Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-09-16
DIAMOND CONTRACT SCHEMES.
Intention of the Law Officer of the
Post Office Department.

The Post Office Department is hot on the
trails of the concerns operating diamond
contract enterprises and the assistant at
torney general has expressed himself as de-
termined to exercise all the power at his
command to kill off these schemes. AS far
as the mails are concerned he Will be able
to do this if he can keep pace with their
rapid growth This is, however, speculative,
since a concern which has had a fraud
order issued against t is very likely TO
change its name and begin business all
over again. taking over the contracts of the
defunct company and guaranteeing to full
fill them.
This happened in the case of the Empire
Diamond Company of San Francisco,
against which a fraud order was lssied
nearly year ago. The Fidelity rundIng
Company of San Francisco then came hi''
existence. took over the contracts oi tis
Empire Diamond Company and proceeded
with its schemes -
The assistant attorney general was ap-
prised of this enterprise. ana tne InVeS,i-
CATION which followed resulted IN the ~
sllance of an order against both companies
and against E c. Hedges of the Fidelity
Company.
These enterprises have had remarkable
growth and are now In operation all over
the country The scheme is scarcely ten
wears old yet it's ramifications extend INTO
the most remote corners or the united
States
They are not all victims. however, for
some of them are paid the amount guaran-
teed by the companies as the value or the
diamond alleged to be purchased under the
contract Those who are paid are paid from
funds received from others and not from
interest or profits on any investments. lof
the companies do not invest the money re-
ceived, but take what one person pays ana
pay ii to that one whose contract expires at
that time 49,
Generally 20 per cent is retained by the
G, mpany for expenses and the balance
has to be paid by investors in the schene.
That the gambling spirit Is alive In the
breasts of millions of men is evidenced 3y
the investors in these enterprises. Ihey
generally know that the scheme VIII iail
when the recruits TO the ranks fall below
a certain number in proportion to the
whole number interested. When that day
comes every person in the scheme will lose
his money yet every man who Is in II
farcies ne will mature his contract before
the crash comes. AS fast as the designat-
ed number of payments have been made a
contract is matured and entitled 10 the
amount guaranteed. This Is paid from
what there is in the treasury. and as the
contracts are maturing every week Ii fol-
lows that there must be more than double
the number of recruits each week as there
are contracts maturing. This is essential
for the reason that the contracts cal for
twice the amount invested. and after ~
per cent is deducted for the expenses of
the company this amount must be paid
from the new funds in the treasury. For
this reason the assistant attorney general
pronounces the schemes pernicious, and is
determined to put the companies out o.
business through the Post Office Depart
ment Just as fast they are located by
the agents of the department