CHAPTER XX

MR. PONZI, HEADING FOR THE ROCKS, MANAGES TO STEER CLEAR OF THEM FOR A WHILE

The Polish deal fell through, as he could not deliver the goods, and I was left high and dry; with no coupons and no profits in sight, and no way of meeting my notes, except by the time-honored custom of robbing Peter to pay Paul. I was a case of either sink or swim, and I admit that I didn't want to sink. Not just yet, in any event, as I figured that as long as there was life there was hope, and I hoped.

Because of that, I have been called an optimist, a dreamer, a visionary, and everything else, including a crook, probably on account of the fact that I didn't get away with it, like many of the bankers I know of and like some of the big corporations I know of. If I had, they would have called me a genius; a wizard, without the quotation marks.

To hope, meant to fight; to fight for my self-preservation. I was threatened with destruction; not by the government or any group of interests and not by any individual, but by an order of things which I had elected to challenge. Let's not make any bones about it. Nobody was responsible for the fix I was in; nobody but myself, even though I might have walked right into it in good faith.

My exact predicament was that every time I paid one of my notes, through the issuance of another note, I added about 75% to my indebtedness; instead of decreasing it. That means that for each $100 borrowed in December, 1919, when I started out, by compounding 75% every six weeks, I owed in August, 1920, about $2,000. Proportionally less, for every $100 borrowed since, but a huge sum nevertheless.

The predicament was relatively critical. With four or five million dollars in cash and every opportunity to beat it for parts not reached by extradition treaties, it could not be called critical. It was ideal. But for a stubborn cuss like me, determined to stick it out to the end, it was more than critical. It was hopeless.

On the other hand, four centuries before, Columbus had started out from Spain on what he thought was the western route to Asia and the East Indies. On the way over he had discovered America. He didn't know it was there, and nobody else knew it, except the Indians. Yet, he ran smack right into it.

I felt about the same way. I knew what I was up against if I stopped. I knew not what I might run across if I kept on. I had unlimited confidence in luck, as well as my ability to exploit it. And on I went headlong, like a bull in a china shop, to smash all precedents and principles of high finance as it was preached, but not practised, in Wall Street.

I believed myself able to cope with any eventuality except death, and that was the last thing I should have worried about. Instead, it was the first thing because I wanted to protect my creditors as well as my family. The answer was life insurance. I decided to take out a blanket policy large enough to cover all my outstanding liabilities. And increasing it from time to time, so as to keep abreast of them.

Acting on the impulse, as I always do, I phoned immediately to an insurance agent. He was inside my office inside of ten minutes.

"I'll tell you want I want," I said to him. "I want a policy on my life for a year for an amount in excess of my outstanding notes. I also want the privilege of increasing that amount from time to time to renew the policy for another year or more. The policy must be made payable to some bank. Let us say the First National Bank. As trustee for my noteholders."

"What is your purpose?" the agent asked me.

"My purpose," I explained to him, is that in the event of my death, my creditors be paid in full out of the policy, leaving my entire estate intact to my family. Free from any impediments. For that reason I want the policy for an amount always larger than what I owe. As my liabilities will grow, I must increase accordingly the amount of my policy."

The insurance agent left promising quick action. I went down to the first National Bank. And put the proposition to the vice-president, in charge of the Trust Department. He approved it and we both went to attorney Blodgett's office to have a regular agreement drawn up.

This instrument, after a series of "whereases" which recited how Ponzi, the manager of the Securities Exchange Company, was engaged in a business dealing with international reply coupons, in the furtherance of which he was borrowing money from the public at a rate of interest of 50% every 45 days, appointed the First National Bank of Boston beneficiary in trust of a life insurance policy in the amount of several million dollars, out of which in the event of Ponzi's death, the said bank agreed to redeem all of the outstanding obligations of the Securities Exchange Company, as evidenced by notes similar in tenor and description to the sample attached to the agreement.

Having settled the problem of my death, I turned to those dealing with my everyday life. I was being constantly investigated. That was a nuisance. I couldn't put a stop to it. The postal inspectors were persistent. They were slowly creeping up on me. With a volume of data hard to beat. But they were up against it too. Even if my claim that I was dealing in coupons was fraudulent, the way I redeemed my notes precluded prosecution. Prosecution could not begin until I defaulted my payments. However, I had to always by on my guard.

That state authorities were not generally nosey. Or troublesome. But now and then they would show signs of life. And cause a little excitement.

One morning, for instance, I received a telephone call from my agent in Manchester, N. H. He told me that the Insurance Commissioner had forbidden him to continue operation until he had obtained a license. The matter was serious. It threatened my entire structure. A defeat in New Hampshire would have invited attack from all of the New England states where I maintained branches. I jumped into a hired car and drove to Manchester.

On my arrival there, my agent gave me the details of the occurrence. Then we went to my banking headquarters and conferred with one of the officers there.

"I am glad you came over," he said to me. "Because the situation is particularly dangerous and must be handled skillfully."

"Is there any inside story to it, beside what Bruno has already told me?" I asked him. Bruno was my agent.

"Yes," he replied. "In fact, it's mostly inside work.

"Politics?" I suggested.

"Some," he admitted. "But pressures from financial interests, more than anything else."

"Do you know the source?" I asked him.

"Not with a mathematical certainty," he answered." But I can guess There is, perhaps, more jealousy among banks than among other competing organizations. And it is well known that we are one of your depositors and that you carry a large balance with us."

"But, undoubtedly, you must have a pretty good idea how to handle the situation?" I hazarded.

"I have," he admitted. "Probably as much as anyone else."

"What do you advise me to do?" I asked.

"My advice is that you retain a prominent attorney to handle both the legal and any other aspect of the matter," he suggested. "It may be a little expensive, but it will prove worth while in the end."

"Have you any particular attorney in mind whom you may recommend?" I inquired.

"Yes," he said. "Go and see this attorney in this building, mentioning my name. Bruno will come with you. He knows him."

Bruno and I went upstairs to call on the lawyer.

"We must take the position that your business does not come within the scope of the Blue Sky Laws," he advised, after having listened to me.

"Precisely," I agreed.

"The commissioner contends that Bruno should submit an application for a license," he went on analyzing the case. "But an application requires a detailed account of your business secrets, such as, I am sure, you would not care to divulge. So, an application is outside of the question. We will dispute this jurisdiction."

"Can we conclude the matter today?" I asked,

"I hope so," he said. "We will start immediately for Concord and have a conference with the insurance commissioner."

The lawyer was some driver! At the wheel of his Stutz he just ate up the road. Regardless of the curves and anything else I never flirted as close to a crash as I did that day. He would have broken all records down at Daytona Beach!

In Concord, the commissioner gave us an immediate hearing. He and my attorney had some lively controversies. But the conference ended as conferences generally do. The commissioner took the matter under advisement.

The commissioner drove back to Manchester with us. And I had him all to myself on the rear seat during the return trip. We talked. The commissioner was very much interested in the operations of the Securities Exchange Company. He enjoyed the details. And I did not miss the opportunity of painting a pretty picture for his benefit. In Manchester, we parted.

In the evening, Bruno and I called again on my attorney there by appointment.

"Well, what are the latest developments?" I asked him.

"I have had a long talk with the commissioner after you left," my attorney replied, "and he seems to concede that he has no jurisdiction."

"Good for him!" I burst out. "When will he announce his decision?"

"Perhaps, tomorrow," my attorney said. "He was telling me that he was very impressed with the explanation you gave him on the way back from Concord."

"Really?" I said.

"Yes," he confirmed. "In fact, I am personally convinced that he would not hesitate to make a small investment with you."

"That sounds too good to be true," I stated. "Can you arrange that?"

"I doubt it," he replied. "Because he had no money."

"Heck! That does not matter," I told him. "He can have one of our notes without paying a cent for it. The pleasure of having his name on my books with worth more than money to me."

"Do you want him?" my attorney asked.

"Do I want him?" I replied. "Just listen to that! Do I want him? I want him so badly that I simply cannot live without him!"

"I believe I can fix that," my attorney promised. "But it would never do to issue him a note without proper consideration. Let's do the right thing."

 "I am listening," I said.

"You and Bruno arrange it so that the Commissioner may borrow some money from the bank," he suggested. "Let him invest what he borrows and when he collects from you he can pay back the bank's loan."

"That's easy," I agreed. "How much shall I let him have?"

"Shall we say two thousands?" said my attorney.

"O.K. with me," I replied. "We will go right down to the bank and arrange it."

The bank readily agreed to loan the commissioner $2,000 on his personal note, with the understanding that Bruno would have guaranteed the loan.

"Well, how did you come out?" one of the bank employees asked, meaning the hearing.

"I think we won the day," I replied to him.

"Is the commissioner going to give Bruno a license?" he inquired.

"I don't think so," I told him. "He seems to agree that he has no jurisdiction. By the way, is the commissioner's credit any good at your bank?"

"I hardly think so," the bank employee answered. "His financial circumstances are rather limited."

"Well, it does not matter," I said. "I want you to let him have $2,000 on his personal note for sixty days. Bruno will stand responsible for the loans. Is that satisfactory?"

"Entirely," he agreed. "I'll let him have ten thousand if you say so."

"No. Two thousand will be enough," I told him. "When his note comes due, if he does not pay it, just have it charged to Bruno or to my account."

"May I ask the purpose of the loan?" inquired the bank employee.

"Sure," I replied. "He is going to invest the $2,000 with me."

"That is certainly rich!" said the bank employee laughing.

When I left Manchester that evening, I had accomplished more than I had hoped. Two days later, the insurance commissioner announced that my agent did not need a license. Right after that, he went to the bank. The attorney also went to the bank and drew out some money. His own money. Fifteen thousand dollars. And also invested them with Bruno.

Shortly after the Manchester incident, I was "invited" to participate at a conference in the office of the Commissioner of Banks in Massachusetts. I could have declined the "invitation". The commissioner had no way of compelling my attendance. But, on the other hand, I couldn't very well stay away and let him think that I was afraid. After all, his questions were not apt to embarrass me. What he didn't know about coupons and foreign exchange would have filled a good sized library.

I went up to the State House and was ushered right into his office. In those days, I did not have to warm my heels at anybody's door. The Bank Commissioner greeted me cordially. Almost effusively. Like a cannibal greets a missionary. Because he knows he is going to have him "for" dinner, chopped up in little pieces, like Hungarian goulash. I could almost see him smacking his lips in anticipation. The Hank Commissioner, I mean, not the cannibal.

