When the affairs of the Tipperary Bank finally came under public scrutiny it was thought that it had only recently come into difficulty and that it was probably the years 1854 and 1855 that were crucial. What private despair Sadleir suffered as a result of the virtual extinguishing of his political life will never be known, but his desperate and disastrous borrowings bolstered by major fraud and forgery seem to date from this time, when he callously began to use the Tipperary funds and the resources of his relatives as his own personal money boxes. Also at this time, his speculations on the Stock Exchange became wilder. He played the commodities market, with notable lack of success. It was later alleged that he lost £120,000 on sugar in the course of a single day in the autumn of 1855, and at other times he lost £35,000 on hemp and £50,000 on iron.
While Sadleir owned a substantial amount of property, most of it was encumbered by loans. As founder and chairman of the Carson’s Creek Gold Mining Company, he had no difficulty in obtaining a large loan from its coffers, which was due for repayment in January 1855. When he was unable to repay, he offered as security the deeds of an estate in Limerick. The deed was lodged in the London and County Bank. He later removed it without anyone’s knowledge or agreement, and used it as a security for another loan.
The Public Officer of the Tipperary Bank, Wilson Kennedy, who was also well aware of Vincent Scully’s concerns, had watched in dismay as Sadleir became more and more indebted to the bank. James, who was initially confident that his brother’s properties could cover the loans, also became deeply concerned, especially in view of mounting evidence of dishonest transactions. In March 1855 Sadleir had approached the London and County asking them for an advance of £20,000 on a Tipperary Bank bill of exchange, but had not consulted James about it first. James was furious with his brother and on 7 March 1855 he wrote: ‘I would not be burthened with your constant lies any longer. You may provide for the credit or let it alone. Until I see the money ordered lodged I will not accept the £20,000 or move in it. Your constant lying is worse than anything else … In fact your doings and impertinence beat anything.’26
Sadleir continued to ask for loans, protesting that without them he would be ruined, to which James responded: ‘I consider your ruin, as you call it, of very little consequence,’ and demanded full legal authority to sell his brother’s properties, ‘as I consider you quite incapable and quite unfit… . I am certain you bungled every property you had to do with.’27
On 15 March an agreement was drawn up, granting James and Robert Keating the power to dispose of Sadleir’s lands, but, against the advice of the solicitor James Kennedy, it was never registered or acted upon. James Sadleir, well aware of the fact that the financial fortunes of his brother and the Tipperary Bank were now almost one and the same, was worried that registering the agreement would expose Sadleir’s desperate position. Sadleir held onto his properties, obtained further advances, and plunged still deeper into debt, while Keating washed his hands of him in disgust.
That April Sadleir concocted his most audacious money-making scheme to date. The Tipperary Bank had authorised the issue of 10,000 shares, of which only 4,055 had been taken up, at £10 each. He now proposed to offer the remainder for purchase by English shareholders through the London and County Bank. The difficulty was that the thousands of new shares would dilute the value of established holdings and reduce the amount of dividends. As soon as shareholders realised this, they would sell their holdings, and confidence in the bank would plummet. For the scheme to work, it would have to look as if the shares on offer were not new ones, but transfers from an existing shareholder. Sadleir already had a dupe to hand, an old school friend called Austen Ferrall. In 1846 Sadleir had asked Ferrall to hold shares in trust for a lady cousin who did not want her name to appear as an investor. Ferrall, unaware that the lady did not exist, agreed. Quite what duplicitous scheme Sadleir had in mind on that occasion is unknown, but eleven years later he still had permission to use Ferrall’s name. Large numbers of blank share certificates were prepared and assigned to Ferrall, who, still under the impression that he was helping Sadleir’s lady relative, was happy to agree to their transfer.
English investors were now made an extraordinarily exciting offer. The shares were offered to them at 25 per cent above par, which was only tenable if the Bank was very prosperous indeed, and to show just how solid the investment really was a prospectus was produced, together with the accounts for 1854, which were said to have been approved by the directors at the annual general meeting of 1 February 1855. The figures were, of course, false and showed a profit of double the true value, while vastly overstating the company’s assets. Most of the bank’s assets were in fact the debt owed by Sadleir.
