By Jeffrey D. Broxmeyer
King Cotton sustained a powerful connection between the antebellum South and New York City, one that expanded and intensified the demand for slavery. Gotham’s well-known cotton ties, however, have long overshadowed another cross-regional bond sealed by the city's appetite for lucrative commodities: Dixie's state lotteries.
Mid nineteenth-century lottery monopolies, granted by Southern legislatures, were owned and operated by leading pro-slavery New York Democrats. Cash prizes large and small were drawn during elaborate public spectacles in far-flung places like Augusta, Georgia, Wilmington, Delaware, and Paducah, Kentucky. After the war, former Confederate generals such as P.G.T. Beauregard presided over drawings in New Orleans. Tickets were marketed in newspapers ranging from the New York Weekly Day-Book to the Tammany Leader, on busy street corners, and in so-called “Exchange” shops scattered across Manhattan. Upstate patrons bought slips via mail order and the Adams Express Company. Results were then telegraphed from Southern offices to lottery headquarters in New York, where gambling managers publicized them widely.
Playing numbers -- buying lottery tickets and making policy side bets -- had a popular following. Clerks and brokers from banking houses often crowded shops on the outskirts of Wall Street after markets closed for the day. Yet, it was workers and immigrants who fully embraced lotteries, speculating modest sums for amusement and the hope of quick riches. With the minimum investment as low as one cent, the busiest sales were typically the Saturday or Monday after wage-earners were paid.
In New York, prizes had once been lawfully drawn from a wheel on the steps of City Hall. Following a nationwide trend, the state outlawed all forms of gambling in 1833. The governing statute was unequivocal: “no person shall, within this State of New York, open, set on foot, carry on, promote, or draw publicly or privately, any lottery game or service of chance of any nature or any kind whatsoever.” And yet, by the firing on Fort Sumter the city was again awash in lottery risks.
The industry inhabited a curious netherworld. Operating in the city without official sanction, Southern lotteries were targeted by middle-class reformers as a vice-laden scourge. Meanwhile, New York-based companies generated millions of dollars annually with enviably high profit margins. Owners, managers, and employees were periodically thrown in jail and forced to defend property in courts where they had dubious legal standing. Lottery capitalists therefore organized business via political channels by necessity; invariably, that meant working through the fractious local Democratic party.
The Woods and Mozart Hall
The central figure in the sprawling numbers economy was Benjamin Wood, a political entrepreneur with the cunning of a street hustler. Kentucky-born, he was a New York officeholder, editor of the Daily News, and the younger brother of three-time mayor Fernando Wood. During the 1850s, “The Woods,” as they were called, organized the first citywide pro-growth coalition. A full decade before the Tweed Ring, the two brothers combined uptown property owners and developers together with the growing ranks of working-class immigrants. After an acrimonious split with Tammany Hall in 1857, the Wood brothers founded Mozart Hall, a faction defined by its pro-slavery positions.
The duo’s personal fortunes derived from business opportunities that accompanied the development of mass party politics, notably in real estate, newspapers, and lotteries. Among the family portfolio, Ben Wood was a named partner in Wood, Eddy & Company and the driving force behind Samuel Swan & Company, and C.H. Murray & Company. After the war, he helped co-found the Louisiana Lottery Company. These firms held a near-monopoly on publicly sponsored lottery schemes. Contemporary observers noted that the industry “coined money” for the Wood brothers. In practice, there was little distinction between their personal finances, various business enterprises, or Mozart’s coffers. Along with Fernando’s real estate fortune, Ben’s lottery profits were reinvested into projects that advanced the brothers’ collective ambitions.
The headquarters of Wood, Eddy, & Company was located at 146 Fulton Street. In fact, the office lay only blocks away from Ben Wood’s Daily News building at 19 Chatham Street and a short walk to both City Hall and the Five Points. Like many lotto shops, the company operated below the radar around Broadway. At the industry’s postwar peak an estimated 600 subsidiary branch managers ran additional shops on “their own capital and responsibility,” essentially purchasing tickets from the central office at discounted rates for resale. Thin margins for these middlemen contributed to a dearth of investment in ambiance. One Herald reporter described, “all policy shops are disgustingly filthy…the walls are reeking with dark and dampness; blotched and tattered remnants of old lottery circulars are pasted about, and the atmosphere is poisonous with foul odors.”
Given Ben Wood’s mercurial relationship with partners, it is difficult to estimate how much he collected from the business. Nevertheless, we have benchmarks that sketch the overall health of the enterprise. Antebellum lotto shops took in as much as $10,000 daily (or $270,000 adjusted for inflation). One police raid in 1858 produced bundles of receipts signed by Ben Wood and $150,000 in cash (over $4 million), a breathtaking haul. Beyond the shops, an extended network of sales agents earned 12 ½% commission on tickets. At the lowest rung of the enterprise were runners, or young children, who took orders, carried news crosstown from telegraphs to the central office, and delivered packages of slips, receipts, and cash between locations.
Wood, Eddy & Company’s sales in 1859 alone were an estimated $5 million (or $130 million today). The firm reportedly earned 6% profit on sales of tickets from $2.50 to $10 a piece. On the other hand, major expenses included $70,000 on advertising per year ($1.9 million) and another $25,000 running up telegraph fees (or about $674,000). Acquiring franchises was relatively cheap. For example, it cost a mere $80,000 for decades of rights to the Paducah University Lottery, although congressional investigation later found the legality of these claims highly dubious. How much in extra “lobbying fees” found a way into the pockets of state legislators, we do not know. A haze of bribery allegations trailed Wood’s companies across the South. The tactics employed were notoriously cutthroat, not only in securing privileges, but also in militating against the passage of new concessions that might dilute their existing monopoly.
Ben Wood was not shy about defending or promoting lottery interests. He once assaulted an anti-gambling activist, John S. Bradford, with a whip in the street for naming him in the press.
The postbellum situation fundamentally altered the political calculus of gaining access to lottery monopolies. With Confederate allies out of power across the South, Ben Wood had difficulty restoring his pre-war business. It is a testament to the value of these lottery charters that Wood—a partisan Democrat and white supremacist—pursued business with Louisiana’s Reconstruction government. Shortly after the state was readmitted into the Union, Wood and his Kentucky State Lottery associate, Charles T. Howard, managed to secure exclusive rights for twenty-five years for the Louisiana Lottery Company. Allegedly, Wood’s bloc of New York investors had flooded the legislature with bribes.
Quasi-underground lotteries represent more than just another curious artifact of New York’s vibrant mid nineteenth-century social tapestry. Rather, lotteries performed a crucial supporting role in developing the city’s alliance with the antebellum South. Much like cotton’s political economy, partnership between lottery capitalists and the South took shape within party politics. Franchises that were owned and managed by Benjamin Wood evolved into profitable adjuncts of Mozart Hall, the pro-southern faction of local Democrats. When the country descended into war, the city’s cotton merchants ultimately rallied to the Union cause. Conversely, lotteries provided a stream of revenue for Ben Wood as he became New York’s leading Copperhead.
Jeffrey D. Broxmeyer is Assistant Professor of Political Science at the University of Toledo, and holds a PhD from The Graduate Center, CUNY. You can learn more about his work here.