CHAPTER THREE The Porousness of the Law

In 1854, having achieved celebrity as the exhibitor of the dwarf General Tom Thumb, the promoter of Swedish opera singer Jenny Lind, and the propri­etor of New York City's American Museum, P.

Barnum received additional lessons in deviousness after his father's death, when, at the age of fifteen, he became a store clerk. Here he became privy not only to the hard bargaining that went on between his employer and local farm­ers and farm wives, but also to all manner of “dishonest tricks and unprinci­pled deceptions,” from debased bundles of rags to short-weighted loads of ag­ricultural produce. While local hatters passed off their “inferior furs with a little of their best,” young Barnum learned to adulterate “sugars, teas, and li­quors.” In the “dog eat dog” world of the rural marketplace,

[o]ur cottons were sold for wool, our wool and cotton for silk and linen; in fact nearly everything was different from what was represented.

In this memoir, the commercial milieu of Barnum’s youth was one of counterpoised imposition and vigilance, a world in which every economic actor—merchants, consumers, laborers, manufacturers, employees, investors, promoters—shaded and shaved, and presumed to be treated in kind. Again and again, individuals managed to put one over—sometimes on a visiting peddler, sometimes on the supplier of raw materials or finished goods, some­times on a partner or clerk or employer, in turn on a neighbor or relative or stranger. Whoever the parties might be, the deceivers reveled in triumph that overcame sustained suspicions, while the deceived gave the deceivers their due. Barnum depicted these episodes as jokes, and presumed that readers would recognize and share the humor. At no point in his narrative, moreover, did the duped discuss legal threats, much less initiate legal process. Rather, they drove a harder bargain if they discovered a false pretense, mumbled face­saving excuses if their own falsehoods came to light, and, whenever sharp practice became evident after a transaction, complimented the perpetrator on his acumen.

Barnum’s remembered society was a domicile of caveat emptor—a Hobbes- ian economic world in which buyers had to beware, lest they lose their shirts, or purchase ones that would lose their sheen and fall apart after a good wash­ing. The residents of Bethel, Connecticut, who appear in The Life of P. T. Bar­num, like those of New York City, where Barnum came to base his operations, and throughout the nation, where he toured with his entertainment acts, ac­cepted this principle. That is, they assumed that adults should be able to look out for themselves; that if individuals suffered losses through clever misrepre­sentations, they had no one to blame but themselves; and that such experiences prepared Americans for the rough-and-tumble of market exchange. Barnum’s reflections, moreover, did not constitute an unusual portrayal of American business relations. The era’s novels and nonfiction accounts of urban life, such as John Chumasero’s Life in Rochester and George Foster’s 1849 volume New York in Slices, were filled with analogous anecdotes and commentaries.²

Ever the showman, Barnum surely embellished some of these recollections for dramatic or comedic effect. Indeed, any treatment of The Life of P. T. Bar­num as a window on antebellum economic culture must remain cognizant of its author's aims. By the early 1850s, Barnum had fashioned a nationwide repu­tation as a master of humbug through well-told hoaxes and deft acts of public misdirection, which nonetheless furnished value as commodified entertain­ment. He had every reason to highlight the penchant of his fellow Americans to cast suspicious eyes on what was before them, as well as their propensity to be taken in regardless. His core business model, both in early traveling exhibi­tions and his American Museum, rested on giving his customers shared expe­riences in the perplexities of looking sharp. The people who experienced Bar­num's spectacles knew that they were going to encounter many contrived illusions; much of the attraction lay in distinguishing genuine oddities from artful impostures.

This chapter cross-examines Barnum's account of American commercial culture, considering the law of business fraud during an era bracketed by the War of 1812's conclusion and the country's retreat from Reconstruction (though at points the discussion glances before or after this sixty-year stretch of Barnum's own life). In the years after 1815, American commerce recon­nected to Europe and state legislatures began to finance the internal improve­ments and create the banking institutions that drove regional economic inte­gration, which sped up the long march of Americans from countryside to city and farm to factory. By its end, the nation's expanding railroad network had accelerated processes of industrialization and the vertiginous growth of large- scale corporate enterprise, as well as the emergence of a truly nationwide mar­ket for ever more goods and services. Throughout this period, the premises of a face-to-face economic world came under assault, battered by the growth of cities filled with strangers, expanded circulation of goods with cloudy origins or characteristics that were difficult to assess, and the need to deal with coun­terparties who possessed uncertain pedigrees. The pressures of an integrated continental economy, along with currents of professionalization, would even­tually transform the legal institutions that dealt with the problem of commer­cial deceit. But one can usefully probe American fraud law across much of the nineteenth century—across the span of P. T Barnum's own life—as a story of continuity.

One part of that narrative involves the tendency of formal law to frown on many of the petty deceptions that recur throughout Barnum's recollections, as well as the more serious swindles that bedeviled the world of commerce. The common law contained numerous criminal prohibitions against economic du­plicity and provided several avenues for disgruntled counterparties to pursue claims of misrepresentation through civil litigation. American statute books and municipal ordinances amplified these customary principles of antagonism to commercial or financial deceit. Thus the formal rules of the nineteenth­century American marketplace sought to vindicate economic candor and but­tress confidence in contracting and the transaction of business.

Barnum's autobiography nonetheless points to the practical weaknesses of antifraud laws before 1880. Daunting legal standards, challenging evidentiary barriers, and ambivalent cultural attitudes combined to weaken legal restraints on fraudulent behavior. America's legal elites tried to balance longstanding norms that upheld truthful commercial speech against their age's commitment to entrepreneurial activity and rapid economic growth. The latter priorities, encapsulated in the concept of “Go-Aheadism,” counseled leeway for sales­manship and showmanship, respect for the free flow of commercial speech, and reliance on the ability of consumers and investors to look out for their own interests.⁴ Such concerns left a big imprint on legal institutions and legal cul­ture, opening up room for dissemblers and swindlers to maneuver. Even in the face of the strictest formal rules, nineteenth-century Americans often encoun­tered a de facto realm of caveat emptor.

Law on the Books

Nineteenth-century America has long had a reputation of being a bastion of laissez-faire. In the decades that preceded Progressivism and the New Deal, this way of thinking goes, governments left businesses to their own devices, other than keeping public order and offering means of enforcing contracts, the classic roles of the “night watchman” polity.

The Americanized version of the common law permitted both civil and criminal actions against mercantile and financial deceit. Throughout the nine­teenth century, local, state, and federal legislatures enacted numerous anti­fraud provisions, often in response to particular swindles that shocked the political establishment into action. To appreciate the thicket of legal rules per­taining to deceptive actions in this era, one need only thumb through treatises such as Melville Bigelow's 1877 The Law of Fraud, whose hundreds of pages testify to the enduring commonwealth tradition of maintaining a well-ordered marketplace.⁶ As in almost all areas of American law, legal definitions and pro­cess varied from jurisdiction to jurisdiction. Nonetheless, the broad contours of fraud law were largely the same across the nation.

Depending on the circumstances, disgruntled buyers of merchandise, land, or intangible financial assets could pursue many legal avenues if they believed that counterparties had cajoled them into a purchase through false representa­tions. If such a transaction involved credit terms, the purchaser might simply refuse to pay, and then, once sued, seek to avoid a judgment on the grounds of fraud. In legal parlance, defendants could plead a defense of fraud as a bar to the suit. Creditors who extended loans on the basis of false assurances from third parties as to a debtor's solvency could sue those individuals for the result­ing losses. If debtors sought to avoid payment by fraudulently conveying assets to confederates, creditors could bring suit in an equity court to void such transfers. After real-estate deals, purchasers who alleged fraud could tender the land back to the seller, and, if the latter refused to refund the purchase price, bring an action in a chancery court for rescission of the contract. In the case of other completed bargains, such as those for commodities, supplies, consumer goods, or financial instruments, aggrieved parties could sue the seller for deceit, seeking monetary damages in a common-l aw court for the economic harm wrought by deception.⁷

These legal actions all involved civil disputes—controversies that, in the eyes of state officials, did not constitute fundamental threats to the broader social and economic order. Nineteenth-century Americans also had the option of bringing criminal fraud complaints. Under the common law, a wide range of “cheats,” such as adulteration of goods or deceiving others through the use of “false tokens” (counterfeited correspondence, false trademarks, etc.), consti­tuted misdemeanors, so long as they involved deception against the market­place writ large. Other fraud-related criminal accusations looked to statutorily defined offenses such as obtaining goods or money through false pretenses, conspiracy to defraud, and engaging in fraudulent bankruptcy, either by hid­ing assets from creditors or secretly transferring assets to other parties on the eve of failure. Thus the 1833 Georgia criminal code declared that an individual who made use of “deceitful means, or artful practice” to defraud a counter­party “shall be deemed a common cheat and swindler,” subject to “fine or im­prisonment in the common jail, or both.”⁸

The nineteenth-century American legal landscape further included myriad regulations targeting deceptive business practices in specific economic sectors. In metropolises such as Philadelphia and towns such as Fredericksburg, Vir­ginia, auction houses had to obtain licenses.⁹ Throughout the country, ped­dlers, traveling salesmen, and insurance agents confronted county-level re­quirements that they post good-behavior bonds before attempting to find local customers.¹⁰ A host of goods markets were also shaped by regulatory schemes that sought to ensure product quality, many of which had longstanding origins in colonial economic policies. America's urban food and energy markets em­ployed weighers, measurers, and inspectors who had the statutory authority to police the daily business of selling produce, meat, wood, and coal to retailers and consumers.¹¹ Because export industries such as tobacco, salted pork, and pickled fish depended on good reputations with foreign purchasers, leading figures in those industries lobbied for the creation of formal quality standards and the appointment of state officers to uphold them. Most of the resulting statutes required that sellers prepare their wares in standard dimensions and that the goods receive a mark from an official inspector who certified their purity and/or grade.

