Sarah Howe (c. 1826-1892) was a fraudster known for carrying out financial crimes well before Ponzi.
Sarah Howe (c. 1826-1892) was a fraudster known for carrying out financial crimes well before Ponzi.
In honor of the spookiest month, we’re revisiting our favorite Womanica episodes featuring villains, troublemakers, magic, and mystery all October. Join host Jenny Kaplan — with a few special introductions — as she takes you back in time, highlighting women like Sadie the Goat, Marie Laveau, Patricia Krenwinkel and more who were ruthless, vengeful, and mystical. The riveting stories of these women are sure to keep you up at night.
History classes can get a bad rap, and sometimes for good reason. When we were students, we couldn’t help wondering... where were all the ladies at? Why were so many incredible stories missing from the typical curriculum? Enter, Womanica. On this Wonder Media Network podcast we explore the lives of inspiring women in history you may not know about, but definitely should.
Every weekday, listeners explore the trials, tragedies, and triumphs of groundbreaking women throughout history who have dramatically shaped the world around us. In each 5 minute episode, we’ll dive into the story behind one woman listeners may or may not know–but definitely should. These diverse women from across space and time are grouped into easily accessible and engaging monthly themes like Educators, Villains, Indigenous Storytellers, Activists, and many more. Womanica is hosted by WMN co-founder and award-winning journalist Jenny Kaplan. The bite-sized episodes pack painstakingly researched content into fun, entertaining, and addictive daily adventures.
Womanica was created by Liz Kaplan and Jenny Kaplan, executive produced by Jenny Kaplan, and produced by Liz Smith, Grace Lynch, Maddy Foley, Brittany Martinez, Edie Allard, Lindsey Kratochwill, Adesuwa Agbonile, Carmen Borca-Carrillo, Taylor Williamson, Ale Tejeda, Sara Schleede, and Alex Jhamb Burns. Special thanks to Shira Atkins.
Original theme music composed by Miles Moran.
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Hello! From Wonder Media Network, I’m Edie Allard, Managing Producer here at WMN, and I’m so excited to be introducing this “best of” episode of Womanica.
Today’s episode was originally part of our August 2019 theme, “Villainesses.”
To tell this woman’s story, we’re heading back to the 19th century. She was a famous American fraudster who ran a series of Ponzi schemes.
Even though this Womanican did some pretty immoral stuff, it’s hard not to be kind of fascinated by the story of a woman who managed to scam people out of the equivalent of millions of dollars today. And she did it before more famous men did the same thing, too!
Now here’s host Jenny Kaplan to talk about Sarah Howe.
The early parts of Sarah Howe’s life are a bit of a mystery. She was born in the United States as early as 1820 or as late as 1827. She may have been born in Providence, Rhode Island or maybe elsewhere.
Her story picks up in 1877 when Sarah was living in Boston and working as a fortune teller in the bustling post-Civil War city. The post-war period, especially in the North, was a major era of expansion, industrial development, population growth and urbanization. Boston was right in the middle of things.
Sarah saw the plethora of capital available to white entrepreneurs at the time and decided to go into business. As author Rose Eveleth put it, “In 1876, Alexander Graham Bell invented the telephone, and in 1879 Thomas Edison created the lightbulb. In between those innovations, Sarah Howe opened the Ladies’ Deposit Company, a bank run by women, for women.” Sarah was going to help her fellow women break into the lucrative world of banking and finance.
So far so good, right? I love a women-run business. But the Ladies Deposit Company wasn’t exactly on the up and up. The concept was that the Ladies’ Deposit Company would be a savings bank that only accepted white clients who were unmarried or so-called “unprotected females.” At the time, that meant any woman who didn’t have a husband or legal guardian handling her money.
Sarah told potential depositors that the Ladies Deposit Company was affiliated with a Quaker charity looking to help women with modest means. Because these women often didn’t have much money, they were typically overlooked by large banks. A bank focused on the needs of poor, single women was in demand.
Sarah promised extraordinarily high returns on deposits at an 8% interest rate per month. New depositors even received three months of interest as a sort of signing bonus to prove the strength of the business model. When skeptics asked how she could possibly afford to do this, Sarah pointed out that the Ladies Deposit Company was less a normal financial institution than a charitable organization funded by a group of secret Quaker philanthropists, which for at least a time, seemed like a plausible enough answer.
Sarah didn’t advertise the bank, but word spread quickly. Soon Sarah was getting deposit checks from single women across the country. According to author Rose Eveleth, “All told, the Ladies Deposit would gather at least $250,000 from 800 women — although historians think far more women were involved. Some estimate that Howe collected more like $500,000, the equivalent of about $13 million today.”
It seemed too good to be true because, well, it was too good to be true. In 1880, the Boston Daily Advertiser began running a series of articles meant to expose the Ladies Deposit Company. This kind of fraud was a phenomenon that had not been seen before in the U.S.
The Ladies Deposit Company was a fairly brilliant Ponzi scheme decades before Charles Ponzi’s name was attached to the crime. There was no Quaker charity, no secret philanthropists- Sarah simply paid her early customers with the money received from her later customers and so on. It wasn’t built to last.
The newspaper articles caused mass panic among depositors and a run on the bank. Nearly three weeks later, Sarah was arrested and charged with multiple counts of fraud. She eventually served three years in prison.
When Sarah was released from prison in 1884, she did it again. She set up yet another fraudulent institution called the Women’s Bank, which ran the exact same scheme as Sarah’s first bank, except that it lowered the promised monthly interest rate from 8% to 7%. She collected another $50,000 in deposits from poor, unwitting women before being exposed once again in 1887. Rather than risking another jail term, Sarah fled Boston before she was indicted. She travelled the country and set up similar schemes in other cities.
In 1888, Sarah returned to Boston where she was promptly arrested for fraud. But she was released a few months later because her victims refused to cooperate with the prosecution and participate in the trial. Victims may have felt too much embarrassment and fear of public shame. They were already being publicly shamed for trusting a woman with their money in the first place!
After her release, Sarah didn’t start any further banks or financial institutions. Instead she fell back on her earlier career of fortune telling. She passed away in 1892 at the age of 65, poor but still famous enough to get her own obituary in the New York Times.
We’re taking a break for the weekend, but join us again on Monday for another of our favorite episodes featuring villainy, magic, and mystery.
Special thanks to Liz Kaplan, my favorite sister and co-creator.
Talk to you Monday!