windowthroughtime

A wry view of life for the world-weary

Double Your Money – Part Twenty Six

James Whitaker Wright (1846 – 1904)

There was a time when being a company director was a bit of a sinecure, earning the trustee of a company’s fortunes a hearty lunch every now and again, a fee and a share of any dividends that were going. There was no shortage of the great and the good willing to put themselves forward to serve on a Board and for the unscrupulous entrepreneur, stacking the board of their companies with titled dignitaries gave their venture the patina of respectability. For the unwary, though, this could be the road to ruin as the story of James Whitaker Wright shows.

Born in Stafford, Wright trained in chemistry and assaying and upon the death of his father, he emigrated to Canada and then the States where he became an American citizen. He made a fortune, becoming a millionaire, by promoting silver-mining companies in Leadville, Colorado, and Lake Valley, New Mexico. Although initially Wright did well out of these ventures, his investors did not see a penny and by the age of 31 he had lost his fortune and returned to Blighty penniless.

Undaunted, he started again, promoting on the London stock exchange a number of Australian and Canadian mining companies. The boards of many of his companies consisted of aristocrats. Perhaps his most significant catch was the former Viceroy of India, the Marquess of Dufferin and Ava, who agreed to be chairman of the London and Globe Company, formed in the 1890s. The company floated numerous stock and bond issues associated with mining, appropriating the term consols to describe the offerings. These were not to be confused with the consols which described the state bonds issued by the British government which were safe and reliable but unwary investors would be forgiven for thinking that they were the same thing.

For a while all went well and by 1897 Wright had become a millionaire for a second time. He bought himself a mansion, Lea Park, which boasted a smoking room underneath a rooftop aquarium. His affairs started to unravel when he founded the British America Corporation with the intention of financing the construction of the new Bakerloo underground line. The bond issue associated with this development was nothing short of a disaster, the construction was difficult and costly and Wright soon found himself short of funds. The situation called for desperate measures.

The solution Wright adopted was to shift money around between his companies in the form of loans. This practice strengthened balance sheets at the time when results had to be published but meant that there was nothing with which to pay dividends. So although he was claiming all in the garden was rosy, there was no pay out for the investors who began to smell a rat. By December 1900 the whole pack of cards collapsed, Wright was accused of misusing investor funds, shock waves were felt in the international mining industry and questions were even asked in Parliament.

After hiding for a week in the ice house at Witley Park, Wright scarpered to Paris and then to New York. New technology meant that the authorities could telegraph a warrant for his arrest to New York and even though he was travelling under a false name, he was arrested. He managed to delay his extradition until September 1902 and didn’t face an unsympathetic judge and jury until 1904. On 25th January 1904 Wright was found guilty of fraud and sentenced to seven years in chokey. But he had the last laugh.

Protesting his innocence and calling for a large whisky and a cigar, he did a Praljak by ingesting a cyanide capsule in an ante-room of the Royal Courts of Justice and died on the spot. For good measure, the police also found a loaded revolver on his person. As for the Marquess of Dufferin and Ava, the shame of the collapse killed him in 1902, proving that there is no such thing as a free lunch.

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