Charles Ponzi (1920): Boom months

A real instrument, an impossible book International Reply Coupons existed. Postal authorities sold them so a correspondent abroad could send a reply without buying local stamps. Small price differences between countries were a known curiosity among people who followed postal circulars.

What the 1920 investigations showed is that the global stock and daily issuance of coupons were tiny beside the cash Ponzi was taking. The Post and Barron treated that mismatch as the public proof that the advertised engine could not be running at the advertised scale. Notes promising 50 percent in 45 days, later advertised at still higher rates, drew working- and middle-class depositors as well as larger tickets. Agents were paid to recruit. The Securities Exchange Company became a local sensation.

As newspapers questioned the arithmetic, some investors redeemed and others doubled down. The run and the reporting arrived together. Authorities took books and stopped new intake. Ponzi pleaded guilty to federal mail-fraud charges in November 1920 and received a five-year sentence, of which he served about three and a half years. Massachusetts then prosecuted larceny; after a 1922 mistrial, a 1925 conviction produced additional state time.