Automatic Age

Issue: 1926 May

THE AUTOMATIC AGE
Vol. 1
CH IC AG O , M A Y , 1926
No. 10
19 OF A U T O M A T IC PIE V E N D IN G
M A C H IN E C O M P A N Y
IN D IC T E D IN M A IL F R A U D
St. Louis, Mo.— Nineteen officers,
directors and fiscal agents o f the
Automat Sales Company and the
Autom at Service Company, promoters
o f the “ Sunny Jim” automatic pie
and sandwich
vending
machines,
which failed last October, with losses
o f $450,000 to several thousand St.
Louisians, were indicted by the fed­
eral grand jury on charges o f using
the .mails to defraud.
nearly $3,000,000 was invested in the
project by citizens o f that state.
Both concerns were incorporated
in Nevada and nearly 3500 o f the ma­
chines, which were purchased in Chi­
cago fo r §16 each, were sold to St.
Louisans fo r from $125 to $200 each.
Only 1100 o f the machines were
delivered to St. Louis, however, the
remainder being paid fo r both never
received.
Termed Gigantic Fraud
Residents o f St. Louis, it was
learned, comprise at least one-half o f
the defendants in the case, which
heretofore has been characterized as
“ one o f the worst frauds ever perpe­
trated upon the citizens o f St. Louis.”
The indictment, it is understood,
also charges the defendants with con­
spiracy to use the mails in further­
ance o f a scheme to defraud. The
fraud charge is punishable by a max­
imum penalty o f five years’ imprison­
ment and $10,000 fine, whereas the
conspiracy section carries a maximum
Punishment o f two years in prison
and $10,000 fine.
Capiases were ordered issued and
amounts o f bonds fixed fo r those in­
dicted who are expected to be ar­
rested this week and who are ex ­
pected to give bail fo r trial at the
March term o f the United States Dis­
trict Court here.
Scheme Failed in California
It was learned that both o f the
companies were organized by the
same group o f defendants and oper­
ated in St. Louis from April to O cto­
ber o f last year after similar experi­
ments had failed in California, where
$385,000 Profit Realized
Net profit o f $385,000 was realized
on sale o f the machines by the A uto­
mat Sales Company, which used
“ high-pressure” salesmen and branch
managers to sell the machines, but
the Automat Service Company, which
kept the machines in supplies, lost
heavily and filed a voluntary petition
in bankruptcy last O ctober 13.
A ccording to investigators, only
$1,000, as required under the Nevada
law was paid in as capital stock when
the companies were organized, and
stockholders o f the sales con'rem re­
ceived $30,000 in dividends in five
months or a return o f more than
7000 per cent on their original in­
vestment.
It is understood that numerous
representations o f $100,000 capital
stock and the earning capacity o f the
machines, which were installed in
drug stores, shops, office buildings
and even police stations, sent in liter­
ature through the mails, form the
basis o f the indictment fo r alleged
mail fraud.
A void Blue Sky Law Here
The companies were able to avoid
the "blue sky” regulations o f Mis­
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http://www.arcade-museum.com/
1 0
T h e A u t o m a t ic A ge
souri and Illinois by selling the ma­
chine direct to purchasers and not
disposing o f any sto^k, Purchasers
were promised a profit o f 2 cents on
each sandwich or cut o f pie sold.
Many small storekeepers in St. Louis
invested in them and now have the
apparatus on hand.
Investigators fo r the Better Busi­
ness Bureau learned that, while the
sales company was selling large num­
bers o f the machines and making
handsome profits, the service company
was operated very inefficiently and
on a heavily losing basis, as the gross
cost o f supplies w as much in excess
o f the selling price.
Despite the fact that the service
com pany was losing
money daily,
“ high pow ered" salesmen, who had
secured positions with the sales com­
pany as branch managers, continued
their selling campaign with alleged
representations that the machines
were working on a paying basis and
showing prospective purchasers false
photostatic copies o f large checks
said to have been sent to other own­
ers as m onthly earnings o f the ma­
chines in some localities.
Misrepresentation Charged
Purchasers were told the machines
would make at least fifteen sales a
day with a yearly income o f not less
than $90, but very fe w o f the appar­
atus were this successful, and, be­
sides, not receiving any earning, al­
m ost 250 purchasers did not even re­
ceive their machines, it has been esti­
mated.
The home office o f the companies
were at Los Angeles, Calif. A fter
selling all o f the machines they couid
in St. Louis, some o f the defendants
are alleged to have opened an inten­
sive selling campaign in Detroit,
Only a few hundred machines were
sold there, reports say.
Only twenty-seven per cent o f the
11,786 regular army officers are
graduates o f W est Point,
© International Arcade Museum
Nuts Are Profitable
A good side line fo r operators is
the salted nut business which are
sold from revolving stands placed on
show cases. The operator can service
them while on his regular route.
The M orrow M fg. Co., who sells
them, as advertised in this issue says:
Through a series o f tests, we
found this type o f counter-rack to be
the best sales producer, but we soon
learned that their cost was prohibi­
tive. The average similar counter
rack o f this type costs anywhere be­
tween $1,00 and $1.25 each. This
would mean an investment o f from
$100 to $125 fo r 100 ordinary counter
racks. This makes them too costly
to place out promiscuously on deal­
ers’ counters.
The development o f the “ Lightnin’
Salesman” is typical o f the kind o f
service we are rendering those who
want to go into the wholesale and re ­
tail nut business.
Instead o f giving up the idea o f
using this type o f display rack when
we learned o f their prohibitive cost,
we immediately began experimenting
in reducing their manufacturing cost.
W here metal wasn’t essential we sub­
stituted equally strong material that
cost less.
The result is an attractive revolv­
ing counter display rack which we
furnish only to owners o f "N u t De­
light Toasters” at 33% cents each in
lots o f one hundred. This is but %
to lA o f the cost o f similar racks.
A New Sin
A church member in a Chicago
suburb has been haled before the
church council and a charge pre­
ferred against him because he had a
mint vendor in his store.
Indians upon reservations do not
have to pay income taxes although
some o f them have good incomes from
business ventures.
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