THE FIRST ARIZONA LOTTERY

In many ways, Arizona hasn't changed a lot since 1879: The public treasury was short of ready cash. A fellow named Goldwater was very big on the political scene. The well-known governor of the period was roundly criticized for spending too much of his time in the East. And the Arizona Lottery was launched to supplement lagging tax revenues. On paper, at least, the lottery scheme appeared to be the answer to Arizona's financial woes. “Poker for the public good!” somebody called it. It was a novel and exciting idea, this Arizona Lottery. Newspaper editors across the territory splashed the story across their front pages during the first week of March, 1879, and gratefully banked the advertising payments sent them by the Lottery Commission.

Territorial Governor John C. Frémont, the revered “Pathfinder” of the West and the first presidential candidate of the Republican Party, thought it was a sensational plan. He issued a proclamation over his signature, urging all Arizonans to participate, and announced that Michel* Goldwater of Prescott-grandfather of Senator Barry Goldwater-was designated as president of the sponsoring Arizona Development Company. Some lucky plunger would win 10,000 dollars when the first drawing was held at the theater in Prescott on June 4, 1879, Frémont said, and many others would come home with windfalls ranging from 2000 down to ten dollars. There was plenty of showmanship in the scheme. Each of the 12,000 numbers would be inscribed on a strip of leather and *("Big Mike" Goldwater spelled bis name Michel, but it was often rendered as Michael.)

What seemed a sure-fire answer to the territory's financial woes turned out to be a fiasco of the first water.

dropped into a huge wheel-shaped glass container. The governor, designated the "territorial lottery commissioner," would seal the wheel himself to prevent any chicanery. Then the mass of leather tickets to wealth would be rotated in the wheel, in the full view of the populace, until no chance of fraud remained. Proceeds of the lottery would go first to the building of a territorial capitol in Prescott, and later to the support of Arizona schools. To further establish the credibility of the Arizona Lottery, the Arizona Development Company (more on this later) was required to post a 20,000-dollar bond with the territorial treasurer. Moreover, the respected Bank of Arizona agreed to serve as custodian of all lottery funds. Little wonder, then, that the first Arizona Lottery was launched with high optimism. The money for the territorial capitol building seemed as good as in the bank, and funds for Arizona schools would soon follow. A group of Prescott citizens, elated over their town's recent success in wresting the territorial capital from Tucson, had already selected the site for Prescott's new domed capitol building: the hill a block east of the downtown courthouse square, from which height the government structure would look out over a grand vista stretching seventy miles northward to the snowcapped San Francisco Peaks. Once the lottery had produced the money for construction and the capitol was in place, they reasoned, no political raiding party could ever take the seat of government away from Prescott again.

Arizona Lottery

Michel Goldwater arrived in Arizona Territory in 1860 and founded a mercantile empire that eventually included stores in early-day Prescott, La Paz, Ehrenberg, Bisbee, and Phoenix.

The Prescott scene at the top of this page originally served as the centerpiece of Jules Baumann's lithograph, the borders of which appear on pages 18 and 19.

Meeting in December, 1878, the Prescott cabal moved swiftly. The planners included George Curtis, at that moment young Morris Goldwater's opponent in the race for mayor; wealthy W. C. Bashford of the pioneer Prescott family; Joseph C. Crane, a popular saloon owner; Charles P. Dake, the new U.S. marshal for Arizona; and Michel Goldwater, one of northern Arizona's most prominent merchants. It was their deliberations that produced the Arizona Development Company. It had the grandest of goals-not only rais-ing money for the capitol and school construction but also planning toll roads, developing electric lighting companies, and much more. It was to be capitalized for the staggering sum of five million dol-lars, with 100,000 shares to be sold at fifty dollars each. The new company was officially incorporated on January 3, 1879, and only two weeks later a bill was introduced in the Legislative Assembly to place the company in charge of the Arizona Lottery. Tom Fitch, Governor Frémont's closest friend and a newly elected member of the legislature, persuaded Council (Senate) President Fred Hughes of Pima County to introduce the measure, Council Bill No. 20, hoping thus to douse the criticism that this was a scheme designed solely to benefit Prescott and Yavapai County.

