1920 (18 page)

It did not work out that way. The bank president saw through Ponzi's ignorance and refused to hire him. Further, certain that the young man's intentions had been dishonest all along, he called the police. Ponzi barely escaped prison again. He was developing a skill in outrunning the law; so far, he had shown no indications of any others.

In New Orleans, he teamed up with a minister of dubious repute, and the two of them claimed they would rid the city of criminals who were
harassing the local businessmen; the city council had only to pay Ponzi's “secret society” a fee of $10,000. It was a lot of money, but city officials seemed almost ready to hand it over. At the last minute, though, they changed their minds when they discovered that the secret of the secret society was the total of its membership: two—Ponzi and the parson, and neither of them had ever confronted an organized-crime ring before, nor did either possess the know-how or courage to do so. As was the case with the bank, Ponzi had anticipated more on-the-job training, but members of the city council decided not to give the dubious pair of crime-fighters a chance. The two crooks were told that neither their services nor their presence were wanted any longer in New Orleans, and off went the Italian again, separating from his partner at the city limits.

Working his way through the South, Ponzi ended up in Brocton, Alabama, where he once again refused to be discouraged by his ignorance. He came up with a plan to provide the town, small but growing, with electric light and running water. “I have no figures to submit at this time as to the cost of the plan,” he admitted before a meeting of the town council. “I have no money to pay for any of it. What I propose to do is form a corporation and ask each member of this fine community to subscribe to one or more shares of its preferred stock—enough to pay for the cost.” And on he went, doing more to talk himself out of employment in Brocton with every sentence he uttered. The council, most of its members yawning, said it would discuss Ponzi's offer, but he knew better. Rather than wait for its decision, he thought the wiser course was to hit the road again.

This time, though, it proved to be not so wise after all. Heading north, so far north that he was no longer in the country, he was arrested for forging checks in Montreal. Shortly after regaining his freedom, he found himself in jail down south again in Atlanta, charged with smuggling Italians into the United States illegally. He denied the charge, but the five men who were now residents of America because of Ponzi all testified against him, and to that there was no defense. Writes biographer Mitchell Zuckoff,

Ponzi was given a job in the prison laundry, but his linguistic skills soon won him a transfer to the mail clerk's office. He impressed his boss, prison record keeper A. C. Aderhold, as
smooth, smart, and congenial, a clever young man with a gift for figures who kept error-free books without complaint. The only peculiarity Aderhold noticed was what he called Ponzi's “obsession for planning financial coups.” Aderhold thought his assistant took so much pleasure from plotting elaborate moneymaking schemes that he might someday put one into play simply to see if it would work.

After four years in the Atlanta Penitentiary, Ponzi was back in the Northeast, and perhaps more upset than he had been at any other time since arriving in the United States. It was not that he had set such corrupt goals for himself and still not achieved any of them; what troubled him was that he still had nothing about which to brag to his mother. He was, at least in one sense, a good Italian boy; he loved his mama, “thin, graying, tiny, but oh, so beautiful still, back in Italy. Someday, someday he would send for her, mail her a prepaid ticket for the finest stateroom on a transatlantic steamer, along with a thousand dollars cash for a new wardrobe and incidental expenses. Charles Ponzi's mother would come to America like a queen.”

But when?

Seventeen years had now passed since he had last seen her, seventeen years since Ellis Island, and Charles Ponzi, so sure of his prospects when he had come ashore, had yet to make good—or, in his case, to make bad profitably. There had been times when he felt so depressed and desperate that he forced himself into legitimate employment again. “He sold groceries and insurance,” we are told by Donald H. Dunn. “He worked in a factory. He repaired sewing machines. He pressed suits in a tailor shop. He waited on tables in cafes and hotels. His vocabulary grew, but his bankroll did not.”

Especially at his next job, in 1912, working part-time at an Appalachian mining company as a nurse, another position for which he had no qualifications. But although his bankroll remained stagnant, his humanity, barely revealed at all in the past, displayed itself in a manner so courageous and startling as to suggest an incident from a totally different man's biography. In a life remarkable for a variety of reasons,
this was to be the most atypical, and heroic, occurrence of all—excessive in its kindness, almost unendurable in its pain. And impossible to figure out.

