The Downfall Of A Victorian Fraudster
If today you stand on the confluence of Cannon Street, Walbrook and Bloomberg Arcade, you’d be roughly inside The Coopers Arms. In the 1890s when Samuel Heibuth was Mine Host, the Pub stood at 19 Budge Row EC4N now buried under steel and glass, a result of the devastation caused during the Blitz.
Budge Row linked Wallbrook and Cannon Street with Queen Victoria Street. In 1356 it is known as Bogerowe, Begerow in 1376 and by 1560 the spelling was Budgrowe. This was once the neighbourhood of the dealers in budge or lamb-skin, which were used as trimming for robes. In the old Lord Mayor’s processions of London there were, towards the front of the procession, the Budge Bachelors, dressed in blue gowns trimmed with budge fur.
Anyhow, I digress, so back to 1892. Had we stopped off to sample what I’m sure were the fine ales served by Samuel Heibuth and had been in his establishment around lunchtime, I’m certain that a number of his clientele would have dropped in for a libation from the adjoining premises at number 20, the home of Liberator Building Society.
The Liberator Building Society had been set up and was controlled, along with the London and General Bank by the villain of the piece, Jabez Spencer Balfour.
Balfour was a flamboyant and colourful character, who through his rise, first as an Administrator, and secondly as a Liberal Member of Parliament became a popular figure in the Victorian press.
He was born in 1843 and was the third child of James & Clara Balfour. His childhood was spent at number 10 Alfred Road, Marylebone (now in the shadow of the Westway).
Jabez was brought up in a devout Baptist household, in fact he was probably named after Jabez Burns, a leading Baptist Minister and friend of the family. Jabez is a Hebrew name, appearing in the Book of Chronicles. Its translation into english is “he makes sorrowful” which would prove to be a portent for the future.
However, conflicting with his Mothers piety was his Fathers intemperance when it came to the demon drink. James was an alcoholic and a somewhat inveterate liar. He managed to hold down a position as a Messenger at the House of Commons but seems to have garnered a reputation for the falsehoods that he peddled, the biggest of which was that he had fought at the Battle of Trafalgar.
As a young man Jabez had studied abroad and returned to gain a position working for the poet and translator Theodore Martin. He proved himself to be a remarkable administrator, entering public service in 1871 with the Croydon school board, the town in which he then lived. He was well respected for his organisational skills and friendly demeanour and between 1883 and 1884 he served as the first Mayor of the newly created borough of Croydon. This was sandwiched in between his terms as Member of Parliament for Tamworth and Burnley.
With his Bona Fides as an all round thoroughly good chap firmly in place, Jabez branched out into the world of finance and along with other City financiers opened the London and General Bank in 1882 and the Liberator Building Society in 1888.
Thanks largely to Balfour’s connections, through family and with the Nonconformist community, its assets quickly increased to become the largest building society in the country. The Liberator promised to invest its depositors’ money in building affordable houses for working families. Unfortunately Jabez actually lent to speculative property schemes that he was involved in, as well as to other parts of his empire.
To keep up the appearance of pillar of the community and successful Businessman, he overinflated the asset value of his firms. Along with this he set up fictitious transactions between these companies, so that he could claim they were growing at a fast rate and loot money from them for his own personal use.
The embezzlement meant that Balfour’s companies had to resort to borrowing large amounts of money, both from the building society and elsewhere, so that they could pay dividends. Eventually, their debt grew so large Balfour was unable to find anyone to lend him money. In 1892 a business that had borrowed £2m from Balfour’s bank, failed and in the resulting melee the London and General Bank found itself unable to meet its financial commitments.
Balfour reacted immediately by closing the doors on both the Bank and the Liberator and fled the country to Argentina leaving his directors to carry the can for the blatant inaccuracies and falsehoods in the accounting.
Overall, the Balfour Group owed £7m (£750m in today’s money) to creditors. This gigantic sum was secured against a small amount of mostly worthless assets. Those who put their money into the building society, somewhere around 25,000 lost almost everything.
Half were over 60 years of age with limited means. A 70-year old spinster from Hertfordshire went mad and a bookseller in Peckham cut off his own head. Several directors were arrested and criminal proceedings were started, However the main defendant was still missing.
The task of apprehending Jabez and returning him to these shores to face trial fell to Inspector Frank Froest of the Metropolitan Police.
Froest was a tenacious character, described as looking like a “Prussian Field Marshall“. He was known on the force as “The man with the iron hands” due to his tremendous strength. In all he doesn’t sound like the sort of person you would want to mess with! He was dispatched to follow Balfours trail, which eventually found him in Argentina.
Meanwhile, Balfour had ended up in Buenos Aires, posing for some time as a reputable businessman. However its likely that he got wind of Froest’s pursuit and moved around a thousand miles East to the city of Salta near the border with Chile, where he purchased a Brewery.
After a year of following Balfours trail, Froest finally caught up with the rogue financier and sought to arrest him, however, this was hampered by local and Government officials. Back in London, the Government were under pressure to secure the return of Balfour to stand trial, but the legal arguments concerning his extradition seemed to be insurmountable.
Fed up with waiting for the courts to settle the matter, Frank Froest took matters into his own hands and kidnapped Balfour, personally frogmarching him up the gangplank to board the steamer “Tartar Prince” back to the Britain.
Balfour was committed for trial at the Old Bailey on 17 May. The media dubbing him “The Napoleon of finance“.
He was convicted on 28 November 1895 and sentenced to 14 years’ imprisonment with hard labour. As Mr Justice Bruce sentenced Balfour, he said, “You will never be able to shut out the cries of the widows and orphans you have ruined.”
Balfour made no reply, but later in the holding cells is said to have asked ‘‘I say, is there any chance of lunch before they take me away?”
He served eleven years of his sentence, all of which at Portland Prison near Weymouth.
On his release he wrote his story in the best-seller “My Prison Life“, but throughout the rest of his life showed no remorse for the victims of his fraudulent activities. He then sets himself up at the age of 71 as a Mining Engineer and takes a job as a consultant in a tin mine in Mandalay. On his return he took another mining position in Newport in Wales. On the 23 February 1916 he boarded the Fishgaurd Express at Paddington and died of a heart attack en route.
And so there ends the story of Jabez Spencer Balfour. From what I’ve read researching this piece, a man with no redeeming qualities whatsoever.