Ran Six Cents To 15 Millions In Few Months

1920

Charles Ponzi, "Coupon Wizard," Defies U. S. to Learn Secret of His Alleged Legal Scheme.

1920

BOSTON, Mass. — "It is my secret. Let the United States find it out if it can."

This is the challenge of Charles Ponzi, the "coupon wizard," who leaped into international fame over night when the world discovered that he had run 6 cents into $15,000,000 in less than a year by an astoundingly simple — yet astoundingly mysterious — scheme. Ponzi insists that his business is perfectly legal and so far has paid off every investor who demanded his money back. He declares that he has neither fear of a financial crash or of punishment.

Ponzi's remarkable business is, so far as is known, based on the use of the international reply coupon, authorized under the international postal agreement as the medium for taking advantage of the difference in rates of exchange.

"I simply buy international coupons," explained Ponzi to the district attorney. "They are exchangeable into stamps and I take care to buy them where the rates of exchange are such that $1 of American currency is really worth $4 or more in the native currency. I therefore get $3 clear on the transaction and can well afford to pay back the original $1 and 50 cents additional as interest to the investor. My margin of profit is enormous, but I have the system and the offices abroad. The investor's margin of profit is tremendous in proportion and he has no responsibility and is entirely certain of his money.

Hit on Scheme Year Ago.

"I hit upon the scheme just a year ago in August, when I thought of issuing an export publication on a small scale. I wrote to a friend in Spain regarding it, and in reply received an international coupon, which I was to exchange for stamps to send a copy of the publication to my friend.

"The coupon cost about 1 cent in United States money in Spain and I could get 6 cents in stamps for it here.

"My secret is how I cash the coupons," says Ponzi. "I do not tell it. Let the United States Government find it out if it can. I do not think that it can."

Will Make $40,000,000 More?

The "wizard" asserted that he intended to open an office in New York city immediately and probably in other big cities. He coupled this declaration with the assertion that "there is thirty or forty million dollars more, to be made out of his scheme, but it must be made quickly." And since difficulties have arisen here he says he will have to go outside New England for the money he needs to use. He said he "feared the postal conference in October would formulate an effective check" to his operations.

All day long clerks in the modest office of Ponzi poured cash into the hands of customers who had lost faith in his international postal exchange scheme.

It was after 4 o'clock when one of Ponzi's attaches stuck his head out the door and shouted inquiringly to the crowd:

"Anybody else today?"

Nobody answered and no one else entered the open door. The door was shut and locked.

Paid Back $500,000 in Day.

It is estimated the total returned to clients in one day was in the neighborhood of half a million dollars. The cash was brought from the banks by the "wizard's" employes, under heavy guard, and a huge businesslike revolver rested at the elbow of one of the clerks who "stood guard" over the paying-teller.

Ponzi's secretary, Miss Lucy Meli, says the office has paid back $2,000,000 to investors this week. About forty per cent of this amount, however, was on accounts that had "matured," meaning that the customers were returned their own money and the promised 50 per cent profit agreed within ninety days, but which had been paid steadily in forty-five days.

In spite of close search the nature of Ponzi's business remains a secret to public officials, and he stoutly maintains that he will continue. While he is busy paying off an army of claimants the authorities are searching the files of the telegraph offices to determine if Ponzi has cabled orders of purchase or sale to representatives in Continental Europe.

Scheme May Soon Be Known.

Uncle Sam has set in motion every Federal governmental investigating agency.

Uncle Sam has called to work with him the United States embassies and consulates in Europe and in all the countries that are included in the international postal agreement and deal in international reply coupons.

"I came to this country seventeen years ago and landed in Boston with $2.50. My family is a fine old Italian family and I am university educated.

"Landing in Boston with such a small sum of money, I was downcast I didn't have a friend in the city nor a relative in the country, so I went on where my ticket carried me — to New York. There I did manual labor. Then I moved on to Pittsburgh in search of some friends who I believed were there. I didn't find them, so I went on from place to place, working now as a clerk in a business office, next as a grocery clerk and often at more menial tasks.

"Back to Boston I came again in January, 1917. I went to work for the J. R. Poole Company, merchant brokers. My salary was $16 a week. It might interest you to know that I own the company today, and intend to incorporate it for $10,000,000.

Insists Business Is Legal.

