Banks Withhold Bonds, Examine Chain Letters; College Warns Students

A rash of possibly illegal chain letters involving Series E Savings Bonds and offering possible return of more than $50,000 has caused the Harvard and Cambridge Trust Companies to suspend sales of the bonds.

The action will offer a delay in which to investigate the legality of a movement that has recently caused a large increase in Bond sales, according to Robert B. Snow, vice-president of the Harvard Trust. He said that the bank legally possessed the right to withdraw bonds in the event of any threat to the public good.

"Eventually some student would be hurt," Snow declared. He added that College officials had asked the bank to take the present stand.

It seemed, however, as of last night, that some bank officials were either unaware of the withdrawal of the bonds or of the reason behind it. "We just ran out of bonds," one vice-president of the Cambridge Trust declared. "It will take a day or two to get more ready, since they have to come from the Federal Reserve Bank in New York," he added.

Watson Unsure of Legality

In a statement for the Administration last night, Dean Watson said of the chain letter scheme: "It is not clear to us whether or not it is illegal." He reminded students that, "if these purchases turn out to be a part of a scheme which violates postal laws, or is otherwise illegal, it might lead to serious consequences for the participants, including disciplinary action by the Administrative Board."

Letters Appear in Yard, Houses

The letters have appeared all over the Yard and in some of the Houses. An employee of the Building and Grounds was reported selling the Bonds.

The game works as follows: The participant pays $37.50 for a letter bearing a list of eleven names and a $25 Savings Bond made out to the name at the top of the list. Then he forwards the Bond to its beneficiary.

Participant Adds Own Name

The participant then makes two copies of the list, leaving out the top name and adding his own to the bottom. He purchases two more $25 Bonds for $18.50 apiece and makes them out to the name now at the top.

After selling both lists and both Bonds, the player has recovered his original investment of $75. Then he waits. After two buyers have duplicated his performance, his name will appear second from the bottom on four lists. If his name reaches the top of the list, over 1,000 people may owe him Bonds, thus making possible an alleged return of over $50,000.

Some enthusiasts attributed the genesis of the letters to Princeton, others to Yale and Brown. "It went through Brown in two days," one declared. According to the Daily Princetonian, however, when the game reached Princeton, the names at the top of the list belonged to Yale students.

Branch Scheme Circulates

Several branch schemes have also appeared. One less expensive plan offers the would-be speculator similar letters with the substitution of five-dollar checks for the Savings Bonds.