The table was all set. The "guests" were seated. That is, a couple of assistant attorneys general and a foreign exchange expert from one of Boston's banks. Not much of an imposing gathering. The Commissioner himself, I felt, was not conversant with foreign exchange and the two assistant attorneys general didn't know any more about the law than the man whose assistants they were. The foreign exchange expert was like the rest of experts. He had the gift of expressing what he didn't know in a way that nobody understood. That's why he made a hit every time he opened his mouth.

After one glance at that conclave, I knew it was cinch. I was almost ashamed to match wits with them. It was like stealing candy from a baby. But they were the challengers. And I couldn't very well let them get away with their lollipops.

The conference didn't last long. It couldn't. My opponents ran out of arguments even before I was half through with mine. The foreign expert had to admit that my claims as to foreign exchange were correct. The two assistant A. Gs. had to acknowledge that my activities were not in violation of any state law. The Bank Commissioner had to concede that my company did not come within his jurisdiction.

We parted the best of friends. Sorry, in fact, that we couldn't chum around oftener.

One of the assistant attorneys general was actually hooked. He drew me aside and told me that he wanted to come down to my office and invest some money. The Bank Commissioner was non-committal on that subject.

"Why don't you come up and see me sometime?" I think he said, or words to that effect. But, in any case, he left out the "dark and handsome". Afraid, perhaps, that Mae West might call him a copy cat.

CHAPTER XX1

LADIES STOP "RUNS" WITH LUX, BUT MR. PONZI STOPS ONE WITH A MILLION DOLLARS

Things were happening fast and thick in my office. I didn't have a minute to myself from 9 A.M. till 5 P.M. And life was one surprise after another. Some pleasant, some unpleasant, but most of them amusing, because I have a sense of humor and still have. I have lost everything, but that.

One morning, as I was going through my mail, a caller was announced—a member of the Massachusetts Senate. I had him come in.

"I am the spokesman for a group of friends," he opened up. "We have gotten together and subscribed a large sum for the purpose of buying one-half interest in your business."

"But I have no intention of even selling an eighth of an interest," I informed him.

"We anticipated that," he stated, "and for that reason I am authorized to offer you one million dollars. We are ready to deposit the amount, in evidence of our good faith and agree that it be paid over to you after you have disclosed the secrets of your enterprise."

"My dear senator," I told him, "your figures do not stagger me at all. Your little million pales into insignificance before my weekly receipts of twice that amount. Besides, what could prevent you from learning my secrets and using them to your own advantage without paying for it?"

"Our own honor and respectability," he replied. "We are all men of the highest character."

"I don't dispute that at all," I assured him. "On the other hand, experience has taught me not to gamble on people's character. I am sorry, senator, but your little million cannot buy anything around here. It is not even attractive as a loan. Good day, senator."

As he went out, a police inspector from headquarters came in. He said he had received a complaint from a Mrs. Campbell.

"What's the nature of her complaint?" I asked him.

"She claims," he replied, "that you induced her to invest some money with you and her friends told her she would lose it. She wants her money back."

"Legally, she cannot force me to redeem my note before maturity," I told the inspector. "And there is nothing you can do about it. But since it has always been my policy to refund money to dissatisfied investors, tell her to come down and get hers."

"Will you give it to her?" he inquired.

"Of course, I will," I assured him, and he left.

He came back with Mrs. Campbell a little later. He handed me the note and I instructed my secretary to give her a check. When she saw that she was going to get her money, Mrs. Campbell changed her mind.

"Mr. Ponzi," she said, "I am awfully sorry I did you an injustice, but my friends led me to it. I want to leave the money with you until maturity."

"What?" interrupted the inspector. "After making all that fuss and putting me to all that trouble, you don't want your money now? You may do as you like, but I am through handling your case." He started to leave but I asked him to stay.

"Please remain until this thing is closed," I urged him. Then turning to Mrs. Campbell, I said:

"I am sorry, but now you must take your money. I do not want it. I do not care to have as investors persons who have no confidence in me. Go back to your friends, show them your money and thank them for the services they have rendered to you. Good day, madam."

"Mr. Ponzi," said the inspector shaking hands with me, "I am sorry for any inconvenience my call may have caused you. I have witnessed how you do business, and from now on, if any person comes to me with a complaint against you I'll show them that I know how to handle it."

"I am glad you came," I told him. "It was no trouble at all. What you saw me doing for Mrs. Campbell, I am always ready to do for all my investors." But I was hoping and praying that I might not be called upon to do it, because I couldn't have gone all the way around.

However, if Mrs. Campbell was nervy, the Chief of Police of a small Massachusetts town was not shy either. He had more gall than a brass monkey. He came to my office one day and said that he wanted to invest. He told me that he had no money.

"Well, what do you want to invest then?" I asked him. "Your badge?"

"No," he said, "I thought I would give you my note for $500. You could discount it at your bank."

"Fine business," I exclaimed. "And you expect me to use my bank credit for you whether you have the money or not, and pay you 50% for it besides?"

"Well, it wouldn't cost you anything," he argued back, "and it is the same for you whether you get your money from me or from the bank."

"Listen, Chief," I told him. "I won't argue with you because I can put my time to better advantage, but it strikes me funny that you should come here and take me for a sucker so I am inclined to do just what you ask. Here, sign this note for $500 and I will give you ours."

A few days later, some woman reporter, a regular hell cat, stormed my private office and started raving about some friend of hers that I had swindled. "What are you talking about anyway," I asked him, or, pardon me, her. "You know well enough," she replied. "You took $500 away from the Chief of Police all right, and I came here to tell you that if you don't make immediate restitution, I will expose you." "Who is this Chief of Police," I inquired. "I don't seem to recollect the name." "He is the Chief of Police," mentioning the name of a small Massachusetts town, she said, and I couldn't help laughing. "So, you claim that I have swindled him, do you?" I asked her. "Yes," she admitted, "I know that you took his money." "Well, let me tell you something, since you are so smart," I told her. "Your friend borrowed from the hand that fed him, from me, the money that he invested."

"I don't believe it," she said.

"I don't give a darn whether you do or not," I assured her, working up a temper. "But here is his note. As to you, since you are so mightily fresh, get out of this office. And stay out."

"Remember, you are speaking to a lady," she warned.

"A person who behaves like you do, is no lady," I told her. "Get out or I'll have you put out. Then, go ahead and expose me as you please."

My day's work was a succession of such incidents. The complaints were few and far between. Practically unknown, in fact. And never justified. But whether justified or not, an investor was never permitted to leave with a grievance for the sake of a few hundred dollars. That's why I lasted as long as I did. If a single complaint had gotten into the courts, it might have wrecked the whole structure.

One day, for instance, a bank messenger came in with five notes of the Securities Exchange Company for $150 each. He presented them for payment to one of the clerks. The clerk brought them to me. Hooked at the notes. They were forgeries. I knew how they had gone out of my office. And who had put them into circulation. I could have refused to pay them. But I didn't. I gave the bank messenger $750 and took the notes. It was better for me to lose the money than to lead a bank to believe I was defaulting on my payments. Or let the bank know the reason why. There would have been an arrest made. A conviction obtained. But I might have had to take the witness stand and submit to cross-examination. And I certainly wanted everything but that.

Besides investors, all sorts of people wanted to see me. Donation solicitors, for instance. They were thicker than mosquitoes down in New Jersey. And I was fairly liberal with them. Provided they represented some worthy cause. I never hesitated to contribute to labor or soldiers' organizations. But I never gave a dime to build homes for disabled cats. Nor to any stiff-necked reformer. Nor to the anti-saloon league. Although I would've gladly paid some of these "reformers" one-way fare to China, if I could have found a way to keep them there.

Among the donation solicitors, I had one from Ohio. He had come all the way from Marion. But on a wild goose chase. He had picked out a bad day. When I was extremely busy. And it was his hard luck if he wasn't able to see me. Maybe, mine too. But in those days §50,000 would have gone a long way with the Ohio gang of political buccaneers.

At any rate, what's the use of crying over spilled milk? A clerk came into my private office and handed me a card. I glanced at it. Somebody, whose name I don't remember, from Marion, Ohio.

"Who is he and what does he want?" I asked the clerk.

"I don't know him," the clerk replied. "He said he came from Marion, Ohio, to see you on an important matter."

"Tell him I am sorry," I directed the clerk, "but I am too busy to see anyone."

"The gentleman says it is very important that he should see you," the clerk informed me.

"I don't give a darn how important it is," I exploded. "I am not going to see him." "Miss Meli," I said turning to my secretary, "you go and see him and tell him to state his business to you. That's the best I can do for him."

Miss Meli, after a short conversation with that man, came back to the office greatly impressed.

"He insists on seeing you personally," she said.

"There can be no such thing as insisting with me," I said. "When I say I won't see him, that settles it. Now, I wouldn't see him even if he was the Czar of Russia."

"But he told me that he was the special messenger of Senator Harding," urged Miss Meli, "and that he was sent by him on a confidential mission."

"Is that so?" I retorted. "Well, tell him I should worry about Senator Harding. I won't see him. I can't be bothered even by a Senator. There are ninety six of them and I cannot create a bad precedent."

Perhaps I was a little too fresh that day. But who would have thought Senator Harding would have become President of the United States? It would have been like betting on a long shot at Rockingham or Narragansett. Still, it would have been a good bet. I might, with a little diplomacy have got in right with the new administration. And, perhaps earned the privilege of bidding against Sinclair for the lease of the Tea Pot Oil Dome.

If I was fresh that day, I had cause to be. I had been told something was brewing over at the court house. And not malt either. Nor hops.

But the sort of brew that spells trouble. I was on pins and needles. I wanted to know what it was. To know it ahead. When the Ohio man came, I was waiting for a newspaperman who knew the ins and outs of Pemberton Square.

As soon as he came, we went over together to the court house. We made contacts. Obtained the information. And an hour's reprieve. For which I paid with a thousand dollar bill. A real bargain! Because, without that reprieve, the Securities Exchange Company would have met with a premature death.

The whole thing was a million dollar suit brought by an ex-furniture dealer. He was claiming to have bought one-half interest in the Securities Exchange Company through the $200 loan he had made to me several months before. The suit was not worrying me. But the writ of attachment that went with it, did. Because it covered enough bank deposits to cripple me. In fact, it took in almost $4,000,000 of the Cosmopolitan Trust Company, $700,000 in the Tremont Trust Company, $49,000 in the Merchants National Bank of Boston, $10,000 in the First State Bank and about $200,000 in the Hanover Trust Company.

The reprieve enabled me to call at most of the banks and juggle things so that only a small part of the funds remained subject to the attachment. I did not bother with the two smaller deposits. But I salvaged three fourths of my account in the Tremont Trust and 90% of the one in the Hanover Trust. At the Cosmopolitan I was told that it was too late. I didn't stop to argue over it. I had to get back to my office before the news of the attachment came out in the papers and prepare myself to cope with the "run" which was sure to follow.