Michigan established a typical set of regulatory requirements for its leading export commodities. As of 1857, its legislature had specified detailed standards for the preparation of beef, pork, butter, hog's lard, fish, flour, leather, pot and pearl ashes, beer, ale, cider, and barrel staves. Before sending wares out of state, producers of these goods had to have them examined by county inspectors, who assessed quality grades and adherence to packing requirements. If manu­facturers or merchants evaded inspections, counterfeited inspection marks, or altered the contents of already-inspected containers, they risked fines and forfeitures.¹²

Such institutional arrangements offered the prospect of more substantial impacts on business practices than did general legal provisions concerning economic duplicity. Unlike civil litigation or criminal complaints, licensing and inspection regimes did not depend on alleged victims of fraud to initiate proceedings. Instead, they vested authority in public officials to survey the metes and bounds of marketplaces, and to levy sanctions on economic actors who violated statutory mandates. Licensing and inspection systems established bureaucratic capacity.

Nineteenth-century American law, then, teemed with legal rules and insti­tutions that attempted to prevent fraudulent practices or give modes of redress to fraud victims. But identifying formal legal requirements constitutes only the first step in any assessment of the impact that law has had on social and eco­nomic arrangements. Once one considers the judicial application of laws relat­ing to business fraud, it becomes clear that the general nineteenth-century legal restraints against commercial or financial deceit were hemmed in by pro­cedural and evidentiary rules. In many contexts—as, for example, the cotton trade—purchasers who wished to lodge formal accusations of duplicitous con­duct by sellers had to do so soon after becoming apprised of imposition. To wait even a few months proved fatal to lawsuits, for delay compromised the ability of middlemen to make similar claims against their suppliers.¹³

Judicial standards for determining when particular acts of duplicity crossed the boundary of legally permitted behavior also tended to be exacting. Com­plainants had to show that misrepresentations were material facts related to the transactions in question. Discussions of contingent circumstances or as­sessments of future events (such as predicted price movements) were, by defi­nition, opinions, not facts. Pledges of future payment, no matter how insin­cere, constituted mere promises, actionable through civil, but not criminal, process. To be “material,” falsehoods had to be clearly related to the decision to go ahead with the deal. Individuals who levied allegations of fraud further had to demonstrate that they had been taken in by the false assertions, that they had actually relied on them in choosing to agree to the sale or purchase or ex­tension of credit, that they had no ability to check the veracity of the untrue assertions or had taken reasonable steps to verify them, that reliance on a false­hood had occasioned economic loss, and, most dauntingly, that the falsehoods represented intentional efforts to defraud. Taken together, these rules created a legal gauntlet.¹⁴

The adoption of tough evidentiary filters for fraud claims reflected elite commitment to economic growth and individual self-reliance as fundamental social values. Providing easy means for Americans to revisit transactions on the grounds of duplicity, lawyers and judges argued, would throw too much sand into the gears of commerce. As Chief Justice John Bannister Gibson of the Pennsylvania Supreme Court argued in an influential 1839 opinion, capacious definitions of fraud “would put a stop to commerce itself in driving every one out of it by terror of endless litigation.” Solicitousness toward fraud allegations would gum up civil and criminal dockets, overwhelming the courts with dis- putes.¹⁵ The bar and judicial fraternity similarly tended to shy away from legal doctrines that might destroy the incentive for individuals to look out for them­selves—to learn from ill-advised purchases of seeming bargains, investments that appeared to be too good to be true, or unwarranted extensions of trust. John Appleton, a Maine Supreme Court judge, encapsulated this view in an 1878 opinion concerning a debtor's effort to avoid payment to an innocent third party holding his promissory note, because the debtor had drawn the note under false pretenses. In such instances, Appleton insisted, “the foolish and the deceived must bear the consequences of their folly and imbecility and not impose on those who relied on their assertions, the penalty which nature always attaches to negligence or want of caution.”¹⁶ Judges such as Appleton grafted the ethos of caveat emptor onto the more restrictive general law of busi­ness fraud.

This judicial skepticism signified a departure from the dominant tendencies of early modern Anglo-American jurisprudence. In England and America, from the sixteenth century into the early years of the nineteenth, purchasers who alleged deceit tended to receive more sympathetic judicial hearings. When buyers bought from artisans or merchants in a regulated public market and paid a price customarily associated with a standard of fine workmanship or quality, judges imputed an implicit warranty of merchantability, and even soundness, to the transaction. There were scattered exceptions to this pattern, which eventually furnished key precedents for nineteenth-century jurispru­dence. On the whole, though, early modern courts in the British Isles and the American colonies protected purchasers of shoddy merchandise even when sellers plausibly contended that they were unaware of defects.¹⁷

The point here is not that nineteenth-century American legal restrictions on duplicitous business practices disappeared entirely through the hocus pocus of judicial hermeneutics. But American judges and treatise writers of the time, like their English counterparts, narrowed those curbs. For the common-law or statutory rules to bite by the mid-nineteenth century, the de­ception had to be especially “skillful,” designed to overcome the diligent, even vigilant, investigations of economic actors. In the case of a sale of adulterated or shoddy goods, the defects had to be “latent,” hidden in such a way that buy­ers could not readily detect them. If promoters of some new company made

fanciful claims and predictions about its future potential and manifested enor­mous enthusiasm about the quality of its assets and management, investors were supposed to know that such claims would not sustain fraud lawsuits. The nineteenth-century American law of business fraud typically reached only de­vious chicanery, not, as a Boston newspaper editorialized in 1834, “the white lies, exaggerations of the truth, and concealment of some particulars” that “by universal consent and common usage” helped to facilitate investment and mercantile trade.¹⁸

An 1847 New York appeals court case, People v. Crissie, typified the judicial inclination to hem in the legal constraints on fraud. The case concerned a criminal prosecution under the New York false pretenses statute, occasioned by the sale of a flock of sheep. The purchaser in question, a farmer named Brock, had asked the previous owners about the poor condition of several sheeps' hooves, which the drovers had explained as the temporary conse­quence of a recent journey over difficult ground, even though they knew that the flock was diseased. A lower court had set aside a conviction, arguing that Brock should not have placed any faith in the explanation. In his majority opinion, Democratic Judge Freeborn G. Jewett disagreed, but in doing so, stressed the limited reach of New York's false pretenses statute. Jewett con­ceded that the goal of the legislation was to “protect the weak and credulous against the wiles and stratagems of the artful and cunning.” But he simultane­ously proclaimed that for a falsehood to trigger criminal liability, it needed “to be an artfully contrived story, which would naturally have an effect upon the mind of the person addressed—one which would be equal to a false token or false writing—an ingenious contrivance or unusual artifice, against which common sagacity and the exercise of ordinary caution would not be a suffi­cient guard.” The fraud statutes, Jewett insisted, did not absolve individuals from the obligation to scrutinize products and counterparties.¹⁹ Similar con­cerns guided the decision-making of British courts in fraud cases, especially those related to misrepresentations by the era's burgeoning corporations. From the 1820s through the 1870s, British judges applied exacting evidentiary stan­dards to allegations of corporate deception, out of worries that they might pro­vide excessive legal protections to speculators. In both civil and criminal fraud proceedings, Great Britain's judiciary refused to weaken the incentives of in­vestors to look askance at extravagant promises.²⁰

