My receipts had reached $1,000 per day mark. My friend was on his way back to Europe. And everything was going along smoothly. When somebody threw a monkey-wrench in the works.

The trouble started down the North End. I had given a couple of coupons to an Italian prospect. And told him to experiment with them at the post-office. They were United States coupons. He took them to the sub-station at the corner of Hanover and North Bennett Streets. Presented them for exchange. The man in charge refused to accept them. The Italian came back to me convinced that I was trying to gyp him.

The situation called for action. Not diplomacy. My reputation was at stake. I could not afford to ignore the incident. So I reached for the phone and called the postmaster in my client's presence. Since I talked principally for the latter's benefit, I tried to be impressive. More so than considerate.

The postmaster's argument was that a reply coupon issued in the United States could be redeemed only in a foreign country. My argument was that, no matter where issued, a coupon could be redeemed at the post-office of any country belonging to the Universal Postal Union. Including the one of issue. Nothing short of a bulletin from the Third Assistant Postmaster General could have convinced the man. Our conversation did not settle the question. But the Italian was satisfied that I must have been right. Or I wouldn't have talked the way I did.

The incident was not closed by the hanging up of the receiver. I dismissed it from my mind. But that postmaster didn't. He reported the matter to his superiors. And I received an unexpected call.

I was in my private office talking to a prospect when the call came. My uncle Dondero and my wife were in the anteroom, waiting for me to get through. The tramping of "flat feet" warned me of the approach of my callers. I don't know whether they entered through the anteroom with thumbs in the armholes of their vests. So as to exhibit their badges. Very likely that they did. I could not see them from where I was sitting. But I heard them.

"We want to see Mr. Ponzi," one of them said in an arrogant voice.

My uncle's face, blanched by fear, appeared at the door of my private office. The poor man was scared stiff. He said, in Italian, that there were three inspectors to see me. He would not have been more awed if he had announced the Father, the Son and the Holy Ghost.

"Tell them to wait," I told him. "I am busy with this gentleman now. I'll see them when I get through."

My uncle looked at me in amazement. He could not grasp the effrontery of anyone telling a cop to wait. He was so darned law abiding himself that he looked upon a cop as he would upon Frederick the Great in full regalia.

The fact is that I didn't exactly mean to be disdainful. But I knew the cops. It's a second nature with them to be gruffy. They like to assert authority. Their favorite method is to try intimidation first. If they can get away with it. Failing in that, they retrench and try subtlety.

I kept the officers waiting for several minutes. I did that to collect my thoughts, more than anything else. I knew the next interview was going to tax my wits. And I wanted to be prepared for it.

I escorted my caller to the door when he left. As soon as he was gone, I turned to the three officers and asked them who they were. And what they wanted. The questions were not really necessary. One of them was the inspector whom I had met before. He spoke for the others.

"I am inspector from Police Headquarters," he said. "We have come to question you."

"Oh, I see," I remarked. "You are paying me an official visit. In that case, show me your warrant."

"We have no warrant," interposed the postal inspector. "We did not come to make an arrest. Just to ask you some questions."

"In that case," I observed, "you must be aware of the fact that you are on my premises entirely at my own tolerance. I don't have to answer any of your questions, unless I want to."

"But you would not refuse to answer our questions?" he asked.

"Wouldn't I? I certainly would," I informed him. "You cannot assume an attitude of proprietorship around my office and get away with it. You may take me in custody. With a proper warrant. And I will not resist that. But, without it, I have a right to resent your presence here."

The postal inspector must have realized that I could not be intimidated. He changed tactics. He acknowledged my rights in the matter. But suggested that a brief conference, in a friendly spirit, might prove more advantageous all around. I agreed with him. And invited them into my private office.

The conversation opened like a fencing bout. With a series of feints and parries. Apparently, the inspector wanted to hear my version of the argument with the postmaster of the Hanover Street sub-station. Actually, they didn't give a rap about that. What they were after, was evidence of fraud in my reported activities in coupons. But I was on guard. And declined to be led into any admission of fact.

"I believe we are wasting a lot of precious time," I urged. "This postmaster's report of his alleged conversation with me is not evidence that the conversation itself occurred. If it did occur and you have reason to believe it constituted a violation of the law on my part, bring charges and the matter will be thrashed out in court. But it is extremely naïve of you to come to me for any statement which you hope to use against me."

"We are not contemplating action against you, Mr. Ponzi," answered the postal inspector. "But we are interested in some of the things you told that postmaster."

"Just a moment, inspector," I interrupted. "You mean that you are interested in some of the statements "attributed" to me by that postmaster. There is no evidence I ever said anything to him."

"Oh, all right," he conceded, shrugging his shoulders, "have it your own way. I suppose you will not admit knowing anything about international reply coupons either?"

"You are wrong again, inspector," I said. "I have no objection in telling you whatever little I know about coupons. If it can be of any help to you."

Right there we launched into an extensive discussion of that particular subject. We analyzed it from every angle. And finally agreed upon the theory that a profitable speculation in coupons was possible. The inspector, however, was of the opinion that a large number of coupons could not be either bought or redeemed.

"I differ with you, Mr. Inspector," I said. " You know that there is no limit to the number of stamps a person can buy from the government. Well, then," I went on after he had agreed with me on that point, "do you know of any good reason why a person should not be able to buy any number of coupons?"

