SEVEN

The Grappler

When Ernest Terah Hooley came to London, he was ‘determined to make a million or go smash’.¹ He did both. In 1896 he was unknown; by 1897 his name was an international byword for conspicuous financial success; by 1898 he was bankrupt. There is a myth that Hooley was a commercial visionary who was able to spot those industries destined for future success, and that his only failing was his personal extravagance. In reality, Hooley had little understanding of high finance, and naïvely assumed that a boom that created rapid and illusory profits would last for ever. Many of his deals were, in his own words, ‘warm [that is, dubious] to the point of sultriness’,² though not actually illegal, but when bribery, fraud and slander were to his advantage he added these weapons to his armoury. His main talents were boundless audacity and the ability to lie copiously and without shame. His fleecing of the investing classes was something about which he remained cheerfully unrepentant to the end of his life.

Ernest Terah Hooley was born in Sneinton, Nottinghamshire, on 5 February 1859. His father, Terah, had a small lace-making business at Long Eaton. Young Ernest assisted his father and was eventually taken into partnership. The Hooleys regularly attended the Baptist chapel, where Ernest played the harmonium. He was a non-smoker and teetotaller, and was often to be heard lecturing others about the sins of alcohol, tobacco and evil speaking. The collection plate was carried by John Charles Cottam, Hooley’s lifelong friend. For both men, the temptation of wealth soon overcame any moral scruples. The orphaned son of a railwayman, Cottam established himself as a company promoter. He used advertising to hike share prices to unreasonable heights, then quickly sold his holdings and walked away leaving the gullible public with worthless investments. Cottam’s rash speculations resulted in his bankruptcy in 1894, but not before his early success had inspired Hooley to follow his example.

At the age of 30 Hooley told his father he was through with the lace trade. With capital of £20,000, he went to Nottingham, where he started dealing in houses, land and breweries. He had always wanted to be an old-fashioned country gentleman, and in 1888 acquired the historic house at Risley Hall and its surrounding farmlands for £5,000. Over the years he spent £100,000 on improving the property. By 1896, with £150,000 in his pocket, he found the Midlands too small for his ambition and, convinced that he had a magic touch with money, determined that from then on he would deal in millions.³

Together with Martin Diederich Rucker, manager of the London branch of bicycle manufacturers Humber and Co. Ltd, Hooley launched a number of subsidiaries. The mid-1890s was a time of massive speculation in the cycle trade. Cycling had become a craze, its popularity established on two crucial developments of the previous decade, the diamond-frame safety bicycle and the pneumatic tyre. Supply could not keep pace with demand. Dozens of new companies were being launched, manufacturing cycles, cycle parts and accessories, and the investing public was happy to snap up shares at a premium. In vain did the financial press utter words of caution. ‘The public was in one of those rare moods when it could be swindled with impunity, and the shady promoter had a right royal time,’ observed Money in retrospect.⁴

Rucker introduced Hooley to Alexander Meyrick Broadley, a barrister and writer, who ever since his defence of the Egyptian revolutionary Arabi Pasha in 1882 was known as Broadley Pasha. Broadley soon became Hooley’s right-hand man and was able further to advance his career by introducing him into high society.

It did not take a business genius to spot that the youthful Pneumatic Tyre Company Limited (Pneumatic), which had been manufacturing the Dunlop tyre since 1889, was a good prospect. According to the anonymous author of The Hooley Book, it was Rucker who suggested that Hooley acquire the business. The asking price was £3 million. Hooley did not have that sum or anything approaching it, but that did not matter, because he had no intention of keeping the company. ‘My great business was to buy something without the money to pay for it, sell it for as much as I could, and get out with the profit’,⁵ he revealed. ‘I was never one to concern myself with what happened afterwards.’⁶ ‘Some people might say that by this method I robbed the public of millions of pounds, but nevertheless I did not do anything against the law,’ claimed Hooley shortly after emerging from prison for the third time.⁷

