Lowstory

Ponzi schemes returned to the news this winter with the revealing of the scam which Bernie Madoff perpetrated on his investors. Time magazine called Madoff, “quite possibly one of the largest [crooks] Wall Street has even seen.” A Ponzi scheme is characterized by the taking of money from new investors to pay off the promised (and fictional) returns from earlier investors. A few days ago Madoff plead guilty to “ 11 felony counts, charges that included securities and mail fraud, perjury and lying to the Securities and Exchange Commission” and was denied bail due to being a “flight risk.” 

Unlike Madoff, who will likely spend the rest of his life in prison, Charles Ponzi, survived his almost 14 years in and out of prison in America from 1920 to 1934 on various charges of larceny and fraud to be deported to his native country, Italy. He never stopped trying to find the next great way to fool and scam people, so it should come as no surprise that Mussolini gave him a “job in the financial section of his government.”

100 years ago today, 11 years before Ponzi, the New York Times reported on the arrest of “the Napoleon of Swindlers,” Henri Rochette in Paris. Rochette “founded the Franco-Spanish Bank and floated not less than a dozen mining enterprises, in which he became a Director the stock of which was eagerly purchased by French investors.” Of course, like Madoff and Ponzi, Rochette was busy “continually organizing new companies and issuing new stock” to defraud his investors.

Perhaps the judges who determined that Ponzi and Madoff might be flight risks knew Rochette’s story, for as Time magazine retold in 1934, Rochette “Henri Rochette was sentenced to two years in prison, which he never served, fleeing to Mexico instead.” Like Ponzi, Rochette could not stay out of trouble with the law though, and when he was finally tracked down to stand trial, he killed himself in the most sensational fashion: “Right in the middle of the court room he slashed his throat from ear to ear.”

Self-aggrandizing to the last, there was reported to be a not “carefully tucked inside Henri Rochette’s hat” which read, “I have postponed my suicide for several weeks to finish correcting the proofs of my book, The Regeneration of France.”

Not all the news is bad though, as the New York Daily News reported, one Queens “construction worker used the swindler’s prison number to play the lottery and won $1,500.” When asked whether he thought Madoff would be happy for him, Ralph Amendolaro said, “He’ll probably want a cut.” As of today, Madoff’s book is still pending.

100 years ago Washington D.C. braced itself for an incoming barrage, not of snow, like it received yesterday, but more in line with what it experienced Jan 20 of this year when roughly 1.8 million people came to town to witness President Barack Obama’s inauguration! In 1909 it was William Howard Taft’s turn and according to the New York Times, “Washington expect[ed] to be swamped with humanity.”

The city prepared to welcome its visitors. At night, “the full strength of the electric lights that are strung in graceful loops from side to side of Pennsylvania Avenue were turned on… thousands of blazing bulbs transformed the buildings… into fairy structures of light.” Not all was so rosy though — not all of the preparations were complete and the “Building Department of the District of Columbia” was disturbed enough at the thought of unreliable, hastily completed grandstands that they threatened to “condemn” and stands not completed before midnight.

Meanwhile, “members of the Inauguration Committee [were] incenced at the action of the railroads in parking their sleeping cars around the city and renting them at exorbitant prices to persons who believe evidently that there are no accommodations in the city for them.” Clearly, the tradition of speculative Inauguration hosting is a long and storied one. The inaugural parade was already an established custom in 1909 but for “the first time in the history of the country the wives of the President and Vice President will… participate in the inaugural parade.”

One small step for Helen Herron Taft, one giant step for egalitarianism. Okay, so, the Tafts rode a carriage and it’s not like the women had an equal chance of becoming President and having their husbands accompany them on the parade, but you get the point. The women’s inclusion may have been due to the rising women’s suffrage movement, one of the big issues of the day. On another of the issues, prohibition, Helen disagreed with her husband. He was in favor of prohibition, she was not.