As in so many areas of Anglo-American jurisprudence, the law of fraud contained numerous exceptions. Legal evolution with regard to commercial deceit was not neat and tidy, uncomplicated by contrary rulings and opinions. If nineteenth-century judges tended to look askance at most allegations of fraud, they could reverse their interpretive predispositions when alleged vic­tims lacked what they perceived as the physical, social, and/or economic mark­ers of republican citizenship. Widows, recent immigrants who did not speak English, the illiterate, the “weak-minded,” youths, “ignorant Negroes,” sailors (whom the law treated as “standing upon the same footing with young heirs and expectants”), in some cases, the aged and the intoxicated—all these groups received more charitable treatment from the courts in fraud controversies. Ac­cording to the era's jurists and legal writers, these social types lacked the expe­rience, savvy, or mental faculties to fend for themselves and so merited pater­nalistic protection. As a result, the judiciary articulated a different set of evidentiary rules for them, lowering the requirements to mount successful fraud-based defenses, bring fraud-based civil actions, or initiate criminal fraud prosecutions. These people, judges argued, deserved greater legal safeguards.²¹

Underlying these judicial distinctions was a set of understandings about the relationship between social identities and the capacity to gain access to rele­vant economic information and evaluate its implications. An “elderly, unedu­cated woman in humble life” who sold a choice piece of real estate to “a person far above her in station” was not, in the eyes of most nineteenth-century American legal elites, someone who could read the land market and judge the reasonableness of the latter's assertions and offer. According to this same line of thinking, courts should furnish means of redress to a newly arrived immi­grant taken in by a real-estate operator selling land to which he lacked good title, or a poorly educated African American who paid a doctor to remove the poison that the physician insisted was all about his home. For these persons, the law need not insist upon the same degree of prudence before economic ac­tion. As Tennessee Supreme Court judge Peter Turney explained in an 1876 opinion laced with racism, when judges and juries considered the decision­making of dupes in fraud-related cases, they should expect only the “caution as we may naturally and reasonably expect to exist under the circumstances and conditions of life of the person practiced upon. The question is, what caution is he capable of exercising?”²² Posing the question this way allowed legal elites such as Turney to reinforce prevailing social prejudices as they considered al­legations of fraud, underscoring the supposed inability of women, working­class immigrants, and African Americans to look out for their own best inter­ests. Even so, this formulation did expand the effective range of legal regulation of commercial speech.

Analogous considerations prevailed across the Atlantic. When duplicitous business managers targeted the British working class, the legal establishment proved far more likely to bring fraud prosecutions, judges proved far less solicitous of defense arguments and motions, and juries proved far more likely to convict. Indeed, most of the significant English fraud convictions before 1880 involved misrepresentations by savings banks and insurance companies, whose failures brought grievous losses to working-class deposi­tors and policyholders.²³

Judicial concern about structural asymmetries of information could even extend to some legal controversies that entangled literate adult white men in full possession of their faculties. When one party to a transaction possessed far better access to relevant intelligence about market conditions, the intrin­sic qualities of property, or even the moral character and financial standing of economic actors, courts lent a more sympathetic ear to fraud allegations. Thus, if only one side to a bargain possessed particular expertise—such as a miller who was selling a flour mill—American judges tended to grant the other side more legal slack. The same inclination led legal elites to evince concern for individuals who alleged that they had been defrauded after rea­sonably relying on the guarantees of undisputed experts, or on third-party assurances about the solid financial standing of credit applicants who turned out to be insolvent.²⁴

The nineteenth-century judiciary, then, embraced a rebuttable presumption that courts should not undo private bargains because one side raised the hue and cry of fraud. In most contexts, judges looked askance at such charges. But if the level of deception impressed, if courts viewed complainants as members of a social group meriting heightened legal protection, or if the deceiver pos­sessed informational advantages, litigants might overcome judicial reluctance to interfere with the consequences of mercantile or financial transactions. An antebellum humorist, James Kirke Paulding, conveyed this pattern nicely in an 1839 tale, “The Perfection of Reason.” In this satire, the narrator, a well-born young man with formal legal education, receives a rude introduction to the perplexities of the common law, courtesy of lawsuits involving deception claims. As a plaintiff asking for damages resulting from two deceitful horse trades, the purchase of shoddy boots from a notorious cobbler, and the acqui­sition of a poorly constructed ship, the narrator learns that he has the respon­sibility of “governing himself by the maxim Caveat emptor” Having neglected to undertake sensible investigations before making his purchases or to demand written warranties, the narrator loses each suit. Bitter about his losses, he re­solves to adjust his transactional outlook, which leads him to take advantage of an elderly neighbor in a horse trade. This unscrupulous act, however, only lands him in a deeper legal thicket. In the resulting civil action, he discovers that courts will indeed protect the interests of an old woman with poor sight when she is shamefully imposed upon.²⁵

In fashioning this interpretive scaffolding for antifraud law, nineteenth­century American judges had concerns beyond encouragement of entrepre­neurial efforts and avoidance of cluttered court dockets. The judiciary also tried to accommodate the law of business fraud to the dominant understand­ings of republican citizenship. There was a dimension of political ideology to the waxing judicial embrace of caveat emptor. The era's judges and legal writers came of age in a society that prized manly self-reliance and celebrated abstract ideals of political and social equality among the ranks of its prototypical white male citizens. These legal elites inhabited a cultural milieu that lionized the ag­gressiveness of politicians such as Andrew Jackson, merchants such as John Jacob Astor, and showmen such as P. T. Barnum.²⁶

Law in Action—The Civil and Criminal Courts

Law on the books may prove to be a dead letter, a vibrant shaper of beliefs and behavior, or something in between. Determining where a given body of law fits along that spectrum is no easy task. Ideally, it requires intensive study of mun­dane legal records across time and space, as well as the range of social experi­ences that intersect with legal rules, mechanisms of enforcement, and modes of dispute resolution.²⁷ Although historians have only completed scattered case studies along these lines, one can also draw on voluminous press coverage of fraud-related criminal proceedings, which offers extensive evidence about pre­vailing social norms and the typical workings of legal institutions. These sources suggest that before the last quarter of the nineteenth century, Ameri­can law only fitfully circumscribed duplicitous marketing practices.

For one thing, individuals who viewed themselves as victims of illegal de­ception often did not make formal complaints against businesses and/or busi­ness owners, through either civil or criminal process. One obstacle was the pos­sibility that the defrauded individuals had manifested intent to break the law in the course of the scam, as in the case of the counterfeiting-related swindles known as “green goods games.” Such victims might eschew public complaints because of their own legal jeopardy. If they did seek out legal redress, courts ruled that fraud complainants had to enter the halls of justice with clean hands. As the New York Court of Appeals explained in a pivotal 1871 case, American courts would not engage “in the protection of rogues in their dealings with each other.”²⁸

In many other contexts, financial losses incurred by victims of duplicity were minimal. An instance of the sort of petty cheating described in P. T. Bar­num's autobiographies would have sent few Americans to the insolvency court or the poorhouse, while most financial frauds extracted small stakes from large numbers of disappointed investors. Such circumstances raised signifi­cant economic barriers to legal action, which required expenditure of both time and money. Carrying out a civil suit or a criminal prosecution to its final conclusion, even in relatively simple matters, meant incurring $50-100 in at­torney’s fees and court costs, which could balloon to much greater amounts if the parsing of legal issues or the amassing of relevant evidence became com­plicated. (Measured in terms of an unskilled worker’s wage, these sums would be the equivalent of approximately $8,000-16,000 in 2016.) As a New York City newspaper observed in 1882, the typical victim of a minor swindle be­came “disheartened and worn out. Having no money to go to law with he abandons all thoughts of redress and disappears.”²⁹ In the phraseology of modern economics, legal responses to business frauds confronted collective action problems.

Of course, Americans have never engaged solely in dispassionate cost­benefit analysis when deciding whether to initiate civil suits or criminal com­plaints. Emotional considerations—anger at perceived mistreatment, desire for revenge, anxiousness for the commonweal—could prompt the filing of lawsuits or the making of indignant statements to law-enforcement officers, even when accusers had little chance of financial gain. In an 1833 New York City prosecution for real-estate fraud, for example, one witness described the complainant as “vindictive” and “in a violent passion,” intent on having the defendant “sent to the state prison.”³⁰ The tug of emotion, however, might also lead a victim of economic deceptions to remain quiet even when possessing a solid legal case. Dupes might keep mum, either because they did not wish to come to terms with their gullibility or because they hoped to avoid the Bar- numesque public ridicule that it might elicit. Thus, in 1862, the New York Tri­bune surmised that a full 90 percent of fraud cases remained hidden from public view, because defrauded individuals were “ashamed to have it known that they have been so easily victimized.” Throughout the nineteenth century, accounts of far-reaching frauds presumed that most defrauded individuals would stay silent.³¹

