Turtle Bunbury

Writer and Historian

 
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HISTORY

IRISH HISTORY

THE GOLDEN CIRCLE OF VICTORIAN DUBLIN

By Turtle Bunbury

 


Sometimes it seems that corruption in Irish banking has reached apocalyptic proportions, that we have never seen anything like the shenanigans of the present day. The truth is, the ‘Golden Circle’ is 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) was arguably the best known of these Victorian fraudsters. Born into a well-to-do Tipperary family, the Clongowes-educated solicitor co-founded the Tipperary Joint Stock Bank in 1838. The bank offered above average interest rates to small farmers, tradesmen and clerks, and quickly prospered. The bank prospered and by 1845 there were nine branches in operation, extending north from Tipperary into Thomastown (Co Kilkenny), Athy and Carlow.

In 1847, Sadlier secured a parliamentary seat at Westminster for Carlow (alongside Captain William McClintock Bunbury) and relocated to London where he began networking at speed. He seemed to have the Midas touch; every venture he touched came up trumps. The shareholders were delighted. They were being paid a dividend of 6%, a point or two more than their competitors. He financed railway developments in Sweden, France and Italy. He purchased vast swathes of land, valued at over £250,000,000. In 1852, the government appointed him a Junior Lord of the Treasury.

However, the impression that Sadlier was a financial wizard was a terrible illusion. He was in fact running on empty. The thin ice began to crack in 1855 when he was forced to resign his seat in Parliament, following allegations of bribery. As his good name came under the spotlight, Sadlier resorted to increasingly wild speculations, borrowing heavily from his own bank. He began courting Catholic heiresses. He started to forge shares in the Royal Swedish Railway Company, of which he was Chairman.

In 1856, the London agents of Sadlier’s Bank refused to cash a draft he sent them. Realising the game was up, Sadlier penned a peculiar letter confessing to the ‘numberless crimes of a diabolical character’ which would cause ‘ruin and misery’ to ‘tens of thousands’. His body was found on Hampstead Heath on the Sunday morning, alongside 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 million at that time, a loss of £400,000 in four counties was enormous. He had also defrauded the Royal Swedish Railway Company of £300,000.

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 colourful rogues of this period was the self-styled Baron Albert Grant (1831 – 1899), a curly-haired hoodwinker who started life in Dublin’s Jewish Quarter where he was known as Abraham Gottheimer. His father Bernard had moved from Prussia to Dublin during the 1820s and worked as a street-pedlar. When young Abraham was born, the Gottheimer’s were so poor that their neighbours had to club together to provide him with swaddling clothes.

By 1863, Gottheimer had changed his name by deed poll to Albert Grant and was operating as a wine merchant. 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 relatively unimportant speculators, he was able to amass an astonishing fortune with great speed. He would have made a formidable player in 21st century Public Relations. He understood that presentation is the key to success. As such, 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.

In 1867, the Baron calculated his wealth at over half a million sterling. By 1870, he was promoting mining and industrial companies across Europe, as well as foreign railways and public utilities such as the Lisbon Tramway. In 1874, he became the talk of Disraeli’s London when he purchased Leicester Square and gifted it to the City as a public garden. However, things were beginning to slide for the Dublin-born financier and, the day after Leicester Square officially opened, he was unseated as MP on a charge of bribery and kicked out of Parliament.

The Baron managed to hold his head above water until 1879 when the Emma Silver Mines Scandal broke. He had been the foremost promoter of this grand scam, exaggerating the company profile to off-load one million shares at $100 each. Within a year, the Utah mines were proved to be completely empty. It emerged that Grant had been paid $500,000 for his promotional role. His company was declared bankrupt. Everything he owned was sold including his large estate in Norfolk and a splendid marble palace in London’s West End. He lived the remainder of his day ‘in utter seclusion and comparative poverty’.

Westminster also provided something of a safe-haven for Sir Joseph Neale McKenna (1819 –1906), Chairman of the National Bank of Ireland (NBI). Born in Dublin and educated at Trinity College, McKenna was the son of a well-to-do Catholic businessman. He first came to prominence in 1865 when elected Liberal MP for Youghal. An able financier, he was made Chairman of the NBI shortly afterwards. The bank had been founded in 1835, with Daniel O’Connell playing a major role in its creation. It expanded considerably under McKenna’s Chairmanship but his attempts to diversify out of Ireland led to some extremely questionable investments.

