Was IPO Frenzy Rigged?

Nov. 13, 2002

Remember those high-flying stocks sold for the first time in the 1990s, the ones that soared from $20 a share to $100 a share in hours? Some insiders now say the great price leaps for these "initial public offerings" - IPOs - were the result of insider agreements designed to force prices artificially high. The scam is called “laddering.” Rumors of laddering have been widespread, Scott Pelley reports, but investigations have been hamstrung by a lack of witnesses. Nicholas Maier was in the thick of the IPO frenzy. In the 1990s, he worked for an investment firm called Cramer and Co. His job was to buy those hot new stocks for the firm. He says he routinely participated in laddering, which had the effect of helping brokerage houses or investment banks artificially inflate stock prices. “I know for a fact that it became such a commonplace activity that I did the same thing with most of the major investment banks, “ he says. In those same years, Blythe Berents’ job was to sell IPO shares for the brokerage firm of Hambrecht & Quist in Boston. A 10-year professional on Wall Street, she said she saw prices artificially inflated in insider deals between the firm and some of its clients. She said the firm was involved in launching up to seven new stocks a week and pushing up prices artificially was standard. “Yeah, it was a game,” she says. “And the retail investor really got left in the dark.” Hundreds of lawsuits allege the prices were inflated by “laddering,” designed to make a new company, even a weak one, look like a sure bet. It works like this: A brokerage bringing a new company to market for the first time privately calls its best clients and offers a big allocation of this stock at its lowest price - say, $10 a share - if the client agrees in advance to buy more shares at higher and higher prices - for example, an order at $20 a share, another order at $40 and finally an order at $100. Buying these shares after the stock starts trading is called "buying in the aftermarket." "They make a winner out of a loser and then, inevitably, the small guy at home watching on the PC wants to participate and comes into the market," says Maier. Of course, there was plenty of investor greed fueling the overall rise in prices. But Berents says artificially inflating the price at the beginning helped a stock reach the stratosphere. “It creates a certain buzz,” she says. “The CEO might end up on CNBC the morning of trading. And they’ll say, ‘You’ve got a really hot stock. And look where it’s trading now.’ And that would get the retail buyers interested. And say, ‘Well, gee, maybe I should put my money in this.’ Not knowing what’s really going on behind the scenes is that maybe that stock has been driven up by this sort of artificial buying that a lot of people committed to simply to get a good allocation.” After two years at Cramer and Company, Maier was in charge of buying hot new IPO shares. He says low price shares were handed out by major brokerages as a bribe or kickback to get buyers like him to play along with the laddering scheme. “I never would have bought that stock at $80, at $100 without that direct kickback to me,” he says. What about the average investor, at home trading on his PC in his kitchen? “There was something in the gut of my stomach that just told me that something was wrong here,” Maier says, “that somebody was getting hurt.”

