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Chapter 1

History of Lotteries

by J.P. Allenbright
© 1988 & 2004 by J.P. Allenbright. All Rights Reserved

(Note: The following excerpt from J.P. Allenbright's book about lotteries is featured with his permission on this website as a public service.)


Lotteries: a salutary instrument wherein
the tax is laid on the willing only. - Thomas Jefferson

The American colonies were floated from proceeds raised through the operation of lotteries. In 1612 King James I allowed the Virginia Company to start a lottery to fund the building of Jamestown. There being no method more palatable, lotteries became the respectable means for local governments to raise funds for construction and repair of city halls, firehouses, libraries, roads, canals and bridges, and for the founding of colleges, hospitals and churches. Lotteries were also used to finance medical research, vaccinations and to support the poor. War efforts were also funded by conducting lotteries. In 1745 the General Court of Massachusetts authorized a lottery to cover the cost of sending a fully equipped military expedition to the aid of harassed Annapolis. In 1746 New Yorkers held a lottery to fund local military defensive works. In 1748 Benjamin Franklin organized a lottery to fund a battery of cannon to defend the City of Philadelphia. And in 1758, to outfit General James Wolfe for an expedition against Canada in the French and Indian War, Massachusetts authorized conducting a grand lottery for a prize of $30,000.

The first federal lottery was conducted in 1793 under the newly organized American government. President Washington purchased the first ticket, the record of which still remains as a treasured item in the Library of Congress. Proceeds from this lottery were used to help finance the building of Federal City in the District of Columbia. Fifty-thousand tickets were offered at seven dollars each. Top prize was a custom-built inn costing $50,000. One stipulation in awarding this prize was that the inn carry the name "Blodgett's Hotel" in honor of Samuel Blodgett of Philadelphia who helped to plan the lotteries for Federal City. A second federal lottery was conducted to fund construction of the six buildings just west of the White House. Subsequent lotteries provided a continuous flow of financial assistance until the plans to build Federal City were realized.

George Washington was not alone in advocating the lottery method of fund raising. Benjamin Franklin, John Hancock and Thomas Jefferson were also among the founding fathers who heavily touted lotteries as a source of government funding. Alexander Hamilton, the first Secretary of the Treasury, in his support of lotteries, said, "Everybody, almost, can and will be willing to hazard a'trifling sum for the chance of considerable gain."

This philosophy of "something for virtually nothing" appealed to businessmen as well. Local governments encouraged private lotteries to provide seed money for commercial enterprises in order to promote "the betterment of society." Early beneficiaries of these government sanctioned lotteries were the grape growers and glass blowers. In 1763 New Yorkers aided their agricultural industry by participating in a lottery for their hemp growers. The paper mill in Milton, Massachusetts was similarly funded with a lottery held in 1785. And, in 1791 the Massachusetts Legislature issued a permit for a lottery to support the Beverly Cotton Manufactury.

Private businessmen devised a variety of lottery schemesto pay off mortgages, start business ventures, and to sell property. One such entrepreneur was Colonel Joseph Pendleton of Rhode Island who turned some of his land holdings into a windfall profit of $10,364. The land thusly "sold" nurtured a town that took the name of Lotteryville.

Educators concerned with their youth were quick to capitalize on the lottery fever that had swept the nation. Such illustrious institutions of higher learning as Princeton, Yale, William and Mary, Union, King's College (now Columbia University), Williams, the University of North Carolina, and Rhode Island College (now Brown) were all partly financed through lotteries. Harvard also ran several lotteries of its own, one which financed the construction of Stoughton Hall.

Churches too found ready funding available for their projects through the respectable means of lotteries. In 1794, for example, the General Assembly of Rhode Island sanctioned a lottery to complete the building of a church, citing as justification, "Public worship and the advancement of religion." The church fathers touted ticket sales with slogans as, "every well-wisher to society and good Order will become cheerful adventurers," and made their appeal to greed, "advantageously calculated, there being less than two blanks to one prize."

By the end of the seventeenth century there were more than two-thousand government authorized lotteries in operation with annual ticket sales grossing an average of $2,000,000. Given a total population of four-million people at that time, there was one lottery being held for every two-thousand people (including women and children). Lottery tickets were sold by every tavern and inn, and in the streets by hawkers. Thus, the lottery broker came into existence.

Following the War of Independence Alexander Hamilton made government notes and certificates interest-bearing and also organized the Bank of the United States. These actions fueled the fires of gambling fever since it financed speculation in land, merchandise, and government script. Businesses that heretofore were sustained by lotteries now could maintain themselves by issuing stock. Speculation mania became rampant and many a former lottery-ticket salesmen became stockjobbers, the direct ancestors of today's stockbrokers.

As great as was the interest in lotteries and speculation in stocks so was there a universal interest in all forms of gaming. Cards, roulette, faro, wrestling, billiards, horse racing and cock fights were commonplace. The mania for speculating or any forms of gambling reached insane proportions. Even "ladies of quality" and children wagered relentlessly and extravagantly as did men. Fortunes were made and fortunes were lost.

Continued

© 1988 & 2004 by J.P. Allenbright. All Rights Reserved