Monday, 21 May 2018

I Guess We Have All Heard Of Ponzi Schemes,

where a company promises huge returns on investment, 

using new deposits to pay for earlier clients interest payments, all being well until depositors want their money back, then the whole scheme comes crashing down, but these schemes were around long before Ponzi, take the case of the Ladies' Deposit Company that was set up by Sarah Howe in an unassuming brick building in Boston's South End around 1879, the former fortuneteller refused to solicit clients for her brand-new bank, there was no advertising, and no public announcement, instead, members could only be referred by other members in good standing, they had to be single women, not rich, who didn't own their own homes, deposits could only be made in amounts of more than $200 but less than $1000, and returns were set at 8 percent interest per month, an incredible amount then as well as today, Howe had 1200 depositors within the first year, and bought herself a fine house, but publicity led some her her clients to attempt to withdraw their deposits, and the house of cards came crashing down, but Sarah Howe was just getting started, for the full story have a look here starting on page 64.

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