He did not know of any reason. Nor did he know why any number of them couldn't be redeemed, if one could.

"They may be counterfeits," he suggested.

"We are not discussing that kind of coupons, inspector," I remarked. "We are talking about coupons which are genuine beyond all doubts."

"Well," he insisted, "the government may decline to redeem them."

"No," I stated. "The government cannot do that. Not so long as it is party to the international postal treaty."

"I don't know a thing about international law," he confessed.

"Neither do I," I said, "but I use common sense and reach my own conclusions."

"You seem to know a whole lot more than I gave you credit for at first," he blurted out.

"Now, don't make me blush, Mr. Inspector," I pleaded. "Really, I don't know enough to get out of the rain."

The inspector did not consider himself check-mated yet. He argued that if a speculation in coupons resulted in a profit for someone, it must result in a loss for someone else.

"If it does, I have been unable to discover who is the loser," I told him. "In fact, I am inclined to believe that everybody makes a profit."

"That's absurd!" the inspector contended.

"And so is a giraffe," I retorted in my own fresh way.

"Do you remember the story about the old rube who had never seen one? When one was shown him, he said; 'There ain't no such annual!' Now inspector, if you don't mind, I am going to show you a giraffe."

This is the way I put it to him: "Let us assume," I said, "that France needs fifteen million dollars of francs. I borrow in this country one million dollars at 50% interest, as I am doing now on a small scale. The million dollars, at the current rate of exchange, is equal to fifteen millions of francs. I send a draft for it to the French government with the understanding that France will issue to me 50,000,000 of international reply coupons. France can obtain the coupons from the Universal Postal Union on open account. As soon as I receive the coupons, I exchange them here for stamps. Then I sell the stamps at a 10% discount. Let us assume that I pay also a 10% commission to the agents who have been instrumental in obtaining for me one million dollars from the public. The transaction, in so far as I'm concerned, would show the following balance:

Cash on from sale of 50,000,000 U.S. 5c stamps

(less 10% discount)....................... $2,250,000.00

Principle due to note holders.....$1,000,000.00

50% interest......................................$500,000.00

10% commission to agents...........$100,000.00

Gross profit for myself...................$650,000.00


"On the other hand, the ledger of the Universal Postal Union would show the United States a creditor to the extent of $2,500,000 and the French government a debtor to the extent of $3,000,000. Why three million dollars? Because the coupons cost the French government 15,000,000 francs payable in gold, at their gold parity of 5 francs to the dollar. While they didn't cost me but one million dollars, at the current exchange rate of 15 francs to the dollar. The difference between what France must pay and what the United States can collect, represents the charges of the Universal Postal Union for the service.

"I will now assume that France is called upon to settle that indebtedness. Since it has received only one million dollars and owe three millions, it faces a loss of $2,000,000. The loss cannot be avoided so long as the franc remains at the ratio of 15 to the dollar. But, if that ratio should decrease, the loss would decrease in proportion. It would entirely disappear if, and when, the franc sold at its gold parity of 5 to the dollar. However, as a general rule, depreciated currencies require a number of years to recover.

"The settlement with the Universal Postal Union cannot be deferred by France. The payment must be effected. And the best way to finance it is through a bond issue. An issue of $3,000,000 of twenty-year 3% bonds, payable in dollars. The carrying charges for the bonds will amount to $1,800,000 in twenty years.

"But it must be remembered that France already has on hand 15,000,000 francs derived from the sale of the coupons to me. The 15,000,000 frances, if loaned by the French government to private or public self-liquidating enterprises, for a period of twenty-years, and at an annual interest of 5% would in twenty years, amount to 30,000,000 francs and would then be equal to 6,000,000 dollars. They would be sufficient to retire the bond issue, with interest charges of $1,800,000, and, in addition, leave a profit of $1,200,000 for the French government.

"As you can see, the public invests a million and makes a profit of $500,000 in six weeks. My agents give their time and services and earn $100,000. The Universal Postal Union collects another $500,000 for their services. The United States post-office sells $2,500,000 worth of stamps and, presumably, makes a profit. The firms or individuals who buy the stamps from me at a discount, split among themselves a profit of $250,000. France makes a profit of $1,200,000. The holders of French bonds earn another $1,800,000. The enterprises launched with 15,000,000 frances loaned by the French government, presumably, earn a profit. Not only that, but they provide work for a number of people, who also earn a living. Last, but not the least, I make roughly, $65,000 on the deal. If you can show me where the entire transaction results in a loss to anyone, I'll buy each one of you a Stetson hat."

The inspector was flabbergasted. He wasn't prepared to dispute my figures. But he was a hard loser.

"Am I to assume, Mr. Ponzi," he asked, "that you are the unofficial representative in this country of some foreign government?"

"No, Mr. Inspector," I replied with amusement. "Ponzi does not represent anybody but himself. And, furthermore, please bear in mind that we have been discussing only theories and not facts."

The interview at an end, my callers departed much the worse for wear and tear. Personally, I had much to be gratified for. I had won the third round with hardly a scratch to my debit. I felt liberal and exultant. I turned to my little wife. She was pitifully upset. For her, the interview had been a trying ordeal.

"Never mind, dear," I said to her. "Cheer up and give us a little smile. There is no longer any reason for you to be anxious. Let's forget the business and relax. You and I are going to have a nice little supper somewhere, by ourselves, and act like a couple of kids."