5 ms·

How Scams Worked in the 1800s

117 points by brahmwg 11y ago

guessbest 11y ago
This sounds like a startup idea, Uber for Scams. Sign Up to Scam or Tap and Swindle.
cs702 11y ago
The most daring scam of that era is probably the successful raising in 1822 of £200,000 (a lot of money at the time) from investors who bought a bond issued by the "Kingdom of Poyais." The bond was floated in the main London exchange. It might be the only bond ever issued by a fictitious country in history.[1] [1] http://www.economist.com/news/christmas-specials/21568583-biggest-fraud-history-warning-professional-and-amateur-investors http://www.economist.com/news/christmas-specials/21568583-bi...
- baobrien 11y ago
  According to [1], £200,000 in 1822 pounds is £20,207,734.91 in 2013 pounds [1] http://www.whatsthecost.com/cpi.aspx http://www.whatsthecost.com/cpi.aspx
  - cs702 11y ago
    According to the Economist article I linked to above, £1.3 million back then, as a percent of Britain's economy, would be £3.6 billion today, so a bond issue of £200,000 in 1822 would be over £550 million today. Either way, it's not peanuts.
    - ikeboy 11y ago
      It's difficult to compare amounts between different cultures/countries/times because money is an abstraction. To the extent people spend on the same things, you can compare how much each costs, but many of the things previous generations spent on are either viewed as useless by us, or are considerably cheaper. (Although even "cheaper" is subjective: we can point to abundance, or marginal cost to produce in labor or similar more objective metrics to get around that). I tend to consider all such statements spanning a sufficiently large time as guesses. (For other countries, you need to consider different cost of goods even when money can be directly converted; you need to consider what's provided by the government as a cost-of-living deduction, and plenty of other stuff. It's like comparing interest rates without mentioning the money float or gold standard when they differ among the two periods you're comparing.) /rant
      - cs702 11y ago
        In general, I agree. In this case, the percent-of-GDP approach used by the Economist is probably a good one, because (1) it relies on high-quality data (the Bank of England, founded in 1694, provides GDP data going back three centuries[1]), and (2) it measures the bond's size in relation to the size of Britain's overall economy, which intuitively makes more sense for financial-market figures. [1] http://www.bankofengland.co.uk/research/Pages/onebank/threecenturies.aspx http://www.bankofengland.co.uk/research/Pages/onebank/threec...
      - barrkel 11y ago
        On a time scale of centuries, the only real way to compare money is by the effect it has on other people when you spend it (i.e. how much effort other people expend when you draw down the claim on future production that money represents). You can look at the percentage of the population / economy affected (for large amounts of money), or the absolute number of people affected (typically measured against of the average wage). When the size of the population overall is changing, numbers calculated using the two basic techniques will necessarily diverge. Which number is more important depends on whether you're interested in relative or absolute purchasing power, which is context dependent.
- deleted 11y ago
  [deleted]
bendykstra 11y ago
I witnessed a scam similar to "Horse Trading" while playing Team Fortress 2. In the game, players can wear cosmetic items. It's just for fun, but the items can still be worth tens or even hundreds of dollars. A player joined the server that I was playing on and after a bit asked if anyone had a certain low-value hat. He said that he was willing to pay the equivalent of $20 for it. No one did (no doubt he had made sure before asking.) He left the server and a few minutes later another player joined wearing that exact hat! A bidding war began and the second player left approximately $10 richer.
- oh_sigh 11y ago
  Horse trading, as reinterpreted by the streets "Can't con an honest john": https://www.youtube.com/watch?v=bTB929OoqI4 https://www.youtube.com/watch?v=bTB929OoqI4
  - JacobAldridge 11y ago
    As they say in the excellent British series Hustle, the art of the Con is finding someone who wants something for nothing, and selling them nothing for something.
- ArcticCelt 11y ago
  People used that scam on WoW. People would type in the chat channel that they want to buy some item for 200 golds. Meanwhile they put for sale that item on the auction house for 100 golds. Some people would then rush to buy the one on the auction house to resell it to the potential buyer but of course the potential buyer is now nowhere to be seeing.
  - tamana 11y ago
    Are there games my kids can play and safely get burned and learned by scams like this, using play money not expensive credits from real money?
    - voxic11 11y ago
ChristianGeek 11y ago
If you're interested in the psychology of audience manipulation for magicians, check out "Strong Magic" by Darwin Ortiz.
Animats 11y ago
"Extraordinary Popular Delusions and the Madness of Crowds", published in 1841, is still worth a read. Read about version 1.0 of the classic big scams, from the South Sea Bubble to Tulip Mania.
- elbrownos 11y ago
  This is a great book. I found the section about the Crusades especially interesting.
  - technofiend 11y ago
    I felt compelled to mention it's available free on Project Gutenberg although printed copies are also available on Ebay. https://www.gutenberg.org/ebooks/24518 https://www.gutenberg.org/ebooks/24518
known 11y ago
Religion was born when first con-man met the first fool; https://en.wikipedia.org/wiki/Timeline_of_ancient_history https://en.wikipedia.org/wiki/Timeline_of_ancient_history
alanwatts 11y ago
For further reading check out Victor Lustig, the man who sold the Eiffel Tower, twice. https://en.wikipedia.org/wiki/Victor_Lustig https://en.wikipedia.org/wiki/Victor_Lustig

