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Wall Street History
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02/07/2003
Oscar Hartzell, Part II
[Wall Street History will return 2/21.]
As we pick up our story of swindler Oscar Hartzell, by 1915
Oscar and his compatriots were telling suckers that $50 invested
in the Drake Estate would bring $100,000 plus the entire city of
Plymouth, England as part of the settlement, just as soon as the
issue was finally adjudicated.
In the early 1920s Hartzell then moved to London, to do further
research, ahem, and help the process along, while his agents in
the Midwest collected the funds. Hartzell would send wires back
to America proclaiming things such as King George and the
House of Lords had stated they were going to pay him billions.
Oscar became a fixture in London, taking up an apartment in one
of the better neighborhoods, buying suits on Savile Row, and
dining nightly at the Savoy Hotel, table number 101. But on
August 9, 1922, the British Home Office wrote the American
embassy in London confirming there was “no unclaimed Sir
Francis Drake Estate.”
Hartzell seized on this, wiring his donors cheerfully, yes there
was no such item as “an unclaimed Sir Francis Drake Estate.”
As Richard Rayner writes in “Drake’s Fortune,” Hartzell’s point
was quite different, “namely that the estate was legally in the
hands of the wrong people and should be handed over to Colonel
Drexel Drake and thus himself.” Of course there never was a
Drexel Drake. But since Hartzell hadn’t committed any offense
in England, there was nothing Scotland Yard could do, no matter
how much the U.S. State Department complained as the years
went on.
By the late 1920s, stock swindles of all sorts were common in
America so the Drake Estate, by comparison, didn’t seem so
outlandish. Then in 1928 Iowa’s secretary of state, Ed Smith,
tried to stop Hartzell, but when the state legislature tried to act,
the public bombarded the representatives with letters protesting
what Smith was doing. Americans can “donate” to whomever
they please, was the attitude of Iowa’s farmers, so the legislation
was defeated, another vindication for Hartzell.
Then on October 11, 1930, Oscar Hartzell struck gold, only this
time it was in the form of an essay by none other than economist
John Maynard Keynes in The Saturday Evening Post titled
“Economic Possibilities for Our Grandchildren.” Keynes argued
that even in difficult times like the nation was now going through
the virtues of capital investment were all too clear. In the piece
he made reference to Sir Francis Drake and the treasure he stole
from Spain.
Keynes linked the emergence of England as a world power
directly to Queen Elizabeth and her use of the money. Rayner
writes, “She invested it and arranged for England to take half the
interest each year while the rest compounded at an annual rate.”
Noted Keynes, “The power of compound interest over 300 years
is such as to stagger the imagination. Every pound which Queen
Elizabeth invested in foreign trade has now become 100,000
pounds.”
Keynes was arguing for deficit spending as a way of dealing with
the Depression, but it was far more than that for Oscar Hartzell.
From Rayner, “Here was John Maynard Keynes, the world’s top
money man, echoing what he’d been saying all along: Sir Francis
Drake! Compound interest! Staggering returns!”
Well, it should be no surprise that Hartzell mimeographed
thousands of copies of the article and distributed them at Drake
Estate meetings and throughout the Midwest. Farmers began
spouting Keynes and it was as if Keynes himself had endorsed
the scheme.
Hartzell wired from London, “You can see that the matter is so
far reaching that the rambling minds of great financiers of the
past have been made to tow my mark regardless of
consequence.”
Farmers in South Dakota and Iowa, for example, would write
Hartzell asking whether the abandonment of the gold standard
affected the estate at all? Hartzell would reply in his normal,
cryptic way. Send money matter moving fast. And so they
did, $millions of it.
Hartzell was still living in London, though, managing to elude
the law and the best efforts of the State Department, the FBI,
Scotland Yard and the U.S. Post Office. Each agency had files
inches thick on Oscar and the Drake Estate. But he wasn’t
committing any crimes as all of the “donations” were being
collected in America, after which his agents would wire vast
sums of it to him overseas.
Finally, a U.S. Postal Service inspector, John Sparks, along with
help from Scotland yard was able to nail Hartzell on mail fraud
charges after getting some of the agents in America, as well as
Oscar’s friends in London to talk. Enough of them admitted the
Drake Estate was a swindle to press charges and Hartzell was
extradited to face trial in Sioux City, Iowa in 1933. He was
convicted and sent to prison for ten years, though his attorneys
did attempt one appeal, which failed. But even after his arrest
the swindle continued, with one new agent collecting $500,000
over 1934-35. These were desperate times and those
Midwesterners who were being solicited wanted to believe in
some miracle to get them out of their misery.
Alas, Hartzell was diagnosed as being mentally ill and he died in
an institution, alone and crazy. But with a simple scheme he had
placed himself in the Wall Street Hall of Shame.
[Source: “Drake’s Fortune” Richard Rayner]
Wall Street History will return on February 21.
Brian Trumbore
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