Lottery: Continental Congress Lottery Description
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# Continental Congress Lottery

### The Continental Congress Lotteries 1776-1782

#### The Plan of the Lotteries

On November 18, 1776 the Continental Congress enacted a national lottery in four classes, consisting of 100,000 tickets in each class.

The FIRST CLASS LOTTERY was to take place on March 1, 1777 in Philadelphia. Tickets were \$10 each with the following prizes:
• 1 ticket - \$10,000              for a total of \$10,000
• 2 tickets - \$5,000              for a total of \$10,000
• 30 tickets - \$1,000            for a total of \$30,000
• 400 tickets - \$500             for a total of \$200,000
• 20,000 tickets - \$20          for a total of \$400,000

It was calculated \$650,000 in prizes would be awarded of which \$400,000 in \$20 prizes would be paid in cash and \$250,000 for higher category winners would be issued in loan certificates. A fully sold lottery would produce \$1,000,000 thus producing an additional \$150,000 for the Congress and an additional \$200,000 to be carried over for prizes in the final fourth class lottery.

The SECOND CLASS LOTTERY would consist of 100,000 tickets at \$20 each. Following the first lottery unsuccessful adventurers (as ticket holders were called) had six weeks during which they could renew their tickets for \$20 each; those who had won a \$20 prize in the first lottery could renew their ticket simply by not collecting their winnings. Higher winners in the first class lottery could also take their winnings in second class lottery tickets instead of a loan certificate if they wished. After the six week period any remaining tickets would be offered to the general public. Prizes in the second class lottery were:
• 1 ticket - \$20,000             for a total of \$20,000
• 2 tickets - \$10,000           for a total of \$20,000
• 10 tickets - \$5,000           for a total of \$50,000
• 100 tickets - \$1,000         for a total of \$100,000
• 820 tickets - \$500            for a total of \$410,000
• 20,000 tickets - \$30         for a total of \$600,000

It was calculated \$1,200,000 in prizes would be awarded of which \$600,000 in \$30 prizes would be paid in cash and \$600,000 for higher category winners would be issued in loan certificates. A fully sold lottery would produce \$2,000,000 thus producing an additional \$300,000 for the Congress and an additional \$500,000 to be carried over for prizes in the final fourth class lottery. Tickets would be handled as in the first class lottery.

The THIRD CLASS LOTTERY would consist of 100,000 tickets at \$30 each. Prizes in the third class were:
• 1 ticket - \$30,000            for a total of \$30,000
• 1 ticket - \$20,000            for a total of \$20,000
• 2 tickets - \$15,000          for a total of \$30,000
• 2 tickets - \$10,000          for a total of \$20,000
• 10 tickets - \$5,000          for a total of \$50,000
• 200 tickets - \$1,000        for a total of \$200,000
• 1,000 tickets - \$500        for a total of \$500,000
• 20,000 tickets - \$40         for a total of \$800,000

It was calculated \$1,650,000 in prizes would be awarded of which \$800,000 in \$40 prizes would be paid in cash and \$800,000 for higher category winners would be issued in loan certificates. A fully sold lottery would produce \$3,000,000 thus producing an additional \$450,000 for the Congress and an additional \$900,000 to be carried over for prizes in the final fourth class lottery. Tickets would be handled as in the second class lottery.

The final FOURTH CLASS LOTTERY would consist of 100,000 tickets at \$40 each. But the prizes would exceed those of the earlier classes for \$1,600,000 from the earlier lotteries would be added to the prizes in this final class. Prizes in the fourth class were:
• 1 ticket - \$50,000             for a total of \$50,000
• 2 tickets - \$25,000           for a total of \$50,000
• 5 tickets - \$10,000           for a total of \$50,000
• 10 tickets - \$5,000           for a total of \$50,000
• 100 tickets - \$1,000         for a total of \$100,000
• 200 tickets - \$500            for a total of \$100,000
• 1,000 tickets - \$300         for a total of \$300,000
• 15,000 tickets - \$200       for a total of \$3,000,000
• 26,000 tickets - \$50         for a total of \$1,300,000

It was calculated \$5,000,000 in prizes would be awarded of which \$1,300,000 in \$50 prizes would be paid in cash and \$3,700,000 for higher category winners would be issued in loan certificates. A fully sold lottery would produce \$4,000,000 with an additional \$1,600,000 rolled over from the previous three lotteries for a total of \$5,600,000 thus producing an additional \$600,000 for the Congress.

Overall the Congress hoped to obtain \$1,500,000 from the four lotteries and to temporarily have the use of \$5,400,000 of the winning for which it would issue loan certificates to the winners.