Even if most victims of duplicitous business practices did choose to “lump it,” thousands of Barnum’s contemporaries did not stay silent in the face of commercial chicanery or unabashed swindling. Formal allegations of fraud, however, neither received a uniformly welcome reception from legal institu­tions, nor readily translated into damage awards, convictions, and jail sen­tences. The legal treatment of nineteenth-century civil suits seeking compensa­tion for fraudulent misrepresentations remains murky at the trial level, because we lack the fine-grained historical studies of particular jurisdictions that can yield quantitative measures of outcomes. Appellate decisions, along with scat­tered newspaper coverage of civil disputes, make clear that plaintiffs could re­cover at least some damages through deceit actions or use the defense of fraud to fend off debt collection suits—especially when they possessed a respectable social status, could afford expert legal counsel, and could substantiate that the misrepresentations met legal requirements.³² But evidentiary standards sty­mied many civil actions for deceit when allegations pertained to complex transactions like those that occurred in the transatlantic cotton supply chain. Antebellum Southern juries and arbitration boards tended to discount claims by middlemen that they had suffered losses as a result of “falsely packed” cot­ton, which hid inferior-quality staple inside a bale with an outer veneer, or “plate,” of the highest grade. In such cases, plaintiffs had to establish the precise character of the deceptions, as well as who was responsible for them.³³

Victories at the bar, moreover, often did not generate significant compensa­tion for fraud victims. As one New England lawyer and disgruntled purchaser of a horse discovered to his chagrin in 1861, a verdict against the seller on the grounds of deceit meant little if the defendant lacked the resources to pay, or was willing to go to jail rather than make good on a judgment.³⁴ Scores of de­frauded Americans learned a similar lesson as a result of a “great land swindle” by Niels Frederiksen, a Danish immigrant capitalist based in Chicago. Frederiksens company purchased thousands of acres at state tax auctions, as well as options on large tracts of railroad lands. It then resold the lands to Scandinavian immigrants on the installment plan, withholding titles until the company had received full payment; created bogus mortgages on the same plots; and sold those fake obligations to investors in Eastern and Midwestern cities. After the firm's 1889 collapse, it faced an avalanche of civil suits seeking damages, and lost all of them. But by this point, Frederiksen and his son had already transferred their American assets to favored creditors as collateral and decamped for Europe, taking along a hefty sum of cash. As a result, the filers of all the lawsuits merely threw good money after bad.³⁵

Evidence about criminal fraud prosecutions is easier to amass; the press at this time covered criminal proceedings more closely than civil suits and some state governments compiled relevant statistics. Attempts at swindling, along with the appropriation of goods or money via false pretenses, comprised regu­lar entries on the nineteenth-century urban criminal docket, though these crimes never constituted a leading preoccupation for policemen and prosecu­tors. The monthly arrest reports of the Baltimore police in the late 1860s illus­trate this: fewer than 1 percent involved charges for commercial or financial deception.³⁶ A significant fraction of successful fraud prosecutions, moreover, involved charges brought by corporations or retail businesses against custom­ers, or by individuals against other individuals, rather than by consumers, in­vestors, or other counterparties against firms. Insurance companies, for ex­ample, regularly went after policyholders whom they suspected of filing fraudulent claims, while storekeepers periodically filed false pretense charges against consumers, and other criminal cases resulted from spats over personal loans.³⁷ Still, nineteenth-century prosecutors and judges handled criminal fraud cases against business owners year in and year out, especially in larger cities. During 1868, the Baltimore police charged about twelve persons a month with fraud-related offenses, of which fewer than half resulted from al­legations of illegal deception against business enterprises.

Initiation of a criminal fraud case against a business owner did not, of course, ensure conviction or punishment. The era's criminal justice system gave most felony defendants ample opportunity to dance out of trouble, whether the charge involved some kind of fraud, other crimes against prop­erty, or physical acts of violence. Many arrests did not lead to indictments; in­dictments did not always culminate in prosecutions; prosecutions sometimes ended with acquittals rather than guilty verdicts; appellate courts had little compunction about overturning convictions if judges could identify proce­dural shortcomings; and governors displayed a penchant for commuting sen­tences and issuing pardons, often at the behest of the juries and local prosecu­tors who sent individuals to prison. One telling measure of the porousness of America's nineteenth-century criminal justice system lies with the treatment of African Americans accused of criminal actions in the slave South. Unable to present testimony from African American witnesses, often bereft of competent legal counsel, and forced to confront all-white juries, black defendants in ante­bellum Southern states had the legal deck stacked against them. Yet between 1819 and 1860, African Americans in South Carolina were found guilty only two-thirds of the time. For white defendants throughout the nation, rates of conviction tended to be far lower, with some jurisdictions producing guilty verdicts in as few as one in five trials.³⁸ Fraud-related prosecutions produced outcomes on the lower side of this scale, if the postbellum prosecutorial statis­tics compiled by Michigan's attorney general mirrored outcomes elsewhere. In the year ending June 30, 1866, three in ten Michigan false-pretense indict­ments led to convictions, less than half the conviction rate for larceny. Six years later, the state's conviction rate in false pretenses cases was only 17 percent, well below the 61 percent rate of conviction for larceny prosecutions.³⁹

Even when victims came forward with specific allegations that fit relevant legal categories and definitions, criminal convictions for business fraud did not come easily. Amassing compelling evidence was often difficult, especially if de­ceptions had been communicated orally. When swindles operated within the growing networks of national trade and finance, jurisdictional complications bedeviled prosecutors, who had to grapple with distant witnesses and thorny questions about who had the authority to try individuals suspected of criminal deceit. If the businessmen charged with fraud had the wherewithal to retain leading attorneys, as many did, they benefited from the ample procedural and substantive loopholes of nineteenth-century American criminal law. Defen­dants who confronted strong cases could also just skip town, especially before initial arraignments. And in the unlikely event that a businessman with money and social connections received a guilty verdict and had little hope of a suc­cessful appeal, he could always petition for a pardon. One can best appreciate these obstacles to punishment by retracing the careers of a few businessmen who underwent high-profile business fraud prosecutions. Three such vignettes follow, concerning a notorious mock auctioneer, a large-scale mercantile credit fraud, and a serial promoter of phony businesses.

From the late antebellum period into the late 1870s, Zeno Burnham devel­oped a reputation throughout New York City as a consummate perpetrator of retailing fraud. After a stint operating an oyster saloon in the early 1850s, dur­ing which he faced a charge for stealing illuminating gas by illegally tapping a local utility's main line, Burnham found his calling in the auction business.⁴⁰ From the emergence of auctioneering in New York City after the War of 1812, some firms had specialized in deceptive business practices, including the switching of displayed merchandise, misrepresentation of goods, and use of shills, often called stool pigeons, cappers, or “Peter Funks,” to force up bids. Prevalent in sales of dry goods, jewelry, and watches, these tactics soon spread to the vending of horses and furniture. Rigged furniture sales were advertised as resulting from some wealthy person's death or imminent move from the city, which ostensibly required a quick liquidation of “fancy” appurtenances, and occurred in “stuffed flats” filled with shoddy “gingerbread” furnishings.⁴¹ Burnham turned the mock furniture auction into an art form, taking in hun­dreds of bargain-seekers during the 1860s and sidestepping several criminal allegations, often through reliance on expert legal counsel.⁴²

In the fall of 1865, a white, married female customer of Burnham's filed yet another criminal complaint, alleging that he had altered the invoice for her furniture purchase to increase the amount due, and then refused to return her deposit of government bonds, worth far more than the $300 purchase price. An assistant district attorney prosecuted Burnham under a new criminal stat­ute that specifically targeted frauds in auctions. Burnham's “profession,” the prosecutor insisted, was “one of iniquity—it lives, thrives, and prospers on de­ception.” If the jury acquitted this “king of the mock auctioneers,” he an­nounced, they would “say in the same breath to the rest of the fraternity, ‘Go and do likewise.'” If they rather “dethrone[d]” him, “his people [would] fall.” Burnham lost this round, with the jury rendering a guilty verdict and the pre­siding judge sentencing him to thirty months in the state penitentiary, an out­come that led the local press to marvel that a “wealthy ruffian” had ended up in jail.⁴³ But Burnham remained in prison only a matter of weeks. Drawing on his social networks and allegedly showering the right people with several thou­sand dollars, he soon conjured up a pardon, based on attestations from promi­nent attorneys that his conviction resulted from unfair prejudice, and a prison doctor's assessment that his health was poor. For the next fifteen years, Burn­ham continued to ply his trade as a mock furniture auctioneer, though now acting behind the scenes, with a confederate as legal proprietor. He confronted further criminal investigations, but managed to dodge them, partly because of haziness about who actually ran his enterprises.⁴⁴

