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."

8 Explorers Who Mysteriously Disappeared (and Some Who’ve Been Found)

A statue of Gaspar Corte-Real
A statue of Gaspar Corte-Real

By their very nature, explorers often push the boundaries of survival in the name of glory, so it’s not a great surprise that many have gone missing in the course of their adventures. Over the years, the quest to uncover the truth of what happened to them has captivated the public, historians, and journalists alike, leading to numerous theories and some surprising finds.

1. Gaspar and Miguel Corte-Real

The youngest of three Portuguese brothers, Gaspar Corte-Real was a keen explorer who undertook an expedition to Greenland in 1500. He embarked on a second expedition in 1501 with his older brother Miguel, in which they claimed Greenland for the crown before apparently sailing on to reach Newfoundland or Labrador. At that point, Gaspar sent two of his three ships back to Portugal, including the one captained by his brother. Gaspar’s ship continued its explorations, but was never seen again.

In 1502, Miguel Corte-Real, learning of his brother’s disappearance, led a search party to the area where Gaspar was believed lost, but he found nothing, and his ship too went missing. The oldest Corte-Real brother, Vasco Annes, begged the king to let him mount a further search party to find his lost brothers, but the king refused—perhaps unwilling to risk the embarrassment of losing a third Corte-Real.

The disappearances have remained a mystery for centuries. But in the 1910s, Edmund Burke Delabarre, a psychology professor at Brown University, put forward a new theory about the inscriptions on the famous Dighton Rock in Massachusetts. The rock is covered with petroglyphs that were first noted way back in 1680, and since then scholars have proposed numerous theories about who carved them and why. Delabarre suggested that the inscription was in fact abbreviated Latin, and reads: “I, Miguel Cortereal, 1511. In this place, by the will of God, I became a chief of the Indians.” This astounding theory implies that the explorer may have continued his travels into America and survived at least nine years in the New World. If his inscription is to be believed, he made quite a success of his new life.

2. Jean-Francois De Galaup

La Perouse's last letter
La Perouse's last letter

Jean-Francois de Galaup, Comte de la Pérouse, was an accomplished sea captain. In 1785, inspired by the successes of Captain James Cook, the French king Louis XVI sent La Pérouse on an expedition to explore the Pacific. The party was made up of two ships—La Boussole and L'Astrolabe—manned by 225 crewmembers. The voyage was expected to last four years. La Pérouse kept scrupulous records of his findings during the trip, mapping coastlines, taking specimens, and making observations of the peoples and places he encountered. (Thankfully, he sent his journals back to France, where they were preserved for posterity and later published to great success.) Having successfully sailed through the Pacific, taking in Japan, the Philippines, and Tonga, La Pérouse arrived at Botany Bay in Australia and was witnessed by British settlers sailing out of the bay in March 1788, the last sighting of the expedition. By 1791, when no communication had been received from La Pérouse for some time, a search party was dispatched from France—but no trace of the expedition was found.

The puzzle seemed to be solved in 1826 when an Irish sailor, Peter Dillon, came across something intriguing while exploring the Solomon Islands. The locals had a number of European swords, which Dillon thought might have belonged to La Pérouse, and told of sighting two large ships that had broken up on the reefs there. In 1964 the wreck of La Boussole was at last discovered on the reefs of Vanikoro in the Solomon Islands, confirming that this indeed was where the expedition had reached its sad end. However, in 2017 an Australian researcher found an 1818 account by an Indian castaway that seems to suggest La Pérouse was killed by locals on a small island off Northern Australia, perhaps in a later leg of his voyage after constructing a schooner from the remains of La Boussole.