He borrowed the money from ‘colleagues of mine who, if they could not emulate me, could at least stand by in respectful admiration’.⁸ The venture was planned in Ridler’s, a rambling rabbit-warren of a hotel in Holborn, with dark, poky rooms where Hooley conferred with Martin Rucker, Broadley Pasha and Adolph Drucker MP, an ambitious young Dutchman with an inheritance that Hooley was happy to assist in spending. Hooley, ‘alert in movement, quick of speech and impetuous in manner . . .’,⁹ was unable to sit still for long and dodged about jotting ideas down on scraps of paper. Artists, the financial press and advertising agents arrived, and articles and prospectuses were written and dispatched. Hooley took no chances, making large payments both in cash and shares to journalists to ensure their approval.

Many of the visitors to Ridler’s were titled gentlemen, for Hooley liked to place ‘ornamental directors’ on the boards of companies he promoted and was willing to pay handsome inducements. These peers would later find they had been saddled with duties they had not anticipated and shares they could not sell, and that Hooley, once having disposed of the company, had no interest in either it or them. Chief among his noble ‘front-sheet men’ was the young Earl de la Warr, who, like many others, would learn to regret his involvement with Hooley.

Having bought Pneumatic for £3 million in a deal approved on 13 April and finalised on the 25th and added his ‘names’ to the Board, Hooley relaunched what was ‘practically the same business’¹⁰ as the Dunlop Pneumatic Tyre Company Limited (Dunlop) on 12 May for £5 million. It was a magnificent coup, and one that made his reputation. ‘On the strength of the Dunlop “deal” Mr Hooley came to be regarded as the Napoleon of finance, at whose word capital could be created by the million and fortunes could be made as if by a magician’s wand.’¹¹

That the public was willing to pay such an inflated price was only partly because of the cycling craze, the massive advertising campaign and favourable articles in the financial press. Hooley also added extra value to the mix by making high publicity offers to buy out Dunlop’s potential rivals, deals that he had no intention of honouring.

Pneumatic had granted licenses to the Beeston Pneumatic Tyre Company Limited (Beeston) and the Grappler Pneumatic Tyre Company Limited (Grappler) to manufacture Dunlop tyres. Neither of these companies had traded profitably. The licences were clearly worth something to Beeston and Grappler, but they were not transferable in the event of a takeover by another person. Exactly when Hooley saw the Beeston licence is unknown, but his solicitors had a copy of the Grappler licence by 6 May 1896 at the latest, six days before the Dunlop prospectus was to be published. He must therefore have known that, if he bought out these companies, he would not acquire the licences. Hooley’s plan for both companies was to make a generous offer for their shares shortly before the Dunlop launch, and later to extricate himself from the deals with the excuse that the licences were not what he had supposed them to be, relying on the fact that the investing public would not have detailed information about the licences. Hooley also planned to make a personal profit, buying up Beeston and Grappler shares cheaply before making his offer, which he knew would increase their value, then quickly disposing of them before the deal collapsed. In neither case did this scheme go entirely to plan. Two years later the public exposure of Hooley’s blatant share-rigging was to contribute to his eventual downfall.

On 10 April 1896 Mr Harry John Lawson, chairman and managing director of Beeston, was visiting the offices of the Humber Company when Hooley, whom he had never met, unexpectedly appeared and bought 20,000 unallocated Beeston £1 shares for £25,000. The company had traded at a loss in the preceding year but prospects were thought to be good. The next day the issued shares, which in the light of the cycle boom had been exchanging hands for £2, jumped to £4. But Hooley was far from finished with Beeston. He offered to buy out the company at an extraordinary £8 per share: ‘cycle shares promise to become as inflated as the tyres’, observed the Financial Times on 27 April as Beeston prices careered up to £6 10s. ‘These same shares eighteen months ago could be procured at 3d apiece.’¹²