Those who say they got hurt by the practice include Mike Szymanowski, a plumber from Erie, Pa.; Allen Taylor, an optometrist in Syracuse, N.Y.; and Tom Kenney, a programmer from New Jersey. They’re suing major brokers, saying laddering defrauded them out of their savings. Taylor estimates he lost hundreds of thousands of dollars and now has to work six and seven days a week to recoup his savings. He invested in China.com months after it came to market. Its IPO price was $20. On opening day, it jumped to $45, then to $67. Now, after a stock split of four for one, it’s about $2. Szymanowski was attracted to a company called Turnstone Systems. He bought into it months after it opened because it looked like there was huge demand. Its lowest price was $29; on its first day, it leaped to $106 and then ended at $97. Now, after a two for one split, it’s about $3. “I guess what I’m looking for from the professionals is the truth, you know,” says Szymanowski. “And I don’t think those people told the truth.” “You know that there are people watching this interview saying to themselves, ‘Hey, nobody ever said the stock market was a risk-free game. You gambled. You tried to get rich. You lost. That’s the way it works.’” Pelley said to Tom Kenney. “Correct, OK. In an honest market, okay. Not where people are lying, cheating, and giving misinformation. I can accept loss. But not when it’s fixed,” Kenney said. More than 300 class action lawsuits have alleged laddering by major brokerages. The suits are so large, worth perhaps billions of dollars, that some worry they could cripple Wall Street. Mel Weiss, a lawyer handling some of the suits, says his clients are suing about 40 different investment-banking firms from all over the country. One of those investment banks was Hambrecht & Quist, which is now part of J.P. Morgan/Chase. H & Q brought roughly 140 new companies to market between 1995 and 2000, and earned roughly $750 million dollars in fees. Some of those new companies were shaky, Berents says, and her firm knew it. “We would tell our clients that," she recalls. “We’d say, ‘Look this is too early, we know it, but we need your help.’” “If a company came to you and said, ‘Look, I’ll participate in the aftermarket. I’ll participate for $20 a share,’ but you wanted $30 what would you tell them?” Pelley asked Berents. “It’s not going to work at $20. All the buyers, the big buyers are in at 30. So if you want stock, you’ve gotta come up to $30,” Berents responded. “So they’re not gonna get their allocation on the ground floor…if they don’t come up to the price that you want?” Pelley asked. “They might get a, they might get maybe a thousand shares,” Berents told him. “They might get a very small allocation, if anything. But if they’re not gonna be a significant factor in the aftermarket trading, they’re not gonna get significant allocation.” “And they understood that?” Pelley asked. “We made it clear to them, yes,” Berents said. Until last year, Arthur Levitt was chairman of the Securities and Exchange Commission. 60 Minutes II told Levitt what Berents had said. “I think that agreement is tantamount to commercial fraud. It’s manipulative. It distorts the market for that stock. It misleads investors,” Levitt responded. Levitt says that under the law, brokers, or investment bankers, have a clear line that they cannot cross. “It’s legitimate for an investment banker to ask whether a buyer will be supportive of the stock over a period of time,” he says. “That’s a fair and reasonable expectation to avoid having buyers who buy in only to sell out the next day. It’s when you get specific and say, ‘Will you buy at this price and continue to buy at that price’ that you have a manipulative practice that violates the securities laws.” Laddering and its effect on the market is under investigation by the SEC and New York Attorney General Elliot Spitzer. “We hear all these terms, laddering, spinning, kickbacks. How have you found they’re all related?” Spitzer said. “Well, they’re all part of one effort to play games with the marketplace,” Spitzer said. “Is the effect of all this focused just on these tech stocks, the telecoms, the dot-coms, or did it have an effect on the broader market?” Pelley asked. “It affected the broader market. I think the most egregious examples are in the tech sector because that’s where there was the greatest volatility,” Spitzer said. “But was that in some sense fuel for the rest of the market?” Pelley asked. “Absolutely,” Spitzer said. “It then carried – just the way helium was being pumped into a balloon - the tech sector carried the entire market with it, pumped it up to a level that - where it should not have been. And then, as these as cracks began to emerge, the whole thing collapsed.” It collapsed on families all across the nation, like Ed Wolfe, whose family lives in the Amish country of Ohio. Retiring after 32 years at the nearby Rubbermaid plant, he says he gave more than $300,000 – all he had saved - to a Merrill Lynch broker to invest. He says he gave the broker clear instructions: very little risk. But the broker put most of the money into hyper-inflated tech stocks, many of the kind that were allegedly being laddered. He says he lost two-thirds of the money in a year and a half. Merrill says that Wolfe’s money went into the tech funds because Wolfe wanted the income. Back at work as a truck driver, Wolfe has filed a complaint against Merrill saying that his broker put his savings in risky fund without his knowledge. “I will not feel bad if he would walk in the shoes that he created with me, and walk in that mess of feeling lifeless and lonely and stripped of everything you worked for all your life,“ Wolfe says of his broker. “Is there going to be a time when we see brokers, brokerage managers and analysts led out of buildings in handcuffs?” Pelley asked Spitzer. “I imagine so. I think that there will be criminal actions and I don’t say that with any great joy. But I think it is probably going to be part of the process of restoring the public’s confidence in the marketplace,” Spitzer said. Maier, who quit Cramer and Co. to become a writer, has already told what he knows to the SEC. The Cramer firm declined an interview, but in a letter to 60 Minutes II wrote that their “purchases of IPO shares were based on sound investment analysis and were at all times lawful and appropriate.” Berents was laid off and is now working with refugees in West Africa, putting Wall Street’s ways far behind her.