"I insist that my business is entirely legal, even tho it may not be strictly ethical. It will continue as long as there is a marked difference in the rates of exchange among the governments of the world. As the rates 'close up' the interest I will be able to pay will decline. But there cannot be any loss, I insist, for I have provided against loss to investors by the creation of a large reserve in stamps and foreign currency.

"My operations are now going on in nine different countries. None of the foreign stamps are now being redeemed in this country, nor do I intend to do so.

I buy international coupons in immense quantities — by hundreds of thousands, by millions — and exchange them for postage stamps.

"I looked around for some connections here and abroad. I explained my plan to a certain party and he was interested. I had a one-room office where I began doing a little exporting business on a small scale, and there, with a few thousand dollars, I began the present concern, the Securities Exchange Company.

Began Last December.

"We really began operations in December. I began as I am still doing; I gave investors a note guaranteeing payment with 50 per cent interest in ninety days. However, I made all payments in forty-five days. I was safe in giving the notes and I am safe in giving them now, for I have built up a reserve.

"Within a month the few thousands had grown to nearly ten thousand dollars. Persons who received their first profits immediately told their friends, and they told their friends — and then the deluge. Everybody wanted us to take their money.

"When the volume of business increased I took three rooms in the building and recently I acquired a large interest in a trust company — really a controlling interest.

"The peak of my business was reached in May, just two months ago. Now my receipts are about two hundred and fifty thousand dollars a day in the Boston offices, and a total of $250,000 daily thru branches in other cities. What I pay out varies from day to day. I have just given my cashier in Boston $200,000 with which to make tomorrow's payments."

—The Saturday Blade, Chicago, Aug. 7, 1920, p. 1-2.

Note: Unfortunately my copy of this newspaper is missing a couple sections, interesting bits, and I can't figure out entirely what they are. After the paragraph where Ponzi says, "Let the United States Government find it out if it can. I do not think that it can," there is a paragraph, and take into consideration the words of nearly an entire line are missing, "While refraining from giving any clew —— [tran]saction, Ponzi —— said. —— is all very simple. First, the psychology of greed. Then, the psychology of fear. Men and women are children a few years older." Drop down to the paragraph that has the sentence, "Uncle Sam has called to work with him the United States embassies," etc. There is an entire line missing. But the sentence starts off, "It will —————- is a veritable bonanza king or something else." Then that leads into all the Ponzi quotes.

A Dead Face In the Window

1901

Crockford, the proprietor of a well known London gambling house, was made to play a queer role after he was dead. When one of Crockford's horses was poisoned just before the Derby, the misfortune brought on an attack of apoplexy, which proved fatal within 48 hours. Now, many of Crockford's friends had staked large sums on another of the gambler's horses, which was a favorite for the Oaks and which was disqualified by the death of the owner. Only the people in the gambling house knew of Crockford's death, and it was resolved to keep it a secret until after the race.

The servants were bribed and sworn to secrecy, and the conspirators on the day after the night upon which Crockford died had the body placed in a chair at a window, so that people returning from the track could see the gambler sitting there. He was fixed up to look as lifelike as possible and through the window and partially concealed from view by the curtains looked so natural that no one of the great crowd which came cheering by the house when on their return from seeing Crockford's horse win the Oaks suspected the trick.

The nest day it was announced that Crockford was dead, but it was years before the true story leaked out.

An Actress Tells About Health and Good Looks

1900

Something Useful May Be Learned From Her Experience

One of the most admired of American actresses, both for her grace and comeliness, has been divulging some of the secrets by which she has preserved her beauty.

"Vigilance," she says, "is the first requisite. I am ever on the alert and when I discover traces of fatigue or any other beauty-destroying symptoms in my face or figure I set about remedying it at once. I don't attempt to be anything but a professional woman during the theatrical season. I don't receive and I don't go to other people's houses, I simply haven't time, and I don't make it.

"My mode of life is very simple. I sleep nine or ten hours as a rule — never less than eight. I eat regularly and heartily, and avoid everything that would be apt to give me indigestion. Indigestion is a powerful foe to beauty, a greater foe than age, as great even as worry. I walk every day, rain or shine, and I wear a corded corset waist and stout flat-heeled boots. I try not to worry, no matter what happens, and I never tire myself unnecessarily.

