Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [81]
The Post printed Barron’s attack the next morning, Monday, July 26, as its lead story at the top of the front page, under a headline more cautious than Barron’s comments: QUESTIONS THE MOTIVE BEHIND PONZI SCHEME; the subhead added, “Barron Says Reply Coupon Plan Can Be Worked Only in Small Way.” Still, the message the Post was sending its readers was clear, and the story began with the ominous claim that the foreign countries where Ponzi was supposedly operating were expected to report to United States authorities by the next day. But if Grozier, Dunn, and their staff expected pronouncements from the Zeus of State Street to dissuade Ponzi investors, they were in for a shock.
When Ponzi arrived at work on Monday morning, School Street was teeming with people desperate to trust their money to the Securities Exchange Company. It was as if Barron had endorsed the idea as foolproof. The street was so jammed police closed it to traffic; only two cars were allowed to pass: Ponzi’s and Mayor Peters’s.
A conga line of would-be investors, four abreast, snaked around the block from the City Hall Annex, up City Hall Avenue, down School Street, and into the Niles Building. Ponzi counted a half dozen mounted policemen in the street, then found more than a dozen others afoot keeping order inside the building. When Ponzi stepped from his Locomobile, he was greeted by three cheers. After the din died down, Ponzi called back, “And three groans for the Post!” The crowd answered with laughter and more cheers. Eddie Dunn, the Post’s city editor, had walked around the corner from his office to watch the spectacle. “Pigs being led to the slaughter,” he said before returning to work.
Ponzi did not entirely disagree with Dunn, but he rhapsodized about what he saw and sensed: “The air was tense with ill-suppressed excitement. Hope and greed could be read in everybody’s countenance, [or] guessed from the wads of money nervously clutched and waved by thousands of outstretched fists! Madness, money madness, the worst kind of madness, was reflected in everybody’s eyes!”
Ponzi was at once exhilarated yet oddly repulsed. It struck him as an “exhibition of reckless mob psychology, entirely too susceptible to the fatal spell of misguided or perverted leadership!” But the notion that he was solely responsible for the “misguided or perverted leadership” was soon replaced by intense satisfaction.
“I was the realization of their dreams,” he exulted, his grandeur growing with each new thought. “The idol. The hero. The master and arbiter of their lives. Of their hopes. Of their fortunes. The discoverer of wealth and happiness. The ‘wizard’ who would turn a pauper into a millionaire overnight!” He became intoxicated by the sight of the madding crowd and became certain it spelled the success he had always imagined: “Nothing could stand in the way of the most complete achievement of my ambitions. I had won!”
It was difficult to argue. By noon he would take in several hundred thousand dollars from all his branches—in his recollections, he rounded it off to one million. The new office he opened that morning around the corner on Washington Street collected more than ten thousand dollars an hour during its first three hours of operation. All told, in July alone Ponzi had taken in nearly $6.5 million, from more than twenty thousand investors, for an average of $325 each. In the remarkable seven months since it had opened for business, the Securities Exchange Company had amassed thirty thousand investors and $9.6 million. All Ponzi had to do to keep them satisfied was to pay them nearly $15 million in return.
But for all his excitement, all his satisfaction about his success, Ponzi knew it could not continue. That reality became inescapable after he waded through the crowds outside 27 School Street, walked around the corner to the Hanover Trust, and slipped into Henry Chmielinski’s private office for a moment of peace.