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Corrupt Banking in Victorian Ireland

John Bull (right) and a hideous old man (left) with a grotesque profile and small wings sprouting from his shoulders face each other, their heads in profile. ‘Corruption’ has a disk on his cheek inscribed An Eye to Interest, his snout-like nose is A Scent for Interest, his gaping jaw A Mouth of Guile. His wings are Wings of Speculation; his arms, Arms of Power. He has (large) Pockets of Perquisites, and wears a Collar of Corruption. He has Legs of Luxury and Feet of Connivance. In each hand (inscribed Hands of Extortion) is a money-bag. He says to John: What you say about Reform Jhonny is very true,—but this is not the time for it. John answers angrily: No nor it never will be—while such a Monster as you remain in existence!!! He is a fat ‘cit’ with an ill-fitting wig.’ (28 May 1809.)

When the Celtic Tiger collapsed in 2008-2009, it seemed as if corruption in Irish banking had reached apocalyptic proportions, that we had never seen shenanigans quite like it. The truth is, the ‘Golden Circle’ of recent times was by no means an original cartel. Ireland’s financial world has always had a hefty share of scoundrels and cronyism at the highest levels.

On the eve of the Great Famine of the 1840s, there were banks in every Irish town with a population of over 5,000. More and more people were withdrawing the money stashed up their chimneys and depositing it in banks. By 1855, everything seemed stable.

The scandals that subsequently rocked the banking sector were little different to today’s. In each case the men responsible – some rascals from birth, others corrupted along the way – attempted to absolve themselves on the basis that they had not expected things to turn out so bad, that the gambles they took had simply back-fired, that everyone else was doing it so why couldn’t they. But the point was that the money with which they gambled, and paid themselves, was simply not theirs. It belonged to their customers and that was their first major misdemeanour.

The second and equally serious charge was that they had all obtained positions of considerable trust within the banking sector and then abused that trust. Moreover, four were Members of Parliament and one was the President of the Dublin Stock Exchange.

 

John Sadlier (1813-1856), Prince of Swindlers

John Sadlier was arguably the best known of these Victorian fraudsters who came to prominence in the Victorian Age. Banking was in his blood. His mother’s father James Scully established a bank in Tipperary town in 1803. Raised a Catholic and educated at Clongowes Wood, John Sadlier’s professional career began when he succeeded his uncle to a prosperous solicitor’s practice in Dublin.

In 1838, he founded the Tipperary Joint Stock Bank with his uncle James Scully as Chairman. They focused on small farmers, tradesmen and clerks, offering above average interest rates. The bank prospered and by 1845 there were nine branches in operation, extending north from Tipperary into Thomastown (Co Kilkenny), Athy and Carlow.

When James Scully died in 1847, John invited his elder brother James Sadlier to become Managing Director. John Sadlier was elected Liberal MP for Carlow that same year, with Captain William McClintock Bunbury representing the Conservatives. Sadlier took to politics in a seemingly calm, wise and practical manner. But behind those calculating eyes was a cold and rascally soul.

In 1848, Sadlier was appointed chairman of the London and County Joint Stock Banking Company, a post he retained until his death. Now a resident of London, he was perfectly poised to expand his networking into Europe. He began financing railway developments in Sweden, France and Italy. In 1851, he founded his own Dublin newspaper, The Weekly Telegraph. He purchased vast swathes of land, valued at over £250,000,000, and including the beleaguered Earl of Glengall’s estate at Cahir. But for all that he lived a rather frugal life. His only flamboyance was a stable in Watford from where he hunted with the Gunnersbury hounds.

Sadlier’s financial success made him a household name in the 1850s and much talk was made over his reputed wealth. He seemed to have the Midas touch; every venture he turned to came up trumps. The shareholders were delighted. They were being paid a dividend of 6%, a point or two more than their competitors.

In 1851, the Liberal government attempted to restructure the Catholic Church in England, a move which would inevitably undermine the Vatican’s influence. Sadlier, an ardent Catholic, led the opposition to the legislation; his supporters became known as the Pope’s Brass Band. That same year, Sadlier helped establish the Catholic Defence Association. When the Liberals returned to power in late 1852, the ‘ brilliant’ Sadlier accepted a post as a Junior Lord of the Treasury.