The theme of ambiguous legal responsibility similarly complicated a prose­cution arising out of the business's failure by Folger & Tibbs, a New York City dry-goods firm that carried out a classic scheme of credit fraud. In the fall of 1866, the firm convinced wholesalers to sell them $100,000 worth of goods on credit. (As a share of the overall economy, this sum would equal well over $100 million in 2016.) Once the partners received shipments of merchandise, they sent them on to auctioneers in Baltimore and Cincinnati with orders to sell for cash at fire-sale prices. Within a few months, some creditors became aware of the scheme and initiated criminal proceedings that alleged a conspiracy to de­fraud. By this time, however, Messrs. Folger and Tibbs had departed for Eu­rope. As a result, prosecutors could only charge clerks and agents who had ar­ranged the original purchases and later shipments, as well as the Cincinnati and Baltimore auctioneers who disposed of the goods. A two-month investiga­tion and trial revealed the suspicious nature of these transactions, which in­cluded nonexistent recordkeeping and an emphasis on immediate sale at any price. But the formal indictment only mentioned the specific goods sold by the single mercantile complainant, a lot of handkerchiefs. In light of the nonap­pearance of several key witnesses and a lack of evidence that linked all of the defendants to a specific conspiracy concerning those particular kerchiefs, the judge dismissed the case.⁴⁵

In addition to exemplifying the capacity of swindlers to flee from legal pro­cess, this episode highlights the evidentiary barriers to fraud-related convic­tions, even in a case that involved brazen duplicity. Demonstrating the knowl­edge and criminal intent of employees and agents who facilitated a duplicitous business scheme was no easy matter. Who could say where an underling's ob­ligation to obey his employer or an agent's duty to follow his principal's in­structions shaded over into criminal enterprise? The “Alleged Great Dry Goods Swindle,” as one newspaper termed it, further illustrates the potential liability that lurked behind any attempt to pursue criminal fraud charges. In the after­math of the directed acquittal, one of the vindicated Cincinnati auctioneers brought a civil malicious prosecution suit against the New York merchant who had charged him with conspiracy. Eighteen months later, he obtained a jury award of $5,000 for the indignity of spending six days in jail, and the resulting “injury to his character”⁴⁶

The swindling career of James H. “Doc” Langley, like that of Zeno Burn­ham, extended over several decades, in his case from the early 1870s through the first years of the twentieth century. Although Langley at one point dabbled in patent medicines, he came to specialize in the promotion of spurious in­vestments and business opportunities. One line of his business focused on peddling shares in bogus companies, including such ephemeral enterprises as the Mexican Guano and Fertilizer Company, the Medical Instrument Com­pany, the Anti-Friction Car Box Company, and the United States Construc­tion and Investment Company, which promised to assist railway inventors in obtaining and marketing patents. Langley deployed all of the leading tactics of late nineteenth-century stock swindlers, including elaborate prospectuses, carefully prepared samples, stock certificates that “were elegant in appear­ance,” decoy directors, and offices “furnished in a sumptuous manner” A sec­ond income stream came from the distribution of agencies associated with such concerns, which required some form of advance fee—either investment in the company, the provision of a loan, or some form of deposit for “good behavior.”

One of Langley's key strategies was constant movement. At one time or an­other, he based his operations in Worcester, Boston, Rochester, New York City, Chicago, Richmond, and Galveston, as well as several other cities. This willing­ness to relocate helped him evade the clutches of the law, despite repeated ar­rests and indictments. Whenever he faced criminal charges, he would post bail and flee. Langley assumed, correctly, that the infrequent sharing of informa­tion among police and prosecutors from different jurisdictions would allow him to begin anew without interference. In 1897, however, a Boston jury found him guilty of fraud in connection with the promotion of an industrial life­insurance scheme, a conviction that did lead to a multiyear jail term.⁴⁷

As Burnham's and Langley's convictions suggest, the masterminds of large- scale swindles in the nineteenth-century United States were not immune from criminal prosecution. In some circumstances, fraud indictments and convic­tions of prominent business figures were especially likely. If deceitful business practices antagonized a respectable constituency, the victims might not only raise funds to prosecute those responsible, but also lobby state legislatures to tighten legal prohibitions. The emergence in the 1850s of scams targeting re­cent immigrant populations, for instance, prompted concerted efforts along these lines by the Emigrant and Benevolent Societies of New York City. These organizations persuaded Albany legislators to enact a statute prohibiting the sale of steamship passenger tickets by unauthorized agents, and then helped to prosecute violators.⁴⁸

The failure of a financial institution with substantial numbers of depositors or policyholders also tended to trigger sufficient popular anger to concentrate the minds and investigative energies of local prosecutors. When such insolven­cies resulted from the looting of corporate assets and prosecutors could amass evidence that managers had issued false financial reports while seeking to cash out before the inevitable crash, criminal proceedings became the norm rather than the exception, with convictions often following. Thus Thomas W Dyott, a wealthy Philadelphia drug manufacturer and private banker, faced prosecution for fraudulent insolvency after his Manual Labor Savings Bank failed during the Panic of 1837. The authorities showed that Dyott had concealed tens of thousands of dollars in assets from the state insolvency court and conveyed valuable property to relatives on the eve of the bank's failure. The eventual re­sult was a conviction and a three-year prison term.⁴⁹ Such outcomes became more common after 1850, as executives of Northeastern banks and insurance companies periodically received jail sentences for criminal fraud associated with corporate failures.⁵⁰

But for every conviction of corporate executives, there were instances in which legal technicalities or ambiguities about fraudulent intent led to quashed indictments or jury acquittals. Prosecutions against corporate managers might founder because it was hard to demonstrate all the legal elements that added up conspiracy to defraud, so that juries could distinguish fraudulent misrepre­sentations from misfortune tinged with wishful thinking. Although T. W. Dyott encountered the cold confines of Philadelphia's Eastern Penitentiary, the well-connected Baltimore lawyers and political operatives whose financiering led to the Bank of Maryland's 1834 failure had little difficulty deflecting fraud prosecutions, even though their use of deposits to fund their own speculations had led to widespread harm.⁵¹ Sometimes individuals at the center of a large- scale banking fraud were even able to negotiate legal immunity in exchange for helping to untangle all the accounting knots that they had created, in order to maximize payments to depositors and shareholders.⁵²

In other cases, despite clear evidence of deception about a corporation's fi­nancial position, executives could point to steadfast efforts to buoy stock prices. Rather than securing their own financial positions prior to the collapse, or even profiting from failure, these officials suffered heavy losses along with depositors, policyholders, and/or investors. Such individuals, like the officers of the National Cordage Trust, an enterprise whose attempt to create a mo­nopoly in rope manufacturing ended in bankruptcy during the early 1890s, typically avoided guilty verdicts.⁵³ Furthermore, in order to build a fraud case against the managers of corporations, prosecutors usually had to undertake “months of preparation, the engagement of costly experts, and a vast amount of legal and clerical labor.” Because such cases involved statutes filled with “vague and general” language, savvy defendants could avail themselves of “loop-holes for escape,” either at trial or on appeal. In light of the herculean efforts required to gain convictions, nineteenth-century prosecutors tended to press only the most convincing cases.⁵⁴ As the New York Times summed up the situation, the cheating of an American company's stockholders “entails little or no inconvenience, save upon its victims.”⁵⁵

Even in cases that resulted in tens of thousands of dollars in losses to hun­dreds of depositors, investors, or policyholders, fraud convictions rarely led to more than a year or two of jail time. Nineteenth-century legislatures and judges did not see crimes of economic deception as deserving the same kind of punishment as violent crime or physical theft. Tellingly, the disgraced banker T. W. Dyott managed to slice more than a year off his unusually long three-year prison sentence, garnering a pardon from Pennsylvania's governor in 1841 on the grounds of his advanced age, and, at least according to the newspapers, because so many other swindling executives of failed banks had recently avoided criminal convictions.⁵⁶ Appropriators of fence rails or chick­ens might end up with far longer jail terms than would the bank cashier or insurance-company president who brought losses to thousands of investors and policyholders.

