by Amy Reading
The legitimate exchanges desperately needed to distinguish themselves from such shamelessly deceptive practices. The Chicago Board of Trade (CBT) soaped up the windows of its exchange, repeatedly tried to prevent Western Union from installing telegraph lines in bucket shops, and hired detectives to discover pirated wire loops within legitimate brokerages. Bucket shops continued to flourish throughout the 1890s, so at the turn of the century the CBT brought the fight over the legitimacy of speculation to the courts, arguing that price quotations were its intellectual property. Though bucket shops violated many state antigambling laws, judges repeatedly denied the CBT a legal victory because it hadn’t yet demonstrated how its business practices materially differed from the bucket shop’s brand of speculation. In 1903, one judge ruled that the CBT’s activities were “so infected with illegality as to preclude resort to a court of equity for its protection.” The Chicago Board of Trade’s strategy of legitimization was backfiring spectacularly.
In 1905, the CBT appealed its suit against one of the most notorious bucket shoppers, C. C. Christie in Kansas City, to the U.S. Supreme Court. In just a few pithy phrases, Justice Oliver Wendell Holmes reversed decades of precedent to hand the CBT a victory and demarcate in absolute terms the difference between speculation and gambling. He wrote, “People will endeavor to forecast the future and to make agreements according to their prophecy. Speculation of this kind by competent men is the self-adjustment of society to the probable. Its value is well known as a means of avoiding or mitigating catastrophes, equalizing prices and providing for periods of want.” He argued that since contracts to buy and sell commodities on the CBT included a clause stipulating the terms for delivery, they were more than “mere wagers,” even if that clause was rarely activated. And he ruled that the CBT’s stock quotations were proprietary knowledge which it could rightfully protect from the bucket shops’ theft. Justice Holmes’s ruling, in effect, turned the Chicago Board of Trade into a producer, with price discovery as its labor and stock prices as its valuable export. As Christie pointed out in his refutation of Justice Holmes in Everybody’s Magazine, there still remained on the books an Illinois statute against wagering, so members of the CBT regularly broke the law each time they executed a put or call option. But it was no use: public opinion had finally turned against the bucket shops, even if the law had yet to catch up. The financiers had accomplished their moral project of separating speculation from gambling and turning stock purchases into a laudable form of investing surplus capital.
The following year, local, state, and federal officials regularly raided bucket shops, causing little flurries of commotion in business districts across the country. The first official to win jail sentences for bucket shop owners was Thomas Lee Woolwine, the Los Angeles district attorney who would later help Norfleet prosecute the crooked police officers Walter Lips and William Anderson. Woolwine and his counterparts in other states were helped along by exchanges in Chicago, New York, and elsewhere that hired their own investigators to dig up evidence and turn it over to law enforcers. In 1913, New York closed the final loophole in its law against bucket shops, and in 1915 the president of the New York Stock Exchange pronounced them dead. Yet their closures were uneven across the country. In Denver, they would not be outlawed until May 1919, and ironically enough the man responsible for shuttering the common man’s confidence dens would be Horace Hawkins, Lou Blonger’s lawyer.
Blonger’s livelihood as a saloon owner was increasingly hard to maintain in the 1890s. The more respectable speculation became, the less tolerance middle-class citizens had for gambling. Organizations like the Woman’s Christian Temperance Union and the Law and Order League put so much pressure on the dens of iniquity that public officials were forced to close them periodically, despite payouts from Blonger, Soapy, and Chase. The entire city knew these closures were a symbolic gesture; all they had to do was look across the Platte River to the “sporty municipality” of Colfax to see the selfsame gambling haunts, well lit and bustling, in rooms rented for the duration of their exile from Denver. The town board of Colfax welcomed the gamblers with a detailed contract: they could operate their games without interference, as long as they agreed to be arrested once a month, upon which they’d pay a fine of $50 into the town treasury and be released. And so these “spasms of virtue,” as the newspapers took to calling them, were merely a monthlong holiday from drinking and gambling before the cards, dice, and wheels came out again and the kickbacks to city officials resumed. Most gamblers saw the benefit of these spasms of virtue: they allowed the mayor and the police chief to save face, and they drove out the weak competition who lacked the capital to weather a dry spell.
