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."

When Mississippi Once Banned Sesame Street

Children's Television Workshop/Courtesy of Getty Images
Children's Television Workshop/Courtesy of Getty Images

Since it began airing in the fall of 1969, Sesame Street has become an indelible part of millions of children's formative years. Using a cast of colorful characters like Big Bird, Bert, Ernie, and Oscar the Grouch, along with a curriculum vetted by Sesame Workshop's child psychologists and other experts, the series is able to impart life lessons and illustrate educational tools that a viewer can use throughout their adolescence. You would be hard-pressed to find anyone—even Oscar—who would take issue with the show’s approach or its mission statement.

Yet that’s exactly what happened in early 1970, when a board of educational consultants in Mississippi gathered, polled one another, and decided that Sesame Street was too controversial for television.

The series had only been on the air for a few months when the newly formed Mississippi Authority for Educational Television (also known as the State Commission for Educational Television) held a regularly scheduled meeting in January 1970. The board had been created by the state legislature with appointees named by Governor John Bell Williams to evaluate shows that were set to air on the state’s Educational Television, or ETV, station. The five-member panel consisted of educators and private citizens, including a teacher and a principal, and was headed up by James McKay, a banker in Jackson, Mississippi.

McKay’s presence was notable for the fact that his father-in-law, Allen Thompson, had just retired after spending 20 years as mayor of Jackson. Highly resistant to integration in the city during his tenure in office, Thompson was also the founder of Freedom of Choice in the United States, or FOCUS, an activist group that promoted what they dubbed “freedom of choice” in public schools—a thinly veiled reference to segregation. Mississippi, long the most incendiary state in the nation when it came to civil rights, was still struggling with the racial tension of the 1960s. Systemic racism was an issue.

Entering this climate was Sesame Street, the show pioneered by Joan Ganz Cooney, a former journalist and television producer who became the executive director of the Children’s Television Workshop. On the series, the human cast was integrated, with black performers Matt Robinson and Loretta Long as Gordon and Susan, respectively, appearing alongside white actors Jada Rowland and Bob McGrath. The children of Sesame Street were also ethnically diverse.

Zoe (L) and Cookie Monster (R) are pictured in New York City in November 2009
Astrid Stawiarz, Getty Images

This appeared to be too much for the Authority, which discussed how lawmakers with control over ETV’s budget—which had just been set at $5,367,441—might find the mixed-race assembly offensive. The panel's participants were all white.

The board pushed the discussion aside until April 17, 1970, when they took an informal poll and decided, by a margin of three votes against two, to prohibit ETV from airing Sesame Street—a show that came free of charge to all public television stations. (The decision affected mainly viewers in and around Jackson, as the station had not yet expanded across the state and was not expected to do so until the fall of 1970.)

The members who were outvoted were plainly unhappy with the outcome and leaked the decision to The New York Times, which published a notice of the prohibition days later along with a quote from one of the board members.

“Some of the members of the commission were very much opposed to showing the series because it uses a highly integrated cast of children,” the person, who did not wish to be named, said. “Mainly the commission members felt that Mississippi was not yet ready for it.”

The reaction to such a transparent concession to racism was swift and predictably negative, both in and out of Mississippi. Board members who spoke with press, usually anonymously, claimed the decision was a simple “postponing” of the show, not an outright ban. The fear, they said, was that legislators who viewed ETV as having progressive values might shut down the project before it had a chance to get off the ground. It was still possible for opponents to suffocate it before it became part of the fabric of the state’s television offerings.

The concern was not entirely without merit. State representative Tullius Brady of Brookhaven said that ETV exerted “a subtle influence” on the minds of children and that the Ford Foundation, which funded educational programming, could use its influence for “evil purposes.” Other lawmakers had previously argued against shows that promoted integration.

Grover is pictured at AOL Studios in New York City in May 2015
Slaven Vlasic, Getty Images

Regardless of how the decision was justified, many took issue with it. In an anonymous editorial for the Delta Democrat-Times, a critic wrote:

“But Mississippi’s ETV commission won’t be showing it for the time being because of one fatal defect, as measured by Mississippi’s political leadership. Sesame Street is integrated. Some of its leading cast members are black, including the man who does much of the overt ‘teaching.’ The neighborhood of the ‘street’ is a mixed one. And all that, of course, goes against the Mississippi grain.”

Joan Ganz Cooney called the decision a “tragedy” for young people.

Fortunately, it was a tragedy with a short shelf life. The following month, the board reconvened and reversed its own informal poll result, approving of Sesame Street and agreeing that ETV could air it as soon as they received tapes of the program. Thanks to feeds from Memphis, New Orleans, and Alabama, Sesame Street could already be seen in parts of Mississippi. And thanks to the deluge of negative responses, it seemed pointless to try to placate politicians who still favored segregation.

In the fall of 1970, the Sesame Street cast appeared in person in Jackson and was met by representatives from the board, which helped to sponsor the live performance, though it’s not clear any apology was forthcoming.

Sesame Street would go on to win numerous awards and accolades over the proceeding 50 years, though it would not be the only children’s show to experience censorship on public television. In May 2019, ETV networks in Alabama and Arkansas refused to air an episode of the PBS animated series Arthur in which a rat and aardvark are depicted as a same-sex couple getting married.

10 Facts About Harry Houdini

Hulton Archive/Getty Images
Hulton Archive/Getty Images

Though Harry Houdini passed away more than 90 years ago, his mystique has never faded. The famed magician captured the imagination of the world with his death-defying stunts and performances, many of which still baffle modern magicians. Whether he was escaping from a straitjacket while suspended from a crane above the streets or getting out of his famed “Chinese water torture cell” with just moments of air to spare, Houdini had a habit of leaving everyone in awe. And with performances that spectacular, it shouldn’t come as a shock that his life was just as fascinating. Read on for some interesting facts about Harry Houdini.