In light of the low conviction rates and minimal formal penalties, one might be tempted to characterize the criminal treatment of nineteenth-c entury American business fraud as all but toothless, especially for larger-scale opera­tors. There is much to be said on behalf of such a conclusion. But a focus solely on the decisions rendered by juries and judges can obscure the full social and economic impacts of criminal proceedings. Arrests, indictments, and the re­sulting press coverage damaged reputations even in the absence of prosecu­tions, convictions, and jail terms. Corporate fraud scandals in Victorian Brit­ain often destroyed the social standing of once high-flying entrepreneurs, even when they avoided jail sentences and civil judgments.⁵⁷ In cases of more pro­saic duplicity, a false pretenses charge might still find its way into a credit re­port, serving as a caution to prospective counterparties.⁵⁸

The point of criminal complaints, moreover, was often not to put deceitful businessmen in jail, but rather to increase the likelihood that they would agree to terms as the price of making complaints go away. Sometimes prosecutors withdrew criminal fraud cases because the accused and accuser had reached a settlement. Such negotiation usually occurred in private communications be­tween counterparties or their legal counsels, and so left little public trace. Nonetheless, press coverage of fraud arrests and trials sometimes ended with a bland declaration that authorities had discontinued proceedings in light of a settlement between the parties, or because prosecuting witnesses had disap­peared, possibly—perhaps probably—after a compromise. More frequently, newspapers noted an arrest or indictment without any subsequent mention of trial. We can presume that at least occasionally, defendants agreed to cough up partial payment.⁵⁹ When alleged perpetrators possessed high social standing, they might be compromised by mere threats of arrest or indictment. Thus, ac­cording to one Alabama newspaper, cotton exporters who detected fraudu­lently packed bales of cotton usually shied away from lodging formal charges. Given “the trouble and expense of prosecuting the guilty party,” middlemen tended to “prefer a compromise,” which resulted in the controversy being “hushed up.”⁶⁰

Nineteenth-century urban police forces also played roles as mediators be­tween business owners and citizens who alleged that they had been the victims of duplicitous treatment, especially in cases that involved small sums. Keepers of employment agencies and proprietors of retail auction houses, for instance, developed the habit of responding to police investigations with at least partial refunds to disgruntled customers. Such activities were common enough that the police sometimes reported statistical overviews. During the first four months of 1862, the New York mayor's office informed newspapers that it had received 101 complaints about mock auctions, which prompted investigations that in turn led to refunds totaling almost $3,000.⁶¹

There is no way to quantify the incidence of such accommodations with precision. According to an 1847 contributor to the New York Legal Observer, hardly a week went by in New York City without someone putting “the ma­chinery of the criminal law... in operation for the purpose of enabling the prosecutor to drive the defendant to a settlement of some civil litigation.” Some twenty years later, a correspondent of the National Police Gazette asserted that similar efforts were commonplace in Pittsburgh.⁶² It seems safe to conclude that compromises occurred with sufficient frequency to impose a measure of accountability for deceptive firms.

And yet, this use of criminal process to redress losses from deceit also rein­forced official skepticism about some allegations of fraud—especially those emanating from creditors who claimed that debtors had lied to obtain loans. Misrepresentations by borrowers about their financial standing had bedeviled America's credit system since at least the late eighteenth century. The least con­troversial circumstances involved outright credit swindles, such as the one per­petrated by Folger & Tibbs. When an individual or a partnership pretended to be launching a mercantile business, received supplies of goods on credit, se­cretly sold those goods, concealed the resulting funds, and then refused to pay creditors, arrests and convictions would follow, so long as the perpetrators hung around long enough to face trial.⁶³ But matters became murkier if an es­tablished business suffered losses and had either shaded the truth when ar­ranging initial orders or obscured worsening finances to maintain a flow of credit, perhaps more out of self-delusion than as a scheme to harm creditors. So long as a creditor could mount a plausible case that a failed debtor had en­gaged in illegal deception, a criminal complaint might persuade the latter to scare up the funds to pay the debt. Throughout the nineteenth century, this logic, along with a more general antagonism toward the willingness of so many Americans to skirt financial obligations, convinced some merchants and bank­ers to file formal allegations of credit fraud.

Using criminal charges as levers to pry out debt repayments, however, elic­ited grousing from hinterland debtors and their political allies. To Americans who depended on credit from wholesalers in New York City, Boston, or Chi­cago, debt collection via a criminal fraud prosecution represented abuse of legal process, especially when it involved extradition to unsympathetic far­away courts. Boston creditors who took such steps, a New Hampshire Demo­cratic newspaper argued soon after the Panic of 1837, were just as responsible for rural mercantile failures as were bankrupts, because they had “urged [them] to buy goods” that turned out to be unprofitable. Rather than accept­ing their share of a general misfortune, the paper complained, Boston mer­chants cynically exploited a Massachusetts “trap” law that made false oral rep­resentations by debtors a felony. Their goal was to “persecute” the insolvent storekeeper “for the purpose of coercing his friends to pay his debts, when the man had done nothing wrong, and gave as fair and honest an account of his situation as he could.” Such arguments dovetailed with the opposition to im­prisonment for debt that reshaped state debtor-creditor laws in the 1840s and 1850s.⁶⁴

A second criticism focused on the public character of criminal process. Anglo-American legal theory had long understood criminal actions as target­ing behavior that had an impact on society as a whole, rather than just the in­terests of private parties. As William Blackstone explained in his canonical treatise Commentaries on the Laws of England, “private wrongs, or civil inju­ries” only affected individuals. Crimes, by contrast, were “a breach and viola­tion of the public rights and duties, due to the whole community, considered as a community, in its social aggregate capacity.” They struck at “the very being of society, which cannot possibly subsist, where actions of this sort are suffered to escape with impunity.”⁶⁵ This understanding did not foreclose attempts by complainants to use criminal process to mediate personal conflicts, in rural and urban jurisdictions alike. But as professionalization began to reshape American legal institutions in the mid-nineteenth century, the separation of civil and criminal actions became more distinct in fact as well as theory. Urban district attorneys and judges came to frown on private parties who tried to di­rect the machinery of criminal justice toward personal ends.⁶⁶

These complementary arguments encouraged distrust of debt-related crim­inal fraud complaints, especially if transactions took place in interstate mer­cantile trade. Although such cases generated extradition requests, governors did not always comply with them. When they did go along, hinterland debtors often challenged extradition orders in state courts, filing applications for ha­beas corpus as they faced imminent transportation across state lines. These legal motions argued that the accused had not fled from criminal proceedings in another state, a key requirement for extradition. Judges sometimes proved sympathetic to this argument, releasing debtors from custody.⁶⁷

In a pivotal 1847 case, Fay and Collins v. Oatley and Blodgett, the Wisconsin Supreme Court went further. This controversy arose out of Fay's 1845 mercan­tile failure in Milwaukee and the unwillingness of Oatley, a Buffalo creditor, to agree to a compromise offer. Instead, Oatley gained a false pretenses indict­ment against Fay in Buffalo, persuaded his state's governor to request extradi­tion, brought the papers to Wisconsin, and used them to compel Fay's arrest. Once in manacles, “menaced with being run out of the State without the op­portunity of consulting with counsel,” Fay agreed to execute a series of promis­sory notes to Oatley, cosigned by his solvent brother-in-law, in exchange for his freedom. When Oatley attempted to collect on these debts, the Wisconsin courts refused to give them legal effect. In an opinion upholding a lower court's ruling on this point, the state Supreme Court maintained that for years, extra­dition proceedings had been “scandalously perverted” by Eastern creditors, and held that Oatley's behavior was “such a gross abuse of criminal process as to preclude its sanction by any court of law or equity.”⁶⁸ By 1887, widespread dissatisfaction with such cases led appointees from nineteen state governments and the District of Columbia to raise bureaucratic barriers for those who wished to pursue fraud-related extraditions. The new recommended “rules of practice” required that extradition applications include a formal affidavit that the prosecution was “made in good faith, for the sole purpose of punishing the accused,” and that the creditor did “not desire or expect to use the prosecution for the purpose of collecting a debt.”⁶⁹

Nineteenth-century opinion-makers and legal elites further advocated ex­acting evidentiary standards for debt-related business fraud cases. Throughout 1847 and 1848, for example, the Philadelphia Public Ledger decried the “un­principled creditors” who resorted to such tactics “as a means of extorting pay­ment” from insolvents. “The object of the criminal law,” the Ledger reminded its readers, was “to punish public wrong, not to adjust private disputes between man and man.” Almost a decade later, the Chicago Tribune similarly dispar­aged the motives of creditors who brought criminal false pretenses charges. Too many creditors did so either “to gratify private pique or revenge, or for the purpose of ‘squeezing out' property which civil process cannot reach.” The au­thorities, the Tribune implied, needed to reread their Blackstone on the dis­tinction between civil and criminal actions, and so redouble efforts to filter out such “vexatious and frivolous controversies.” Leading lights of the Northeast­ern judiciary picked up on this theme as well.⁷⁰

Such sensibilities influenced the handling of debt-related fraud prosecu­tions. A legal writer for Hunt’s Merchant’s Magazine observed in 1857 that “there is no [other] offense, which prosecuted, is so difficult to obtain convic­tion upon.” District attorneys, “magistrates and grand jurors,” and trial jurors all knew that these allegations were frequently “frivolous or avaricious.” As a result, they all tended to manifest prejudice toward debt-related charges of conspiracy to defraud or obtaining goods through false pretenses. In these cases, the protagonists within the criminal justice system focused on the com­plainant’s “pecuniary interest” and therefore “regard[ed] the evidence with mistrust.”⁷¹ Prosecutors could and did overcome such wariness when the ac­cused came from a disreputable social background, adopted a false identity as part of a scheme to borrow or buy on credit, or engaged in such extensive misrepresentations that multiple creditors came forward demanding prosecu- tion.⁷² But if defendants had purchased goods “in a regular way” and could mobilize social networks to testify to their social standing and good reputa­tion, convictions were unlikely.⁷³ And on the rare occasion when creditors en­gineered criminal fraud convictions against failed debtors who could lay claim to respectability, appeals courts might find grounds to overturn guilty ver­dicts.⁷⁴ Even as settlements occasioned by criminal complaints extended the legal reach of Americans who saw themselves as victims of deceit, they simul­taneously curtailed options for redress.⁷⁵

Conciliation also enabled deceitful proprietors to go about their business. Indeed, the willingness of disgruntled counterparties to reach settlements gave repeated lifelines to career swindlers such as the mock auctioneer Zeno Burn­ham. His knack for eluding pressure from police and district attorneys re­flected not only careful exploitation of legal ambiguities, but also discreet pay­ments to persistent complainants. Before and after his 1866 conviction, he defused the anger of customers who had lodged formal complaints by getting out his checkbook. Even Burnham's early release from prison was contingent on a full refund to the woman who had initiated prosecution.⁷⁶ Compromise extended a measure of justice to insistent victims, but at the cost of leaving some of the most duplicitous operators free to cheat another day.

