Durant weekly news. (Durant, Choctaw Nation, Indian Territory [Okla.]) 190?-1944, 1920-08-27
FRIDAY, AUGUST 81, 1920
PONZIED FINANCE


one word in the last few weeks ant
that is the word "Ponzied." A strang'
thing about the word is that nobod.
seems to be able to define it will
any degree of exactitude. 1t seems t.
differ from "Frenzied" as applied t,
financial operations in that "Fren
sled" finance benefits only the finan
cier to the great detriment of the
trusting investor while "Ponzied" fl.
nance seems to be of great benefit
to the investors.
Ponzi, of Boston, the city of cul,
ture and beans, sprang into national
prominence when the minions of the
law started an investigation into his
methods. The starting Of the investi-
cation precipitated run on him by
his clients who held his notes drawing
fifty per cent interest running for
three months.
Ponzi cheerfully turned his books
over to the auditors of the govern
ment and stated that he would give
back the money to any of those who
held his notes whether the notes were
due or not. The run lasted three
days and details of policemen were
used to keep order in the lines
Of frightened depositors or rather
note holders who wanted their money.
Undisturrbed by the commotiOn Ponzi
redeemed his paper as fast as it
could be presented paying the promis-
ed fifty per cent interest on all notes
which were due and cheerfully refund
ing the money to those whose notes
had not run. the prescribed three
months.
The run lasted three days and dur
ing that time Ponzi paid out $780,
600; and then the run ceased. There
are few, even the most stable finan-
cial institutions of the country that
could have stood such a sudden and
protracted run and survived, but
Ponzi's paying ability did not seem to
be impaired.
He had done everything that he
had been asked to do. He had sub
mitted his books, he had completely
suspended his borrowing operations
and he had voluntarily repaid loans
which he was not obliged to repay for
three months. Meanwhile he went on
making good his promises to deposit
tors who held their faith in him. On
every matured loan, no matter what
the amount-onc was for $50, ,00O-- he
paid back the principal and added 80
n IN Of Mt &c,
ably no city within days ride of
Boston where some individual has not
enriched himself through Ponzi's Of
fer.
Financial experts said that it
couldn't be done; but he did it.
To every inquiry, and there have
been hundreds, as to how he can pos
sibly pay the interest which he offers,
Ponzi returns, That's my secret"
There are two things which he abso-
lutely refuses to do. One Is to show
the source of his wealth and the other
Is to detail his resources. II will show
the authorities enough funds to cover
MI my obligations" he says, "but
that is as far as will co.
The auditors could find nothing
wrong with his books and public con-
fidence was restored; but the author
tiles still continue to refuse to permit
him to resume business.
Meanwhile a Boston financial
pournal which Ponzi has sued, keeps
up a continual barrage on his opera
tions. This Journal suggests that
Ponzi is merely washing this weeks
payment with last weeks deposits and
says Ponzi has been Satisfying his
obligations with funds which equita-
bly, belong in part to his other credi-
tors"
Suppose" continues this paper, "a
man took in 100000 day. promising
to pay after IS days $3.50 for every
500 received. At the end of As days
he would have taken in $4,5OO,OOO
without paying out cent. If he had
deposited the whole $4.5OO.OO in local
banks, it would be easy enough for
him to meet the $l5O,OOO that he
would have to pay out on the 45th
day. If he then were stopped from
taking in money. he could still cOntin-
ne to pay $150,0OO a day as his notes
'matured for 80 days, before his money
would be exhausted. but if he were
permitted to do this there would be
nothing left for those whose money
was taken in the last Is days of oper-
ations."
It is fact tnat the main trouble
seems to be that Ponzi is an upstart
He broke into finance last September
and in defiance of all of the rules of
the game, he gave small investors
the lions share of his winnings. The
profits have been enormous, but there
is nothing impossible about the mat
ter. Fifty per cent profit in three
months is two hundred per cent per
year and since the war started there
are doubtless many concerns which
have done that well, but only those
on the inside know it as a general
thing. McAdoo asserted in one state