The Blongers were squeezed several times by just such spasms. In September 1891, their saloon on Larimer Street was singled out, and then again in April 1892, just after they’d filed their claim on the Forest Queen Mine. They were undaunted by what must have felt like persecution, and later that year they relocated to a new saloon around the corner on Market Street just off Seventeenth.
In 1894, a new chief of police, Hamilton Armstrong, took office with a strict mandate to shut down gambling in the city of Denver. Accordingly, the big players in the underworld pooled their resources and sent a man to see Chief Armstrong in his office. The representative opened a bag and spilled onto the chief’s desk a pile of $100 bills, more than $13,000 in total. The chief didn’t touch the money. He picked up a gun lying next to the stack. “You put that money back in the package before I drill you,” he ordered, “and tell the men who sent you that gambling in Denver—while I am chief of police—doesn’t go!” True to his word, he soon shuttered every gambling den on Seventeenth and its environs, including the Blongers’ place, every saloon dark and ornamented with a sign reading “Closed” or “To Let.” But Chief Armstrong wasn’t yet done. Next, he arrested Ed Chase in his policy shop on Fifteenth Street (the one with a sign out front reading “Loans Negotiated”), which was almost certainly a first for the underworld czar. The following month, the chief arrested Soapy Smith for luring a Kansas schoolteacher into a gambling den and uncoupling him from his money.
In November 1894, fifty prominent businesses, including two banks, petitioned the Fire and Police Board to allow gambling dens to reopen in downtown Denver. The petition strikingly avoided any mention of the “moral, social, and legal aspects of the case,” as The New York Times noted in wonderment. Instead, it proceeded in the language of cool, rational economic self-interest: if gambling dens remained closed, “many buildings and parts of buildings [would be] rendered tenantless and bring in no rent to the owners thereof.” Furthermore, “a large amount of money [would be] kept from coming into the city of Denver and being put into circulation.” Rumor had it that the man behind the petition was Lou Blonger. He had mastered the rhetoric of his more respectable peers and could align them with his interests in part because he was not a showman like Soapy Smith. Soapy was soon forced to leave town, and his departure left a power vacuum that Lou Blonger was, by now, perfectly groomed to fill. When the newspapers reported the goings-on of the bunco gangs on Seventeenth Street, they now referred to Chase and Blonger as the vice district’s overlords.
The last obstacle to Blonger’s career evaporated in November 1895 when gambling was again legalized. Soon, Blonger signaled his ambitions by opening the Elite on Stout Street with his brother Sam. Suddenly the newspapers had only encomiums for the man above the law. The Rocky Mountain News wrote, “Nowadays men drink like gentlemen and it is little wonder that when they drink they insist on surroundings befitting them. There are gentlemen in Denver who realize this truth. They are the Messrs. Blonger Brothers.” The papers lavished description on the Elite: its mahogany fixtures, marble floors, and the frescoed ceiling that alone cost $8,000. The public froth over dramshops had subsided enough that the city could acknowledge the need for a genteel watering hole, and with its elegant café in the back serving a midday meal, the Elite conformed to the general expectation that imbib
ing would not be its sole activity and that gambling would no longer be overt. In 1897, Lou and Sam finally warranted an entry in R. G. Dun’s credit reference book, where their “pecuniary strength” was estimated at $5,000 to $10,000 and their credit rating was “good,” the next-to-highest score. Blonger was reshaping himself as a businessman, and the city accepted the impersonation at face value.