In order to make things happen, McKenna substantially increased the banks 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. People wondered why. Rumours also abounded about the bank’s involvement in high-risk ventures in France and Peru. Confidence plummeted. Deposits and current accounts began to dry up. The bank’s stock value inevitably plunged too.

McKenna managed to puff on until 1869 when he and his co-directors were sacked, leaving debts of nearly £400,000. The shareholders accused McKenna and his co-directors of paying themselves disproportionately high salaries. They also complained against the princely wages paid to McKenna’s cronies who occupied the top echelons of the NBI staff. At the 1868 election, McKenna lost his seat in Parliament but that seems to have been his solitary punishment. He bounced back by becoming one of the stalwarts of Irish nationalism in the late 19th century. The NBI also survived the scandal and, by 1888, it was the eighth largest bank in Britain and Ireland. It became part of The Royal Bank of Scotland in 1969.

One of McKenna’s allies was William Shaw (1823-1895), Chairman of the Munster Bank which, until the present crisis, was the last major Irish bank to fail. Born in Moy, Co Tyrone, in 1823, Shaw began his career as a Congregational Minister preaching from a pulpit in Cork. In 1850, he cast off the clerical cloth, married into a wealthy Cork merchant family and began building up extensive connections in the city. By the 1870s, he was MP for Co Cork and one of Sir Isaac Butt’s right hand men in the Home Rule Movement. Following Butt’s death in 1879, Shaw succeeded as the party Chairman but was ousted by Parnell the following year.

In 1864, Shaw was one of a number of Cork City industrialists and merchants who founded the Munster Bank. Shaw became the bank’s Chairman. By 1880, it had 43 offices across the country, with 19,000 creditors and 22,000 debtors, and all seemed fine. But those in the know realised the bank’s liquidity was extremely vulnerable. In 1883, alienated shareholders began a whispering campaign against certain directors who were said to be helping themselves to huge unsecured loans. Shaw brazenly declared: ‘I never in my life bought £500 worth of speculative security; anything I have ever bought, I bought to keep’.

However, it soon 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. Shaw’s resignation in 1884 coincided with the public acknowledgment that the bank did indeed have substantial long-standing bad debts. The crippled Munster Bank was liquidated on 14 July 1885 and its directors found guilty of insider lending on a grand scale. Matters were made worse two weeks later when one of the bank’s managers in Dublin absconded overseas when confronted with a fraud to the tune of £70,000. In the ensuring proceedings, Shaw and two other directors were forced to declare bankruptcy. Shaw was fined over £120,000 and gave up his parliamentary seat. He spent his latter years working as a journalist in London, before retiring to Enniskerry where he lived ‘in seclusion and under shadows of commercial and domestic misfortune’. The Munster Bank was rescued by Cork brewing magnate JJ Murphy, who reincarnated it as the Munster & Leinster Bank which, in 1966, was subsumed into Allied Irish Bank.

Not everyone tainted with corruption could get away with starting again as a politician or journalist. One of the most shocking scandals of the Victorian Age involved Francis (Frank) DuBédat, President of the Dublin Stock Exchange. Of Huguenot origin, the DuBédats were one of the oldest and most respected stock-broking firms in Dublin. The family motto was ‘Sans Tache’, meaning ‘Without Stain’, but in 1890, the veracity of that motto was seriously called into doubt. Frank DuBédat was an enormous man, weighing 20-stone, who lived a lavish life, enjoying theatre and racing, and owned an impressive apartment in Paris. In 1880, he managed to charm his way to the highest office of the Dublin Stock Exchange. Over the ensuing decade, this cad used his position to invest in a number of ill-advised brewery, distillery and meat ventures. DuBédat twirled his moustache and watched his investments go up in smoke, one after another. The men who built ‘Frankfort’, his ‘magnificent new mansion’ in Killiney, must have muttered about where he would find the money. Head-quartered at 2 Foster Place, DuBédat covered up his losses by taking money directly from his client’s accounts.

In December 1890, DuBédat’s company was declared bankrupt. DuBédat swiftly withdrew £1,000 from his firm’s London agency and fled to South Africa. Investigations revealed he had debts of over £100,000 and an impressive litany of misdemeanours followed. For instance, he had for a long time traded on the fact that he owned 3,325 shares in the Indianapolis Brewery; it transpired these had been sold on almost as soon as they bought them.

An honest man, said the Judge, would have faced the music. But DuBédat had run away. Moreover, he 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 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 bestowed upon him the utmost trust of the Irish people – and sentenced him to a further seven years penal servitude. DuBédat later settled in 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.


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

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