1. Harry Houdini's real name was Ehrich Weiss.

He likely took the first part of his stage name from his childhood nickname, "Ehrie," although some sources say that his first name was a tribute to magician Harry Kellar. His last name, however, was definitely a tribute to French illusionist Jean-Eugène Robert-Houdin.

2. According to legend, He also named Buster Keaton, although inadvertently.

Along with Houdini, Buster's dad, Joe, was the co-owner of a traveling show called the Mohawk Indian Medicine Company. The story Buster tells (though some believe it's a myth) is that one day, when he was only about 6 months old, he took a tumble down a flight of stairs while he was under his dad's watch, but came out of it completely unscathed. Houdini remarked, "That was a real buster!" In those days, according to Keaton, buster meant a spill or a fall that had the potential to really hurt someone. Joe started calling him Buster, and the nickname stuck. His real name was Joseph Frank Keaton, if you're curious.

3. He introduced his famous milk can trick in 1908.

If you're not familiar with it, Houdini invented an oversized milk can that would be filled with water for his act. Once in the can, he would be handcuffed and sealed inside, then left behind a curtain to make his daring escape. When this became too commonplace, he further encased the milk can in a wooden crate. Perhaps building on this stunt, the folks at Joshua Tetley & Son, the brewers behind Tetley's beer, invited him to escape from a cask of their fine product. Houdini accepted and gave the stunt a go, but the task proved too difficult and he had to be rescued by his assistant, Franz Kokol.

4. Houdini probably didn't die from a sucker punch.

Houdini had long boasted of his physical prowess—and one of his claims was that he could withstand a punch from anyone. After a performance in Montreal on October 20, 1926, a student from McGill University asked him if this was true, and when Harry said it was, the student immediately punched him three times in the gut. Surprised by the blows, Houdini didn't have a chance to tighten his abs, which was part of his secret. He ultimately died of a ruptured appendix days later, which many people said was brought on by the punches. But that's not necessarily true.

Houdini had actually been suffering from appendicitis for a few days beforehand but hadn't done anything about it. In fact, he had continued to travel and do shows afterward. Finally, on October 24, 1926, he gave one last show and was immediately hospitalized. Unfortunately, he had let it go too long: on October 31, 1926, he died of peritonitis from his ruptured appendix.

5. The symbol of the Society of American Magicians is engraved on his tombstone.

Houdini was president of the Society of American Magicians when he died. And members are still invested in making sure the famed magician's gravesite at Machpelah Cemetary in Queens, New York, receives routine maintenance and restoration. Sadly, his beloved wife, Bess, is buried 10 miles away in Westchester; she wasn't allowed to be buried with him because she wasn't Jewish.

6. His wife, Bess, held a séance every year for 10 years on the anniversary of his death to see if he would get in touch.

Before Harry Houdini died, he and Bess made a pact that if there was a way to do it, Harry would contact her from the beyond. They even agreed upon a phrase that he would tell her so she would know it was really him speaking to her and not a ghostly imposter. When he failed to contact her on the 10th anniversary, she gave up, but the Houdini Museum in Scranton, Pennsylvania, still holds the séance every year. So far, no one has gotten Harry to communicate. 

The secret code, by the way, was "Rosabelle- answer- tell- pray, answer- look- tell- answer, answer- tell." "Rosabelle" was the name of a song she sang in her vaudeville act when the two of them met, and the other words corresponded to letters of the alphabet in a language the two concocted for themselves. Combined, they spelled out "Believe."

7. Houdini was an avid aviator.

Though there's some dispute over the claim, Houdini is often recognized as the first person to ever make a controlled flight in a powered plane on Australian soil. The flight took place on March 18, 1910, in Diggers Rest, which is near Melbourne. In June, 1920, it was reported that Houdini was even making plans to embark upon what would have been the first transatlantic flight from Paris to New York. The plans, unfortunately, never materialized.

8. Houdini could also escape from copyright restrictions.

By 1912, Houdini added another act to his routine: the escape from the infamous "Chinese water torture cell," where the magician would be lowered upside-down into a water-filled tank while his feet were locked in stocks. It was a hit with crowds, and despite the overwhelming danger, Houdini repeatedly performed the stunt without a hitch. In fact, he was the only one who could legally perform this death-defying act. That's because Houdini found a way to copyright the cell routine in a pretty ingenious way. Since you couldn't copyright magic tricks, he first performed this escape as part of a one-act play called Houdini Upside Down! Well, you can copyright a play, and by incorporating the cell escape into the script, he was allowed to copyright the effect and would actively sue anyone who tried to imitate the stunt.

9. Although the Chinese Water Torture Cell didn't do him in, one of his performances nearly did.

In 1915, Houdini was buried in a pit with just dirt shoveled right on top of him for a stunt in Santa Ana, California. While trying to dig his way out, he started to panic and use up his precious air. He tried to call for help, but that's not exactly the easiest thing to do while covered in mounds of dirt. Finally, his hand broke the surface, and he was pulled to safety, where he promptly passed out. He later wrote that "The weight of the earth is killing."

10. You can still see one of his most famous stunts.

The straitjacket escape is one of Harry Houdini's most famous acts. For this one, Houdini would be strapped into the jacket and then suspended by his ankles very high in the air, usually from a crane or off a tall building. Once hoisted in the air, he would make a death-defying escape with countless onlookers below. You can still watch it below:

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