MR. PONZI TAKES IT INTO HIS HEAD TO CLEAN UP A FEW BANKS WITHOUT DUTCH CLEANSER
Years ago, and even now, the surest way to get my Nannie was to slight what I call my dignity. I am not stuck up. Never was I welcome familiarity. Of the right kind. But when somebody tries to put on airs and make me feel like thirty cents. I am off on a rampage.
A rampage does not necessarily mean trouble, I am not troublesome. Not much. Outside of poking a stick in a hornet's nest now and then, I am really not vicious. But I have a tongue modeled after the rear-end of a bee. It can sting with a vengeance. When I let loose one of my hypodermics, whoever gets it, knows he has been jabbed, "Touche," as they say in France.
Speaking of dignity, that reminds me of the young lady who was catapulted from her saddle over the horse's head. She fell in a heap of disarranged clothes. Jumping to her feet, she was gratified to find herself whole and unobserved.
"Thank goodness!" My dignity hasn't suffered!" she said voicing her thoughts with relief.
"I guess it hasn't, ma'am. Not much," remarked a farmhand who had witnessed the performance from behind a pile of hay, "but you've sure ripped the seat of your pants!"
My dignity was considerable ruffled one day when a small out-of-town bank insisted that I should furnish references before my account was accepted. That made me hot under the collar. So hot that I actually fumed.
"Gentlemen:" I wrote them. "Your request for references is noted and hereby denied. Evidently, our agent has either misunderstood or disregarded our instructions when he offered you our deposit. We deal only with substantial institutions. The size of our accounts is such that we make it a practice to never entrust our money to banks the total resources of which, including building, may be packed into an ordinary club-bag and caused to vanish overnight." —Yours truly, etc."
Eventually, I cooled off and got to think about references. I had a dozen or more of the garden variety. But not one with real background. You know what I mean.
True enough, I had a substantial balance in the Tremont Trust Company. Around half a million. But it was like a ten-carat ring in a pawnshop window. It lacked surroundings.
As a reference, the Tremont carried some weight with the common run of people. With the right people. But it enjoyed very little prestige among the blue-bloods. Its president, Simon Swig, was Jewish and very much despised by the scions of Mayflower forefathers.
It was a case of State Street versus Salem Street. The two could not mix. Just like oil and water. And the worst part of it was that Simon Swig was persistently stepping on the Puritans' toes. And making them like it. Because of his strong political connections.
But, in his own way, Simon Swig, was somewhat of a snob himself. He was of the opinion that a Jew was better than a wop any day. I could not agree with him. In my own mind, nothing could be better than a wop. Except two wops. However, we never clashed on racial issues. But, from his attitude, it was evident that he did not care for me beyond the exact figure of my balance. Personally, I didn't give a hoot whether he loved me or not. What I expected from him was service. Not kisses. So, I got none of the latter. And not much of the former, either.
Whenever I gave the name of the Tremont Trust Company as reference to some supercilious investor, I could read a message on his countenance: "Birds of a feather, etc." And I would wince. But I grew tired of wincing. So, I looked around for more flattering connections.
Now, there was, for instance, one of the old aristocratic banks in town. A most exclusive institution. A sort of step-sister to another similar institution, both old timers. Very substantial. But also considerably rapacious. It had a finger in every activity in the State. Controlled both business and politics.
I began casting longing glances in its direction. But I have always been very impulsive and sudden in my courting. Faint heart never won fair lady … Haven't I married a blue-ribbon? So, one day, I slapped twenty-five one-thousand-dollar bills in my pocket. And went to call on the Old Lady to win her favors. She had a reputation of being very distant with strangers. But I discovered that she was a real "coquette" with prospective depositors.
A spotless, speckless and manicured vice-president, with a camel-hair-pencil moustache, noticed me hanging around uncertainly.
"Are you being waited upon?" he drawled with an Oxford accent.
"Not yet," I told him.
"May I assist you, sir?" he volunteered.
"I guess so. I only wanted to open an account," I explained.
"I will be delighted to wait upon you, Mr.… er… I don't believe I got your name," he said.
