Fraudsters and Charlatans (24 page)

Druscovich was finally able to set sail for England with his charge. In a miserable private discussion with Benson he said he hoped the sides of the ship would open up and they would all go to the bottom. He knew that he was suspected, since in the twenty-five days he had been in Rotterdam no one had given him any information.

Back in England, Benson wrote a pathetic letter to his father begging for his assistance and expressing remorse for his crimes. At the same time he was writing coded messages to Kurr, hopeful that some arrangement might be made with the Comtesse to drop the case. In fact the Comtesse, who had recovered most of her money, did plead for the men to be dealt with mercifully; but at the trial that took place in April, William Kurr, his brother Frederick and Charles Bale were sentenced to ten years' imprisonment, Benson, who was regarded as the mastermind behind the plans, fifteen years, and Murray, as an accessory, eighteen months with hard labour.

While Meiklejohn and Druscovich remained under suspicion, the Home Office had not been able to prove anything against them, and it was eventually decided not to make any charges against the detectives. There the matter might have rested in an uncomfortable limbo, but Kurr and Benson still had a final card to play. Kurr had carefully retained every warning letter he had received, and in July 1877, hoping to get a reduction of his sentence, he exposed his police informants. The letters did not implicate Clarke, but Meiklejohn was soon in custody, while Clarke and Williamson personally arrested Palmer and Druscovich at Scotland Yard. Froggatt was arrested by Clarke at his own office. With all the suspects under arrest, Williamson must have thought he had no more shocks to bear, but in the magistrates' court he heard Kurr assert that Clarke had also been bribed. Williamson was obliged to arrest his old friend, and when Clarke joined his colleagues in the dock they wept. The trial attracted worldwide interest, and lasted a record twenty days. To the great mortification of the detectives, the chief witnesses against them were Benson and Kurr. Thanks largely to the clever counsel, Sir Edward Clarke, and a glowing testimonial from Chief Commissioner Edmund Henderson, Inspector Clarke was acquitted, but the others were found guilty and received sentences of two years with hard labour.

Soon afterwards Clarke retired on a pension. On their release, Meiklejohn and Druscovich became private detectives and Palmer a publican, but Druscovich, who probably never recovered either his mental or physical health, died of tuberculosis in 1881, aged 39. Froggatt was rearrested as he left prison and charged with embezzling money of which he was a trustee. He was imprisoned for seven years, and died in Lambeth Workhouse in 1889, aged 46. Williamson, his health affected by the stress of overwork, died in the same year, aged 58. Only Meiklejohn, who according to his own defence counsel ‘would have corrupted a regiment',
³⁰
was able to look the world in the eye. ‘It is easy to blame a man for his shortcomings,' he claimed, ‘but sometimes it is fairer to blame the circumstances behind the man.'
³¹
In his memoirs, which were published in 1912, he hinted that he might be able to reveal more about ‘circumstances to which I can, and shall, if I am spared, give a very different colouring to that usually accepted',
³²
but he never did so.

Both Benson, who gradually regained full use of his legs, and the Kurrs were eventually released and went back to their old lives of swindling, although this time in the United States, Belgium and Switzerland. On 14 January 1888 Benson was arrested in New York for a Mexico City scheme in which he had posed as the agent for opera singer Madame Patti, selling bogus tickets for a concert. In Ludlow Street Jail he awaited extradition to Mexico, which he dreaded, certain that it would mean ‘extraordinary punishment'
³³
and a cruel death. On 16 May 1888 he bolted away from his jail keeper and threw himself over a second floor railing. A few hours later he died of his injuries.

SEVEN

The Grappler

W
hen Ernest Terah Hooley came to London, he was ‘determined to make a million or go smash'.
¹
He did both. In 1896 he was unknown; by 1897 his name was an international byword for conspicuous financial success; by 1898 he was bankrupt. There is a myth that Hooley was a commercial visionary who was able to spot those industries destined for future success, and that his only failing was his personal extravagance. In reality, Hooley had little understanding of high finance, and naïvely assumed that a boom that created rapid and illusory profits would last for ever. Many of his deals were, in his own words, ‘warm [that is, dubious] to the point of sultriness',
²
though not actually illegal, but when bribery, fraud and slander were to his advantage he added these weapons to his armoury. His main talents were boundless audacity and the ability to lie copiously and without shame. His fleecing of the investing classes was something about which he remained cheerfully unrepentant to the end of his life.