Law in Action—Administrative Regulation

Civil and criminal proceedings did not constitute the only forms of authority that the perpetrators of business fraud might encounter in nineteenth-century America. As we have seen, localities and states created administrative mecha­nisms to foster honesty in commercial dealings. Evaluation of how these li­censing and inspection regimes functioned is again hampered by the fact that historians have undertaken few detailed case studies. But press coverage, along with scattered government reports and occasional political debates, allows for some conclusions.

The regulatory institutions that maintained the strongest record in combat­ing deceptive business practices were inspection regimes in states that had commodity export sectors. In tobacco states such as Virginia and Maryland, planters and merchants shared an interest in trustworthy evaluations of cured leaf, which created enduring political support for meaningful regulation. Building on inspection regimes that had begun in the early eighteenth century, these states mandated that prior to export, state inspectors had to examine the contents of shipping barrels to ensure merchantability and furnish judgments about quality. This process called for a tobacco inspector and his assistants to open a random barrel at a central warehouse, remove samples from several places in it, and then assess the samples' quality. Northeastern states such as Massachusetts maintained similar inspections of pickled fish, while Pennsylva­nia retained compulsory inspection of exported flour.

Up through the Civil War, many public inspection regimes maintained rep­utations for effectiveness, especially among larger-scale producers. In the colo­nies around the Chesapeake Bay, inspection laws improved European demand and prices for tobacco. Buyers in Britain, France, and Germany continued to rely on the judgments made by Virginia and Maryland tobacco inspectors for decades after the Revolution.⁷⁷ By the 1840s, the work of these appointed offi­cials had become interwoven into the region's commercial practices, occasion­ing newspaper commentary only via matter-of-fact reports about monthly or annual inspection statistics. As the Missouri tobacco industry began to expand in the early 1840s, local elites, many of whom had grown up in Virginia or Kentucky (another tobacco inspection state), took it for granted that the emer­gence of St. Louis as a tobacco center depended on trustworthy public inspec­tion. Without it, they assumed, far-flung buyers would look elsewhere.⁷⁸

The Massachusetts system of fish inspections similarly sustained industry reputation at home and abroad. “There is no doubt,” one writer maintained in 1843, “but the fisheries of Massachusetts have derived great advantage from our Inspection Laws.” Public fish inspections ensured that “the public are pro­tected... from imposition in purchasing an article with which they are not familiarly acquainted, and which they would not purchase at all, were it not for the character stamped on them by the State”⁷⁹ From the 1810s through the 1850s, flour exported from Baltimore and Philadelphia—cities in states with strict inspection requirements for that commodity—traded at a premium compared to flour exported from states without such stringent monitoring. Mercantile observers consistently attributed this market advantage to the “in­tegrity” of Maryland and Pennsylvania inspectors.⁸⁰

State inspection regimes, however, faced a growing chorus of objections from the early 1840s onward, voiced both by Jacksonians and some Whigs and then Republicans. Critics depicted inspection as costly, oppressive, and rife with the cronyism associated with the rise of machine-style democratic poli­tics. Instead of choosing competent inspectors, opponents argued, governors selected party activists who had expended great effort on behalf of a winning electoral ticket. Such individuals, the critics alleged, cared far more about milking offices for fees than upholding quality standards. As a result, they in­dulged marginal lumbermen, millers, fishermen, or tobacco planters, passing suspect goods or inflating their quality. Instead of protecting the public against fraud or sustaining the reputation of American commodities in foreign mar­kets, inspection requirements gave unsophisticated buyers a false sense of se­curity, while imposing de facto taxes on commerce. An inspector’s stamp of approval, moreover, often absolved manufacturers and dealers from legal re­sponsibility for goods that they sold, leaving disgruntled purchasers few op­tions but to sue inspectors for dereliction of duty. The National Police Gazette summed up this viewpoint in 1846, depicting inspection laws as “a farce, by which the community are swindled under cover of law.”⁸¹

Adversaries of compulsory public inspection did not have to scrape the bot­tom of regulatory barrels to find instances of inaccurate appraisals or political maneuvering in appointments. In 1847, for instance, the combination of a poor catch and intense pressure from local fishermen led Massachusetts fish inspectors to expand their definition of No. 1 pickled mackerel, much to the consternation of Philadelphia fish dealers. When pressed by state legislators responding to public outcry, the Massachusetts inspectors conceded that their work during the season had been characterized by “negligence and careless­ness,” and quickly promised reforms. During the early 1850s, San Francisco flour inspectors caused an uproar among inland communities by approving the merchantability of any barrel that purported to contain a substance called flour, no matter how sour or musty.⁸² Every so often, commercial victims of poor inspections found their legal position compromised, as critics warned they might, by the fact that tainted goods had passed official muster. Because the sellers could plead an affirmative state inspection as a defense, they often skirted liability for the sale of adulterated or spoiled commodities.⁸³ And some­times, as with Chicago's decision to create the new office of “city flour inspec­tor” during the Civil War, the driving force behind a new regulatory authority was furnishing a valuable office to an influential politico.⁸⁴

Opponents of public inspection linked such evidence to the wider critique of government that emerged in the wake of the financial panics of the late 1830s and the resulting debt crises that paralyzed so many state and local au­thorities. They further stressed the increasing importance of large-scale Amer­ican manufacturers, whose attention to quality exceeded government stan­dards and whose reputation sustained premium prices without official stamps of approval. All of these arguments had left their imprint on public policy from the mid-1840s through the postbellum era, nowhere more than in New York. There, the 1846 state constitutional convention prohibited the legislature from creating public offices for weighing, measuring, and otherwise inspecting ar­ticles of trade, a policy confirmed by the subsequent constitutional convention of 1867-68. Buyers or sellers who wished to avail themselves of inspection ser­vices in the state had to rely on private parties who operated without color of state authority. Other states exempted out-of-state goods that came to their ports for transshipment elsewhere. Still others made at least some commodity inspections voluntary rather than compulsory. These provisions allowed buy­ers and sellers either to bypass inspection altogether or to rely on private certi­fication firms rather than public facilities.⁸⁵

Advocates for these reforms linked them to an ethos of caveat emptor. Americans, according to delegates at New York's 1846 convention who spoke against state inspections, “were sharp-sighted to see their own interest” and “perfectly capable of taking care of themselves in all the transactions of life.” Just over two decades later, the most vociferous proponent of maintaining New York's constitutional ban, Thomas G. Alvord, placed his faith in the workings of what twenty-first-century economists would call reputational capital. When businessmen tried to cheat, this prominent attorney and recent lieutenant gov­ernor proclaimed, “it is bruited about in the community,” causing the cheaters eventually to lose far more than any short-term gains. Alvord concluded that New York would be well advised to rely on “the old doctrine of caveat emptor. Let a man's eyes be his guide.” The Baltimore Sun agreed with this logic as it campaigned for an end to Maryland's system of tobacco inspection in 1876. To argue for inspection of any article of trade, the Sun maintained, was to commit oneself to “inspectors for everything” and “offices for everybody.” It made much more sense to “depend less and less upon government... guardianship of men's private dealings,” trusting instead to “personal character and men's sense of their own interests.”⁸⁶ Here was a vision in tune with P. T. Barnum's approach to political economy.

That vision did not fully vanquish nineteenth-century inspection regimes. Although Kentucky and Virginia both ended compulsory tobacco inspection during Reconstruction, the Maryland legislature continued to ignore the shrill pleas from the Baltimore Sun for similar action into the 1880s, listening instead to the numerous tobacco growers who preferred mandated public assessments of leaf.⁸⁷ Many commercial states, such as Massachusetts, Ohio, and Louisiana, retained a robust and wide-ranging inspection system for at least some goods, while taking steps to limit conflicts of interest among inspectors.⁸⁸ As we will see, the growing economic importance of many products that defied easy cer­tification of quality led to new inspection laws after the Civil War. Nonetheless, the pullback from compulsory commodity inspection reduced the states' role as arbiters of fair commercial dealings.