3. Naomi Uemura

Japanese explorer Naomi Uemura in 1974
Japanese explorer Naomi Uemura in 1974
Keystone/Hulton Archive/Getty Images

Modern explorer and adventurer Naomi Uemura was part of the first Japanese team to scale Mount Everest in 1970. (He would have been the first Japanese person to reach the summit if his impeccable manners hadn’t made him relinquish the lead to allow his elder, Teruo Matsuura, the honor of going first.) Uemura completed many amazing feats during his lifetime, including climbing the highest mountain on each of the world’s continents solo, trekking across the Arctic to become the first person to reach the North Pole solo, and rafting down the Amazon. In February 1984, Uemura set off to scale Mount McKinley in Alaska in an attempt to become the first person to achieve a solo winter climb of the treacherous peak. Uemura reached the peak, but that is all we know, as he never made it off the mountain. Rescue parties searched for the adventurer, but all that was found was some equipment and his diary hidden in a snow cave. To date his body has not been found, and the exact circumstances of his tragic death remain a mystery.

4. Percy Fawcett

British soldier, archaeologist and explorer Percy Fawcett
British soldier, archaeologist, and explorer Percy Fawcett
Topical Press Agency/Hulton Archive/Getty Images

In the last 90 years, some 13 expeditions and over 100 people have perished in futile attempts to discover the fate of British explorer Colonel Percy Harrison Fawcett. Fawcett was the very epitome of a dashing explorer: He had a distinguished military career before following his sense of adventure to help create maps of the vast and uncharted Amazon jungle. During the 1920s, he departed on a number of ambitious expeditions in an attempt to locate the fabled lost city of El Dorado, which he dubbed the city of “Z.”

In 1925 Fawcett set off into the Mato Grosso region of Brazil with his eldest son, Jack, and his son’s best friend, Raleigh Rimell. The trio plowed into the jungle, covering up to 15 miles in a day in their zeal to find the rumored riches of the lost city. By May 29 the group sent their native guides back with their latest letters, including one to Fawcett’s wife, Nina, in which he wrote: “You need have no fear of any failure.” This missive was the last thing heard of Fawcett, and after two years with no sign, the Royal Geographical Society sent the first of many search parties. That no trace was discovered of Fawcett only served to keep the many rumors surrounding his fate alive.

Researchers have since come forward with many different theories: Fawcett had “gone native” and was living among a remote tribe; he succumbed to malaria or a jaguar attack; he deliberately disappeared in order to set up a mystical commune. But perhaps the most believable version of his fate was obtained by journalist David Grann, who retraced Fawcett’s steps in 2005 and discovered the Kalapalo Indians had an oral history indicating that Fawcett had ignored their advice and walked right into the domain of a hostile tribe who, in all likelihood, killed him.

5. George Bass

George Bass was an English surgeon who, inspired by tales of Pacific exploration, took to the seas as a ship’s surgeon. He embarked on many expeditions, but the one for which he is most remembered is his voyage to Australia with Matthew Flinders in the 1790s. The pair mapped large swathes of the Australian coast, and Bass identified the body of water between Australia and Tasmania that was later named the Bass Strait in his honor. Despite his success as an explorer, Bass felt under-appreciated and became envious of the merchants who were making their fortunes shipping goods from Europe to the new settlements in Australia. Consequently, he abandoned his cartography and set himself up as a trader. Unfortunately he was a little late to the party and when he returned to Australia, his ship laden with goods, he discovered many others had beaten him to the punch and the market was saturated with British products.

Undeterred, he decided to try his luck in South America and set sail with his bounteous cargo in 1803. Bass and his ship were never seen again, and their fate remains an enigma. Rumors persisted that Bass made it to Chile or Peru, where he was captured by the Spaniards and forced to work in the mines there as a slave until his death.

6. George Mallory

George Mallory was a British explorer and mountaineer who captured the public’s imagination after he was asked why he wanted to climb Everest and he responded: “Because it’s there.” As one of the foremost mountaineers of his day, Mallory was an obvious choice to take part in the first British expeditions to the as-yet-unconquered Everest throughout the early 1920s—well before the benefit of modern materials, technology, and weather forecasting.

