The Ladies' Deposit: The 19th-Century Ponzi Scheme by Women, for Women

Hulton Archive/Getty Images
Hulton Archive/Getty Images

Sarah Howe never disclosed the methods by which she did business. After establishing the Ladies' Deposit Company in an unassuming brick building in Boston's South End around 1879, the former fortuneteller refused to solicit clients for her brand-new bank. There was no advertising, and no public announcement. Instead, members could only be referred by other members in good standing. They had to be single women, not rich, who didn't own their own homes. Deposits could only be made in amounts of more than $200 but less than $1000, and returns were set at 8 percent interest per month—an incredible amount then as well as today [PDF].

Despite the lack of advertising, word of the Ladies' Deposit Company traveled quickly among Boston's working-class women. Howe's selectiveness endeared her to potential clients, as did the fact that she presented herself as a maternal figure at a time when gender stereotypes and predatory practices often left women and their money at the mercy of men. She even invited her select few depositors to sit with her, offering small talk and compliments. The experience seemed, as one woman put it, "sympathetic."

For the single women of Massachusetts, Howe appeared to be offering a remarkable opportunity to grow their nest eggs in a female-friendly environment. But the Ladies' Deposit was far from what it appeared to be.

A CHARITABLE INSTITUTION

The Ladies' Deposit Company had not been operating for long when its exclusive nature—and its amazing returns—captured the curiosity of local newspapers. One Boston Herald investigator who tried to ask some questions at the bank was rebuffed, so in January 1880, he disguised himself as a woman and successfully got inside. His article reprinted a notice pasted inside each Ladies' Deposit-issued bankbook, which described the establishment as a "charitable institution for single ladies, old and young." When the reporter asked how their interest rates were possible, a clerk had replied, "We never disclose the methods by which we do business."

The answers to further questions were similarly unilluminating. A follow-up article in the Herald included an interview with Howe herself, who described the bank as a "Quaker Aid Society" that had first been formed in Alexandria, Virginia. She coyly claimed that she couldn't provide any further details without angering her superiors.

The more reporters mocked and prodded the Ladies' Deposit, the more business poured in. At the height of the operation's popularity, Howe was serving an estimated 1200 women from Boston and beyond—Buffalo, Chicago, Pittsburgh, Baltimore, and Washington. She bought a luxurious home worth $40,000 on Franklin Square, which she paid for in rubber-banded bundles of cash and furnished with thousands of dollars' worth of exotic plants and other decorations.

But although business was booming, it was the beginning of the end for Howe.

On September 25, 1880, the Boston Daily Advertiser ran the first in a series of articles that reignited the controversy around the Ladies' Deposit. Under the title "A Mysterious Bank," the piece detailed the "fabulous rates of interest" offered to "unprotected females," explaining that "the mystery which surrounds and attaches to [the bank] has never been fully dispelled." While the writer wasn't able to solve the mystery of the amazing interest rates themselves, they noted that no one had yet complained about losing even a dollar, which made it difficult to probe much further: "Whatever there may be that is suspicious, nothing unlawful is disclosed, and no depositor comes forward to say that she has been unjustly dealt with."

But the Advertiser's articles were enough to set tongues wagging. Soon, experts wrote in predicting a crash and theorizing that Howe could only afford to pay out her customers with the deposits of other women, a well that would soon run dry. No one used the phrase "Ponzi scheme"—this was 40 years before Charles Ponzi would garner attention for his frauds—but the Advertiser's series, printed over several weeks, proved to be key in turning opinion against the Ladies' Deposit.

As more investors who read the articles became suspicious, they demanded to withdraw their funds. At the end of that September, there was a week-long run on the bank. For a while, Howe was able to sustain the withdrawals, but she soon tried to suspend payments. In response, the Advertiser published an article interviewing seven prominent lawyers, who all said she was liable to pay her depositors' principal without delay. Not long after, as The Atlantic put it, "a storm of legal process burst upon her."

Howe was arrested upon order of the district attorney on October 16, 1880, with her bail set at $20,000. In court, she was tried on five counts of "cheating by false pretenses" by five former depositors. The nail in the coffin was Howe's claim that a Quaker fund backed the Ladies' Deposit. It became apparent during the Advertiser's investigation and her subsequent court hearing that there was no such fund, and that Howe had no connections with any Quaker organization. "She had no more hold upon the Quakers than she had upon the Pope," The Atlantic wrote.

On April 25, 1881, Howe was sentenced to three years in jail on four counts of cheating by false pretenses. Later that November, she would also be involuntarily declared insolvent after trying to pay back depositors.

A RESILIENT CHEAT

Howe didn't learn any lessons from her experience with the Ladies' Deposit. Upon her release from jail in 1884, she set up a new enterprise, the Woman's Bank, in elegant apartments on Concord Street. The operation again targeted women, but offered a more humble 7 percent interest, as opposed to the Deposit’s 8 percent returns.

The Woman's Bank operated successfully for two years, until in April 1887, one woman from Maine called to retrieve her investment and found she couldn't. Howe soon absconded with an estimated $50,000 in deposits.

Next, she tried a similar scheme in Chicago. Her "Ladies Provident Aid" operated in a familiar manner, promising 7 percent interest a month, with three month's interest offered in advance. Local reporters quickly exposed Howe yet again—proving just how notorious she had become.