In addition to inspection laws, nineteenth-century American states, cities, and counties also maintained myriad licensing schemes as ways to curb du­plicitous business practices. Local governments could deny licenses to travel­ing salesmen, auctioneers, or keepers of intelligence offices whose background raised serious questions about their probity; they could also threaten to revoke or actually rescind the licenses of miscreants. Public officials could use these powers to sanction individuals whose customers had accused them of fraud. Even after receiving his pardon, for instance, Zeno Burnham was unable to regain a New York City auctioneer's license.⁸⁹ Furthermore, city governments combined these official means of enforcement with more informal strategies. In the 1840s, the police in New York City emulated a tactic that local authori­ties in London had deployed as early as 1812: they paid young boys to stand in front of notorious mock auction shops wearing large placards that warned, “STRANGERS, BEWARE OF MOCK AUCTIONS.” City authorities in New Orleans soon pursued a similar strategy, employing “negros,” perhaps free, perhaps enslaved, to “parade the streets with boards. On one side is ‘Beware of Mock Auctions,' and on the other is ‘Beware of Peter Funks.'”⁹⁰ Early in the Civil War, New York City stationed police in front of known mock auction houses to warn off potential customers, threaten arrests, and pressure propri­etors to provide refunds.⁹¹

When pursued with sufficient vigor, these approaches reshaped urban geog­raphy. The 1862 operation against New York's dodgy auction trade in watches and jewelry cleared the Broadway, Chatham Street, and Maiden Lane shopping districts of these establishments.⁹² But such campaigns by no means rid the city or nation of the individuals who ran those firms. Many mock auctioneers who cleared out of the downtown retail districts joined Zeno Burnham in the up­town auction furniture trade or turned to rigged auctions of cigars or horses. Others moved to new cities, with their own supplies of strangers and green­horns ripe for picking. Even the refusal to grant licenses did little to stop deter­mined perpetrators of business fraud. One might simply open for business without a license like many, if not most, nineteenth-century intelligence offices, or, like Zeno Burnham after his conviction and pardon, operate through a front man.⁹³ Indeed, just a year or so after the extensive 1862 police campaign against New York City mock auctioneers, the police commissioner observed that con­certed efforts to compel settlements with complaining customers turned out to be “futile.” “The rogue,” he pointed out, “will continue to rob as long as he loses only the amount of the robberies in the few cases where he is detected, and gains the amount of the robberies in the many cases where he is not.” To land a real blow against mock auctioneers, the commissioner called for systematic, ongoing license revocation.⁹⁴ Sustained administrative focus on antifraud cam­paigns, however, proved to be the exception among postbellum urban police forces.

One further antifraud policy adopted at this time deserves at least a brief mention: legal requirements to improve the disclosure of pivotal economic in­formation in a particular market. An important antebellum policy of this sort emerged as a response to the problem of falsely packed cotton. Complaints from Northeastern and European merchants about bales filled with trash, stalks, seeds, sand, dirt, and/or stones, or made heavier through judicious use of water-soaked cotton, rained down upon US exporters in the twenty years that followed the War of 1812, especially during periods of strong demand and high prices. One key problem was that middlemen in the global supply chain struggled to identify who was responsible for such tricks. The connection be­tween a particular bale and the original planter or gin-owner whose workers had pressed it was often lost amid the flurry of activity on river landings and in seaports on both sides of the Atlantic. Difficulties in fixing responsibility for deceptive packing encouraged the practice.⁹⁵

Southern elites might have addressed this problem by instituting a system of cotton inspection. But close examination of the inside of a several-hundred­pound bale was no easy matter. An alternative idea, pushed by US seaport ex­porters and British importers alike, called for statutory requirements that every cotton bale include an external mark specifying the planter or ginner who sold it. Because this would greatly assist middlemen in enforcing claims of false packing, the thinking went, it would help to deter the practice. Alabama enacted such legislation in 1832, and other states may have followed suit.⁹⁶ But grumbling from American and European textile manufacturers continued. In­deed, renewed high prices during the 1850s led many Southern planters to ig­nore the duty to brand their bales amid expanded volume and a more hectic trade. Complaints about fraudulent packing once again reached a crescendo, with renewed pleas for tougher regulatory action from mercantile organiza­tions on both sides of the Atlantic.⁹⁷

In Barnum's America, then, administrative mechanisms to combat business fraud made duplicitous business practices more difficult and less remunerative in some sectors. Yet large chunks of economic activity remained outside the jurisdiction of administrative officers, while the dynamics of political patron­age and the shifting of executive priorities blunted the effectiveness of regula­tory schemes. Like the checks of the civil and criminal law, bureaucratic re­straints on fraudulent enterprises, whether involving goods inspection, licensing, or standards of information disclosure, bound deception-minded American proprietors only so tightly.

****

The living, breathing law of American marketplaces did not quite map onto P. T. Barnum's published recollections. Individuals and firms who suffered eco­nomic losses and attributed their misfortune to duplicity did not find them­selves bereft of all legal protections and levers. But given the monetary and social costs of taking fraud allegations to the courts, the degree of institutional and popular skepticism about such allegations, jurisdictional limits, and ca­pacity constraints on public bureaucracies, the showman's autobiographical reflections did not fall wildly short of the mark. The legal environment of his world tilted toward the premises of caveat emptor.

The nineteenth-century United States, of course, encompassed several re­gions—remote rural sections and bustling urban districts, Yankee New En­gland and the cotton states. It was further riven by social fractures based on race, ethnicity, gender, and class. The legal handling of business fraud reflected these geographic and social divisions. Antebellum appellate judges in South­ern states that imported slaves proved more sympathetic to civil fraud suits by slave purchasers than did their counterparts in Virginia or Kentucky, where slave-owners were far more likely to be sellers than buyers.⁹⁸ It mattered that Zeno Burnham's accuser in 1865 was a respectable, middle-class white woman, just as it mattered that the corporate officers who faced criminal fraud charges could pay for the very best legal representation and enjoyed the benefit of the doubt accorded to high social position. Despite the salience of these differ­ences in social identity, the legal treatment of American business fraud gener­ated some broader commercial and financial risks that confronted Barnum's contemporaries from all social backgrounds and in every part of the country. Their economic world was filled with deceit.

The antebellum countryside indeed teemed with sharpers—peddlers seek­ing to unload shoddy wares, rural farmers and storekeepers who engaged in running battles over adulterated goods and manipulated weights and mea­sures, slave-owners who attempted to disguise the ailments of the seriously ill men and women whom they wished to sell, land claimants who played fast and loose with legal requirements to secure a slice of the public domain, and land dealers who misrepresented the market value of their real estate or the strength of their claims to ownership. Commercial practices in the antebellum city were, if anything, even less predicated on candor. In addition to the routine deceptions of retail trade, the typical metropolis contained plenty of mock auc­tioneers like Zeno Burnham and quite a number of mercantile firms that did not hesitate to stretch the truth in their circulars and advertisements.⁹⁹ Would- be borrowers lied about their finances, persuaded third parties to lie on their behalf, and lodged already-pledged or fraudulent collateral, all to make credit flow. Everywhere, the nineteenth-century economy was awash in counter­feits—bogus imitations of branded goods, forged securities, impostors who posed as legitimate business agents, and above all else, fake currency.¹⁰⁰

Rapid growth in the scale and reach of corporate enterprise from the 1840s onward magnified the possibilities for economic legerdemain. Promoters of new corporate securities issued prospectuses that promised fabulous returns and indulged in the grossest of financial evasions, especially in industries whose stocks were greatly in demand, such as mining and oil drilling. The secondary markets remained rife with insider manipulation, and as financial corporations became fixtures of the American economy, so too did sham banks and insurance companies that siphoned off a fraction of deposits and premi­ums. With far greater regularity, incorporated businesses suffered losses from embezzlements and endemic self-dealing among corporate managers.¹⁰¹

During the early 1850s, the German journalist, translator, and travel writer Moritz Busch came to the United States for a year's sojourn. Like many Euro­pean visitors, Busch took on the task of explaining the new republic to his countrymen and -women. After months spent in cities, on steamboats, and in rural hamlets, Busch concluded that “ganz Amerika ist eine einzige ungeheure Mock-Auction!”—“all America is one gigantic Mock Auction.”¹⁰² This general­ization, like Barnum's autobiography, was exaggerated. And yet, there was little doubt that the land between the Hudson and the Mississippi, and beyond them as well, remained locations of much gulling and grafting, in which people were well advised to seek whatever channels of information might help them distin­guish the trustworthy from the Peter Funks.