"My name is Charles Ponzi," I said handing him my card.
He looked at it for a while. Trying to connect the name either with ancient history or modern success. He failed. He set me down as an insignificant.
"What kind of account do you wish to open, Mr. Ponzi?" he inquired. "Savings or checking?"
"Checking," I replied.
"A business account?" he asked.
"No. Just a small personal account." I answered.
The word "small" made him pause and think. I kept on puffing away at my cigarette. He was nervously tapping his desk with a pencil.
"I must be frank with you, Mr. Ponzi." he stated, "but it is the policy of our bank to accept only desirable accounts. We endeavor to give the best of service. We maintain an expensive organization. For that reason, we require checking accounts to show a substantial balance. Are you prepared to meet our requirements?"
"I sincerely hope so," I replied. " By the way, what do you consider a substantial balance?"
"Two or three hundred dollars and up," he said.
"Oh that's reasonable enough …" I admitted. "You almost had my scared. You may put me down for an initial deposit of twenty-five …"
"Hundreds?" he asked.
"No. Thousands." I replied.
"Twenty-five thousands" he repeated. "Why … I thought you said you wanted to open a small personal account?"
"So I did," I acknowledged. "This is about the smallest of my bank accounts."
"Have you any objections to furnish us with the names of your other banks?" he inquired.
I had no objections. I named a few. He took my deposit and left. Apparently, to get me a pass-book. Actually, to check up on me. The moment he came back, I knew he had been doing some telephoning. He was all smiles and attentions. He must have called up the Tremont Trust, among others, and learned of the half a million dollar balance there.
"Here is your pass-book, Mr. Ponzi," he said. "Would you like to have a check book especially printed with your name on it? We will be glad to send you one. If there is anything we can do for you, please command us."
Had there been a whisk-broom handy, that man would've brushed my clothes! And that goes to show that money is yet the best credential of all.
The matter of references satisfactorily disposed of, I began to look around for something to occupy my mind. Just as if taking in money from morning till evening wasn't an occupation. Well, it wasn't. It had gotten to be sort of monotonous to watch my clerks fill the waste baskets with green-backs after the cash drawers were full. The money itself meant nothing to me. What I wanted was to test its power. To derive from it the thrill incidental to the accomplishment of things called impossible.
I decided to buy banks. It was the logical thing for me to do. I had accounts in a number of them. All over New England and abroad. And those accounts were surely profitable to others. Earning dividends for others. So, why not make them profitable for myself by owning some bank?
My first choice fell upon the Hanover Trust Company. Not because it was better than the rest. But because I had a score to settle with its president. I figured it was a good chance to catch two birds with one stone.
The control of the Hanover could not by bought with much diplomacy. And the control of it could only be had at a price which I had no intention to pay. The stock was not worth more than its market value of $125 a share. And, perhaps, not even that. So, I had to go at it stealthlike.
First of all, I opened there for sixty thousand dollars. I permitted it to grow from day to day up to $500,000 or more. Without drawing against it. I wanted to create the impression that was what is known as a "dormant" account. So that bank officials might feel reassured that there would be no sudden and substantial withdrawals. And might, therefore, invest my balance. Instead of keeping it liquid.
In the meanwhile, through Charles Pizzi, an employee of the bank, and others, I began to buy up small lots of the Hanover Trust's stock. One hundred and twenty-five shares. By paying a few dollars above the market price. But, instead of having that stock transferred to me on the books of the corporation, I merely had it endorsed over to me by the stockholders of records, whose voting proxies I also held.
My next step was to arrange a meeting with the Italian stockholders of that bank. Stabile, Locatelli, Badaracco, Di Pietro and one or two more. I told them that I wanted to buy control of that bank. And to get rid of practically all the officers. Whom they had been backing until then. The Italian stockholders were not in a position to buck me just then. It paid them better to have me on their side than against them. We reached an agreement by which all of our shares were pledged to be voted in block on any issue. As I may decide from time to time. That gave me voting control over 600 or more additional shares.