However, unbeknownst to everyone, the Sadliers were on very thin ice. The impression that Sadlier was a financial wizard was a terrible illusion. He was in fact running on empty. The payment of high dividends was justified by fraudulent book-keeping which, for instance, falsely claimed the bank had reserves of £17,000.

The darkness began to fall in 1853 when Sadlier was forced to resign his seat, following an investigation into his 1852 election campaign. Pressure had seemingly been brought to bear by the Joint Stock Bank in Carlow upon 208 voters in the constituency. The word was out that Sadlier’s wizardry was not as magical as it might seem. As Sadlier’s fortunes began to sink, he resorted to increasingly wild speculations and illicit tactics. He began to borrow heavily from his own bank. He began courting Catholic heiresses and proposing marriage to them. The bachelor began to forge shares in the Royal Swedish Railway Company, of which he was Chairman.

On 13 February 1856, the London agents of the Tipperary Bank refused to cash drafts sent to them by Sadlier. The following weekend, the depressed and bloated banker wrote a letter of grief and remonstrance to a cousin, confessing to the ‘numberless crimes of a diabolical character’ which had caused ‘ruin and misery and disgrace to thousands – ay, tens of thousands’. His body was found on Hampstead Heath on the Sunday morning, alongside a silver cream jug and a vial of poisonous prussic acid.

It transpired that his personal overdraft had climbed to £250,000. His collapsed banking empire also owed the Bank of Ireland £122,000. His depositors, the farmers and labourers, lost £70,000. Considering that the amount of deposits in all the Joint Stock Banks in Ireland was only £12,000,000 at that time, a loss of £400,000 in four counties was a very heavy calamity. He had also defrauded the Royal Swedish Railway Company of £300,000. His own relatives were not spared – his cousin Vincent Scully, MP for Cork, was shocked to hear that, contrary to what he had been told, he still owned Castle Hyde. Sadlier had assured him he had resold the property, at a profit, to Hebert Ingram, MP for Boston, proprietor of the Illustrated London News. A court case, Scully v. Ingram ensued.

Ireland was stunned. The press called him the ‘Prince Of Swindlers’, a miser ‘wrinkled with multifarious intrigue, cold, callous and cunning’. Charles Dickens may have had a greater role in immortalizing him in Little Dorrit, published in 1857, in which the character Mr Merdle was based on Sadlier.

Mr Merdle was immensely rich … He was in everything good, from banking to building. He was in Parliament, of course. He was in the City, necessarily. He was Chairman of this, Trustee of that, President of the other.

Mr Merdle, MP, however, is a forger and a robber, and his fine career ends in suicide.

Sadlier’s brother James did not live happily ever after. He was expelled from the House of Commons and fled to Zurich where he was murdered while walking one day in 1811. From a personal perspective, I wonder did my ancestor Captain Bunbury, Sadlier’s political colleague, invest in his bank?

 

Albert Grant, as depicted by Vanity Fair, on 21 February 1874.

Baron Albert Grant (1831–1899) – A Pioneer of Public Relations

 

Sadlier was of course by no means the only man to use his seat at Westminster for his own nefarious gains. One of the more mysterious financial rogues of the Victorian Age was the self-styled Baron Albert Grant. This curly-haired hoodwinker started life in Dublin’s Jewish Quarter where he was known as Abraham Gottheimer. His father Bernard had moved from Prussia during the 1820s and operated as a pedlar on the streets of the city.

When young Abraham was born, the Gottheimer’s were so poor that their neighbours apparently had to club together to provide swaddling clothes. He claimed that he was subsequently educated in London or Paris but much of his life was mythology.

Little is known of his younger years but he evidently developed a passion for money early on, setting himself up as a wine merchant. He was also extremely charming which is a vital trait for a swindler.

In 1863, he changed his name by deed poll to Albert Grant. He soon began to make his mark as a promoter of companies, talking them up, convincing investors to come on board. His targets were clergymen, widows, retired army officers and other small-time patrons. By attracting large numbers of these small speculators, he was able to amass an astonishing fortune with great speed. As soon as he had enough backers to float a company, the unscrupulous Dubliner moved on to the next ship of fools.