On 30 April the offer was discussed at an extraordinary general meeting of the shareholders. The mood of the meeting was to sell, but Lawson was against the move and spoke eloquently about the past history of the company, of the excellence of its tyre, which he claimed was better even than those made by Pneumatic, and the ‘enormous’ future prospects, predicting that in the following year either Beeston would buy out Dunlop or Dunlop would buy out Beeston – ‘either way we will divide the trade between us’. He advised the shareholders against accepting the offer on the grounds that they would make much more in the long run: ‘he thought the trade was boundless.’¹³ Only a few months previously Beeston shares had been worth 1s, ‘now, I may say, without being presumptuous, that if we are not doing it now, we soon shall be running neck and neck with the £5,000,000 company’.¹⁴ A Dr Redmond responded that he had come to the meeting intending to vote to accept the offer, but Mr Lawson’s speech had entirely altered his opinion. If it was worthwhile for Dunlop to offer £8, then it was worthwhile for Beeston to hold the shares. The meeting agreed and voted unanimously to reject the offer. A hearty vote of thanks for the chairman was carried with acclamation. Hooley must have been staggered at the result, but it played right into his hands, as he now had neither the trouble nor the expense of getting out of a deal he had never intended to complete.

Beeston shares continued to ride high, and Hooley further enhanced their value by backing a deal in which Beeston made a profit of £30,000 paid in shares. On 7 May, on the basis of this paper profit, Beeston declared a 100 per cent dividend of £30,000 and borrowed the necessary cash through Hooley. Meanwhile, the demand for Beeston shares had enabled Hooley to dispose of his holdings, and by 16 May he had sold all 20,000, making a personal profit of over £80,000.

The Irish-based Grappler Company had been formed in April 1893 with capital of £75,000 in £1 shares. By April 1896 a great deal of its capital had gone, it had never paid a dividend and was trading at a loss. The shares were then quoted at between 1s 9d and 4s. From that time on, however, and for no very obvious reason, the price began gradually to creep up and eventually reached the wholly unwarranted heights of 14s. Someone, it seemed, was quietly buying up Grappler shares. Although it was never proven, the buyer was almost certainly Hooley, who had arrived in Dublin with Rucker on 13 April 1896. How much Rucker knew of Hooley’s real intentions regarding Grappler has never been established.

Hooley’s plans appeared to be marching on without hindrance, but he reckoned without the persistent plain-speaking of Frederick Faber McCabe, editor of the Irish Field and Gentleman’s Gazette, a weekly paper devoted to the manly pastimes of hunting, fishing, racing and cycling, with a regular financial column called ‘City Notes’. McCabe focused a great deal of his attention on share dealings in the bicycle trade, and became alarmed at the Grappler developments. In March 1896, when the company tried to increase its capital by an appeal to the shareholders, the Field commented:

with Irish shareholders the more unsuccessful a company has been the longer they stick to it, provided only that the directors hold out some hope, and continue to ask for more money. Such has been the history of the Grappler Pneumatic Tyre Company. . . . We have repeatedly told the shareholders to close their pockets to these appeals.¹⁵

This enraged Grappler’s chairman, Joseph Tumulty. The Field’s city column was highly influential and its criticisms of the performance and prospects of Grappler were instrumental in slowing the rise in share prices. McCabe was at some pains to highlight those occasions where Tumulty had been sparing with the truth. While Tumulty had told the shareholders that the company was making profits, these, the Field pointed out, were only gross profits, that is, the difference between cost and sale price. The statement had not taken into account contingent liabilities, notably the expense of repairs carried out under guarantee.

In April rumours began to fly around Dublin, first that Mr Dunlop himself (who was long retired from the tyre business) had joined the Grappler board, then that the Grappler patents were to be bought by Pneumatic. On the basis of these rumours the shares shot up to 30s, but once the reports were found to be untrue, the price fell back to 10s. Quite who was spreading these stories was never discovered. It could have been either Hooley or Tumulty – although it was more Tumulty’s style to omit unpalatable truths than to concoct lies. In any case, on 18 April the Field strongly advised investors to sell their Grappler shares.

