The Bamberg herald. [volume] (Bamberg, S.C.) 1891-1972, 1920-09-16
THE PONZI SCHEME.
Hahson Calls Attention to Three In
teresting Points.

do not believe in post mortem. The
Ponzi episode, however, shows us
some very important things. 1t re-
yeals to us that:
|. The average man should not try
to invest his money to earn more than
the prevailing market rate.
2. The bank should make interest
On their deposit in proportion to the
rate which they can earn on thelr
money.
3. There will be no trouble getting
people to save and invest If they are
Maid the full interest that their money
is worth.
I have a good deal of sympathy Tor
the people who we're caught IN the
Ponzi affair. Some Of those who DIT
are Just the usual group commonly
called "suckers." They are always
present when there is chance to be
duped. The rest are largely the vic
tins of circumstances.
Everybody has heard of prodigious
profits in foreign exchange, a subject
not one man in a thousand really
knows anything obout. Then along
came a man who claimed tc give the
common people big share of profit
from foreign exchange manipulation.
Many fell for his story. All that
saved many experienced investors
from the same fate was they knew big
profits meant bigger risks. Fifty per
cent. in As days was too big a risk. So
they stayed out.
The average wage Garner thought
he saw a chance to get a part of the
swag which the bankers are supposed
to have been getting. This was the
argument that put Ponzi's scheme
across. What is more any faker that
comes along can make haul with the
same cry.
Investing your money is just like
working for wages. In one case you
sell the use of your money for Ger
tain rate of interest. In the other case
you sell your wage for a certain wage.
If you try to get more wages, than
you are worth you soon lose your job.
If you try to get more interest than
your money is worth you soon lose
your money. The trouble with people
who bought .Ponzi notes was they be-
lieved their money to be worth more
than it really was.
How much was your money worth
before the war? Three and half to
four per cent was fair rate If you
would take a moderate risk. Seven
or eight per cent was big risk.
Today, the price of money has gone
up, just like the price of groceries.
You can buy securities which will
. yield you or 7 per cent. with little
risk, or per cent. of you can take a
moderate risk. If you put your money
in savings bank you can get 5 per
cent. and you don't have to worry
about picking out the right securities.
In many cases the banks are MAX
ing much larger profits than they used
to because of higher rate that they
charge when they loan money. And
they sometimes make profit on for
eign exchange transactions. They are
not making anywhere near as much
as most people think. If the bank
would tell the public more about
their earnings, it would save great
deal of trouble.
A bank should treat it's depositors
as partners in the business. If it can
get more interest for the money it
lends, it should be willing to pay
more in the same proportion, for the
money which it deposits with it. The
time is not far off when some en-
terprising bankers will adopt this
plan. They Immediately will get the
confidence of the public, and all
hands will make more money for it.
In few months time Ponzi would
raise over s10,0G0,000. The people
had plenty of money to lend when
they thought they could get so per
cent month. What is more, every
body who could save few dollars
did it in order to get in on this
scheme. Nobody is ever going to pay
such rate for money, but the princi-
pie is there just the same.
The government is trying to en-
courage saving. They way to do it is
to make saving worth while. En-
courage industries to pay as much in
terest to depositors as they can with
safety.
When people see a worthwhile
profit in saving most of them will
save.-ROger w. BabsOn, noted au-