Double Your Money – Part Ten

John Sadleir MP

John Sadlier (1813 – 1856)

Dickens’ Mr Merdle (Little Dorrit) and Trollope’s Augustus Melmotte (The Way We Live Now) are larger than life literary characters, the epitome of all that was wrong and evil with the Victorian capitalist system. There is little doubt that these characters were based on John Sadlier, an Irish financier and Member of Parliament, dubbed by the contemporary press as the Prince of Swindlers when his peculations were unearthed.

Although he started his working career as a solicitor in Dublin, he founded the Tipperary Joint Stock bank with his uncle, James Scully, in 1838, offering above average interest rates to small farmers and tradesmen. The bank prospered. In 1847 Sadlier was elected member of parliament for Carlow and on moving to London was appointed chairman of the London County Joint Stock Banking Company the following year. It was from this base that he began his investment career, financing railway developments in Sweden, France and Italy, founding his own Dublin newspaper, the Weekly Telegraph and buying swathes of land, valued at over £250 million.

Sadlier seemed to have the Midas touch and quickly became a household name as the Warren Buffett of his era. He couldn’t fail and returned dividends of 6%, significantly higher than his competitors, to his delighted shareholders. In parliament he led what was known as the Pope’s Brass Band, a group of MPs who resisted the Liberal government’s attempt to restructure the Catholic Church, founded the Catholic Defence Association and in late 1852 became Junior Lord of the Treasury.

But like Midas, he was doomed. Not everything was at it seemed. The high dividends were only payable because of fraudulent book-keeping and over-valuation of assets. In 1853 Sadlier was forced to resign his parliamentary seat when an investigation into his election campaign of 1852 showed that the financier had used his bank to bring pressure to bear on 208 voters in the Carlow constituency.

Sadlier started to make increasingly reckless investments, borrowing heavily from his own bank, forging shares in the Royal Swedish Railway Company of which he was chairman and rather desperately and unsuccessfully sought the hand of any Catholic heiress that had enough dosh to get him out of his difficulties. By February 13th 1856 the writing was on the wall. The London agents of the Tipperary Bank refused to cash drafts that Sadlier sent him. The following weekend he wrote a despairing letter to a cousin in which he confessed to “numberless crimes of a diabolical nature” causing “ruin and misery and disgrace to thousands – ay, tens of thousands”.

On the night of February 16th he went to Hampstead heath and behind Jack Straw’s Castle took prussic acid from a silver cream jug – Melmotte’s chosen form of suicide – and was found the next day. Sadlier may have escaped justice but his peculations left many ruined. His overdraft was £250,000 and his collapsed banking empire owed the Bank of Ireland £122,000. He had defrauded the Royal Swedish Railway Company to the tune of £300,000. Over £400,000 was lost by depositors – an enormous sum given that the total deposits of all the joint stock banks in Ireland at the time was £12 million.

Sadlier’s brother, James, an MP at the time, also put his hand in the till and upon his brother’s death scarpered, ultimately to Paris where he was spotted and ordered to return to Westminster. He refused to attend and was expelled – the first MP to suffer this fate in half a century. James eventually settled in Zurich and in June 1881 he was set upon by a knife wielding man who stabbed him to death. Whether the assassin was a creditor with a long memory is not certain.