Ernest Terah Hooley was born in Sneinton, Nottinghamshire, on 5 February 1859. His father, Terah, had a small lace-making business at Long Eaton. Young Ernest assisted his father and was eventually taken into partnership. The Hooleys regularly attended the Baptist chapel, where Ernest played the harmonium. He was a non-smoker and teetotaller, and was often to be heard lecturing others about the sins of alcohol, tobacco and evil speaking. The collection plate was carried by John Charles Cottam, Hooley's lifelong friend. For both men, the temptation of wealth soon overcame any moral scruples. The orphaned son of a railwayman, Cottam established himself as a company promoter. He used advertising to hike share prices to unreasonable heights, then quickly sold his holdings and walked away leaving the gullible public with worthless investments. Cottam's rash speculations resulted in his bankruptcy in 1894, but not before his early success had inspired Hooley to follow his example.

At the age of 30 Hooley told his father he was through with the lace trade. With capital of £20,000, he went to Nottingham, where he started dealing in houses, land and breweries. He had always wanted to be an old-fashioned country gentleman, and in 1888 acquired the historic house at Risley Hall and its surrounding farmlands for £5,000. Over the years he spent £100,000 on improving the property. By 1896, with £150,000 in his pocket, he found the Midlands too small for his ambition and, convinced that he had a magic touch with money, determined that from then on he would deal in millions.
³

Together with Martin Diederich Rucker, manager of the London branch of bicycle manufacturers Humber and Co. Ltd, Hooley launched a number of subsidiaries. The mid-1890s was a time of massive speculation in the cycle trade. Cycling had become a craze, its popularity established on two crucial developments of the previous decade, the diamond-frame safety bicycle and the pneumatic tyre. Supply could not keep pace with demand. Dozens of new companies were being launched, manufacturing cycles, cycle parts and accessories, and the investing public was happy to snap up shares at a premium. In vain did the financial press utter words of caution. ‘The public was in one of those rare moods when it could be swindled with impunity, and the shady promoter had a right royal time,' observed
Money
in retrospect.
⁴

Rucker introduced Hooley to Alexander Meyrick Broadley, a barrister and writer, who ever since his defence of the Egyptian revolutionary Arabi Pasha in 1882 was known as Broadley Pasha. Broadley soon became Hooley's right-hand man and was able further to advance his career by introducing him into high society.

It did not take a business genius to spot that the youthful Pneumatic Tyre Company Limited (Pneumatic), which had been manufacturing the Dunlop tyre since 1889, was a good prospect. According to the anonymous author of
The Hooley Book
, it was Rucker who suggested that Hooley acquire the business. The asking price was £3 million. Hooley did not have that sum or anything approaching it, but that did not matter, because he had no intention of keeping the company. ‘My great business was to buy something without the money to pay for it, sell it for as much as I could, and get out with the profit',
⁵
he revealed. ‘I was never one to concern myself with what happened afterwards.'
⁶
‘Some people might say that by this method I robbed the public of millions of pounds, but nevertheless I did not do anything against the law,' claimed Hooley shortly after emerging from prison for the third time.
⁷

He borrowed the money from ‘colleagues of mine who, if they could not emulate me, could at least stand by in respectful admiration'.
⁸
The venture was planned in Ridler's, a rambling rabbit-warren of a hotel in Holborn, with dark, poky rooms where Hooley conferred with Martin Rucker, Broadley Pasha and Adolph Drucker MP, an ambitious young Dutchman with an inheritance that Hooley was happy to assist in spending. Hooley, ‘alert in movement, quick of speech and impetuous in manner . . .',
⁹
was unable to sit still for long and dodged about jotting ideas down on scraps of paper. Artists, the financial press and advertising agents arrived, and articles and prospectuses were written and dispatched. Hooley took no chances, making large payments both in cash and shares to journalists to ensure their approval.

