The Great Moon Hoax…of 1835?

On August 25, 1835, a strange article appeared in the New York Sun. The piece, attributed to famed astronomer Sir John Herschel, announced a startling discovery…the moon was inhabited by intelligent creatures. The Sun’s circulation increased dramatically and within a couple of days, was the most popular newspaper on the planet. What was the Great Moon Hoax of 1835?

What was the Great Moon Hoax?

In 1835, the moon was a source of great mystery. So, when the New York Sun’s headline blared, “Great Astronomical Discoveries Lately Made by Sir John Herschel, L.L.D. F.R.S. &c. At the Cape of Good Hope,” citizens turned their heads.

In total, six articles were published by the Sun, claiming to be supplements to the (non-existent) Edinburgh Journal of Science. Supposedly written by Herschel’s assistant, (the fictitious) Dr. Andrew Grant, the pieces described how Herschel had created a new telescope at his Cape of Good Hope observatory. This miracle of science was capable of 42,000x magnification, more than enough to see small objects in space. The resulting images were then reflected onto the observatory’s walls where they were sketched and described.

The Great Moon Hoax…Life on the Moon?

The articles insisted that Herschel had “discovered planets in other solar systems…firmly established a new theory of cometary phenomena…and…solved or corrected nearly every leading problem of mathematical astronomy.” Despite this impressive list of accomplishments, all of it paled in comparison to the shocking news that Herschel had spotted life on the moon.

After viewing rock, a poppy field, vast forests of yew trees, inland seas, and beaches, Herschel turned his attention to an oval-shaped lunar valley. He reported seeing bison herds and blue unicorns. But the most amazing animals were yet to come. On August 27, readers learned that Herschel had observed signs of intelligent life on the moon. More specifically, he saw a primitive tribe of biped beavers who lived in huts, used fires, and carried their young in their arms. The next day, he reported something even more spectacular…a population of winged humanoids who appeared to live near a golden temple. Herschel and Grant labeled these humanoids “Vespertilio-Homo,” or man-bat.

The man-bats appeared to be engaged in conversations, complete with gestures. While the initial creatures were somewhat primitive, more elaborate man-bats would soon make an appearance. Herschel would later report the existence of a beautiful race of angel-like creatures and a mostly human population of middle class citizens.

Guerrilla Explorer’s Analysis

The story is now known, of course, as the Great Moon Hoax. Not only had Herschel failed to see any of the sights claimed by the article, he wasn’t even aware of the articles until well after they were published. From all accounts, he was initially amused by the incident but soon grew weary fielding questions about it.

The New York Sun reaped strong benefits from the Great Moon Hoax. Its circulation quickly rose from 15,000 before the series to 19,360 after its conclusion, making the Sun the most popular newspaper in the world at the time. Other newspapers followed suit and soon, the Great Moon Hoax was worldwide.

To this day, it remains unclear whether average citizens were aware of the Great Moon Hoax. At that time, newspapers were known for making up outrageous stories in order to drive sales. Also, it’s important to note that subscribers didn’t cancel their subscriptions once the truth began to emerge. Indeed, the Great Moon Hoax of 1835 became somewhat of a cultural icon for the time, leading to a play at the Bowery Theater among other things. Still, eyewitness accounts from the time make it clear that large numbers of people were fooled by the Great Moon Hoax. For example…

“Yale College was alive with staunch supporters. The literati—students and professors, doctors in divinity and law—and all the rest of the reading community, looked daily for the arrival of the New York mail with unexampled avidity and implicit faith. Have you seen the accounts of Sir John Herschel’s wonderful discoveries? Have you read the Sun? Have you heard the news of the man in the Moon? These were the questions that met you every where. It was the absorbing topic of the day. Nobody expressed or entertained a doubt as to the truth of the story.” ~ Yale Reporter, 1853

So, that leads us to our final question: who was behind the Great Moon Hoax? A reporter named Richard Adams Locke is usually given credit for the articles. However, Locke never admitted his involvement in the Great Moon Hoax and some researchers believe that the French astronomer Jean-Nicolas Nicollet, or Lewis Gaylord Clark, editor of the Knickerbocker Magazine, may have perpetrated it. Unfortunately, it’s impossible to know for certain. And unless new evidence comes to light, we may never know the hoaxer’s true identity.

Charles Ponzi’s Scheme?

