Thursday, October 9, 2008

When a bank goes burst

When a bank goes burst


On a cold Sunday morning, 16th February, 1856, people passing along Hampstead Heath in London noticed a ‘well-dressed gentleman’ lying on a mound, as if asleep. This unusual sight in such a cold month excited curiosity in some of those passing by. Some people who moved closer noticed a small silver tankard that had fallen from his hand and lay nearby. A crowd soon gathered and the police were called as it became obvious that the ‘gentleman’ was quite dead. The police soon ascertained that he was an Irish Banker, John Sadlier. He had committed suicide. This was to prove not only a personal tragedy for the forty-something banker and his family but also for many thousands of Irish people as well.

John Sadlier was born near Tipperary Town in 1814. His family were wealthy by the standards of the time and place. He was apprenticed to a solicitor as a youth. He qualified and moved on to work in Dublin. Later, he moved to London and began a career as a parliamentary agent. Soon he began to try his luck in financial speculation. His initial success led him away from his chosen profession and he became a full-time banker. He returned to Tipperary and with his brother, he ran their highly successful ‘Joint-Stock Bank’. He appeared to have the Midas touch so farmers and smallholders from all over the area left their savings and dowries in the keeping of the trustworthy Sadlier’s Bank.

Banks make profits from taking in money and then lending it out at a greater interest than it pays out. Sadlier’s Bank took in lots of money but instead of lending it out to customers to finance the development of the farming industry, the bank found more exotic outlets for its loans. It invested in Italian, Swiss, Spanish and American railways and in many other ventures. On the reputation of the family bank and through his English contacts, John Sadlier was appointed Chairman of the London and County Joint-Stock Bank. Like many successful business and legal people, he set his eye on politics and was elected M.P. for Carlow in 1847. He later served as M.P. for Sligo. In 1852 he was one of more than fifty Irish Members who had been elected to the British Parliament, pledged to independent opposition, on a platform of support for the Tenant League. He also established a newspaper, ‘The Telegraph’, in Dublin in 1851 to put across his views to the public.

John Sadlier was a speculator and opportunist and when the prospect of a prestigious job as Junior Lord of the Treasury was offered to him, he defected to his political enemies along with a colleague called William Keogh and promptly made enemies of his erstwhile friends. In 1853 he lost a Court action taken against him by a Carlow elector who claimed that Sadlier had prevented him from recording his vote. Sadlier denied the charge but the jury gave the verdict to his accuser. He was forced to resign his post as Junior Lord of the Treasury. This was to be the turning point of his career.

He spent the next two years covering up from his former colleagues and acquaintances the trauma he was experiencing. It was during this time that he lost everything as his financial speculations went wrong and his political career hit the dust. Sadlier had been educated by the Jesuits at Clongowes Wood College. He was a solicitor, a politician, a newspaper proprietor and a defender of the Catholic Faith but above all he became a speculator in votes, land, railways and banks. He was, it seemed, a man of all talents. Ambition outweighed ability however, and Sadlier's disgrace as a politician and his failure as a speculator brought misery and shame to a great number of innocent people.

He tried to cover his tracks by forging shares in a Swedish Railway Company. He forged deeds of land that he was supposed to have acquired in Ireland. He forged cheques and other financial documents so successfully that no suspicion arose, yet, as to his true financial state. The end-game began when one wise investor checked out the deed of a supposed Irish property that had been given as security for a loan of ten thousand pounds. The house of cards began to collapse. Drafts from the Tipperary Joint-Stock Bank were initially not honoured in London but later they were again accepted. A troubled Sadlier brother, running the Bank back in Tipperary, telegrammed, ‘All right at all the branches. Only a few small things refused there. If from twenty to thirty thousand over here on Monday morning, all is safe.’ John Sadlier visited a Mr. Wilkinson in the City asking for help in his predicament. His financial friend had helped him before but this time the answer was in the negative. Sadlier’s reaction was to stride up and down the office pondering out loud on how, if the Tipperary Bank should fall, it would be his fault and it would be the ruination of thousands of people.

That night a distressed John Sadlier left his London home at midnight, telling his butler not to wait up for him. He took with him the small tankard that was found beside him the next morning, some knives and a phial of Prussic Acid. On Monday the news of his death reached Ireland. Country people stormed in to the towns, some armed with crowbars, picks and spades, thinking that if they could get in to the Branch Offices, they could recover their investments and hard-earned savings. Elderly people were confused and distressed. Some wept hysterically or prayed. The rich lost out too as Sadlier’s debts were revealed to be of the order of one and a quarter million pounds Sterling.

Though Sadlier had left intensely remorseful suicide notes reproaching himself for the ruin of others, he became notorious as the ‘prince of swindlers’. In his book, Manias, Panics and Crashes – a History of Financial Crises, Charles Kindleberger refers to John Sadlier as, ‘one of the greatest, if not the greatest, and at the same time the most successful swindler that any country has produced’. Sadlier’s story was to provide inspiration for Charles Dickens’ character, Mr Merdle in the novel called Little Dorrit.

This extraordinary story of the rise and fall of John Sadlier has its parallels in our own time of course. Its lessons on the fickleness of finance and of reputation and its commentary on the consequences and prevalence of corruption, greed and betrayal are remarkably contemporary, though it all came to head in Victorian Britain one hundred and fifty two years ago.

1 comment:

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