117 points by brahmwg 11y ago

This sounds like a startup idea, Uber for Scams. Sign Up to Scam or Tap and Swindle.

cs702 11y ago

The most daring scam of that era is probably the successful raising in 1822 of £200,000 (a lot of money at the time) from investors who bought a bond issued by the "Kingdom of Poyais." The bond was floated in the main London exchange. It might be the only bond ever issued by a fictitious country in history.[1] [1] http://www.economist.com/news/christmas-specials/21568583-biggest-fraud-history-warning-professional-and-amateur-investors http://www.economist.com/news/christmas-specials/21568583-bi...

baobrien 11y ago
According to [1], £200,000 in 1822 pounds is £20,207,734.91 in 2013 pounds [1] http://www.whatsthecost.com/cpi.aspx http://www.whatsthecost.com/cpi.aspx
- cs702 11y ago
  According to the Economist article I linked to above, £1.3 million back then, as a percent of Britain's economy, would be £3.6 billion today, so a bond issue of £200,000 in 1822 would be over £550 million today. Either way, it's not peanuts.
  - ikeboy 11y ago
    It's difficult to compare amounts between different cultures/countries/times because money is an abstraction. To the extent people spend on the same things, you can compare how much each costs, but many of the things previous generations spent on are either viewed as useless by us, or are considerably cheaper. (Although even "cheaper" is subjective: we can point to abundance, or marginal cost to produce in labor or similar more objective metrics to get around that). I tend to consider all such statements spanning a sufficiently large time as guesses. (For other countries, you need to consider different cost of goods even when money can be directly converted; you need to consider what's provided by the government as a cost-of-living deduction, and plenty of other stuff. It's like comparing interest rates without mentioning the money float or gold standard when they differ among the two periods you're comparing.) /rant
    - cs702 11y ago
      In general, I agree. In this case, the percent-of-GDP approach used by the Economist is probably a good one, because (1) it relies on high-quality data (the Bank of England, founded in 1694, provides GDP data going back three centuries[1]), and (2) it measures the bond's size in relation to the size of Britain's overall economy, which intuitively makes more sense for financial-market figures. [1] http://www.bankofengland.co.uk/research/Pages/onebank/threecenturies.aspx http://www.bankofengland.co.uk/research/Pages/onebank/threec...
    - barrkel 11y ago
      On a time scale of centuries, the only real way to compare money is by the effect it has on other people when you spend it (i.e. how much effort other people expend when you draw down the claim on future production that money represents). You can look at the percentage of the population / economy affected (for large amounts of money), or the absolute number of people affected (typically measured against of the average wage). When the size of the population overall is changing, numbers calculated using the two basic techniques will necessarily diverge. Which number is more important depends on whether you're interested in relative or absolute purchasing power, which is context dependent.
deleted 11y ago
[deleted]

bendykstra 11y ago

I witnessed a scam similar to "Horse Trading" while playing Team Fortress 2. In the game, players can wear cosmetic items. It's just for fun, but the items can still be worth tens or even hundreds of dollars. A player joined the server that I was playing on and after a bit asked if anyone had a certain low-value hat. He said that he was willing to pay the equivalent of $20 for it. No one did (no doubt he had made sure before asking.) He left the server and a few minutes later another player joined wearing that exact hat! A bidding war began and the second player left approximately $10 richer.

oh_sigh 11y ago
Horse trading, as reinterpreted by the streets "Can't con an honest john": https://www.youtube.com/watch?v=bTB929OoqI4 https://www.youtube.com/watch?v=bTB929OoqI4
- JacobAldridge 11y ago
  As they say in the excellent British series Hustle, the art of the Con is finding someone who wants something for nothing, and selling them nothing for something.
ArcticCelt 11y ago
People used that scam on WoW. People would type in the chat channel that they want to buy some item for 200 golds. Meanwhile they put for sale that item on the auction house for 100 golds. Some people would then rush to buy the one on the auction house to resell it to the potential buyer but of course the potential buyer is now nowhere to be seeing.
- tamana 11y ago
  Are there games my kids can play and safely get burned and learned by scams like this, using play money not expensive credits from real money?
  - voxic11 11y ago

ChristianGeek 11y ago

If you're interested in the psychology of audience manipulation for magicians, check out "Strong Magic" by Darwin Ortiz.

Animats 11y ago

"Extraordinary Popular Delusions and the Madness of Crowds", published in 1841, is still worth a read. Read about version 1.0 of the classic big scams, from the South Sea Bubble to Tulip Mania.

elbrownos 11y ago
This is a great book. I found the section about the Crusades especially interesting.
- technofiend 11y ago
  I felt compelled to mention it's available free on Project Gutenberg although printed copies are also available on Ebay. https://www.gutenberg.org/ebooks/24518 https://www.gutenberg.org/ebooks/24518

known 11y ago

Religion was born when first con-man met the first fool; https://en.wikipedia.org/wiki/Timeline_of_ancient_history https://en.wikipedia.org/wiki/Timeline_of_ancient_history

alanwatts 11y ago

For further reading check out Victor Lustig, the man who sold the Eiffel Tower, twice. https://en.wikipedia.org/wiki/Victor_Lustig https://en.wikipedia.org/wiki/Victor_Lustig