With $3,000,000 in cash in Boston and $3,000,000 more outside of Boston, I faced the music. It lasted a couple of days. In those two days, I refunded about a million dollars. And saved thereby $500,000 in interest, which I would have had to pay at the maturity of those notes. Forty-eight hours were enough to restore confidence. And the million dollars came back again. In less time than it had taken to pay it out.

CHAPTER XXII

MR. PONZI, PEEVED AT THE "MONEY LENDERS," DECLARES WAR ON THEM AND BEGINS HOSTILITIES

The "run" had resulted in a bit of publicity. But that hadn't hurt me a bit. With the general public. Just the opposite. It had served to swell my daily receipts.

In financial circles, however, the publicity stirred up some jealousy. You know how it is. Bankers hate competition. They fear it. Especially the kind of competition I was responsible for. The best they could offer to their depositors was about 4% a year. While I was not only offering, but actually paying, my investors 50% in 45 days. Or, 400% a year.

Withdrawals of deposits from banks grew in proportion with my cash receipts. The more I took in, the more the banks had to pay out. And the money, once in my possession, would be redeposited only in banks in which I already had an account. Particularly, in the Hanover Trust Company. Because it was my intention to drain several of the banks of liquid cash so as to compel them, eventually, to sell out to me at my own price. All is fair in love and war.

I had it all figured out. The banks could not continue to pay money out and survive. Some might have lasted longer than others. But, sooner or later, all would reach the point where they had either to sell out or close.

A closed bank is generally a total loss to the stockholders. Not only don't they get back what they originally have paid for the stock, but, usually they are assessed for an additional amount equal to the par value of the stock they hold. In other words, a man who has paid $125 for a share of bank stock, loses not only the $125, if the bank goes into liquidation, he is often required to cough up another $125.

I reasoned that, in a pinch of that sort, any bank stockholder would have been tickled to death to sell out to me for about fifty bucks a share. He would have been a fool, if he hadn't. And I was prepared to do just that. Because for every $50 so invested I would have made a profit of $75. Or, 150% in less time than it takes to say Jack Robinson.

How? Why? That's easy! People had confidence in me at that time. They would have rather deposited their money in banks owned by me than banks owned by somebody else. But, even without new deposits, I could have straightened a bank out by redepositing there, to my name, the money which had been withdrawn by those of its depositors who had invested with me. Since I was not dealing in coupons any longer, since I was not dealing in anything, since money was coming in faster and in larger amounts than I was paying it out, I was in a position to keep my funds idle. Anywhere. And for any length of time. Even if they earned me only 4% a year.

My profit would have come from a different source, from the increased value of the bank stock, after I had bought it at a knocked down price. There was absolutely nothing to it. It was a cinch. I could have bought a bank today at $50 a share and sold a 49% interest in it, a week later, at $125, or better, per share. The public would have gladly bought shares in anything I might own. Not because they were worth more. But because of my name. Of my credit. The same as they were buying my notes.

That would have been one way out of my difficulties. An opportunity to switch, gradually, from the coupons venture into a more conservative line of business.

To reduce, a little at a time, the 400% rate of interest I was paying; to get out from under all together, in a non-distant future, and retire a multimillionaire. But I didn't make it. For any number of reasons which I have never bothered since to analyze fully.

Anyway, the publicity I got from the "run" came to the notice of one of my depositors. It would. I couldn't help it. For a couple of months they hadn't heard anything else but my name. Over the phone. Over the counter. They had seen it in the mail. In telegrams as if it was actually haunting them.

The fact was that, whenever anybody asked me for references, which was often, I gave the name of the bank. Sometimes, I even went into detail. And told how I had a substantial deposit in that bank Not only, but also how the bank had accepted to be the beneficiary in trust in the matter of my life insurance policy.

From president to messenger boy, everyone in the bank was tired of answering questions about Ponzi. Especially, because they couldn't very well say what was in their mind. And so, one day they sent for me.

I went. I was ushered into some private office. Whose office, I don't know. Whoever the man in that office, was, he came right to the point.

"Mr. Ponzi," he said, "we are besieged by requests for references as to your standing. I am sorry, but we are unable to give any. We don't know a thing about your business."

"Of course, you don't," I told him. "And I don't expect you to tell them what you don't know. But you can tell them that I carry a substantial account here."

"The trouble is that they seem to derive the impression that this bank is in some way associated with your activities," he complained.

"There is nothing I can do to correct that impression," I explained. "What people may think or believe is beyond my control."

"Certainly," he conceded. "But we are placed, nevertheless, in an embarrassing position. For our own protection, I would suggest that you close your account with us."

"It's all right with me," I replied. "Let me have my balance and that will be the end."

"Thank you, Mr. Ponzi," he said. "I shall write you a check right away."

"A check?" I inquired. "Why a check? Let me have the cash, if you don't mind."

"You certainly don't mean to imply that our check is not acceptable to you?" he asked with considerable astonishment.

"I will not go into details," I replied non-committally. "But if you want me to close my account, you will kindly hand over my balance in one-thousand-dollar bills. Forty-five of them, I believe."

He didn't like my attitude at all. But he couldn't refuse me, either.

So, he gave me the cash, and I left. Account or no account. I could still use the bank as a reference, because it was the beneficiary under the insurance policy, although that reference was no longer necessary. By then, I had subscribed to Dun and Bradstreet's. And I was rated by them $8,000,000!

The law suit which had resulted in the "run" was taking its course. I had retained Arthur D. Hill to represent me. And I was sure to win out. But, in the meanwhile, I had about three quarters of a million tied up by the attachment. Which, by the way, was not drawing any interest.

That's what set me thinking. Those banks in which my money was tied up, had the use of the funds, without paying for it. The longer the suit lasted, the better it was for them. They were actually the gainers, regardless of how the suit ended.

One of these banks was a small institution in the North End, hardly justifying the name of bank.

I had $10,000 in that bank. I had put them there to help it. The President had begged me on his knees, and as I thought he was a deserving fellow, I had given him the account, which I would have left there indefinitely. But it was subject to my check. And it would have practically ruined the bank if I had asked for my balance, suddenly, and without notice. The attachment afforded him an ideal protection.

As to a larger Trust Company, I had $190,000 tied up there. But they had permitted me to withdraw about half million from the attachment, and it was one of the gainers from the suit, yet, to a smaller extent than it could have been.

In another Trust Company, I had $190,000 tied up. The president refused to release any part of it. And I knew he needed the money. Only a short time before he had come to my office and begged me to open an account with his company.

"Mr. Ponzi," he had told me. "You are ruining me."

"How's that?" I had asked him.

"All of my depositors are closing their accounts to invest with you," he explained.

"I am sorry," I had assured him. "I did not think it was as bad as that."

"It is," he insisted. "For the past week, we have cleared checks to your credit for about $100,000 a day."

"What do you want me to do?" I had asked him.

"Give me a deposit," he had pleaded.

"But I have my own bank," I had argued.

"I know," he had rebutted, "but do you want to ruin all of the others just for that?"

"No," I had assured him. "I don't want to ruin anybody. I will give you a deposit. I will re-deposit in your bank all of the checks drawn against your bank by any one of my investors."

I had done that. But the president was no man of principles. But, of course, I didn't know the kind of man he was, when I gave him my deposit.

I put him down with others as another who justified suspicion. And I wasn't far from wrong when I did. The attorney for the man suing me was a friend of the president of the bank.

As I was gradually piecing together my clues and bits of evidence, a police inspector from headquarters paid me a visit.

"The president of one of the trust companies was up at headquarters yesterday," he informed me.

"Yes? What was he up to?" I inquired.

"He was raising the devil about you," he said.

"About me?" I asked.

"Yes," he confirmed.

"I thought he was my friend," I remarked.

"Well, he isn't," the inspector assured me. "He says that you are ruining him."

"Of all the nerve!" I exclaimed. "I have about $400,000 tied up indefinitely in his bank and drawing no interest. What more does he want?"

"He wants to have you arrested," he told me.

"Is that so?" I was painfully surprised.

"Yes," the inspector went on. "He raved at headquarters and said that we ought to arrest you."

"And what did you tell him?" I asked.

"We told him that we could not arrest you because we had nothing to arrest you for," he replied.

"And what did he say?" I kept on quizzing the inspector.

"He said that you should be arrested," he answered.

"Is that straight?" I wanted to make sure.

"You know me, Charlie," the inspector remarked.

"All right," I said. "I'll fix that skunk."

"For God's sake, keep me out of this," he begged.

"Don't worry," I assured him. "You have nothing to fear from me."

"I trust you all right," he said. "The boys at headquarters and myself would go to hell for you because we know you are on the level and a regular guy."

What the inspector told me was all I needed to jump right into action. I sent for the man suing me, much as I hated to do it. I dickered with him. I paid him $50,000 in cash to drop the suit. He signed a release. With that, I went right down to the president of the trust company.

"I have come to withdraw my balance," I told him, showing him the release.

"It's too late now," he said. "It's after banking hours. Come back in the morning and I'll have my lawyer examine the release."

"I will do nothing of the kind," I shot back at him. "I have come here to get my money and I am going to get it. The man suing me is here. My attorney is here. And the papers are O.K. I will not leave here until I have my money. There are 2,000 people outside who want to see how well you can honor your obligations."

"It's after banking hours," he insisted.

"I don't give a darn if it were bed time," I shouted. "You will either give me my money or you will never open in the morning."

"All right," he agreed. "I will give you a check."

"You will give me none of your checks," I threw back at him. "Your signature couldn't find credit for a plugged nickel with me. I want cash. All in ten-thousand dollar bills. Thirty-seven of them and a five."

I had to wait perhaps two hours before I finally got my money. And, in the meanwhile, I exchanged a few more pleasantries with both him and the attorney for my suing friend, who had also joined the party. But I walked out of the bank with the money. And in the morning I went right over to the Tremont Trust to get the other $190,000. There, my visit was anticipated. I wonder why? At any rate, I found 19 ten-thousand-dollar bills awaiting me. I stuck them in my pocket, together with the other 37. And I went back to my office. What I nice picking I would have made for some of the stick-up boys of later days. Can you imagine it? A man going around dear old Boston with 56 ten-thousand-dollar bills in his pants-pocket! With six certified checks of $200,000 each in his wallet! With enough smaller bills and gold pieces to buy himself an apartment house! And with only a 25 Colt automatic in his vest pocket!