It was not until then that I called upon the officers with a trump card up my sleeve. I strolled down to the bank one day, shortly before 3 o'clock. And stepped into their private office. They invited me to sit down and asked me whether there was anything they could do for me.
"Yes. I think there is," I said. "I have dropped in to buy a block of stock in the Hanover and a directorship."
"I believe we can easily accommodate you," one said. "Would you care to buy as many as one hundred shares?"
"A hundred would hardly interest me at all," I replied. "I would like to buy 2,500 or so."
"But the whole capitalization of the bank calls only for 2,000," interrupted the other one.
"The original capitalization, you mean." I corrected. "Are you not offering for sale 2,000 shares of new stock?"
"We have not offered it for sale yet," said one, a bit surprised, perhaps that I knew of the projected increase of capital, "but we are ready to do so."
"Well, then why not issue it all to me?" I asked.
"We cannot do that because we would be selling you control of the bank," replied the other.
"That's just what I want," I admitted.
"We are sorry," said one, "but we cannot consider anything like that."
"We are willing to make you a director," added the other.
"Of what good is that to me?" I asked. "A minority stockholder in a corporation is like nothing at all."
"Do you expect us to surrender that control we have worked so hard to get?" asked the one.
"Do you expect me to place within your unchecked control what my investors entrust to my care?" I retorted. "My millions mean as much to me as your control means to you. My financial standing entitles me to be trusted by you with the control of the bank."
My arguments were not getting me anywhere. They were adamant in their determination to keep the control. But I was equally determined to take it away from them. I looked at my watch. It was about ten minutes to closing time. It was my chance to play trumps. And I led one.
"It seems to me," I said, "that our differences cannot be bridged. Let's drop the subject. Keep your bank and I'll look for another one."
I pulled out my checkbook and started to make out a check.
"Can you tell me what my balance is today?" I asked and they understood right away what I was after.
"You are not going to withdraw your balance, Mr. Ponzi?" The officers asked considerably perturbed.
"Certainly, I am going to withdraw it," I replied. "Right now."
"But it is hardly fair for you to do that," the other remarked. "You have a large balance and should give us notice."
"Why? My money is on a checking account. Is there any reason why I shouldn't write checks to the extent of my balance?" I inquired.
"No. You have a perfect right to do that," they agreed. "But a bank does not usually keep such a large amount of liquid cash on hand. We would have to dispose of some securities, probably, at a loss to honor your check."
"That does not concern me," I insisted.
"Why can't we get together and compromise?" it was suggested by one.
"What have you got to offer?" I asked.
"We will sell you 1,000 shares of the new stock," he replied.
"Nothing doing," I told him. "That would be like throwing good money after bad money. We cannot get together on that basis."
"But we don't own that many shares ourselves," pleaded one of them.
"Perhaps, not," I conceded, "but you control more than you own."
"We are willing to sell you as many shares as we control," said one. "An equal number. No more. No less. The independent stockholders will vote with whatever side they see fit."
"How many shares do you think you control?" I demanded to know.
"Not over 1,500 all told," he stated. "We will sell you 1,500 shares."
Both were banking on their control of the Italian stockholders, who, in the past, had always voted with them. They didn't know that those stockholders were now pledged to me. While I knew that 1,500 shares would have given me a substantial majority.
"Do you also agree to make me a director?" I asked them.
"Yes," it was affirmed. "We will call a special meeting so that you may be elected director and a permanent member of the executive committee."
"I have also a couple of friends I want on the board of directors," I stated.
"All right, we will concede that too."
"Fine!" I said. "I'll take the 1,500 shares."
Half an hour later, I left the Hanover Trust with certificates for 1,500 shares of the stock. The bank was mine! With everything that stood in its name. Including the 12 or 14 story building—the Journal Building, so called,—at the corner of Water and Washington Streets. In which the Hanover Trust was located.
With a little over $2,000,000 I had gained control over resources amounting then to about $5,000,000. Not only that, but I had the officers by the small of their neck. Those same officers a few months before had refused me a $2,000 loan because my account "was more of a bother than a benefit." Oh Boy! Didn't it feel good to know that I could now tell them a thing or two!