Stock Fraud in Jacksonville, Florida Morgan Stanley Fraud | Merrill Lynch Fraud | Smith Barney Fraud | Credit Suisse Fraud | Charles Schwab Fraud Morgan Stanley Fraud in Florida Morgan Stanley has been accused of allowing its investment banking interests to color its stock reports. It is one of twelve financial firms to come under recent fire. Luxury firm LVMH says that Morgan Stanley gave preferential treatment to its rival, Gucci, because Gucci is an investment banking client at Morgan Stanley. Although Morgan Stanley did not admit wrongdoing, the firm did agree to a recent $125 million dollar fine to the SEC. If you believe you have a case against Morgan Stanley, please contact the Morgan Stanley fraud lawyers at Farah, Farah, & Abbott today - located in Jacksonville, Florida.

Merrill Lynch Fraud in Florida Merrill Lynch has been accused of issuing positive reports about stocks they knew were in decline due to conflicts of interest. The firm did not want to give bad ratings to companies whose investment banking business they wanted to gain or keep. Allegedly, even though it knew trouble was brewing for them, Merrill Lynch advisors gave high ratings to Internet companies during the year 2000. When the companies value deteriorated, Merrill Lynch clients lost their investments -- sometimes their life savings. If you have lost money due to Merrill Lynch investment fraud, please contact the Merrill Lynch fraud lawyers at Farah, Farah, & Abbott today - located in Jacksonville, Florida.

Salomon Smith Barney Fraud in Florida Salomon Smith Barney was fined $400 million in April of 2003 for allegedly allowing conflicts of interest to influence its telecom stock reports. The firm's roster of investment banking clients included major telecommunications clients such as WorldCom. During the telecom bust, Smith Barney continued to give high ratings to its client companies up until just months before they collapsed. The misleading stock reports cost investors millions. Although former Smith Barney telecom analyst Jack Grubman maintains his innocence, the firm agreed to pay the $400 million fine levied by the SEC, even though it was twice the amount Merrill Lynch and some other firms paid. If you have lost money due to Salomon Smith Barney investment fraud, please contact the securities fraud lawyers at Farah, Farah, & Abbott today - located in Jacksonville, Florida.

Credit Suisse First Boston Fraud in Florida The fraud allegations against Credit Suisse First Boston (CSFB) encompass several areas. First, as with so many other brokerage firms, the question of conflict of interest between the firm's investment banking business and its research and stock reports has arisen in the CSFB case. Former CEO Frank Quattrone is accused of favoring analysts who gave favorable stock reports to CSFB's investment banking clients. There has also been a question as to whether Credit Suisse was involved in "laddering" stocks. This means selling a buyer a set number of stocks before they go public on the condition that they buy an equal amount once they do go public. This benefits the buyer because they get a good deal on the pre-market stocks and the guaranteed sale temporarily inflates the stock price for the securities firm. Finally, Quattrone and CSFB are accused of "spinning" stocks, or giving certain privileged clients (usually executives of top investment banking clients) access to new stock before they hit the market. The client can sell them for a large return in the first busy day or two of trading. In exchange, CSFB gets their investment banking business and heavy transaction fees. If you have lost money due to Credit Suisse First Boston investment fraud, please contact the securities fraud attorneys at Farah, Farah, & Abbott today - located in Jacksonville, Florida.

Charles Schwab Fraud in Florida A discount brokerage, Charles Schwab tried to be an alternative to the big-name securities firms that were coming under fire. Schwab took several key steps in an effort to avoid conflicts of interest and other types of securities fraud. Nevertheless, Charles Schwab is facing several lawsuits. One deals with a delayed billing that occurred nearly half a year after investors' transactions were handled. Another is a class action lawsuit accusing Charles Schwab of overcharging clients for trades and services. If you have lost money due to Charles Schwab investment fraud, please contact the securities fraud lawyers at Farah, Farah, & Abbott today - located in Jacksonville, Florida.

Goldman Sachs Allegations against Goldman Sachs have focused on the company's practice of 'laddering' public offerings. The firm is one of twelve companies that have been examined since the alarming Merrill Lynch investigation by Eliot Spitzer.

