Before Madoff and Ponzi: 19th-Century Business Frauds Essay Example

most investors became unknowing victims who lacked self-defense mechanisms. George Robb emphasized this lack of protection and highlighted how investors often had insufficient financial knowledge to safeguard themselves from fraud while receiving minimal government support. Robb also mentioned the deceitful "Railway King" known as George Hudson, whose company controlled a significant portion of England's railway tracks. Despite doubts concerning railroad profitability, many individuals fell prey to psychological manipulation and invested their savings only to receive no profit or return on their money. Additionally, Robb's research uncovered another case of fraud involving the "Ladies' Deposit Company," a bank specifically targeting female depositors. This bank was run by an uneducated woman who swiftly embezzled over $250,000 from approximately 800 female depositors. In Boston in 1879, a bank made enticing promises of doubling money within a year; however, these claims were hard to believe.
Only those with minimal savings, typically the poor, were deceived by this fraudulent scheme as a potential source of profit. When the media initiated a campaign against Sarah Howe, the leader of the bank, they claimed to be a charitable bank capable of doubling profits. According to George Robb, false company shares or immediate bankruptcy are the most frequent types of fraud that can still occur. The perpetrators always possess extensive business knowledge while their unsuspecting victims rely on advertisements or advice from individuals promoting starting a business without considering profitability. As a result, these schemes convince people to invest in mere soap bubbles instead of genuinely profitable companies. Often, well-known public figures such as politicians or religious leaders orchestrate frauds by gaining people's trust with regards to their savings without any hesitation. With the

recent growth in web development, there has been an increase in fraudulent schemes targeting victims for their money. Unfortunately, those responsible for these schemes can easily disappear with the funds and leave the victims with limited options and little motivation to pursue legal action. Moreover, such schemes are occurring more frequently compared to the 19th century. It is worth noting that both Ponzi and Madoff schemes continue to be widely used.