MR. PONZI IS FIFTEEN MILLION BUCKS AHEAD OF GAME BUT DOES NOT QUIT
My mind was made up to buy the Shipping Board fleet. Failing that, I was determined to buy up banks, right and left. In either event, I needed all the money I could lay my hands on. Receipts of $1,000,000 a day were not enough. They were like a drop in the bucket. I needed more. And the only way to get it, was to go after it by opening more offices.
At that time, I had about 180 agents with sub-agents in New England. But only 35 offices. With the result that some of the offices had from half a dozen to a dozen sub-agents. In Greater Boston, all of my 50 or more agents and sub-agents dealt with my office in School Street. They were in and out all day long. And they would send their customers.
Things got so bad that I had to do something to relieve the congestion. I couldn't cope with it. Not even with the ten or twelve cops I had hired to regulate the traffic in the street and along the corridors. The jam beggars description! It's unbelievable! Only those who have seen it can believe it.
Combining the two objects, i.e., of raising money and clearing my office, I directed each of the 50 Boston agents and sub-agents to open a branch office in some district of Greater Boston. That served to divert part of the crowd rendering the situation easier to handle and at the same time bringing in more money.
Then I turned to the banks. I had already built up some large balances in several of them. For instance, $1,500,000 in the Lawrence Trust Company of Lawrence; $150,000 in the Lexington Trust Company of Lexington; $900,000 in the Merchants National Bank of Manchester, N. H.; $500,000 in the Citizens National Bank of Woonsocket, R. I.; and any number under $100,000 but over $50,000, in small institutions. With the ones named, I was about to spring the same surprise I had sprung on the officials of the Hanover Trust Company. That is, pay a call. Offer to buy a controlling interest. Immediately withdraw my balance, in case of refusal.
All banks in general were beginning to feel the effects of heavy withdrawals. The contest I had promoted to boost the Hanover's deposits, had rendered the crisis even more acute. But it wasn't acute enough to stop me. And so, I proceeded to give them another wallop.
In the course of a meeting of the executive committee of the Hanover Trust, it struck me that the bank depositors in general were not receiving a square deal. There were at the mercy of the board of directors who might and might not be honest men. Some of them are not. They are burglars. The depositors, it seemed to me, were not receiving adequate returns for the risks they were incurring.
As these thoughts were flashing through my mind, I was paying very little attention to the meeting, but a good deal to a new plan of banking reform. So, before the meeting came to a close, I arose and addressed the members.
"Gentlemen," I said, "I desire to submit a suggestion to your vote. It occurs to me that this committee has supreme control over the millions which our depositors have intrusted to this bank. We may or may not exercise control judiciously. If we do, we earn some extra stock dividends. If we don't, we might lose not over twice the amount of our holdings, or $800,000 while our depositors may lose several millions. The greater risk is theirs. Theirs is the greater loss. Yes, when all goes well, we only pay them about 4% a year. The situation seems unfair. I would be in favor of extending to depositors greater privileges and larger returns. For instance, I suggest that the depositors be permitted to elect a certain number of directors. They have a right to know what is being done at these meetings. In addition, I suggest that stockholders be paid a definite dividend of 7%, the same as the depositors are being paid 4%. All net earnings in excess of that should be equally prorated between stockholders and depositors. In other words, I advocate profit sharing banking. I fully realize that my doctrines may appear almost revolutionary, but I am sure they are equitable and fair I desire your vote on the following questions. First, shall the Hanover Trust Company take the initiative in advocating such a reform, and second, shall Ponzi be permitted to inform the newspapers about the suggestions submitted at this meeting?"
The committee voted both questions in the affirmative and I departed to consult my counsel who had supervision over my banking activities. We decided to invite the financial editors of every Boston paper to a meeting and we arranged for a room at Young's Hotel. They came, and I put the proposition up to them. But I could read in their countenances that they would never dare to throw that monkey wrench into the Boston banking machinery. They knew only too well which side of their bread was buttered. In fact, the next day they reported that, after consulting with their managing editors, they couldn't publicly endorse my plan.
"All right, boys," I told them, "I can still obtain publicity without your papers. I shall organize a publicity bureau and circularize every bank depositor in New England."
"It will cost you some money," one of them remarked.
"Money? What's money to me? Money means nothing to me," I replied. "I would give a million any day for a good cause."
The following day, at the suggestion of my counsel and the bank officers, I hired a publicity manager, and the moment I hired him I gave my counsel $7,000 to rent suitable offices for a publicity bureau, and to cover incidental expenses.
Under my publicity manager's direction, I was going to circularize every bank depositor in New England, explaining my profit sharing plan. Anybody can realize what that would have meant. Any bank that would have gone on record against such a plan would have been boycotted. It would have to contend with runs, and since no bank was in a position to cope with a run for over 48 hours, it would have to go under, or sell out to me.
While my publicity manager and counsel were, presumably, carrying out my instructions, my attention was engaged by the activities of an outfit called the Old Colony Foreign Exchange Company. It was made up of a few fellows who had failed to land a job with me. That Company professed them to be doing exactly what I was doing, and everybody believed them, because everybody believed that I was doing the right thing. I couldn't come out and say that the other fellow was lying, just like I was. They had me by the small of the neck, and the best that I could do was squirm. They went so far as to have notes printed exactly like mine, except for the company's name, to which the average investor paid no attention. In fact, most of the people who invested with the Old Colony thought that they were investing with me. From the standpoint of inroads in my cash receipts, there were not doing much damage. But what was bothering me was the danger that the authorities might take some action against them. None of them had either the courage or the ability of their own in a match of wits. They would have been exposed in no time, and if they had been exposed it would have been almost impossible for me to have escaped the same fate.