The Company
Goldman Sachs is a major investment banking firm that operates across the world. It is headquartered in New York, where it has been operating since 1869. Goldman Sachs has performed investment banking for such clients as Enron, Ford Motors, Tyco and WorldCom. It was divulged through recent investigations that the executives of these companies, Kenneth Lay, William Ford, Dennis Kozlowski, and John Sidgmore, respectively, received IPO shares from Goldman Sachs. The firm is suspected of having offered these and other investment banking clients large portions of IPO shares in return for their continued business.

IPOs frequently generate large sums of money in short periods of time. When a company begins to trade publicly it issues its first shares through an underwriting firm. The firm (or firms, if more than one is underwriting the opening) will, in exchange for banking fees, evaluate what price the shares should initially be offered at, and how many shares should be sold. It will then sell them to investors. The opening company is guaranteed a specific sum of money from the firm (or firms) that underwrite its opening. Underwriting firms assume the risk in an IPO. When a firm holds IPO shares it may offer them to its clients before public trading commences.

In a process called 'laddering,' IPO shares are offered to particular clients by underwriting firms under the understanding that they will purchase more shares at a specified price after the opening company begins publicly trading. These 'particular clients' are frequently executives of companies that the underwriting firm does banking business with (and wishes to do further business with). The practice of laddering tricks the market. Investors observe that an IPO stock's prices are rising and join in the trading, assuming the shares are moving at an honest rate. Laddering artificially balloons the value of a stock, making it appear to be a hot pick before investors. After the IPO stock's value rises, the client-investors often sell their shares and make huge profits. Those who are not client-investors of the underwriting firms, and thus not aware that the value of the stock has been inflated, fail to sell, and end up holding highly overpriced shares.

Pending Allegations- In May of 2002 eToys filed a lawsuit against Goldman Sachs for allegedly projecting the value of its IPO stock too low. The company began publicly trading in May of 1999. By March of 2001 it was bankrupt. EToys claims that it would have had a better chance of survival if it had received more money on its IPO. The shares were valued by Goldman Sachs at twenty dollars each. By the end of the first day of trading they were selling at over seventy-five dollars.

In November of 2002 it was reported that the SEC had issued a "Wells Notice" to Goldman Sachs. A "Wells Notice" is a formal warning sent to a company from the SEC that informs it that there is reason for the SEC to pursue securities fraud charges against it. Goldman Sachs was informed that its IPO practices, which had been the subject of investigation, could lead to a civil-securities fraud charge.

Company Recourse
In June of 2002 Hank Paulson, the chairman and CEO of Goldman Sachs, issued an address in support of the SEC's actions against Wall Street. Paulson advised that further measures be taken to restore the confidence of investors. Later, in November, the firm publicly responded to the "Wells Notice," maintaining that it had not committed securities fraud and that the SEC's allegations were unfounded. The SEC has continued its investigations.

Steve Shultz,

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"... these are life and breath to me. A literal emancipation is occurring in my marriage, family, relationships, and ministry as a direct result of your faithful work. Thank you...." -DK

From: http://www.elijahlist.com/
By: Steve Shultz
Email: steve@elijahlist.com
Date: Oct 23, 2001
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-- by Steve Shultz, THE ELIJAH LIST steve@elijahlist.com


You may be aware that several prophetic voices have seen restoration and reconciliation with the Native American as "a" key ---if not "the" key --- to the healing of the land in America.

And when the Land is healed, terrorism will likely diminish, or even be a thing of the past. But perhaps we have not as much hope for protection as we COULD have--unless we repent of our own bio-terrorist of 1763 (and surrounding years). The Country had not yet had it's JULY 4th Declaration of Independence. We were not yet the United States of America. And already, our forefathers and predecessors, egged on by Satan himself, sought to--or at least succeeded in-- defiling the blessing on the land by our intentional murdering of many of the Host Peoples, Native Americans---with nothing less than intentional bio-terrorism . Our goal---their annihilation--using the smallpox germ--sent "in the mail" on blankets to Indian villages.




