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Ep.573 American Express Had $100 Million on Paper—and Just $6 Million in Oil

The most dangerous number in your financial reports may be the one nobody has bothered to verify. In 1963, American Express became entangled in one of Wall Street’s most notorious financial scandals. Its warehousing subsidiary had issued $100 million in receipts backed by supposedly stored vegetable oil. But when the inventory was examined, only $6 million worth of oil remained, alongside enormous quantities of salt water. The paperwork looked reassuring. The underlying assets told a complete...