actively under way from February 7, the date that the papers were turned over to me and Col. Sullivan, before Mr. Cortelyou came in on March 4 following. I mean by under way, the inquiry as to the different businesses that were to be inves- tigated, the reading of all literature, and getting together the magazines. Unless that is done, no person is able to understand fully this case. They must go to the beginning and read every article that was used in the pro- motion of any of these institutions. We engaged ourselves in this way prior 384 THE SIEGE OF UNIVERSITY CITY to our actual appearance at the office of the promoter. We were thus en- gaged trom February 7 up to March 14, when the inspectors connected with the investigation first appeared at the office of Mr. Lewis. Copies of the Woman's Magazine and Woman's Farm Journal containing any reference to any of these institutions were obtained. I read them all carefully — studiously. I have undertalten to make it clear to the committee that, so far as I know, this case was placed in the hands of Col. W. T. SuUivan and myself regularly without any other instructions than what we might have had in any other case. We entered upon this case, both of us, with an open mind. We knew nothing of Mr. Lewis or his business and had never investigated him before. Mr. Sullivan had been recently transferred to St. Louis from Denver, Colorado. I had been transferred from the Kansas City division in June preceding. Neither Mr. Cortelyou, Mr. Goodwin, Mr. Wyraan, nor any other persons whose names are mentioned in the evidence as being parties to a conspiracy, had any connection with these cases up to the time the investigation was made and our reports submitted in May, 1905, with the possible exception of Mr. Fulton. The attention of Lewis, of course, had been called to the articles of Beedy in the Mirror. The relation between Nichols and Reedy appears to have been known to him. It was apparently to set at rest these charges that he dispatched the following letter to the chief inspector at Washington, which had the effect of hurrying on his disaster: Recently some of the enterprises in which I am concerned, as well as myself, have been subject to very unfriendly criticism in a local weekly publication here, making various vague and indefinite charges. The princi- pal accusation appears to be that in some way I have been able to hoodwink Postoffice Department officials and thereby seal my enterprises and inten- tions from publicity. I have reason to think that the instigator of this attack is a young man, formerly in my employ, whose animus is extremely hostile and wlio possesses little sense of responsibility in matters of this sort. But, whatever the mo- tive or sources of the attack may be, justice to the Postoffice Department as well as to myself and to the many very responsible business men of St. Louis and elsewhere who have been for some years interested and asso- ciated with me in my various enterprises, leads me to respectfully request your Department to make an immediate and thorough investigation of my enterprises as fully as you may consider appropriate. Every facility will be given to your Department to make the investigation as thorough as you desire. All that we shall ask is that the investigators may be disinterested and intelligent men, acquainted with the subjects involved in my lines of business. Postmaster-General Hitchcock, in his response in 1911 to the charges of the Lewis Publishing Companj^, comments upon this communication as follows: On the day after the induction in office of Postmaster-General Cortelyou, March 8, 1905, Mr. E. G. Lewis, president of the Lewis Publishing Com- pany, addressed a letter to the chief inspector for the Postoffice Depart- ment, requesting a thorough and complete investigation of his several en- terprises. It would now appear that all doubt as to the necessity of an in- vestigation had been cleared away. CHAPTER XVII. THE NEW FEDERAL BANK-EXAMINERS. Lewis' Subscription to Capital Stock — The Stock in Lewis' Name — Stockholders' Proxies — Was Lewis Millionaire OR Pauper? — The Alleged Shortage — The Increase in Capital Stock — The Fifty Thousand Dollar Note^ The Note for One Hundred and Forty-Six Thousand Dollars — Was There Any Shortage? — Other Loans op the Bank. A kind of grim humor attaches in retrospect to Lewis' childlike simplicity in turning to the banking department of Missouri and to the Postoffice Department at Washington as his natural helpers. Was Lewis conscious of fraudulent misrepresentation in the pro- motion of the bank? Was he aware of having embezzled the bank's funds and converted the money to his personal use? Did he know of any shortage of hundreds of thousands of dollars in the funds for which he was responsible? If such charges are true, one can hardly account, upon any theory save that of madness, for Lewis' urgent and oft-repeated invitation to the State authorities to send their bank examiners and to the Federal authorities to send post- office inspectors to make an investigation of his affairs. To assert, as the inspectors have done, that Lewis was merely bluffing, in the hope that a show of willingness to throw open his books and papers might enable him to get off without detection, is to accuse Lewis of a kind of folly that is wholly out of keeping with the admitted quality of his wits. For Lewis, whatever his faults, is not a fool. Nor is any such supposition borne out by the event. Lewis, in fact, has never made any attempt to conceal anything. Except for his refusal to permit the inspectors to continue their investigations beyond the point where their animus and incompetence had become apparent, and after the bank examiners had completed an exhaustive inquiry, his attitude has always been that of courting investigation. All the circumstances suggest to the dispassionate inquirer that Lewis was misled by his temperamental optimism into the belief that everybody would be as delighted that his achievement was a huge success as he was himself. Therefore, he welcomed, as allies, the spies who afterwards betrayed the bank to its doom. The representatives of the Government before the Ashbrook Com- mittee testified that the inspectors who conducted the investigation of the People's Bank were among the most competent in the postal service. The methods they employed were said to be in strict 385 386 THE SIEGE OF UNIVERSITY CITY accordance with the instructions of their superiors and the policies of the Department. The investigation of the bank maj', then, be regarded as t3'pical of the attitude of the Government toward the citizen, as exemplified in this branch of the public service. These facts have been repeatedly testified to by the inspectors. There can be no dispute concerning them. A summary review of the na- ture, manner and extent of tliis investigation will clear up any doubts there may be in the reader's mind as to the proprietj^ of stigmatizing postofRce inspectors by the odious name of spies. Stice testified that there were on file, in the office of the inspectors in charge in St. Louis, four jackets on as many diiferent cases touching Lewis and his affairs. These had been made up at Wash- ington and forwarded to St. Louis for investigation. Each contained one or more letters of complaint against one or other of the Lewis enterprises. Did the inspectors send for Lewis or call upon him and lay before him frankly the contents of these j ackets ? Did they ask him to explain the facts in each particular case .'' Did they show him, for example, the letter of Howard Nichols and attempt to ascertain if he knew of any reason why Nichols should turn against him.'' Did they inquire whether or not Nichols was actually in a position to secure the information which he claimed to have? Did they ask Lewis if the statements made by Nichols were true? Did they give him any opportunity whatever to rebut those statements? Did they take into account tlie nature of his rebuttal in their inves- tigation of the facts ? The answer to all of these questions and many similar inquiries that suggest themselves is. No ! For it is said by the inspectors themselves to be one of their fixed policies never to reveal to the accused the nature of the charges that have been made against him. Let us see what actually took place. Stice testified that the first thing he and Inspector Sullivan did, after the four cases against the Lewis enterprises were turned over to them for investigation, was to familiarize themselves somewhat with the charges. To this end they read and studied all the copies of the Lewis promotion literature that they could obtain. They occupied in this way the interval from February 7, to March M, 1905. The avowed purpose of this preliminary study was to enable them to grasp Lewis' activi- ties in their entirety. They did not seek to investigate each indi- vidual complaint. That method, in the case of the letter of Howard Nichols, would have resulted in their learning that Nichols simply did not know what he was talking of. They proposed, on the con- trary, a comprehensive inquiry, embracing no less than the totality of the Lewis enterprises. A number of questions will at once suggest themselves to every practical man of affairs. Were these men competent to conduct such an investigation? No! They were, as we have seen, men of the most ordinary intelligence. Did they employ expert accountants or otherwise audit the books of account of the various enterprises? THE DREYFUS CASE OF AMERICA 387 No ! They did not deem the co-operation of such experts necessary. Did they conduct formal hearings, and require the testimony given to be taken down by an official stenographer? No! Their con- versations were informal ; and they depended largely upon their recollection of the verbal testimony given. Did they conduct a thorough examination of the books of account and check up the original vouchers, in order to obtain a proper comprehension of the subject matter in each case.' No! They contented themselves with the inspection of particular books of account, and from particular accounts and items which they deemed suspicious they made such memoranda as they saw fit. Did they devote to the entire investi- gation an amount of time adequate to an exact knowledge and thorough comprehension of the subject matter involved.'' No! They were present in person on the premises of the bank not to exceed three and one-half days, or twenty-odd hours all told, during their investigation of a two and one-half million dollar institution. How, then, did they obtain the information upon which their report was based and the fraud order was recommended? Partly, by two after- noons of desultory conversation with Lewis and certain of his asso- ciates ; partly, by the examination of his promotion literature, and partly by his written replies to lengthy written interrogatories. In addition, they made a few memoranda from the daily balance book of the bank. They totaled up the stock subscription books kept by Lewis as promoter. And they caused Lewis and his associates to draw up and make affidavit to three or four brief statements as to circumstances which they deemed to be suspicious, for the manifest purpose of introducing these as evidence in the event of criminal prosecution. To sum up briefly. Inspectors Fulton, Stice and Sullivan first presented themselves at Lewis' office on the afternoon of March 14, 1905. Lewis placed himself wholly at their disposal. He reminded them that he had courted investigation and stated his gratification that an inquiry was being made. He described in great detail the history and the present status of all his enterprises. He announced his willingness to furnish all information, whether verbally or in writing, that might be required. He told the inspectors that the ■whole institution was open to them from top to bottom. He observed no precaution, called no witnesses, took no stenographic record of the proceedings. He supposed that he was, in effect, talking to the President of the LTnited States, and relied absolutely as a loyal citizen upon the good faith of the inspectors as representatives of the Administration. An agreement was reached at this interview that Lewis should furnish files of his publications and other promotion literature and should answer in writing a series of interrogatories. The next three weeks were occupied by these matters. The inspectors came back on the afternoon of April 8. Once more an entire afternoon was consumed by a desultory cross-examination ranging over all of Lewis' 388 THE SIEGE OF UNIVERSITY CITY enterprises. An agreement was reached during this interview in pursuance of wliich the inspectors returned on April 10 and 11, with a number of clerks from the St. Louis postoffice, and totaled up on adding machines the subscriptions to the People's Bank shown in Lewis' books as promoter. Some days afterwards they came back and asked for the vouchers showing the return by Lewis of certain sums of money to persons whose subcriptions had been cancelled. He then told them that they had "gone the limit." Such, in brief outline, is the story of the entire investigation. What was the purpose of the inspectors' inquiries.'' AVhat cir- cumstances aroused their suspicions.'' What were the issues subse- quently joined.^ The following brief analysis purports to furnish answers to these questions: The attitude taken by Lewis toward the inspectors' investigation is one of the subjects as to which there is no disagreement. The inspectors testify that the first two interviews of March 14 and April 8, each consuming an entire afternoon, were most cordial. In the interval Lewis cheerfully furnished all the information they required. Lewis' personal counter books, containing the list of subscriptions to the bank stock, were freely turned over to post- office clerks who came out to run up the totals on adding machines on April 10 and 11. But, subsequently, when Inspector W. T. Sullivan called to verify the sums shown by those books to have been returned to subscribers, Lewis refused to give him further access to his books. Following is an extract from Fulton's testimony: The purport of the interview on March 14 was a statement to Mr. Lewis that we called to investigate the bank. He said that he had made a re- quest to the postmaster-general for an investigation and was willing and de- sirous that it be made. Some rumors and charges had been made in the public prints and on the streets by a former associate with whom he had had trouble. This man claimed that Lewis had been fraudulently engaged and had been insolvent with several different schemes with which the two were connected. Also that he had been indicted in the state court when Governor Folk was circuit attorney, for conducting a lottery in connec- tion with the World's Fair Contest Company. These rumors, he said, were causing the bank to be discredited. Some stockholders were with- drawing their deposits. He was anxious to have an investigation, so that he could be vindicated from those charges. We went into those charges with him in detail. Following is an extract from the testimony of Mr. Stice: Our first interview there, the 14th of March, was rather a preliminary discussion about what his disposition was, and what the purpose of our in- vestigation was. Certain arrangements were made verbally. Certain things we would want he agreed to furnish. Other information he agreed to sub- mit in writing. Before our next visit we submitted a lot of questions asking for information. This he furnished. Then we returned on April 8, to verify some of the information he had given us in writing. We were there over half a day. No obstacle was thrown in our way. Everything was lovely. We next went out on April 10 and 11 to get the total from these fifty- four subscription books. I don't recall any obstacle then. We took up the ques- tion of the cancellation of subscriptions. AVhere there was a line drawn through the subscriber's name on Lewis' subscription book, he said it meant THE DREYFUS CASE OF AMERICA 389 that the subscriber's money had been paid back. The total, according to the book, was $a04,993.65. But he afterwards refused to furnish us the papers which would establish the leturn of these cancellations. Two or three requests failed to get that information. He first said that he would furnish it at a certain time, but never did. Col. Sullivan went out there and I went out there, and the statement he made to us was, "You postofEce inspectors have gone the limit. You can't get any more information here." The next time I went out there on the bank matter was the first part of July, on instructions of the Depart- ment, to examine the salary vouchers that were represented in the promo- tion of the bank. The information that we asked for then was given. lewis' subscription to capital stock. The nature and amount of Lewis' subscriptions to the capital stock of the bank, the question as to whether he paid for any of the stock with his own money, and the circumstances surrounding the issuance of stock certificates in his name, are subjects of considerable con- troversy. The facts of record are as follows : The first subscription by Lewis shown by the articles of incor- poration of the bank was for 9,915 shares. The balance of eighty- five shares was subscribed in lots of five shares each by the other seventeen incorporators. Lewis drew a check for $495,750 in half payment for this stock, upon his personal account. This account then contained both funds remitted to him by subscribers, as their agent in the organization of the bank, and funds belonging to him personally. The inspectors state that when Lewis was asked by them on March 14 if he had subscribed and paid for the stock which was then standing in his name, he said he had. On the 8th of April he corroborated that statement under oath. What amount of stock was subscribed for by you in the original corpora- tion, and how much was paid on it up to the close of business, March 14, 1905? Ans. Nine thousand nine hundred and fifteen shares were sub- scribed for by me and $495,750 paid on it by me. Same question as to the increased capital stock? Ans. Fourteen thou- sand nine hundred and ninety-nine shares were subscribed for by me, fully paid, as trustee for other subscribers ; value, one hundred dollars each. How much stock was taken by subscribers, other than yourself, of the original stock, and how much was paid on it up to the close of business, March 14, 1905? Ans. Eighty-five shares, at one hundred dollars each, half paid. Same as to increased capital stock? Ans. Ten shares, all paid. E. G. Lewis. Subscribed and sworn to before me, a postoffice inspector, April 8, 1905, at St. Louis, Mo. R. M. Fulton, Postoffice Inspector-in-Charge. The inspectors then state that Lewis' testimony at the hearing in Washington on June 16 and 17, 1905, was that his original sub- scription of $495,750 at the incorporation of the bank, was paid for by him as trustee from the funds of other subscribers. The testi- mony of the inspectors, and also of Assistant Attorney-General Goodwin and his assistant, Lawrence, to this effect, was introduced in evidence at Lewis' trials. The fact appears to be that the truth lies between the two statements, or rather that both statements are true with qualifications and explanations which Lewis apparently did not deem it necessary to give to the inspectors, but which he 390 THE SIEGE OF UNIVERSITY CITY entered into detail under examination by the State banking de- partment on April 13, five daj's later. In the above affidavit Lewis did not state that the shares subscribed for by him in the original incorporation were his own shares, or that the money paid on those shares by him was his own money. Nor, on the other hand, did he state specifically that he acted as agent in that transaction, although he does so state in the following paragraph as to his subscription to the increased capital stock. The basis of the inspectors' criticism is, therefore, either an inference as to Lewis' meaning, or an assump- tion that he ought to have made as full and explicit a statement to them as he afterwards did make to the secretary of state and to the assistant attorney-general at Washington. Secretary of State Swanger, as head of the State banking depart- ment, and Bank-Examiner Nichols interrogated Lewis on April 13, 1905, and the result of that examination is of record. The sub- stance of Lewis' statement as to his subscription at the incorporation of the bank is as follows: The nature of the subscriptions made prior to the incorporation of the bank on November 14, 1904, was in effect the placing in my hands of a cer- tain sum for organizing a bank or trust company under such name and in such manner as in my judgment was best. I was practically a trustee for the subscriber on a written agreement in which I agreed to refund the money or give him stock in a bank or trust company, which I would form. I carried the money in my personal account at the Missouri-Lincoln Trust Company. I did not keep these funds separate from my personal account, because the transaction was between myself and the subscriber. He could call on me for his money at any time and many subscribers did so. My rela- tion with the subscribers was purely one of personal contract. The subscription as incorporator was mine. I was a bona fide sub- scriber. I regarded myself as an organizer of a bank with a planned ob- ject in view between myself and my associates. They had confidence in my ability. I subscribed for all but eighty-five of the shares and paid in $495,750. I paid this only partially out of the subscriptions received from subscribers. A part was my money; the rest that of the subscribers. That will be shown by the record showing the amounts received before Novem- ber 14. We did not apply all of the funds received to the payment for this stock. Some of it was carried over to a special account. We did not want to overpay the half. We carried tlie rest on certificates of deposit. A large part of the subscriptions received was advanced by me. It came out of my account. Suppose a man bought one hundred dollars' worth of the stock but paid only sixty dollars. I would pay the forty dollars and hold his receipt as collateral. I should say that altogether my loans on ac- count of subscriptions and advances for demand subscriptions would amount to about one-third of my original subscription. I borrowed the money from private parties and banks. These figures are approximate. The remaining two-thirds of my original subscription was held for the sub- scribers in trust, the funds of the subscribers and myself being kept to- gether. There is no means of knowing exactly how much of my own money was used. We carried over to a special account two hundred thousand dol- laws, and I cannot now say how much was my money and how much was the subscribers'. THE STOCK IN I.EWIs' NAME. The propriety of Lewis' conduct in causing certain certificates of stock to be issued to himself is also a matter of controversy. Exami- iffliiiillH -f'Q lis o ^ a = a '■', a J^ Cq "^ 9^° 1^ '•,""■,: III 'i!"i;ii'. (i,^ ^•|;e«T '"' Hi o -c. •i) Li, n .i:; -, K ■^■^ -ti -a '^ -^ "-J ^~- ^ o kJ-^ = o b/J ^c c S ri: "^ ^ s V -— -S^ s^ t) :r o ■c^ =: qg "^ THE DREYFUS CASE OF AMERICA 893 nation of the stock certificate book of the bank shows thai certificate No. 1 was made out in the name of E. G. Lewis for 915 shares. This was an oversight or clerical error. These 915 shares (or eighty-five shares less than 1,000), at the par value of one hundred dollars, would have made the capital stock of the bank only one hundred thousand dollars instead of one million dollars. The correct number should have been 9,915 shares. Bank-Examiners Cook and Nichols detected this error on their first visit on April 6 and called it to Lewis' attention. Nichols' statement on this matter at Lewis' first trial is in substance as follows : I tried to ascertain from Mr. Lewis, himself, what stock was issued to him personally. I found that he held all but eighty-five shares of the origi- nal capital stock. I asked him if he subscribed for all that stock for him- self or as trustee for outside stockholders. He said he was trustee. I then suggested to him that he should issue these certificate in his name as trus- tee. He replied, "I shall have to have two shares in my name to qualify as a director." He then canceled the first certificate and drew another for himself for two shares and another as trustee for 9,913, as I recall it. This statement is confirmed by the testimony of Bank-Examiner Cook. On this head, the inspectors submit the following affidavit, taken on the occasion of their second visit: The first certificate was issued to me for nine hundred and fifteen shares, a clerical error, and should have been for 9,915 shares, and on which I paid ?495,T50. The next seventeen certificates, for eighty-five shares all told, were is- sued to subscribers outside of the original incorporators. From that num- ber to No. 4,381 have been issued to date, April 8, 1905. Certificate No. 1 is half-paid stock. It was marked "canceled" through error and then marked "half-paid" under the instructions of the bank-ex- aminers. Then the certificate which should have been canceled in the first place. No. 19, was canceled in the place of certificate No. 1, under the in- structions of the bank-examiners. Certificate No. 1 should not be marked "canceled" but should be "half-paid." This was an error in the instruc- tions of the bank-examiners at the time the writing was put on the first certificate. When the balance of the original incorporation of a million dollars is paid up, then certificate No. 1 will be canceled and certificates issued for the full amount paid in its place. The pro rata of this would be a certificate for Sl^S.