Miss Annabelle Winslow was born in Boston, Massachusetts on the eve of the Civil War. Living in Massachusetts, as she did with her family, she was not much affected by the events of the war, and as she was merely an infant and toddler throughout most of it, it’s not clear that she was even aware of the battles and skirmishes that were so far away. She didn’t have any immediate family serving in the Union Army. Her father, a tinsmith, walked with a decided limp as a result of a mishap in a carriage many years ago, and Annabelle’s only siblings were her sisters Linda and Suzanne. The Winslows were a family of modest means, but went about the town proudly. Annabelle attended school, where her abilities were noticed by both teachers and headmistresses. When she turned 19, in 1878, she took a job as a teacher in the Thistlewood School. It was west of Boston, far enough that she moved out of her parents’ home and took rooms in Mrs. Simpson’s Rooming House for Women.
Mrs. Simpson ran a clean and upstanding house where 8 young women boarded. The women were all unmarried, and as their ages were all within a few years of one another, and they all found themselves in similar circumstances, they got on quite well together. It was at dinner one night when Miss Winslow heard about the Ladies’ Deposit Company. It was a savings bank having the unique distinction of accepting deposits only from unmarried women. According to Mary Anders, who brought the news to the dinner table, the Company was in league with a Quaker charity, and although it was a commercial enterprise aiming to make good, it was also dedicated to the mission of assisting young women of modest means to save their money and make their way in the world. According to Miss Anders, who had it from her friends at the emporium where she was employed, anyone who deposited a sum of, shall we say ten dollars (just to make it easy), would receive twenty cents interest per week.
The very next day, she presented herself at that same address.
Miss Winslow, being a teacher and familiar with arithmetic, quickly worked out in her head that the same ten dollar deposit, if untouched for a year, would double in value in only a few months. And if one were to augment it with additional deposits, the total would rise to an even more impressive sum. Of all the young women at Mrs. Simpson’s table that evening, Miss Winslow was perhaps the most excited at the possibilities offered by the Ladies’ Deposit Company. When Miss Anders kindly shared the address of the company’s offices, which were not far from Miss Winslow’s school, she made a note of it. The very next day, she presented herself at that same address, and having satisfied herself that the company’s representative appeared to be of sound business sense, and that the company was well presented with what could well be gold leaf embossing on their sign, opened an account with a deposit of twelve dollars and fifty cents (that being the bulk of her savings to that point).
Miss Winslow left the offices of the Ladies’ Deposit Company with a printed pamphlet detailing the company’s founder, a Mrs. Sarah Emily Howe. Mrs. Howe, who originally came from Providence, Rhode Island, had moved to Boston with her husband at the end of the war, where she embarked on her endeavor to assist young ladies who found themselves in situation perhaps similar to that which Mrs. Howe herself had experienced earlier in her life. That very evening, Miss Winslow shared the information with her dinner companions at Mrs. Simpson’s table, and convinced three of them to accompany her to the Company to open their own accounts.
Miss Winslow was motivated in this by her conviction that an investment in the Ladies’ Deposit Company made outstanding business sense, and also by the assurance made by the company representative that for every acquaintance she was able to inspire to open an account, she would receive up to fifty cents gratuity, deposited directly into her own account. As this turned out to be quite true over the next few days, Miss Winslow made it her business to turn conversations she might have with other young ladies (some of who were, like her, teachers) to the advantages of opening their own accounts.
It suddenly seemed much more reassuring than a storefront.
It was nearly two years later that Miss Winslow, whose original deposit had by then increased to four hundred and eighty-seven dollars, more than she had ever dreamed of possessing, read in the Boston Daily Advertiser that questions had been raised about the Ladies’ Deposit Company, as well as its founder, Mrs. Howe. As her parents had taught her to be cautious in business, as in life, and as she had begun to have misgivings about her account after receiving less than satisfactory answers to questions she had posed to the company representative, Miss Winslow wasted not a moment before presenting herself at the company’s offices and requesting her account be immediately closed and the proceeds turned over. This was done to her satisfaction, and before returning to Mrs. Simpson’s Rooming House for Women (where she still resided in spite of her financial success), she deposited her money in the respectable Savings and Loan bank just down the street from the Ladies’ Deposit Company. The Savings and Loan, she noticed, was housed in a granite edifice, which suddenly seemed much more reassuring than a storefront, even with a sign embossed in gold leaf. At dinner that evening, she encouraged her companions to take similar steps.
