Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [45]
Put another way, Ponzi had chanced upon what he was certain was a legitimate, foolproof formula to Get Rich Quick.
In contrast to con artists who use stealth and subterfuge to target individual marks for big scores, Get Rich Quick promoters generally take a wholesale approach to generating wealth. When critical masses of people have ostensibly prospered, their friends and neighbors come running, setting off a financial frenzy. By the time Ponzi appeared on the scene, the people of Boston and New England had had plenty of experience with Get Rich Quick operators. Unlike Ponzi, however, most promoters paid no attention to the boundaries of legality, focusing only on the greed and gullibility of their audience.
Fast-talking salesmen had promised fortunes from silver fox–fur farming and from engines that supposedly used water for fuel. Some had claimed divine intervention or inspiration. Many had told tales based on high finance—offering stocks, bonds, insurance, and complex loan deals with fraudulent underpinnings. Some had combined elements of several approaches to turn themselves into money magnets. What they’d all had in common was a three-step playbook: splash, cash, and dash. That is, make a big impression, grab as much money as possible, and disappear before being exposed.
In the late 1890s, a handsome Baptist minister named Prescott Ford Jernegan, the scion of a well-known whaling family from Martha’s Vineyard, declared that a “heavenly vision” had delivered unto him the secret of extracting gold from seawater. He shared this revelation with several prosperous members of his former congregation in Middletown, Connecticut, who agreed to provide financing to test his discovery. Among them was Arthur B. Ryan, a former city alderman and partner in a successful jewelry company. Less publicly, Jernegan enlisted his boyhood friend, one Charles E. Fisher, a burly confidence man and professional diver from Cape Cod. Minister Jernegan once displayed his true nature in a letter to Fisher: “Money and lust,” he wrote, “have been the two most vexing problems in my life.”
Jernegan needed proof of his “discovery” to attract big money, so one winter night he sent Ryan to a deserted resort on Narragansett Bay in Rhode Island. Swathed in fur coats to fight the chill, Ryan and an associate went out to a pier, cut a hole through the ice, and dropped into the water a box with iron bars and a secret catalyst that Jernegan called an “accumulator.” Jernegan claimed that a current of electricity, carried by platinum wires attached to the accumulator, would attract noticeable amounts of gold within twenty-four hours. While the experimenters waited, Jernegan’s accomplice, Fisher, took a back route to the resort on horseback. He slipped into a diving suit and followed the wires through the icy water to the box. He dropped nuggets of gold into the accumulator box and vanished without being seen. When the box was pulled to the surface the next day, Ryan tested the nuggets with tools of the jewelry trade. The gold was real. Ryan believed it had truly been sucked from seawater. He declared the test a rousing success.
Word spread quickly, and soon Jernegan and Fisher began planning the Electrolytic Marine Salts Company in the remote fishing village of North Lubec, Maine. Jernegan said he chose the site because it boasted a daily twenty-foot rise and fall of the tides, which would send an enormous volume of seawater through the huge accumulating equipment he intended to build. He incorporated the company in November 1897 with $10 million worth of stock for sale at a dollar per share. Gold similar to the nuggets pulled from Narragansett Bay were displayed in Boston and elsewhere. Already primed by recent news of the Alaska Gold Rush, investors threw money at the idea. Newspapers throughout the region could barely contain