I will now pass to grave but less atrocious crimes. In 1850 occurred the first of a series of gigantic frauds, which followed each other at no long intervals, which had a strong family likeness, and originated all of them to make money easily, without capital, and at railroad speed. Walter Watts was an inventor, a creator, who struck an entirely new and original line of crime. Employed as a clerk in the Globe Assurance, he with unusual quickness of apprehension discovered and promptly turned to account an inexcusably lax system of management, which offered peculiar chances of profit to an ingenious and unscrupulous man. It was the custom in this office to make the banker’s pass-book the basis of the entries in the company’s ledgers. Thus, when a payment was made by the company, the amount disbursed was carried to account in the general books from its entry in the pass-book, and without reference to or comparison with the documents in which the payment was claimed. This pass-book, when not at the bank, was in the exclusive custody of Watts. The cheques drawn by the directors also passed through his hands; to him too they came back to be verified and put by, after they had been cashed by the bank. In this way Watts had complete control over the whole of the monetary transactions of the company. He could do what he liked with the pass-book, and by its adoption, as described as the basis of all entries, there was no independent check upon him if he chose to tamper with it. This he did to an enormous extent, continually altering, erasing, and adding figures to correspond with and cover the abstractions he made of various cheques as they were drawn. It seems incredible that this pass-book, which when produced in court was a mass of blots and erasures, should not have created suspicion of foul play either at the bank or at the company’s board. Implicit confidence appears to have been placed in Watts, who was the son of an old and trusted employé, and, moreover, a young man of plausible address.
Watts led two lives. In the West End he was a man of fashion, with a town house, a house at Brighton, and a cellar full of good wine at both. He rode a priceless hack in Rotten Row, or drove down to Richmond in a mail phaeton and pair. He played high, and spent his nights at the club, or in joyous and dissolute company. When other pleasures palled he took a theatre, and posed as a munificent patron of the dramatic art. Under his auspices several “stars” appeared on the boards of the Marylebone theatre, and later he became manager of the newly rebuilt Olympic at Wych Street. No one cared too closely to inquire into the sources of wealth. Some said he was a fortunate speculator in stocks, others that he had had extraordinary luck as a gold-digger. Had his West End and little-informed associates followed him into the city, whither he was taken every morning in a smart brougham, they would have seen him alight from it in Cornhill, and walk forward on foot to enter as a humble and unpretending employé the doors of the Globe Assurance office. His situation exactly described was that of check clerk in the cashier’s department, and his salary was £200 a year. Nevertheless, in this position, through the culpable carelessness which left him unfettered, he managed between 1844 and 1850 to embezzle and apply to his own purposes some £71,000. The detection of these frauds came while he was still prominently before the world as the lessee of the Olympic. Rumours were abroad that serious defalcations had been discovered in one of the insurance offices, but it was long before the public realized that the fraudulent clerk and the great theatrical manager were one and the same person. Watts’s crime was discovered by the secretary of the Globe Company, who came suddenly upon the extensive falsification of the pass-book. An inquiry was at once set on foot, and the frauds were traced to Watts. The latter, when first taxed with his offence, protested his innocence boldly, and positively denied all knowledge of the affair; and he had so cleverly destroyed all traces that it was not easy to bring home the charge. But it was proved that Watts had appropriated one cheque for £1400, which he had paid into his own bankers, and on this he was committed to Newgate for trial. There were two counts in the indictment: one for stealing a cheque value £1400, the second for stealing a bit of paper value one penny. The jury found him guilty of the latter only, with a point of law reserved. This was fully argued before three judges, who decided that the act of stealing the bit of paper involved a much more serious offence, and told him they should punish him for what he had really done, and not for the slight offence as it appeared on the record. The sentence of the court, one of ten years’ transportation, struck the prisoner with dismay. He had been led to suppose that twelve months’ imprisonment was the utmost the law could inflict, and he broke down utterly under the unexpected blow. That same evening he committed suicide in Newgate.
The details of the suicide were given at the inquest. Watts had been in ill-health from the time of his first arrest. In Giltspur Street Compter, where he was first lodged, he showed symptoms of delirium tremens, and admitted that he had been addicted to the excessive use of stimulants. His health improved, but was still indifferent when he was brought up for sentence, and he was an occupant of the Newgate infirmary. He returned from court in a state of gloomy dejection, and in the middle of the night one of the fellow-prisoners who slept in the same ward noticed that he was not in his bed. This man got up to look for him, and found him hanging from the bars of a neighbouring room. He had made use of a piece of rope cut out from the sacking of his bedstead, and had tied his feet together with a silk pocket-handkerchief. The prison officers were called, but Watts was quite cold and stiff when he was cut down. Strange to say, a second suicide occurred in Newgate the same night, that of a prize-fighter named Donovan, tried the same day, and convicted of manslaughter. Sentence of death had been recorded against Donovan, who, like Watts, had seemingly been overcome with sudden despair.