“Many people honestly believe that they are serving the common weal by the captious criticism and the indiscriminate abuse of public officials. Nothing in this world is perfect. It is always easy to pick flaws in the wisest programmes of Government and in the most honest of officials. The game of official baiting has become almost as popular in New York as is the National game of baseball.* It is attended with no risk to the players, and with a very pleasing notoriety, for even the most conservative newspapers will give scare headlines to the most inconspicuous and irresponsible citizen provided he attacks a public official with sufficient enthusiasm.”

*Oddly enough, the first ever game of night baseball was played on the same day.

From reading that quote, you might suspect that President Barack Obama recently visited New York and was caught uncharacteristically criticizing those members of the public who attack him and the stimulus plan and the news organizations who profit from them. Actually, it was New York Mayor George Brinton McClellan who served from 1904 to 1909. The New York Times (of the time) reported on the mayor’s speech, which was “held in the interest of the Girls’ Branch of the Public Schools Athletic League.

Criticism is, well… critical, and it’s a sign of the health of our country that it can be freely expressed. Not only is it a sign that our country is free of tyrannical control, but the best ideas usually come out of criticism and the subsequent debate. For an example of that, see Fred Wilson’s recent post on his blog A VC which generated a 192 comments in less than two days. It doesn’t seem to me that McClellan was trying to thwart free speech but that he was frustrated by unconstructive thought — mindless disobedience is just as bad as mindless obedience. A few days ago, the Times ran an article that examined the recent history of congressional/presidential politics, which suggested that what we have now are politicians that are loyal first to their party and only then to their country. No longer can “a president, especially a new one elected by comfortable majority… expect cooperation from the other side, in deference to the will of the voters.”

As a voter, I don’t wish to command any deference from the Congress, but I would ask that if they do not agree or disagree with laws, proposals, and ideas by blindly following their political party. For Mayor McClellan’s words are as true today as they were a 100 years ago when he said, “Destructive and ill-judged criticism and abuse, however, are altogether to the injury of the community. Moreover, there are many real evils to be righted, much constructive work that should be done.”

Let me begin this blog by apologizing in advance for any typos or misquotations I might make in it or any other Lowstory related writing. A few days ago, another blog, Gothamist, reported on a very old and hard to fix typo. Apparently a George Washington quotation carved into the Manhattan Supreme Courthouse should really read “The due administration of justice is the firmest pillar of good government” not “The true administration…” The Gothamist reports that “James Rees (the executive director of Washington’s estate) is calling for the typo to be fixed, noting that George was a ‘real stickler for detail.’”

B. Borrmann Wells, who wrote a letter to the Editor of the New York Times a hundred years ago was another stickler for detail. Mr. (I assume) Borrmann called to the reader’s attention an intentional misquotation by an opponent of women’s suffrage, Mrs. Annie Nathan Meyer. Wells accused Meyer of misrepresenting the position Judge Ben Lindsay about suffrage. It sounds to me like Wells was anxiously waiting to catch Meyer in a mistake at least since the day that Wells felt that he had “myself suffered from misquotation at the hands of Mrs. Annie Nathan Meyer.”

History and Lowstory is silent on how and whether Wells and Meyer ever settled their dispute, but it does tell quite a story about how two newspaper owners, John Looney and M.W. Wilmerton tried to settle theirs. In Rock Island Ill on February 22, 1909, the owner of the Tri-City Journal, Mr. Wilmerton and the owner of The Rock Island News, Mr. Looney “exchanged seven shots across the street at each other… Looney was slightly wounded. Both men were arrested.” Before trying to kill each other, the two men had been attacking each other through the platforms of their newspapers. 

Luckily for all involved, newspaper men can’t aim guns, George Washington is dead, and the readers of Lowstory are enlessyl patieient with tipeos.

100 years ago an important modification was made to New York subway cars, one which has been maintained in the design of subway cars to today. No, not the faint aroma of urine, good guess though. No, the modification they made 100 years ago was the addition of side doors.

According to the New York Times editorial, although the “experimental train… did not work satisfactorily on its first trip through the Subway yesterday… once the side-door system can be got to work smoothly undoubted advantages must accrue. The waits at the stations will be decreased, thereby increasing the schedule speed, while the loss of eight seats in each car by the introduction of the side doors will be offset by the extra standing room, and by the possibility of passing many more cars through the Subway at times when they are most needed.”

