Bucketeers and Conmen

Jacob Simon Herzig (AKA George Graham Rice), was one of the most successful bucket shop operators in history.

A bucket shop was an ostensibly legal brokerage firm. Some of the firms operated within the law, but most did not. They cheated their customers, stole from them, misused their money. In New York State, in one five-year period early in the twentieth century, bucket shops went into bankruptcy owing their customers more that two hundred twelve million dollars, the equivalent of several billion in today's dollars.

Originally, bucket shops were markets where flour and grain were sold by the bucket to poor people. The wealthy, of course, did not patronize those places since they could afford to buy in larger amounts. The modern equivalent of a bucket shop began soon after the Civil War when railroad stocks were placed on the market and sold in small lots to investors who didn't normally buy stocks.

Financiers like Daniel Drew, Jay Gould, and Jim Fisk were all early bucketeers; in fact, they set the standard. They created artificial markets, issued false proclamations concerning the value of the stock, kept printing fresh stock as long as there was a demand. At the beginning of the twentieth century, when the early bucket shops had grown into rich, powerful brokerage houses, they attacked the bucketeers. It took three decades, but these so-called legitimate brokerage houses, the New York Stock Exchange, and the big bankers managed to put the bucketeers out of business, though there was a reincarnation of them in the penny-stocks of the l980s.

George Graham Rice sold a great deal of stock, milking each scheme as long as he could then moving on to a new venture. He began to print a financial newspaper called The Iconoclast. The Iconoclast lambasted the financial powers of the country, blaming Wall Street for all the ills that affected the people. It claimed that the multi-millionaires and insiders were using the Stock Exchange to cheat hundreds of thousands of innocent people out of millions of dollars, which they were. He promised his subscribers that he'd help even the score by disclosing his own private information.

His daily circulation grew to over 300,000 subscribers nationwide, giving him the biggest sucker list in America. He sold parts of his list to other bucket shops, but only after he'd squeezed some money out of the people on that partial list. One of his scams was the Columbia Emerald Company. According to The Iconoclast, the mine was operating and producing emeralds valued in the millions, and he bilked people out of half a million dollars before anyone discovered there were no emeralds. As long as there was actually a mine in South America, however (which Rice had purchased for eight hundred dollars) Rice was not liable to prosecution.

Rice also owned almost a million and a half shares of Idaho Copper Mine, for which he paid ten thousand dollars total, almost eight cents a share. Though the mine had not been worked in twenty years, was in fact completely flooded, it had two big assets: it actually existed and it was listed on the Boston Curb Exchange.

The Iconoclast touted the stock, and it went up to $6.25 a share as thousands of suckers rushed to get in on the ground floor. The whole thing eventually fell through, but Rice walked away with millions.