I think most people would agree that we live in the great age of scams. Just imagine the paltry size of the newspaper you hold in your hands if everything relating to financial dodges were removed. Naturally, the business page would practically disappear, as would any mention of the greatest pyramid scheme of all time, Social Security. Gone, too, would be further news of our adventures in Iraq and Afghanistan, the coming elections, urban planning, environmental programs, nonprofit and not-for-profit organizations, real estate, transportation, education, science, technology, and medicine. It just makes my bones ache to read the daily paper as it now exists because I can't help taking it personally. On the other hand, reading about monstrous swindles of the past is a different matter. Everyone involved is dead and gone, leaving behind only the lessons that are never learned.
''The Land That Never Was: Sir Gregor MacGregor and the Most Audacious Fraud in History" (Da Capo, $26), by David Sinclair, does not quite merit its subtitle; nonetheless, it affords an excellent view of a very bad man and his ingenious, conscienceless schemes. MacGregor was a Scotsman, born in 1786, and descended, he claimed, from none other than Rob Roy. Though this was not true, it did add further luster to his various self-conferred titles, among them His Majesty the Inca of New Grenada and, the more-often-used one, His Highness Gregor, Cazique of Poyais -- a country said to be situated on the Mosquito Coast, in Central America, and ripe for development by settlers and offshore investors.
Here was a place of which an Englishman of the 1820s might dream. The country possessed a bustling capital, the amenities of civilized society, and the necessities of commerce, including its own paper currency; still, it was, essentially, virgin territory. It's a little complicated to explain exactly how this could be; though, as it turned out, it proved easy enough to believe. Its fertile soil, abundant forests, plentiful fishery, natural harbor, and gold were pretty much there for the taking -- that is, through the offices of MacGregor, who had been granted control over the territory by the King of the Mosquito Coast and had a certificate to prove it. Moreover, the natives, or ''Poyars," as they were apparently called, not only spoke English, but were especially well disposed toward the British. Indeed, according to the most informed source, ''a tradition has long prevailed among them that the grey-eyed people, meaning the English, have been particularly appointed to protect them from oppression and bondage." All this and much more could be learned from ''A Sketch of the Mosquito Shore, Including the Territory of Poyais, descriptive of the country; with some information as to its Productions, the Best Mode of Culture, &c," a 300-page book that MacGregor caused to be printed, just as he did Poyais money.
Sinclair's book begins with the most painful denouement of MacGregor's scheme: the arrival in March 1823 of a boatload of Scottish settlers at the geographical location of the supposed Poyais. Having sold everything to buy their passage and a stake in this land of opportunity, they found only wilderness and the desperate survivors of an earlier ship of settlers. From there, Sinclair goes back to trace MacGregor's extraordinary career, a progress that included both military glory and disgrace, as well as an earlier land scam. The conjuring up of Poyais, complete with detailed guidebook, maps, currency, certificates, bonds, and even a legation in London, eventually allowed him to bilk hundreds of thousands of pounds from gullible investors and would-be settlers, destroying countless lives in the end. In addition to its portrayal of the scheme in all its diabolical meticulousness, with exactly the right degree of deadpan restraint, the book's great strength lies in showing how ideal the political and economic conditions were in post-Napoleonic War Britain for a financial bamboozle of this scale. Thousands of investors sought a good place for their money, which was no longer making the return it had on wartime government bonds. Getting in at the bottom in South and Central America, where Spain was losing its hold, by buying a stake in a hitherto-neglected territory was too good to pass up.
Sinclair calls MacGregor's scheme ''the most audacious fraud in history," but surely that honor belongs to our own Social Security system as it now functions. If you doubt this -- and have the stomach for a truly demoralizing read -- you may wish to take up ''The Looting of Social Security: How the Government Is Draining America's Retirement Account," by Allen W. Smith (Carroll & Graf, paperback, $14). Perhaps it is because I am self-employed and pay both my own and my ''employer's" Social Security contributions that the subject drives me particularly nuts.
And perhaps not; for it is sickening looked at from any perspective but that of the scam artist. The facts are these. Social Security is extracted only from working people, and only up to the first $87,900 earned (in 2004), and is used now by the government as general revenue. In other words, it is simply a tax, a monumentally regressive one, and an explicitly illegal one according to the Budget Enforcement Act of 1990. Instead of a pension fund that can be drawn upon by future retirees, there exists now in the Social Security coffers only sheaves of government IOUs, which are, as Smith puts it, ''a 21st-century version of Confederate bank notes."
With dismal clarity, Smith lays out the step-by-step history of how a national pension plan was transformed into an outright shakedown of working people, a maneuver that began during Ronald Reagan's administration. Bill Clinton aggravated the situation by making no distinction between general revenue and Social Security in crowing about budget surpluses -- which, in turn, culminated in the grand largess of George W. Bush in handing out whacking great tax cuts to the rich.
The most beautiful aspect of this caper, from my point of view, is that federal and state employees, which includes legislators, the president, and his administrators, don't pay Social Security. They have their own pension plans, which are kept safely away from the public pot. I wish I could find this as entertaining as I would if it had taken place 180 years ago in a country not my own.
Katherine A. Powers, a writer and critic, lives in Cambridge. Her column appears on alternate Sundays. She can be reached by e-mail at email@example.com.