The Elite did not last long, perhaps because Blonger’s energies were required elsewhere. At the beginning of the twentieth century, Blonger marshaled men on the street, while Chase sat in a paneled office and ran Denver with a nod of his head. Aspirants for elected office were forced to visit the great man and get his approval before even publicly suggesting they’d like to run. One ambitious young lawyer named Benjamin Lindsey auditioned for district attorney in 1900. Chase’s go-between explained what would be required of Lindsey were he selected for the position: “Mr. Chase doesn’t want anything but what’s fair. He doesn’t expect to run wide open all the time. Whenever the District Attorney has to make a demonstration, he’s willing to pay up. That’s understood. You needn’t feel worried about that.” Chase sensed that Lindsey was unsettled by the proposition, and he selected someone else as district attorney. It was a prescient character assessment: Lindsey would go on to become a crusading county court judge, the founder of the nation’s first juvenile court system, a Progressive reformer, and the author of a muckraking exposé of the Denver machine called The Beast.
As Chase advanced into his seventies and eighties, he retired from the strenuous work of machine politics, preferring instead to settle into his redbrick mansion on the corner of Colfax and Race, surveying the city from its corner tower, or taking the air in his touring car, a sporty Thomas Flyer, accepting the admiration of Denver’s citizens in his goggles and dust coat. By the first decade of the twentieth century, Blonger had become the city’s center of gravity.
He stayed almost completely out of the newspapers during this time, but when he did appear, it was always without introduction, as if all of Denver knew his role in the shadow government. The police laughed uproariously in 1898 when a bold young impresario named C. M. Fagen-Bush swung into town and swindled Blonger out of $1,000 in a mining stock deal—“He Buncoed Blonger,” read the gleeful headline. The Rocky Mountain News reported on the scene in the police station when Blonger came in to make his complaint: “All the detectives were taken with a fit of laughter. Their mouths stretched and their sides shook. Tears rolled down their cheeks and it was fifteen minutes before they could compose themselves.” They laughed again in 1902 when a man in a dirty coat submitted to a short con in one of Blonger’s joints on Seventeenth Street but reversed the direction of the swindle and took $200 from Blonger with a bad check. “The funniest part of the joke,” crowed The Denver Times, “is the ‘holler’ Blonger made to Chief Armstrong. Blonger left the bank for headquarters so fast his coattails could not be seen for dust.” The papers gave comparatively little space to Blonger’s arrest for assault and battery in the Fagen-Bush affair; nor did they dwell on the beating he and Sam gave to a saloon keeper who wouldn’t let Blonger’s crew work in his establishment, nor could they work up much ire when a young Kansas fireman committed suicide after writing a check to L. H. Blonger for money he did not possess. The newspapers largely confined themselves to toothless griping at Blonger’s connections with Frank Adams, head of the Fire and Police Board, and Milton Smith, chairman of the Democratic State Central Committee. Lou racked up two more arrests for gambling but evaded jail time for both.
In 1904, a shocking speech delivered on the floor of the House of Representatives in Washington, D.C., predicated Blonger’s sudden ouster from Denver. Congressman John Shafroth of Colorado’s First District stood up before his colleagues and announced that he had been illegally elected. He told them he’d been examining ballots from the 1902 contest between himself and the Republican Robert Bonynge, and “I must say that if I were a Judge upon the bench, considering this case, I would be compelled to find that, according to law, Mr. Bonynge is entitled to the seat.” In the suit that Bonynge had filed against him, eight witnesses, including an undercover detective sent downtown on a sting operation, testified to seeing Lou Blonger hand out silver dollars and voting tickets to the drinkers and gamblers who thronged around him on Seventeenth Street. Blonger’s crew voted all day long, even interrupting him when he ducked inside for a drink to plead, “Give us some more slips right quick, we want to go back again.” Shafroth handed his seat over to Bonynge just three days after his announcement to Congress, and Bonynge served until 1909. “Honest John” Shafroth’s reputation soared, and he would go on to become governor of Colorado and then U.S. senator. There were no losers in the election of 1902.