If you’re wondering why a change in subway car design necessitated an editorial, clues can be found in the news article on the subject. It seems as though the experimental side doors were an innovation of the “Public Service Commission’s” and was being foisted upon the private subway company, the Interborough. According to the Times, the test was a success “at least from the point of view of the members of the commission’s staff,” even though “the Interborough officials maintained that the experiment proved that there were several disadvantages, and that practically no time was saved.”

Whether or not time was saved by these new doors was a hotly debated subject and one that might have been manipulated by one group or another. When the train stopped at Grand Central Station, a stop which usually took a minute, shenanigans may have ensued:

“It was observed that the loading and unloading operation had been completed in forty seconds. The dispatcher’s gong was sounding at the time the last door closed. Seemingly the train should have left the station, showing a gain of twenty seconds. It did not leave the station, however, until the sixty seconds had elapsed. The reason was suggested that the block light might have been holding the train back.”

“Suggested…” and “might…” — I’m going to suggest that that delay might have been created by a disgruntled Interborough loyalist.

This year the Westminster Kennel Club Dog Show was protested by a group of PETA People wearing the garb of KKK members. The USA Today reported that PETA was trying to “draw a parallel between the KKK and the American Kennel Club.” The purported connection being that both the Klan and the Kennel Club “have the goal of ‘pure bloodlines.’” David Frei, a spokesperson for the Kennel Club responded by saying that they “want to produce the next generation of healthy and happy dogs not just for the show ring but for the couches at home.”

Little did Frei know, but 100 years ago almost the same exact criticism was being launched at the Kennel Club and if he had pulled a 100 year old copy of the New York Times out of his pocket, he could have quoted an editorial which would have perfectly defended the dog show from the PETA People’s accusations:

“Some old fogies still contend that good dogs are out of place in a bench show. However much of truth there may be in their obviously exaggerated assertion that dogs bred for exhibition are good only to exhibit, it is clear that the influence of the Kennel Club as been potent and far-reaching in the breeding of good American dogs.”

For those who are interested in the results, the President’s cup of 1909 was won by “Guarge Quintard, 3d’s (huh??,) wire-haired fox terriers, which virtually won everything in their regular classes.” The Best-In-Show of 2009 was won by a Sussex spaniel called Stump who became the oldest winner ever at 10 years old.

I don’t know about you, but I absolutely LOVE the Winter Olympics. It’s not just that the central sport of the games is Hockey, one of my favorites, as opposed to the Summer Olympics’ fascination with Track and Field and Swimming, two sports which I find impressive, but not terribly fun to watch, it’s also that the Winter’s random sports are more fun to watch than the Summer’s random sports. What could be more entertaining than watching teams of insane people fly down an icy series of tubes (the Internet isn’t a big truck… it’s a series of tubes!) in Bobsledding? Watching pairs of lunatics fly down similarly treacherous courses on a sled… on top of each other in doubles luge! Sure, cross-country skiing might be a little like watching paint grow, but what if we had the skiers stop every couple minutes and have them fire a gun! Now you’ve got something — the biathlon. And, of course — there’s nothing like spending a good couple hours watching Curling.

Curling, in case you’re not familiar with it is basically shuffleboard on ice, with big, heavy “rocks” and brooms which you’re allowed to use during a throw to either make the ice smoother so that your rock goes farther towards the target or to get it to go slower to make it stop right at the target. Needless to say, Canadians are great at this game and have been for a long time. 100 years ago, the New York Times reported that “the third and final test match for the Strathcona curling trophy resulted to-day in a victory for the Canadian players.” The Strathcona cup which was won by the Canadians at least as recently as 1998 is a competition between Scotland and Canada.

Olympic curling has a much wider field of competitors, one which may get larger if these intrepid curlers from Brazil have their way. As reported in the Times about a week ago, Brazil has its first ever curling team and is competing for a spot in the Olypics. The team is made up of 4 Brazilian natives who found themselves in Canada for Graduate School and “were looking for a winter sport.” Marcelo Mello, their captain says they “became passionate, I would say, addicted, for curling.” On hearing him speak with such confidence, I immediately added him to my roster in my fantasy curling league.