Even after withdrawing my funds from these banks, I was still mad as a wet hen. And I wasn't given a chance to cool down. Instead, another bank jumped in the fray. This time, one of the national banks. And my temper went to fever heat.

"What's the matter now?" I asked them.

"Our drawing bank has notified us that it will decline to do our clearings unless we induce you to place part of your balance on a certificate of deposit."

"What's the idea?" I wanted to know.

"They do the clearings for us," one explained. "You might draw a check on us for several millions and they would have to clear it. This, they claim, they cannot do."

"Ha, ha! I see!" I remarked sarcastically. "So, the highbrows haven't got cash enough to clear my checks? Wouldn't I love, though, to have them turn down one of my checks! Wouldn't I hang their hide up a tree to dry! I am glad of it. Tell them to go to the devil and we will give the story out to the newspapers."

"No, no. We can't do that," said he.

"And why not?" I asked. "Can't we do our own clearings?"

"Not yet," he replied. "We would have to join …"

"Well, join whatever it is you have to join," I told him.

"But in the meanwhile we would be left without clearings," he pointed out. "Please don't force us into that situation."

"But you are asking me to tie up my balance," I rebutted. "And I cannot do that because I may need my money at any time."

"You don't have to tie up the whole balance," he said. "Only a part will do. Let's say one million and a half."

I resisted their pressure for a while. But finally I gave in. It seems I couldn't do anything else just then. I walked out of the bank with a certificate of deposit for a million and a half. But madder than ever. And determined to take it out on the whole banking crowd.

The moment I got back to my office, I called up the Bank Commissioner. Made an appointment with him. And went up to the State House.

"Mr. Allen," I said to him, "I have a plan to boost deposits in the Hanover Trust Company, but I desire your approval before I go ahead with it."

"What is your plan?" he asked.

"My plan is to run a sort of contest," I explained to him. "I am going to offer a prize of $1,000 each month to the person who will be instrumental in bringing the Hanover Trust the largest number of new deposits."

"How are you going to work it out?" he inquired.

"I'll have thousands of cards printed," I told him. "Some sort of introduction cards. The contestants will give them out to their friends. Each card will bear the name of the new depositor and the signature of the contestant. It will be turned in with the initial deposit and the bank will pass it along to me or file it. At the end of each month, the cards will be counted and sorted. The contestant with the larger number of cards to his credit will get the $1,000."

"I don't see anything irregular with the plan," admitted the Bank Commissioner. "As a private citizen, you can give out your money as you see fit. But you cannot use the Hanover's funds for it. Or promote the contest in the bank's name."

"I will abide by your directions," I assured him, and left.

I sent for a printer and told him what I wanted.

Ten or twenty thousand cards to begin with. And right away. Then I stuck up a couple of notices in my office with the rules of the contest. The war between myself and the banks was on. I had thrown the gauntlet. And I was going right into action to deliver the first blow.

CHAPTER XXIII

MR. PONZI OFFERS UNCLE SAM $200,000,000 FOR HIS SHIPPING BOARD FLEET

I had not seen the postal inspectors for some time. I had not heard from them. And was wondering whether they had met with an accident. As I had often hoped for. Or, given up the investigation as a bad job. But no such luck. They had been digging up dirt.

In fact, one day the phone rang. The clerk in the outer office answered on the extension. Then he came to tell me that the United States Attorney was on the wire. I left the receiver on my desk and announced myself.

"Mr. Ponzi," I heard a voice saying, "this is an assistant United States District Attorney, speaking."

"How do you do?" I greeted him. "What can I do for you?"

"I would like to confer with you," he replied. "Would it be convenient for you to see me?"

"Certainly," I told him. "Where shall I meet you?"

"Could you meet me in my office in Boston?" he asked.

"Yes, sir," I answered.

"When?" he inquired.

"Right now, if you want to." I stated.

"I don't want to inconvenience you, Mr. Ponzi," he apologized.

"You are not inconveniencing me at all," I assured him. "I am always glad to place myself entirely at the disposal of the United States Attorney."

That wasn't so at all. I would just as soon see the devil any day. But a man has to be polite now and then.

"That's very nice of you," he commented. The assistant district attorney—I mean, not the devil. "You say you could come now?"

"Yes, sir. I can be at your office inside of ten minutes," I promised.

"Then I shall expect you," he said. "Thank you."

"Don't mention it. I'll be there." I told him.

I went at once to his office. Announced myself. I was ushered into his private office. There, I found one of his assistants, a stenographer, and my two "friends", the post-office inspectors. We exchanged the usual greetings.

"Where is your attorney?" the assistant district attorney asked.

"I have no attorney," I replied.

"Do you mean to tell me that you have come alone to this conference?" he asked.

"Am I threatened with any danger?" I asked back.

"No," he admitted. "But I assumed that you wished to protect your rights. As you know, under the constitution, you are not compelled to speak unless you want to."

"But I have no intention of invoking my constitutional prerogatives," I assured him. "I assume that you want to learn from me something about my activities. I will be only too glad to answer your questions because I have nothing to conceal."

"Mr. Ponzi," he stated. "I am very favorably impressed by your attitude. Do you object to the presence of the post-office inspectors?"

"That's all according to how they behave," I replied with a tinge of humor. "In my office they have forced me to remind them that they were on my premises without authority. However, if they promise to behave, they may remain."

"They are here only in the capacity of spectators anyways," he assured me. "I will conduct the conference."

"All right, then, I agree. Let us get down to business."

The conference lasted about two hours. I reiterated the statements previously made about coupons. I covered the same ground covered at previous conferences. And when the conference was concluded he seemed pleased. He did not give any indication that he suspected irregularity. If he did suspect, he was keen enough to realize that I had gone into the thing without a criminal intent and was trying my darndest to do the right thing. Even if in a most deplorable way.

The conference with the United States District Attorney did not alarm me. No more than previous conferences with other officials. In fact, why should it have alarmed me? For nine months I had been under investigation. I had been asked all sorts of questions. And I had been able to answer them all. No action had ever been taken against me. I felt reasonably sure that none would be taken, so long as I kept paying my notes. At any rate it was too late for me to stop any action that might be contemplated.

I dismissed the conference from my mind. And went along as usual. Meeting events and unexpected situations as they occurred.

One day, I received a hurried call from one of the trust companies. The officer wouldn't tell me over the phone what the matter was. So, I went down to the bank.

"What is the scandal now?" was the first thing I asked.

"We have found a good man for one of your offices," the officer told me.

"For the love of Mike!" I said a bit resentfully. "Is this the important message you had for me?"

"Yes," he admitted with the least vestige of shame. "He is well recommended and will be very useful to you."

"Why didn't you send him up to the office and talk to Miss Meli?" I wanted to know.

"He has been up to your office," he replied. "And you have met him. But it seems that you did not give him much hope."

"Who is he, anyway?" I inquired.

"A young man by the name of, let's say 'Smith,'" he said.

"I'll be darned if I remember him," I remarked.

"Don't you remember a young feller asking you for the Holyoke office?" he asked.

"Oh, yes," I admitted. "I think I do. But I told him that the Holyoke office was already covered."

"Well, he is the man," he confirmed, "and you must give him that office."

"What's that?" I said pricking my ears at the word "must."

"I said you must give him that office," he repeated.

"What's the big idea?" I demanded to know. "Why all the pressure?"

"You take our advice and give him the Holyoke office," another officer urged.

"The thing is getting interesting," I had to admit. "What are you so much in earnest for? I have my own man there and I am entirely satisfied with him."

"Well, fire him," one suggested.

"I will, like heck!" I shot back at him.

"Give him another agency," the other suggested.

"Look here," I said. "What is the young man to you, anyway?"

"Nothing," he confessed. "Except that I have been told to get him that office."

"Explain to your friend the circumstances," I told him.

"Impossible," he stated. "I must do as he says."

"There's no reason why I should do as he says," I argue.

"Oh, yes, there is," he answered back.

"Say, are you trying to be funny?" I asked. "There is no man alive who can tell me what to do and not to do."

"Listen, Charlie," he coaxed. "It's no use to beat around the bush. The 'boss' wants you to give that man the Holyoke office."

"The 'boss'? And who in heck is the 'boss'?" I wanted to know.

"Don't you know?" he asked in surprise.

"No, I don't know!" I had to admit.

"Well, for God's sake! Where have you been all this time?" He mentioned one of the men running the state and he was positively amazed at my political ignorance.

"What?" I asked, afraid to have been misunderstood.

"It's just him," he confirmed. "One of the big boys up on the hill."

"Well! Well! Well! " I said by way of comment. "So, he wants the job covered by one of his friends?"

"I don't like the idea of being bossed," I told him. "But since the big boy thinks enough of my business to become associated with it through his political friends, I believe I will grant the request."

"That's fine!" said he. "So, it is settled?"

"Yes," I assured him. "You can tell the boss that his order will be obeyed right away. And you can also tell that young man to come to my office and arrange the details with Miss Meli. I will wire my man in Holyoke that I have another place for him."

The confidence of the "boss" in my business was rather flattering. I assumed that he would not have urged one of his friends upon me unless he was satisfied, from investigation, that, in his opinion, I was conducting a legitimate enterprise. So, I began to feel hopeful that all government activities against me would soon cease.

Shortly after that, my attention was attracted by an advertisement. Or, some sort of announcement. The United States government was offering for sale the Shipping Board fleet. And imposing array for some 3,000 vessels which had been built during the way at the tremendous cost of nearly $3,000,000,000! The government was asking $20 per dead-weight ton. They were easily worth $200. Their combined tonnage was approximately 10,000,000. The deal would have involved a lump sum of about $200,000,000!

I took a day off. I went over my data on foreign trade and shipping. Did a lot of figuring. And became convinced that I ought to buy that fleet! I lost no time. Once my mind was made up, I acted. I sent one of my men to Washington with my bid of $200,000,000 and a check for $2,000,000 as a guaranty of my good faith.

In the meanwhile, I began to plan what to do about the money. And with the fleet. In the event it was awarded to me, as it might have been.

In my bid I had mentioned that I would pay cash C.O.D. within 30 days of the acceptance of my bid. And unnecessary haste. Because the government would have been willing to wait ten years for the money. In fact, it waited longer than that. And got nothing for it in the end, from others.

To raise 200 million in 30 days, was not much of a problem, for me. My daily receipts had already reached the million dollar mark. And I was operating only in New England. Or, "on" New England. As some wise guy might say. With requests for agencies from every state in the Union, in 48 hours I could have covered the country from coast to coast, like a radio hook-up.