He would have made a formidable player in 21st century Public Relations industry. He understood that presentation is the key to success. And to prove that he began to present himself as an increasingly impressive figure. He began engaging in what has been called ‘targeted philanthropy’, patronising all the right art galleries and earning a valuable thank you from Parliament when he purchased a portrait of Walter Scott for the National Gallery.

He published his own newspaper (The Echo) and, in 1865 and successfully stood for Parliament as Liberal MP for Kidderminster. In Italy, his patronage of slum clearances in Milan earned him a Baronetcy from King Victor Emmanuel which he rapidly inserted before his name. He simultaneously purchased a Portuguese baronetage for good measure.

As his personal stock increased, so his fortune rose. In 1867, he calculated his wealth at over half a million sterling. By 1870, the Baron was promoting mining and industrial companies across Europe, as well as foreign railways and public utilities such as the Lisbon Tramway. (When the Lisbon Tramway failed, the Baron’s luckless investors included Disraeli’s friend Lord Henry Gordon-Lennox who was obliged to resign as First Commissioner of Works). His combined portfolio had a market value of STG£24 million. Whenever his flotations began to lose his investors money, he would side-step the issue with another extravagant flurry to showcase his financial wizardry, such as purchasing and opening a new music hall for his constituents.

In 1874, the Baron became the talk of Disraeli’s London when he developed a chunk of the city into Leicester Square and gifted it to the City as a public garden. A wag commented that this was the only thing ‘square’ that the Baron had ever been associated with. [1]

However, he had already pushed the boat out too far and things began to slide for this exceptionally voracious financier. The day after Leicester Square was officially opened, he was unseated as MP on a charge of bribery and kicked out of Parliament, much like John Sadlier a generation earlier.

He managed to hold his head above water but his day of reckoning came in 1879 when the Emma Silver Mines Scandal broke. The Baron had been the foremost promoter of this grand Utah scam, puffing up the company profile with unashamed bombasticism. One million shares were issued and sold for $100 each. Within a year, the mines were proved to be completely empty of silver. It also emerged that Grant had been aid $500,000 for his promotional role. Others embroiled in the scandal included the US Ambassador to Britain (who received $50,000 to sit on the Board of Directors) and the Financial Editor of The London Times (who was sacked for promoting the venture).

Before any charges could be brought, Grant was declared bankrupt. His bankruptcy was hotly pursued by allegations of misrepresentation and fraud. In 1885 the London Bankruptcy Courts deduced that he had liabilities of £217,000 and assets of £74,000. Everything he owned was sold including the large Horstead estate in Norfolk and a splendid marble palace in London’s West End (which he built at a cost of $5 million). The staircase, which was his particular pride, was sold off to Madame Tussaud’s. In 1883 the house was demolished. Two years later he was back to the bankruptcy courts. He lived the remainder of his day ‘in utter seclusion and comparative poverty’ and died in Bognor, Sussex, in 1899 aged 67. The New York Times declared him ‘The Hooley of his Day’.

He is said to have been the model for Trollope’s Augustus Melmotte, MP, in ‘The Way We Live Now, published in 1875:

“From the moment in which Mr Melmotte had declared his purpose of standing for Westminster in the Conservative interest, an attempt was made to drive him down the throats of the electors by clamorous assertions of his unprecedented commercial greatness. It seemed that there was but one virtue in the world, commercial enterprise – and that Melmotte was its prophet.” [2]

 

Sir Joseph Neale McKenna (1819 –1906), Chairman of the National Bank of Ireland

Sir Joseph Neale McKenna, Nationalist MP & Chairman of the National Bank

 

Westminster also provided something of a safe-haven for Sir Joseph Neale McKenna (1819 –1906), Chairman of the National Bank of Ireland (NBI). His political roots were intertwined with the Home Rule movement. He was born in Dublin, the son of a well-to-do Catholic businessman, Michael McKenna. The McKenna’s hailed from Co Monaghan originally and his grandfather had prospered in Philadelphia the previous century. He was educated at Trinity College Dublin and called to the Irish bar in 1849. In 1842 he married Esther Louise Howe of Dublin, and after her death married Amelia, widow of R. W. Hole.