One area of sin that most Americans have never heard about...sounds "coincidently" like today's newspaper. BIOTERRORISM. With the Lord, a day is as a thousand years and a thousand years as a day. This means that the bioterrorism you are about to read about--in the LORD'S timetable was about 8 HOURS AGO! So you see, it was recent and God has not forgotten. The PLANTING of SMALLPOX-laden (rather than envelope-filled) blankets in Native Villages, INTENTIONALLY TO KILL THEM OFF -- needs to be repented of--by both British and American descendents to those who did the evil deeds.




God is looking for a MAN or a WOMAN to stand in the gap. You can be that man. Who knows but that your specific prayers in your prayer closet will cause the Lord to look with compassion on this issue and forgive and cleanse America . We, the White man (and woman) through our ancestors, were parties to murder--- in planting a terminal disease, smallpox --into Indian Villages. (See article below).

When Daniel wanted to heal the Land of Israel, he looked at the sins of his forefathers and he cried out to God. . .




Dan 9:4-10 4 I prayed to the LORD my God and confessed: "O Lord, the great and awesome God, who keeps his covenant of love with all who love him and obey his commands, 5 we have sinned and done wrong. We have been wicked and have rebelled; we have turned away from your commands and laws. 6 We have not listened to your servants the prophets, who spoke in your name to our kings, our princes and our fathers, and to all the people of the land. 7 "Lord, you are righteous, but this day we are covered with shame-- the men of Judah and people of Jerusalem and all Israel, both near and far, in all the countries where you have scattered us because of our unfaithfulness to you. 8 O LORD, we and our kings, our princes and our fathers are covered with shame because we have sinned against you. 9 The Lord our God is merciful and forgiving, even though we have rebelled against him; 10 we have not obeyed the LORD our God or kept the laws he gave us through his servants the prophets. (NIV)


Please read the following article and then pray a prayer with me at the end! --- Steve Shultz




From: NATIVEWEB From: http://www.nativeweb.org/pages/legal/amherst/lord_jeff.html




Lord Jeffrey Amherst's letters (and Trent's letter) discussing germ warfare against American Indians


Trent's entry for May 24, 1763, includes the following statement:

... we gave them two Blankets and an Handkerchief out of the Small Pox Hospital. I hope it will have the desired effect. Trent's Journal confirms that smallpox had broken out in Fort Pitt prior to the correspondence between Bouquet and Amherst, thus making their plans feasible. It also indicates that intentional infection of the Indians with smallpox had been already approved by at least Captain Ecuyer at the fort, who some commentators have suggested was in direct correspondence with General Amherst on this tactic


"... every Tree is become an Indian...." Colonel Henry Bouquet to General Amherst, dated 29 June 1763. [63k]




Lord Jeffrey Amherst was commanding general of British forces in North America during the final battles of the so-called French & Indian war (1754-1763). He won victories against the French to acquire Canada for England and helped make England the world's chief colonizer at the conclusion of the Seven Years War among the colonial powers (1756-1763).

The town of Amherst, Massachusetts, was named for Lord Jeff even before he became a Lord. Amherst College was later named after the town. It is said the local inhabitants who formed the town preferred another name, Norwottuck, after the Indians whose land it had been; the colonial governor substituted his choice for theirs. Frank Prentice Rand, in his book, The Village of Amherst: A Landmark of Light [Amherst, MA: Amherst Historical Society, 1958], says that at the time of the naming, Amherst was "the most glamorous military hero in the New World. .. ...the name was so obvious in 1759 as to be almost inevitable." [p. 15]


Amherst College china plates depicting mounted Englishman with sword chasing Indians on foot were in use until the 1970's


Smallpox blankets

Despite his fame, Jeffrey Amherst's name became tarnished by stories of smallpox-infected blankets used as germ warfare against American Indians. These stories are reported, for example, in Carl Waldman's Atlas of the North American Indian [NY: Facts on File, 1985]. Waldman writes, in reference to a siege of Fort Pitt (Pittsburgh) by Chief Pontiac's forces during the summer of 1763:

... Captain Simeon Ecuyer had bought time by sending smallpox-infected blankets and handkerchiefs to the Indians surrounding the fort -- an early example of biological warfare -- which started an epidemic among them. Amherst himself had encouraged this tactic in a letter to Ecuyer. [p. 108]

Some people have doubted these stories; other people, believing the stories, nevertheless assert that the infected blankets were not intentionally distributed to the Indians, or that Lord Jeff himself is not to blame for the germ warfare tactic.