I sent word for them to cut it out and I threatened them but it did not do any good. They defied me, not because they were brave, but because they were fools. They even went and hired an office on the same floor as mine and then they started to divert my own investors from my office to their own company by claiming that we were one and the same company.
I got tired of that racket and decided to give them a lesson, even if I had to swing for it. I called in the Pinkertons and put them on the trail of every man and woman connected with the Old Colony Foreign Exchange Company.
"Find out all you can about them," were my instructions to Murray, the Pinkerton's Boston Manager.
"Follow them everywhere; to China, if necessary. Never lose sight of any of them, day or night, and send me a daily report and a copy to District Attorney Pelletier. Spare no expense. I want you to land those people in jail!"
I couldn't let them get away with what they were doing. They constituted a greater menace than all of the government agencies put together. Perhaps my activities were not entirely within the law. The were as objectionable. But my intent was honest. I was in a critical position and I had fallen into it without any intention to do wrong. Now that I was in it I was trying my hardest to pull myself out of it, without hurting my investors. The means I was resorting to, in order to swim out of the hole, might not have been sound and might not have been entirely legitimate, but I felt that the end justified the means, and the end, my purpose, was not dishonest. For that reason I could not tolerate that outfit. I could not let them stand in the way of my investors and my own welfare.
Leaving the Pinkertons to take care of the Old Colony gang, I conferred with my publicity manager and my counsel. According to what they said, the organization of the publicity bureau was progressing satisfactorily. Like the patient who registers a temperature of 105Â° in the shade. He is always "progressing satisfactorily". If you believe the nurse. But in the wrong direction. And nobody knows differently until after he's dead.
I took it for granted that my instructions were being carried out. Or soon would be. And I accepted McMasters' suggestion that some newspaper publicity would help things along. I actually commended him for it. And when he told me that the Boston Post had agreed to feature the Securities Exchange Company and myself, I was tickled to death.
On July 24, 1920, the Boston Post published the promised article. The 24th was a Saturday. A day when all business usually stops at noon. A day when almost everybody ducks the city for the country or the beaches. But it wasn't on that particular Saturday. It seemed, instead, as if everybody had made a date to meet at 27 School Street! Everybody was there. The 2,000,000 inhabitants of Greater Boston were all there! If there were not exactly 2,000,000 they looked that many.
The day after, Sunday, the Boston Post found it could spare even more room for Ponzi. So, it gave me a couple of pages. The Herald, The Globe, The Advertiser, could not let the Post get away with a scoop like that. They too jumped into the fray. With front page stuff. And they covered me and the Securities Exchange Company from head to foot.
Like a blanket. I never realized what a big fellow I was, until after I had ready all of the papers.
That Sunday was no day of rest for me. Telegram and telephone calls began to pour into my house at daybreak. From everybody. Big men and little men. Every one of them anxious to get on the right side of me. Because I was a multi-millionaire. I received more congratulations than a President-elect! More persons called at my residence in a day than are usually seen at the Brockton Fair in three days! More automobiles went by my house than Ford and General Motors can put out in six months! I had to give out more interviews and pose for more pictures than a movie star of the first magnitude. All summed up, that Sunday was the busiest day in all my life I ever put in doing nothing!
But both that Saturday and that Sunday were mild compared with the Monday that followed them! The newspapers had not let up. They were still pouring kerosene on the blaze. And when I got down to School Street, the conditions I found beggar description.
All vehicle traffic had been suspended. My and Mayor Peters' car were the only two permitted to navigate School Street. "Navigate" is right. The whole street was a sea of straw hats and squirming humanity! In front of the Niles Building, six mounted policemen were on duty, regulating the crowd. Fourteen or more uniformed officers were doing duty inside of the building. A huge line of investors, four abreast, stretched from the City Hall Annex, through City Hill Avenue and School Street, to the entrance of the Niles Building, up stairways, along the corridors â€¦ all the way to my office!
The air was tense with ill suppressed excitement. Hope and greed could be read in everybody's countenance. Guessed from the wads of money nervously clutched and waved by thousands of outstretched fists! Madness, money madness, the worst kind of madness, was reflected in everybody's eyes. In a silent exhibition of utter disdain to all principles of calm and careful judgment. In a silent exhibition of reckless mob psychology, entirely too susceptible to the fatal spell of misguided or perverted leadership!
The scene deployed before me, as I alighted from my car, is something that no man could forget. To the crowd there assembled, I was the realization of their dreams. The idol. The hero. The master and arbiter of their lives. Of their hopes. Of their fortunes. The discoverer of wealth and happiness. The "wizard" who could turn a pauper into a millionaire overnight!
That scene spelled success for me. It couldn't spell anything else. The crowd in School Street was fairly representative of the millions of men and women who were ready to do exactly the same thing. Ready to invest with me. To give me their money. All they had. As soon as I made it possible for them to get to me. Nothing could stand in my way of the most complete achievement of my ambitions. I had won!
On that Monday morning, my cash receipts reached their peak. In my School Street office alone, I took in one million dollars in three hours. More than all of the Boston banks put together had taken in during the same three hours. I don't know how much my other offices took in. But the rush of investors was general in every community where I had an office. Their legion was in excess of 30,000. The combined face value of the Securities Exchange Company's notes they held, was $15,000,000! New England had come through in grand style. The Yankees and the Puritans were no pikers! They had bought my six-cent international reply coupon for $15,000,000! Just as I thought they would! Even if they never got anything for it, it was cheap at that price. Without malice aforethought, I had given them the best show that was ever staged in their territory since the landing of the Pilgrims! I had given them the most brazen exhibition of sheer nerve that had ever been witnessed in the world of finance! I had given them the longest ride, the most mileage, for their money they had ever got before or since! It was easily worth fifteen million bucks to watch me put the thing over!