In 1853 a second case of gigantic fraud alarmed and scandalized the financial world. It outshone the defalcations of Watts. Nothing to equal the excitement caused by the forgeries of Robert Ferdinand Pries had been known before in the city of London. He was a corn merchant who operated largely in grain. So enormous were his transactions, that they often affected the markets, and caused great fluctuations in prices. These had been attributed to political action; some thought that the large purchases in foreign grains, effected at losing prices, were intended by the protectionists to depress the wheat market, and secure the support of the farmers at the forthcoming election; others, that Napoleon III., but recently proclaimed Emperor of the French, wished to gain the popularity necessary to secure the people. Few realized that these mysterious operations were the “convulsive attempt” of a ruined and dishonest speculator to sustain his credit. Pries, although enjoying a high reputation in the city, had long been in a bad way. His extensive business had been carried on by fraud. His method was to obtain advances twice over on the same bills of lading or corn warrants. The duplicates were forged. In this way he obtained vast sums from several firms, and one to which he was indebted upwards of £50,000 subsequently stopped payment. Pries at length was discovered through a dishonoured cheque for £3000, paid over as an instalment of £18,000 owing for an advance on warrants. Inquiries were instituted when the cheque was protested, which led to the discovery of the forgeries. Pries was lodged in Newgate, tried at the Old Bailey, and transported for life.
Another set of frauds, which resembled those of Pries in principle, although not in practice, were soon afterwards discovered. These were the forgeries of Joseph Windle Cole. This clever but unscrupulous trader proposed to gain the capital he needed for business purposes by raising money on dock warrants for imported goods which had no real existence. When such goods arrived they were frequently left at a wharf, paying rent until it suited the importer to remove them. The dock warrant was issued by the wharfinger as certificate that he held the goods. The warrant thus represented money, and was often used as such, being endorsed and passed from hand to hand as other negotiable bills. Cole’s plan was to have a wharf of his own, nominally occupied by a creature trading as Maltby and Co. Goods would be landed at this wharf; Maltby and Co. would issue warrants on them deliverable to the importer, and the goods were then passed to be stored in neighbouring warehouses. The owners of the latter would then issue a second set of warrants on these goods, in total ignorance of the fact that they were already pledged. Cole quickly raised money on both sets of warrants. He carried on this game for some time with great success, and so developed his business that in one year his transactions amounted to a couple of millions of pounds. He had several narrow escapes. Once a warrant-holder sent down a clerk to view certain goods, and the clerk found that these goods had already a “stop” upon them, or were pledged. Cole escaped by throwing the blame on a careless partner, and at once removed the “stop.” Again, some of the duplicate and fictitious warrants were held by a firm which suspended payment, and there was no knowing into whose hands they might fall. Cole found out where they were, and redeemed them at a heavy outlay, thus obtaining business relations with the firm that held them, which were soon developed, much to that firm’s subsequent anger and regret. Last of all, the well-known bankers Overend and Gurney, whose own affairs created much excitement some years later, wishing to verify the value of warrants they held, and sending to Maltby and Co.’s wharf, found out half the truth. These bankers, wishing for more specific information, asked Davidson and Gordon, a firm with which Cole was closely allied, whether the warrants meant goods or nothing. They could not deny that the latter was the truth, and were forthwith stigmatized by Mr. Chapman, Overend and Gurney’s representative, as rogues. But Overend and Gurney took no steps to make the swindle public, and therefore, according to people of more rigid principle, became in a measure a party to the fraud.
The course of the swindlers was by no means smooth, but it was not till 1854 that suspicion arose that anything was wrong. A firm which held a lot of warrants suddenly demanded the delivery of the goods they covered. The goods having no existence, Cole of course could not deliver them. About this time Davidson and Gordon, the people above-mentioned, who had fraudulent warrants out of their own to the extent of £150,000, suspended payment and absconded. This affected Cole’s credit, and ugly reports were in circulation charging him with the issue of simulated warrants. These indeed were out to the value of £367,800. Cole’s difficulties increased more and more; warrant-holders came down upon him demanding to realize their goods. Cole now suspended payment. Maltby, who had bolted, was pursued and arrested, to end his life miserably by committing suicide in a Newgate cell. Cole too was apprehended, and in due course tried at the Central Criminal Court. He was found guilty, and sentenced to the seemingly inadequate punishment of four years’ transportation. Davidson and Gordon were also sentenced to imprisonment.