Forced to flee once more, Howe made her way back to Boston, where she was arrested in 1888 on an outstanding warrant. By this point, the women preyed upon by Howe received little sympathy at all. "It is plain that Mrs. Howe's methods of business would not have inveigled men," The New York Times wrote. "Men, even when they become victims of the sawdust swindlers, require to see how the tempter can find his account in the offer he makes them." The article neglected to mention that a number of men, seeing an opportunity for quick cash, had enlisted female relatives to invest in the Ladies' Deposit for them.

Howe maintained her penchant for duplicity until the end of her life. After being released from prison for the final time in 1889, she returned to her former profession of fortunetelling, charging 25 cents a reading. She died in 1892 at the age of 65, penniless and alone, but insisted until the day she died that she had not been responsible for the Ladies' Deposit. "It was not I," she said. "I did no swindling."

The Mongolian Princess Who Challenged Her Suitors to a Wrestling Match—and Always Won

iStock.com / SarahWouters1960
iStock.com / SarahWouters1960

In a lot of fairy tales, a disapproving father or a witch's curse stops the princess from finding Prince Charming. But things were a little different in 13th-century Mongolia. Any single lad, regardless of status or wealth, could marry the khan's daughter, Khutulun. There was just one caveat, which the princess herself decreed—you couldn't take her hand in marriage until you took her down in a wrestling match. If you lost, you had to give her a handful of prize horses.

Sounds easy, right? Nope. After all, this is the great-great-granddaughter of Genghis Khan we're talking about!

Born around 1260, Khutulun was an intimidating presence. According to The Travels of Marco Polo, the princess was "so well-made in all her limbs, and so tall and strongly built, that she might almost be taken for a giantess." She was also the picture of confidence. She had mastered archery and horsemanship in childhood and grew up to become a fearless warrior. Whenever her father, Kaidu—the leader of the Chagatai Khanate—went to battle, he usually turned to Khutulun (and not his 14 sons) for help.

Nothing scared her. Not only did Khutulun ride by her father's side into battle, she'd regularly charge headfirst into enemy lines to make "a dash at the host of the enemy, and seize some man thereout, as deftly as a hawk pounces on a bird, and carry him to her father," Marco Polo wrote. The 13th- and 14th-century historian Rashid al-Din was more direct, writing that she "often went on military campaigns, where she performed valiant deeds."

It's no surprise that Khutulun had suitors lining up and down the street asking for her hand in marriage. The princess, however, refused to marry any of them unless they managed to beat her in a wrestling match, stipulating that any loser would have to gift her anywhere between 10 to 100 horses.

Let's just put it this way: Khutulun came home with a lot of prize horses. (Some accounts say 10,000—enough to make even the emperor a little jealous.) As author Hannah Jewell writes in her book She Caused a Riot, "The Mongolian steppes were littered with the debris of shattered male egos."

On one occasion, a particularly confident suitor bet 1000 horses on a match. Khutulun's parents liked the fellow—they were itching to see their daughter get married—so they pulled the princess aside and asked her to throw the match. After carefully listening to her parents' advice, Khutulun entered the ring and, in Polo's words, "threw him right valiantly on the palace pavement." The 1000 horses became hers.

Khutulun would remain undefeated for life. According to legend, she eventually picked a husband on her own terms, settling for a man she never even wrestled. And centuries later, her story inspired François Pétis de La Croi to write the tale of Turandot, which eventually became a famed opera by the composer Giacomo Puccini. (Though the opera fudges the facts: The intrepid princess defeats her suitors with riddles, not powerslams.)

Scientists Find Fossil of 150-Million-Year-Old Flesh-Eating Fish—Plus a Few of Its Prey

M. Ebert and T. Nohl
M. Ebert and T. Nohl

A fossil of an unusual piranha-like fish from the Late Jurassic period has been unearthed by scientists in southern Germany, Australian news outlet the ABC reports. Even more remarkable than the fossil’s age—150 million years old—is the fact that the limestone deposit also contains some of the fish’s victims.

Fish with chunks missing from their fins were found near the predator fish, which has been named Piranhamesodon pinnatomus. Aside from the predator’s razor-sharp teeth, though, it doesn’t look like your usual flesh-eating fish. It belonged to an extinct order of bony fish that lived at the time of the dinosaurs, and until now, scientists didn’t realize there was a species of bony fish that tore into its prey in such a way. This makes it the first flesh-eating bony fish on record, long predating the piranha. 

“Fish as we know them, bony fishes, just did not bite flesh of other fishes at that time,” Dr. Martina Kölbl-Ebert, the paleontologist who found the fish with her husband, Martin Ebert, said in a statement. “Sharks have been able to bite out chunks of flesh, but throughout history bony fishes have either fed on invertebrates or largely swallowed their prey whole. Biting chunks of flesh or fins was something that came much later."

Kölbl-Ebert, the director of the Jura Museum in Eichstätt, Germany, says she was stunned to see the bony fish’s sharp teeth, comparing it to “finding a sheep with a snarl like a wolf.” This cunning disguise made the fish a fearful predator, and scientists believe the fish may have “exploited aggressive mimicry” to ambush unsuspecting fish.

The fossil was discovered in 2016 in southern Germany, but the find has only recently been described in the journal Current Biology. It was found at a quarry where other fossils, like those of the Archaeopteryx dinosaur, have been unearthed in the past.

[h/t the ABC]

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