Pyramids of worms

Press, 9 June 1980, Page 18

Pyramids of worms

From the “Econ<”«ist,” London

America’s worm boom has collapsed. The final blow was a court ruling that the common manure worm is an investible security. Now read on . . .

Mr Ronald Gaddie, a selfmade millionaire, built up Northern Bait Farms in Ontario. California, till by . 1978 it was selling an annual Slm-worth of worms. The strategy was simple. People bought 201 b of worms ' foi $500; feed, bedding and breeding box cost,. extra. Nature then took over. The company claimed that within 60 days the customer would have 401 b of worms. Soon after, the grower would have a productive surplus, which the company promised to buy back at up to $3 per lb, !. More than 10,000 people took the bait. They were promised earnings of up to $3OOO a month from the scheme. Northern Bait Farms’ sales force held heavilyadvertised investment. seminars up and down the country. Worms were no longer simply angling bait, the blurb, suggested, they were, also the answer to the affluent . society’s prayer as waste disposal units. And. if the worms d’d not eat. they could always be eaten. The company held a national recipe competition. Mr Gaddie’s" own suggestions included earthworm pattie supreme

and ver de terre stuffed peppers. ‘ The diet of worms was in reality merely a bizarre form of pyramid selling. The only way Mr Gaddie could dispose of the worms he bought back from old customers was to resell them to new bait growers. The company had an escape-clause. It had promised to buy back only those worms that measured at least 21 inches, fully contracted. In ' fact, only one. in a hundred common manure worms — the type Northern Bait Farms supplied — ever grows to that size. . The worm finally turned in 1978 when a number of states, after getting complaints from- rival worm-

raisers, denied Mr Gaddie the opportunity to sell boughtback worms to new growers. Denied a market, Mr Gaddie refused' to buy those few worms that managed to grow to the requisite size. He was finally run to ground earlier this year in Marion County .circuit court, Oregon, where 66 irate citizens testified they had lost at least $50,000 buying worms from Northern Bait Farms. They argued that Mr Gaddie had entered into an investment contract with his customers, in which .there was no way they could earn a return. They won the case. Mr Gaddie must recompense their losses. But he is insolvent: A can of worms.