The documents provided here are made available to set the record straight. These are images of microfilmed original letters written between General Amherst and his officers and others in his command during the summer of 1763, when the British were fighting what became known as Pontiac's Rebellion.

Pontiac, an Ottawa chief who had sided with the French, led an uprising against the British after the French surrender in Canada. Indians were angered by Amherst's refusal to continue the French practice of providing supplies in exchange for Indian friendship and assistance, and by a generally imperious British attitude toward Indians and Indian land. As Waldman puts it:

... Lord Jeffrey Amherst, the British commander-in-chief for America, believed ... that the best way to control Indians was through a system of strict regulations and punishment when necessary, not "bribery," as he called the granting of provisions. [p. 106]




The documents provided here are among Amherst's letters and other papers microfilmed as part of the British Manuscript Project, 1941-1945, undertaken by the United States Library of Congress during World War II. The project was designed to preserve British historical documents from possible war damage. There are almost three hundred reels of microfilm on Amherst alone.

The microfilm is difficult to read, and paper copies even harder. Nonetheless, the images obtained by scanning the copies are sufficiently clear for online viewing. The images are of key excerpts from the letters. An index is provided to show by document number the location of these images in the microfilm set. Ascii text of the excerpts is also provided.




These are the pivotal letters:

Colonel Henry Bouquet to General Amherst, dated 13 July 1763, [262k] suggests in a postscript the distribution of blankets to "inoculate the Indians";

Amherst to Bouquet, dated 16 July 1763, [128k] approves this plan in a postscript and suggests as well as "to try Every other method that can serve to Extirpate this Execrable Race." (This postscript spans two pages.) These letters also discuss the use of dogs to hunt the Indians, the so-called "Spaniard's Method," which Amherst approves in principle, but says he cannot implement because there are not enough dogs. In a letter dated 26 July 1763, Bouquet acknowledges Amherst's approval [125k] and writes, "all your Directions will be observed."




Historian Francis Parkman, in his book The Conspiracy of Pontiac and the Indian War after the Conquest of Canada [Boston: Little, Brown, 1886] refers to a postscript in an earlier letter from Amherst to Bouquet wondering whether smallpox could not be spread among the Indians:

"Could it not be contrived to send the Small Pox among those disaffected tribes of Indians? We must on this occasion use every stratagem in our power to reduce them." [Vol. II, p. 39 (6th edition)]

I have not found this letter, but there is a letter from Bouquet to Amherst, dated 23 June 1763, [189k] three weeks before the discussion of blankets to the Indians, stating that Captain Ecuyer at Fort Pitt (to which Bouquet would be heading with reinforcements) has reported smallpox in the Fort. This indicates at least that the writers knew the plan could be carried out.

It is curious that the specific plans to spread smallpox were relegated to postscripts. I leave it to the reader to ponder the significance of this.




Several other letters from the summer of 1763 show the smallpox idea was not an anomaly. The letters are filled with comments that indicate a genocidal intent, with phrases such as:

"...that Vermin ... have forfeited all claim to the rights of humanity" (Bouquet to Amherst, 25 June) [149k]

"I would rather choose the liberty to kill any Savage...." (Bouquet to Amherst, 25 June) [121k]

"...Measures to be taken as would Bring about the Total Extirpation of those Indian Nations" (Amherst to Sir William Johnson, Superintendent of the Northern Indian Department, 9 July) [229k]

"...their Total Extirpation is scarce sufficient Attonement...." (Amherst to George Croghan, Deputy Agent for Indian Affairs, 7 August) [145k]

"...put a most Effectual Stop to their very Being" (Amherst to Johnson, 27 August [292k]; emphasis in original). Amherst's correspondence during this time includes many letters on routine matters, such as officers who are sick or want to be relieved of duty; accounts of provisions on hand, costs for supplies, number of people garrisoned; negotiations with provincial governors (the army is upset with the Pennsylvania assembly, for example, for refusing to draft men for service); and so on. None of these other letters show a deranged mind or an obsession with cruelty. Amherst's venom was strictly reserved for Indians.