Many of the visitors to Ridler's were titled gentlemen, for Hooley liked to place ‘ornamental directors' on the boards of companies he promoted and was willing to pay handsome inducements. These peers would later find they had been saddled with duties they had not anticipated and shares they could not sell, and that Hooley, once having disposed of the company, had no interest in either it or them. Chief among his noble ‘front-sheet men' was the young Earl de la Warr, who, like many others, would learn to regret his involvement with Hooley.

Having bought Pneumatic for £3 million in a deal approved on 13 April and finalised on the 25th and added his ‘names' to the Board, Hooley relaunched what was ‘practically the same business'
¹⁰
as the Dunlop Pneumatic Tyre Company Limited (Dunlop) on 12 May for £5 million. It was a magnificent coup, and one that made his reputation. ‘On the strength of the Dunlop “deal” Mr Hooley came to be regarded as the Napoleon of finance, at whose word capital could be created by the million and fortunes could be made as if by a magician's wand.'
¹¹

That the public was willing to pay such an inflated price was only partly because of the cycling craze, the massive advertising campaign and favourable articles in the financial press. Hooley also added extra value to the mix by making high publicity offers to buy out Dunlop's potential rivals, deals that he had no intention of honouring.

Pneumatic had granted licenses to the Beeston Pneumatic Tyre Company Limited (Beeston) and the Grappler Pneumatic Tyre Company Limited (Grappler) to manufacture Dunlop tyres. Neither of these companies had traded profitably. The licences were clearly worth something to Beeston and Grappler, but they were not transferable in the event of a takeover by another person. Exactly when Hooley saw the Beeston licence is unknown, but his solicitors had a copy of the Grappler licence by 6 May 1896 at the latest, six days before the Dunlop prospectus was to be published. He must therefore have known that, if he bought out these companies, he would not acquire the licences. Hooley's plan for both companies was to make a generous offer for their shares shortly before the Dunlop launch, and later to extricate himself from the deals with the excuse that the licences were not what he had supposed them to be, relying on the fact that the investing public would not have detailed information about the licences. Hooley also planned to make a personal profit, buying up Beeston and Grappler shares cheaply before making his offer, which he knew would increase their value, then quickly disposing of them before the deal collapsed. In neither case did this scheme go entirely to plan. Two years later the public exposure of Hooley's blatant share-rigging was to contribute to his eventual downfall.

On 10 April 1896 Mr Harry John Lawson, chairman and managing director of Beeston, was visiting the offices of the Humber Company when Hooley, whom he had never met, unexpectedly appeared and bought 20,000 unallocated Beeston £1 shares for £25,000. The company had traded at a loss in the preceding year but prospects were thought to be good. The next day the issued shares, which in the light of the cycle boom had been exchanging hands for £2, jumped to £4. But Hooley was far from finished with Beeston. He offered to buy out the company at an extraordinary £8 per share: ‘cycle shares promise to become as inflated as the tyres', observed the
Financial Times
on 27 April as Beeston prices careered up to £6 10
s
. ‘These same shares eighteen months ago could be procured at 3
d
apiece.'
¹²

On 30 April the offer was discussed at an extraordinary general meeting of the shareholders. The mood of the meeting was to sell, but Lawson was against the move and spoke eloquently about the past history of the company, of the excellence of its tyre, which he claimed was better even than those made by Pneumatic, and the ‘enormous' future prospects, predicting that in the following year either Beeston would buy out Dunlop or Dunlop would buy out Beeston – ‘either way we will divide the trade between us'. He advised the shareholders against accepting the offer on the grounds that they would make much more in the long run: ‘he thought the trade was boundless.'
¹³
Only a few months previously Beeston shares had been worth 1
s
, ‘now, I may say, without being presumptuous, that if we are not doing it now, we soon shall be running neck and neck with the £5,000,000 company'.
¹⁴
A Dr Redmond responded that he had come to the meeting intending to vote to accept the offer, but Mr Lawson's speech had entirely altered his opinion. If it was worthwhile for Dunlop to offer £8, then it was worthwhile for Beeston to hold the shares. The meeting agreed and voted unanimously to reject the offer. A hearty vote of thanks for the chairman was carried with acclamation. Hooley must have been staggered at the result, but it played right into his hands, as he now had neither the trouble nor the expense of getting out of a deal he had never intended to complete.