He was elected Liberal MP for Youghal in 1865, thumping the incumbent Isaac Butt by 122 to 30 votes. His mathematical mind had a considerable influence over Irish Nationalist thoughts on Ireland’s over-taxation. He was knighted in 1867, and was a magistrate and Deputy Lieutenant for Co. Cork, and a magistrate in Co. Waterford.

He was an able financier but ultimately proved to be yet another rogue out to fleece his customers. In the 1850s and 1860s, he was both Chairman and Managing Director of the National Bank of Ireland. The bank had been founded in 1835, with Daniel O’Connell playing a major role in its creation. (It should be noted that O’Connell’s personal borrowings from the bank amounted to nearly £30,000 a year in the late 1830s and early 1840s). The bank grew quickly and, by May 1836, had seven full and 12 sub-branches.

This was a period of considerable expansion for the NBI. However, during the 1860s, the attempts by McKenna and his co-directors to diversify their business out of Ireland led to some extremely dubious investments. In order to make things happen, the bank substantially increased their capital and took on a number of highly speculative accounts. When the ‘Bank of Hindustan, China and Japan’ collapsed in 1866, the NBI was visibly shaken. Rumours also abounded about the bank’s involvement in high-risk ventures in France and Peru. Confidence in the bank plummeted. Deposits and current accounts began to dry up. The bank’s stock value inevitably plunged too. McKenna survived for a few years, ‘through bullying and bravado’, according to Cormac O Grada. In 1869, the bank’s proprietors decided enough was enough and McKenna and his co-directors were sacked. They left the company with debts of between £300-400,000 and ‘a grossly excessive paid up capital’. The shareholders, who included some well-known names, accused McKenna and the Board of paying themselves far too princely salaries and also for giving too high wages to the many croneys who occupied the top echelons of their staff. Many of these officials were deemed to be ‘more men of pleasure than of business with ideas and … habits entirely above their position’. McKenna himself was accused of lending money to companies whose security was clearly dubious. At the 1868 election, he lost his seat in Parliament. For all that, the City of London retained its confidence in the NBI and, under William Massey, McKenna’s vigilant successor, its stocks and dividends were gradually restored. By 1888, the National Bank of Ireland was the eighth largest British Bank in terms of authorised and issued capital.

McKenna bounced back from his disgraced banking career by becoming one of the stalwarts of Irish nationalism. He was at Butt’s side when the latter founded the Home Rule League in 1873. The following year he won back his seat in Youghal for the Home Rulers, holding it again in the 1880 election. He frequently lambasted Parliament for taxing Ireland without doing anything to improve the infrastructure but, as one correspondent kindly put it, ‘unfortunately Sir Joseph was more learned than lucid, and knew mathematics better than he practiced amiability’. In the leadership contest of 1880, he voted for William Shaw to lead the party over Parnell. He stood successfully for the Irish Parliamentary Party for South Monaghan from 1885 to 1892, during which time he threw his allegiance behind Parnell. He retired at the subsequent general election in 1892, being then well over 70. He died at Ardogena, his residence in Waterford, in the summer of 1906, aged 89.

 

Munster & Leinster Bank, 30 Lower O’Cpnnelll Street, pictured 1898.

William Shaw (1823-1895), Chairman of the Home Rule Party & Munster Bank

 

William Shaw was the Chairman of the Munster Bank when it collapsed in 1885. Indeed, his complicity in fraudulent banking practices led to, what was until the Anglo-Irish Bank crisis of 2008-9, the last failure of a major Irish bank. Prior to the Munster Bank’s collapse, Shaw had been a well-respected Protestant businessman and independent Liberal MP. As a nationalist, he led the Home Rule movement between the tenures of Butt and Parnell

Born in Moy, Co Tyrone, in 1823,Shaw was one of many young Protestant students at Trinity College Dublin who became embroiled with the Young Ireland movement during the 1840s. He then studied theology at Highbury College in Middlesex, and served as a Congregational Minister at an independent church in Cork from 1846. In 1850, he cast off the cloth and moved into business. That same year, he married into a wealthy Cork merchant family and began to build up extensive business connections in the city.