The false certificates were passed to a London and County director, Farmery John Law, who, unaware of the fraud, passed them on to his branch managers, inviting them to sell the shares to their customers. With a commission of ten shillings for each share they sold, they plunged into the task with enthusiasm.
In June 1855 Wilson Kennedy, after protesting against the loans being made to Sadleir, decided that he wanted to have no more to do with the Tipperary Bank and offered his shares to James Sadleir. James, realising that the bank could be damaged if his brother’s overdraft was made public, agreed to purchase the shares. That month another spectre from the past reared its head as the Earl of Kingston obtained a court decree demanding that both Thomas Eyre, who was supposed to have lent him £40,000, and the Tipperary Bank account for the rents received from his estate.
Sadleir did not want to sell his lands, but the prospect that he might do so was a valuable commodity to him, and on the basis of this, in June he obtained £20,000 from the London and County Bank. A month later this had been sucked into the whirlpool of his financial affairs, and he asked for another £15,000. Fortunately for that bank, the directors were not so trusting as his friends and relatives in the Tipperary. Recognising that he was in financial difficulties, they refused the loan and froze his account.
In the meantime James was taking desperate measures to try to save the bank. He arranged a special meeting of the directors in July, and asked for an advance of £95,000 on the security of his brother’s lands, informing them that Sadleir’s overdraft amounted to £40,000 (the figure was far higher, but James knew that if he told the truth not only would he not receive the director’s agreement, but his gross mismanagement would cost him his position). Sadleir’s properties, valued by James at between £450,000 and £480,000, were, he said, to be held by trustees and used to discharge his debts. Trustingly, the directors agreed that the Tipperary Bank would act as guarantor for Sadleir’s debts at the London and County Bank. James was paid the first instalment of the £95,000, which he banked immediately. This kept the Tipperary Bank afloat for a little longer, but when it came to registering the deeds to assign Sadleir’s estates to the trustees, there was a snag: a number of estates had already been assigned to Thomas Eyre as security for earlier loans. The second instalment of the £95,000 was stopped.
In order to release the securities Sadleir embarked on a scheme to defraud the Royal Swedish Railway Company and the by now 75-year-old Eyre. The Royal Swedish required capital to expand, which was to be raised by selling debentures on the Stock Exchange. Sadleir carried out the sale and pocketed the money. He then wrote to Eyre on 13 August offering him shares in the Royal Swedish for the release of his properties, representing the exchange as a valuable opportunity that should be taken advantage of immediately. As an inducement, he stated that under the new arrangement Eyre would receive an annual income of £5,000. Eyre replied that he would agree to the exchange only if advised to do so by James Kennedy. Sadleir immediately telegraphed Kennedy to tell him that Eyre had made a favourable response, and informed Josiah Wilkinson his solicitor that Eyre had agreed to the arrangement. Wilkinson took Sadleir at his word and obligingly released the remainder of the advance. Sadleir now had to move fast, and wrote to Eyre to close the deal, advising him tha
t ‘whatever serves me in this respect, cannot, I believe damage you’.28 He was still concealing from Eyre the fact that the £40,000 loan to the Earl of Kingston had never reached its intended recipient, and even as these letters went back and forth the Earl filed his decree and waited for judgment.
James Kennedy was sent to negotiate the deal. He had told Sadleir that in order to secure an annual income of £5,000, 20,000 Royal Swedish shares would be required. Sadleir replied that this was no problem, and indeed it was not, because he had forged them. He also told Kennedy that the £5,000 annual income could be guaranteed by his brother James, and offered another security, a promissory note of £12,000. This too was a forgery.
The unsuspecting Kennedy carried out the negotiations as required, and the lands were released. They were transferred in trust to the London and County Bank by a deed dated 7 September, which ensured that after their sale any surplus was to go to the Tipperary Bank. The deed was duly sent to the Tipperary Bank board of directors. In due course, minutes of a board meeting approving the deed were available for inspection.