But that wasn't all. I was getting cables from Indian maharajahs asking me how many million rupees I would accept for investment. Cables from Chinese mandarins offering millions of taels. Cables from Australian and South African "gold diggers" tendering millions of pounds sterling. Cables from South America talking about millions of pesos, or milreis, or bolivianos, or sucres, or sols. A long telegram from a Canadian bank informed me that a Mr. Leyture had deposited with them $7,000,000 to my credit! To raise $200,000,000 under those circumstances would have been a cinch.

I was considerably more puzzled about the fleet. What was I going to do with it? With 3,000 vessels of all sizes? With the Leviathan? With all of the floating Presidents? With the legion of freighters and tankers and tramp steamers?

There wasn't much I could do with them. Except re-sell them. So, I lay awake nights studying some selling arguments, some use for the boats, some ways and means to promote a number of subsidiary companies which would take them off my hands.

The fleet was actually going to stand me 320 million dollars. Because, to buy it, I was borrowing 200 million at 50%, through the Securities Exchange Company. And paying agents' commissions amounting to 20 million dollars.

I devised the organization of two companies. One, the Charles Ponzi Steamship Company, which would have owned the fleet. The other, the International Shipping & Mercantile Company, which would have leased and operated the vessels. The C. P. S. S. Co. was to be capitalized at $1,000,000 or 1,000 shares of common stock at $1,000 each. This company would have issued $350,000,000 of 12% ten-year bonds.

The I.S.&M. Co. would have exchanged 3,500,000 shares of its common stock for 500 shares of the C.P.S.S. Co.'s common. Then it would have underwritten the entire bond issue at 93. Or, for $325,000. Paying for it with demand notes. It would have offered for sale to the public at large one $100-bond, one $100-share of preferred and one of no-par-value common for $200. Notes of the Securities Exchange Company, at their maturity value, would have been accepted in payment, in lieu of cash. The sale of the stock, whether for cash, or against such notes, would have wiped out all liabilities of the Securities Exchange Company. And that company would have passed out of existence.

The next step was to find a way to wipe out the indebtedness of the two new companies. To this end, the I. S. & M. Co. would have leased the entire fleet by paying to the C. P. S. S. Co. $80,000,000 a year for ten years. The C. P. S. S. Co. would have applied the 80 millions to the payment of interest on the bond issue and to the amortization of the principal. The interest would have amounted to 420 millions in ten years. The 38 millions set aside each year for the amortization of the principal, would have earned easily 3% net. Or not less than 12 millions in ten years. Leaving $42,000,000 after payment of the principal, to be distributed as dividend to the common stock. Something like $42,000 a share!

The I. S. & M. Co. would have sub-leased the vessels to a number of subsidiary companies for 150 million dollars a year for ten years. That would have left the company $70,000,000 a year with which to pay the interest on its preferred stock and for the amortization of the principal. The interest would have amounted to 280 millions in ten years. The 43 millions set aside each year for the amortization of the principal would have earned 3%. Or, not less that $15,000,000 in ten years. Leaving 85 millions, after payment of the principal, to be distributed as dividend to the common stock. About 12 dollars a share.

At the end of ten years, it did not matter, so far as I was concerned, what become of the fleet, from the standpoint of money. It would have earned for me and my companies everything I had planned it should earn. But, in order that my ten-year plan might be successful, I would have to organize and control a number of subsidiary companies.

Such companies would have been capitalized in accordance with their requirements. Their capitalization would have consisted of preferred stock and no-par-value common. The I. S. & M. Co. would have retained 51% of all the common in each instance. The preferred and the remaining 49% of the common would have been offered to manufacturers, exporters, and importers. Some, to the general public. Each subsidiary company would have paid to the I. S. & M. Co. a rental price of $15 per dead-weight ton per year for such vessels as it might have leased.

My figures were all based upon dead-weight tonnage. The entire fleet consisted of 10,000,000 tons. Leased by the C. P. S. S. Co. to the I. S. & M. Co. for $8 a ton per year. Subleased by the I. S. & M. Co. to the subsidiary companies for $15 a ton per year.

Thus, as an illustration, a ten-thousand-ton vessel would have cost the subsidiary company $150,000 a year. In addition to the operating expenses, which I had no means of estimating. But such vessel could have made easily four round trips a year. Even to distant ports. And could have carried, therefore, 80,000 tons of cargo.

Assuming that the operating expenses amounted to $8 per ton, still it would have cost them altogether only $10 a ton for their freight. And that was about one-half of what shippers were paying in those days.

Each subsidiary company would have operated its own vessels independently. The freight boats, I mean. Insofar as it was practical to do so. Insofar as it could guarantee a full cargo both ways. The I. S. & M. Co. would have operated all of such other vessels as the subsidiary companies could not themselves operate. In that case, the actual operating expenses, plus the lease price per ton, would have been prorated on the basis of the freight-tonnage carried.

It was also my plan that passenger steamers should be used as floating sample rooms for American products. They would travel from port to port, carrying those tourists who might care to go along. But carrying particularly American salesmen and buyers, a variety of samples, and a whole cargo of goods. Goods that could be delivered right from the boat to any chance foreign buyer. On their return trips, those boats would have picked up whatever freight they could, or goods especially bought right on the spot by the American buyers on board.

Apparently, the whole scheme was a money-making proposition. I was optimistic enough to believe that I would have cleaned up several millions. Not only that, but I believed also that I had discovered a safe way out of my difficulties. However, I was only secondarily interested in the profitable aspect of the thing. Primarily, it was my object to restore the prestige of the American Merchant Marine.

I was a patriotic cuss in those days. American in everything, except in name, because my full papers were not due yet. One hundred per cent American. More so than many natives. Including those in Wall Street and in Washington who were doing their darndest to keep the American boats rotting at anchor, in order that the International Mercantile Marine of John Bull might not lose its supremacy.

Nothing would have pleased me more than to see the Stars and Stripes float where the Union Jack was then floating. With every blessed thing any country might wish for, in the way of products and money, and plenty of both, I could not see the sense for the United States of having to depend on foreign shipping. And nobody in America could see any sense, either. Except those responsible for the situation. But if they saw any sense in it, it must have been spelled c-e-n-t-s. And it must have summed up to a good many dollars. Pardon my error, I should have said pounds sterling. Of the same coinage in which Benedict Arnold was paid.

CHAPTER XXIV

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 105° 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 … 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!

CHAPTER XXV

THE BATTLE ROYAL IS ON, WITH THE ODDS IN FAVOR OF MR. PONZI

The international reply coupon I had set out to sell was sold And how! There was no doubt as to that. Not only was it sold but I had got a fairly good price for it too. Fifteen million bucks for a six-cent item are not to be sneezed at anywhere. Not even in New England where the average dollar is trained from infancy to breed faster than a guinea pig. However, my day's work was not over yet. Not by a long shot. Because I had to see to it that the coupon might stay sold. And the indications were that it wouldn't.

In fact the outlook was far from favorable. It might have looked rosy to me, for a moment. From the time I alighted from my car and went upstairs to my office, until I emerged again, ten or fifteen minutes later, to go to the Hanover Trust. But after I had a chance to peruse the morning papers, and especially the Boston Post, in the privacy of the bank president's office, it came home to me that the situation was considerably more tense than it had ever been.

The press was unanimous in its condemnation of official laxity. My activities were not openly qualified as fraudulent. Because the newspapers knew better. But they were pictured so far out of the ordinary, magnified to such an extent, as to make them appear absurd. And the officials were blamed for having failed to check up properly the various claims upon which my activities were based.

The situation was especially dangerous because a man in public office generally runs amuck the moment he becomes the target of printed criticism. Under the spur of what he believes to be a public opinion, he is apt to do almost anything. Except be quiet. He will not hesitate to misuse his authority. To misconstrue the law. To lapse from blunder to perfidy. Rather than to come right out like a man and explain that his failure to act is due to circumstances over which he has no control.

After I read the papers, I began to fear just that. Within the day, within the next hour or so, some proceedings might be instituted against me. Whether civil or criminal, I didn't know. But proceedings which might have closed me down. Justly or unjustly. Temporarily, or for good. Such as an injunction.

Without any doubt, I had a battle on my hands. This time with the press, in general.

I reached for the phone.

"Call up the United States Attorney, and District Attorney," I directed the Hanover's switch-board operator, "and tell them I want to talk to them. Give me the calls as they come in."

The United States Attorney was the first one to answer.

"I assume you have read the papers," I told him.

"I have," he admitted.

"It occurs to me," I continued, "that it is rather unfair for them to criticize public officials for their alleged laxity. Personally, I resent the criticism because of its implications. I am going to demand a showdown. I am going to offer you and the other officials an opportunity to investigate my business. Would you be willing to join the attorney-general and district attorney at a conference with me, in order that the details of such an investigation may be arranged?"

The Assistant U. S. District Attorney replied that he would be glad to. Mr. District Attorney sent word for me to go over to his office and he would talk to me. Attorney-General said that a joint conference was not agreeable to him.

"But, Mr. Attorney General," I argued, "I'm a busy man. I can't spend a whole day in conferences. I feel that the consideration I am showing to the authorities should meet with equal consideration from them. After all, you must realize that, under the law, no investigation can take place without my consent."

It was a waste of time to argue with him. I couldn't move him. And I was on the verge of telling him to go to the devil. But, as yet, I didn't know him well enough for that. And so, I agreed to go up to his office later in the day.

"About what time?" he asked me.

"I couldn't say," I replied. "As soon as I get through with the state and federal officials."

"I'll be waiting for you," he said, but he did not know how long I was going to keep him waiting. Since he wanted to be so disagreeable, I intended to make him whistle. And if he didn't know how, he could learn.

The phone calls soon disposed of, I had to do some quick thinking. I stood committed to an investigation. And had to go through with it. I wouldn't and couldn't go back on my word. But it was vital for me to decide upon the type of investigation which might satisfy the officials and the public without disclosing my true situation. By a process of elimination, I arrived at something that looked pretty good.

Acting on the impulse, as usual, I went to the Court House to put my proposition up to Mr. District Attorney. I had never met him before. I did not know what sort of fellow he was. But I found him none too pleasant at the start.

"It is being rumored," he said, "that I have $20,000 invested with you. Under the circumstances, I feel that I ought to investigate the sort of business in which my money is supposed to be invested."

"That's right," I agreed with him, "as an investor it would be your privilege to investigate. At the proper time. That is, before investing. But it so happens that you are not an investor of record. Therefore, it does not seem that you have any interest in the matter."

"I have," he stated. "I am the District Attorney of Suffolk County and, as such, I owe to my constituents the protection of this office in anything that may affect their welfare."

"But there is no indication that the welfare of your constituents is being jeopardized," I argued. "You have no complaints upon which to base any action."

"That's true," he admitted, "but the newspapers are openly hinting that you are perpetrating a fraud upon the public."

