Abstract
The focus of this chapter is on the variety of underhand share-pushing scams that were carried out on the fringes of the British financial sector during the interwar period. Focusing in particular upon the plethora of so-called bucket-shops that were in operation across London at this time, it outlines both the context within which these scams took place and the methods by which they were orchestrated. As this chapter shows, whilst individually the losses suffered as result of these frauds may have been comparatively small-scale, the collective damage that these scams did to investor confidence did still have serious ramifications for the wider financial sector as a whole.
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Notes
Dilwyn Porter (2006) has recently written an excellent chapter on bucketshops in the late nineteenth and early twentieth centuries. However, his focus is primarily on the commercial aspects of the share-pushing industry, rather than its more overtly criminal features.
The Economist (22 December 2012).
In addition, there was also nothing preventing a former bankrupt or convicted criminal from setting up in business as an outside broker (Porter, 2006: 109; Thomas, 2013: 198–200)..
This speculative growth was important both in the sense that it meant that more new (and often inexperienced) investors were encouraged to invest in the stock market (thereby increasing the pool of potential victims for them to target) and in the fact that it resulted in the formation of thousands of new joint-stock companies.
The Sydney Morning Herald (22 January 1926), p. 11.
The Manchester Guardian (15 June 1929), p. 18.
Ibid., p. 8.
‘Court of Bankruptcy: Wheeler, Sir Arthur, Baronet’ (1931), PRO, B 9/1188.
The Economist (7 March 1931), p. 504.
Ibid., p. 504.
News of the World (22 January 1928), p. 11.
Ibid. (5 February 1933), p. 8.
Daily Mail (29 April 1926), p. 9.
Predictably, Factor chose a location close to the heart of the City, taking out office space in the imposing Walmar House, Regent Street, for his sham brokerage business.
Indeed, there were numerous stories of individuals who, after receiving their initial dividends, decided to reinvest all their life savings in Factor’s sham enterprise. See The Register (30 April 1926), p. 15.
Daily Mail (26 March 1926), p. 3.
See ‘An Interview with Crime Writer John William Touhy’ (22 July 2001). Available online at: http://www.americanmafia.com/Feature_Articles_151.html (accessed: 27 April 2014).
During this period, Factor also went by the aliases of ‘Mr H. Guest’ and ‘Mr Davis’. See The Times (28 October 1930), p. 5.
The Times (23 June 1931), p. 5.
Other speculative concerns peddled by the Broad Street Press during this period included, Hecla Consolidated Gold Mines, Allied Mines Syndicate, and Asbestos and Holdings Trust. See Daily Mail (28 February 1932), p. 11.
The Times (28 October 1930), p. 5.
Daily Mail (26 March 1926), p. 3.
There were persistent rumours during this period that a number of prominent members of the Royal Family had been duped into giving thousands of pounds to Factor (Touhy, 2001: 132).
The Straits Times (28 February 1932), p. 11.
The Times (9 July 1931), p. 11.
Ibid. (10 February 1932), p. 14.
Factor famously even went as far as staging his own kidnapping to avoid being extradited back to Britain (Touhy, 2001: 143–149).
The Manchester Guardian (19 July 1938), p. 7. He was also rumoured to have collaborated with Factor on a separate scam involving bogus outside brokers called the Cambrian Trust and British Allied Estates, which, if reports are to be believed, netted the pair close to £500,000: HC Deb (15 December 1937), vol. 330 cc. 1175–1238, p. 1209.
The Times (30 May 1931), p. 14. Newman (1984: 62–65) has identified 43 bogus financial newspapers and reviews that were in circulation in the years between 1926 and 1937, although, as Porter (2006: 119) notes, the figure is likely to have been far higher.
The Manchester Guardian (30 May 1931), p. 16.
The Manchester Guardian (19 July 1938), p. 7.
Daily Mail (11 July 1934), p. 6; ‘Activities of Maurice and Alexander Singer: International Fraud’ (1927–1939), PRO, MEPO 3/2925.
The Times (7 July 1927), p. 5.
Although it was rumoured that he was also involved with Ernest Harborow in a shady brokerage outfit called the Universal Consideration Company. See The Times (21 January 1938), p. 12.
Daily Mail (11 July 1934), p. 6.
Ibid. (10 July 1934), p. 3.
The Times (7 December 1935), p. 4.
Of course, this is not to say that, prior to the 1930s, share-pushers and dishonest financiers were simply ignorant of the potential power of the press. During the 1890s and early 1900s, for example, there were countless reports of sham financial newspapers and bogus investment periodicals being freely distributed around Britain in order to promote disreputable share-pushing schemes (Nicholls, 1935: 122–123; Porter, 2006: 115–116). In addition, it is obviously also worth remembering that, for much of this period, it was almost taken as a given that those involved in shady company promotions would pay large bribes to journalists and editors in the financial press to ensure that their share issues got favourable coverage (Porter, 1986: 3–8; Robb, 2002: 116–118).
‘Henry Isaac Rothfield: Sentenced to 4 Years Penal Servitude for “Share Pushing”: Enquiry into Means by Which He Obtained Copy of a Police Report to the Official Receiver’ (1937), PRO, MEPO 221/OS/49.
The Manchester Guardian (18 September 1937), p. 17.
The Queenslander (17 August 1938), p. 31.
Ibid.
The London Evening News (19 August 1938), p. 7.
‘Stanley Spiro: Record’ (1938), PRO, MEPO 3/1467.
The firm was put up for sale owing to the fact that all the original partners had died. See The Manchester Guardian (25 March 1938), p. 17.
In addition, he also began publishing his own bogus financial publication – the Financial Review – which was circulated to the public at large (albeit with the Maclean and Henderson name on the front). See The Glasgow Herald (9 September 1938), p. 12.
The Manchester Guardian (25 March 1938), p. 17.
The Glasgow Herald (9 September 1938), p. 12.
Board of Trade, Share-Pushing: Report of the Departmental Committee Appointed by the Board of Trade 1936–37, Cmd. 5539 (1937), p. 17.
HC Deb (10 November 1936), vol. 317 cc. 672–674.
In addition, it also recommended that all undischarged bankrupts should be disqualified from registering as dealers in stocks and shares. See Board of Trade, Share-Pushing, pp. 67–69.
As the judge at one share-pushing trial ruefully noted, such frauds were only ‘rendered possible by the unhappy fact that the public have been willing to believe the things that have been said to them’. See The Manchester Guardian (20 March 1937), p. 17.
The Manchester Guardian (22 November 1938), p. 14. In a similar vein, a contemporary Police Detective-Inspector also found that, even after they had been swindled out of their money, many share-pushing victims were still unaware of the difference between an ‘outside broker’ and a registered Stock Exchange Stockbroker (Nicholls, 1935: 151).
Indeed, so well-publicised were the exploits of Factor et al. that some sharepushers seem themselves to have been ‘genuinely puzzled’ at how easily ‘big money came our way from investors’. See The Queenslander (17 August 1938), p. 31.
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© 2015 Matthew Hollow
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Hollow, M. (2015). Rogue Financiers: Fakers, Confidence Tricksters, and Share-Pushers in Britain between the Wars. In: Rogue Banking: A History of Financial Fraud in Interwar Britain. Palgrave Pivot, London. https://doi.org/10.1057/9781137360540_4
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DOI: https://doi.org/10.1057/9781137360540_4
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