A woman named Pearl Gossett, a full-time nurse for the miners, was cooking dinner one night in 1912 when the gas stove on which she was working unexpectedly blew up, leaving her with serious burns on the left side of her torso: arm, shoulder, and breast. A few days later, Ponzi heard about the mishap and asked a Dr. Thomas, who was treating Gossett, about her condition. Thomas told him she was near death; traces of gangrene had begun to appear on the burns, and these would almost certainly prove fatal. Ponzi asked whether anything could be done. The only possibility, Thomas said, was a skin graft, but Thomas had asked almost everyone who worked in both the hospital and the mining company to donate skin, and no one was willing. The doctor was saddened, even angry. If only everyone to whom he had spoken would have parted with one inch, just one tiny square inch of epidermis, Pearl Gossett would survive.

Ponzi wanted to know how much skin she needed altogether.

Forty or fifty inches, Thomas said, a substantial amount which would require numerous donors.

Except in this case. Ponzi told Thomas that he would provide all the required skin himself. Thomas was stunned. Is she a friend of yours? he asked after a few seconds to regain his composure.

Ponzi said he didn't know her, had never met her. She wasn't even a
paisan
. But that wasn't the issue. How quickly, he wanted to know, did she need the skin?

The doctor tried to talk Ponzi out of a procedure that would be so painful to him, but could not. Ponzi demanded an answer to his question. She needs the skin as soon as possible, Dr. Thomas finally conceded.

The donor said he was ready.

One more time: Didn't he want to think about it some more? the doctor asked. It was such a drastic measure for one man to provide so much skin.

No.

Was there anyone he wanted to notify, any next of kin, close friend?

No one who could possibly come to his side, he said, thinking of his mother.

The doctor nodded, then began striding toward the operating room, telling Ponzi to follow him. Both men cleaned up, prepared for the ordeal ahead of them, and, as soon as he gave one final go-ahead, Ponzi was anesthetized. From Dunn again:

That night, doctors removed seventy-two square inches of skin from his thighs. Ponzi spent the next few weeks in the hospital, bandaged from hip to knee. When he had nearly recuperated, Ponzi got another visit from Dr. Thomas. The nurse needed more skin.

“Go as far as you like,” Ponzi answered.

On November 5, another fifty square inches were taken from his back. He spent most of the next three months in the hospital, battling pain and pleurisy. The donations would leave him with broad white patches of scar tissue on his back and legs. Gossett remained scarred as well, but she recovered.

At the hospital, Ponzi was a savior. Several people there brought him to the attention of various award committees, including the Carnegie Hero Fund, which had been established eight years earlier to honor precisely the kind of civilian valor that Ponzi had just performed. But the fund did not even reply. Neither did other organizations with medals or plaques to present in cases like this. With the exception of a single newspaper article, Ponzi's remarkable display of selflessness went unacknowledged. It is not known whether Charles sent the article back to Italy.

Others at the hospital were happy to care for Ponzi as he slowly recovered, both at the institution and in their homes, and he was grateful for their kindness. They brought him food, flowers, tiny gifts of all sorts. But kindness is not riches. When he finally healed, at least enough to be on his feet and on the go again, he was back to his old priorities. Perhaps he thought that, after what he had gone through in almost complete anonymity, society finally owed him something, and Ponzi was determined to collect. Regardless, the heroic phase of his life, as brief and inexplicable as it had been, was over.

AN INVESTMENT BANKER NAMED CHARLES W. MORSE
had been serving a fifteen-year term in the Atlanta Penitentiary for misappropriation of funds at the time that Ponzi was also incarcerated there. The two of them became friends and often played chess together, with Morse constantly giving Ponzi advice about matters other than the game. “Always have a goal, Charlie, my boy,” was how Morse began the counsel Ponzi found most memorable. “A goal that keeps getting bigger. If you think that a thousand dollars is enough the first time around, an hour later you'll realize that you might as well go for ten thousand. In another hour, you'll see that you might as well go for ten million. The risk is the same, isn't it? If you have the nerve to go for the first bundle, you have the nerve to go all the way.”