Blonger was never prosecuted for election fraud, yet his position in Denver had become untenable. In February 1904, he announced that he and his brother Sam were packing up their faro boxes and leaving Denver for Havana, Cuba. “What’s the use of staying in a business where you can’t make anything?” complained Lou. “When you do make a little, the police take it away from you.” A businessman to the last, Blonger would go where the profits were unimpeded by a maturing city’s need for respectability. Sixteen years after he’d arrived, Blonger left the city of Denver.
CHAPTER NINE
The Machine and the Sting
Hermann H. Heiser of the Heiser Saddlery Company purchased an office building on Welton Street in Denver in June 1915, and the first thing he did was to dispatch a crew to clean the vacant second floor. What they saw prompted them to call the sheriff’s office. Walking through the suite of rooms, Deputy Sheriff Charles Thompson found letters and telegrams torn into scraps, a blackboard with faint traces of chalk letters, bank deposit slips, and bookies’ tickets for a winning horse named Kootenai. In the east room, which had been fitted as a reception area, he found a wire that started over the hallway door, continued in a manner both covert and conspicuous along the molding, and disappeared into a hole leading to the second room. Picking up the wire’s trail, Sheriff Thompson followed it over doorways, along baseboards, and around corners to a hole leading to the third room. And there it was unceremoniously clamped to a radiator. Sheriff Thompson had stumbled upon the imperfectly dismantled set of a fake betting parlor.
As he pieced together the scraps on the floor, he saw both the props of the con men’s play and their tidy bookkeeping system. The correspondence appeared to be between the Denver crew and its counterparts in San Francisco, Oakland, Salt Lake City, Wichita, and Chicago. Some of the letter scraps read: “You can fix it—,” “Lead the fellow on—,” “These guys have the money,” “Of course, I won,” and, most damningly, “Blonger is always—.” The wiretappers had left so suddenly because one of their marks—a British army officer who had come to Denver to purchase horses and mules for the war effort but instead bought into the big con at the price of $85,000—kicked to the federal government. The swindlers had somehow gotten wind of the complaint and had refrained from cashing the bank drafts, so federal law enforcers were currently stymied in their pursuit, but the local police force was on the case, and they knew the man to whom the evidence pointed: “Lou Blonger, well known in racing circles during the last twenty years.”
Except the entire scene was fake. Blonger was never in danger, because the contents of the office had been planted and their discovery staged as part of a municipal power play whose target was not Blonger but Chief of Police Felix O’Neill, a close friend of Blonger’s (who would one day serve as Blonger’s pallbearer). The main conspirator was Under Sheriff Glen “Big Mitt” Duffield, an officer in disgrace for having been caught a few weeks earlier accepting two diamonds from a pair of crooks and letting them escape from the county jail. To rehabilitate his career, he conscripted the help of Isadore J. “Kid” Warner, a con man run out of Denver during Chief Hamilton Armstrong’s cleanup in the 1890s and later jailed along with the Mabray gang in Council Bluffs. The two of them strung the wire and tore the
incriminating scraps of paper to make the empty rooms look like one of Blonger’s stores. The plan was almost upset when Sheriff Thompson was called onto the scene. Under Sheriff Duffield was supposed to “find” the rooms and use them to embarrass and ultimately unseat Chief O’Neill. Like a good spieler, he ad-libbed in a hurry. He sent a public letter to the commissioner of safety, reminding him that he’d reported on the bunco operations of the city several months earlier at the commissioner’s request, finding that bunco artists had been at work since the previous December and had earned between $85,000 and $90,000 in that six-month period. With his own reputation suddenly at stake, the commissioner was forced to suspend Chief O’Neill. Duffield readied himself by ordering a new uniform. Sure enough, two weeks later, O’Neill resigned to avoid a messy trial, and the commissioner appointed Duffield in his place—even though the daily papers had widely reported that Duffield had constructed the swindlers’ lair and framed its discovery. By faking a fake betting parlor, Duffield baldly conned his way into office.