The forged shares were transferred to Eyre, together with a forged statement from the company certifying that they carried 5 per cent annual interest, and the forged promissory note. The package also included the conveyance of part of an estate. This too was a forgery, and in any case, the property in question was already mortgaged for more than its value.
In October Josiah Wilkinson spotted a good investment opportunity. The Newcastle-upon-Tyne Commercial Banking Company was up for sale, following the illness of its managing director. James Sadleir and others purchased it as a going concern, dismissed the manager and appointed Thaddeus O’Shea in his place. The directors were replaced with new men who included James Sadleir, Robert Keating and Farmery John Law. A month later £59,000 was transferred to the London and County Bank, of which £52,000 helped ease the position of the ailing Tipperary Bank.
In the previous few months, London and County Bank managers in Chelmsford, Peterborough, Uxbridge, Luton and Leighton Buzzard had been busily selling the Tipperary Bank shares to their customers at £12 10s apiece – but the sales were not going fast enough for Sadleir. He decided to offer a further inducement, with a falsified balance sheet for 1855, for the benefit of the English market alone. Proposing to ‘shove the customers’ balances up’, he claimed: ‘I know many of the English Joint-stock Banks, in order to give a good appearance to their balance, have constantly trebled the amount of their balances, &c., &c., by making a series of entries. Whereby they appeared to have assets and liabilities to four times the amount they really possessed or had. This has always been kept very quiet, and what at first was a kind of fiction became gradually to be bona fide.’29
The fraudulent balance sheet showed the issue to him of deposit receipts for sums up to £500,000, supposed to have been received from companies in which he had an interest, balanced by an account in his name as trustee. Despite the now desperate financial state of the Tipperary Bank, he still hoped to adjust the figures to show a profit.
The scheme was not as successful as expected. Seventy English investors bought shares, paying a total of over £15,000, which was not nearly enough to avert disaster. Many were small investors, such as farmers, ministers of religion, doctors, a draper, a miller and several spinsters.
By the end of 1855 John Sadleir’s overdraft with the Tipperary Bank was £247,000 (about £15 million at today’s values). It had been permitted to rocket to that figure only because he was supplying James with figures that showed he had sufficient investments to cover his liabilities. James later claimed that his brother had told him that the worst was over and that he was confident that after paying all his debts he would have a considerable surplus. The truth was that Sadleir’s finances were in a desperate state, of which only he knew the full enormity, and were recoverable only by an amazing stroke of unanticipated good fortune. If he hoped for good luck on the Stock Exchange, he was to be disappointed. He made further losses in January 1856, and the Tipperary Bank was obliged to loan him a further £41,000. By now his total losses from all sources amounted to £1,500,000, of which about two-thirds was probably a result of his speculations on the stock market.
On 1 February 1856 it was necessary to delay disaster by producing, for the benefit of the Irish shareholders, a set of false accounts which showed the hopelessly insolvent Tipperary Bank to be a profitable and valuable concern and declaring a dividend of 6 per cent with a 3 per cent bonus. The list of directors mentioned in the document were no longer with the company; in fact, the only one remaining was James Sadleir. The fraud worked and the ‘unfortunate traders and farmers … deluded by this proclamation of prosperity, deposited their hard earnings in this voracious pit with increased confidence’.30
Sadleir was by now facing inevitable ruin. An order had been served upon him to lodge £6,000 as receiver of the Earl of Kingston, and all his usual sources of money were vanishing. The coffers of the London and County, which had taken away his chequebook, were closed to him, and the Tipperary could scarcely advance him any more without precipitating a disastrous crash. He was reduced to approaching individuals for private loans, on the strength of hastily forged deeds, and misappropriating the funds of a marriage settlement that he was holding in trust. As a last ditch measure he sought out suitable heiresses and proposed marriage. His air of frantic desperation cannot have helped him, and they turned him down.