So cleverly had the legislative skids been greased that the bill passed the Council without a dissenting vote, and sailed through the House with only two objections. Governor Frémont signed it into law on February 5. By late February, the first tickets were placed on sale at Goldwater's store in Prescott. The Arizona Lottery Commission placed advertisements in newspapers all across the territory proclaiming the good news:

ARIZONA LOTTERY

Under the direction of GOVERNOR J.C. FRÉMONT, Territorial Commissioner M. Goldwater, President Bank of Arizona, Treasurer In accordance with an act of the Legislative Assembly of Arizona Territory, and the Proclamation of the Governor issued thereunder, a lottery will be drawn at Prescott, Arizona, on Wednesday, June 4th, 1879.

Tickets were priced at five dollars each-the first mistake of the commission. Since most people in 1879 made less than five dollars for a day's work, several had to pool their money to buy even one ticket. The territorial building and public education funds were to receive ten percent of the prize money-the second mistake. It did not take higher math to figure that most of the money was going into other pockets.

The Tucson Citizen's column, “The Inquirer,” asked: If gross proceeds are to be 60,000 dollars (12,000 tickets at five dollars) and 32,000 dollars is offered as prize money (of which 3200 dollars goes to the building and education funds), “now a legitimate inquiry arises as to what becomes of the balance, 28,000 dollars.” Goldwater protested that he and the other lottery planners would not make a dime on the scheme, and that the 28,000 dollars would be used to launch the lottery program.

Still, Arizona's newspapers were cynically critical of the whole idea. Even Mike Goldwater's old friend, Charley Beach, publisher of the prestigious Arizona Miner of Prescott, expressed his doubts. Mike retaliated with a letter to the Prescott Arizona Enterprise: Charley Beach hints that I am getting richer and the people poorer by this lottery. The profits which I have made or may make out of the Arizona Lottery I am ready at any moment to turn over to any benevolent institution in Yavapai County....

The alienation of Goldwater and Beach became a topic of town gossip, and the two former friends crossed streets to avoid each other. Mike withdrew all Goldwater's advertising from the pages of the Miner for many weeks. Goldwater was learning a painful lesson about public office: a man in the public eye is an easy target for criticism. For nearly twenty years, he had been honored as a pioneer and a builder of Arizona Territory. He had braved Apache attacks and frontier hardships to earn a reputation for integrity, and now that reputation was being attacked from every side.

One of his most infuriating newspaper critics was James Reilly, fire-eating editor of the Yuma Expositor, who had opposed the lottery from the beginning and had even refused the fifty dollars sent him to pay for the first lottery advertisement. Reilly said the lottery caused “a stink in the nostrils of honest men” and declared that “Arizona people just will not 'develop' worth a cent.” Even level-headed John P. Clum, editor of the Tucson Citizen, warned Goldwater to extricate himself:

Arizona Lottery

We are assured by many that Mr. Goldwater is an honorable man; yet if he gets into an unpleasant and unprofitable controversy over the miserable and wrongly conceived lottery business, he will, we feel sure, admit that punishment is not altogether undeserved.

The storm of protest-from church leaders, from editors, and from communi-ties that complained only Prescott would benefit-engulfed the lottery and painted its leaders as villains of the worst sort. After a brief early period of brisk sales, lottery tickets could not be sold anywhere. In Tucson, where the citizens were still irate about losing the capital to Prescott, ticket sales could literally be counted on two hands.

By mid-May, it became obvious to the officers of the Arizona Development Company that they were headed for disaster. Only a few hundred dollars had come into the till from ticket sales, expenses had been higher than expected, and they were faced with awarding some 30,000 dollars in prize money on June 4.

They should have admitted defeat and called the whole thing off, but they were a stubborn lot, who hoped for some miracle to save their cherished plan. So they rushed this advertisement to newspapers around the territory: The Lottery heretofore advertised to take place June 4th, 1879 is hereby postponed until

AUGUST 4th, 1879

To be then held at the same place and drawn in the same manner heretofore announced.

ALL TICKET HOLDERS Desiring to do so may surrender their tickets to J. GOLDWATER & BRO., Prescott, Arizona Territory, and will thereupon receive full cash value for the same.

Mike Goldwater hoped this generous gesture-refunding anybody's money who so requested-would end the storm of invective. But it didn't.

