Monday, June 16, 2008

1920. Society (5)

1920. The "Ponzi Scheme" bilks thousands of Bostonians out of their savings. Italian-American "financial wizard" Charles Ponzi, 38, offers a 50% return on investment in 45 days, 100% in 90 days, and by late July his Securities and Exchange Co. is taking in hundreds of thousands of dollars per day. Ponzi says he has found that a 1-cent reply coupon issued in Spain as a convenience by international postal agreement is exchangeable at any U.S. post office for a 6-cent stamp and that he has agents buying up millions of coupons throughout Europe and is making a 5-cent profit on each. The idea is ridiculous, says Boston financier Clarence Barron, who publishes a financial daily that will later become Barron's Weekly.

1920. Ponzi continues to reimburse investors at 50 to 100% interest; his supporters claim he is being attacked by 'unscrupulous bankers,' but it soon develops that he has been convicted of swindling in Montreal and the 'wizard' has been paying only part of what he has been taking in. At least $8million of the $15 million he has accepted will never be accounted for, his noteholders will receive 12 cents on the dollar, six banks will fail and Ponzi will serve 3.5 years in Plymouth County Jail, escaping a further 7-to-9-year term by jumping bail of $14,000 in 1925.

1920. Barely 20% of America's virgin forest lands remain uncut.

1920. Prohibition will force California vineyard owners to diversify their production, to market as table grapes much of the fruit that has gone into wines and brandies, and to improve their methods of producing raisins, which will soon be marketed under the Sunmaid label.

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