by Paul R. Spitzzeri
Photos show a mild-mannered looking fellow with large glasses befitting a shy clerk more than an ambitious promoter with massive ideas and a talent for raising millions of dollars from investors. E.G. Lewis, however, proved to be an incredibly complex figure, who managed to avoid too much legal jeopardy for about a quarter century before justice got its due with him in the late 1920s.
Among his schemes and easily his most grandiose and perhaps the most audacious to date in greater Los Angeles history was his Palos Verdes Estates project, launched in 1921 to great fanfare and promotional glitz. Within a few years, however, Lewis’ endeavor crashed mightily and he wound up convicted in federal court on fraud charges that sent him to prison for several years.
Born in Connecticut in 1869, Edward Gardiner Lewis was the son of a minister. During his youth, his family lived in Connecticut and in Philadelphia. While living in Baltimore in the early 1890s, he married Mabel Wellington, a native of England. His first known speculative venture was a purported remedy for tobacco addiction and it was said it had an auspicious debut before spiraling into failure. In 1900, he and Mabel, who did not have children, headed west to St. Louis.
There, he became a publisher of a pair of popular magazines for women, the Woman’s Magazine and Woman’s Farm Journal through his Lewis Publishing Company and established what has been termed a utopian community, a suburb called University City, because it was adjacent to George Washington University. He also formed the People’s United States Bank that was to operate purely on a mail-order basis. 60,000 persons, most women who subscribed to his magazines, took out stock totaling some $2.5 million.
Times, 18 December 1921.
This led to his first brush with federal authorities, who leveled fraud charges against him, but he escaped legal punishment as he was acquitted on one charge of mail fraud and others were dismissed, though the bank went into receivership. He remained in University City, serving as its mayor and then launching another ladies’ journal, the Woman’s National Daily, and he was said to have received $12 million in investment in the magazine and other promotions, including a trust and savings bank and oil prospecting in Montana. Lewis also talked of building a subway from downtown St. Louis to University City, a “people’s university;” and an art institute.
Lewis’ fortunes, however, quickly eroded and his various companies went into receivership as he’d amassed debts of $9 million. There were assets of some $2.5 million. While creditors to the bank and trust and savings institution got much of their money back, almost no one did for his publishing company and other projects.
Yet, in 1912 when he and his wife decamped for California, where Lewis found his next speculative opportunity in the central coast. With just $500 cash down, he was able to finagle the purchase of a 23,000-acre Rancho Atascadero, which was owned by Patrick Murphy in the 19th century. Murphy purchased a couple thousand cattle from William Workman in the late 1860s, likely because Workman was transitioning more to agriculture and business and away from ranching.
On his new holdings, Lewis laid out the town of Atascadero as a planned Utopian colony similar to his University City project. The concept was to create a community of 30,000 persons with experts in engineering, city planning, and agriculture brought in to assist in the planning.
He constructed a water system, built a beautiful civic center (now a state landmark), published a newspaper, and launched the California Illustrated Review magazine, among others elements. Lewis also built a road from the town to the coast where his company erected an inn at Morro Bay—that road is now the scenic State Highway 41.
In 1921, Lewis took on his most ambitious scheme: Palos Verdes Estates. Another pre-American rancho, Palos Verdes and embracing the hilly peninsula of that name, was owned by the Dominguez family and then by José Loreto and José Dolores Sepulveda who pastured cattle and other stock there. Later, Palos Verdes was owned by Jotham Bixby, a very successful sheep rancher, who also owned the Rancho Los Cerritos, acquired from Jonathan Temple, in what became Long Beach.
In 1913, the 16,000-acre ranch was acquired by Frank Vanderlip, one of America’s best-known bankers. A former assistant secretary of the U.S. Treasury, Vanderlip was president of the National City Bank of New York and was one of the key figures in creating the Federal Reserve.
Lewis then convinced Vanderlip of his extraordinarily ambitious plans for the Palos Verdes Projects concept in 1921. Immediately, aggressive advertising and large-scale planning was launched. Lewis, for example, proposed that the University of California, which was looking for a “Southern Branch” site in the Los Angeles area, establish that campus at Palos Verdes. He also talked of building a monorail, on the order of one in Germany, to run from downtown Los Angeles to his project, with a spur line to the Port of Los Angeles. It was claimed that some 150,000 people could live on the peninsular tract.
One advertisement, from the Los Angeles Times in February 1922, stated that the project cost in unimproved land was $5 million, while the development of streets, water, electricity and other basic infrastructure would be double that amount. To erect civic structures, schools, parks, business buildings, a golf club and other elements, the projected cost was $20 million.
Lewis then claimed that the sales value of the tract was $110 million against the $35 million in development costs, which would yield tremendous returns for investors buying convertible and non-convertible notes, while he anticipated his own profit would total $5 million. He managed to convince the well-known Title Insurance and Trust Company of Los Angeles to be the underwriter for this enormous venture.