The week a 100 years ago was a bad week for 153 Cornell students who were sent “quit notices” from their school “as a result of the midwinter examinations.” The New York Times reported that this was a record high for Cornell. If you figure that about the same number of students fail out during the exams at the end of the year as in the winter, you get close to 300 students failing out each year. To really simplify the math, take that number and divide it by 4 (to access each class an equal number of students failing) and then multiply that by four (figuring that people will continue to fail throughout their 4 years at the college) and you come away with a rough idea that 300 of the students in each class at Cornell in 1909 didn’t graduate.

Unfortunately, I wasn’t able to figure out how many people were students at Cornell in 1909, but I’m going to assume that it was far fewer than the 13,510 that now take Undergraduate courses there. Today, the Cornell claims a 90% graduation rate — that’s 3,377.5 students per class which leads us to calculate that 337.75 Cornell students in each class flunk out these days.

All of this fuzzy math points towards the idea that colleges today flunk out a much smaller percentage of their students than they did 100 years ago. Why is that? The cynic in me says that this is because Universities are institutions of academics, but for-profit businesses whose main job is to hand out degrees that allow their holders to enter the workforce. The optimist in me says that this is a function of the democratization of the University system.

In 1909 Universities were only meant to serve a small segment of the population and degrees were not only unnecessary for the majority, but in fact, unthinkable. My alma mater, Rutgers, serves a wide cross-section of people, around 50% of whom are in the first generation of their family to go to college. In an idea that the progressives of 100 years ago (more like 85-90, but whatever…) would have appreciated, I’m going to suggest that Rutgers’ job is to improve the lot of their students and their students families, whereas Cornell’s role in 1909 was to prepare the nation’s lawyers, architects, and doctors.

And, to weed out those who they thought would not make it in those professions, which they did 100 years ago — 14 lawyers, four architects, and one budding doctor got the ax.

It is sometimes, now and then, unclear to me what merits the focus of government. It isn’t entirely clear why our government feels the need to get involved in steroids in baseball and sneaky video tapes in football while not feeling the need to take decisive action about matters such as illegal wiretapping or the safety of our bridges (from falling apart, not terrorism!) I can’t really blame our current politicians, because I find the action and inaction of the government from 100 years ago equally puzzling. Here’s four issues which came up in the newspaper 100 years ago.

• Providing “wholesome, well-ordered amusement and recreation.”
• Prohibiting “pool selling, bookmaking, or gambling on horse races.”
• The “segregation of Japanese school children.”
• “Preventing further caustic reference there to the President of the United States or to the judiciary…” by U.S. Senators!

All had recently been the subject of proposed or passed legislation. In New York, the “Committee of the Association of Neighborhood Workers” criticized city Assemblyman Mr. Moritz Graubard’s 1908 dance hall bill and his two proposed 1909 measures regulating dance halls in the city. Claimed the committee, “Legislation is urgently needed…. and not only legislation, but intelligent administrative action by the city authorities.”

California’s legislature was busy, having recently passed a bill which made gambling a felony and the ridding of Japanese people from public schools a legal necessity. Governor Gillett of California “signified his intention to sign the [gambling] measure, but it is believed that he will not take this action until thirty days hall have elapsed… [so that] the present season of racing at the Emeryville and Santa Anita courses will not be disturbed.” Although President Theodore Roosevelt himself telegraphed the Governor to reinforce his previously stated opinion that “to shut them (the Japanese) out from the common schools is a wicked absurdity,” the newspapers had no mention of Gov. Gillett doing anything other than signing that bill.

While Roosevelt was busy doing what to me seems like obviously the right thing, some U.S. Senators and the Vice President were busy doing what they probably thought the right thing was, but which seems a little silly. Fearing a repeat of some “caustic and bitter personal attacks made on President Roosevelt” specifically by a  Senator Tillman. In a classic statement showing that the one true historical constant is nostalgia, they were reported to “hope to restore the somewhat dented dignity of the Senate to its oldtime form.”

Oh, right… nostalgia and wasteful legislation.