^oO being issued to me personally, unless for some reason I had sold part of it to some one else. As the subscriptions are paid in, the original capital stock of a million becomes full-paid and will be issued full-paid. For instance, if $100,000 came in today and was applied on the original incorporation of a million dollars, one-half of which has already been paid, this would enable us to at once issue $200,000 of full-paid stock of the original: $100,000 of it would go to me personally, full-paid, I having already paid in the first half of the original capital; the other $100,000 would go to the other subscribers outside of the original incorporators. E. G. Lewis. Subscribed and sworn to before me, a postoffice inspector, April 8, 1905, at St. Louis, Mo. R. M. Fulton, Postoffice Inspector-in-Charge. Returning to the record of Lewis' examination by Swanger of April 13, above cited, his explanation as to the issuance of the stock is in substance as follows: The first eighteen shares of stock were issued to the original incorpora- 394 THE SIEGE OF UNIVERSITY CITY tors. I issued the first certificate in my own name for nine hundred and fifteen shares as full-paid, and canceled one-half of it, because it was in- tended to be issued full-paid. My intention was to issue half to myself and the other half to subscribers. I expected to pay on this original stock up to half a million dollars in addition to what I had paid in. I could not determine what particular subscribers would get the other half of the stock until we were ready to issue it. That was left to my discretion. That was the agreement when they sent in the money. They did not know whether they would get the stock or get the money back. I re- served the right to refuse subscriptions. For instance, I received a ten thousand dollar subscription from Woodworth, La. A man sent in a list of twenty names for five hundred dollars each. I found that nineteen of these names were fictitious. I then refused his entire subscription and sent back his money. My object from the start was to prevent any one person from securing over five hundred dollars' worth of stock. I intended to issue the stock to those who, in my judgment, were entitled to it. I stated explicitly what I intended to do. I said that if it was in my means I would subscribe to one-half of the stock and, besides myself, no man on earth would be allowed over five hundred dollars' worth of the stock, and that my stock would be placed in the hands of a trustee so that if I should die it would serve as a protection to the small stockholders. I am carrying out the trust as rapidly as I can, and that is one of the matters I want to take up with the banking department. I do not claim to hold all of the stock represented by the original certificate personally. My purpose in is- suing it to myself was to facilitate the organization of the bank. There was no other practicable way to do it. My public announcement to these peo- ple was that this was what would be done. The controversy between the inspectors and Lewis is here due to the difference between their respective viewpoints. The inspectors evidently regarded the organization of the bank as having been completed. They, therefore, considered that its existing status was conclusive as to Lewis' actual intent. The existence of a certificate of stock in his name, which had been paid for wholly or in part with the funds of other subscribers, was construed by them as proof of fraudulent intent. Lewis' entire testimony shows that he looked upon the existing status as a purely temporary stage in the forma- tion of the bank with five million dollars of capital, of which he proposed to subscribe for and pay, personally, one million dollars, if he could. The problem was complex. He was inexperienced in the minutiae of banking. There was no material difference in his opinion as to the method in which the stock was issued, provided every subscriber received the full amount of his subscription in the stock of the bank at par before the full capitalization of five million dollars was issued, or got his money back in cash. The reservation of half of the original capitalization for himself by the device of paying in only half of the original capital stock, was in accordance with his imdertaking to pay dollar for dollar up to the limit of his private fortune, upon which so much insistence has been placed. According to the laws of the State of Missouri, the other half of the capital could have been paid up by him at any time within one year. The evidence shows that he was taking steps to realize upon his various assets, and that he could easily have raised that amount in time to complete this subscription within the period allowed by THE DREYFUS CASE OF AMERICA 396 law. The testimony of the bank-examiners is conclusive as to Lewis' willingness to comply with their suggestions touching the manner in which the stock certificates should be made out. They both state their instructions in this regard were immediately carried into effect. The testimony of Goodwin, Lawrence and the inspectors present at the hearing in Washington, is relied upon by the inspectors as a flat denial of the above affidavits furnished them by Lewis. The true effect of that testimony is, however, merely to put into juxta- position two apparently contradictory statements, without the quali- fication and explanation by which they were accompanied when uttered. No transcript of the hearing at Washington is of record, and Lewis' full statement at that time is not, therefore, available. The testimony of the Government witnesses on this point is wholly ex parte and shows upon its face that efforts had been made to refresh the memory of the witnesses as to facts relied upon to secure conviction, in strong contrast with absence of any recollection of circumstances favorable to the defendant. Lewis may be open to criticism, from the inspectors' standpoint, for not having furnished them as exhaustive an explanation of his plans and purposes as he afterwards furnished the secretary of state. Possibly their conclu- sion that the certificates of stock standing in Lewis' name were evidence of fraudulent intent, may have been a logical inference from the information then in their possession. Such inference, how- ever, would be removed from any candid mind by an analysis of Lewis' statements to the secretary of state, above cited, and by his willingness to comply with the instructions of the bank-examiners. The inspectors and bank-examiners were in frequent consultation, and the presumption is conclusive that all these facts must have been in the inspectors' possession at the time they submitted their adverse report and recommendation of a fraud order. This is the conclu- sion of Inspector Stice: Tlie record of stock subscriptions shows tliat Mr. Lewis was not a bona fide subscriber to the stock of the bank at its incorporation. Neither was he a bona fide subscriber up to March 14, 1905, nor did the records show that he ever paid in any of his private funds for stock, notwithstanding, nearly all the stock had been issued to him personally at the time of incor- poration. Yet he represented that he was investing dollar for dollar. Stice was corrected at this point by Congressman McCoy, and accordingly modified his last statement to say that he was repre- senting that "he would" take dollar for dollar. The above is a comprehensive review of the evidence pro and con as to this matter. The reader may draw his own deductions. There is no material controversy as to the certificates issued for the increased capital stock, to which Lewis subscribed as trustee for other stockholders to the amount of 14,490 shares, and his asso- ciates, F. J. Cabot and E. W. Thompson, to the amount of five shares each. The latter subscriptions were made to comply with the provisions of the law, which require the names of at least three persons as incorporators. 396 THE SIEGE OF UNIVERSITY CITY stockholders' proxies. The propriety of requests by Lewis for jiroxies from out-of-town stockholders is called in question upon the ground of his represen- tation that no group of men could ever get control of the bank, whereas the proxies would place the full control in the hands of Lewis and his associates. The testimony of the inspectors is to the effect that a proxy was required of every subscriber before Lewis would consent to issue a certificate of stock. Stice testified at Lewis second trial that on the inspectors' second visit, Lewis stated that for every share of stock which had been issued, a proxy was first requested, and that between three and four thousand proxies had been secured. Fulton testified to the same effect, except that, accord- ing to his recollection, -i,381 shares had been issued between April 3 and 8, and that a proxy had been required in every instance. The inspectors, however, were presumably familiar with Lewis' examina- tion by Swanger, five days later, when Lewis testified on this head as follows : I asked the stockhiolders to sign a proxy if it was not objectionable to them. All of the stockholders have not sent me proxies. I should say that out of one and a half million dollars, six or seven hundred thousand was represented by proxies. Practically every person who subscribed to this stock did so through a personal acquaintance with me or through implicit confidence in my ability. 1 am personally held strictly responsible. Failure would mean the destruction of my publishing business. I felt my responsi- bility to them, and asked them to allow me all proxies on their stock. I would divide the proxies into four classes: There is the straight proxy, in which no alternation was made; the proxies in which somebody else's name is substituted for mine; those, in which the time limit has been stricken out, making the proxy revokable at any time; and others, bearing various alterations, such as revocation of my right to buy the stock at the market price, and the like. The subscribers were authorized to make any modifications in the form of proxy that they saw fit. None of these qualifications are mentioned in the testimony of the inspectors — a most significant oversight. WAS LEWIS MILLIONAIRE OR PAUPER? Lewis' net worth, his credit and that of his various concerns, in short, his personal standing in the financial world as of January 1, 1905, prior to these investigations, are very important subjects of inquiry. They have a direct bearing upon his ability to pay in cash for the half million dollars' worth of the original capital stock held in reserve, and the additional subscription he proposed to make up to one million dollars. These questions will come up again, in connection with the proposed bond issue and other steps to raise money for this purpose, which he asserts were frustrated by the attacks afterwards made upon him. Much testimony as to these matters was introduced at his two trials, especially the second. Still more was adduced before the Congressional Committee. No more space need be devoted here to that controversy. Grave as are the above findings of the inspectors, they may be regarded as incidental to the following conclusions which are eyi- This old hcn-honse w::s conz-crtcd by Lewis into a pottery. Mara ha acquired the art of molding, f.ring, and decorating porcelains, aided solely by Taxila Boat's master- piece "Grand Feu Ceramics." translated by Samuel Robineau. This was the germ of the Art Institute of the American Woman's League ^Lewis' early attempt at ceramics ^Exterior view of hen-house pottery ^Interior view THE DREYFUS CASE OF AMERICA 399 dently the gravamen of the inspectors' charges. They are thus summed up by Inspector Stice : THE ALLEGED SHORTAGE. On March 14, 1905, the special account of E. G. Lewis in the banlc books failed to show the receipt by him of $190,375.63, money received for invest- ment for stock in the bank. Consequently, had his accounts been charged with the whole amount received, according to his own personal record, he was short in his assets that amount and in addition there remains a defi- ciency of $75,571.06* which was never entered in the bank books at all, a disappearance of $271,947.59. * * * The report of the receiver filed with the county court as of August 16, 1905, shows that up to that time Mr. Lewis had converted, either directly or through loans to the use of himself, his officers or corporations con- trolled by them, or had loaned on collateral of these corporations $1,039,- 6,'22.44, practically one-half of the capital stock. Concerning the alleged shortage of $271,947.59, Stice indulges in the following arraignment: I want to say to the committee that this condition was brought about by Mr. Lewis at a time when he had a free hand, untrammeled by the state bank-examiners, postoffice inspectors, officers of the bank or any other deterring influence. No investigation had previously been made. There was no attack by the officers of the Postoffice Department or the express companies or any of the powerful forces that he characterizes as his ene- mies. Everything was in his absolute control. Yet he did not and could not account for the shortage. I ask, in the face of the evidence then before the postoffice inspectors, how could any honest officer of the Government, charged with the duties imposed upon him, and obligated under his oath of office, do other than recommend that the officers of the People's t'nited States Bank and E. G. Lewis, be cited to show cause why a fraud order should not be issued. This alleged shortage was deducted by the inspectors from the comparison of the books kept by Lewis as promoter, described by Inspector Fulton in the following language, with the daily balance book of the People's Bank: We then called for the liabilities of the bank, in a general way; in other words, what contributions there had been to the bank. Lewis stated it would be practically an impossibility to learn that without calling; in all of his preliminary receipts scattered all over the country. Upon further inquiry, it developed that he had kept some fifty or more books that might be caUed counter-books. They were square pasteboard-covered books, about eight inches wide and ten inches long, contained possibly one hundred and fifty pages, in which he listed the persons who had remitted certain amounts and the sums remitted. Lines were drawn through some of those items indicating, as he stated, the return of some of those contributions. He suggested that it would be an enormous task to ascertain the facts from these. We agreed v.ith him, but told him it was necessary to undergo that. AVe made arrangements that this should be done with the aid of clerks and adding machines. The result was that the contributions shown by these counter-books indicate something over $271,947.59, more, as of March 14, 1905, than he had listed among his assets or evidences of assets upon the books of the People's Bank. These charges (of which we shall hear much in what follows) show how important it is that these two sets of books — Lewis' sub- 400 THE SIEGE OF UNIVERSITY CITY scription books as promoter and the books of the bank as a corporate entity — be clearly differentiated from one another. THE INCREASE IN CAPITAL STOCK. The state of facts in question had to do with a coincidence which presented itself in a very diiferent light to the inspectors and the officers of the banlc respectively. Fulton, it will be remembered, responding to Vickery's demand for an immediate inquiry, stated that the bank would not be fully installed until March 4. He, there- fore, proposed postponing his investigation until that time. Before the Ashbrook Committee he said: On March 14, 1905, the capital stock was to be increased to $2,500,000. To facilitate the investigation and render conditions more favorable toward getting at the exact situation, I had requested the chief postoffice inspector for permission to defer further investigation until the banlj had placed itself in the position of a going concern. This the chief inspector acqui- esced in. Announcement of the proposed increase of capital stock to take elfect March 17 had been publicly advertised, in the newspapers according to law, for sixty days preceding. The inspectors had full knowledge when it would take place. Fulton designedly appeared on the eve of this transaction. Yet, the inspectors allege that the changes on the books of the bank necessary to carry the increase into effect excited their suspicions and directed their particular at- tention to the alleged shortage of one hundred and ninety-six thou- sand dollars. The facts may be briefly mentioned. On March 15, two days before the proposed increase was voted, all the available funds of the bank were transferred by Lewis' direction to the E. G. Lewis Special Account. The amount so transferred lacked precisely $196,375,63 of the amount of a million and a half dollars required. There is no dispute as to what was done in this emergency. The inspectors and Lewis agree that two notes were placed among the assets of the bank and credited to the E. G. Lewis Special Account, aggregating the sum required to make up the deficiency. One of these two notes, for the amount of $146,375.64, was alleged by Lewis to represent the promotion expenses of the bank. The other was his personal note for $50,000. The addition of these two notes to the available cash assets brought this account up to the sum required for the increase in cajjitalization. This was accordingly paid and went into effect as planned. The propriety of these two notes has been bitterly assailed on several grounds. The inspectors allege that Lewis had represented that he would himself pay the promotion expenses, whereas, in fact, he admitted having paid them to the amount of a hundred and forty- six thousand dollars from the subscribers' funds. They challenge the propriet^v of the item of advertising in the Lewis publications of some fifty-two thousand dollars as a wrongful conversion to that concern of the subscribers' money. They allege that many of the THE DREYFUS CASE OF AMERICA 401 items covered by the schedule of promotion expenses were incurred after the organization of the bank and were, therefore, properly chargeable to operation rather than to promotion. They base a charge of perjury against Lewis upon the ground of his oath to the secretary of state that the increase had been paid in cash. THE FIFTY THOUSAND DOLLAR NOTE. As to the fifty thousand dollar note to Lewis personally, the fact that no cash was passed to Lewis when his note was accepted by the bank, was taken as evidence that he had previously drawn the money. Lewis was criticised for borrowing of the bank at all. The security which he offered was deemed improper. Both these items, in fact, have been exhaustively scrutinized and criticised from every conceivable viewpoint. The record on these matters is far too voluminous to be quoted, and as the facts as to what took place are not in controversy, further comment here seems unnecessary. In- spector Stice says: These two notes were subsequently surrendered by the board of directors to Mr. Lewis without pajinent, and the money previously advanced to Mr. Lewis never came back to the bank or its stockholders. Yet, Mr. Lewis says he never profited a penny by these transactions. What did he do with the $50,000? How can it be said that these actions were overwhelming evidence of good faith? Mr. Lewis acted in a fiduciary capacity. He was a trustee under certain conditions which he himself prescribed. I charged in 1905 in my recommendation to the Postoffice Department that this was a wrongful conversion and I believed that it was. The reader is already familiar with the answer to Stice's query. Lewis did not withdraw one dollar of the $50,000 in question from the People's Bank. On the contrary, he afterwards paid that sum in cash into the bank from funds belonging to subscribers which he had on deposit elsewhere. Thereupon his note was taken up and canceled. THE NOTE FOR ONE HUNDRED AND FORTY-SIX THOUSAND DOLLARS. The first issue raised by the inspectors as to the directors' note for one hundred and forty-six thousand dollars is to the effect that in his representations as promoter Lewis agreed to pay the promo- tion expenses of the bank itself. A close analysis, however, fails to confirm this statement. Lewis stated in several instances that he was "carrying" the promotion expenses. In furtherance of this claim, he alleges that he caused the advertising of the bank and other expenses incurred by the Lewis Publishing Company to be charged to his account during the promotion period. He also borrowed from various banks and private individuals considerable sums, which he drew upon in course of the bank's organization. No direct quotation is made from any of his literature wherein he agrees definitely to pay all the costs of promotion, although the purpose of the directors' note was to make Lewis and his associates respon- sible for such portion of that amount as the secretary of state de- clined to allow as a legitimate charge against the bank. Inspector 402 t'HE SIEGE OF UNIVERSITY CITY Stice on this point made this statement, which is corroborated by the testimony of Fulton, Nichols and Goodwin: On our second visit the question of promotion expenses came up in connection with the hundred and forty-six thousand dollar loan. Mr. Lewis said that money had been previously expended and that he did not expect to pay the note. The matter would be presented to the secretary of state and whatever was allowed he would take credit for. He did not consider the note of any further value than to file it in lace of the money which had been used for that purpose. A condensed summary* of the items of expense charged to pro- motion was furnished by Lewis to Inspector Stice. Lewis after- wards furnished to the bank-examiners a more lengthy memorandum, with the vouchers, showing total disbursements of $286,919.38. From this, however, he crossed off items totalling $90,543.70, leav- ing the balance of $196,375.63 represented bj^ the directors' note for promotion expenses. Inspector Stice alleges that this sum of $90,54'3.7O was not accounted for at all. He further saj^s the pro- motion expenses continued long after the bank was chartered and that the sum of $9,017.57 was included in the note which was ex- pended after the note was made, namely, between March 17, 1905, and April 5, 1907. He saj's: The $90,543.70 should also have been charged to the Lewis Special Ac- count on the bank's records. The books of the bank showing stock subscrip- tions would then have agreed practically with the memorandum account kept by Mr. Lewis. The shortage in the bank would have stood on March 14, 1905, at a sum equal to this amount, plus Lewis' note of $50,000 and the directors' note for promotion expenses of $146,375.70, or a total of $286,- 919.38. Deducting the disbursements made after March 14, the day of the note (but included therein) of .$9,017.57, leaves a shortage of $277,901.81, as against the total shortage found by us of $371,947.59. Fully half the items of expense charged to promotion are improper, a large portion being items of expense, salary and operating expenses incurred long after the bank was organized. On the occasion of our visit in July, Lewis stated that the sum expended for advertising was about $63,000. On April 8, he stated that the reading matter which appeared in the AVoman's Magazine and Woman's Farm Jour- nal was a part of that expense. He submitted a written statement of the number of lines, rate per line, and amount charged in the Lewis publica- tions. He escorted Messrs. Fulton, Sullivan and myself downstairs to the first floor of the office of the Lewis Publishing Company. There he directed the bookkeeper to prepare this and give it to us. A total of between fifty- two thousand and fifty-three thousand dollars had been paid the Lewis Publishing Company for advertising, and some advertising had been done outside. Lewis was unalile to account for this shortage which we found of $271,- 947.59, except on the theory that the Postoffice Department compelled him to charge $53,000 to himself and pay it to the Lewis Publishing Company for the editorials he had written (to be taken from the money of his inves- tors for alleged promotion expenses) and other amounts' for operating expenses incurred after the hank was organized. On this point, I desire to say that the Postollice Department, to my knowledge, never advised Mr. •The summary gives the following figures: Advertising, $63,338.27; Postage $53- 857.50; Salaries, $22,948.68; Sundries, stationery and printing, $6,231.28- 'Total $146,375.73. ' ' THE DREYFUS CASE OF AMERICA 403 Lewis in this matter about charging for the advertising expenses. No ex- planation has been offered by him as to the balance. WAS THERE ANY SHORTAGE? These differences of opinion appear to have been due to differ- ences of viewpoint. The inspectors regarded the organization of the bank as having been accomplished, whereas Lewis considered the existing status as preliminary to a five million dollar incorpora- tion. The inspectors do not appear to have inquired whether there were loans by the bank of subscribers' funds outstanding; or other funds in Lewis' possession belonging to subscribers, which had not yet been turned over to the bank. Lewis' theory was that he was acting as agent for the subscribers in the incorporation of the bank and was personally responsible to them individually. He did not consider that he was under obligatitjn to carry the total subscriptions in the People's United States Bank, and there is no evidence of record to the effect that he actually did so. He alleges that he was responsible for the total sum contributed by subscribers and kept a careful account of every penny of actual disbursements. Both the bank-examiners and the inspectors testify that they never had an opportunity to verify the sums refunded by Lewis to withdrawing subscribers on the cancellations of their subscriptions. The inspec- tors credit Lewis with the amount of $204,000, but, as we shall see, the sum of two hundred and eighty-four thousand dollars was in fact returned to subscribers before the bank passed into the re- ceiver's hands. The difference in these two items nearly equals and evidently accounts for the alleged shortage. A conclusive answer to these charges is found in the fact that every subscriber held Lewis' receipt and had the privilege of claim- ing from the receiver his pro rata in the liquidation of the bank's funds. Lewis' original stock subscription books (the counter-books alluded to by Fulton), upon which the calculations of Stice were based, were turned over to the receiver. All of the subscribers were circularized by him and invited to submit their claims. The receiver, in other words, took cognizance of the sum total of Lewis' collections from the public. Every individual subscriber had his option of exchanging his claim against the bank for cash, for the preferred stock of the Lewis Publishing Company or for Lewis' trustee notes. The sworn statement of the receiver to the court does not make mention of the shortage variously alleged by the inspectors at sums ranging from seventy-five thousand to ninety thousand dollars. The investigation of the inspectors was admittedly a very brief and fragmentary one. The books of the bank as a whole were never in their possession. Their visits were confined to portions of four days, during which their time was chiefly occupied in discussion with the bank's officials. The inspectors are evidently mistaken. The alleged shortage was confined to their own memoranda. It had in reality no other existence. The widespread dragnet thrown over the United States by the 404 THE SIEGE OF UNIVERSITY CITY inspectors' service has failed to disclose a single complaining sub- scriber who did not get Lewis' receipt for his money. Everyone afterwards got stock in the bank for the full amount of his sub- scription, or the equivalent in his pro rata of cash, or Lewis Pub- lishing Company preferred stock, or Lewis' trustee notes, at his option. The subscribers know of no shortage. The receiver found none. Nor has the Government been able to establish in court or otherwise the fact that any shortage actually exists. The testimony on this head is limited to that of Inspectors Stice and Sullivan. With so much of explanation the reader must draw his own deduc- tions. OTHER LOANS OF THE BANK. There remains for consideration, finally, the inquiry of the in- spectors into the loans made by the bank to Lewis and his associates and to the corporations under his control. Dismissing the two notes already mentioned, there remain a series of small loans in sums of from one to ten thousand dollars to the Lewis Publishing Company, amounting in all to about sixty-six thousand dollars, made from the subscribers' funds prior to the incorporation of the bank; sundry small loans to Lewis' associates; a series of loans to the University Weights Realty and Development Company, aggregating over four hundred thousand dollars, and the note of the Lewis Publishing Company to the amount of three hundred and seventy-five thousand dollars — a total amount, according to Stice, of $842,886.81, exclu- sive of the two notes above mentioned. The facts concerning these loans are not only of record on the books of the bank and the minutes of its board of directors. They also appear in the report of the State bank-examiners and of both receivers to the court. The only controversy regarding them is as to the propriety of loans by the bank to Lewis and his associates, and as to the nature and value of the security on which they were made. The inspectors challenge the right of Lewis to borrow from the bank on the score of the representation made in his promotion literature that neither he nor any director would become a borrower of the bank's funds. They also make the direct charge that his loans were in violation of the State banking law. The report of the State bank-examiners at close of business April 1, which was available to the inspectors, thus comments upon such of these loans as were then in existence: The notes of the I,ewis Publishing Company to the amount of eighty-eight thousand dollars bear dates of April 9, 1904, and are in sums of from one thousand to ten thousand dollars. These notes are payable to E. G. Lewis and by him endorsed. They draw interest of 6 per cent from date and are payable on demand. Upon Inquiry of one of the local banks as to the financial condition of Mr. Lewis, I was informed that they were extend- ing him a line of credit to one hundred thousand dollars. The report of one of the reliable commercial agencies states that the company had assets, over and above all liabilities, of five hundred thousand dollars. This is exclusive of the Woman's Magazine and Woman's Farm journal franchises. THE DREYFUS CASE OF AMERICA 405 The note for five hundred dollars of Sterling Brothers is given by a local firm which does bank printing. The note will be taken out of the amount due them by the bank. The note of $57,459, given by the University Heights Realty and Devel- opment Company is secured by warranty deed to thirty-five acres of land, situated west of Pennsylvania Avenue. The land is deeded to the Peo- ple's United States Bank. The deed is not recorded, but is held as col- lateral to secure the payment of this note. The note of two thousand dollars, made by C. W. Clawson and Cal Mc- Carthy, dated January 18, 1905, bears interest at 6 per cent from date, and IS secured by ten thousand shares par value one dollar of the United States Fibre Stopper Company. I have been unable to ascertain the value of this stock, but have heard