He also assembled a team of several dozen people to plan and develop Palos Verdes Estates, including such entities as a general planning board (headed by Lewis and featuring the famed Olmsted Brothers landscaping firm, renowned architect Myron Hunt and Army General Hunter Liggett); an engineering staff for infrastructure; an art jury (including Hunt and fellow architects David Allison and Robert Farquhar); an industrial research and chemistry team (hunting for oil among other tasks); and a plantings team headed by the prominent University of California Professor Edward J. Wickson; and more.
Promoting heavily in newspapers for subscribers for the notes that would finance the project, Lewis and Title Insurance and Trust indicated that $15 million was raised to pay for the land and built the basic infrastructure by the target date of 1 June 1922. Lewis’ knack for vivid advertising techniques was shown, for example, through his targeting of women for the project with another February 1922 ad in the Times titled “Woman’s Voice in Palos Verdes.” Tapping into his past focus on women constituencies, claimed:
Woman has one adobe—her HOME. There she lives from eighteen to twenty-four hours a day. There she cares for her children. Whatever her outside activities, her clubs, her recreations, her social responsibilities, her business interests—her home is her fortress. From it and in it she manages her destiny, and this is equally true of the modern business woman, alert and capable . . . you may test Palos Verdes Estates, now being underwritten for development, by this standard of life.
Lewis didn’t stop at this cleverly calculated gendered sales pitch, he turned his flights of fancy to racial purity, as well. In an ad from June 1922, he offered this bizarre vision for the Palos Verdes project:
Starting in the Himalayan Mountains, breaking through the passes, surging over India, then across Europe and finally, ever Westward across the Atlantic and the North American continent through countless ages, the Aryan (Caucasian) race is now assembling its flower on the shores of the Pacific, facing the ever-eastward flow of the Mongolian races.
Evidently, Palos Verdes Estates was to be bulwark and beachhead to stem the tide of Asian hordes! He went on to state:
By a peculiar process of natural selection [those coming to the area] embody the success, the brains, the initiative, and the best blood of the American people . . . [and the financial success of the underwriting drive] gave assurance that there will be built an Acropolis of the Caucasian race on Palos Verdes’ wonderful hills, overlooking all Greater Los Angeles as the Acropolis of Athens overlooked the Athenian city.
Despite these staggering claims, it didn’t take long for Lewis’ house of cards to crumble. Though it was announced that work had begun on infrastructure projects and that Lewis was turning over the project to others in mid-January 1923, as the latest real estate boom peaked in greater Los Angeles, Title Insurance and Trust abruptly dropped out of the project shortly afterward. The company told the 9,000 purchasers of notes that they had the option of staying with the project or seeking the return of the funds.
Lewis responded by forming the Commonwealth Trust Company to keep the project going and claimed total support from Vanderlip, investors, and others. In early March, it was reported that $1 million was paid out so that work could continue. But, quickly, the scheme dissolved.
In early 1924, Lewis sued Title Insurance and Trust for $17.5 million in a breach-of-contract claim, but the matter was soon dropped. The following year, the beleaguered developer and visionary was the target of involuntary bankruptcy proceedings filed by a handful of claimants against him. He managed to secure a ruling of a discharge of bankruptcy by turning over assets to creditors, but then faced new problems.
The federal government went after Lewis in two separate trials alleging mail fraud, not for Palos Verdes, but for other schemes involving Atascadero projects, including his California Illustrated magazine and an oil project. He was convicted in both trials, taking place in 1927 and 1928 and wound up with a six-year sentence to a federal prison in Washington state.
While in prison, to which he reported in spring 1928, he was reported to have found life behind bars to be a positive experience, as newspaper articles from 1930 revealed. He apparently did so well that he was paroled in 1931 halfway through his sentence.
Yet, when Lewis launched another magazine, through mail order, claiming that friends, business associates and investors prevailed on him to do so, he ran afoul of his parole conditions. He went back to federal prison in 1932 and served out the remainder of his sentence, finally being released three years later.
Lewis pledged to renounce all business interests and money-making schemes. His wife having died in 1935, the year he left prison, the disgraced developer returned to Atascadero, where he quietly lived for fifteen more years, dying in 1950. He was cremated and the ashes interred in the city cemetery. Ironically, someone once referred to Lewis as having “an Oriental imagination,” an interesting choice of words for an avowed racist!
The highlighted artifacts in this post include a letter from Lewis to a potential Palos Verdes Estates investor, dated 1 April 1922 (an April Fool’s joke of a sort?), and some photos showing the peninsula before development. Though Lewis’ scheme failed, the project was resurrected and the Palos Verdes area became a high-end residential enclave that remains a very desirable place to live nearly a century after the Palos Verdes Estates project was launched.