"If I am," I remarked, "it seems to me that you should welcome my call, because I have come to offer you an opportunity to investigate my activities."

"Do you mean it?" he asked.

"Certainly," I said. "I wouldn't be here, if I didn't. If I didn't intend to cooperate with you, I would let you take the first step while I would hire half a dozen of the best lawyers to resist your investigations."

"If that is the case," he stated, "I am ready to listen to you with an open mind. What have you got to offer?"

"An opportunity to ascertain whether or not I am solvent," I replied. "What the authorities are interested to know at this time is whether or not I have enough money to meet all of my outstanding notes."

"How do you propose to show that?" he asked.

"By allowing an auditor, acceptable to all of the officials concerned, to determine the total of my liabilities," I explained.

"Will you let that auditor examine your books?" he went on.

"I will turn over to him all of the books, papers and records which are necessary to determine my liabilities," I stated. "And no more."

"How is he going to verify whether you or not you are solvent?" he inquired.

"I will attend to that," I replied. "When the total of my liabilities will be announced, I shall exhibit by assets. Is that satisfactory?"

"Yes," he said, "but who is going to pick out the auditor?"

"You and the other officials," I told him. "I don't care who the auditor is. Only, I want it understood that here is going to be one investigation for all of the officials concerned. And not a separate investigation for each one of them."

"Why do you say that?" he asked.

"Because, from my phone conversation with the Attorney General, I have reason to believe that he wants to conduct a separate investigation for each one of them."

"Why do you say that?" he asked.

"Because, from my phone conversation with the Attorney General, I have reason to believe that he wants to conduct a separate investigation of his own."

"For my part," said Mr. District Attorney, "I am willing to agree to a joint investigation."

"And so is the Assistant United States District Attorney," I stated. "Therefore, unless the Attorney General falls in with the majority, he'll be out of luck. That's all there is to it."

It was at this point that I felt the psychological moment had arrived for an announcement intended to upset my opponents.

"Mr. District Attorney," I said, "it occurs to me just now that it might be an impossible task for an auditor to determine my liabilities, if I should continue to issue notes every day throughout the investigation."

"I guess it would be at that," he agreed. "Couldn't you stop issuing those notes?

"I could," I admitted, "but I haven't had the time to consider whether it would be expedient for me to do so. However, the suggestion has an appealing feature. Because it offers me the opportunity to spike certain insinuations which are being made by the press, I will do it."

"You will stop issuing notes?" he asked. "When?"

"Right now," I told him. "May I use your phone?"

"Surely," he said. "Help yourself."

I called up my office. Miss Meli answered.

"Miss Meli," I directed her, "from this moment we shall cease accepting money for investment. Until further order. Post a couple of notices around the office. Notify by phone or wire all agents and sub-agents. But we shall continue to redeem notes as usual. At maturity, with interest. Before maturity, without it."

"Mr. Ponzi," said the District Attorney after I had replaced the receiver, "I had probably misjudged you before you entered this office. Your frankness impresses me favorably. I believe you mean to do the right thing. I want to thank you for facilitating my task and I want also to assure you that I will not put you to any greater inconvenience than is absolutely necessary."

From his office, I went to call on the United States Attorney. I related to him what had occurred. And he seemed entirely satisfied with it.

He said we would consult with the District Attorney and let me know about the auditor.

I left the office of the Assistant United States District Attorney to go to the State House where the Attorney General had been waiting for me for the last three or four hours. But, on my way, I had to drop in at my office to straighten things out. My announcement that I would not accept any more money, had provoked a run. I found as many investors ready to withdraw their money, as I had seen there in the morning eager to give it to me. Only, the cops were missing and the crowd was not as orderly.

I entered my office and was told that the police on duty had been recalled. Immediately, I phoned to the Police Commissioner. I couldn't get him.

Finally, I got the Superintendent on the wire. He said that the police had been withdrawn because it was against the law for them to be on duty in private buildings.

"That's a fine time to tell me!" I exploded. "So long as I was taking in money and presumably, stealing it and committing a felony, it was all right for the police to protect me. Now that I am performing a lawful act, that of making restitution, the law denies me protection! There is something fishy somewhere, but I haven't the time to bother with you fellows. You can tell the Commissioner I don't need his police force. I will organize one of my own."

And I did. I hired the Pinkertons and other private guards. Inside of an hour I had the crowd under control. Without resorting to violence. I went personally through the line of investors. Talking to them. Explaining things. Making it easy for them to get their money. And with that I averted another vicious blow.

The police, as I was told later, had been withdrawn in the hope that some rioting might develop and furnish a pretext to the authorities to step in and take charge. I don't know for sure where the order came from. I learned, however, that political and financial interests had caused that order to be issued. But I disappointed them.

As soon as I had things running smoothly in my office, I went to call on the Attorney General.

I brought a lawyer along with me as a precaution. I had the intuition that I wasn't going to a mere conference. In fact, when I entered the Attorney General's office, I found about a dozen people sitting at a long table. Assistant A. Gs galore. Stenographers. And what not. The only one missing was the official executioner.

Fortunately, there wasn't what you may call a keen intellect in the whole bunch.

The conference wasn't much of an ordeal. Except from the standpoint of time. It lasted longer than any other. Because my audience was just naturally slower. At grasping things. But, on the other hand, I got away with more fibs. Some of them actually awful. And had the pleasure of leaving that distinguished gathering as much in the dark about my activities as they were at the start. Only, they didn't realize it. Ignorance is bliss.

On my way home, in the evening, I had twenty or thirty minutes in which to review the events of the day. So far, I was still master of the situation. The Assistant United States District Attorney had appointed Edwin L. Pride, a noted accountant, to compile the list of my liabilities. The District Attorney had declared himself ready to abide by Pride's findings. The Attorney General had been left out in the cold. He wasn't likely to make any trouble because, with two district attorneys on my side, he didn't have a chance either with the courts or the public.

But, even if I was still the master of the situation, the fact remained that I did not have enough money or assets to balance my liabilities. Nobody knew that. Except myself. Yet, it looked as it the whole world would know it before long. Unless … That's it! Unless I happened to have a couple of wild deuces up my sleeve. And I had them all right. I had tucked them there myself in the morning.

In fact, for one thing, I had nothing to fear and everything to gain from the run I had provoked. I had enough liquid cash to keep on paying out half a million a day for two weeks. The chances were that I would have paid out an average of half that amount per day. For four weeks, instead of two. Then, in a pinch, I could have liquidated my other assets and stretched things along for another week. But the best feature of the run was that I would have redeemed more notes without interest than with interest. Because frightened investors would not have waited for their notes to mature. Even a few days. And every time I refunded the principal, I would save the roughly 50% interest.

Roughly, I owed then $15,000,000. Of which $5,000,000 were interest. My total resources were around $8,000,000. And I was $7,000,000 in the hole. But, by refunding the principal only, before maturity, instead of paying principal and interest, at maturity, with $8,000,000 I would have wiped out $12,000,000 of liabilities. And made a gain of $4,000,000. True enough, I would still be in a hole of $3,000,000. But the second wild deuce would have taken care of that.

The second deuce was the Hanover Trust Company. The bank had, at that time, easily $5,000,000 in negotiable securities and plenty of liquid cash. There were not mine. They were the bank's. But I had access to them.

Now, the Hanover was located at the corner of Washington and Water Streets. The United States Attorney's office was at the corner of Devonshire and Water Streets. The two were less than one-half block apart. My plan was to have the showdown in the office of the Assistant United States District Attorney. As soon as he was ready to announce the total of my liabilities, I would have gone up to his office with all of my cancelled notes, all of my bank books, and all of my other assets, whether in the form of deeds or stocks. But, on my way over, I would have dropped in at the Hanover and grabbed enough securities and cash to make up the difference between the liabilities and my actual assets. The show-down might have lasted an hour or so. On the way back, I would have replaced in the Hanover what I had temporarily taken away. And nobody would have known the difference.

The investigation would have ended right there and then. The authorities would have to certify as to my solvency. And I would have resumed my activities with an officially clean bill of health.

All considered, I was far from licked yet. But I certainly had to be on the alert twenty-four hours of the day. For the next two or three weeks. The banks, the authorities and the press were all after my scalp.

CHAPTER XXVI

OH, BOY! WHAT A FIGHT! THE FUR IS STILL FLYING AND YOU CAN'T TELL WHICH IS WHICH!

The next day brought new excitement in the form of a petition for an injunction filed by an attorney, for one of my investors who held one of my notes for $500. Neither he nor his claim had a leg to stand on, between the two.

I scouted for the creditor all over Boston. To settle his claim. Even if I had to give ten times what I owed him. But he could not be found. Neither could I reach his attorney. So, I told Sam Bailen, one of my several lawyers, to appear and oppose the petition.

In the meanwhile, I made arrangements to retain Dan Coakley. I needed a man of his caliber to cope with the State House crowd.

Still, my hiring of Dan Coakley was a blunder. A political blunder. Some officials had no use for Dan. Dan, a firm believer in reciprocity, had no use for them. Which made it mutual. In so far as they were concerned. But it raised hell with my peaceful progress, so far as I was concerned. It placed me, so to speak, between the devil and the deep blue sea. And it was a toss up which one was the devil.

The moment Dan stepped into the picture, some officials made up their mind to take out on me what they couldn't take out on Dan. And I became the pliant pig-skin, the football, in the game between the two teams. For which I got more kicks in the slats than any man alive. It's a wonder that I can still sit down without wincing.

What I should have done, instead of hiring Dan, was to stroll down to State Street and pick me out one of those lawyers with a Mayflower pedigree. One of those blue-ribbon Pomeranians. Or Spaniels. With an appetite like a Great Dane. Or a Saint Bernard. Then, I could have gotten away with murder. Or, with millions, rather. One of my contemporaries wasn't a sap like me. He went and hired for himself a real aristocratic counsel. It might have cost him part of his fortune. But not his liberty. Like it did me.

Anyway, blunder or no blunder, I am not sorry I hired Dan Coakley. Even if I got in Dutch with the highbrows. It was worth all I went through, to meet Dan. To have his friendship. The benefit of his advice. The most competent advice in the State of Massachusetts. Bar none. To watch his brilliant mind at work. And to fight alongside of him. Against the same outfit. The same bunch of professional buccaneers whose only title to respectability rests in the fact that they are in power. That they sit pretty. Because they are subservient to the money interests.

I put in the best part of that day straightening out that customer's business. I was still searching for him and had almost given up all hope to find him, when he walked right into my office. He was upset and indignant. He had seen his name on the bulletin board of a Boston newspaper and he didn't know what it was all about. I explained the situation to him and he claimed that he had been misled into signing that petition. I rushed up to my attorney's office and made the customer sign an affidavit. Less than an hour later, his attorney withdrew the petition.