that it has been sold as low as thirty-five cents on the dollar. Clawson is assistant cashier to the People's United State Bank. The note of Edmund H. Powers for two thousand, five hun- dred dollars is secured by ten thousand shares in the United States Fibre Stopper Company. The notes appear to be in a clean condition. The average rate of inter- est is about five per cent. The quality and value of collateral securing same is donbtful in most eases. The accommodations seem to be limited to E. G. Lewis and his associates and the Lewis Publishing Company. Under the head of bonds^ stock, etc., mention is made of the addi- tional items of two hundred and thirty shares of the par value of one hundred dollars, six per cent preferred Lewis Publishing Com- pany stock, held by the bank for twenty-three thousand dollars; 1,373 shares at par value of ten dollars of the University Heights Realty and Development Company six per cent preferred stock, held at thirteen thousand seven hundred and thirty dollars; and twenty income bonds of the par value of three hundred and fifty dollars of the California Vineyards Company at seven thousand dollars. On these the bank-examiners state they had been unable to get quotations. The security for the additional loans to Lewis and his associated enterprises, subsequent to the investigations of the inspectors and bank-examiners, will appear in their place. DISCOUNTS OF COMMERCIAL PAPER. The first of the above items, namely, the notes of the Lewis Publishing Company to the amount of eighty-eight thousand dollars, represent a class of transactions which began almost as soon as Lewis commenced to receive money on his mail bank project, long before its charter was taken out. These consist of discounts of commercial paper received by the Lewis Publishing Company, chiefly in payment for its advertising space. The makers of these notes were for the most part the responsible business houses advertising in the Woman's Magazine, or the great advertising agencies that patronized its columns. They mostly bore not only the endorsement of the Lewis Publishing Company, but of Lewis individually. They could have been discounted at any bank in St. Louis. The St. Louis banks had already handled many hundred thousand dollars' worth of commercial paper similarly endorsed. The sole reason that Lewis discounted these notes with the funds of the subscribers, both before the bank was chartered and later 406 THE SIEGE OF UNIVERSITY CITY with the People's Bank itself, was to give the subscribers the profits that would otherwise have been earned by the St. Louis banks. All the profits thus earned before the bank was chartered were credited to the subscribers. Later, the discounts on these notes went to swell the earnings of the People's Bank. No candid business man would for a moment think of criticising such transactions. Both the loans to E. G. Lewis, of fifty thousand dollars and of five thousand dollars respectively, were, as we have seen, paid up in full. The directors' note for the promotion expense was can- celed by the reorganized directorate. The sequel will show the litigation that followed. The minor loans above mentioned were paid in due course. There remain only the two large loans of about four hundred thousand dollars each to the University Heights and the Lewis Publishing companies, the facts as to which are stated elsewhere in this volume. THE LOANS TO LEWIS CORPORATIONS. The bank-examiners' comment that the bank's accommodations seemed to be limited to E. G. Lewis and his associates and the Lewis Publishing Company. This state of affairs was the basis of the inspectors' criticism. Viewing the bank as a going concern, they took the existing status as evidence of Lewis' ultimate intent, and argued that if he remained in undisputed control, its aff'airs were likely to go on from bad to worse. I^ewis replies in effect that the permanent directorate could not be organized until the fvdl capital stock had been paid in; that he loaned the money of the bank to his own enterprises, because he knew the condition of his own affairs and was willing to assume individual responsibilitj' for them. He further argues that the large ioans to the University Heights and the Lewis Publishing companies were made necessary by the attacks of the State and Federal authorities. Let us see how far these claims are borne out by the evidence. A number of the most prominent bankers in St. Louis have testi- fied that Lewis requested them vo act as oliicers and directors of the People's Bank; that he wrote a letter to each of the principal banks in St. Louis requesting them to appoint a member of their directorate to serve upon the proposed advisory board, and that he offered the presidency of the People's Bank to more than one of the foremost bankers in St. Louis. The attitude toward these proposals taken by conservative banking men was, however, that they would prefer to wait until the total capitalization had been paid in and the final organization effected. This delay was not of Lewis' seeking. The advice of a permanent directorate and of the proposed ad- visory board not being immediately available, Lewis found himself confronted with the problem of investing large sums of money for which he felt he was personally responsible. He was not a banker, although, as he aptly puts it, he already had a good deal of experi- ence in banking from "the outside of the wicket." Neither he nor the People's Bank, however, had any adequate credit system as a -.-as _ a ~ .3-^'^ .2M ? ^, ci -a - . "ii J. o~: ^ £ "a z^ o ■:! (^ = 2 P i "^ = : 1 « 5 ^ = 5 S '^ THE DREYFUS CASE OF AMERICA 409 means of investigating and deciding upon proposed investments. Lewis, in fact, had announced his intention of deferring all perma- nent loans until the final board of directors and the members of the advisory board had been appointed. Meantime, as a business man, he found himself in the position of carrying large sums on deposit in the St. Louis banks at three per cent, while at the same time he was borrowing other sums from the same banks at six per cent with which to carry on his enterprises. The obvious course, to his mind, from the standpoint of his experience as a business man rather than as a conservative banker, was to withdraw his bank- ing business from these other institutions and give his own bank the benefit of the interest charges, discounts and commissions which he was paying. The attack of the Mirror, followed by the rumor of Federal in- vestigation, which as we have seen got into the press the day after the inspectors' first visit to the bank, strengthened this line of rea- soning by the added motive of self -protection. His credit began to be impaired. He was threatened with the possibility of his loans in other institutions being suddenly called in. Hence, the large loans to the Lewis Publishing Company and the necessity of de- ferring the bond issue of $750,000, which caused the carrying of the loans of the University Heights Company longer than was in- tended. The day after his hearing before Goodwin, Lewis appeared before Third Assistant Madden. At this time he touched upon the subject of these loans to the People's Bank as follows: I have been too optimistic at times. I have told my readers what I intended to do almost as if it were already done. The sun shines all around our building and the birds are chirping all the time. I have told them about the People's Bank. I have helped them organize that bank exactly as I said that I would do. Then came the rumor that I was going to be attacked from so many quarters, that when the sun went down that day it would see the last of me. I did not wait until they got there. I am a heavy borrower. I must have tens of thousands of dollars to carry on these great enterprises and to get out my magazines at the rate they are growing. I employ nearly a thousand persons, all told, and my pay- roll is very large. I am able to borrow large sums, because I have always paid when I said I would pay. One of the charges against me is that I have done business on credit, but I do not see how any one can reason that credit is a discredit. Where did I get that credit? I was not born with it. My notes were spread around in the banks of Chicago, New York, and St. Louis to the amount of hundreds of thousands of dollars, because my credit was only limited by what I would borrow. I knew if those men who were engineering that attack caught me with those notes outstanding, largely on demand, neither I nor any other Institution in America could stand the cyclone for a single hour. I saw them coming. I knew first duty was to the people in the bank and to the people who take my magazines, and to those who get their bread and butter from my enterprises. I got my notes in from the other banks and put them into ray bank. I did not make any bones about that at all. It was done legitimately and honestly, with the full knowledge of the peo- ple interested. They never complained. The stockholders in the bank never said a word. My readers were not the ones that found fault. The 410 THE SIEGE OF UNIVERSITY CITY postoffice inspectors in their secret report are tiie ones that made the charges against that institution. lewis' own version. In addition, Lewis made the following statement at the Ashbrook Hearings : I want to explain the circumstances under which the large loans were made to the Lewis Publishing Company and the University Heights Realty and Development Company, which have been so severely criticised. My per- sonal means aside from my banking credit, then consisted of my real es- tate holdings, subject to what I owed on them, and my interest in the publishing company. Following out the promise that I would subscribe to the limit of my personal means, if possible one million dollars, I went to the Royal Trust Company of Chicago, to the Missouri-Lincoln Trust Company of St. Louis, and I believe to one other, and arranged with them to purchase of me a first mortgage bond issue on my interest in the real estate to the amount of seven hundred fifty thousand dollars. I had ar- ranged for further loans. I went up to Mr. Wilbur of the Royal Trust Company of Chicago and borrowed one hundred thousand dollars from them on some of Lewis Publishing Company stock. I had arranged in all for about nine hundred thousand dollars, which was as much as I could secure at that time without agreeing to pledge the bank stock itself as collateral In other words, I was raising this money not on the bank stock I was subscriber for, but on my publishing interests and my real estate, as I had said that I would do. The bonds for the real estate loans of seven hundred and fifty thousand dollars were engraved and the papers were all drawn. The necessary adver- tisements had been inserted in the newspapers. The bonds had been sold almost at par. But when the bonds were delivered at St. Louis by the Western Bank Note and Engraving Company of Chicago, they had made a mistake in the printing of the bonds and coupons. This necessitated the printing of a rider to be pasted on every single bond, or else their all being re-engraved. I have samples of both the original bond and the corrected bond. I took them to the trust companies and they said they could not accept them in that form. They proposed to sell them, and it would ne- cessitate an explanation to every customer and an examination of the rec- ords. Consequently, the bonds had to be sent back to Chicago to be re- engraved. Meantime, when I arranged for this bond issue and had sold thd bonds, I took up the real estate loans that I already had, in order to con- solidate all that real estate under one first mortgage covering this seven hundred and fifty thousand dollars' worth of bonds. I got all my obliga- tions in the shape of demand loans with mortgages attached to them be- cause, in order to issue the bonds it was necessary to make one transaction of the whole thing. A new mortgage had to be filed, covering the bonds, including all the parcels of property that came under it. The old mortgage would then have to be canceled so that the bonds would become first mortgage bonds. Then 1 could deliver them to the purchasers and collect the price with which to pay the banks from whom I had borrowed the money necessary to carry out the transactions. So I had gotten these various loans Into shape of demand loans, a very foolish thing to do. The amounts represented a very small proportion of the value of the properties. The situation was dangerous. The unexpected delay of nearly two months in re-engraving the bonds, put me in a position where I might have been called for those loans at any time. Inability to replace the loans in an emergency would have cost me the loss of real estate holdings very greatly in excess of the loans. The first attack in the Mirror came at this time. Then came a despatch to the Hearst newspaper service. It appeared that there was going to be gome THE DREYFUS CASE OF AMERICA 411 sort of an assault on us, but of course, we had no idea where it was com- ing from or what it was going to be. The large loans to the University Heights and Lewis Publishing companies were made under these circum- stances to prevent the complete destruction of our institutions. The reorganized directorate of the People's Bank, as we shall see^ caused an investigation of these loans to be made by an expert auditor. The directors afterwards testified before the Congressional Committee, in substance, that they regarded the loans as being ex- cessive from the standpoint of good banking, on the ground that no bank ought to loan so large a proportion of its assets to any single group of institutions. They testified further that some of these loans were "slow," in the sense that the assets, under the then exist- ing circumstances, were not immediately convertible into cash. They agreed, however, with one accord and testified most positively that the large loans to the University Heights and Lewis Publishing companies were abundantly secured. Lewis undoubtedly benefited by these loans in the sense of pro- tecting his institutions against the assaults that were made upon them, but in so doing he pledged to the People's Bank nearly all his personal assets in real estate and in his publishing business to an amount far in excess of the sums that he obtained. Each and every one of these loans were inquired into minutely, as we shall see, during his trials in the Federal courts. It is perhaps suffi- cient in concluding this topic to say that Federal Judge Riner pro- nounced the evidence of the defendant's (Lewis) good faith in these transactions to have been "overwhelming." CHAPTER XVIII. THE INSPECTORS' REPORT. The Federal Spies — Justice, the Sole Safeguard of Liberty — The Dreyfus Case op America — The Issue Joined — The Inspectors' Report — Madden's Opinion. The office of the secret spy or informer is one which the entire English race loathes with a sovereign contempt. Men even look somewhat askance at the ordinary detective, because the nature of his employment compels him to act upon the Jesuitical maxim that the end justifies the means. The spy, the informer and the detective have this in common: they most often approach their victim in friendly fashion, under some form of deception or disguise, in order to worm their way into his confidence. Yet they harbor in their hearts the while the deliberate purpose to secretly work his undoing. Men instinctively shrink from these lethal agents as they do from the hiss of the viper, the first whiff of deadly gas or the leprous touch of one suffering from some loathsome, contagious ail- ment. However useful and necessary to the ends of justice the spy and the informer may be deemed, the instinct of repulsion against their practices extends to and includes their person. Men shun them with a half-unconscious sense that their spirit must be congenial to their tasks. THE FEDERAL SPIES. The growth, therefore, of a Federal .spy system in America, of such a nature that a man who claims the right of inquisition in the name and by the authority of the President of the United States, may be in fact a secret spy, is repellant to every tradition and sentiment of a great free people. Murmurs have arisen from every part of the United States in recent years of the insidious extension by the Federal authorities of such methods of espionage. Two classes of Federal agents are chiefly named: the special agents of the Department of Justice, and the postoffice inspectors. The Secret Service of the United States, properly so called, is recognized as inevitably necessary. Even the activities of the Department of Justice are viewed with some semblance of toleration. But the ex- tension of the function of the postofKce inspector to include espion- age into business practices and che affairs of private life, is a species of abuse of power which has created a vague unrest. Men feel instinctively that it strikes at the very roots of their dearest liber- ties. That such practices can exist at all under a representative govern- ment is due chiefly to two considerations. The work of the spy is 412 THE DREYFUS CASE OF AMERICA 415 secret. And dead men tell no tales. The reports of postoffice in- spectors, when employed in the investigation of business enterprises or of private persons, are carefully hid from public view. They are often denied to Congress, ostensibly upon the ground of public policy, but perhaps in reality from very shame that the paucity and puerility of their contents should be revealed. Thus these secret charges and accusations lie festering in the dark, or are brought to light only to be peered at by privileged officials when required for the purpose of damning the accused, or for the justification of his oppressor. These papers would almost seem to be contaminated with the germs of some fatal sickness, which the pure white sun- light of publicity would kill, and which can only be kept alive in the darkness and seclusion of official archives. If the business repu- tation and the personal honor of men are to be contaminated by the secret findings of Federal spies, the whole battle of the Anglo- Saxon race for trial by jury in courts of justice and with the right in every man to be confronted by his accusers, must be fought again. Every system of espionage is justifiable in the eyes of those who profit by it. Neither the spy nor his master can see any impropriety in his proceedings. The officers of government whose duty it is to detect and punish crime must steel themselves to witness the conse- quences that are inevitably brought upon men by the exposure of their wrongdoing. They become callous to human suffering. Con- stant familiarity with all forms of guilt breeds, moreover, an attitude of suspicion, and a not unjustifiable presumption that many whom the community delights to honor would, if they received their just deserts, find themselves within the shadow of the law. Such an officer, on the occasion of a serious accusation, is not apt to be scrupulous as to its nature or the source from which it comes. His duty is the detection of crime, if crime there be. His field of achievement is the conviction and the punishment of wrongdoers. His hopes of advancement, tragic as the thought maj^ seem, are in- extricably interwoven with the downfall of guilty men. The prosecuting officers of government are, therefore, as apt to welcome the disclosure of guilty secrets by the informer or their detection by the spy, as the military commander is to approve of similar service. In either case every species of deceit that a spy can successfully employ is likely to be condoned. The public does not know how such information is procured. The services and reports of spies are shrouded in inviolable secrecy. Their findings are set forth in the official charges and indictments which follow in decent language, and purport to be established by the evidence of reputable men. The public accusation, the odium which attaches to the offense charged, the very fact of the indict- ment, tend to alienate from the accused the sympathies of the public. A prima facie case arouses a presumption of guilt which works powerfully to justify any methods of securing evidence that public officials deem it needful to employ. Even such flagrant abuses of 416 THE SIEGE OF UNIVERSITY CITY power as the red-hot pincers, the "boots" and the rack of medieval torture, or the more refined but equally brutal methods of the modern "third degree," have been tolerated by public opinion, when they have been applied to actual criminals, and when by their means the ends of justice have been attained. History has shown that it is only when a judicial murder or other flagrant injustice has been done, by the false witness of the secret accuser or the illicit finding of the spy, that the actual enormity of such abuses of administrative power is brought, in the phrase of Bacon, "home to men's business and bosoms." A spy system may grow up over a long term of years practically unknown and unre- garded, only to be destroyed in a night when a popular conscious- ness of its essential menace is aroused by the discovery that it has been the instrument of judicial wrong. Nor is it needful that the victim of injustice be wholly guiltless. No citizen is under an obligation to lead a blameless life under penalties which go to a sweeping condemnation of his business and personal reputation and the complete destruction of the fruits of his legitimate labors. The law prescribes penalties which the ex- perience of mankind has held to be suited to the precise character of each offense. After such penalties have been exacted by judicial process, the culprit is entitled once more to the presumption of his future innocence. JUSTICE, THE SOLE SAFEGUARD OF LIBERTY. But as to the officials entrusted by the people with the adminis- tration of justice, the case is otherwise. Let the agents of govern- ment swerve but a hair's breadth beyond the letter of the law; let them commit or condone injustice, however slight, and not the vic- tim only, but the whole body of citizens is injured, and have the right, as indeed they labor under the obligation, of demanding redress. For the law is impersonal. Justice is absolute. The act of the public officer is not his own. It is the act of the whole people. If any public official suffers his prejudice, his passion or his in- competence to hurry him beyond the limits of the law, and if thereby injustice enters in, it becomes the duty of the people to rectify that wrong, however slight, with arms, if need be, in their hands. For there are no degrees in justice. Nor can the people suffer the shadow of their own injustice or that of their servants to fall upon any citizen, however lowly or however great, without consciously lowering the standard of universal liberty under the law which is their sole defense against oppression. This instinct, which is innate in the Anglo-Saxon blood, that in no case must a penalty be exacted beyond that which the law and custom of the community prescribes, has caused the English-speaking race to single out the decision of Portia in Shakespeare's "Merchant of Venice" as a symbol of eternal justice: THE DREYFUS CASE OF AMERICA 417 "Therefore prepare thee to cut off the flesh, Shed thou no blood; nor cut thou less nor more But just one pound of flesh: if thou cut'st more Or less than a just pound, by but so much As makes it light or heavy in the substance. Or the division of the twentieth part Of one poor scruple, nay, if the scale do turn But in the estimation of a hair. Thou djest and all thy goods are confiscate." Has Lewis erred? What man has not! Has he intentionally or unintentionally, consciously or unconsciously, deviated from the strict lines of commercial rectitude, and placed himself within the shadow of the law? Then to the extent of his error and to the full limit of the penalty that the law of such case makes and provides, it was and is no more than right that he be punished. But, in so far as he has done no wrong, and to the full extent that the conduct of his private life and of his various enterprises was blameless, he was and is entitled to the presumption of innocence and the protection of the law. If any servant of the people, be he the President him- self, shall have been so far misguided through ignorance, through incompetence, through zeal, through a mistaken fidelity to a mis- conception of his oath of office, as to pursue Lewis, in consequence even of his wrongdoing, across the line that divides the wrong, if any there be, of which he has been guilty, into the rightful and lawful field of his legitimate career, and there visit upon him so much injury as one breath of baseless slander, the deprivation of a single dollar or the burden of an hour of anxious care, that act is wrong. It is absolutely wrong. Nor can that wrong be borne or purged by any official scapegoat. Let the guilty official suffer. Still, the burden of his misdeeds must lie upon the consciences of the American people. The tongues of millions have made free for many years with Lewis' good name. In so far as what has been said against Lewis is the truth, he suffers justly. But in so far as lies and slander are being bandied from mouth to mouth, Lewis suffers grievous injustice and indignity. And if it shall appear that so much as a single falsehood has been spread abroad by the servants elected by the people of the United States to administer the ends of justice, not that guilty man alone, but the whole people lie under a burden of guilt from which they must yet be purged. THE DREYFUS CASE OF AMERICA. Let this issue be once indissolubly joined, as it was in the case of Dreyfus, and the American people will work it out at the bar of conscience, though they do it with blood and fire. For the case of Dreyfus settled forever the issue between the rights of men and the rights of institutions. The medieval theory of the papacy that the dissenter, the revolutionist, the enemy of the existing order, must, if need be, burn at the stake rather than that the institutions by which society is governed shaU suffer, has been dissipated. 