While many people knew about the perilous position of the Tipperary Bank, it is unlikely that they realised the scale of the crash that was to come. When the London clearing house began to refuse Tipperary drafts, the claim that non-payment was the result of an error bought only a day or two of time.
On 15 February things went from bad to worse. The secretary of the Royal Swedish had spotted something very amiss in the company’s books, and confronted Sadleir, who promised to make a full report in three days’ time. On the morning of Saturday 16 February Sadleir received a telegraph from James, optimistically stating ‘all right at the branches – only a few small things refused here. If from twenty to thirty thousand over here on Monday morning all is safe.’31 Since Sadleir did not have the money or any hope of raising it, this did not have the soothing effect James might have anticipated. Soon afterwards Sadleir arrived at the office of Josiah Wilkinson in a very excited state, where he paced restlessly about the room, begging for help to save the bank. He showed Wilkinson the telegraph, and proposed a number of desperate schemes to raise loans to save the bank, all of which Wilkinson said he could neither recommend nor adopt. He was in any case extremely loath to loan Sadleir anything. The previous November James had come to see him, asking for £15,000 for his brother, saying that he would not be able to meet his engagements without the money. Although James had claimed that his brother had assets to cover the loan, Wilkinson felt sure that Sadleir’s debts were far greater than he admitted. He had refused the loan, and now, hard as it seemed, he refused again. Sadleir clapped his hand to his head and exclaimed: ‘Good God, if the Tipperary Bank should fail, the fault will be entirely mine, and I shall have been the ruin of hundreds and thousands.’32 On being told that a deed he had given as security for an earlier loan was about to be registered, he became even more agitated. Wilkinson’s firm had previously advanced large sums to Sadleir, but the balances had become so large that they had asked for security. This had been supplied six weeks previously in the form of a deed for the purchase of a property at the Incumbered Estates Court, but the firm had not yet registered the deed. Wilkinson was now so alarmed by the behaviour of his client that he at once dispatched his partner to Dublin to register the deed.
Sadleir spent the rest of the day in the city meeting friends and relatives in a last frantic attempt to raise funds. With all hope gone, he sent his butler to a nearby chemist’s shop for a bottle of Essential Oil of Bitter Almonds. After going to his club that evening, he returned home, where he wrote four letters. At midnight he walked to Hampstead Heath.<
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The contents of Sadleir’s last four letters were a matter of intense public speculation, and details were released long before they were read at the resumed inquest. When the Morning Advertiser of 23 February carried an article headed ‘Astounding Disclosures’ alleging that the frauds and forgeries of John Sadleir would not be under £1 million, copies of the newspaper were changing hands for 5s (£14 at today’s values).
‘I cannot live,’ Sadleir had written to Norris, apparently overcome by a long belated sense of remorse. ‘I have injured many. I committed abominable crimes, unknown to any human being that will now appear to light, bringing my family and others to distress.’33 ‘Oh how I feel for those on whom all this ruin must fall!’ he wrote to Keating. ‘I could bear all punishment, but I could never bear to witness the sufferings of those on whom I have brought ruin. It must be better that I should not live. No-one has been privy to my crimes. They sprung from my own cursed brain alone.’34 To James’s wife, Emma, he wrote: ‘James is not to blame. I have caused all this dreadful ruin. James was to me too fond a brother, but was not to blame for being deceived, and led astray by my diabolical sin.’35
At the inquest, which resumed on 26 February, and at which the letters were read, the questions arose of whether Sadleir was sane at the time he wrote them, and was the disaster really as bad as he supposed? Despite the best efforts of Sadleir’s friends and family, who strove to obtain a verdict of insanity, the court eventually brought in a verdict of wilful self-murder. The family had already anticipated this finding, for Sadleir had been buried in a quiet private ceremony early on the morning of 21 February in Highgate Cemetery in an unconsecrated plot, as was appropriate for a suicide. A Roman Catholic clergyman officiated, and only a few immediate family and close friends were present.
Fraudsters and Charlatans Page 14