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Merenda not only invested for himself, he bought a Ponzi note for his mother.

Others remained dubious.

After quashing the police strike in the fall of 1919, Massachusetts Governor Calvin Coolidge had turned his attention to what he believed was a rot undermining the roots of the state’s financial system. Coolidge had grown concerned that a cozy relationship between state banking officials and the bankers they were supposed to regulate was inviting a crisis. Moreover, Coolidge thought his banking commissioner, the estimable Augustus L. Thorndike, the scion of an old Brahmin family, was more comfortable dining with bankers than overseeing them. When Thorndike’s term ended in March 1920, Coolidge decided to fill the five-thousand-dollar-a-year job with a candidate far from the cloistered world of Boston finance and politics. He chose a rural Republican in his own image: Joseph C. Allen.

At forty-two, Allen was tall and trim, with pince-nez glasses perched on a handsome nose, a downturned mouth, and stiff, high collars poking from pinstriped suits. Newly wed to a Smith College graduate fourteen years his junior, Allen was a prominent banker and civic leader in Springfield, ninety miles west of Boston. Born in New York, he had moved to western Massachusetts as a boy and had begun his banking career as a messenger for the Second National Bank of Springfield. He’d risen through the ranks of several banks to become vice president of the Union Trust Company, the job he held when Coolidge tapped him. Allen also served on the Springfield City Council and had run for mayor of the small city in 1912. But he was a banker, not a politician, and the glad-handing necessary to win votes was not his style. In the messy world of Massachusetts politics, Allen was a misfit, a man one reporter described as “quiet, dignified, immaculate, kind.” He liked nothing more than a perfectly clean office with “never a speck of dust on his desk; never a piece of paper misplaced,” the reporter found. The closest thing Allen had to a vice was a lousy golf game. To no one’s surprise, he failed to win the Republican mayoral nomination and returned to the more quantifiable world of profit and loss. Which made him all the more attractive to Coolidge. The governor was looking for a banking commissioner without baggage, someone with a pillar-of-the-community résumé and physical and psychological distance from Boston. Joseph Allen fit the bill.

Early in his tenure as bank commissioner, Allen realized that whatever good work he did might be undermined without a cordial relationship with the newspapers covering his agency. He knew he would never be one of the fast-talking, tip-dropping, back-slapping political animals who stalked the marble corridors of the gold-domed State House atop Beacon Hill. So he took the opposite tack. He opened his office to the newspapermen who covered the business world and told them plainly, “I am new to this game. I am not used to being interviewed and quoted. You all can probably take advantage of me. I am asking you to help me in my job, and not hinder me. I am asking you to help the public. What I give the press will be first carefully prepared in my office. I shall then read it to you experienced men and ask whether you think it is best to publish.” It was a frank admission, one that might have opened the out-of-towner to criticism or doubt among hard-bitten Boston reporters. Instead, his candor endeared him to them, and for the most part they gave him a chance to prove whether he could rein in mismanaged banks and protect depositors in the process.

Just as he was getting comfortable in office, Allen began to hear word of the Securities Exchange Company. Ponzi’s enterprise was not a bank, but the Post story about Daniels’s million-dollar lawsuit mentioned that the business was based on currency speculation. Allen wondered whether the public or the banks he regulated might be at risk from a fast-money operator. Not certain