On 30 April Hooley and Rucker, together with their Irish stockbroker Mr Daniel Bulger, went to the Dublin Stock Exchange, where Bulger bought up as many Grappler shares as he could. Rucker later denied that he had ever bought any such shares or even that he had understood what was going on. They then proceeded to the Grappler offices, where they met Russell Dowse, the managing director. Rucker, introducing Hooley as the man who had bought up Pneumatic, got straight to business, saying that it was no good beating about the bush but they had come to buy the company and asked that a board meeting be held. Hooley questioned Dowse about Grappler’s capital and debentures, made some notes and offered to buy out the company at £4 a share, a price that caused Dowse to open his eyes wide in astonishment.

Hooley’s intentions at that point may be judged from a telegram he sent on his return to London on 1 May to Mr William J. Watson, a Nottingham solicitor who had acted for him in a few small matters. ‘Think you might buy yourself a few Grappler Tyre ordinaries for a sharp turn.’¹⁶

On the following day Hooley and Rucker met Dowse and Tumulty in the presence of Grappler’s solicitor Mr Clay, at Rucker’s office in Ely Place, Holborn, where Hooley repeated the offer. Four pounds was a ridiculous price, but Tumulty knew about the Beeston negotiations and thought he could get more. He was careful not to express any doubts about the licences. If Hooley thought they were valuable to him, Tumulty was not the man to argue. Eventually a price was agreed of £385,000 for all the shares and assets of the company. A deposit of £10,000 was payable, with a further £15,000 when the shareholders had confirmed the agreement. An appointment was made for later that afternoon for Mr Hooley’s solicitor to finalise the paperwork, but the solicitor did not arrive and another appointment was made for later the same day. Once again the closure of the deal foundered as Hooley wired that the solicitor could not come. Soon afterwards, Hooley sold all his Grappler shares.

The Field must have had good sources of information, for by 2 May its message to its readers had taken an unexpected direction. While the editor had not changed his opinions on the long-term future of Grappler, he suggested that investors who liked a gamble should buy Grappler shares for a ‘short turn’,¹⁷ but understandably did not reveal his reasons. These became obvious when Hooley’s solicitors, just in case no one had heard about the remarkable offer, published details in the Dublin newspapers. The share prices jumped again.

Tumulty waited for the deal to be concluded. He also waited for the deposit. An appointment was made for Hooley to go to Dublin, but he sent a telegram saying that his solicitor would be unable to attend. As time passed and nothing happened Tumulty showed himself to be more than equal to the dubious prevarications of Hooley. On 7 May, just five days before the Dunlop floatation, he wrote to Hooley through his solicitors saying that, unless the matter was settled on the following day, he would conclude that the offer was a bogus one and that it had never been the intention of Hooley and Rucker to buy the company. This he threatened to explain to the meeting of the shareholders on the following day.

Hooley called his bluff, but Tumulty was as good as his word, and the shareholders, many of whom had bought up Grappler shares for a ‘short turn’, heard that Hooley and Rucker were trying to get out of the bargain and had only made the offer in order to rig the market. Soon, allegations were published in the Dublin newspapers that warrants were out for Hooley’s and Rucker’s arrest. Telegrams flew back and forth between London and Dublin, and it became common knowledge that those people who had been induced to buy Grappler shares on the basis of the report that the company was to be sold had instituted a criminal prosecution in the event of the agreement not being signed.

Late in the evening of 11 May, Mr Clay went to see Hooley at the Midland Grand Hotel. Rucker was sent for, as was Mr du Cros, director of Pneumatic, and Hooley’s solicitor. Reports of the encounter naturally vary depending on who told the story. Hooley later claimed that he and Rucker were threatened with arrest, but according to Clay he had said only that it would be a dishonourable thing for them to back out of the deal. Clay agreed to wire Dublin on their behalf to find if there was any truth in the rumours that warrants had been issued. At first Hooley refused to sign the papers on the grounds that there was some doubt about the licences, but eventually, at 1 a.m., afraid that their arrest could ruin the Dunlop venture later that day, Hooley and Rucker signed the agreement and paid the £10,000 deposit. At 10 a.m. Clay received a wire confirming that the rumours about the warrants were untrue, but by then he had the signed agreement and the cheque.