In 1865, Shaw began his move into politics, standing unsuccessfully as a Liberal Party candidate in Bandon. Three years later, he won the same seat as an independent Liberal. In 1870 he became active in the Home Government Association, a pressure group set up by Isaac Butt in support of home rule for Ireland. Indeed, he was the only MP present in Bilton’s Hotel, Dublin on the evening  of 19 May 1870 when Butt founded the Home Rule movement. In 1873, Shaw presided over the convention held to found the HGA’s successor, the Home Rule League. In 1874, Shaw was elected unopposed MP for County Cork. Along with Mitchell Henry, he now frequently deputised for Home Rule Party leader Isaac Butt. When Butt died in 1879, Shaw was selected as the new party chairman. The following year he lost his chairmanship to rising star Charles Stewart Parnell.

Shaw objected to the increasing gulf Parnell now wedged between the Home Rule Party and its Liberal roots, opposing the Irish Land League and resigning from the Home Rule Party. In 1880, he sat on the Bessborough Commission which nonetheless declared in favour of the “Three Fs” as demanded by the Land League: fair rent, free sale, and fixity of tenure

In 1864, Shaw was one of a number of Cork City industrialists and merchants who founded the Munster Bank to look after the farmers and traders of the southern counties of Ireland. In 1870, the bank acquired the long established private bank of David La Touche & Son. From 1876, The Irish Banker constantly highlighted the Munster Bank’s liquidity but to no avail. By the end it had 43 offices, 19,000 creditors and 22,000 debtors. And William Shaw was its long-standing Chairman. In 1883, he brazenly declared to the Board: ‘I never in my life bought £500 worth of speculative security; anything I have ever bought, I bought to keep’.

The collapse did not begin until alienated shareholders began a whispering campaign against certain directors who were said to be helping themselves to huge unsecured loans. It emerged that Shaw had received a personal loan of £80,000, more than double that of all the other directors combined. He and the other directors had also received excessively generous dividends. In July 1884, Shaw bit the bullet and resigned. He was strongly denounced and blamed for his role in the bank’s collapse.

Shaw’s resignation coincided with the public acknowledgment that the bank did indeed have substantial long-standing bad debts. Inevitably, debtors became increasingly slow to pay off loans due to an institution that looked to be utterly doomed. The crippled Munster Bank was liquidated on 14 July 1885 and its directors found guilty of insider lending on a grand scale. Over 200 employees were laid off. Two weeks later, Robert Farquaharson, one of the Munster’s managers in Dublin, absconded when confronted with a fraud valued at £70,000. In their summary of events, The New York Times reported on July 14th, 1885, that the directors’ conduct had amounted to “plain fraud”. In the ensuring proceedings, Shaw and two other directors were forced to declare bankruptcy. Shaw himself was fined over £120,000.

A serious calamity threatened Ireland. Fortunately, Cork brewing magnate JJ Murphy, an upright member of the Board, quickly stepped up to the mark and reincarnated the bank as the Munster & Leinster Bank. In time, all the creditors and depositors in the failed bank were repaid in full, and with interest, and a financial calamity was averted. When Murphy was honoured for his efforts by the City of Cork in 1890, one speaker declared that if Murphy had not saved the day, ‘the trade and commerce of the country would have been paralysed for many years, credit would have been destroyed, and misery and poverty would have fallen upon thousands of hapless victims’. In 1966, the Munster & Leinster was subsumed into Allied Irish Bank.

Shaw, who still represented Co Cork in Parliament, did not contest the 1885 general election, which took place just months before the collapse of his bank. He was ruined and spent his last years ‘in seclusion and under shadows of commercial and domestic misfortune’. The disgraced banker worked as a journalist in London for many years, before retiring to Enniskerry, where he settled with his sister in a house on Church Hill, passing away in September 1895.

 

A poster from 1897 advertising Locomotives for the Waterford, Limerick and Western Railway by Kitson and Co.

