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A Forgotten Stock Market Scandal from the 1920s

by David Dyer

Publication Year: 2013

In a casual quest to find his long-lost great uncle Clayton Pickard, Dyer stumbled upon a little-known story of unbounded success and devastating failure in the history of Steel’s Stores. In 1919 L.R. Steel founded a five-and-dime store in Buffalo which would eventually grow to a chain of 225 stores across America and Canada (including one in Syracuse), with nearly 5,000 employees and 40,000 investors. The stores provided jobs for men returning to the workforce after World War I, employed women, the elderly and the disabled, and incorporated many of the business tactics that current corporations employ (vertical investment, P.R., even infomercials). Steel bought sugar factories and coal fields to produce for the stores, he sold millions of dollars’ worth of stocks in the company, and provided easy credit for both employees and customers. But by 1923, Steel was bankrupt and the company was struggling to satisfy outraged investors and federal investigators. Within a year, Steel would die of a stroke and his wife would move from the expansive estate named in her honor to a boarding house. Clayton Pickard, Dyer’s ancestor, had a meteoric rise through the ranks as a “Steelite,” but when he was implicated in the scandal he disappeared, leaving behind a wife and children. In the course of writing the book, Dyer discovered what happened to Clayton and what kind of life he led after Steel’s. The text explains in an understandable way the financial decisions which led to the company’s fall, and illustrates how this scandal relates to (and ultimately eclipses in scope) the original Ponzi scheme. The book has many photographs and clippings from “Steel Sparks,” the company newsletter, which provide a fascinating glimpse of the corporate, as well as the social, world of 1920s America.

Published by: Syracuse University Press

Front Flap, Title Page, Frontispiece, Copyright, Dedication, About the Author

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pp. 2-8


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pp. vii-viii

List of Illustrations

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pp. ix-xiv

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pp. xv-xxviii

They say that history is written by the winners, but maybe it should not always be about the winners. The losers, especially the ones who had what it takes to win, can be fascinating. That idea certainly applies to the L. R. Steel Company, founded in Buffalo in 1919 and bankrupt by 1923, leaving sixty thousand investors about twenty-six million dollars poorer. ...

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pp. xxix-xxx

Buffalo and Erie County Public Library. The Grosvenor Room has a large and well-organized collection of newspapers, scrapbooks, and city directories that I used extensively. The local history card catalog had several items about L. R. Steel. ...

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1. The Man Who Did Almost Everything Right: The Right Business at the Right Time in the Right Place

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pp. 1-12

In the early 1920s, Buffalo residents saw plenty of well-dressed “Steelites” driving new cars and eating at the best restaurants. Their offices had fresh flowers every day. And they all had a certain peppy attitude, possibly from the motivational meeting that started each day at the office. ...

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2. The Creative Promise of the L. R. Steel Company: Ten Thousand Lollipops

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pp. 13-30

L. R.’s Big Idea was not his only idea. This energetic visionary was full of ideas, many of them good. But he was not just a visionary; he actually implemented many of his ideas in the company. His creativity was evident throughout his enterprise. ...

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3. Inventing the Infomercial: Fifty Endings

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pp. 31-41

Leonard Rambler Steel came of age along with the motion picture industry. His birth in 1878 was almost coincidental with a technical insight that demonstrated the possibility of motion pictures. ...

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4. The Life of a Salesman at the L. R. Steel Company: “How’s Yer Pep?”

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pp. 42-62

“Steelites” could be found anywhere; churches, theaters, restaurants, and, of course, at your doorstep. They gave people the opportunity to become part of a cheerful organization by owning shares in Steel’s. These “Steelites” were the heirs of the Liberty Bond Four-Minute Men who approached strangers with patriotic zeal. ...

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5. The Stores: The Best Fifty-Cent Chicken Dinner in Canada

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pp. 63-80

The good things in life were never more abundant than at the start of the Roaring Twenties in North America. L. R.’s personal calling was to bring this abundance to the average family. Things that would have been unimaginable luxuries in prior days were now “everyday miracles”: radios, toasters, washing machines, electric lights. ...

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6. The Denver Miracle: “Meet Me at Steel’s Corner”

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pp. 81-100

The Denver store at the northwest corner of Sixteenth and Welton was the final embodiment of his retail theory. He built a store large enough to dominate a market with low prices and surrounded it with satellite stores that were fed from the same warehouse. The product selection was so wide that there would be little need to shop elsewhere. ...

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7. The Late-Night Meeting: “Well, Folks, Here We Are”

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pp. 101-109

The Lincoln Building in downtown Buffalo was the scene of a heated meeting on Friday, January 26, 1923. Steel’s was out of money. They could not pay their bills. A $250,000 payment on a loan that funded the acquisition of the F. E. Nelson stores was due, and they were unable to pay it. ...

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8. L. R.’s Last Train Ride: “I Was Awakened by a Peculiar Sound”

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pp. 110-117

L. R. grew restless at Marguerite Manor. Both federal and state authorities were auditing his records for evidence of fraud, illegal use of the mails, or any other irregularities. Also, winters in Buffalo are not likely to lift the spirits of someone who has just lost his empire and is in the process of losing his reputation. ...

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9. Was It a Ponzi Scheme? Would a Crook Live Next to a Chicken Farm?

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pp. 118-125

Leonard Rambler Steel and Charles Ponzi had a lot in common. They were both snappy dressers who had many loyal followers. They were both known for their personal generosity and donations to charity. They were both extremely devoted to their mothers. They were both optimists who had great faith in themselves. ...

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10. What Went Wrong? Failure Is an Option

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pp. 126-133

The newspapers reported the story as if crimes were committed, but, in the end, it was a story about the failure of a very creative and aggressive business that lost money. There is nothing illegal about losing money. ...

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11. The Legacy of Failure: Life Goes on . . . or Not

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pp. 134-144

At its zenith, Steel’s had seventy-five retail locations in sixty-one cities, perhaps five thousand employees, and sixty thousand investors. There were also more than one hundred offices that supported the “service” organization in its mission to sell stock. ...

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12. Postscript

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pp. 145-146

We have all heard the rags-to-riches stories told by those who succeed against the odds. We have heard the inspirational messages about how anyone can do it with hard work, frugality, honesty, perseverance, and a good heart. Everybody knows that story. ...

References Index

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pp. 147-148


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pp. 149-152


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pp. 153-158

Back Flap, Back Cover

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pp. 193-194

E-ISBN-13: 9780815652069
E-ISBN-10: 0815652062
Print-ISBN-13: 9780815610120
Print-ISBN-10: 0815610122

Page Count: 200
Illustrations: 144 black and white illustrations
Publication Year: 2013

Research Areas


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Subject Headings

  • Financial services industry -- Corrupt practices -- United States -- Case studies.
  • Ponzi schemes -- United States -- Case studies.
  • Fraud -- United States -- Case studies.
  • Steel, L. R, 1878-1923.
  • Investment advisors -- United States -- Case studies.
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