Tumulty must have thought he had won, but the Field was blunt. The deal, it said, could never go through because Pneumatic did not grant transferable licences. This was the last thing either Hooley or Tumulty wanted to be made public, Hooley because this was his bargaining card for getting out of the deal at the right time, and Tumulty because he knew that the finalising of the deal would be threatened by the information. On the Stock Exchange, Grappler shares ‘bounced up and down in the wildest manner’,¹⁸ rising to £4 then falling back to £1 5s.

On the morning of 12 May 1896, with a massive fanfare of advertising, the Dunlop Pneumatic Tyre Company Limited subscription list was open to the public. There was an immediate rush for shares, 4 million at £1 apiece and £1 million in debentures.

Meanwhile, Mr Tumulty was trying to finalise the Grappler sale. He was still at odds with the Field, which published an article on 16 May suggesting that the shareholders ought to appoint new directors, since the current ones did not understand the cycle trade. In vain did The Economist of the same date warn investors against companies whose shares had recently been worth a few shillings apiece and were now valued in pounds because of industriously circulated rumours.

On 27 May, by which time Grappler shares had risen to over 40s, Tumulty told a meeting of shareholders that there was no reason to believe the agreement would not be carried out, which must have been a relief, as many of them had bought in recently at high prices. The Field, he said, was ‘a relatively unknown publication . . . either praise or censure from such a quarter is not worth noticing’,¹⁹ and promised that in a very short time the market value of the shares would be much greater. He revealed that the company had made a gross profit of £4,000 in the last four months. A voice from the floor cried out ‘What are the net profits?’²⁰ ‘I am dealing with gross only,’ he responded. ‘I think that is sufficient for the present purposes.’ He advised the shareholders to ‘hold onto your shares hard and fast’.²¹ The meeting voted unanimously to ratify the agreement with Hooley and Rucker. Again, the Field insisted that the deal would not go through. ‘Messers Rucker and Hooley are shrewd men of business, but they must have been led into error in some incomprehensible way.’²²

At another meeting, held on 11 June to discuss the liquidation of the company in preparation for the sale, shareholders were again told to take no notice of rumours. By 20 June the second instalment of the deposit had been paid, and Tumulty was claiming that the Grappler shares were worth even more than the offer price, but there followed a long delay, and the remaining £360,000 did not appear.

On 18 July the Field, which had had its ear to the ground to pick up all the rumours, reported that Hooley and Rucker, claiming that the directors of Grappler had misled them as to the nature of the licence, were pulling out of the deal and taking legal action for the return of the £25,000. On reading this report, many of the shareholders sold their Grappler shares. Tumulty was furious, and on Monday 20 July he was in court obtaining permission to bring a libel action against the newspaper, which he said had written a false and malicious article with the sole intention of depreciating the shares. The case was heard on Thursday 23rd, and the Field, which had no supporting evidence for its allegations, was obliged to make a contrite apology, withdraw the article and pay the costs. Tumulty was triumphant, but only briefly. On 24 July Hooley’s solicitors wrote to Tumulty saying that the deal would not be completed on the grounds that the nature of the licence had been misrepresented. On the 25th, the same day the Field published an account of its defeat in court, Tumulty was obliged to send a circular to all the shareholders advising them of the letter. The circular and the letter were published in the Field of 1 August entirely without comment. Grappler shares fell to 20s. The reaction of the shareholders is unrecorded. Many may have believed that they would prosper even without Hooley, and continued to ride the cycling boom as if it would never end.

Hooley’s £25,000 deposit was never returned. Whether or not he made money from selling his Grappler shares at the top of the market – and it was never proven that he was behind the initial rise in share prices – his interest in the company had undoubtedly raised the value of Dunlop. As was his usual practice, he sought only to make a cash profit from the Dunlop venture and retained no personal investment in the company.