Frank DuBédat – A President Avec Tache

 

Many of the leading financial families in 19th century Ireland descended from the wily French Huguenots who set themselves up as merchant princes in Dublin in the early 18th century. Amongst these were the La Touches, whose bank lives on today as the Bank of Ireland, and the DuBédats whose stock-broking firm W.G. DuBédat & Sons was one of the oldest and most respected in the city. [3] The family motto was ‘Sans Tache’, meaning ‘Without Stain’, but in 1890, the truth of that motto was to be seriously called into doubt. Frank (Francis E) DuBédat was born in 1851 and went on to succeed his father as head of the family stock-broking firm, head-quartered at 2 Foster Place, Dublin. In 1880, Frank was elected President of the Dublin Stock Exchange.

As President, this man of ‘an ancient and honourable name’ became involved in several mining and manufacturing concerns which went bust. The 20-stone charmer became increasingly edgy and was considered a reckless speculator. He had large dealings in Bristol brewery and American Brewery shares and Irish Distillery Shares, all of which were in decline, and he sustained considerable loss in Hammond’s Meat shares.

On 30 December 1890, his company was declared bankrupt. However, the President of the Irish Stock Exchange was already on the run. Knowing the game was up, he had managed to cash two checks worth £1000 before sailing from London to South Africa. Meanwhile, investigations got underway and it soon became apparent that DuBédat had debts of over £100,000. An impressive litany of misdemeanours emerged. In 1887, he had invested and lost £2000 of his clients money in the Waterford & Limerick Railway Company. He had kept rooms in Paris and his lavish lifestyle betrayed a fondness for theatre. For a long time he traded on the fact that DuBédat owned 3,325 shares in the Indianapolis Brewery; it transpired these had been sold on almost as soon as they bought them. 1890 was a terrible year for stock-brokers. Frank DuBédat twirled his moustache and watched his investments go up in smoke, one after another. The men who had helped build ‘Frankfort’, his ‘magnificent new mansion’ in Killiney, must have muttered about where he would find the money. In the end, DuBédat ran.

An honest man, said the Judge, would have faced the music. But DuBédat had made a ‘rush for riches, and the race of greed, as too often happens, ended in ruin to himself, and bitter misery to many-in benefit to none’. DuBédat returned from South Africa to face trial in July 1891. The Times described him as ‘bronzed and healthy-looking, and there was nothing in his appearance when he entered the dock today to suggest that he had undergone much mental suffering since his departure’.

The Judge seems to have been a family friend of sorts and underlined how it was his painful duty to pass sentence on a man who had ‘occupied a foremost position in the commercial life of the city … and had acquired the friendship of many of the prominent citizens’. But friendship was certainly put aside. DuBédat was given 12 months hard labour for absconding from Ireland with money that was not his. Rather more seriously, the Judge slammed him for abusing his position as President – a role with which he had been granted the utmost confidence and trust of the Irish people – and sentenced him to a further seven years penal servitude. Not surprisingly, DuBédat was ‘greatly affected during the delivery of the sentence’ and then removed. He returned to South Africa where he became involved in a number of other frauds. He died penniless in the tiny village of Kommetjie on the Cape Peninsula in South Africa in 1919.

He was married twice. His first wife, Rosa Waterhouse, was a daughter of Samuel Swinburne Waterhouse, gold and silversmith appointed to Queen Victoria. Ten days after her death in 1902, he married Rosita Tennyson, an actress. He had four children, two by each marriage. That juicy tale is told here.

 

With thanks to Art Kavanagh (author of ‘The Tipperary Gentry), Eneclann Ltd, Michael Purcell, Regina Lavelle and others. 

 

FOOTNOTES

[1] Second Chance, by Werner Eugen Mosse, Julius Carlebach.

[2] Melmotte also has a hint of John Sadlier. His empire, too, was founded on fraud; he, too, dies by his own hand.

[3] See: “The DuBedat Story, Killiney to Kommetjie,” Maria Wootton, paperback, (1999, Tram Cottage Productions, Gray’s Lane, Howth, Co. Dublin).