The sharpest contrast with letters about Indians is provided by letters regarding the other enemy, the French. Amherst has been at war with the French as much as with the Indians; but he showed no obsessive desire to extirpate them from the earth. They were apparently his "worthy" enemy. It was the Indians who drove him mad. It was they against whom he was looking for "an occasion, to extirpate them root and branch." [J. C. Long, Lord Jeffrey Amherst: A Soldier of the King (NY: Macmillan, 1933), p. 187]

Long describes Amherst's "kindliness to the French" and refers to Amherst's "intensity of feeling on these issues":

Amherst's kindliness to the French civilians was more than a military gesture. He had a warm sympathy for the countryside, an interest in people and the way they lived. "The Inhabitants live comfortably," he observed in his journal, "most have stone houses.... ....

This humane attitude was reflected in his rules for the governing of Canada. As its de facto military Governor-General he established a temporary code ... a program of tolerance and regard for colonial sensibilities.... ***

Perhaps most statesmanlike of all was Amherst's recognition of the French law, ... a recognition which permitted change of national loyalty without social upheaval. [p. 137]

In contrast to these kindly feelings, Long says that Pontiac's attacks on British forts at Detroit and Presqu'Isle "aroused Amherst to a frenzy, a frenzy almost hysterical in its impotence." Long then quotes from Amherst's letter to Sir William Johnson:

... it would be happy for the Provinces there was not an Indian settlement within a thousand Miles of them, and when they are properly punished, I care not how soon they move their Habitations, for the Inhabitants of the Woods are the fittest Companions for them, they being more nearly allied to the Brute than to the Human Creation. [p.186]

Colonel Bouquet's poetic line, "... every Tree is become an Indian," [63k] quoted above, was his description of a contagion of fear among soldiers and settlers, for whom the Indians were a part of the wildness they perceived around themselves. These warriors would not stand in ordered ranks; they fell back into the forests only to emerge again in renewed attack; their leaders defied British logic and proved effective against a string of British forts; these were the enemy that nearly succeeded in driving the British out, and became the target for British genocide.




All in all, the letters provided here remove all doubt about the validity of the stories about Lord Jeff and germ warfare. The General's own letters sustain the stories.

As to whether the plans actually were carried out, Parkman has this to say:

... in the following spring, Gershom Hicks, who had been among the Indians, reported at Fort Pitt that the small-pox had been raging for some time among them....

An additional source of information on the matter is the Journal of William Trent, commander of the local militia of the townspeople of Pittsburgh during Pontiac's siege of the fort. This Journal has been described as "... the most detailed contemporary account of the anxious days and nights in the beleaguered stronghold." [Pen Pictures of Early Western Pennsylvania, John W. Harpster, ed. (University of Pittsburgh Press, 1938).]


Trent's entry for May 24, 1763, includes the following statement:

... we gave them two Blankets and an Handkerchief out of the Small Pox Hospital. I hope it will have the desired effect. Trent's Journal confirms that smallpox had broken out in Fort Pitt prior to the correspondence between Bouquet and Amherst, thus making their plans feasible. It also indicates that intentional infection of the Indians with smallpox had been already approved by at least Captain Ecuyer at the fort, who some commentators have suggested was in direct correspondence with General Amherst on this tactic (though I have not yet found such letters). -




Some readers question whether smallpox can be spread by such methods as infected blankets. There is a smallpox virus Variola minor that is transmitted by inhalation, communicable for 3-7 days. There is a smallpox virus Variola major that is transmitted by inhalation and by contamination; it is communicable by the former method for 9-14 days and by the latter method for several years in a dried state.