In June 1924, George Mallory and fellow mountaineer Andrew Irvine set off for an attempt on the summit. Another member of the expedition glimpsed them climbing at over 26,800 feet, but that was the last time they were seen alive. That the pair perished in their attempt was certain, but debate raged over whether they had become the first to reach the summit and died on their way down, or if they died having never reached the top. Various pieces of the puzzle emerged over time—in the 1930s, Irvine’s ice axe was discovered at 27,700 feet, and in 1991 a 1920s oxygen canister was found. Finally, in 1999, an expedition discovered Mallory’s frozen body on the mountainside, clearly the victim of a terrible fall. The climbers carefully buried the body where they found it, but sadly no trace was ever found of Andrew Irvine.

It was hoped that Mallory’s camera might be found—an artifact that could prove for certain if he made it to the summit—but unfortunately the camera remains missing. Tantalizingly, Mallory had stated that he was going to carry a photograph of his wife and leave it at the summit, and when Mallory’s body was found the photograph was not there, providing yet another clue that perhaps this great mountaineer had conquered the world’s tallest mountain.

7. Sir John Franklin

Sir John Franklin circa 1830
Sir John Franklin circa 1830
Hulton Archive/Getty Images

One of the foremost explorers of the Victorian era was Sir John Franklin, who had captained a number of expeditions to the Arctic in search of the Northwest passage. Franklin succeeded in mapping large areas of coastline, identifying many new botanical specimens and furthering our knowledge of the unforgiving Arctic weather during his first two expeditions. Some 20 years after he had retired, Franklin was tempted back to make one final effort to find the Northwest Passage. In 1845, when Franklin was 60 years old, he set off with 129 crewmembers in HMS Erebus and HMS Terror. The ships made it to Baffin Island, where they were sighted by a whaling ship, but after that the ships were seen no more.

With no word from the expedition, numerous rescue missions were sent out to try and discover their fate. Finally, in 1859, after a tip-off from local Inuit hunters, a team led by Francis McClintock found objects and remains from the group on King William Island. It became clear that the two ships had become hopelessly trapped in the sea ice. A note was found which indicated that the ships had finally been abandoned in April 1848, having been stuck fast in the ice since September 1846. The note also revealed that Franklin had died in June 1847, though no cause was given. Scientific analysis of the mummified remains of some of the sailors indicated they may have died from lead poisoning, likely caused by the lead used to seal their canned food. Historians argue that those who did not die from contaminated supplies probably perished in the freezing conditions as they tried to march across the ice to safety. In September 2016, archaeologists announced the discovery of the wrecked remains of HMS Terror off the coast of King William Island, which historians hope will provide yet more clues about the terrible fate of the stranded crew and their desperate struggle for survival.

8. Ludwig Leichhardt

Ludwig Leichhardt, German explorer
Ludwig Leichhardt, German explorer
Hulton Archive/Getty Images

In 1848, German scientist and explorer Ludwig Leichhardt led an attempt to cross Australia’s desert interior from east to west. Leichhardt was already an explorer of some renown, having completed two earlier expeditions across Australia—on one occasion, he had been given up for dead after he spent 18 months in the Australian interior, only to show up very much alive and with copious notes and discoveries.

Leichhardt set off for his final mission accompanied by seven companions, 50 bullocks, 20 mules, seven horses, and a huge amount of supplies and equipment. Despite all of that, the only trace ever found of the missing expedition was a small brass plaque inscribed with Leichhardt’s name and the year 1848, which had been attached to his rifle. The lack of any further evidence of the bodies or equipment from the expedition has proved an enduring mystery, and things aren’t made any clearer by the fact that no one is sure which route they took or how far through Australia’s vast interior they got.

An 1852 search party reported that they had found an abandoned campsite with a tree with the letter L carved into it, a mark Leichhardt reportedly frequently left to indicate his route. Over the years a number of further searches uncovered more trees inscribed with an L, but their disparate locations did little to solve the riddle of the progress and fate of the explorers. The public was so intrigued by the mysterious disappearance that numerous rumors were published in the newspapers, inevitably leading to sensationalist stories of the group dying of thirst, being murdered by Aboriginal people, or even of Leichhardt surviving into old age living in the bush. However, until some concrete evidence or remains are discovered, it is likely that the truth will remain elusive.

This story first ran in 2016.

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