418 THE SIEGE OF UNIVERSITY CITY In France, the crime for which Dreyfus suffered was not his own. It was the crime of the chiefs of the French army. There had been treasonable communications in high quarters. The effect of public disclosures might be to shake the faith of the people in the integrity of its military system. Such loss of confidence might spell the weakening of the loyalty of the people. It might impair the morale of the army, or even deprive it of needed popular support. The end might be the menace and peril of the dreaded German invasion. So reasoned men high in authority, whose motives seemed to them those of the purest patriotism. Not so reasoned the people. Was Dreyfus guilty? Let him suffer. Was he not guilty.'' Let him be declared innocent, though the heavens fall. And so the French people brought Dreyfus back to honor, even from Devil's Island. Is Lewis an American Dreyfus .'' The fraud order, the withdrawal of second-class entry, the indictments, the petty persecutions of the postal officiary, the widespread ruin and the final catastrophe all merge into this single issue. Let us see if this parallel will hold. In America, the postoffice inspection system is the right hand of the postmaster-general. It is the most powerful agency in the consolidation of his power. The Postoffice Department is not only a vast business organization designed to serve the people. It is an enormous political machine, the greatest existing menace to the American democracy. The postmaster-general, in actual practice, is not primarily the head of the Postoffice Department as business manager. He is primarily the campaign manager of the President, the chief political spoilsman of the party in power. Let us suppose that a judicial murder has been done, in which postoffice inspectors have been the guilty aggressors. To acknowl- edge the crime and repudiate its participators would inevitably tend to discredit the service and weaken the grasp of the Administration upon its chief source of political support. Let those in high author- ity be imbued with the pernicious doctrine that the prosperity of the Nation is bound up with that of the Administration, and that the defeat of the dominant party at the hustings is equivalent to national calamity. Might it not well seem to them that the mere life of a single citizen or the utter destruction of any enterprise or any group of enterprises were, by comparison, a negligible thing? Upon the one hand stands the citizen surrounded by the wreck and ruin of his enterprise, fastened to the public pillory and bearing the brand of fraud upon his brow. Upon the other is the compact array of the postal inspection service, the rank and file of the post- office officiary in every city, town and hamlet, the entire administra- tive organization of the Government, and even in the background the Federal judiciary itself, in so far as it is capable of being swayed at critical moments by the prestige and patronage of the Adminis- tration. Such a choice, mayhap, is not one before which the chief THE DREYFUS CASE OF AMERICA 419 spoilsman of any political party would long falter. But if he err, if the sword of justice be cast into the opposing scale^ the time must surely come when he shall see arrayed against him the solid pha- lanx of the people. THE ISSUE JOINED. Such, and no other, is the issue raised by the report of Postoffice Inspectors James L. Stice, William T. Sullivan and Robert Fulton, on the People's Bank. If these men had come to Lewis' door as citizens making inquiry, they would hardly have won past the office boy. They were men of most ordinary capacity. Stice had been head bookkeeper for a coal company, where he directed another clerk or two. Sullivan had been publisher of a country weekly. Fulton, inspector-in-charge, was a fledgling lawyer. Neither man could command a salary in commercial business in excess of thirty or forty dollars a week. Lewis would not ordinarily have dreamed of attempting to explain the character of his enterprises to men who in the very nature of things were incapable of any adequate under- standing. His associates were the presidents of the greatest mail order houses, advertising agencies and banking institutions of America. He had spent months canvassing with these men his projects, winning from them the tribute of their approval and applause. Why should he turn from such men as these and submit to the inquisition and exactions of Robert Fulton and his underlings ? Simply, because they presented themselves in the name and with the authority of the people of the United States. And the people, whose commission they bore, are answerable at the bar of absolute justice for the conduct of these men and for every consequence that has flowed, or shall flow, either directly or remotely through to the bitter end from any act of theirs. THE inspectors' HEPORT. The inspectors' secret report on the People's United States Bank bears date of May 17, 1905. The popular demand for a Congres- sional inquiry, reinforced by a political upheaval which altered the political complexion of the lower House of Congress, has at length dragged this document forth into the light of day. This is the report procured by Betts from Inspector Sullivan (who composed it), and largely quoted in the Post-Dispatch Extra of May 31, 1905. Let us see what it contains. The opening paragraph follows: We have the honor to submit the following report on Case No. 39,640-C, relating to an alleged scheme to defraud by E. G. Lewis of the People's United States Bank located at Winner Station, St. Louis, Missouri, at what is called University Heights addition, the result of personal investigation begun March 14, 1905, and continued from time to time since. Before entering on the case, a brief history of Mr. Lewis' career for the last ten years may be of interest as showing something of his conduct and character during that period. The thirteen paragraphs following (set forth in a preceding chapter) are evidently based upon the allegations of Nichols to the inspectors. The character of Nichols and his animus against Lewis 420 THE SIEGE OF UNIVERSITY CITY has been shown. The inspectors admit that they accepted his state- ments unverified and incorporated them into tlieir report as matters of fact over their o^vn signatures. Three falsehoods occur in the opening paragraphs. Lewis was said to have been in debt for his board, whereas, in fact, he was not boarding, but keeping house. Otto Stoelker was represented as having from grief and humility committed suicide, whereas, in fact, he is still living. Lewis was charged with having induced the sheriff, "by fraud and deception, to loosen up on a car of Anti-Skeet, which Lewis shipped out of the state.'^' This is pure fabrication. The whole alleged history of Lewis' career is highly colored from being viewed through the green glasses of Nichols' jealous rancor. The thirty-three paragraphs next following purport to be chiefly extracts from Lewis' articles in the Woman's Magazine with the inspector's comment thereon. The latter will be quoted as indica- tive of the tone and temper that characterizes the entire report: E. G. Lewis beg;an to advertise the "Postal Bank and Trust Company" in the February, 1904, AVoman's Magazine. Lewis says in this article, among other misrepresentations: "Now I want you to co-operate with us in or- ganizing the greatest banlc in the world. A few dollars from every family where the AVoraan's Magazine goes would mean millions of dollars of capi- tal, and we stand ready to co-operate with you dollar for dollar so that you and we own this great banlc equally." Up to the present time Mr. Lewis has not co-operated to the extent of a single dollar of his own money. The fact of subsequent changes in the plans of the bank and corresponding modifications of its promotion literature is nowhere mentioned. The report proceeds: In the June, 1904, edition of the Woman's Magazine, after dilating and enlarging on the safety, security and prosperity of banking in general, and holding out seductive and brilliant prospects for all to get into a postal bank at its organization, as participants in the greatest bank in the world and sharer of its enormous profits, which will bring wealth in a short time, E. G. Lewis says, among other things: The extract is omitted. The inspectors' comment is as follows: In the July, 1904, Woman's Magazine, two whole pages are devoted to exploiting the "People's United States Bank." The efficient promoter, E. G. Lewis, herein discloses himself as a profuse writer, a shrewd promoter, a genius of more than inventive tact (sic) and pledges his private fortune, the Lewis Publishing Company, his other holding in wildcat schemes, and his sacred honor to the success of this enterprise in the name and for the love of the people. The impropriety of the characterization of any citizen, and especially the president of a two million, five hundred thousand dollar bank in language so intemperate and abusive, in an official report by a responsible officer recommending to his superiors the destruction of that institution, is manifest. The gravity of such accusations obviously demands that they be discussed at least with judicial tone and temper, if not in a spirit of fairness, and with a disposition to allow the accused the benefit of every reasonable doubt. The Anglo-Saxon spirit of fair play, which finds expres- sion in the Americanism, "a square deal," would seem to demantj THE DREYFUS CASE OF AMERICA 421 that the authors of such a report as this should have been severely reprimanded, and at least directed to restate their findings in a proper manner. The whole document would unquestionably have been vitiated if read in evidence before an American jury. An atmosphere of assurance, of implacable hostility and of envenomed malice breathes from every line. Many of the comments and con- clusions stated are obviously impertinent and irrelevant. Counsel for the defense, upon cross-examination, would have literally torn into shreds this basic document which underlies the fraud order, and is directly responsible for the ensuing calamities to the stock- holders of the bank and the associated interests. Tlie next comment by the inspectors, after extensive quotations from the Woman's Magazine, bears upon representations of Lewis as to the proposed directorate of the bank, and especially the fol- lowing statement: "The officers and directors can not borrow or use a dollar of its funds," on which point the inspectors comment as follows: On March 15, 1905, the capital stock was increased to two and a half million dollars, and the increase of one and a half millions was entirely paid in out of subscriptions March 18, 1905. To make whole those sub- scriptions which had been partly used by Lewis in other business, the sum of one hundred ninety-six thousand dollars was borrowed from the bank on March 15, 1905, by Lewis and his directors, that could not be bought. Tliis comment, in view of the circumstances above described, must be characterized as false, misleading and totally gratuitous. Relative to the foregoing (i. e. additional quotations from the Woman's Magazine) let us state here that on March 18, 1905, » * » not a single dollar of E. G. Lewis' money had gone into the bank. He told Bank-Exam- iners Cook and Nichols, April 3, 1905, that he had not paid one cent of the capital stock out of his individual funds, and that it was a mistake to have issued nine hundred and fifteen shares of capital stock in his name. He took a pen and canceled the certificate for nine hundred and fifteen shares in their presence. Later in the same day, after consultation with some of the directors (who are not embarrassed with the acquaintance of experi- ence of banking) he claimed that two shares of the stock should have been issued to him, otherwise he could not be director or president. He accord- ingly issued two shares of stock to himself. On April 8, 1905, in reply to a question propounded by Inspector Sulli- van, he said to Inspectors Fulton, Sullivan and Stice that it was a mistake to have canceled the certificate for nine hundred and fifteen shares of stock made by the bank-examiner. When asked what had become of the other nine thousand shares of the original capital stock, Lewis claimed he was en- titled to nine thousand nine hundred and fifteen shares. He said that he had paid $495,750 of his own funds of the original half-million paid in. The truth is that he had not paid one cent. His charter was secured on the false statement that there was paid in by him $495,750, when in fact it was paid in by subscribers. Evidently the inspectors are depending as to the foregoing largely upon their recollection of verbal statements, as to which they are contradicted in essential details by the sworn testimony, both of the bank-examiners and of Lewis. The report of the inspectors is not made under oath and was so privileged that the authors were aware 422 THE SIEGE OF UNIVERSITY CITY that no responsibility would attach to them for any misstatement of which they might be guilty. Such testimony would obviously be valueless in any court of law. After commenting on Lewis' articles in the Woman's Magazine for October, November and December, the inspectors remark as to the last article as follows: He again pledges his honor, his property and the Lewis Publishing Com- pany and appeals to the help of God to carry on this work, making the broadest and most philanthropic appeals to the people to stand by him in honesty and sincerity. As to Lewis' January (1905) article in the Woman's Magazine, the inspectors comment in part as follows: The most of the article is devoted to how the bank will make profits, the erection of a new bank building, how to save money by sending it to the bank, and generally advertising E. G. Lewis as the greatest benefactor the world has ever known, or is likely to hear of in the future. Thereafter follows a statement as to what purports to be "A careful checking of the subscription books of E. G. Lewis on April 10 and 11, 1905, by Inspectors Sullivan and Stice, assisted by Clerks Byers, McBurney, Fawcett, Miller, Boland and Eitman, showing receipts of subscriptions to capital stock to a total amount of $2,124,539 as of March 31, 1905, the latest then entered upon the subscription records. Some of the entries on subscription rec- ords were marked 'canceled,' others had a line drawn through them, others were marked 'duplicate,' etc. A careful compilation of all these by Clerks Byers and McBurney aggregated credits of $204,993.65, which, being deducted, left $1,919,545.35 as net re- ceipts." Next follows comment upon the transactions connected with the increase of capital stock above narrated, after which is inserted the following schedule: The account of E. G. Lewis in connection with funds received and dis- bursed in this general transaction properly stated for March 16, reads as follows : RECEIVED. Subscriptions for stock $2,114.,926.67 Demand subscriptions 46,074.50 Collection subscriptions 128,043.44 Total $2,389,043.61 Due to balance account 84,049.96 DISBURSED. Paid capital stock 5 500,000.00 Paid capital stock 1,500,000.00 Deductions claimed for cancellations, etc 304,993.65 Total $2,204,993.65 The item of $204,993.65 is unverified by us, and it is our opinion that this amount is overstated. We called on Mr. Lewis for vouchers showing these disbursements, but he refused to permit a personal verification at that time, although he proposed to produce this evidence at a later date. The two items of demand and collection subscriptions are also unverified, and it will be understood that this statement is made up from figures furnished by Mr. I^ewis. THE DREYFUS CASE OF AMERICA 428 This statement shows that E. G. Lewis has actually paid every cent of the two million dollars capital stock which has been paid in, out of sub- scriptions which he received, and that not one dollar of his individual money has been used in the transaction. It further shows that E. G. Lewis had used $196,375.63, which was re- ceived from the dear people as subscriptions for stock in the bank, for his own individual purposes — practically embezzled that amount from the trust funds deposited with him — and only made it good in notes when he found it necessary to pay in the capital stock without encroaching on his "private fortune, his sacred honor, and the Lewis Publishing Company" which had been pledged to put up dollar for dollar with the subscribers. The impropriety of such phrases as "dear people," "practically embezzled" and the like is manifest. The circumstances here de- scribed were specifically testified to at both of Lewis' trials and no evidence of embezzlement was shown. On the contrary, the evidence of good faith was held by Judge Einer to have been "overwhelm- ing." The formal response, under oath, of Lewis as president of the bank to the citation based upon this report, certifies the total amounts refunded to subscribers, as of June 17, 1905, on account of the withdrawal and cancellation of their subscriptions, as in excess of two hundred and eighty-four thousand dollars, or approximately eighty thousand dollars more than the amount allowed by the in- spectors. This difference, added to the item of one hundred and ninety-six thousand dollars, made up of Lewis' note and that of the directors for promotion expenses, exceeds the total alleged short- age charged by the inspectors of two hundred and seventy-one thousand dollars by the sum of two thousand dollars. The in- spector's "opinion" that the "item of two hundred and four thou- sand dollars unverified by us is overstated," is admittedly pure guess- work. Yet former Postmaster-General Cortelyou has testified that he would in the last analysis accept the statement of a post- office inspecor against that of the legally approved and duly quali- fied bank-examiners of the state of Missouri! The circumstances connected with Lewis' note of fifty thousand dollars are next set forth, and thus commented upon: The collateral to secure the fifty thousand dollar note is an agreement on the part of Lewis to execute a mortgage when he obtains a title. If he never takes a title, the security is worthless. The other note is un- secured, but it is alleged that this will be paid when the items charged to promotion expenses are allowed by the secretary of state. Then it will be paid from the earnings of the bank, or in other words by the stockholders. * * * When these notes were placed in the bank as an asset, no money was paid to the bank, hence they were placed there to cover money previously used by Lewis. So that he was short, according to his own records on March 14, 1905, $196,375.63. Of the balance of .$84.,0'19.96 shown to be due the stockholders on March 15, 1905, by the above table of receipts and disbursements, Lewis had on that day a" balance of $3,745.90 in the special account, and $4,733 in his collection account, leaving a balance of $75,571.06 of the subscription trust fund still unaccounted for, which Lewis had used in other concerns. As above stated, the difference between the total amounts paid 424 THE SIEGE OF UNIVERSITY CITY back by Lewis to subscribers and the fraction of that amount allowed by the inspectors, more than wipes out this alleged shortage. Next follows a description of the entries in the bank books in connection with the increase in capital stock, with the following comment : The special account of E. G. Lewis for the bank was increased $375,338.4.7 by the shifting of funds, deposit of notes and the covering into the bank of moneys used by Lewis, all consummated, as we believe, in consequence of our investigation and with the design of deceiving us with reference to the true state of accounts. There is no evidence, other than the inspectors' "belief," of any such design. The entries in question were necessitated by the in- crease in stock and are capable of full and satisfactory explanation in that relation. The inspectors are evidently mistaken in this opinion. They give themselves undue credit. Next comes the following paragraph: On April 8, 1905, E. G. Lewis stated positively to Inspectors Fulton, Sullivan and Stice that of the original capital stock paid in (five hundred thousand dollars), he himself had paid in $495,750, and the otlier seventeen persons who are named as organizers of the bank had paid in $4,250. If this statement was true, which in our opinion it is not, then on March 15, 1905, E. G. Lewis was an embezzler of $575,571.06 of the funds previously remitted to him for stock subscriptions to the bank. A comparison of these statements with the facts of record above cited will show that they are capable of justification upon no theory whatsoever. The report continues: In this connection, permit us to revert to the literature sent througli the mails in which Lewis claimed to be paying all the expenses of pro- moting this bank and that he was putting up dollar for dollar with all the subscribers for stock in the bank, and to say, further, that in the booklteeping department of the Lewis Publishing Company on April 8, 1905, we found a record showing that E. G. Lewis had drawn a salary from the Itank from July, 1904, to February, 1905, inclusive, amounting to $16,598.55 This charge was repeated in the Post-Dispatch and generally published in the newspapers throughout the country. Lewis there- upon complained to the Postoffiee Department and, as has been seen. Inspector Stice was directed to verify this item. He reported to the Department that it was an error. The item was not properly salary, but was in reality work and labor. The entire amount had been drawn by employees and no part of it had been received by Lewis. No effort on the part of the PostofSce Department to give publicity to the fact that this charge had been made under a mis- apprehension, is of record. Next follows an excerpt from the charter of the bank giving the names of the incorporators, and in that connection attention is called to the fact that the first Board of Directors were employees of the Lewis Publishing Company. Then comes an extract from one of Lewis' promotion letters, and a further extract from the Woman's Magazine of January 23, 1D05, stating that the sub- scription books closed as of December 24 with ninety thousand THE DREYFUS CASE OF AMERICA 426 subscriptions to the stock. A further quotation is given in which Lewis stated his plan for trusteeing one million dollars of the stock of the bank, holding half a million dollars to be sold on the install- ment plan, and placing another half million with bank officers and other influential persons to secure their advice and co-operation. The inspectors proceed: The remainder of this article is devoted to showing how great the profits are to be and encouraging savings depositors and the profit-sharing certificates of the bank, and still soliciting additional subscriptions to the capital stock. In the March, 1905, Woman's Magazine, E. G. Lewis devotes about five columns on pages thirty and thirty-one to advertising and exploiting the People's United States Bank, telling how the bank is to make money for its stockholders, and is to be the most profitable bank in existence, and saying that through the fees coming into the legal department of the bank it will pay its expenses; that the bank will be run cheaper than other banks, not costing over fifteen per cent of others; and generally trying to inspire confidence in himself as its head. The savings deposit, the certified-check system, the profit-sharing certificate system, and the expected income and profits are largely paraded, and solicitation is made for deposits. The Bank Reporter is promised, which is to be the bank organ and expositor in future. The impression sought to be made is that Lewis became rich enough through the Lewis Publishing Company, and will make everybody else rich, or at least comforable, who will join this enterprise. After commenting on Lewis' article in the Woman's Magazine for April and the publication called the Bank Reporter, the inspectors proceed to set forth their views as to the value of the Lewis Pub- lishing Company: In advertising and exploiting the People's United States Bank, and in trying to convince the public that the bank would prove a profitable and advantageous investment to the stockholders from the day the bank was organized, E. G. Lewis kept prominently before the public, and particularly the readers of the Woman's Magazine and the Woman's Farm Journal, the building up of these two publications from a capital of $1.25 in the year 1900 and the enormous success which the Lewis Publishing Company had attained in these four years, arising chiefly from the inventive genius, the organizing ability, tact, and shrewdness of E. G. Lewis, and arguing from this standpoint that the bank, engineered and promoted and managed by this same world-astonisher, would bring untold wealth, prosperity, financial power, and great riches to any person who would invest in same, even to the extent of one dollar, promising himself to put in dollar for dollar for every dollar put in by all his patrons. He claimed that the Lewis Publishing Company is now earning an annual profit of from one- quarter of a million to one-lhird of a million dollars a year, and had erected the "great ofEce-building of the Woman's Magazine and Woman's Farm Journal for cash, without mortgage or lien, at a cost of over a half million dollars, in five years, from a start of $1.35, showing what can be done, if enough people combine to do it, even at ten cents per year each." Then follows extracts from the April and June numbers of the Woman's Magazine to the same effect, after which the inspectors insert a statement of tlie Lewis Publishing Company furnished them by Lewis as of March 14-, 1905, upon M'hich statement they thus comment : 426 THE SIEGE OF UNIVERSITY CITY Analysis of the assets given above shows that one and a quarter million dollars thereof consists of the franchise or privilege of mailing the two publications as second-class matter at the rate of one cent per pound. This franchise only one of the publications possesses. The Woman's Magazine is being mailed on a temporary permit of the postmaster at St. Louis, Mo., on an application filed in 1899 (three years before the Woman's Magazine had existence) for same privilege to the Winner Magazine, made by the Mail Order Publishing Company. Hence, these are improper assets and do not exist in fact. Deduct this amount from the assets and, without questioning the remaining assets, the total assets would be $951,326.45. Pay off the liabilities due banks, notes for sup- plies, and special loans (with which the "great ofBce" was built), aggre- gating $593,593.71, out of the assets, and there would remain only $357,733.74, and the surplus would have been absorbed and the capital stock impaired. This analysis shows (sic) that the Lewis Publishing Company did not build its "great office" building with "cash and without mortgage or lien," and clearly indicates that its great earning power is far below "a quarter to a third of a million dollars per annum." The fart is, the Lewis Pub- lishing Company has long been doing business on credit, and so has every other company with which E. G. Lewis has been associated. The only companies with which he has been connected which have been able to meet expenses, independent of assistance, are the World's Fair Contest Com- pany (a lottery, pure and simple), and the Lewis PubUshing Company, during the year ]901>, and both these companies did business on borrowed money. Lewis states that he was enabled to build up the Lewis Publish- ing Company from a capital of $1.35 to its present earning power of from a quarter to one-third of a million dollars a year by borrowing at needed times approximately two million dollars. (See his answer to question 28, dated April 4, 1905.) All the other companies were in debt in 1904 and are in debt today; hence, the necessity for organizing the People's United States Bank, in order to have ready cash from which to supply the harassing needs of the struggling companies. The actual earning power of the Lewis Publishing Company is certainly much less than he attributes to it; but, in his system of shifting funds from one to another, making the strong help the weak, it is difficult to determine what its earning power really is. The function is here assumed to be inherent in the office of post- office inspectors to sit in judgment upon the values and methods of accounting of large business enterprises, and, on their unaided judgment, to make deductions for the guidance of a great adminis- tr.a.tive bureau. Certified public accountants have testilfied that the Lewis Publishing Company was, in fact, highly prosperous during the period in question. Duly qualified experts have under oath as- sessed the franchises of the two publications which the inspectors stigmatize as "purely theoretical assets" as in excess of the sums at which they were carried on Lewis' books of account. By what license do tliey — an ex-bookkeeper of a coal company, a former publisher of a country weekly and a fledgling lawyer — presume to embody in an official report these baseless slanders? By virtue, forsooth, of a commission whereby they stand in the place of and embody the authority delegated by the people to the President, and by him to the postmaster-general, of the United States. By order of Lewis, two statements were furnished the inspectors by Will Ahrens, bookkeeper of the Lewis Publishing Company. THE DREYFUS CASE OF AMERICA 427 The first showed the consolidated receipts of the company for the first quarter of 1905. The second, the same statement of receipts and expenses for each month separately. Upon a comparison of these the inspectors make out a difference in the two reports of $56.85 upon the side of earnings and $1,020.85 upon the side of expenses. The former item was shown by Lewis at the Hearing before Goodwin to have been an item of interest earned durino; that period. The latter was due to an error in addition by Inspector Sullivan, which, according to the testimony of Inspector Stice, Sullivan freely acknowledged on the same occasion. On examination Inspector Fulton admitted that he did not detect this error. Nor, he said, did he consider it any part of his duty as inspector-in- charge to verify the additions or other statements of the inspectors' reports. This difference of one thousand dollars between two state- ments furnished the inspectors was published in the Post-Dispatch as among the items which aroused their suspicions. The newspaper- reading public had no subsequent knowledge that this charge was due to the inspectors' error in a very simple addition. The inspectors next comment on the fact that the cost of adver- tising the Woman's Magazine and Woman's Farm Journal in other publications was not charged to expenses during the quarter in question, and if so charged, would have reduced the earnings by that amount. This charge in itself betrays total ignorance of the publishing business. The cost of advertising done during the quar- ter preceding a financial statement would be ordinarily regarded as an asset or investment rather than as an expense. The report next discusses the loans of the bank to the Lewis interests, to the total amount of $411,203.18, upon which this com- ment is made: Thus, before the increase in capital stock from