Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [39]
That same month, the Court Street office building changed hands, coming under ownership of the Tremont Trust Company, known throughout the city as “Simon Swig’s bank.” Swig was a leader of Boston’s Jewish community who treated Tremont Trust as a personal piggy bank. Swig fancied himself a political player, doing business with kingmaker and blackmailer Dan Coakley. To Ponzi, though, Swig was simply a landlord who wanted him out; Swig planned to renovate the building and charge higher rents.
Ponzi moved around the corner to a couple of dingy rooms on the fifth floor of 27 School Street, the Niles Building. It was unfurnished, so he went to Daniels & Wilson Furniture Company in the city’s increasingly Italian North End. Ponzi picked out $350 worth of used desks, chairs, a typewriter, filing cabinets, and a small rotary printing press called a Multigraph. He could not afford the full cost, so he struck a deal with the store’s owner, Joseph Daniels, a deceitful man who had anglicized his name from Giuseppe Danieli. Under their agreement, Ponzi would pay fifty dollars down and five dollars a month. Once the furnishings were in place, Ponzi had an optimistic sign painted on his office door: CHARLES PONZI, EXPORT & IMPORT. The world took no notice.
Ponzi’s original plan was to work on commission as an import-export agent, acting as a broker for domestic and international companies hoping to trade across borders. He thought he would be especially attractive to companies too small to hire such agents outright. Unfortunately, he had no contacts of his own at companies that might need his services. To attract business, Ponzi thought about printing circulars and sending blanket mailings to potential clients. But that would cost him a nickel per circular for domestic companies and eight cents each for international firms. Ponzi realized he would be wiped out by mailing fees before he collected his first commission. Instead, he decided to advertise in foreign trade magazines, but again he was stymied by the cost. That led to a new plan: He would start his own foreign trade publication, one whose huge circulation would allow him to charge lower advertising rates for budding entrepreneurs like him. Inspired, he had a new sign painted on his door—THE BOSTONIAN ADVERTISING & PUBLISHING COMPANY—and set about launching a publication he called the Trader’s Guide.
Ponzi devised an elaborate, impossibly ambitious business plan that envisioned his guide as a permanent reference book. He would distribute it in loose-leaf binders, to allow additional pages to be added as years passed and new editions were printed. To increase the guide’s reach, he intended to print it in English, French, Italian, German, Spanish, and Portuguese. The most audacious aspect of his plan was his imagined method for doubling circulation on a regular basis. First, he would mail 100,000 free copies of the Trader’s Guide to companies whose names he found in directories from the U.S. Bureau of Foreign and Domestic Commerce and the U.S. Consular Service. Six months later, he would mail those same companies an updated edition of the guide, while also sending the original mailing and the update to another 100,000 companies, also for free. Ponzi thought he could do this indefinitely, or at least until his mailing lists were exhausted. By then, he was sure, he would be rich.
The initial mailing, he thought, would cost him thirty-five cents a copy, or $35,000. To meet that cost, he would lard a two-hundred-page guide with 150 pages of advertising. The ads would cost $500 a page, with a $5,000 premium for the cover page, for a total imagined advertising income of $80,000. After expenses, he figured on a profit of at least $15,000 in the first six months. He expected his profits would double as many times as he doubled circulation.
Certain of success, he took larger quarters on the building’s second floor, Room 227, and hired two