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Chain letters—yes, the type you still occasionally get via email, or see on social media—have their roots in snail mail, first popularized in the late 1800s. One of the most successful ones, “The Prosperity Club,” originated in Denver in the post-Depression 1930s, and asked people to send a dime to a list of others who were part of the club. Of course, you would add yourself to the list as well. The next set of people would return the favor, sending dimes back, and so on and so forth—with the promise that it would eventually generate $1,562.50. This is about $29,000 in 2019 dollars—not bad! The last line says it all: “Is this worth a dime to you?” It might surprise you that in a world before email, social media, and everything digital, the Prosperity Club chain letter spread incredibly well—so well, in fact, that it reached hundreds of thousands of people within months, within Denver and beyond. There are historical anecdotes of local mail offices being overwhelmed by the sheer volume of letters, and not surprisingly, eventually the US Post Office would make chain letters like Prosperity Club illegal, to stop their spread. It clearly tapped into a Depression zeitgeist of the time, promising “Faith! Hope! Charity!” This is a clever, viral idea (for its time), and I will also argue that this is an analog version of a network effect from the 1800s, just as telephones and railways were, too. How so? First, chain letters are organized as a network, and can be represented by the list of names that are copied and recopied by each participant. These names are likely to be friends, family, and people in the community, furthering the Prosperity Club’s credibility, thereby increasing the engagement level. It follows the classic definition of network effects: the more people who are participating in this chain letter, the better, since you are then more likely to receive dimes. And it even faces the Cold Start Problem: if enough people aren’t already on the list and playing along, then it will fail to grow.
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