See Ann F. Ramenofsky, Vectors of Death: The Archaeology of European Contact (Albuquerque, NM: University of New Mexico Press, 1987):

Among Class I agents, Variola major holds a unique position. Although the virus is most frequently transmitted through droplet infection, it can survive for a number of years outside human hosts in a dried state (Downie 1967; Upham 1986). As a consequence, Variola major can be transmitted through contaminated articles such as clothing or blankets (Dixon 1962). In the nineteenth century, the U.S. Army sent contaminated blankets to Native Americans, especially Plains groups, to control the Indian problem (Stearn and Stearn 1945). [p. 148] See also Robert L. O'Connell, Of Arms and Men: A History of War, Weapons, and Aggression (NY and Oxford: Oxford University Press, 1989):

Marking a milestone of sorts, certain colonists during the French and Indian Wars resorted to trading smallpox-contaminated blankets to local tribes with immediate and devastating results. While infected carcasses had long been catapulted into besieged cities, this seems to be the first time a known weakness in the immunity structure of an adversary population was deliberately exploited with a weapons response. [p. 171]


Author of this WWW site is Peter d'Errico. Most recent additions of material: 17 March 2001 Comments to: derrico@legal.umass.edu




The pray something like this, according to the prayer of Daniel 9 :

According to: Dan 9

I prayed to the LORD my God and confessed the sins of America and the people who CAME to America: "O Lord, the great and awesome God, who keeps his covenant of love with all who love him and obey his commands, we have sinned and done wrong. We have been wicked and have rebelled; we have turned away from your commands and laws. We have not listened to your servants the prophets, who spoke in your name --- nor to those who we found in the land that you brought us into, the host peoples, our Native American brothers and sisters. We did not listen to them, nor did we honor or respect or love them. Instead we became murderers by hating them. We neither listened, neither did we care to restore those we called "Savages" to their creator--but rather determined to eliminated them and thus "cleanse the land ethnically".

So, instead of love those you loved, we hated them with a vengeful hate, and so we lied, and we cheated and we burned their villages down. We used bio-terrorism and we inflicted smallpox on them with one goal and one goal only ---to wipe them from the face of the earth. And then we--through our forefathers, rejoiced that we had done a service to God --by clearing the land for those we called "Christians" to inhabit it.

"Lord, you are righteous, but this day we are covered with shame-- the men of Britain, the entire U.K, and the United States of America, both near and far, and in all the countries where you have scattered many of us--- O LORD, we and our presidents and leaders, our politicians and our fathers are covered with shame because we have sinned against you and our brothers by murdering out Native family members, our own flesh and blood.

The Lord our God is merciful and forgiving, even though we have rebelled against him; we have not obeyed the LORD our God or kept the laws he gave us through his servants the prophets.

"Now, O Lord our God, who brought your people from the four corners of the earth to this hallowed land called AMERICA that we have now desecrated---WE HAVE SINNED-- WE HAVE DONE WRONG! Oh, Lord, in keeping with all your righteous acts, restore your favor to this land and restore your protection on this which is called ONE NATION UNDER GOD.

May we be, or become the very thing that we say we are-- Many Nations. Yet One Voice. One nation under God. And NOT divisible. Our sins and the iniquities of our fathers have made America and your people an object of scorn to all those around us--and to many throughout the world. "Now, our God, hear the prayers and petitions of your servants. For your sake, O Lord, look with favor on your desolate land--that yet enjoys a measure of your blessing, though we do not deserve it. For the sake of those who have gone before and prayed to truly bless this land-- Give ear, O God, and hear; open your eyes and see the desolation of a great nation that bears your Name--though we have not represented your name. We do not make requests of you because we are righteous, but specifically--and ONLY because of your great mercy. For we indeed are anything but righteous. Greed has been our God. Gold our Goal. The destruction of the downtrodden our desire and our legacy.

O Lord, listen! O Lord, forgive America for our sins and for the sins of our forefathers against the Host People of this Land, the First Nations people.! O Lord, hear and act! Show us how to individually and corporately restore the Native Peoples to the dignity they deserve--and even to the land that they deserve, that you will show us! Show us, and show our nation and show our leaders how to make this great sin against the Host People right-- and thus cleanse and restore the land--while vindicating our hurting brothers and sisters, the First Nations People.

For your sake, O my God, do not delay, because your nation, America the Beautiful-- to be so--to be beautiful, Your people on this land must bear your name AND represent your name. So.... restore us we pray, because of YOUR mercy and YOUR grace and the BLOOD of your only begotten son Jesus---in Jesus' Holy Name we pray this together, in our individual hearts and prayer closets. Amen! and AMEN!!

Bless you all!
Steve Shultz

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