A more distressing case stands next on the criminal records—the failure and subsequent sentence of the bankers Messrs. Strahan, Paul, and Bates, for the fraudulent disposal of securities lodged in their hands. This firm was one of the oldest banking establishments in the kingdom, and dated back to the Commonwealth, when, under the title of Snow and Walton, it carried on business as pawnbrokers. The Strahan of the firm which came to grief was a Snow who changed his name for a fortune of £200,000; he was a man esteemed and respected in society and the world of finance, incapable as it was thought of a dishonest deed. Sir John Dean Paul had inherited a baronetcy from his father, together with an honoured name; he was himself a prominent member of the Low Church, of austere piety, active in all good works. Mr. Bates had been confidential managing clerk, and was taken into the firm not alone as a reward for long and faithful service, but that he might strengthen it by his long experience and known business capacity. The bank enjoyed an excellent reputation, it had a good connection, and was supposed to be perfectly sound. Moreover, the partners were sober, steady men, who paid unremitting attention to business. Yet even so early as the death of the first Sir John Paul, the bank was insolvent, and instead of starting on a fresh life with a new name, it should then and there have closed its doors. In December 1851 the balance sheet showed a deficiency of upwards of £70,000. The bank had been conducted on false principles; it had assumed enormous responsibilities—on one side by the ownership of the Mostyn collieries, a valueless property, and on the other by backing up an impecunious and rotten firm of contractors with vast liabilities and pledged to impossible works abroad. The engagements of the bank on these two heads amounting to nearly half a million of money, produced immediate embarrassment and financial distress.
The bank was already insolvent, and the partners had to decide between suspending payment or continuing to hold its head above water by flagitious processes. They chose, unhappily for themselves, the latter alternative. Money they must have, and money they raised to meet their urgent necessities upon the balances and securities deposited with them by their customers. This borrowing continued, and on such a scale that their paper was soon at a discount, and the various discount houses would not advance sufficient sums to relieve the necessities of the bank. Then it was that instead of merely pledging securities, the bank sold them outright, and thus passed the Rubicon of fraud. This went on for some time, and might never have been discovered had some good stroke of luck provided any of the partners with money enough to retrieve the position of the bank. But that passed from bad to worse; the firm’s paper went down further and further in value; an application to the Committee of Bankers for assistance was peremptorily refused, then came a run on the bank, and it was compelled to stop payment. Its debts amounted to three-quarters of a million, and the dividend it eventually paid was three and twopence in the pound. But worse than the bankruptcy was the confession made by the partners in the court. They admitted that they had made away with many of the securities intrusted to their keeping. Following this, warrants were issued for their arrest, the specific charge being the unlawful negotiation of Danish bonds and other shares belonging to the Rev. Dr. Griffiths of Rochester, to the value of £20,000.
Bates was at once captured in Norfolk Street, Strand. Police officers went down at night to Nutfield, near Reigate, and arrested Sir John Paul, but allowed the prisoner to sleep there. Next morning they only just saved the train to town, and left Sir John behind on the platform, but he subsequently surrendered himself. Mr. Strahan was arrested at a friend’s house in Bryanston Square. All three were tried at the Central Criminal Court, and sentenced to fourteen years’ transportation, passing some time in Newgate en route. Bates, the least guilty, was pardoned in 1858.
Two cases of extensive embezzlement which were discovered almost simultaneously, those of Robson and Redpath, will long be remembered both within and without the commercial world. They both reproduced many of the features of the case of Watts, already described, but in neither did the sums misappropriated reach quite the same high figure. But neither Robson nor Redpath would have been able to pursue their fraudulent designs with success had they not, like Watts, been afforded peculiar facilities by the slackness of system and the want of methodical administration in the concerns by which they were employed. Robson was of humble origin, but he was well educated, and he had some literary abilities. His proclivities were theatrical, and he was the author of several plays, one at least of which, ‘Love and Loyalty,’ with Wallack in a leading part, achieved a certain success. He began life as a law-writer, earning thereby some fifteen or eighteen shillings a week; but the firm he served got him a situation as clerk in the office of the Great Northern Railway, whence he passed to a better position under the Crystal Palace Company. He now married, although his salary was only a pound a week; but he soon got on. He had a pleasant address, showed good business aptitudes, and quickly acquired the approval of his superiors. Within a year he was advanced to the post of chief clerk in the transfer department, at a salary of £150 a year. His immediate chief was a Mr. Fasson, upon whose confidence he gained so rapidly, through his activity, industry, and engaging manners, that ere long the whole management of the transfer department was intrusted to him.