Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

In 1872, John Keely, an inventor from Pennsylvania, invited scientists and the press to attend a demonstration

of a machine, which he explained was driven by a new and previously unknown force.

Keeley explained that the machine ran using a new form of energy at an astonishingly low cost.

Public interest was intense, and Keeely's grand ambitions and bold statements attracted investments

from around the country.

Within a few months of the initial demonstration, Keely Motor Company was formed in New York,

with starting capital of $5 million, which is equivalent to around $100 million in today's

money.

Keeley claimed that his motor could power a train journey from New York to San Francisco

and back using just a quarter of a gallon of water as fuel.

An entire gallon of water would power a steamship from the United States

to England and back. His idea would revolutionise transportation. It would be financially

insane to buy anything other than a Keely powered vehicle. The only problem was that Keely Motor

Company was quite simply an elaborate fraud, a fraud

that he managed to keep going for 26 years.

The extent of the fraud was only discovered after his death when investigators went through

his workshop and announced that Keely's inventions were a deception and the

result of trickery.

Possibly the most remarkable thing about Keely is that over the 26-year period between

founding his company and his death, Keely never brought a single product to market. How did he get away with this? Well, his

main trick was that whenever investors became agitated about a product not being delivered,

...