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Hulton Archive/Getty Images
Hulton Archive/Getty Images

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."

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You Can Now Rent the Montgomery, Alabama Home of Zelda and F. Scott Fitzgerald Through Airbnb
Chris Pruitt, Wikimedia Commons // CC BY-SA 3.0

The former apartment of Zelda and F. Scott Fitzgerald, perhaps the most famous couple of the Jazz Age, is now available to rent on a nightly basis through Airbnb, The Chicago Tribune reports. While visitors are discouraged from throwing parties in the spirit of Jay Gatsby, they are invited to write, drink, and live there as the authors did.

The early 20th-century house in Montgomery, Alabama was home to the pair from 1931 to 1932. It's where Zelda worked on her only novel Save Me the Waltz and F. Scott Fitzgerald wrote part of Tender Is the Night. The building was also the last home they shared with their daughter Scottie before she moved to boarding school.

In the 1980s, the house was rescued from a planned demolition and turned into a nonprofit. Today, the site is a museum and a spot on the Southern Literary Trail. While the first floor of the Fitzgerald museum, which features first-edition books, letters, original paintings, and other artifacts related to the couple, isn't available to rent, the two-bedroom apartment above it goes for $150 a night. Guests staying there will find a record player and a collection of jazz albums, pillows embroidered with Zelda Fitzgerald quotes, and a balcony with views of the property's magnolia tree. Of the four surviving homes Zelda and F. Scott lived in while traveling the world, this is the only one that's accessible to the public.

Though the Fitzgerald home is the only site on the Southern Literary Trail available to rent through Airbnb, it's just one of the trail's many historic homes. The former residences of Flannery O'Connor, Caroline Miller, and Lillian Smith are all open to the public as museums.

[h/t The Chicago Tribune]

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Maynard L. Parker/Courtesy of The Huntington Library in San Marino, California
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The Concept of the American 'Backyard' is Newer Than You Think
A home in Long Beach, California, in the 1950s.
A home in Long Beach, California, in the 1950s.
Maynard L. Parker/Courtesy of The Huntington Library in San Marino, California

Backyards are as American as apple pie and baseball. If you live in a suburban or rural area, chances are good that you have a lawn, and maybe a pool, some patio furniture, and a grill to boot.

This wasn’t always the case, though. As Smithsonian Insider reports, it wasn’t until the 1950s that Americans began to consider the backyard an extension of the home, as well as a space for recreation and relaxation. After World War II, Americans started leaving the big cities and moving to suburban homes that came equipped with private backyards. Then, after the 40-hour work week was implemented and wages started to increase, families started spending more money on patios, pools, and well-kept lawns, which became a “symbol of prosperity” in the 1950s, according to a new Smithsonian Institution exhibit.

A man mows his lawn in the 1950s
In this photo from the Smithsonian Institution's exhibit, a man mows his lawn in Long Beach, California, in the 1950s.
Maynard L. Parker/Courtesy of The Huntington
Library in San Marino, California

Entitled "Patios, Pools, & the Invention of the American Back Yard," the exhibition includes photographs, advertisements, and articles about backyards from the 1950s and 1960s. The traveling display is currently on view at the Temple Railroad & Heritage Museum in Temple, Texas, and from there it will head to Hartford, Connecticut, in December.

Prior to the 1950s, outdoor yards were primarily workspaces, MLive.com reports. Some families may have had a vegetable garden, but most yards were used to store tools, livestock, and other basic necessities.

The rise of the backyard was largely fueled by materials that were already on hand, but hadn’t been accessible to the average American during World War II. As Smithsonian Insider notes, companies that had manufactured aluminum and concrete for wartime efforts later switched to swimming pools, patio furniture, and even grilling utensils.

A family eats at a picnic table in the 1960s
A family in Mendham, New Jersey, in the 1960s
Molly Adams/Courtesy of the Smithsonian Institution, Archives of American Gardens, Maida Babson Adams American Garden Collection

At the same time, DIY projects started to come into fashion. According to an exhibit caption of a Popular Mechanics article from the 1950s, “‘Doing-it-yourself’ was advertised as an enjoyable and affordable way for families to individualize their suburban homes.” The magazine wrote at the time that “patios, eating areas, places for play and relaxation are transforming back yards throughout the nation.”

The American backyard continues to grow to this day. As Bloomberg notes, data shows that the average backyard grew three years in a row, from 2015 to 2017. The average home last year had 7048 square feet of outdoor space—plenty of room for a sizable Memorial Day cookout.

[h/t Smithsonian Insider]

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