#### The Administration of the Lotteries

On November 20, 1776 the Continental Congress appointed a board of managers consisting of Sharp Delany, John Purviance, Owen Biddle, Jacob Barge, Jonathan Bayard Smith, James Searle and David Jackson. By March 1777 Smith, Biddle and Barge had resigned and were replaced by John Ord, Robert Ritchie and James Budden. Later Jackson, Ritchie and Purviance resigned and in April 1778 were replaced by George Campbell, John Mease and Joseph Bullock, then in December Thomas Lawrence replaced Searle who had resigned in September. Apparently Ord died while still in office but was never replaced. Those who resigned usually took another government appointment, Smith and Searle took seats in the Continental Congress, Biddle joined the Forage Department, Ritchie became a commissioner of claims and Jackson joined the General Hospital. Barge and Purviance left for family and business reasons. Only Sharp Delany held office throughout the entire process.

The board was allowed to print tickets and hire clerks and agents to assist in the processing and distribution of tickets. The actual drawing was performed in a manner similar to that described in the section on the 1744/45 Massachusetts Government Lottery, which followed the general European practice of the period. Congress also requested each state to pass a law against counterfeiting lottery tickets. In general counterfeiting was punishable by death. Ezell (p. 62) relates a change of thought that took place in North Carolina in 1779, apparently they:
reduced the punishment for the first offenders to standing in the pillory for three hours, having the right ear nailed to it and cut off, thirty-nine lashes, branding on the right cheek with the letter M (the iron being one by three-quarters inches), imprisonment not exceeding one year, and forfeiture of one-half of the culprit's goods! (Finally in 1784, perhaps in a spirit of charity, the death penalty was restored.)

Sales of tickets for the first class lottery were far slower than expected and the lottery was postponed several times. Finally on May 1, 1778 the drawing was begun with only 20,433 of the 100,000 tickets sold. Sales continued during the drawing period. When the final tickets were drawn on May 27th about 36,500 of the \$10 tickets had been sold. The government owned most of the tickets and is estimated to have ended up with a net loss of more than \$72,000!

In an effort to boost sales it was announced six percent interest would be added to the government loan certificates issued to winners in the second class lottery, in which tickets would cost \$20 each. Sales were worse in this lottery. The drawing began on January 1, 1779 but was conducted at a very slow pace so that additional tickets could be sold. When the final lots were drawn, some six months later, on June 29th, about 20,000 tickets had been sold and it is estimated the government lost about \$340,000.

In the third class lottery sales were slightly better with about 40,000 tickets sold at \$40 each. The drawing took place from March 1, 1780 - April 29th and the final loss was about \$360,000.

Clearly the higher awards in the fourth class lottery would cause an even greater loss to the government. To that end it was decided to hold the drawing as soon as possible so that the government would hold the largest number of tickets. The mandatory six week renewal period for holders of tickets in the previous lottery occurred during December 1780 - January 1781. The fourth class drawing started on April 2, 1781 but was soon suspended because the managers went on strike as they had not been paid. The hiatus continued for almost a year before it was resolved when Robert Morris, Superintendent of Finance, promised to pay the managers. The lottery was completed on April 16, 1782 with some 40,000 tickets sold. In this final round it has been estimated the government, which owned some 3/5th of the tickets, would have collected about the same proportion of the prizes. In addition to the prizes the government also took 15% of the overall proceeds, this time it has been calculated the government obtained a profit of \$1,200,000.

Unfortunately, during these years Continental Currency greatly depreciated in value. At the completion of the first class lottery in May of 1778 it took 2-5 Continental dollars (depending on which state you were in) to equal one dollar in specie. By the completion of the second class lottery in June of 1779 it took from 13-20 Continental dollars to equal one dollar in specie. By April of 1780 when the thirds class lottery ended Continental dollars traded at 40-60 to one dollar in specie. (On March 18, 1780 the Continental Congress had passed a resolution that states accept Continental dollars at a rate of 40:1). Finally by the start of the drawing for the fourth class lottery in April 1781 Continental dollars traded at 80-260 to one dollar in specie; by the completion of the drawing a year latter the rate of exchange was over \$1,000 in Continental bills to \$1 specie! When calculating the value of the government winning in specie (and using the very conservative "official" rate of 40:1) the total income has been estimated at less than \$100,000.

Clearly the distribution problems in selling and publicizing the lottery throughout the country, coupled with the significant inflation rates of Continental currency made the national lottery a failure when compared to the success lotteries found on the state and especially the local levels.

Bibliographical references: John Samuel Ezell, Fortune's Merry Wheel: The Lottery in America, Cambridge, MA: Harvard, 1960; and specifically on the Continental Congress lotteries, Lucius Wilmarding, "The United States Lottery," The New York Historical Society Quarterly, 47 (1963) 5-39.