one million to two and a half million dollars, E. G. Lewis, for himself and the companies in which he is financially interested, had taken from the bank $411,203.18 of the half million dollars paid in as capital stock by the original sub- scribers to the bank stock. This action was in direct violation of that part of the State banking law under which the bank was incorporated, which reads: "No officer or director of the bank shall be permitted to borrow of the bank in excess of ten per cent of the capital and surplus without the consent of a majority of the other directors being first obtained at a regular meeting and made a matter of record. * * * No bank shall lend its money to any individual or company, directly or indirectly, or permit them to become indebted or liable to it to an amount exceeding twenty- five per cent of its capital stock actually paid in." The statement of the inspectors that the loans of the bank to Lewis enterprises were in direct violation of the banking laws of Missouri is absolutelj^ false, as inspection of the minutes of the bank will most conclusively demonstrate. These inspectors were not lawyers, nor did they possess a knowledge of the minutes of the directors, upon which to base either an individual judgment or an 428 THE SIEGE OF UNIVERSITY CITY inquiry of counsel. They simply guessed that these loans were lawless^ and their guess was wrong. From the foregoing statements the inspectors deduce the follow- ing conclusions: Therefore, Edward G. Lewis, having devised and intending to devise a scheme or artifice to defraud the subscribers to the capital stock of the People's United States Banlc, which scheme then and there consisted in obtaining money subscriptions for stock in said bank, by exaggerations and misrepresentations of the security, safety, and profits to accrue to said subscribers of stock, and promising to put in of his own funds dollar for dollar for every subscriber, and then organizing said bank so that Edward G. Lewis could and would control the same without the voice of its stockholders therein, and use the funds subscribed, or a large portion thereof, for his own purposes and benefits, by use of the PostoflBce estab- lishment of the United States, in furtherance of such scheme did deposit in the United States mails at Winner Station, St. Louis, Mo., certain letters, pamphlets, magazines, circulars, and books, representing that said bank would be one of the greatest organizations of the world; that its capital stock would be worth several times par the day the charter was granted; that its expenses would be only fifteen or twenty per cent of banks doing a like amount of business, while its profits would be many times greater; that, from the certified check system alone the earnings "will be nearly a quarter of a million dollars per year," and that Lewis would subscribe for a million dollars of the stock and "every dollar of my profit will go to increase the reserve of the bank each year," and it (the bank) "will be the financial guardian of a milion homes," and as to its safety and security he stated five propositions: First. The bank is governed by officers and directors, but they can not loan its funds to anyone and can not borrow from it themselves. Second. By our system, its loans are passed on, and the greatest part of them are guaranteed and secured by other banks with the best col- lateral. Third. The entire capital of five million dollars will be invested ex- clusively in Government bonds and State bonds and the most gilt-edged securities. Fourth. * * * Fifth. My own stockholdings of one million dollars (one-fifth of the capital) are trusteed so that their entire earnings go into the reserve fund of the bank, thereby adding each year greatly to the value of youi stock holdings. The inspectors then declare that these and sundry other proposi- tions which they attribute to Lewis, are untrue. The language used has been quoted, in substance, in Betts' story from the Post-Dis- patch. Next is printed the proxy which has been previously quoted from the Post-Dispatch. Commenting on this, the inspectors say: On April 8, 1905, Mr. F. V. Putnam, cashier of said bank, stated to Inspectors Fulton, Sullivan and Stice, in the presence of E. G. Lewis, that 4,381 shares of the increased capital stock had been issued and in every instance the stockholders had signed the foregoing proxy and waiver before the certificate of stock was issued. The statements made under oath at Lewis' examination by the secretary of state in this connection are here totally ignored. The inspectors thus characterize the collateral loan feature of the bank: THE DREYFUS CASE OF AMERICA 429 It is untrue that the great profits, which Lewis represented in litera- ture sent through the mails would accrue to the bank, could possibly ac- crue to the bank as represented, and Lewis, recognizing this fact, devoted a long article in the May, 1905, Woman's Magazine to a scheme of turning the bank into a pawnshop and accumulating riches out of the diamonds, gold watches, and gold bullion pawned to the bank on loans at eight per cent interest, and melting up the gold watches and bullion pawned as pledges for loans and forfeited to the bank. No form of language could convey a notion more preposterous or more diametrically opposed to probability than that Eewis' motive in copying the collateral loan feature of such institutions as the Mont de Piete of France (of which, presumably, the inspectors had never heard) was the recognition by him that the great profits he anticipated would not accrue. The proceeding whereby Lewis placed at interest the funds of the subscribers which were in his hands and credited the interest earned pro rata to the various subscribers is thus characterized by the inspectors: Special attention is invited to correspondence of E. G. Lewis with Miss F. Ellen Ayars, New Richland, Minn., rural route No. 3, which shows that under date of September 17, 1904, Lewis mailed her a receipt for one dollar, "for a corresponding amount of shares of stock in a People's Mail Bank or Trust Company" (envelope enclosing same being post- marked September 30, 1904), and under date of December 9, 1904, he sends demand for an instalment of twenty-four dollars on her subscrip- tion of twenty-five dollars to stock of People's Postal Bank, to be sent not later than December 20, 1904. It appears that she did not remit the twenty-four dollars, and on March 2, 1905, he mails her a passbook, with a credit of one cent dividend on her one dollar remittance for stock. He was therefore paying a dividend of about two per cent per annum at a time when the bank had not earned a dividend and was practically insolvent from the misuse of funds received for capital stock. This conclusion is not only pure guesswork. It is totally errone- ous and can be justified upon no hypothesis whatever. Lewis' attitude in relation to the investigation is set forth as follows : The investigation of this case, which, at the beginning was apparently courted by E. G. Lewis, was afterwards much hampered and delayed by him when he found we desired to verify eveiy account and representation, and on the 21st ultimo, when Inspectors Sullivan and Slice called to verify the credits to which Lewis was entitled to returns of remittances for capital stock, cancelations, withdrawals, alleged duplicates, etc., found on original records of subscriptions for stock, Lewis practically informed us that we had '"gone the limit" in the investigation; that his girl clerks were scared to death every time the inspectors or state bank-examiners visited his oiEce, and were circulating it over the city that the bank was in a bad way and was likely to go out of business; and that Inspector-in- Charge Fulton's letters sent out had cost him over eight thousand dollars in withdrawals of money sent in for stock or deposits. He then proposed that we leave with him a list of the credits which we had found, and he would withdraw all papers relating to same, and then allow us to verify them. We have not yet had that opportunity. The net conclusion of the inspectors is conveyed in the concluding paragraph of the report as follows: 430 THE SIEGE OF UNIVERSITY CITY We have already demonstrated that a large portion of the funds secured by E. G. Lewis for stock of the People's United States Bank through misrepresentations and exaggerations sent through the mails, were misappropriated and used by Lewis, and believe if the bank be continued and increases of capital stock thereto be granted from time to time, enabling him to have excuse for additional solicitations of more money, either as additional capital stock or deposits, that great and enormous frauds will continue to be perpetrated by said Lewis, and we, therefore, recommend that a fraud order be issued against the People's United States Bank, its officers and agents as such at St. Louis, Mo. We will submit the evidence and facts obtained as early as practicable to the United States attorney for the eastern district of Missouri, with a view to crim- inal prosecution for using the mails in furtherance of a scheme to defraud. Very respectfully, (Signed) Wm. T. Sullr'an, J. L. Stice, Postoffice Inspectors. To Mr. Robert M. Fulton, Inspector-in-Charge, St. Louis, Mo. May 17, 1905. Report examined, approved and forwarded to chief inspector. R. M. Fulton, Postoffice Inspector-in-Charge. IIADDEn'S OPINION'. Former Third Assistant Postmaster-General Madden tlius com- ments on the above report, in his statement to the Ashbrook Commit- tee as attorney-in-fact for the Lewis Publishing Company: The first part of the report is devoted to a "brief history of Mr. E. G. Lewis's career for the last ten years." It then goes on to make liberal quotations from the literature alleged to have been sent out by Lewis in the promotion of the bank, and arrives at conclusions as to the fraudu- lent intent thereof. This is followed by statements of the bank's financial affairs as disclosed in the inspectors' investigation of its books. The report closes with a recommendation that a fraud order be issued against the bank and its oflicers. It then says that the matters reported upon will be laid before the United States district attorney with a "view to criminal ])rosecution for using the mails in the furtherance of a scheme to defraud." The report does not state or refer to any statute which authorizes such an investigation. It does not state that any person had complained of having been defrauded. It does not state what bearing the past history of Mr. Lewis had upon the right of the bank to use the mails. I had fifteen years' experience in the postal service and I am unable to recall an instance where any other liank in the LTnited States, and es- pecially a State institution, was so investigated and reported upon to the postmaster-general. I have searched in vain for a statute which author- ized any such proceeding. bji r'l a o, "y cj = V. ^j-c: ^ -^ - 2 , a s '^ ,*- "^ 5e t I i-sl s - - ^ ^ ■« ? - ~ -~ O a J . ^ '^ "i> ■~ '-5 "^ ^ -^ c "^i ^ ^ ~ CHAPTER XIX. ORDER NUMBER TEN. The Fraud Order Process — The Citation to Washington — The Lawrence Memorandum — Statement op General Shields — The Response of the Bank — Goodwin's Report to Cortelyou — Goodwin Under the Probe — After the Hearing — Order Number Ten. One of the grievances that led our forefathers to rebel against the Throne of England was the authority claimed by King George and his ministers to hale them three thousand miles across the seas to stand trial at the seat of Imperial power. The courts of England are surrounded with all the safeguards of English liberty, wrested from King John in Magna Charta and interwoven in the very warp and woof of English law. The Colonists were guaranteed trial by a jury of their peers. They had the right to a presentment of the accusation against them. They could claim the right to be con- fronted in open court by their accusers. They demanded more ! They insisted upon an open and speedy trial at or near the locality of the supposed offense. They denied the privilege of the Majesty of England to subject them to the expense of the distant journey over seas, the cost of transporting witnesses for their defense, and the dangers of confronting a jury unfamiliar with the customs, modes of thought and state of public sentiment and opinion surround- ing the accused. Let us see how well we of the present generation are preserving the traditions of liberty which we have received as a priceless heritage from the fathers. the fraud order process. The law which grants the postmaster-general the right to issue fraud orders does not prescribe that the accused shall have any trial whatever. The postmaster-general may act upon information fur- nished him by the inspectors, if it is "satisfactory to him," without attempt at verification and without giving the accused any oppor- tunity to set up his defense. There has been no parallel in history to the power thus lodged in the postmaster-general of the United States, except such curiosities of absolute despotism as the infamous lettre de cachet;* or the absolute license over the life and property of the subject which is the privilege of the Asiatic despot. This extraordinary power of the postmaster-general of the United States to brand a man as a fraud, and to destroy his enterprises *This was an executive order whereby the French Louis' without trial or hearing of any sort, were wont to throw men into political prisons by the mere stroke of a pen, 433 434 THE SIEGE OF UNIVERSITY CITY without trial and without warning, is among the divisions of his authority which has been delegated to a subordinate. This func- tion is attached to the office of the assistant attorney-general for the PostoiEce Department. To provide against being misled into oppression or injustice by an interested or ignorant informer, it has become the practice of that officer to give a hearing to the accused. A citation is first served upon persons charged by postoffice inspec- tors and others, with the fraudulent misuse of the mails. This directs them to appear at the seat of Government, and show cause why a fraud order should not be issued against them. This monstrous power has been, so far as the public is aware, usually employed with intelligent caution. It has been directed for the most part against the meanest and most injurious class of frauds. These facts have served to blind the eyes of the easy going, toler- ant masses of the American f>eople to the possibilities of injustice and oppression that thus obtain. For the accused, within the -ivide latitude of the discretion of the postmaster-general, has no rights that the assistant attorney-general for the postoffice is bound to re- spect. So perverted is this method of procedure that it is even deemed a privilege for the accused to be haled to Washington ! The opportunity of presenting his defense is not a right, but a favor ! It may be withheld at the pleasure of the official in charge. The ex- pense to which a man is thus subjected in comparison to that of a hearing before a local magistrate appears to be utterly disregarded. The frequent impossibility of bringing the most important witnesses thither, or the hardships to which all concerned may be subjected in leaving their homes and business for such purposes, are over- looked. The possibility of ruin from the scandal of such citation is forgotten. Nothing is weighed in the count, except the con- venience of the Federal official, at whose mercy the citizen is thus placed. The hearing itself under such circumstances can scarcely be other than a farce. The presiding officer is not part of the judicial sys- tem of the Nation. He is bound by no constitutional safeguards. He is restricted by no regulations of procedure. He is outside the constitutional Bill of Rights. He is accountable to no one except his immediate superior. He may admit such evidence as he sees fit, and exclude that which he pleases. He is in his single person both judge and jury. And by one of his assistants, he is the prose- cuting officer as well. He listens to such defense as the accused may see fit to make. He asks such questions as his sense of justice or his curiosity may dictate. He weighs the matter as much or as little as he will. He forms his own decisions upon considerations known only to himself. Finally, he dismisses the case or recom- mends to the postmaster-general that a fraud order shall be issued. His recommendations are commonly adopted by his superior as a matter of routine. THE DREYFUS CASE OF AMERICA 435 A sinister feature of this entire process is the fact that the in- formation upon which the assistant attorney-general for the post- office acts as to the fraud order, comes as a secret report of Federal spies of the postoffice inspection service. It is one of the fixed principles of the Department, that this report must not be dis- closed to the accused. The only argument advanced in support of this policy, wliich is totally at variance with a fundamental principle of English jurisprudence, is that the names of informers who under pledge of secrecy have laid accusations against men before the post- office inspectors must not be revealed. The citation served upon the accused is supposed to contain the substance of the charge. But the names of the accusers are withheld. Neither the informer nor the inspector is subjected to cross-examination. The language in which the charges are clothed is totally concealed. Thus, all evidence of prejudice, bias, malice, is wholly hidden. All the finer evidences of meaning, which may be read between the lines of written documents, are lost to observation. The accused and his counsel are practically fighting in the dark. A still more questionable feature of the fraud order process is the fact that the inspectors who bring the accusation are members of the same service as the assistant attorney-general who sits in judgment. They are often personally known to him. They belong to the same official world in which he temporarily moves. They profit by the subtle freemasonry of official life, which enables those within the circle of its charm to obtain the ear of persons in author- ity at will. Let any man be accosted by two persons on the same subject, of whom one is known to him personally or officially, and the other is a total stranger: to whom will he listen and give heed.'' Let the postoffice inspectors recommend a fraud order in their secret reports ; let them have access to the ear of the assistant attor- ney-general for the postoffice; let them confirm their official findings by the weight of their personal influence ; in such a case the defense of the citizen must be strong, indeed, if he can break down the barrier of prejudice thus built up. THE CITATION TO WASHINGTON. The report of the inspectors reached Washington on May 19, addressed to Vickery, chief postoffice inspector. Under the ordinary routine it would be referred by him without comment to the office of the assistant attorney-general for the Postoffice Department, then as now, Russell P. Goodwin. Goodwin appears to have turned the report over to his assistant, E. W. Lawrence. The testimony of Betts would indicate that Fulton followed immediately and re- mained in consultation with Vickery and Goodwin until the citation under date of May 25 was issued. During this interval a short memorandum of the inspectors' charges was condensed from their report by Lawrence, and forwarded with the citation. As this latter is brief, it is here reproduced as follows: 436 THE SIEGE OF UNIVERSITY CITY OiBce of the Assistant Attorney-General for the Postoffice Department, Washington, May 25, 1905. The People's United States Bank and E. O. Lewis, St. Louis, Mo.: Inclosed herewith is a memorandum outlining certain charges, whicK by direction of the postmaster-general, are under examination in this office, to the effect that you are engaged in conducting a scheme or device for obtaining money or property through the mails by means of false or fraudulent pretenses, representations, or promises in violation of sections 3929 and 4011 of the Revised Statutes as amended, a copy of which is also sent herein. It will be observed that these statutes authorize the post- master-general tc prohibit the deli\ery of mail and the payment of money orders addressed to or drawn to the order of any person or company found to be using the mails in the operation of a scheme or device of this character. It is desired that you make reply to the charges set forth in this memo- randum, and June 16, 1905, is designated as the day on which the case will be considered. Your reply must be in writing. It may be forwarded by mail or you may present it in person or by attorney at that date and supplement the same by oral argument. Should you fail to malie answer by the date named, the case will be considered and disposed of in your absence. Very respectfully, R. P. Goodwin, Assistant Attorney-General for the Postoffice Department. THE LAWEENCE MEMORANDUM. The memorandum of Lawrence opens as follows: E. G. I^ewis, operating under the name of The People's United States Bank has been for over a year, and is now, engaged in selling shares of stock in the corporation organized by him, named The People's United States Bank. He is effecting sales by means of false and fraudulent representations and is receiving large sums of money through the mails. Among the false and fraudulent representations and promises which Mr. Lewis has made to obtain this money, are the following: The next twenty-nine paragraphs, comprising the bulk of the document, are brief excerpts from Lewis' promotion literature quoted by Lawrence from the report of the inspectors. These are summed up by the following comment: "It is charged that the above quoted statements are false and fraudulent in every particular." The memorandum goes on: During the last ten years Mr. Lewis has been identified with the fol- lowing enterprises: * * * Many of these schemes have been failures, the practices of Lewis in conducting them have been questionable and some of the schemes have been fraudulent. The remaining nine paragraphs are a brief summing up of fifteen specific charges culled from the inspectors' report. The memorandum concludes: "I recommend that the People's United States Bank and E. G. Lewis should be cited to show cause why fraud order should not be issued against them." The entire memorandum comprises no more than about four *Here follows a list inchi.Iini? Lewis' e.-irly ventures and enumerating also an electric railroad company unnamed, concerning which Lewis has no recollection and there is no other information cblainable. SI = •-, ° : ■■-.='^ ;^ ^ i^ 5b-^^^5 ■^ <*> O '^ ~ ^1 C -O C = S l-^ pi !- C ^ ■ L: .^^^, lil •^ to ^ S^rR o C J^ ^ :- T-S^ Q 'o 5 U -b ^ G J^s"^ ?-, ■-% c g<: ^ r' := ' ;: '^ ~ ~ r -* .cq t t-. -~ - k. -^-i S t^.2 ^ c. f^ ■^ - be '■^- ■£-. ^2 - ~ =~:^q t, -Ccq ^fc^t. c ^ "^u. '~- b '-' ~? •^ ij S C c '^ s ■CL, b^ ~ •^ Cl :t 'V. Q i~. ■a ^ ~ <- S "B iSfl ^^ = ?^ a ~ -c: -C ^ o " i ^ U U -o bfi be i s: 'Z 5j i^j ^ ';2 -3 ^1 3 ^ 5 o ^ B i^ 1^ -4 -3 (J 'y C p. ■5 •o H^ Q C; ■cL,^ -^ ■i) t^ O |i 3 a '^^-5 -t; ■O -o -13 -^ W. V. -c^uq o S . ■:; s C tj or ^ THE DREYFUS CASE OF AMERICA 439 thousand words as against about sixteen thousand words employed by the inspectors. The intemperate language of prejudice and passion in which the inspectors' charges were couched is decently kept from view. By no stretch of imagination could the reader of this memorandum conceive the bitterness and hostility that characterized the original document, or the forcCj extent and par- ticularity of its contents. The officials of the bank thus placed upon their defense, but without adequate knowledge of the charges against them, made ready their response as best they could. They presented themselves on the prescribed date for the hearing before Goodwin. The infor- mal nature of this proceeding is seen from the fact that no official stenographic report such as is customary in courts of justice was taken. The testimony of Goodwin on this head at Lewis' trial is as follows: I made some inquiries of Mr. Lewis at the time of the hearing, but I am not now certain what statements were made by him in response. No record was kept by me or under my direction of these proceedings which would show all of Mr. Lewis' statements. There was a stenographer em- ployed by him to take the testimony, who was there during the entire hearing. There was also a stenographer whom I understand to have been a clerk in the Postoffice Department, present part of the time, but not all of the time. No complete, accurate record of all Lewis' matters, or matters urged in his defense, was kept by me. This statement was corroborated by that of Goodwin's assistant, Lawrence, who testified as follows: I have never seen a verbatim report in possession of the Government officials concerning that hearing, and no sucli official has ever told me they had such a repoi-t. There was no stenographer representing the Government. A Government stenographer was present, but I understand he never wrote out his minutes. He relied largely on the stenographer whom Mr. Lewis had there. That stenographer promised to give him a transcript of the evidence. I understand that the transcript was never written up. I have never seen a transcript of the proceedings, nor a transcript of the argument of counsel, except a written response which was submitted. The stenographer who was present on behalf of the officials of the bank had so much difficulty with his notes that a dispute after- wards arose as to his compensation. His notes were never written up, with the exception of the remarks of counsel. An imperfect transcript of these is available. The vice of such a proceeding appears from the fact that the verbal evidence of Lewis in his own defense was not before the attorney-general when his opinion as to the legality of the proposed fraud order was requested. Neither was its force felt by the mind of the postmaster-general in arriving at his ultimate decision. The absence of any official record of the hearings permitted Goodwin and Lawrence, at Lewis' trial, to de- pend wholly upon their recollection as to the latter's statements. Naturally enough the circumstances which seemed to justify their course of action were green to memory, whereas the particulars of Lewis' defense had passed almost entirely out of mind. On the occa- 440 THE SIEGE OF UNIVERSITY CITY sion of Lewis' first trial, in November, 1907, Goodwin, after stat- ing his position and the fact that he had held that office "three years last May," responded specifically and without hesitation to a series of questions on the part of the Government attorney, designed to substantiate the charges upon which the prosecution was based. On cross-examination for the defense he testified in substance as follows ; I am a member of the bar. The proceeding in which Mr. Lewis made these statements was a citation issued by me as attorney-general for the Postoffloe Department to show cause why a fraud order should not issue. The citation was issued because of a report of the inspectors which con- tained the charges against Mr. Lewis. It was mj' duty to recommend to the postmaster-general his actions. I was exercising what lawyers call a quasi judicial function to show whether an order should issue cutting off Mr. Lewis from the benefit of the privilege of the mails. That citation also included the bank which was in theory and law a separate entity from Mr. Lewis. I do not remember that Mr. Lewis said he had advanced money for the organization expenses other than the note for one hundred and forty-six thousand dollars, but I would not say that he did not. I understood the bank: was already organized. I do not think he said it was in process of organization. He did not tell me he was arranging his affairs so as to contribute the amount of money that he had already subscribed to the stock when the capital of the bank was increased to five million dollars. I do not think he told me the stock was to be increased to five million dollars. I don't remember any statement that he made in regard to the use of his own funds in the promotion of the bank. He did not state that he had arranged the loans of the L^niversity Heights property upon bonds to the amount of seven hundred and fifty thousand dollars, or that the Metropolitan Insurance Company of New York had agreed to take them. I think he said something about preparing to issue some bonds, but I don't remember his stating that the issue of bonds had been delayed by a mistake in the lithographing. I do remember he said the property was worth about seven hundred and fifty thousand dollars, but, as to the issuance of the bonds, I think there was nothing