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FEDERAL RE SER VE BANK OF NEW YORK Fiscal A g en t o f the U nited States r Circular No. 4 5 2 3 1 L October 25, 1957 J CHAIN-LETTER SCHEME USING SAVINGS BONDS To All Issuing Agents in the Second Federal Reserve District Qualified for Sale o f United States Savings Bonds, Series E ; We have had reports that chain-letter schemes involving the use of Savings bonds are in progress in the State of New York. The schemes seem to be similar to those that appeared in several parts of the country early in 1955. At that time, the Post Office and Treasury Departments issued statements disapproving the schemes. These statements have application today. Portions of them are printed on the reverse side of this circular. To prevent the spread of these schemes, the Treasury Department has asked us to advise you that the Treasury authorizes and requests you to reject any application for the purchase of Savings bonds where the applicant states, or where you have reason to believe, that the application is made as part of a chain-letter scheme. Authority for this action is in Treasury Department Circular No. 653, Fourth Revision: Sec. 316.18 (b ) R eservation as to issue o f bonds.— The Secretary o f the Treasury reserves the right to reject any application fo r bonds o f Series E , in whole or in part, and to refuse to issue or permit to be issued hereunder any such bonds in any case or any class or classes o f cases if he deems such action to be in the public interest, and his action in any such respect shall be final. Additional copies of this circular will be furnished upon request. A lfred H ayes, President. (over) P o s t O f f ic e D e p a r t m e n t , F e b r u a r y 10, 1955 . . ., Postmaster General Summerfield said that this new chain letter scheme differs from those encountered in past years in that U. S. Savings bonds or, in some instances, receipts fo r the purchase o f bonds are being transmitted through the mails without the accom panying list o f names. The list itself is circulated from hand to hand. A typical endless chain “ ch art” being circulated in the conduct o f these schemes is one entitled “ This is a give-away-your-wealth campaign (possible return o f $38,400 or $51,200 if you wait 10 y e a r s ).” Participants in this scheme obtain the list by giving a receipt fo r purchase o f a $25 Savings bond to the person supplying the list. In the latter’s presence, the purchaser is also to mail to the individual whose name appears at the top o f the list a receipt fo r purchase o f a second $25 Savings bond. Two copies o f the list are then to be made, eliminating the first name and adding the name o f the purchaser, who then endeavors to continue the chain by selling the list to two others will ing to com ply with the same conditions o f purchase. The Postmaster General has advised that each scheme o f this character will be investigated fu lly and submitted to the Department o f Justice for its consideration o f possible violation o f Federal criminal statutes. He also stated that the Internal Revenue Service is studying the matter to deter mine whether this scheme involves a violation o f the wagering tax statutes and other internal revenue laws. The experience o f the Post Office Department with such endless chain schemes over a period of many years is that in some instances a few persons entering the scheme at the outset receive more than they put in, but never receive the large sums prom ised; and that many participants receive nothing at all, but lose their entire investment. Such an outcome is inevitable inasmuch as the supply o f interested persons is soon exhausted; and the greater the amount to be invested, the sooner the satu ration point will be reached. T reasury D epartm ent , S a v in g s B onds D iv is io n , J an u ar y 19, 1955 The T reasu ry’s National Savings Bonds Director, E arl O. Shreve, cautioned Americans today about becoming involved in chain letter or similar schemes to get rich quick with Savings bonds. He stated that the Treasury Departm ent disapproves o f the use o f Savings stamps as prizes or awards in lotteries or games o f chance involving the element “ This has been a policy o f long standing,” he pointed out. The Treasury has no to the use o f Savings bonds and stamps in contests o f knowledge or skill, such as athletic events. * * bonds and Savings o f personal profit. objection, however, quiz program s and * Mr. Shreve pointed out that the Treasury’s objection is based upon consideration o f public policy and in no way involves the legality or illegality o f this or any device or method employed. “ The purchase and distribution o f Savings bonds through the so-called ‘ chain-letter’ arrange ment, which has been brought to my attention by newspaper articles and personal inquiries to the Treasury Department, is contrary to the policy o f the T reasu ry’s intended purpose fo r which such Savings bonds are sold by the Government. “ United States Savings Bonds are issued by the Treasury to permit our citizens to invest in securities o f the Government and through their savings put aside regularly something fo r future use and benefit. . . . ”
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