Adele Spitzeder's Ponzi scheme collapses in Munich

Background. Spitzeder opened her bank in 1869, running what was possibly the first recorded Ponzi scheme, paying earlier investors with new investors' money. By 1871 she received 50,000 to 60,000 gulden daily, though she had lowered returns to 8% per month. From 1871 authorities sought legal grounds to stop her, but she avoided intervention by fulfilling her obligations. In 1872 the Munich Commerce Court, revising an earlier decision that had included rules about proper accounting, required her to enter the business in the register of companies.

Official Warnings. In fall 1872, Bavaria's Minister of the Interior reported to the king that Sparkasse branches faced drastic measures due to customer withdrawals. The Ministry placed advertisements in newspapers on 30 October and 5 November warning customers. Munich's police issued a statement on 7 November detailing the bank's lack of reliability.

Withdrawal Limits and Inquiry. In November 1872, withdrawals clearly exceeded investments, forcing Spitzeder to limit withdrawals to an hour between six and seven in the morning, with none on Wednesdays and Saturdays. In the fall of 1872 the Münchner Neueste Nachrichten began a new attack, repeating official warnings and prophesying the bank's immediate demise. On 12 November 1872, a five-person inquiry commission arrived at the bank for a court-ordered review.