definite. I don't remember just what Mr. Lewis said about consultation with prominent bankers in St. Louis as to the advisory board. I challenged him on this subject and asked him whether he had created it or not. I am inclined to think he did say something about having consulted some- one, but can not say positively. Mr. Lewis said he considered the loans of the bank good. I don't remember any statement in regard to col- lateraL The question of the sufficiency of the securities pledged with the bank for these loans would be a matter of some importance, but not material — merely incidental. I would not have considered the fact that the loans were amply secured controlling by any means. Some days after the hearing, I received several affidavits, purporting to be from real estate men in St. Louis, as to the value of this property. I am not sure that there were no affidavits at the time of this hearing. It may be that there were one or two. 1 don't remember any statement about any bank in Chicago offering to take one of the Lewis Publishing Company's loans, or another bank offering to take the real estate loans. Mr. Lewis stated that the directors were prominent business men. I did not understand that Directors Carter, Stephens and Coyle were connected with other banks at that time. It may be that they were. I don't remember. I think Mr. Lewis did say that all he asked was to be permitted to meet the requirements of the Department and save the bank. As a result of the hearing I recommended to the postmaster-general the issuance of a fraud order against both Mr, Lewis and the bank. THE DREYFUS CASE OF AMERICA 441 Lewis' defense on his trial, at which this testimony was given, was conducted by the same counsel (in part) as his defense at the hearing. The questions as to statements made by Lewis, of which Goodwin had no recollection, were formulated by counsel who were guided by their own positive knowledge as to what statements were actually made. STATEMENT OF GENERAL SHIELDS. The clearest report covering the hearing as a whole, as viewed by the defense, is to be found in a statement prepared by Hon. George H. Shields, of counsel for the bank, sometime assistant attorney- general under President Harrison. This was prepared under date of August 12, 1905, at the request of Lewis. General Shields says: You asked me to state what took place before Hon. R. P. Goodwin, assistant attorney-general for the Postoffice Department, in reference to the fraud order against you and the People's United States Bank on June 16, 1905. A few days before that date I had been employed to assist Judge Barclay in presenting that matter before the Postoffice Department. On that day we appeared before the said assistant attorney-general. After introductions he stated he was ready to hear our reply to the charges, a memorandum of wliich, signed by Hon. E. W. Lawrence, assistant attorney, had been previously sent to you and the bank. We replied we were ready to hear what the Government had to offer in support of the charges, and were informed that the report of the postoffice inspectors who had investigated the subject had been read by Hon. R. P. Goodwin, that the facts stated in these reports were assumed to be true, and, that unless they were satisfactorily explained by the respondents, action would be taken on the assumption that the charges were true. The respondents filed answers in writing to the charges, under oath, denying the same, that of the bank being general and your's being more specific and explanatory. We insisted that as the charges were quasi criminal the Government shrould sustain the same by testimony. The reply was that the reports of the inspectors were before the assistant attorney-general; that the said reports had been read by him and would be considered as true. We asked to see the reports of the inspectors and to cross-examine them on their said reports. This was refused on the grounds that the reports were confidential. No witness or documentary testimony was offered on the part of the Government. The respondents were informed that they could offer any- thing they had in reply to the charges. Finding we could not see the re- ])Orts or hear what the Government relied on to sustain the charges, the respondents then offered both oral and documentary testimony on their behalf. The counsel for the respondents were permitted to argue the matter as best they could, without knowing what was contained in the very voluminous and secret report of the postoffice inspectors, and with- out the privilege of examining them on their report. Counsel for the Government made no argument. A motion was made by the respondents to dismiss the proceeding for want of jurisdiction and because the respondents were not permitted to see or hear the evidence against them, and on other grounds violative of their constitutional and legal rights. The assistant attorney-general refused to pass upon this motion. 442 THE SIEGE OF UNIVERSITY CITY In addition to Lewis' verbal statements and those of counsel, the defense submitted a written response. A solemn denial of the charges comprising the Lawrence memorandum was made by the reorganized directorate of the bank and by Lewis individually. Both were verified under oath. In addition, the respondent entered the following protest: This respondent objects to the vague and indefinite nature of the said charges which appear to be a summary of the report of inspectors of the Postal Department of the United States, which report has at no time here- tofore been delivered or submitted to this respondent and of the particu- lars whereof he is ignorant, except from information derived from the alleged puljlication thereof in the Post-Dispatch, a daily newspaper pub- lished in the city of St. Louis, in its issue of May 31, 1905. This respond- ent protests against being required to answer to specific allegations, the precise terms of which have not been exhibited to liim otherwise than as aforesaid. THE RESPONSE OF THE BANK. The response then alleges that the quotations from Lewis' pro- motion literature are in many instances "inaccurate, garbled and wrested from their context in a manner materially to affect the mean- ing thereof as understood by the reader." The respondent also protests that, in many instances, the paragraphs of quotations have been "composed of materials drawn from several different publica- tions at widely separate intervals of time, separated from the con- text and conveying a totally different representation from the origi- nal." And further, that these excerpts "constitute a very small and immaterial portion of the descriptive matter which the respondent issued, concerning the formation and organization of the bank." The quotation which appears in large type in the beginning of the pamphlet "Banking by jMail" is then quoted with especial reference to the following sentence: It is, of course, understood that such modifications as may be found necessary for best accomplishing the end desired will be made under the advice of skilful bankers, but the plan as outlined here is essentially the one that I intend to carry through. The nature of the subscription blank in which the subscribers appointed Lewis their agent with full powers "to organize and in- corporate said bank upon said terms with such directors and under such laws as may be considered by you best suited for the purposes intended," is dwelt upon. Copies of the original subscription blanks are incorporated as exhibits. The Lawrence memorandum was next analyzed, in full detail, and specific reply was made to every alle- gation. An affidavit of Francis V. Putnam, the cashier, was put in evidence, showing him to have been a bank official of many years' experience and explaining in some detail the manner of operation of the bank. The response includes also an affidavit of the board of directors, reciting the reasonable market value of the University Heights Company at seven hundred and fifty thousand dollars, and the plant of the Lewis Publishing Company at four hundred and fifty thousand dollars. These estimates were supported by the THE DREYFUS CASE OF AMERICA 443 affidavits of the builder cand architect as to the value of the plant and of five of the principal real estate experts of St. Louis as to the value of the real estate property. The response concludes with a motion in due form for a dismissal of the charges. The following is an excerpt from the report to Congress of Post- master-General Hitchcock, in 1911, on the Bartholdt bill, providing for the reference of the claim of the Lewis Publishing Company for damages to the Court of Claims. Previous to tlie issuance of the fraud order • * * » Mr Lewis and his counsel were heard at lengtli. Upon the conclusion of the hearing the assistant attorney-general reported in writing to the postmaster-general the facts, together with his recommendation that a fraud order be issued. This report set forth a complete statement of the case, and the fraud order was issued for the reasons tlierein stated. Goodwin's report to cortelyou. Goodwin's report to Cortelyou is inserted at this point in the postmaster-general's response. It is made up chiefly of quotations from Lewis' promotion literature and from the inspectors' report. This document is dated June 26, 1905. It opens as follows: Memo- randum in regard to the People's United States Bank, its officers and agents as such, and E. G. Lewis, St. Louis, Mo. The letter of Secretary of State Swanger of June 5, 1905, pre- viously quoted from the Post-Dispatch, is published at length, but no reference is made to Swanger's subsequent letter to Fulton written on June 12. This was in the hands of Goodwin five days prior to the hearing. This official communication from the banking department of Missouri was to the effect that the newly elected board of directors was acceptable to the State authorities and, in Swanger's opinion, would carry out his recommendations in full. The omission of any reference to this letter should be taken in conjunction with Goodwin's statement, "the fact that new direc- tors have been substituted for some of the old ones, does not ma- terially aifect the purposes of this inquiry." Evidently his recom- mendation of the fraud order was based upon the supposition that, fraudulent representations having been made, the bank could not be redeemed. The effect of the fraud order upon the officers, de- positors or stockholders does not appear to have been seriously thought of. No discrimination was suggested between the innocent and the guilty. The fraud order was evidently regarded as a puni- tive measure. The alleged misconduct of Lewis and his associates was construed as placing them bej'ond the pale of mercy. The effect of the isroposed drastic action was held to be chargeable to the pro- moter of the bank and a necessary consequence of his wrong- doing. The possibility that the directorate of the bank, as reor- ganized under the supervision of the secretary of state, might save the institution to the stockholders and depositors, does not appear to have received any consideration whatever. The report concludes with this summary; 444 THE SIEGE OF UNIVERSITY CITY At the hearing the point was made by attorneys for the bank that, if it should be decided that false and fraudulent representations and promises had been made to obtain remittances for stoclr, a fraud order should not issue against tlie banis, but only against Mr. Lewis, as the pay- ments for stock were all sent to him. I am unable to take this view. * * * I am unable to see how it is possible to separate the bank and Mr. Lewis in this matter. He has been, and is, in absolute control. The bank is his creature. All of the money which the bank has received for capital stock and on deposit, and which it is now receiving, and will receive, is the result of the false and fraudulent representations of Lewis. The sole duty of the Postoffice Department in this matter is to protect the investors and depositors, and prospective investors and depositors. I have carefully considered the facts in this case and all possible courses of action, to see if the interests of the investors and depositors could better be protected by some action other than the issuance of a fraud order, but in view of all the facts in the case, especially the facts that Mr. Lewis is in control of the affairs of the bank and has now loaned to himself and his companies over nine hundred thousand dollars of the funds of the bank, I am of opinion that the Postoffice Department, which has been and is the principal agent of Mr. Lewis in this enterprise, should demand an immediate accounting, that it is my duty to recommend the issuance of a fraud order against the People's United States Bank, its officers and agents as such, and E. G. Lewis. R. P. Goodwin, Assistant Attorney-General for the Postoffice Department. The Postmaster-General. GOODWIN UNDER THE PROBE. Goodwin was closely cross-examined by Lewis, himself, at the Ashbrook Hearings in Washington, in February, 1911, as to the sources of this report and recommendation to Cortelyou and as to the evidence submitted by him to the postmaster-general. He as- serted that the moving considerations in his mind were not only the inspectors' report, but, also, Lewis' verbal testimony at the hear- ing, and the contents of his promotion literature. He admitted that the inspectors' report was withheld from the accused in accordance with the fixed policy of the Department, but asserted that Lewis was free to cross-examine the inspectors, and that they were free to answer any questions that might have been asked, even though their answers had revealed the contents of their reports. Asked why, in that case, the report was not frankly submitted as a basis of cross-examination, Goodwin could give no reason other than such was not the custom of the Department. Lewis' cross-examination was based chiefly upon his formal re- sponse and that of the bank, submitted under oath to Goodwin at the hearing. A careful analysis by Lewis showed that a large por- tion of the charges embodied in the Lawrence memorandum accom- panying the citation did not appear in Goodwin's report to the postmaster-general. Goodwin was unable to recall whether these charges had been answered to his satisfaction at the hearing or not. A large number of additional charges were included in Goodwin's report to Cortelyou. Goodwin asserted that these additions grew out of the verbal testimony at the hearing. He alleged that they were based upon portions of Lewis' promotion literature, which THE DREYFUS CASE OF AMERICA 445 had been read during the hearing, and upon which Lewis had been cross-examined. He admitted that no stenographic report was taken and that no part of the verbal testimony submitted by Lewis in his defense was transmitted to the postmaster-general, except as embodied in his report. He asserted that, according to his recollec- tion, all the documents in the case were transmitted to the post- master-general, but was unable to recall specifically whether or not the written response of the bank was thus submitted. That docu- ment does not appear in the list of exhibits contained in his report. Whether or not it was actually before the postmaster-general is problematical. The salient fact to be grasped is that the findings of the inspec- tors were in effect accepted by Goodwin as true and were held by him not to have been controverted by the respondent. The short of the matter appears to be that Goodwin took the inspectors' word against I,ewis' oath and that of the bank's directors. The vice of the whole proceeding is manifest in that the overwhelming tendency of the inspectors' report to discredit Lewis and impeach his veracity, was uncontroverted in the mind of Goodwin, because the report was not submitted to the accused as the basis of cross-examination. The issue of veracity was sharply joined. Goodwin was forced to sup- port the inspectors and discredit Lewis, or support Lewis and dis- credit the inspectors. There was no alternative. Once the fixed principle of accepting the findings of the inspectors as true had been adopted by Goodwin, the end was inevitable. The inspectors reported in substance that Lewis was not a credible witness; hence, if Goodwin believed them, he could not accept Lewis' testimony even under oath. AFTER THE HEARING. At the close of the hearing before Goodwin, occurred the first hearing before Third Assistant Madden upon the inspectors' reports recommending that the second-class mailing privileges be withdrawn from the Woman's Magazine and Woman's Farm Journal. During the same day by appointment of Congressman Bartholdt, Lewis, ac- companied by the directors of the bank, was accorded a personal interview with the postmaster-general. The directors state posi- tively that they had Cortelyou's personal assurance of a further he.iring before himself before any adverse action would be taken upon the result of the hearing before Goodwin. The officials of the bank, therefore, satisfied of the merits of their cause, reassured by the apparent friendliness that had obtained during the hearing, and relying upon Cortelyou's personal promises, returned to St. Louis in the belief that the worst was over and that the bank had before it an opportunity to restore confidence and rebuild its for- tunes. The response of Postmaster-General Hitchcock to Congress, in 1911, further recites that after receiving Goodwin's reports and before deciding his action on the case, Cortelyou called upon the 446 THE SIEGE OF UNIVERSITY CITY attorney-general of the United States for advice as to his legal au- thority in the premises. In response to this request Acting Attor- ney-General Henry M. Hoyt, on July 6, 1905, advised the post- master-general that the proposed fraud order would have the sanction of legality. Cortelyou, in the course of a lengthy deposi- tion taken in the case of the People's United States Bank vs. Good- win and Fulton for libel, says : I do not recall whether or not I personally dictated the letter trans- mitting the papers to the attorney-general. As I recall it, all the essential papers were sent — all the papers that had any vital bearing. I mean that certain reports would have no particular bearing on the matter on which we wanted a decision. Under the rules of the attorney-general's office, you have to tell him specifically on what you want his decision. We asked as to our authority on certain features of this case. We did not transmit all the papers, because he would have returned them with a state- ment that he did not render opinions on that basis. Oh, yes, his opinion recites that "from the facts stated I am of the opinion." Of course an opinion upon an incomplete statement of the facts on file would not be proper. But I understood that all the essential papers were forwarded. If he had any doubt, tlie attorney-general would have come back and asked us if we had any further papers. We under- stood he had gotten everything we had on the case. I do not recall that Mr. Lewis came to me after the hearing before Judge Goodwin and asked that, in the event a fraud order was con- templated, he be given a further hearing before me. I certainly did not promise to give him a hearing and then not give it to him. The post- master-general can not presume to hear all these various matters. It would be utterly impossible. Mr. Cortelyou when asked to identify the letter written by Sec- retary of State Swanger to Fulton on June 12, 1905, said, in sub- stance: Unfortunately, what was expected as stated in that letter, was not done. Furthermore, we did not attach the same weight to what had been done that the secretary of state of Missouri did. The reports made to me by the inspectors were that Mr. Lewis did not do what was expected of him by Mr. Swanger. I did not go out and ascertain personally, nor did I call upon Mr. Lewis for evidence. That was all reported to me in Washington. I was advised of what was done and what was not done. I do not know whether that letter was sent to the attorney-general or not. In the last analysis I would take the statement of the inspectors as controlling rather than the statement of Mr. Swanger. ORDER NUMBER TEN. The foregoing review brings us up to the evening of Sunday, vTuly 9, 1905, on which, according to newspaper reports, Postmaster- General Cortelyou, after receiving Hoyt's opinion that the fraud order could be legally issued "upon the facts as stated," remained in his office until midnight awaiting advices from St. Louis, presum- ably from Inspector-in-Charge Fulton. We may imagine Cortelyou sitting at his private desk alone, with the documents in the case gathered about him. Whether or not the jacket containing the original complaints, including the letter of Howard E. Nichols and Reedy 's articles in the Mirror, were brought to Washington for his inspection, is not of record. Cor- Meszanine Hoor, Woman's Magazine Building ^Private office of Mr. Lewis, as president of the American JVonum's League "Pri7mte office of John IV. Lewis, manager of the University Heights Realty and Development Company Me;;j:aiiiiie tluof, Woman's Mdru-iiiw BiiilJnig ^Private office of Mr. F. ['. Putnam, treasurer Lewis Puhhshing Conil'any office of Mr. IV. E. Miller, secretary "'Prr.ate THE DREYFUS CASE OF AMERICA 449 telyou in his deposition states tliat he had no recollection of the name of Nichols. He remarks that there were many letters trans- mitted by the President's secretaries to the postmaster-general which he never saw. Certainly there were before him the inspectors' re- port and Goodwin's report with its exhibits. These were accom- panied by some form of memorandum of what was alleged to have taken place during the hearing. Possibly, also, he may have had the written response of Lewis and of the bank, and Hoyt's opin- ion. What complaints, if any, other than those of record may have been in Cortelyou's possession is, of course, unknown. What infor- mation he may have had from unofficial sources remains a mystery. He has sworn that his opinions were formed upon Goodwin's find- ings and those of the inspectors, and in the absence of positive evi- dence to the contrary, his deposition is conclusive. The secretary of state of Missouri, it will be remembered, had announced to a reporter of the Post-Dispatch that the State author- ities could not legally take any further action against the bank, but that if the Federal authorities issued a fraud order, then the State authorities would intervene and place the bank in the hands of a receiver. Upon the eve of the hearing a representative of the secretary of state had presented a letter of inquiry from the secre- tary of state of Missouri to the postmaster-general. Judge Selden P. Spencer acknowledges having been the bearer of such a letter. Cortelyou testifies that he knew the promises of the board of directors were not being carried out to Swanger's satisfaction. What representations may have been made by this or other messengers, and what private understanding, if any, may have been arrived at, is problematical. The visions that arose before the mind of Cortelyou during these hours of vigil are probably known to no one other than himself. He must have foreseen the ruin of the People's United States Bank, the dispersion of its employees, and the blemish placed for all time on the reputation of Lewis and his associates. He must have been aware of the disappointment of the hopes a«id expectations of the stockholders and depositors scattered everywhere throughout the country. He must have known that great outcry and public scandal would arise. Never before had a postmaster-general directed a fraud order against so great and conspicuous an institution. Criti- cism by Lewis and his followers was inevitable. All the resistance of which the friends of the institution were capable was to be antici- pated. Upon the hypothesis of the inspectors, Cortelyou must have expected that the loss to the stockholders would be very great. For the inspectors held that Lewis' securities were of doubtful value and they stated that more than one million dollars of the funds of the institution were loaned upon no otlier collateral. The fraud order would necessarily cause the further depreciation of these securities. The net conclusion in the mind of Cortelyou' must have been that 450 THE SIEGE OF UNIVERSITY CITY the loss on the loans to the Lewis enterprises would be very nearly, if not quite, total. Lewis' articles in the Woman's Magazine and other promotion literature which were before the postmaster-general contained nu- merous references to the competition of the People's United States Bank with the express trust, in the sale of money orders and other- wise. They also set forth Lewis' beliefs as to the future power and influence of the bank. Did Cortelyou read those articles? If so, what were his mental reactions upon the visions conjured up by Lewis' facile pen of the contrast between the need for greater banking facilities for the rural population of America, and the bene- fits accruing from postal banks in other nations.'' What sentiments were provoked by Lewis' references to the recommendation of Cor- telyou's predecessors to Congress that a similar institution should be founded under the Government of the United States? What reflections were suggested by Lewis' allusion to the Mont de Piete of France, and its manifold beneficences? What possibilities oc- curred to his mind of the competition of the certified mail check system of the People's United States Bank with the sale of post- oflice money orders as bearing, conceivably, upon an important branch of the revenues of his own Department? What interests or individuals presented themselves to his recollection as likely to give him their unqualified approval and lend him moral support again.st the storm of criticism certain to follow the destruction of so large and popular an institution? Some such balancing of prospective consequences there must have been, prior to the decision of a question fraught with consequences so momentous. The actual considerations that were controlling upon Cortelyou and the precise motives which impelled the pen that signed the fatal order can be arrived at only by a process of infer- ence, a series of deductions. His personality, his temperament, his environment, the story of his career and all the facts that are of record as to the bank and his relations with it, must be cast into the crucible and the reader must apply the fires of his own intellect to smelt the gold of truth from the dross of speculation. Certain it is that the decision was arrived at and the People's United States Bank was doomed. Some time before midnight of July 6, 1905, Mr. Cortelyou attached his signature to the follow- ing official letter: POSTOFFICE DEPARTMENT, WASHINGTON, JULY 6, 1905. Order No. 10. It having been made to appear to the postmaster-general, upon evidence satisfactory to him, that the People's United States Bank, its officers and agents as such, and E. G. Lewis, at St. Louis, Mo., are engaged in con- ducting a scheme or device for obtaining money through the mails by means of false and fraudulent pretenses, representations, and promises, in violation of the act of Congress entitled "An act to amend certain sec- tions of the Revised Statutes relating lo lotteries, and for other purposes," approved September ly, 1890: THE DREYFUS CASE OF AMERICA 451 Now, therefore, by authority vested in him by said act and by the act of Congress entitled, "An act for the suppression of lottery traffic through international and interstate commerce and the postal service, subject to the jurisdiction and laws of the United States," approved March 2, 1895, the postmaster-general hereby forbids you to pay any postal money order drawn to the order of said parties, and you are hereby directed to inform the remitter of any such postal money order that paj-ment thereof has been forbidden, and that the amount thereof will be returned upon the presentation of the original order or a duplicate thereof, applied for and obtained under the regulations of the Department. And you are hereby instructed to return all letters, whether registered or not, and other mail matter which shall arrive at your office directed to the said parties, to the postmasters at the offices at which they were originally mailed, to be delivered to the senders thereof, with the word "fraudulent" plainly written or stamped upon the outside of such letters or matter. Provided, however, that where there is nothing to indicate who are the senders of letters not registered or other matter, you are directed in that case to send such letters and matter to the Dead-Letter Office with the word "fraudulent" plainly written or stamped thereon, to be disposed