"My method is so very simple few women would care to try it. It has no balms or diets, and I don't even go in for fancy baths. A warm bath at night and a cold bath in the morning are good enough for me. On Sundays I don't have to go to the theater, but I don't devote it to lolling or receiving visitors. I have my usual amount of exercise and then devote most of the day to manicure and hairdresser. When one's hair is five feet long and very thick it is not an easy task to have it shampooed.

"How do I keep the same weight all the time? Why, by vigilance and determination. If I gain a pound I immediately stop drinking water at meals and give up sugar for a while. If the bones in my neck begin to show I eat bananas and cream and put an extra spoonful of oil in my salad. It's so simple, but, of course, it precludes much pleasure."

Secret Correspondence Using Invisible Ink

1900

Inks Composed Mainly of Salts and Cobalt Are the Best

Of the many invisible and sympathetic inks that have been used for secret correspondence perhaps the best known are those composed mainly of salts of cobalt. Marks made with these fluids remained invisible until they were subjected to heat, and then were revealed in lines of pale green. The phenomenon was transient and entirely dependent on the temperature. As soon as the sheet of paper grew cool writing would disappear.

Now, to those who had occasion to employ such means of communication it was desirable to know whether any one tampered with their letters or not. So long as the fact of the correspondence was kept secret, of course, there would be no danger. But if that once became known the contents of a private letter might be ascertained by anyone through whose hands the letter passed. Cobalt writing can be made to appear and disappear a dozen times without giving the least evidence of having been read.

But a patent was recently granted in Germany which meets this difficulty, and in some other respects, also, is an improvement on the old system. In the first place the paper used is soaked in the cobalt solution and is prepared in advance. The inventor aims to put his stationery on the market. The writing is done with a solution of common salt and behaves as the cobalt ink did formerly. It can be seen only when warmed and disappears immediately on cooling. Moreover, it appears as often as heat is applied. Its color is a bluish green.

But the German also provides what he calls a "control ink." This may be prepared by adding two grains of resorcin to eight drops of water and six drops of sulphuric acid. When a person has written his letter with salt water he makes a few supplementary remarks, in a spot previously agreed upon, with the control ink. So long as the letter remains cool these test marks are invisible, but when the heat is applied they come out and they come out to stay. They are of a brown hue, different from that of the salt writing, and they will not disappear when the green writing does. If the authorized recipient of a letter finds these marks on a letter before he himself warms it he has reason to suspect that his secret is known. But if they are missing the opposite conclusion is justified.

Kashgaria — You Can't Get There From Here

1907

There are few places in the world so difficult to get at as Kashgaria. Though it lies in Chinese territory, the journey from Peking occupies no less than six months. From India caravans take two months, having to cross meanwhile the three highest mountain ranges in the world by way of several passes measuring 18,000 feet above sea level.

Then from the tail end of the Russian railway system in central Asia one may reach Kashgaria in three weeks by several routes, all involving the transit of difficult and storm swept passes.

Kashgaria is said to cover an area of 350,000 square miles — a statement that has little interest until considered in relation to the proportion which is cultivated by man. It is startling to realize that human endeavor has been capable of rendering fertile little more than a hundredth part and that ninety-nine hundredths of it is irredeemable desert. — Blackwood's Magazine.


Books Bound In Lead

A bookbinder was putting a binding of lead on a book. When asked about it, he explained: "This is a naval code book for use on a battleship All such volumes are bound in lead, so that in the event of the ship's destruction the books will sink with it for they contain secrets of immense value, and every precaution must be taken to keep those secrets dark."

Secret of a Flower - What Might They Know?

1916

How Did the Trumpet Vine Discover the Bared Stump?

If someone advanced the theory that this plant had some unknown power of reasoning you would probably reply that "plants can't reason because they have no mind." You may change your opinion after you hear this story, related by Royal Dixon, who writes entertainingly about how near like human beings in their actions plants are.

The story is about a trumpet vine, the favorite of many an old fashioned garden. About twenty feet from where it grew was an old pine stump with the bark on. One day a fire was built about the foot of the stump, and the bark was burned off.

Immediately the trumpet vine sent forth a long trailer across the garden to the stump. It raised the tendrils, felt the smooth surface of the stump and started to climb. Before long the whole blackened surface was hidden beneath the leaves and blossoms of the new vine.

With the rough bark on the stump it provided no surface for the clinging tendrils of the vine. After the fire destroyed the bark the vine found a place to climb.

How did the plant know that the fire had prepared the stump? We don't know. Ask the flower! — Philadelphia North American.