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."

10 Killer Gifts for True Crime Fans

Ulysses Press/Little A
Ulysses Press/Little A

This article contains affiliate links to products selected by our editors. Mental Floss may receive a commission for purchases made through these links.

Humans have a strange and lasting fascination with the dark and macabre. We’re hooked on stories about crime and murder, and if you know one of those obsessives who eagerly binges every true crime documentary and podcast that crosses their path, you’re in luck—we’ve compiled a list of gifts that will appeal to any murder mystery lover.

1. Donner Dinner Party: A Rowdy Game of Frontier Cannibalism!; $15

Chronicle Books/Amazon

The infamous story of the Donner party gets a new twist in this social deduction party game that challenges players to survive and eliminate the cannibals hiding within their group of friends. It’s “lots of fun accusing your friends of eating human flesh and poisoning your food,” one reviewer says.

Buy it: Amazon

2. A Year of True Crime Page-a-Day Calendar; $16

Workman Calendars/Amazon

With this page-a-day calendar, every morning is an opportunity to build your loved one's true crime chops. Feed their morbid curiosity by reading about unsolved cases and horrifying killers while testing their knowledge with the occasional quizzes sprinkled throughout the 313-page calendar (weekends are combined onto one page).

Buy it: Amazon

3. Bloody America: The Serial Killers Coloring Book; $10

Kolme Korkeudet Oy/Amazon

Some people use coloring books to relax, while others use them to dive into the grisly murders of American serial killers. Just make sure to also gift some red colored pencils before you wrap this up for your bestie.

Buy it: Amazon

4. The Serial Killer Cookbook: True Crime Trivia and Disturbingly Delicious Last Meals from Death Row's Most Infamous Killers and Murderers; $15

Ulysses Press/Amazon

This macabre cookbook contains recipes for the last meals of some of the world’s most famous serial killers, including Ted Bundy, Aileen Wuornos, and John Wayne Gacy. This cookbook covers everything from breakfast (seared steak with eggs and toast, courtesy of Ted Bundy) to dessert (chocolate cake, the last request of Bobby Wayne Woods). Each recipe includes a short description of the killer who requested the meal.

Buy it: Amazon

5. Ripped from the Headlines!: The Shocking True Stories Behind the Movies’ Most Memorable Crimes; $15

Little A/Amazon

In this book, true crime historian Harold Schechter sorts out the truth and fiction that inspired some of Hollywood’s best-known murder movies—including Psycho (1960), Scream (1996), Arsenic and Old Lace (1944), and The Hills Have Eyes (1977). As Schechter makes clear, sometimes reality is even a little more sick and twisted than the movies show.

Buy it: Amazon

6. The Deadbolt Mystery Society Monthly Box; $22/month

CrateJoy

Give the murder mystery lover in your life the opportunity to solve a brand-new case every single month. Each box includes the documents and files for a standalone mystery story that can be solved alone or with up to three friends. To crack the case, you’ll also need a laptop, tablet, or smartphone connected to the internet—each mystery includes interactive content that requires scanning QR codes or watching videos.

Buy it: Cratejoy

7. In Cold Blood; $10

Vintage/Amazon

Truman Capote’s 1965 classic about the murder of a Kansas family is considered by many to be the first true-crime nonfiction novel ever published. Capote’s book—still compulsively readable despite being written more than 50 years ago—follows the mysterious case from beginning to end, helping readers understand the perspectives of the victims, investigators, and suspects in equal time.

Buy it: Amazon

8. Stay Sexy & Don’t Get Murdered: The Definitive How-To Guide; $13

Forge Books/Amazon

Any avid true crime fan has at least heard of My Favorite Murder, the popular podcast that premiered in 2016. This book is a combination of practical wisdom, true crime tales, and personal stories from the podcast’s comedic hosts. Reviewers say it’s “poignant” and “worth every penny.”

Buy it: Amazon

9. I Like to Party Mug; $12

LookHUMAN/Amazon

This cheeky coffee mug says it all. Plus, it’s both dishwasher- and microwave-safe, making it a sturdy gift for the true crime lover in your life.

Buy it: Amazon

10. Latent Fingerprint Kit; $60

Crime Scene Store/Amazon

Try your hand (get it?!) at being an amateur detective with this kit that lets you collect fingerprints left on most surfaces. It may not be glamorous, but it could help you solve the mystery of who put that practically empty carton back in the refrigerator when it barely contained enough milk for a cup of coffee.

Buy it: Amazon

Sign Up Today: Get exclusive deals, product news, reviews, and more with the Mental Floss Smart Shopping newsletter!

What Are Sugar Plums?

Marten Bjork, Unsplash
Marten Bjork, Unsplash

Thanks to The Nutcracker and "'Twas the Night Before Christmas," sugar plums are a symbol of the holidays. But what are sugar plums, exactly? Like figgy pudding and yuletide, the phrase has become something people say (or sing) at Christmastime without knowing the original meaning. Before it was the subject of fairy dances and storybook dreams, a sugar plum was either a fruitless candy or a not-so-sweet euphemism.

According to The Atlantic, the sugar plums English-speakers ate from the 17th to the 19th century contained mostly sugar and no plums. They were made by pouring liquid sugar over a seed (usually a cardamom or caraway seed) or almond, allowing it to harden, and repeating the process. This candy-making technique was called panning, and it created layers of hard sugar shells. The final product was roughly the size and shape of a plum, which is how it came to be associated with the real fruit.

Before the days of candy factories, these confections could take several days to make. Their labor-intensive production made them a luxury good reserved for special occasions. This may explain how sugar plums got linked to the holidays, and why they were special enough to dance through children's heads on Christmas Eve.

The indulgent treat also became a synonym for anything desirable. This second meaning had taken on darker connotations by the 17th century. A 1608 definition from the Oxford English Dictionary describes a sugar plum as “something very pleasing or agreeable, esp. when given as a sop or bribe.” Having a "mouthful of sugar plums" wasn't necessarily a good thing, either. It meant you said sweet words that may have been insincere.

As true sugar plums have fallen out of fashion, demand for Christmas candy resembling the actual fruit has risen. You can now buy fancy candied plums and plum-flavored gummy candies for the holidays, but if you want something closer to the classic sugar plum, a Jordan almond is the more authentic choice.