The run was progressing satisfactorily for a run. The crowd was orderly. Checks were being issued at the rate of about 200 per hour. Brother Pride was busy listing my liabilities from the note stubs I had turned over to him. Out-of-town bank accounts were being gradually reduced and the money concentrated into the Hanover Trust. There was a reason for that. By paying my depositors with checks drawn on that Bank they would have to go there to cash them. Many might feel inclined to leave the money there and open an account, and that is just exactly what did happen. Most of the money I paid out of one pocket was re-deposited in the other. It was a case of "heads I win" and "tails you lose."

The city editor of one of the Boston newspapers was still at it; that is, still dogging my footsteps, only a little more cautiously, but no less persistently. Never letting me out of his sight and nothing less than a shower of buckshot would have discouraged him, and I was just wishing that he was a "deer" instead of being a "dear." Just then my attention was diverted by one of his confreres, the publisher of a local financial sheet.

That he, of all men, would come out and call me names was something I couldn't swallow.

Out of a clear sky he gave me more display on his sheet than he ordinarily would have given to one of his friends; the stock-exchange paper hangers, even at one hundred bucks an inch. What he didn't say about me wasn't fit to be printed, no more than what I thought about him was. And he did not spare me, only he forgot to hire a lawyer as a proof-reader, with this result that he left himself wide open and I flew at him. I sued him for $5,000,000. He had a dairy farm near-by and I attached to everything he had. I tied him up so thoroughly, that the morning after the attachment even his cows couldn't give milk.

About that time, a telegram from New York came to liven things up a bit. As if they weren't lively enough. The telegram informed me that a certain Joseph Hermann "of London and Melbourne" was on his way to Boston to confer with me on an important deal. A little later I got a phone call informing me of his arrival, and I arranged to meet him at the Parker House.

The interview was brief. He said he represented some New York and Paris capitalists. And had come to purchase, if possible, the Securities Exchange Company. His statement found me quite unreceptive. I did not believe he meant business. However, I talked things over with him. Just to see what his game was.

"Are you familiar with the conditions of the Securities Exchange Company?" I asked him.

"Only to the extent described by the newspapers," he said.

"Well, then, let me inform you," I suggested. "All of the company's assets consist of cash. Its liabilities are represented by notes. When I shall have redeemed my last note, all of the left over cash will be my own property. The company will have a fairly good supply of office furniture, fixtures, equipment and a wonderful mailing list. Are you prepared to buy that?"

"Yes," he admitted, "that's just exactly what we want."

"All right, then," I said. "We will not bother to figure out the furniture, fixtures and equipment. I will throw all of that in, for good measure. But we must agree upon the price you shall pay me for the mailing list and the good will."

"We shall leave it to you to name your figure," he stated. "We shall endeavor to meet your terms."

He acted too blamed optimistic to sound convincing. I had a feeling he was bluffing. So, I decided to name an exorbitant figure. Which would have forced him to show his hand.

"I want ten million dollars," I told him.

"It is a large sum," he commented, "but we are prepared to produce it. Personally, I accept your figure. However, I must return to New York to consult with my associates. We will all be here the day after tomorrow to discuss the details. Will it be convenient for you to meet us on that day at the Copley Plaza between 9 and 10 A.M.?

"Yes, I'll be there," I agreed. "But please remember that my price is for cash on delivery. Subject to increase, if you cause me to lose my time unnecessarily."

At the appointed date, we met again. We discussed the matter for almost two hours. By then I had learned that they were fully supplied for funds. There was even a rumor current that they were backed by one of the largest banking houses in America. A rumor which I was never able to verify. But I had grown suspicious of their purpose. So, I altered my terms.

"I do not know what you propose to do with my company," I told them. "I assume that you want to use it to further some enterprise of your own. I could turn it over to you and give you a free hand. Without worrying what may happen afterwards. But I feel morally obligated toward my investors and the public to protect them against dangerous investment. So, I will sell out only to persons who will not use the company for illegitimate purposes. I don't know any of you gentlemen. Even if I did, I would not assume the responsibility of endorsing you. Therefore, I will sell to you on the condition that you will give me an executive position in your company. I don't want any salary. I ask for no share of the profits. All I want is the most ample opportunity of keeping a check on what you are doing. After I shall have satisfied myself in that respect, I will withdraw."

"We are willing to agree to that," Hermann said for himself and the others.

Regardless of the obstacles I created, I simply couldn't discourage those men. However, they were not ready to close the deal that day. And suggested a new conference.

"I don't see any necessity for further conferences," I stated. "You know my terms. Have a regular contract drawn up by your attorneys and bring it to me for my signature. We can close the deal in fifteen minutes. I cannot see you again until you are ready to close the deal When you are, you shall exhibit to me a certified check before I even consent to talk to you. I am too busy right now to spend any more time in this sort of conference."

The Hermann's visits could have been my salvation. If I had had sense enough to take advantage of them. Without developing a conscience. Which was never appreciated either then or since. But my mind was running along the wrong channels at that time. I had more life preservers thrown at me than a ship-wreck.

Yet, I was so wrapped up in those crazy notions of mine that I never so much as reached for one.

I felt so sure of myself that I never looked ahead further than my nose. Big and little politicians were trailing me right along. And I didn't have to go looking for overtures. They were being made right to me.

For instance, one morning a couple of politicians called at my residence before breakfast. One of them was a representative of a New York newspaper. I received him in the sun-parlor in my pajamas.

"Mr. Ponzi, here are our credentials," said he, handing me some letters which showed his connection with the Republican National Committee. "We are sent by one of its leaders and the National Committee of the Republican Party to solicit your contribution to the campaign. We have been told of your success and liberality and have taken the liberty to hope that you will contribute."

"You may have come to the right church," I replied to him, "but I believe you have stepped into the wrong pew."

"Why?" he asked. "You certainly appreciate the fact that Senator Harding will be the next President of the United States?"

"Perhaps," I remarked. "Unless Cox beats him to it."

"Not a chance," he said. "The Democrats are due for defeat."

"Well, how much do you expect from me?" I inquired.

"Anything you care to give," he answered. "In your position, you would hardly contribute less than a thousand dollars, I believe."

"Is that all you want?" I asked. "Why, a thousand dollars is no money at all. I thought you said I was liberal."

"Of course," he said. "You can give as much as you like and we can assure you that the more you will give us the more we shall be pleased."

"If I were to follow my inclinations I would contribute considerably more than a thousand dollars," I told him.

"We are glad to hear it?" he acknowledged, "How much will you say?"

"How much will I say?" I repeated after him. "I will say a cool million, in round figures."

"A million dollars?" he asked with amazement.

"Yes," I confirmed. "A whole million dollars, gentlemen,… to hang the whole Republican Party!"

"Evidently your language indicates that you have some grievances against our party," said he.

"Grievances? That's no word for it!" I told him. "While you are here soliciting my contribution, look at what they are doing to ruin me. They are all Republicans. Wouldn't I be a sap to contribute to their political success while they are actually conspiring against me?"

"We didn't know that," he apologized.

"Inform yourselves, then," I suggested, "Go and tell your friends to lay off. And then come and talk to me about contributions. But not before."

"We will see what we can do," he said. "Will you make an appointment to see us later?"

"I will not make an appointment now," I told him, "But you can have a talk with Judge Leveroni. If you reach a satisfactory arrangement, I will accept his recommendations."

Once more I had turned the cold shoulder on the team. The winning team. In some way or another, I always managed to place my bets on the wrong horse. For a gambler, I certainly was a corker!

CHAPTER XXVII

A COUPLE OF WINDJAMMERS SETTLE MR. PONZI'S GOOSE AND HE GOES DOWN FOR THE COUNT OF TEN

Toward the end of the first week of the run, my payments had dwindled down to a few thousand dollars per day. My investors had made up their mind to hold their notes until maturity. And earn their 50%. The editor of one of the Boston papers was at his wits' end. For the first time in his life, he had found himself up against a surprise. A "banker" who could weather a run. And he did not know what to make of it.

However, he had gone too far to give up the fight. He spent a busy week-end, preparing for a new offensive. And recruiting some allies. Among them, one Chiaramonte. Chiaramonte knew me from Montreal. And brought to him the information that I had done time in Canada.

Monday morning, August 2nd, that newspaper carried a huge headline, "PONZI HOPELESSLY INSOLVENT," it read. Which contained many inaccurate statements. And some utterly false. That blow was a whopper! If it didn't knock me cold, it's a wonder. But it certainly raised the deuce! The run blazed out with new vigor. And for the next two or three days I paid out close to two millions.

But the run wasn't the only thing I had to contend with. I was being double crossed on all sides. One of my help saw his opportunity and took advantage of it. He issued notes by using straw names and managed to file the stubs with the rest of them. All my clerks could do was to compare them with the stubs. We had no means of knowing whether or not we had ever received the money. So, we paid them. How many of them? I don't know exactly. But I estimate the defalcation at about a quarter of a million.

Beside him, other clerks robbed me of at least one hundred thousand dollars. By the simple expedient of not marking "cancelled" notes which had already been paid, and presenting them for payment through a confederate. I have a complete record of them. As well as of other notes issued by some clerks to themselves or their relatives and paid with interest long before maturity. They did that by juggling the date on the face of the note. A date that should have matched the cancellation date on the revenue stamps. But it didn't

The stealing wasn't serious from the standpoint that it diverted my attention away from other matters. Because it didn't. I was aware of the fact that I was being robbed. But it was serious on account of the inroads it was making in my bank balance. My cash resources had been reduced considerably. By about $5,000,000, I would say. And the run was still in full swing.

It took me the best part of the second week to restore confidence among my investors. But, by Friday, I had the situation again under control. And the Boston newspaper pursuing me the hardest, was up a tree once more. Except for the Canadian lead. I learned of it somehow. And I fully realized that I was in for the worst wallop yet.

The newspaper had sent one of its best men up to Montreal. It was only a question of days before the cat would be out of the bag. Exposure could not be avoided. And exposure spelled ruin. In a way. In every way, perhaps. Except in the matter of the investigation. Of proving my solvency to the satisfaction of the officials and the public. I still had confidence to come out on top at the show-down with auditor Pride. But I needed a few more days. It was vital for me to delay the exposure until after the show-down.

