Crowdfunding
Charles Ponzi finally had his fortune-making idea. Unfortunately, he didn’t have enough money to put it into action, so he sought investors. Ponzi approached some of his wealthy friends and promised that he could double their money within 90 days if they allowed him to use it to buy European IRCs. Soon after, he decreased this to 50% profits in just 45 days.
This was a phenomenal return, with Ponzi’s early investors earning $750 from a $1250 investment in just six weeks. In January 1920, Ponzi formalized these arrangements by setting up the Securities Exchange Company. Note the similarity of the name with that of the regulatory body which would be set up in 1934 and still exists today: the US Securities and Exchange Commission.
