Una Fortuna, Espresso

Ponzi Stamp

The 1921 Vatican 2.50-lira express mail stamp honoring the meteoric Charles Ponzi. Some background: In 1906, the Universal Postal Union created an international reply coupon (IRC), which could be enclosed in a letter to another country and exchanged there for postage to send a reply. In late 1919, an Italian immigrant in Boston, Charles Ponzi, noted that an IRC could be bought cheaply in Italy and exchanged for U.S. postage stamps of much higher value, which could then be sold at a profit of up to 400%.

The idea looked good on paper, but Ponzi had no idea how to actually buy the coupons and sell the resulting stamps. Undaunted, in January of 1920 he went ahead and set up an investment company, promising clients a 100% profit within 90 days. For his first 18 investors and their $1700, it would have taken the buying and selling of 53,000 postal coupons to realize the promised profits. Instead of bothering with that, Ponzi paid his earliest investors with money from new investors. And most of them reinvested their money, so Ponzi got to keep it. By July, he was a millionaire. Shortly thereafter, it crashed; investors were out $20 million; Ponzi was arrested, and gave his name to every “Ponzi scheme” to follow.

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