In order to do that, it was necessary for me to be posted as to the progress the reporter was making in Montreal. I had ways and means of learning what was going on in the editorial rooms of that paper. Ways which permitted me to know the Ponzi news before the paper was in the streets. But I needed more than that. I needed to know certain things even before it did. Because I didn't want it to bluff me into some damaging admission of fact. What it might know, was not really dangerous until it could prove it. And when I was sure it could prove it, I wanted to be one step ahead of it. But I did not want to take that step until and unless I had to.

I solved the problem of learning of its progress by intercepting its telegrams. Both coming and going. A copy of every incoming telegram relating to Ponzi would be delivered to me even before it was delivered to it. Outgoing telegrams would be communicated to me almost instantly. Day or night. Its office phone was also covered. How did I arrange that? Well that would be telling. And involving others. But I can say that for each communication I paid a fancy price. Even for a millionaire. Like I was. Or supposed to be.

While this was going on, one of the officials after me was showing marked hostility. In a number of ways. Getting under my skin regularly. Like a splinter. And drawing out curses from me. He got to be so cordially hated around my office that one of my help, the "black sheep" of the family, decided to have him "removed". To have him "taken for a ride."

Through his connections with the underworld, he sent to New York for a gunman. He agreed to pay him $15,000 for the job. The killing of the official. Which was entirely too much money. For any official. But, in so far as that official in particular was concerned, he wasn't worth the powder to blow him to Hades.

After he had the thing all arranged, this employee came to me and told me about it. Nonchalantly. He wanted me to watch the fireworks.

"What do you think I am?" I jumped at him. "A murderer? Do you think that I would stand for anything like that? Don't you dare to go ahead with it. Because, if you do, I'll deliver you myself to the police."

"But the gunman wants to go through with it now," he protested. "He wants his money."

"A fine mess you got me into," I told him.

"I thought I was doing you a favor," he apologized.

"I don't want any of that kind of favors!" I replied to him. "If that official is an obstacle to me, I can take care of him. I don't have to have him killed. I can spend half a million to discredit him. You leave those things to me. No, you go and find that fellow and send him to me."

The go-between as he was known, was one of the old time "gang lords". He undertook to dissuade the gunman. And send him back to New York. But he charged me $4,500 for his services. For which I made him sign a regular receipt. Only, I put an arbitrary date to it. So as to cover up things.

That is about the worst investment I ever made. In the opinion of many. Including myself. I actually went and paid good money to save an enemy's life. The man who hounded me unremittingly for the next years. Notwithstanding his knowledge of what I had done for him. Because, on a latter occasion, when he had me by the nape of the neck and was telling me what a dangerous person I was, I didn't miss the chance of telling him what I had done.

But I do not regret the bad investment. Even if I paid a price far in excess of what his life was worth to the community. Forty-five cents would have been more like it. But a human life is a human life. And I wouldn't have one on my conscience for any amount.

The week-end found me scouting for cash. I don't believe I had $500,000. And stocks and property amounting to another million or more.

I tried to negotiate the certificate of deposit. Everywhere. Even in New York. But I couldn't do anything with it. The big banks had passed the word around to lay off. And everybody was laying off. I thought of Tom Lawson. The only one likely to help me. He was approached. But he wouldn't handle it. Or couldn't. I don't know which.

Things looked kind of black. I had to have money to carry me along until the auditor was ready to report. And nobody knew when he would be ready. He might have been ready in four or five days. Or in a couple of weeks. At any rate, I had to have money for the next Monday. Because the $500,000 couldn't last much over the week-end.

I consulted with the Hanover's officials. About cashing on the certificate of deposit. It was suggested that I make out 18 demand notes for $80,000 each and one for $60,000. And that I have them signed by "dummies". Employees of the bank and others. Then, by endorsing the certificate over to the Hanover as collateral, the bank could have discounted the notes and credited the amount to my account. I did as it was suggested.

On Monday morning, August 9th, I started to draw against the proceeds from those notes. To an extent of about $450,000. Why that much? I don't remember. I probably drew against my account for much less. But some out-of-town checks, which had not been cashed as vet, might have come in. At any rate, $450,000 of the funds from the certificate of deposit were used up on Monday morning. Then, hell broke loose! From the State House. The Bank Commissioner sent down word that the transaction was in violation of the banking laws. Maybe it was. Maybe it wasn't. It surely didn't make sense. I had $1,500,000 in that bank. And the Bank Commissioner said that the law did not permit me to draw against it! If that was the law, it was strange to me! If it wasn't the law, the commissioner was decidedly wrong. No two ways about it. He ordered me to cover the overdraft immediately. Or, else …

I managed to cover it. By splitting the original certificate into three smaller ones. Two for $500,000 each and one for about $57,000. The difference went to cover the overdraft. That, was the best I could do. Legal or illegal.

But I remained without liquid cash. And I couldn't stop issuing checks. We issued some. Hoping to raise some cash in the meanwhile. Before they were presented for payment. But we couldn't make it. The Hanover Trust had to turn several down. An attorney for several investors, who for a week had been trying to round up some of my investors in order to petition for a receivership, saw his chance. He filed a petition in the bankruptcy courts. And that had the effect of stopping any further payments. Title to everything I had, automatically passed from me to the United States Courts.

It was the same night, I believe, that a city editor came up to my house in Lexington about midnight. Flashing a telegram from Montreal. But without allowing me to read it. Which wasn't necessary, anyway. Because I already had received my copy of it. He waved it at me and said that he had proofs of my Canadian conviction. Was going to print the story in the morning. Wanted to know whether I had anything to say.

"Yes, I have," I told him." You go ahead and print that story. But that will be the last issue of the paper that will ever be issued. You don't dare to print it. And you know it."

He didn't print it. He couldn't print it. The man from Montreal had wired him that, before he could be absolutely positive I was the same man who had been convicted in Canada, he would have to compare pictures. And so, I had another respite for a day or two. But the exposure was unavoidable.

Under the circumstances, the best I could do was to come out myself with the story. Before the newspapers did. So as to take the sting out. I sent for Joe Toye. Then with the Boston Record. Now, city editor of the Boston Traveler. I told him the facts. Gave him permission to use the story as soon as he had information that the papers were about to come out with it. He used it. On the 11th, I believe.

My sole hope rested now in my ability to produce sufficient assets to meet my liabilities. Auditor Pride was about ready to report. And I was all set for the show-down. I had been down to the Hanover Trust. Picked out the securities I could use. Arranged for their temporary removal. And everything. But even that last hope failed to materialize.

Word reached me that the Bank Commissioner was up to something. I rushed down to the Hanover. And found the bank officials listening to an attorney. He was telling them that the Bank Commissioner intended to close the bank.

"What for?" I asked.

"Because he claims the bank's conditions are not sound," he replied.

"Not sound," interrupted one of the bank officials. "It's sounder now than it ever was. Our deposits have increased about 100% within the last two months."

"Well, maybe so," the attorney conceded, "but the Bank Commissioner insists that the bank has some bad loans on his books."

"You can tell him he is mistaken when he says that," I butted in. "This bank has not and cannot have any bad loans."

"Why?" asked the attorney.

"Because," I replied, "when I bought the control of this bank I went up to see the officials and told them that I would personally guarantee all loans. This bank holds a paper from me authorizing its officials to charge to my account any loan which may be deemed unsafe by the Bank Commissioner."

"That's true," one of the bank officials confirmed. "We have that paper and the Bank Commissioner knows about it."

"Furthermore," I went on, "the Bank Commissioner told me when I bought the control of the Hanover that the bank was in sound condition. If it was then, it is still more so now. You go up to the State House and tell them what I told you. Tell them also that I still have over a million dollars in this bank to take care of the bad loans."

"I will go and see them," the attorney agreed. "After what you tell me, I am prepared to argue with him."

He went. Inside of half an hour he was back.

"Did you see them?" I asked him.

"I did," he replied.

"What did they have to say?" I inquired.

"They didn't say anything," the attorney stated. "They wouldn't say anything. He told me to see the Governor."

"And did you see the Governor?" I pressed him.

"I did," he answered. "And this is what he said: 'The Hanover must be closed'."

And the Hanover Trust Company was closed the same day. And then they got me.

The morning after, the 12th, I remained home. There was nothing I could do. But wait for things to happen. And happen they did.

First, Hermann called. I received him. And he exhibited a check for $10,000,000 made out to me. The check was certified for $10,000,000 made out to me. The check was certified to by the Harriman National Bank of New York. For a moment, the sight of that check rekindled my hopes. I asked him if he had the contract with him.

"No," replied Hermann. "I have not brought the contract. We have not changed our minds. But the latest developments have caused us to defer the matter for a couple of days."

"Oh, I see!" I remarked, using a commonplace expression. What I really meant was that I realized perfectly well the case of cold feet he had developed. Nevertheless, I made him stay with me and we chatted for a while.

Then, the telephone rang. I answered it. It was the United States Attorney. He asked me to go right down to his office because Pride was ready to report. I told Hermann that, if he cared to wait, he could. I had to go in town. I jumped in my car and went.

In the United States Attorney's office, I found, Mr. Assistant United States District Attorney, an auditor and one or two more people.

"Mr. Ponzi," said the Assistant United States District Attorney, "the auditor reports that the total of your outstanding liabilities is about $7,000,000. Are you ready to produce sufficient assets to cover them?"

"My liabilities are not $7,000,000," I replied. "I don't believe they are one-half of that sum."

"But you have agreed to accept the auditor's figures," he reminded me.

"Yes," I admitted. "I have agreed to accept his figures. Because I assumed, when I made the agreement, that his figures would not be more than a quarter of a million out of the way. Nevertheless, since I have agreed. I shall live up to the agreement."

"Are you ready to produce the assets?" the Assistant United States District Attorney insisted.

"Yes, I am," I told him. "But my total assets are of about $3,000,000."

"Then, you are $4,000,000 short," he remarked.

"I am," I conceded. "On the basis of the auditor's figure. Which I am precluded by my own agreement from disputing."

"Under the circumstances, I am sorry, Mr. Ponzi, but I must do my duty," he announced. "I must place you under arrest."

A United States deputy marshal stepped forward.

"Mr. Ponzi," he said, "in the name of the United States of America you are under arrest."

"O. K., marshal. I am your prisoner," I replied, making ready to follow him to the post-office and arrange about bail.

My house of cards had collapsed! The bubble had busted! I had lost! Lost everything! Millions of dollars. Credit. Happiness. And even my liberty! Everything, except my courage. I needed that to take my medicine like a man. To meet the future. Unquestionably, I was licked. For the time being. But no man is ever licked, unless he wants to be. And I didn't intend to stay licked. Not so long as there was a flickering spark of life left in me. Like there was then. And there is now. Life, hope and courage are a combination which knows no defeat. Temporary setbacks, perhaps, but utter and permanent defeat, never!