Favorite

Danehy 

Bernie Madoff's rip-off scheme was just the latest in a series of notable, historic scams

It's been rough as of late for some of the used-to-be wealthy.

Many were paraded in front of the cameras, telling their sad stories, as Bernard Madoff was sentenced to 150 years in prison for (ahem) single-handedly running the largest Ponzi scheme in history. I felt moderately sorry for most of them, but I feel a whole lot worse for the average teachers, nurses and firefighters who have been terrified to open their respective mutual-fund statements over the past several months.

I don't feel sorry at all for Madoff's wife, who claims not to have known anything that her husband had been doing over the past half-century, and who complained loudly that the government left her with "only" $2.5 million. I mean, what's a goil to do?

The landscape is littered with people who lost fortunes, large and small. It's impractical (and maybe a bit cheesy) for anybody to always be looking after their money, but it's prudent to check on it sometimes. Many of Madoff's victims almost begged him to take their money.

Still, they shouldn't feel too dumb. Historically speaking, they're in rarified company, because one of the first-ever victims of the modern financial scheme was none other than Sir Isaac Newton, who was ... oh, only the greatest mathematician ever!

The story of Newton's discoveries is fairly well-known. Newton spent nearly 30 years as a professor at Cambridge. Oddly enough, that for which he is best-known occurred away from Cambridge. In the spring of 1665, the plague hit England. Having been brought into London from Holland by flea-bearing rats, the plague killed tens of thousands and prompted Cambridge to cease operations for a year. Newton went home to the countryside, and rather than till the soil at his stepfather's farm, he instead invented calculus, crafted the basis for his three laws of motion, and began the work that would become Principia, generally considered one of the most important books ever written.

After he hit the big time, he corresponded with noted diarist Samuel Pepys and with Sir Christopher Wren, the architect who helped design some of London's most famous buildings after the great fire. His two best buddies were Sir Edmund Halley (for whom the comet is named) and noted philosopher John Locke. Imagine being the fourth person at that table! About the only people who could handle that seat without finding it at least a bit daunting would be Jesus Christ and Mel Brooks.

Later in his life, Newton longed for something a bit more comfortable than the 100 pounds a year he was being paid by Cambridge. He took what amounted to a civil-service job as warden of the Mint in London. The timing of the appointment was crucial, as England was on the verge of economic collapse. King William III (of William and Mary) was waging an expensive war; England was literally running out of currency, as a large percentage of the silver coins were being shipped across the channel to France, where they could buy more gold and other goods than on the isles; and much of the coinage that remained in England was either counterfeit or "clipped." (Low-level thieves would use scissors to cut a tiny bit of the metal from around the edges of the coins, melt it down and either combine it with pewter to make counterfeit coins, or sell the silver back to the crown.)

It got so bad that counterfeiting became a capital crime, tantamount to treason. Newton saved the day by overseeing the complete re-coining of England, rendering the old fakes useless and making the new coins much harder to counterfeit. He designed an assembly-line procedure that drastically cut the re-coinage time, and even adapted his scientific skills to detective work in tracking down and convicting London's most notorious counterfeiter, one William Chaloner.

For his efforts, Newton was paid well and amassed, if not a fortune, then certainly a tidy sum of money. The smartest man in the world (maybe ever!) should have been set for life.

In 1711, as the War of the Spanish Succession raged, some British speculators created the South Sea Company to begin trading with Spain's erstwhile Latin American colonies, left unprotected because of the fighting on the Continent. Such trade should have been very lucrative, and people began trading paper stock in the company in what was the forerunner to today's stock exchange.

According to Thomas Levenson's Newton and the Counterfeiter, the price of the stock went from £128 to £175 in one month. Four months later, it topped out at £1,050 a share. The speculators were so giddy that they never bothered doing any actual trading with the colonies; it was all on paper and was eerily similar to a problem Newton had solved with his new calculus some 45 years earlier. When the scheme crashed, it crashed hard. Newton jumped in right about the time it started falling. By some accounts, he lost £20,000 when the bubble burst, the equivalent of 40 times his base annual salary at the Mint. He lived to be 84, but never spoke publicly of the humiliating episode.

It's like that joke Denis Leary used to tell. Pretending to be Babe Ruth, he said, "Poor Lou Gehrig ... died of Lou Gehrig's Disease. He probably should have seen that coming."

More by Tom Danehy

  • Danehy

    Tom sticks up for Ariana Grande and raps with the Confederate flag
    • Jul 16, 2015
  • Danehy

    Tom checks in with a Pima County sheriff and his metal life away from the badge
    • Jul 9, 2015
  • More »

Comments (2)

Showing 1-2 of 2

Add a comment

 
Subscribe to this thread:
Showing 1-2 of 2

Add a comment

Facebook Recommendations

The Range

Leo Needs a Home

Sample Russian Beer and Cuisine at Special Kalina Dinner

More »

Latest in Danehy

  • Danehy

    Tom laments about how we were cool and loved science enough to think that greatness existed out in space
    • Jul 23, 2015
  • Danehy

    Tom sticks up for Ariana Grande and raps with the Confederate flag
    • Jul 16, 2015
  • More »

Most Commented On

Facebook Activity

Tucson Weekly on Facebook

© 2015 Tucson Weekly | 7225 Mona Lisa Rd. Ste. 125, Tucson AZ 85741 | (520) 797-4384 | Powered by Foundation