In fact Miss Winslow’s quick action saved her from the fate of many other depositors to the Ladies’ Deposit Company, most of whom lost their money. Additional stories about the bank appeared in the newspapers in subsequent days, leading to a run on the bank and its collapse the following month. Even worse, the entire enterprise was revealed as nothing but a fraud. The astonishing rate of interest paid on deposits was not generated by the clever investments and wise business decisions that the company representative had so confidently alluded to — but never explained in detail. Instead, it was simply the money from later depositors shifted to the earlier accounts, in the vain hope that the scheme would simply continue as new depositors forever appeared. Mrs. Sarah Howe was arrested, and as Miss Winslow later read, served three years in prison.
Miss Winslow thought the matter closed and proceeded with her affairs, in 1883 becoming engaged to Joseph Beaumont, whom she had coincidentally met the day she opened her new account at the Savings and Loan. Mr. Beaumont was employed by that institution, and by 1883 had been elevated to the post of Bank Manager. Miss Winslow’s account had similarly been elevated, and the young couple was happily anticipating a well-funded beginning to a prosperous life together. Then in 1884 Miss Winslow was surprised to read about a new business venture in Boston: the Women’s Bank. It reminded her strongly of the Ladies’ Deposit Company, although it promised only seven percent interest per month on deposits. Looking more carefully into the background of the Women’s Bank, Miss Winslow was not surprised to see a familiar name: Mrs. Sarah Emily Howe. Miss Winslow shared this knowledge with her fiancé as well as her companions at the Rooming House (most of whom were the same), but thought no more about it.
That difference became profit that one might share in.
Many years later, in 1919, Miss Winslow — now Mrs. Joseph Beaumont — was a prosperous Boston housewife, mother, and grandmother and well known (as was her husband, now a bank president) in the Boston banking community. As such, she heard of a new financial business that had opened on School Street. The business was selling international reply coupons — these enabled international commerce by being a medium of exchange for postage. One would purchase IRCs for the cost of postage in one’s home country, then exchange them for another nation’s postage. If one found a variance in the value of postage — for example, if an IRC bought for one dollar in Italy would buy a dollar’s worth of Italian stamps, but could be exchanged for US stamps of much higher value, that difference became profit that one might share in by investing in the new business.
Mrs. Beaumont, even at sixty years of age, was possessed of a sharp mind and shrewd judgement. When she read that this new company was claiming investors would double their returns in just 90 days, she immediately said to Mr. Beaumont, “there’s something not right there. It’s just like that Mrs. Sarah Howe back in the ‘80s, only worse. Who’s behind it?”
Mr. Beaumont charged a clever employee of his bank to answer that very question, and the next day was able to inform his wife that the company founder was a Mr. Charles Ponzi. The man was said to have a very pleasant demeanor, present an elegant façade, and to speak fluent English, Italian and French. “Stay away from him,” answered his wife. “It’s going to end badly.”
She was quite right. Charles Ponzi was running a more complicated fraud than Mrs. Howe had, but it was cut from the same cloth. He was, temporarily at least, more successful; he brought in millions of dollars. He was caught, of course, and the scale of his scheme was so big (nationwide, by about 1920) that we still call that kind of fraud a “Ponzi scheme.” Oh, and why am I going on about this on March 3? Because today is Charles Ponzi’s birthday, of course.
Charles Ponzi and Sarah Emily Howe are quite real, and so were their schemes. Miss Annabelle Winslow, as well as her friends and family, are unfortunately fictional — although plausible. Someone born in Boston around 1859 or so could easily have been aware of both of those con artists.