In late 1919, Charles Ponzi was a poor but ambitious man. Less than a year later, he was worth millions. Then his ill-gotten wealth vanished in an epic collapse that brought down six banks and ruined thousands of investors. What was Charles Ponzi’s scheme?

Who was Charles Ponzi?

In August 1919, Charles Ponzi became fascinated with International Reply Coupons, or IRCs. An IRC was prepaid reply postage for international mail. They were usually bought in one country and then exchanged for stamps in another country.

Charles Ponzi thought he saw an arbitrage opportunity. He could buy large amounts of IRCs in countries with weaker currencies and redeem them in countries with stronger currencies. According to his autobiography, The Rise of Mr. Ponzi, he stood to gain an entirely legal net profit of 230% by exploiting the difference between the Italian and American exchange rates.

Ponzi established the Securities Exchange Company and set out looking for investors. He “claimed to have elaborate networks of agents throughout Europe who were making bulk purchases of postal reply coupons on his behalf.” Investors egaerly jumped aboard, intrigued by the generous terms of his promissory notes, which offered an eye-popping 50% interest rate payable in 90 days. For later notes, the term changed to 45 days.

Happy investors poured money back into the company and convinced their friends and relatives to do the same. By February 1920, Ponzi had recorded $5,000 in profits. By March, he was up to $30,000. By May, Charles Ponzi’s total profits reached a whopping $420,000. By June, Ponzi was a millionaire and the majority owner of The Hanover Trust Bank of Boston. He spent lavishly, acquiring a 12-room mansion among other things.

Ponzi was triumphant. Yet, dark clouds filled the horizon. Joseph Daniels, who’d never been paid for furniture he’d sold to Ponzi, sued for $1 million. The size of the lawsuit raised a troubling question among the public…how had Charles Ponzi gotten rich so quickly?

Charles Ponzi & his Ponzi Scheme?

On July 24, the Boston Post published a favorable article on Ponzi and reported his newly-acquired fortune at $8.5 million. But the newspaper’s acting publisher and city editor remained suspicious. They hired Clarence Barron (the man behind Barron’s), to investigate Ponzi.

Two days later, the Boston Post began a series of articles questioning Ponzi and his company. Barron played a key role, uncovering several unsettling pieces of information. For instance, Ponzi was not investing his own money in his company. Also, a whopping 160 million IRCs were needed to cover Ponzi’s purported investments, yet only 27,000 were in circulation. Last but not least, the U.S. Post Office reported that IRCs were not being bought in quantity anywhere in the world.

On August 2, Ponzi’s former publicity agent, William McMasters, wrote his own story for the Post. He claimed that Ponzi was over $4.5 million in debt, including the interest on outstanding loans. Investors clamored for their money back. Ponzi obliged, temporarily quelling fears.

On August 11, approximately one year after he started his business, Ponzi’s scheme ran out of steam. The Boston Post published an article detailing Ponzi’s criminal past. Meanwhile, Hanover Trust was seized by the Bank Commissioner, thwarting Ponzi’s plans to use its deposits to cover his debts.

How did the Ponzi Scheme Work?

It turned out that Ponzi never made investments of any sort. In its final audit, his company was found to own just $61 of IRCs. Instead, he paid off earlier investors with money obtained from later investors. While he didn’t invent the “Ponzi Scheme,” he made it famous.

Ponzi was arrested by federal authorities on August 12. He was charged with 86 counts of mail fraud and served three and a half years in prison. In 1925, he was charged with 22 counts of larceny by the state of Massachusetts and given an additional nine-year sentence.

Guerrilla Explorer’s Analysis

I wish I could say Ponzi learned his lesson. But after making bail, he traveled to Florida and concocted a similar confidence game, this time involving land. He returned to jail and stayed there until 1934. Ponzi’s original scheme ruined six banks and cast thousands of individuals into financial ruin. Yet, he never regretted his actions. In his last interview, given shortly before his death, Ponzi said:

“Even if they never got anything for it, it was cheap at that price. Without malice aforethought I had given them the best show that was ever staged in their territory since the landing of the Pilgrims! It was easily worth fifteen million bucks to watch me put the thing over.” ~ Charles Ponzi

While Charles Ponzi is nearly forgotten, his legacy lives on in the scheme that bears his name. So, beware the siren’s song of easy money and guaranteed profits. In the end, it never turns out well.