MONEY SNOWBALL

Dominion, Volume 24, Issue 250, 18 July 1931, Page 7

MONEY SNOWBALL

Dutch Chain Proposal SELLING OF, "CLAIMS” New Zealanders Take Part SOMETHING FOR NOTHING Dominion Special Service. Auckland, July 15. A prize of £165 in cash for the outlay of no money at all is the promiM which is the basis of a scheme in which numbers of Auckland people have been led to place their hopes of winning small fortunes. Emanating from Holland, this alluring excursion into the realm of intricate finance operates on the wellknown principle of the “prayer chain," and it has influenced people of almost every country in the world. The royal road to modest wealth ta advertised by its promoters, the “Credit Continental," of Amsterdam, as "an excellent opportunity to earn money without money.” The business has been going on In New Zealand for several months, and already has gained some momentum. As far as can be determined the majority of participants who buy and sell tickets and send money to Holland are women who have been impresseij by a circular so framed as to present a most interesting picture. “Of course, we do not take it at all seriously,” said one young woman who foresees a trip abroad, say, to Holland, out of her "flutter.” She added, “It is just women’s way of having a little harmless fun.” A Professor's Opinion.Professor H. W. Segar, Professor «f Mathematics at the Auckland University College, to whom the scheme was submitted as a test of its arithmetical practicability, expressed the opinion that it was simply one of those foolish propositions which periodically made their appearance. “Persons who obtained tickets early in, the business will, of course, get some return, but the rest—they will obviously carry the baby,” remarked the professor. Professor Segar demonstrated with a little mental calculation that the whole business would quickly involve figures of grotesque proportions with not a chance of the participants ever being paid what they, anticipated. The money to pay ticket holders had to come from somewhere, and it was clear enough that it did not-come out of the pockets of the promoters. Multiplying Co-operation System. A “prospectus” obtained from a resident who has already dispatched a money order to the Amsterdam firm, hoping to receive £660 from the four claims she holds, engagingly invites the public to embark upon “our ingenious system of multiplying co-operation.” This guarantees that ticket-holders will earn “within a rather short time and without running any risk,” the sum of 2000 Dutch guilders, or about £165 for every claim purchased. The circular proceeds: “Buy a claim, (a ticket) from one of your friends, for which you will have to pay him one/guilder (1/8), and send this claim to our address, together with a money order for 5/-. On receipt of the money we send you four claims of the next colour (the tickets run in a series of six tints). These have to be sold by you at 1/8 each to four friends (thus you recover your outlay of 6/8 and your claim costs you nothing), and you have to see that your four buyers send in their claims, together with a remittance of 5/- each. Then each of your buyers will receive from us a set of four claims of the next colour to he likewise sold.” Expectation of Remittance. This done, the invitation continues, the original claim-holder has done his part and the system moves automatically on until the initial series has passed six colours with about 4000 claims involved, the operation requiring about five months in normal circumstances. The sale of any quota of four tickets has to be completed within three weeks. If claims remain unsold the neglectful holder loses his rights and Credit Continental then endeavours to place duplicates elsewhere to keep the series moving. Discussing her part in the scheme, the claim holder who supplied the circular mentioned that she anticipates receiving her first award of £165, or part on account, by April of next year. Endorsed on the pamphlet are the names and addresses'of numerous residents of countries from France to Palestine, England to Egypt, said to have received a first advance on their tickets. Asked if she were satisfied with the authenticity of the scheme, this claim holder indicated' a heavily underlined legend, “Registered. with the Chamber or Commerce, Amsterdam,” which headed the circular. Analysis of the Proposition. Dr. E. P. Neale, secretary of the Auckland Chamber of Commerce, who was invited to comment on Credit Continental’s activities, pointed out that the. reference to the Amsterdam chamber did not necessarily mean that the scheme had the approval of that body. In certain Continental countries chambers of . commerce were not purely voluntary bodies as understood in New Zealand, but were invested with quasi-official powers and entrusted with, certain functions of record. It was probable that in the exercise of such functions registration of Credit Continental had been effected. The fact of registration was no more a hallmark that the scheme was in the social interest than was the fact that a public company registered here with the registrar of companies was a guarantee that its operation had been approved as socially desirable by the State. In giving an idea of what the scheme involves. Dr. Neale calculated that, starting from one ticket, the series would mount from one ticket-holder to 4096 in 18 weeks if every participant sold his tickets within the prescribed three weeks. The, 4096 tickets, each representing 5/-, meant that £1024 would have to go to Holland before any claim holder stood a chance of receiving his £165. Dependence Upon Continuity. The whole thing depended upon the continuity of the chain and the likelihood of the default of one or more persons was considerable. In the event of default by any link the promoters would have great trouble in keeping the series moving, especially at the distance New Zealand is from Holland. ... . . What proportions of the funds received by Credit Continental represented its profits, management expenses, and prize awards, could hardly ho determined from the circular, added Dr. Neale. The turnover in any event must be enormous, it the scheme continued in New Zealand as it had begun it would roll on like a snowball and soon involve a huge sum of money. . . . However, a business of such proportions must eventually break down under its own weight. The organisers stressed in the circular that it was not a lottery or gamble of any sort. . but Dr. Neale was inclined to be sceptical.