Ponzi nodded, thinking it over.

And then, late in 1919, the moment seemed to come.

IT WAS A COMPLICATED IDEA,
and it speaks well of Ponzi's intelligence that he could have figured it out. He would not have been able to do so, however, had it not been for something that had happened almost fourteen years earlier. “In April 1906,” biographer Zuckoff explains succinctly, “representatives of the United States and sixty-two other countries gathered in Rome with the goal of making it easier to send mail across national borders. … A key item on the Rome agenda was to create a way for a person in one country to essentially send a stamped, self-addressed envelope to someone in another.”

The problem, of course, is that stamps cost different amounts of money in different countries, and one nation cannot be expected to accept the postage of another's at face value, any more than it can be expected to accept another's currency at face value. But after working through a number of obscure and complex details, and spending numerous hours at the negotiating table, officials in Rome were able to overcome their problems, and the Universal Postal Union was created. All member nations would accept something called the International Reply Coupon of any other member nation. The coupon, as
Business Week
put it, “could be purchased in one country and redeemed for postage stamps” in another. It might have been, as Zuckoff believes, that a “more mundane and obscure financial instrument [than the International Reply Coupon] is hard to imagine,” but Ponzi could see the possibilities.

Especially in the wake of an event that was totally unforeseen when the Universal Postal Union was created. One of the results of the Great War was that the economies of most European nations had taken a pounding, and as a result were left with money worth considerably less than it had been before the fighting broke out. One day, Ponzi was reading an article about different currency values in the paper; at the same time, there lay on his desk a coupon from Spain which he planned to use to send a publication called
Trader's Guide
for a businessman in Barcelona. He was just about to go to the post office when it occurred to him that, because of the war, the Spanish International Reply Coupon was no longer worth what it had been earlier. So instead of mailing the
Trader's Guide
, Ponzi decided to do some math. It wasn't easy.

Zuckoff again:

The coupon had cost the Spaniard thirty centavos, or roughly six cents. After a penny processing fee, it could be exchanged in the United States for a stamp worth five cents. Ponzi knew that the Spanish monetary unit, the peseta, had been devalued after the war, so he began figuring how many pesetas he could buy for a dollar. Using exchange rates published in Boston newspapers, Ponzi concluded that a dollar was worth six and two-thirds pesetas. Because there were one hundred centavos to a peseta, Ponzi calculated that a dollar was worth 666 centavos. If each International Reply Coupon cost thirty centavos, a dollar could buy twenty-two of the coupons in Spain. If Ponzi brought them to the United States, those twenty-two coupons would be worth five cents each, or a total of a dollar and ten cents. By redeeming them in Boston rather than Barcelona, Ponzi would earn a profit before expenses of ten cents, on each dollar's worth of coupons he bought in Spain and redeemed in the United States.

Through a friend in Italy, Ponzi knew that the lira, his homeland's basic monetary unit, had been even more thoroughly devastated than the centavo, and his manipulations could earn three times as much money
as would be provided by wheeling and dealing in Spain. “Sixty-six coupons purchased in Rome for a dollar,” writes Donald H. Dunn, “would be worth $3.30 in Boston. Ponzi's mind reeled at the thought—he was looking at profits of $2.30 on every dollar spent, or 230 percent, before expenses. Other countries might have even more devalued currencies, and the profits would be even more astronomical. One example was Austria. … If redeemed in the United States, Ponzi's initial thousand-dollar investment [in Austria] would yield stamps worth more than twenty-five thousand dollars.”

There were complications to work out, of course, even more mind-bending than those that had already presented themselves; but after a few days Ponzi believed he had unbent them sufficiently and was left with nothing more than one final complication: how to get enough money to buy the coupons in bulk—and therefore make profits in bulk. It did not bother him that, so far, what he was proposing to do was legal.