of as other dead matter under the laws and regulations applic- able thereto. Geo. B. Cohtelyou, Postmaster-General. The Postmaster, St. Louis, Mo. The above order became effective immediately upon its receipt by the postmaster at St. Louis, namely on Monday, July 10, 1905. Then, for the first time, knowledge of its existence was communi- cated to the bank's officials. During the interval the fact that Order Number Ten was in process of transmission to St. Louis is said to have been communicated over the long distance telephone to Secre- tary of State Swanger. In the brief period of time thus gained over the fast mail service, steps were taken, as will be seen in the follow- ing chapter, to bring about the desired "concerted action" between the State and Federal authorities. CHAPTER XX. CONCERTED ACTION. The Onslaught op the Allies— Cortelyou's Memorandum to THE Press — Nation-Wide Publicity — The First Receiv- ership — A New Kind of Bank Failure — Home Rule vs. Federal Usurpation. Sunday, July 8, 1905, was a day big with momentous consequences for the People's Bank. The fears of the directors had been lulled to sleep by the delusive promises of the postmaster-general and of the secretary of state that no further action would be taken without notice. They did not know that the combined assault of the allied Federal and State forces was at hand. Cortelyou had stated that the fraud order would not be issued on the hearing before Goodwin without a hearing before himself. Swanger had assured the direc- tors of his confidence and had promised them full co-operation and support. The opinion of the attorney-general that a fraud order could be legally issued, quoted in the Saturday evening papers, did not, therefore, arouse any serious apprehensions. No official noti- fication of the fraud order was given to the bank or the press until Monday morning. Sunday was a day of undisturbed tranquility at University City. On the other side, the generalissimos of the attacking armies, Cortelyou and Swanger, took advantage of the immemorial license of military men to fight battles on the Sabbath, or to make what- ever preparations the needs of warfare demand. The work of war does not always admit of the niceties of Sabbath observance. Many eleventh-hour preparations were pre-requisites of the combined as- sault. Cortelyou and Swanger both broke the Sabbath in order to make their final dispositions. Cortelyou was at his office until mid- night, Sunday, awaiting final advices from his lieutenants at St. Louis, and working on his official statement to the press. Swanger is said to have spent the day of rest with Spencer in conference with local Republican political leaders in St. Louis county, and in pre- paring an application for receivership to be presented early Monday morning. the onslaught of the allies. The blow fell. The St. Louis morning papers of Monday, July 6, 1805, bristled with scare-heads: "Fraud Order Against the Peo- ple's Bank: Postmaster-General's Reasons Set Forth in Official Memorandum to the Press." The evening papers printed the text of Cortelyou's memorandum, and scare-headed the fact that Judge ^Coss octuple four-color printing press on which the Woman's MagarJne was printed after having been reinstated in the mails ^Foundation laid for the above press during May. mS. after the second-class entry of the Woman's Magazine had been withdrawn ni9% ^pMN^ "yP* TfV^'^ ^Kff^^^^^^ ^^"^ ' IiUcrior '■iczi-s of the M„g«::inc Press Building of the Lewis Publislung Cdmfany 'The lor -,esl magazine pi^'ss-room i; Ihe li'nrld . equif^fcd with four-color oelnfle Cos! Rotary three Kiddcr Rotates, free Miehle flat-bed printing presses, eight Derter folding maehincs and all tieeessary appurtenances 'Battcrv of Mtchle flat-l'^ed premie,- THE DREYFUS CASE OF AMERICA 456 Selden P. Spencer had been appointed receiver of the bank and had assumed control. The Federal authorities thus prevented Lewis or any officers of the bank from receiving further contributions. The State authorities took from the bank's managers the funds already sent in. It was a grand stroke. So sudden and complete was it that, apparently, the incident was closed. The story of the People's Bank, so happily begun, seemed at an end. A reporter visiting the bank to interview Lewis, on Monday morning, found Spencer in charge. He was told that Lewis had gone horseback riding. The officers of the bank were literally astounded. The assurances of Cortelyou and Swanger had both been disregarded. A fraud order had been issued against a two and a half million dollar State banking institution, organized and operated in full compliance with the State banking laws, upon a hearing the inadequate nature of which has already been narrated. A receiver had been put in charge of a perfectlj' solvent bank without a moment's warning. Not the slightest notice had been given to the directorate of respon- sible business men, which had been selected on the request of the secretary of state and with his full approval. Lewis evidently wanted to get away from everybody for the moment to recover his poise after the shock of this unexpected onslaught. He had need to take counsel with himself. A meeting of directors had been called for four o'clock on Monday. By that hour it was his duty, as the person responsible for the defense, to make up his mind what action he should recommend. Had there been a streak of cowardice in Lewis' make-up, he would have quit after that horse- back ride. He would have told his readers that the combined powers of the L^nited States and the State of jNIissouri were too much for anyone to fight. He would have said that, while he felt that he had done no wrong, he must needs submit to the inevitable. But, had there been any tinge of "yellow" in Lewis, this story of the Siege could never have been written. The American people are always interested in a fight. They love a fighting man. And their interest goes out spontaneously to the under dog. The fight which Lewis started on this occasion and has kept np ever since is by all odds the most noteworthy ever put up by a private citizen against the combined powers and resources of a great State and Nation. All through the Middle and Far West Lewis is still talked of as "the man who beat the Government." There are many who, upon the information that they possess, think Lewis has been somewhat if not wholly in the wrong. But all who know the facts cannot but applaud the courage, energy and opti- mism with which, during all these years, he has withstood the utmost power that his opponents could array against him. CORTELYOU'S MEMORANDUM TO THE PRESS. The public at St. Louis was first apprised of the issuance of the fraud order by lengthy news items in the Monday morning papers. The Globe-Democrat bracketed these two paragraphs under the 456 THE SIEGE OF UNIVERSITY CITY caption^ "Moody's Arraignment and Lewis' Reply," at the head of the Washington dispatch which follows: I think there can be no doubt, from the facts submitted, that E. G. Lewis is to be regarded as conducting a scheme for obtaining money through the mails by means of false representations and promises. The facts stated, represent him as the creator of the bank, and absolute mas- ter of its charter, directors, stocks, and funds, and as diverting those funds into the hands of himself and certain associates by way of loans to various companies of which he is the principal member. — Attorney-General Moody's opinion, submitted to Mr. Cortelyou. I have been publicly condemned, tried and executed without having been granted the privilege of offering a defense. We had no access to the report of the postoffice inspectors, knew nothing except in a general way of the charges made against us, and were denied the right to examine any of the postoffice inspectors' witnesses. — E. G. Lewis. Special dispatch to the Globe-Democrat, Washington, July 9: George B. Cortelyou, the postmaster-general, has issued a fraud order against the People's United States Bank, its officers and agents at St. Louis. The order is dated July 6 (Thursday), but does not go into effect until tomorrow (Monday). The postmaster-general has waited until his order, and instructions accompanj'ing it, had been received in St. Louis and every arrangement had been made for complying with it. He re- fused until midnight tonight to make any statement relative to his decision. He had a force of clerks and stenographers at the Postoffice Department this (Sunday) afternoon, and dictated a lengthy statement, in which he goes into the history of the organization of the bank and its associate companies. Mr. Cortelyou spent the greater part of the afternoon and evening at his office in the Postoffice Building working on the statement. During the day he refused to respond to repeated appeals to make known his course in the matter. He stated to all inquirers that he had wired to St. Louis at three o'clock Saturday afternoon for information bearing on the case, and had fully decided to have no word to say until he received a reply from his message of inquiry. He persisted in this attitude, refusing to give the nature of his inquiry or the name of the person to whom it was addressed. The fact that the long-delayed "concerted action" had come at last was chronicled in the evening papers. The Post-Dispatch ran this eight-column scarehead across its front page: "Judge Spencer, ApjDointed Receiver for Lewis' People's Bank, Takes Charge ; Fraud Order Against the Concern." It thus sums up the day's events: Judge McElhinney of the St. Louis county circuit court this morning appointed Judge Selden P. Spencer receiver of Edward G. Lewis' People's United States Bank. The appointment was at the request of Secretary of State Swanger. Judge Spencer immediately quahfled, furnishing bond for $350,000, and went at once to the office of the bank to take charge. The action of the secretary of state follows the issuance of a fraud order by Postmaster-General Cortelyou on the strength of which thousands of letters being received at the postoffice, addressed to the bank, are being stamped "fraudulent" and returned to the senders. The fraud order was issued on a report submitted by Postoffice Inspectors Fulton, Sullivan and Stice of St. Louis, which was published exclusively in the Post-Dispatch May 31. Lewis was granted a hearing on this recommendation that a fraud order be issued against the bank and made a defense before Assist- ant Attorney-General Goodwin in Washington June 16. Under the caption, "Postmaster-General Explains Fraud Order," Cortelyou's statement was printed in full. After reciting briefly THE DREYFUS CASE OF AMERICA 457 the substance of the citation and hearing, the most damaging of the inspectors' charges against Lewis are summed up, and the state- ment closes thus: The attornev-general, to whom the postmaster-general submitted the matter for an opinion, said: "The existence of a charter of incorporation — another legal 'person' — affords no protection to him. A corporation can be used as an instrument for the violation of law. * * * As for tlie bank and its mail, we may, upon the facts stated, treat the constant public representations of its president, made with its acquiescense, and their fruits accepted by it, as its own, or looli upon it as an 'agent or repre- sentative' of Lewis in the reception of the mail. The bank seems, accord- ing to the facts stated, to be no other than Lewis himself, under a thin disguise." The Post-Dispatch, after alluding to the fact that the charges against the bank are not news to its readers, editorially contrasts the decisive action of the Federal Government with the previous inaction of the State banking department, and holds Secretary of State Swanger to strict accountability. This memorandum of the postmaster-general became the basis of the case of the People's United States Bank vs. Goodwin and Fulton, a suit for libel. Cortelyou, examined under oath, said in substance: This memorandum was prepared in the office of the assistant attorney- general for the Postotlice Department. It was submitted to me and sent out in response to inquiries as to why the Department had acted. It was very largely in response to inquiries of stockholders of the bank. The title on the cover and also on the inside of the pamphlet sets forth that it is the memorandum of the postmaster-general, as embodied in a state- ment given to the press July 19, 1905. Mr. Lewis' side of the question was set out as far as it was possible to do so. I considered it a fuU and fair statement of the conditions existing at the time, or it would not have been issued. Mr. Lewis, through the medium of his magazines of large circulation, had been stating his side of the case broadcast over the country. It was due to the Postoffice Department and the Government that some publicity be given its side. The urgency arose from the fact that Lewis had flooded the country with his own side of the case and his promises and representations. It was due to the Government to act, and it did act, promptly. Cortelyou testified that he does not know who prepared this statement, but that Fulton was called to Washington frequently and helped to prepare a number of statements in the case and that he may have been at this time in Washington. Congressman Redfield, at the Ashbrook Hearings, directed the committee's attention to the fact that this pamphlet as issued from the Postoffice Department does not bear the imprint of the Govern- ment printing office, and bears no signature. While it purports to be a memorandum by the postmaster-general, it is thus, in effect, an anonymous publication. Responsibility for the statements which it contains is not directly assumed by anyone. Cortelyou states that he did not give out this statement to the press. But the fact that it was issued from the Postoffice Department as the postmaster- general's memorandum, and was followed by no contradiction, was 468 THE SIEGE OF UNIVERSITY CITY conclusive to the press that it was by authority. As such it was given instant and widespread publicity. NATION-WIDE rUBLICITY. The bank project was not only novel. The stockholders were everywhere. An expose is always a preferred news item. The official action of the postmaster-general freed the press from all caution as to libel. Lewis had by this time employed a clipping bureau to furnish him with news items, and three large scrapbooks are taken up chiefly with clippings about the bank. Some idea of the effect of the postmaster-general's statement to the press may be had from the fact that computation by actual measurement of the number of lines of news published about the bank on July 10 and 11, shows that the equivalent of at least two hundred and sev- enty-five full newspaper columns were published. The total would amount to the equivalent of three complete ordinary issues, includ- ing advertisements, of one of the great modern dailies. During the remainder of the month of July more than one hundred and twenty- five additional columns were published, being the equivalent in all during .July of more than four complete daily newspapers. These are only such clippings as Lewis chanced to preserve. Large num- bers of others were undoubtedly printed. Every state in the Union is represented in this publicity. No less than seventy-five cohunns of newspaper space were devoted to the bank in the state of Illinois. The Missouri press comes next with twenty-eight columns; Wisconsin, twenty-three; New York with twenty ; Ohio, nineteen ; Colorado, fifteen ; Iowa, twelve ; Ten- nessee, ten; Minnesota, Michigan, Indiana, California, each nine columns; Connecticut, eight; and so on down to Montana, Arizona, Virginia and Wyoming, with fractions of one column. Former Third Assistant Postmaster-General Madden comments upon the postmaster-general's memorandum to the press as follows: This pamphlet purports to state the reasons for the issuance of the fraud order, but includes only the postmaster-general's side of the case. It does not include the June 3d letter of the secretary of state of Mis- souri. It does not state that any person had complained against this bank. It does not identify the statute, under which the postmaster- general assumed to send his inspectors into the bank to search its books «nd papers to find a liasis for "charges," which should be used to secure criminal indictments of the president. * * * So far as my experience goes and I have been able to learn, the postmaster-general has never previously deemed it necessary to issue such a public statement explaining an official act. If the act were correct under the law and facts, its propriety is assumed. No explanation is called for beyond what appears in the fraud order itself. This pamphlet does not state that it was issued under authority of, or in compliance with the requirements of any law. On the contrary, there are two acts of Congress which seem tc forbid the spending of public money for such purpose. THE FIRST RECEIVERSHIP. Lewis and his associates were tasting the full bitterness of defeat. The St. Louis Star-Chronicle of Monday evening — the day on THE DREYFUS CASE OF AMERICA 459 which the fraud order went into effect — tells the story of the dra- matic moment when the conquering invader first set foot in Lewis' citadel. At the foot of the marble stairway, like a feudal chieftain about to yield up the keys of a captured city, Lewis met the man who had come to supersede him in authority and undo for all time the results of his labors for so many busy, happy months in the upbuilding of the People's Bank. Lewis could as yet hardly realize what had occurred. He was conscious of but one thing: the bank was about to be destroyed. His whole soul was upheaved with bitter protest and revolt. It was as if his latest-born child was about to be torn from him and foully done to death. The thing seemed unbelievable. Yet, in spite of his abhorrence, the conscious- ness was forced upon him that it must be true. Knowing, as we do, something of Lewis' temperament and having caught in the eye of fancy a glimpse of his ideal conception of the People's Bank, we may feel, even in the dry lines of the newspaper story of this episode, some slight palpitation of the heartbreak that underran Lewis' reception of Selden P. Spencer, first receiver of the People's Bank. What, then, must have been his bitterness of spirit during that historic horseback ride, while the newly installed receiver was busily engaged in "protecting" the People's Bank out of existence. This is the reporter's story: Judge Spencer has filed a bond for two hundred and fifty thousand dollars with the United States Fidelity & Guaranty Company, as surety. This bond is subject to increase to cover the assets of the bank. Accom- panied by State Bank-Examiner Cook, he went immediately to the Woman's Magazine Building. There it was announced to E. G. Lewis that Judge Spencer had been appointed receiver. Before turning the affairs of the People's Bank over to Spencer, Lewis in the presence of three witnesses made a formal protest to the appoint- ment. Spencer acknowledged the protest and was then taken up to the fifth floor where he took charge. Almost his first act was to telegraph about fifty banks over the United States not to honor any more checks on the People's United States Bank. These bank checks had been sent out by the People's Bank for sale and were purchasable by those who desired to use them. Judge Spencer continued to use the same clerical force that had been used by the bank officers. Bank-Examiner Cook was at the institution all day, but Spencer said Cook was taking no part in the conduct of its affairs. He said, further, that he would make an endeavor to gather in all the assets of the institution for the protection of the depositors, stockholders and creditors, in the order named. No one was permitted on the fifth floor, on which the bank offices are located, without an order. The words "Wind up the afl'airs" which were in the order for petitioner's appointment, were stricken out by agreement. The signifi- cance of this change in the ultimate disposal of the bank's affairs, was not explained. The following is a written protest made to Judge Spencer by President Lewis: "In acknowledging service upon me as President of the People's United States Bank of an order of the circuit court of St. Louis county, dated July 10, 1905, whereby Judge Selden P. Spencer is appointed receiver of said bank, I, acting as president of this bank, do protest that order as unjustified and in every way prejudicial to the interest of both 460 THE SIEGE OF UNIVERSITY CITY stockholders and depositors and do surrender said bank and its assets only under protest and in obedience to said order of the honorable court. (Signed) "E. G. Lewis, President." Witnesses: C. D. Garnett, F. J. Cabot, F. V. Putnam. The most amazing feature of the first receivership, and the one which later raised a storm of protest and public criticism, was the lack of any notice or warning of his intended action by the secre- tary of state. What possible motive, men asked, could account for this instant reversal from friendly co-operation to open war.'' Swanger's first explanation was given to a reporter of the Globe- Democrat in the following interview: I instructed N. T. Gentry and John Kennish, assistants to Attorney- General Hadley, to make application for a receiver for the bank in the Circuit Court at Clayton. I could not take charge myself under the law, as I am only authorized to assume control of banks that are in an insolvent condition. The People's Bank is not insolvent. It is, however, in an unsafe condition. The matter is now out of my hands and the bank is in charge of the courts. As to the amount the stockholders in the bank will receive back, I am in no position to say. I believe that a large majority of the loans are well secured. The largest loans are .?440,000 to the University Heights Realty and Development Company, $400,000 to the Lewis Publishing Company, and $146,000 which is credited against promotion expenses of the bank. The first two are secured by the University Heights property and the Woman's Magazine Building, business and contents. As to the promotion expenses, I am not prepared to say. None of these loans were made to Lewis personally, but he was the prime factor, of course, in the concerns to which the money was loaned. A NEW KIND OP BJ>NK FAILURE. The twenty-four hours' developments after the first receivership was installed first perplexed the people of St. Louis and then filled them with amazement. For the public has been taught by past experience to expect that the failure of a bank or the exposure of a get-rich-quick concern will be followed by sensational details of defalcation or embezzlement, spiced by scandalous tales of the mis- management or riotous living bj'' which the assets have been dis- sipated, and enlivened by the arrest of the bank's officials or their flight from justice. But here was a bank, branded as fraudulent by the Federal Government and thrown into forced receivership by the State authorities, which was not only solvent. It had in its vaults certificates of deposit for a million and a half dollars — more than five times enough funds in ready cash to pay off its depositors and its current liabilities in full. True, it had made loans of nearly a million dollars to corporations controlled by Lewis. But Lewis had put his real estate and publishing interests in pawn to protect these loans, and they were said by the head of the State banking department himself to be well secured. No law had been broken. The books had not been falsified. No charges of theft or mis- application of funds appeared in the public prints. Lewis had not been playing the stock market, or betting on horse races, or going in fast company. The only late hours he had been known to keep THE DREYFUS CASE OF AMERICA 461 were his vigils in his tower with a fountain pen as his sole com- panion, save for the spiritual presence of his readers. No funds of the People's Bank had been dissipated. Every dollar was accounted for by lawful loans. Each was doing its full share in turning the wheels of wholesome industry and in the upbuilding of legitimate enterprise. This was a kind of bank failure for which the people of St. Louis and of the United States were not prepared and which at first they could not seem to understand. Slowly it dawned upon them that the postmaster-general might have committed a grave injustice and that the secretary of state in aiding and abetting him might have overstepped the bounds both of morals and of law. The St. Louis Globe-Democrat of Tuesdaj^ morning published a lengthy news article, including a photograph of Receiver Spencer and also a view of the interior of the Woman's Magazine building. Under the caption, "Official Statement of Bank's Condition," is printed the first public statement as to the present status and prob- able outcome of the bank's affairs: Judge Spencer, the receiver, last night gave out the following statement of assets and liabilities of the People's United States Bank: ASSETS. Loans and discounts $1,010,183.43 Bonds and stocks 129,469.93 United States bonds 75,000.00 Cash and due from banks 1,393,656.06 Building and furniture and fixture account 19,701.05 Expenses 26,737.88 Total $2,654,748.03 LIABILITIES. Capital $3,435,000.00 Deposits 219,748.03 Total $3,654,748.03 Included in the loans and discounts are the following items considered by the recei's-er of doubtful value- and liable to shrinkage: An unsecured note given hj Lewis and the old directors for one hundred and fifty thou- sand dollars, representing the promotion expense of the bank; a loan of three hundred and eighty thousand dollars, secured by stock of the Lewis Publishing Company; a loan of four hundred and forty- four thousand dol- lars, secured by stock of the University Heights Realty and Development Company. The balance of thirty-nine thousand dollars is made up of smaller miscellaneous loans, many of them on notes endorsed by Lewis. Under the caption, "All for Depositors, Half for Stockholders," is this: State Bank-Examiner R. M. Cook last night declared the affairs of the People's United States Bank were in no very complicated condition. He said: "According to an examination I made of the assets and liabilities, I believe the receiver now would be able to pay all the depositors in full and have enough left to pay the stockholders fifty per cent of their stock. Judge Spencer, the receiver, places a more liberal estimate on the bank's ability to pay the stockholders. He stated that, allowing for shrinkage in the collateral, the stockholders might receive seventy-five per cent on the dollar." 