The Expositor leaped on Goldwater and the lottery like a wolf on a lamb:

THE SECRET OUT

So that frantic rush for lottery tickets, reported in nearly all the 'respectable' newspapers of the territory, was all a fiction-we might say a deliberate falsehood. We will bet our last shirt and longest Faber pencil that the ticket sale didn't amount to 600 dollars....

Mike Goldwater offers to pay back the money for all tickets.... Well done, friend Michael; get a good name, even if it does cost you.... You need some sort of purification to keep you from stinking....

Goldwater was left to take most of the heat. Legislator Fitch managed to be out of town, and Governor Frémont departed for an extended visit to Washington, New York, and New England.

(BELOW) Facsimile of the Arizona Lottery newspaper advertisement. Sections 4 and 5 contain the embarrassing "ten percent clause" that finally helped kill the project.

Frémont's reaction to an official investigation of the Arizona Lottery was not surprising to those who knew him. He told auditors: I was not informed of this [his own prominent role in the lottery administration] or any other provision of the bill until it was presented to me for approval, and I did not think this objection sufficient to justify refusing my signature.

Thus he piously disclaimed any responsibility for the scheme. Public officials, it has been claimed, still take that way out to this day.

Arizona Lottery officers looked around frantically for some way to save the plan. Before they could act, however, a final crushing blow descended on them. The U.S. Postmaster General ruled that no communication about the Arizona Lottery could be sent through the mails. Mike Goldwater fired off an angry letter to the Postmaster General, pointing out that the lotteries of Cuba, Ireland, and several states were publicized through the mails. But his protest only brought him more criticism from the Arizona press.

Finally Goldwater concluded that there was no way to win this one. He sent out an announcement in late July announcing the death of the lottery and repeating the offer to refund ticket money. Many took him up on that offer. In the next legislature, a bill was quietly passed which repealed the lottery.

For Mike and his fellow officers of the Arizona Development Company, the lottery had been a disaster from start to finish. Reputations were smeared, friendships strained, and newspaper relations damaged.

The cost? Records of the Goldwater family, now in the archives of the Arizona Historical Foundation at the Arizona State University Library, show that more than 8000 dollars was spent on lottery advertising, ticket printing, and other overhead expenses.

Ticket sales? The figures were kept secret for many years to keep hostile editors from screaming, "I told you so." But these, too, have now been revealed in the Goldwater records. The last entry, on June 4, 1879, shows that only 138 tickets had been sold, for a cash total of $690. Editor Reilly had guessed more correctly than he ever knew. More than a century passed before Ari-zonans were rash enough to give a state lottery another try.

ARIZONA LOTTERY!!

UNDER THE DIRECTION OF

GOVERNOR J.C. FREMONT, TERRITORIAL COMMISSIONER M. GOLDWATER, President BANK OF ARIZONA, Treasurer

In accordance with an Act of the Legislative Assembly of Arizona Territory, and the Proclamation of the Governor issued thereunder, a

LOTTERY

WILL BE DRAWN AT

PRESCOTT, ARIZONA

ON

Wednesday, June 4th, 1879. ACT OF THE LEGISLATURE.

An Act to aid in the Construction of Capitol Buildings, and for the Support of Public Schools in the Territory of Arizona.

Be it Enacted by the Legislative Assembly of Arizona Territory: SECTION 1. It shall be lawful for, and the right, power and authority is hereby granted for the period of twenty years, from the first-day of February, 1879, to the Arizona Development Company-a corpora-corporation organized and existing under and by virtue of the laws of the Territory of Arizona-and of its assigns, to give public lotteries, at which, or by means of which money may lawfully be disposed of by chance, anything in the laws of this Territory to the contrary notwithstanding, etc, etc.

SEC. 2 The Governor of the Territory of Arizona, and his successor in office, and in the event of the absence, disqualification or death of the Governor his legal substitute is hereby appointed a Commissioner to superintend the drawing or distri bution of said lotteries and each of them, and certify to the correctness thereof, etc., etc.

SEC. 3. All lotteries drawn under the provisions of this Act, shall be drawn in some public place to be designated by the Commissioner, between the hours of ten o'clock AM, and five o'clock PM., and in a manner to be approved by the Commissioner.

SECTIONS 4, 5 and 6 provide for the collection of ten percent, from all prizes, and the payment of the same into the Capitol and School Funds.