462 THE SIEGE OF UNIVERSITY CITY Summarizing the day's events, attention is called by the Globe- Democrat to the fact that the receiver had made application to R. M. Fulton, as postoffice inspector-in-charge, for the bank's mail, to be delivered to him upon the ground that it might contain stock subscriptions, deposits or other assets of the bank. The demand was refused with the statement that "the procedure of the Depart- ment permitted of no lifting of the fraud order except by injunction of a Federal court or its revocation by the postmaster-general." The Chronicle of Tuesday evening reviews the day's proceedings thus: Judge McElhinney granted the request of Receiver Spencer this morn- ing for authority to pay the depositors of the People's United States Bank on demand. The court also increased Judge Spencer's bond from $350,000 to $1,000,000 at the hitter's own request. Judge McElhinney advised that the bond be distributed among several companies. Spencer an- nounced that he would begin an investigation of the expenses of the bank. He has engaged Judge George P. Wolff and State Senator A. E. L. Gard'- ner, both of St. Louis county, to represent him in any legal phase that might develop. The receiver stated to the court that there is suiiicient money to pay all present demands. He stated that there were now about fifty employees, including fifteen stenographers, who would not be needed if the fraud order was allowed to stand. The Post-Dispatch, in furtherance of its implacable hostility, ran under tlie heading, "Stockholders Lose More Than Six Hundred Thousand Dollars in Lewis' Collapse," a four-column story open- ing thus : By the collapse of the People's United States Bank, the get-rich-quick enterprise of E. G. Lewis, the sixty-five thousand stockholders scattered throughout every state and territory in the Union will lose more than six hundred thousand dollars, even if Receiver Spencer's greatest expec- tations as to the values of the bank's securities are realized. Bank-Exam- iner Cook, who should be thoroughly familiar with the institution's affairs, says the stockholders cannot be paid more than fifty per cent, thus en- tailing a loss of more than one million dollars. According to Receiver Spencer's estimate, he expects to realize from the present assets one million, eight hundred thousand dollars and pay back to the stockholders seventy-five per cent of their holdings. The securities upon wliich he contemplates realizing seventy-five per cent on the dollar paid in for stock, is the property pledged for collateral to secure the Ijank's loans to the two other Lewis concerns, the University Heights Company and the Woman's Magazine, aggregating eight hundred thousand dollars. This security consists of two hundred acres of land owned by the University Heights Company, on one hundred acres of which there is a previous lien of between one hundred seventy thousand dollars and two hundred thousand dollars. The Woman's Magazine Building, the printing plants and the subscription lists of the magazine are included in the security. The real estate is conceded to be injured in value by its proximity to racetracks and saloons in that vicinity. The official report of the postoffice inspectors speaks of the Woman's Magazine Building and plants as being "plastered with mortgages." As for the tangible value of the magazine subscription lisits, the report calls atten- tion to the fact that the magazines are being sent through the mails on a temporary permit, which grants the privilege of the one cent per pound rate. This permit is subject to revocation at any moment, and such action is even now under consideration in AVashington. If this temporary THE DREYFUS CASE OF AMERICA 463 privUege should be withdrawn, the report points out that the value of the Woman's Magazine subscription list as collateral would at once shrink to practically nothing. The sequel will show the contrast between this wilfully pessi- mistic view and the actual situation. Lewis no longer stood alone opposed to a powerful newspaper and to both the State and Federal officials. Thanks to Swanger himself, he now had ^powerful cham- pions in the newly elected members of the bank's directors. This interview with Governor Stephens was published the day after the receivership took place: My own idea is that the secretary of state acted hastily and not in the best interests of the bank. The new board has been acting in good faith. It supposed that the secretary of state had confidence in every member and was heartily co-operating. Mr. Swanger gave us no notice of bis in- tention to place the bank in the hands of a receiver, but at all times expressed his entire satisfaction with the plans announced to him for th? future conduct of the bank. I believe that should we have failed in resist- ing the fraud order the board would have considered the advisability of the bank's immediate liquidation and retirement from business. The work of liquidation would have been simple and rapid. The banl{ is wholly solvent. The deposits could have been paid off in full in a single day. We should have converted all the remaining assets into cash as fast as possible. With the cash on hand, we should have paid an immediate cash dividend to stockholders. The balance or final dividend could have been paid as soon as the remaining assets were realized upon. There would have been little expense to the stockholders, whereas the receiver's expenses wiU be very great. Had Mr. Swanger seen fit to treat us with that courtesy with which we have endeavored to treat him, and conferred with us after the fraud order had been issued, while in the cily Sunday or Monday, I believe we could have shown him the absolute inadvisaliility of the receivership. Tlie board feels that the secretary of state has treated us with discourtesy. Mr. Carter and 1 went on the board at the request of many of the friends of the institution and with Mr. Swanger's approval. In the light of developments I cannot understand why he wanted a: new board selected at all, since he has not, at a critical time, seen fit to confer with it on matters of vital importance. Editorially, the Post-Dispatch ran a leader entitled, "Credulous Investors," based on the assertion of the postmaster-general that Lewis' expectations as to profits could not have been fulfilled. It closes with these words: "If Secretary of State Swanger was moved by timidity in his halting and easy method of dealing with Lewis' bank, the dangerous character of which was fully known to him, his timidity is a menace to the public." The secretary of state was evidently pleasing no one. All the New York dailies of Tuesday commented on the bank. The Herald carried a three-quarter column St. Louis dispatch sum- marizing the news published in St. Louis. The following para- graphs appealed to out-of-town readers, and were widely re- published throughout the country: The holding up of Lewis' mail is quite as important an incident in the routine of tlie local postoflSce, probably, as it is to the persons most concerned. Lewis and his banking interests were the Government's heav- iest customers in town, though the Woman's Magazine was responsible for 464 THE SIEGE OF UNIVERSITY CITY the largest part of the mailing done and received. Not since the days of the Arnold get-rich-quick schemes and others like it, has an order on the postoffice in St. Louis called for the stoppage of so great a quantity of mail matter. So vast did the mail matter of the People's Bank become, that a branch postoiiice had to be established in the Woman's Magazine Building for its accommodation. Here all the stamps were bought, and this was a tremendous incidental to the carrying on of this rapidly grow- ing business. Incoming mail was received at the downtown or general postoffice, and was carted in wagons to the private car of Lewis which was daily sidetracked at Seventh and Chestnut streets, and thence trans- ferred in the car to the publication office out in the county. Out-going mail was similarly handled, the car taking it downtown to meet the wagons. The fraud order covers all mail but that addressed to the Woman's Magazine. All matters of the People's United States Bank, its agents, or E. G. Lewis, will be held up and returned immediately to the sender if proper endorsement graces the corner of letters. One of Lewis' claims as to the superior safety of the bank its freedom from "runs" — was now made good. The Globe-Democrat of Wednesday, the third day after the fraud order, chronicles the first symptoms of a "run" on the People's Bank: Two depositors appeared at the bank headquarters to demand their money. Both were women. One was middle-aged. She carried a baby in her arms. She lives in St. Louis and has three dollars in the bank. Judga Spencer told her to wait imtil later in the day and he would pay her. She left, saying she would come back again. The other was an old woman who lives in the East. She was returning from a visit to relatives out West when she read the news about the bank, so she stopped oflf in St. Louis to draw her balance. Jiidge Spencer assured her that her deposit was safe, and that she could draw out the money by mail. He advised her to keep on her journey home. Judge McElhinney has authorized the receiver to pay depositors and it was stated that applicants by mail would be forwarded withdrawal receipts for signature. Depositors will be paid on presentation of their checks. Affairs at the Women's Magazine Building quieted down yesterday after the flurry of Monday. Lewis spent part of the afternoon downtown and visited several of the banks. The longer the affairs of the bank were before the people and the more they were investigated, the less like a failure and get-rich- quick concern the bank appeared to be. Under the sub-title, "Ex- aminer Cook Explains," occurred the retraction of a previous inter- view in which he had been made to say that a loss of fifty per cent to stockholders was anticipated: State Bank-Examiner R. M. Cook yesterday made the following explana- tion in reference to his published statement that the bank would pay back fifty per cent to the stockholders: AVhat I meant was that the receiver will be able to pay back to the stockholders from the cash assets on hand fifty per cent on the dollar, after the depositors are paid in full. The bank's statement shows that after paying off the deposits there will be over a million dollars on hand, or nearly enough to pay back fifty per cent to the stockholders, without including the assets in bonds and stocks. This is without talking into account the collateral held as security for loans. It leaves the final divi- dend to the stockholders to depend on the amount which may be realized on the collateral. With this remarkable admission on the part of the examiner -vrho THE DREYFUS CASE OF AMERICA 465 had just completed a thorough investigation of the bank's affairs, this chapter may be drawn to a close. The whole history of bank- ing, it is believed, may be safely challenged to produce a parallel. Why was a receivership forced upon a bank that was afterwards admitted by the receiver, the head of the State banking depart- ment and the chief bank-examiner, to be in a position of almost unexampled strength and safety.'' There was hardly a dubious dollar in the bank's assets. It had a million and a half dollars in cold cash. It had seventy-five thousand dollars in Government gold bonds. The only large items among its assets that were open to question were the loans to the University Heights and Lewis Pub- lishing companies. Even these were said by those best qualified to judge to be abundantly secured. Four men out of five on the board of directors were outsiders, who had just come into the bank with the approval of the secretary of state, expressly to safeguard its stockholders and depositors. None of them had a dollar of interest in any investments of the bank. These men were business men and bankers of the highest standing. Their integrity and the probity of their intentions were above reproach. Yet they agreed that every loan of the bank was amply protected. HOME RULE VS. FEDERAL USURPATION. The sequel to the "concerted action" thus taken by the State and Federal authorities shows how much more easily the people can call to strict accountability a local or State official than they can reach a Federal officer at the seat of national power. For, as we shall see in the following chapter, the newspaper-reading public of St. Louis and throughout the State of Missouri was promptly told that a great wrong had been done by the hasty and ill-advised act of the secretary of state and were given an opportunity to make their indignation felt. To bring Cortelyou to book for his act in issuing the fraud order, six years of agitation and a campaign of education extending to every part of the United States and costing many hundred of thou- sands of dollars has been required. Gradually a sufficient popular sentiment has been created to bring about a congressional inquiry. But this has, itself, occupied many months and has cost both the people and the complainant many thousands of dollars. In the end justice will be secured, but at what a frightful cost! It is by such lessons as this that the principle of home rule has become dear to every liberty-loving race. The People's Bank was the creature of the state of Missouri. It was operated under the State laws. If the Federal authorities had not interfered with it, through the abuse by the postmaster-general of the discretion re- posed in him by an unwise Federal law, the People's Bank might still be in existence. It might today be the source of countless benefits, past, present and to come, to thousands of men and women throughout the United States. CHAPTER XXI. HOME RULE VS. FEDERAL USURPATION. War is Declared — Official Accountability — Swanger Under Fire — The Early Birds — The Early Birds on the Grill — Ouster of the Early Birds — Spencer Asks $1.73 Per Minute — First Steps in Liquidation — Exit Judge Spen- cer — Campaign in the Federal Courts — McPherson's Opinion — The Defeat at St. Paul — The Second Re- ceiver — The Missouri Supreme Court Decision. If the conservative, responsible element of St. Louis will make a little ring and give me a fighting chance with fair play I will be willing to defend my acts against all comers. I have built up here in St. Louis the largest publishing business of its sort in the world. It furnishes bread and butter for half a thousand St. Louis families. I have built up from cowpastures what promises to be your most desirable residence district. I have brought millions of money into the city and invested them in such a way that I could not possibly run away with or profit personally by them beyond the ordinary comforts of life. For years I and my associates have labored night and day. If ever I have an opportunity to demonstrate whether my new theories of banking are right or wrong — as every one who has a dollar at stake in them seems to wish me to have, — and if the conservative banking element then conclude them to be wrong, I am willing to go out of the banking business. But I do not intend to be pushed out of it, if I can help it. The dearest rights of an American citizen are to be heard in his own defense and to be confronted by his accusers. These rights are involved in this struggle. All we ask is a square deal. war is declared. Such was the ringing appeal for fair play with which Lewis dismissed the newspaper men who came to ask if the bank was going to put up a fight against the allied forces of State and Nation. The bank would fight. That was the message which the reporters heralded through the press. Nor was Lewis to be single-handed in the struggle. The newly elected board of directors was thoroughly incensed by the failure of the postmaster-general to make good his pledge of a further hearing before himself. They smarted under the affront that had been put upon them by the secretary of state. While the clerks at the St. Louis postoffice were hard at work, stamping the shameful word "fraudulent" upon mail addressed to themselves as officials of the bank, and while the newly appointed receiver was exercising his authority by wiring the agency banks all over the country to suspend pa3fment on all People's Bank checks, the board gathered for conference. Men like Stephens, Carter, Meyer and Coyle could not but resent the idea of letters addressed to them being returned to the sender stamped "fraudu- 4«$ THE DREYFUS CASE OF AMERICA 467 lent." The sentiment was unanimous. To lie down under the "con- certed action" of the State and Federal authorities would amount to an admission of guilt. The action taken had been so drastic that all possibility of compromise was shut off. A flag of true could only suggest willingness to surrender. Any attempt to conciliate an enemy so implacable would be to show the white feather. The challenge of the allies against the bank was as incapable of adjust- ment without a fight as that of Spain against America^ or of the Boers against England. Fight they must, and Lewis felt that he had the people on his side. The Globe-Democrat of July 10 says: Lewis talked bitterly about the action of Secretary of State Swanger in putting the bank into the hands of a receiver and of the methods of the Postoffice Department in issuing the fraud order. The other directors were reticent and would make no comment. Former Governor Lon. V. Stephens was the first arrival. There was a long wait before all had as- sembled, during which Mr. Stephens divided the time between occasional chats with Lewis and telling funny stories to the reporters. He referred to the directors as the "ex-board" and a "board without a bank" and said he didn't know what was going to be done until it was done. After the meeting Lewis let himself out in an impassioned declaration : "Fight? I should say we are going to fight to the last ditch," he de- clared. "I consider the actions of Secretary Swanger and the postofiice inspectors unwarranted to the last degree. By these proceedings they have utterly destroyed my credit and branded me from Maine to Cali- fornia, all without a cause. The bank is solvent. Every dollar of its loans is good. A board of directors of Secretary Swanger's own selection says so. Then, without any notice, he secures a receiver. "Fighting the Postoffice Department, in a fraud order proceeding, is like going against a man with a club in a dark room with your hands tied. There is no trial or hearing worthy of the name. Assistant Attor- ney-General Goodwin told us in Washington that the postoffice inspectors had found us guilty and that we were so adjudged until we satisfied him otherwise. We could not see the inspectors' reports containing the charges. We could not do anything except make a statement without knowing what we had to refute. "The board was making every effort to comply with Secretary Swanger's demands to take up the two loans to the Lewis Publishing Company and the University Heights Company. They were not due until October. But in a few weeks we would have had them straightened out." The minutes of this meeting read thus: The President reported that a "Fraud Order" had been issued against the bank and himself by the postmaster-general and that Judge Selden P. Spencer had been appointed receiver of the assets of the bank by the circuit court of St. Louis county, Missouri, today. Mr. Carter offered the lollowing resolution, which was adopted unanimously: Resolved, that the members of this board hereby put on record their expression of protest against the action of Hon. John E. Swanger, secre- tary of State of Missouri, in procuring the appointment of a receiver of the People's Bank upon an application to the circuit court of St. Louis county, Missouri, without notice of any kind to this bank or any of its officers, after having expressed his entire satisfaction with this board and with the plans which it had announced to him for the future course of this bank, and while this bank is in an entirely solvent condition. This board, furthermore, puts on record this expression of its protest against the fraud order issued by the postmaster-general of the United 468 THE SIEGE OF UNIVERSITY CITY State,s, after refusing an application for a hearing before said postmaster- general, and refusing, by the assistant attorney-general for the Postoffice Department, to permit the representatives of this bank or its attorneys to examine the reports of the postoffice inspectors, whose statements had been submitted to the said assistant attorney-general for the Postoffice Department as part of the evidence considered at the alleged hearing held at Washington, D. C, June 16 and 17, 1905. This board protests that there is no evidence whatsoever of any improper action by this banl£ and none was presented at said hearing or has been presented at any time. Resolved, That it is the opinion of this board that the action of the postmaster-general in the matter aforesaid is subversive of the constitu- tional rights of the officers and stockholders of this banli and is un- American and a warning to all citizens of the United States that no one, having large or small interests at stake, is immune from such arbitrary action, and that, in our opinion, some correction of the law and practice upon that subject should be invoked at the hands of our representatives in Congress. The following resolution was moved by Mr. Carter and seconded by Governor Stephens: Resolved, That the attorneys for this bank be in- structed to take such steps as in their judgment may be necessary, to cause to be discharged the receivership of this bank this day appointed by the circuit court of St. Louis county and to cause to be vacated the fraud order heretofore issued against this bank, by the Postoffice Department. After voicing their protest, the officers of the bank resolved them- selves into a council of war to plan a campaign that should wrest victory from defeat. The outlook seemed desperate. All the bank's resources were in the hands of the enemy. Every dollar of its funds was tied up by the receivership. The incoming mails bearing succor were being impounded. Lewis and his associates thus found themselves cut off from the sinews of war and con- fronted by tlie prospect of a double campaign of costly litigation against opponents backed by unlimited resources and by the pres- tige of State and Nation. The odds seemed absolutely overwhelm- ing. Anything less than a just cause must have sunk under the combined attack. The cause of the bank looked like a forlorn hope. Yet its officers did not falter. Once the decision to fight had been recorded, every member of the reorganized directorate came out in a public interview declaring that an outrage had been done, and asserting that the bank would fight for its rights to the last gasp. The definite and positive stand upon tlie side of the bank taken by such well-known St. Louisans as Messrs. Stephens, Carter, Meyer and Coyle arrested public attention. The revelation of its solvency and of the ample security of its loans and investments set people to thinking. The events that followed brought about a revulsion of feeling in St. Louis which was vigorously expressed in the col- umns of the press. OFFICIAL ACCOUNTABILITY. The helplessness of the citizen against Federal interference in local afl'airs was illustrated by the comparative immunity from criticism of the postmaster-general. Nobody seemed to know much about the rights of that official to issue a fraud order. All the ma- chinery of the postal inspection service and of the Department at THE DREYFUS CASE OF AMERICA 469 Washingtoiij whereby this fell stroke had been brought about, was shrouded in mystery. That phase of the affair struck the common mind with a sense of bewilderment. The figure of the postmaster- general alone stood out in the public view fronting the blame. His exalted position, his apparent remoteness from any personal interest in the People's Bank, and his prestige as a member of the President's official family, combined to place him beyond the imme- diate reach of local criticism. Not so as to the secretary of state. The people of Missouri, and especially of the city of St. Louis, felt that Swanger was one of themselves. All his comings and goings were under the observance of newspaper men. It was felt that his every act was properly subject to public comment. The campaign of the Post-Dispatch against the People's Bank was still green to memory. The recent coup by which that newspaper had thwarted Lewis' attempt to buy a rival publication was perfectly well known and understood by the local public. It was known that the Post-Dispatch had advo- cated the election of Swanger; also that it had then asked him to seize the bank, and that it had scourged him mercilessly for his hesitant and vacillating policy. All of a sudden Swanger had changed his mind. Between Saturday night and Monday morning he had resolved to act. Whence this new impulse? Why this sud- den change.'' How account for this mad rush after so many weeks of hesitation. These questions flew from lip to lip, in the business offices, cafes, streets and clubs of St. Louis, and out among the corner groceries and farm houses of the rural districts of Missouri. The sequel should drive home to the mind of every thoughtful citizen the dangers of encroachment of Federal power in local affairs. For such is the lesson taught by the contrast between the ease with which Swanger was brought to book, as compared with the difficulty of reaching Cortelyou and his aids, by which for many years they have escaped scot-free. The story of the rout of the secretary of state and the ousting of the first receiver of the People's Bank is well worth the telling. Not only is it full of picturesqueness and local color; it also stands out in bold and significant contrast to the campaign against the fraud order that followed in the P'ederal courts, in which the bank went down to final ruin and defeat. The whole history of the liti- gation of the bank during the summer of 1905 and after, shows that under the principle of home rule the stockholders and depositors of the People's Bank could have been adequately protected by the State banking laws of Missouri as administered in the Missouri courts. Any abuse of power by a State official could have been promptly corrected by judicial procedure and by pressure of local public opinion. But neither the stockholders and depositors, nor the officers of the bank on their behalf, could protect themselves against the usurpation of administrative power by a Federal official, because of the refusal of the Federal courts to intervene. The vital 470 THE SIEGE OF UNIVERSITY CITY issue of home rule against the abuse of Federal power, thus sharply drawn, gives point to the newspaper controversy between the direc- tors of the People's Bank and the secretary of state, and to the editorial discussion of the latter 's conduct. The episode of the first receiver of the bank, whose appointment was procured by Swanger and for the propriety of whose conduct he was therefore held accountable, adds a welcome bit of farce- comedy to what is otherwise a grimly tragic story, unrelieved by any humorous touch. For, like the famous king of France of nursery lore, the first receiver marched up the hill at University City, only to march down again, a sadder, perhaps a wiser, but certainly not a I'icher man. SWANGER UNDER FIRE. The Republic, in a three-column summarj' of the events of the great day of the joint attack and victory of the allies, thus dis- cusses the opening of the bank's campaign: W. F. Carter, a prominent attorney, recently elected director of the People's United States Bank, last night declared that Secretary of State Swanger has violated promises made to the directors of the bank and through his unbuslness-like methods has wasted over one hundred thousand dollars. "I am unable to account for the actions of Mr. Swanger," said Mr. Carter. "He misrepresented matters to me without cause or provocation. Last Saturday evening he came to my office to use his own language, 'purely on a social visit.' He said he was en route to his home In Jeffer- son City from down on James river where he had been fishing. He 're- mained at my office for about an hour, and before departing asked me what steps I thought the authorities at Washington would take in the Lewis bank matter. I told him I had received information from a certain congressman that the matter would be satisfactorily adjusted. He de- clared that he could not agree with me, but said that if Lewis was removed from the position of president of the institution and if the two notes amounting to eight hundred thousand dollars were removed, the matter, he believed, would be settled all right. He declared, however, he had not received an inkling of what action would be taken. "On leaving my office he promised to see me Sunday and also assured me that in the event of a fraud order being issued he would consult the directors of the bank before appointing a receiver. About six o'clock in the evening I read the dispatch from Washington saying that a fraud order would likely be issued. I then realized the significance of Swan- ger's visit. I telephoned the Southern Hotel, but was told that he was not there. I then telephoned to Jefferson City and learned that he had been there Friday and was not returning from a fishing trip as he had said. I was unable to get into communication with him all Saturday night and Sunday morning. He did not come to my office as he had promised to do. From a conversation with Judge Spencer on Monday, I learned that he and Swanger were together Saturday afternoon. They appeared at the courthouse in Clayton before nine o'clock Monday morning with a $250,000 bond signed by the United State Fidelity and Deposit Company. Besides the petition asking for a receiver, they presented an exhibit composed of twenty-five typewritten pages. This alone is enough to lead me to believe that they were together the greater part of Saturday and Sunday prepar- ing the exhibit. I have not seen Mr. Swanger since and he has" failed to communicate with any of the directors as he had promised." The Chronicle published a statement attributed to Governor Ste- ■If ( ^.t€ «i;,'i,>*Mr'^»r^ ^A single day's incoming mail ditring the reorganiaation of the Peoples' United States Bank as the Peoples' Saz-ings Trust Company "Average daily incoming mail of the Lewis enterprises of about ^.noo letters ^Lezvis Publishing Company's incoming mail of May 24^ 1904, said to contain 26,000 subscriptions to the Woman's Magazine Two of Ihc iiico)ning daily iiuiUs of the American IVomaii's League ^Afiiil of ihc (uiy after Clirisfmas. IQO'), containing magazine subscription orders awoiiuling tn ,S_^\./n,'..v -A hig diiilv mail during a bns\> season, July s, ]