For a time the investing public was enthralled by the romance of Hooley’s success. ‘The daring manner in which he treated millions dazzled them,’ observed the Pall Mall Gazette, ‘and they were ready to believe that he would extend to them, by means of some strange power that they did not altogether understand, the same capacity for amassing wealth that he undoubtedly showed in his own case.’²³ It was not only the public who regarded Hooley in this light: ‘the millions I had made before I was forty had turned my head,’ he later admitted. ‘I fondly imagined there was nothing I could not do.’²⁴

Hooley now took a suite at the Midland Grand Hotel, which he established as his London centre of operations. The rooms were in a constant bustle. Everyone wanted to see Mr Hooley. He would breakfast usually with several visitors, then hurry off to examine the post. Printer’s devils brought in proofs of prospectuses, lawyers arrived for consultations, wires went to and fro, transfers were effected and cheques written, with Hooley darting back and forth between the different rooms. Coordinating all this scurrying about was Broadley Pasha.

Many callers simply wanted to borrow money, others had business ideas they wanted to discuss. An American put forward a proposal to market petrol to drive the internal combustion engine, but Hooley did not think the idea had a future and turned him down. Large numbers of visitors were invited to stay to lunch, and there were sometimes several groups eating at the same time, all at Hooley’s expense. At breakfast the tables were laden with fruit, eggs, fish, cutlets, kidneys and bacon. This was repeated, with the addition of expensive wines, for lunch and dinner, with snacks in between. Less welcome to Hooley was the assembly of anxious nobility in the corridor, who sent ‘imploring messages asking to see him, but he treats them with contempt. Once he has got from them all he wants they are of no further use, let them . . . “go off the board” . . . if they are dissatisfied, there are others to take their places.’²⁵

Most of his 1896 flotations were cycle companies, including Singer in June, but in August he was offered the chance of acquiring Bovril. The company, while recognising its international possibilities, had concentrated its efforts on developing the home market. J. Lawson Johnston, the industrious Scotsman credited with the invention of Bovril, and who was certainly the man responsible for its success, must have been seriously misled by someone when he put before the shareholders Hooley’s offer to buy the company for £2 million. ‘The new ship will of course embody, in an enhanced degree, all the advantages of the old one, plus Mr Hooley’s well-known financing facilities and singular capacity for exploiting subsidiary companies the world over . . . We are not financiers: Mr Hooley is; and we must conclude that the business, plus Mr Hooley will be capable of much greater things than it could possibly be without him.’²⁶ Hooley’s business acumen was, as would be seen, illusory, and even if it had been genuine he certainly did not intend to use it for the benefit of Bovril. The resolution to sell was carried unanimously on 13 October, and six weeks later Bovril (British Foreign and Colonial) (Limited) was offered at £2,500,000. The Times, concerned about the glowing estimates of future profits, commented:

A short while ago the business of the old Bovril Company was sold to Mr ET Hooley for £2,000,000, and it is now offered to the public, and incidentally to the old shareholders, for £2,500,000. We must assume, we suppose, that something has happened to add 25 per cent to the value of the concern since the beginning of October, though it is not easy to imagine what it can be.²⁷

In May 1897 Hooley added another famous name to his portfolio: Schweppes. He was then at the height of his success and was determined to live up to it. He had already bought a yacht, the Verena, for £5,000, not because he was interested in yachting but because it was the thing to do. He now found that the splendid Risley Hall had become ‘too small to satisfy my ambitious tastes’,²⁸ and so he bought Papworth Hall Estate in Cambridgeshire for £70,000. As the farms were in poor condition, he bought out the farmers, ejected them and farmed the land himself. Naturally he had to have the best of everything. He spent £250,000 in renovations, £40,000 in furniture and paintings, and £14,500 stocking the cellars with fine wines and cigars for his visitors. ‘The lavish manner in which I spent my money made me the most popular man in England,’ he claimed.²⁹ ‘The public fairly hungered for news of my latest extravagance.’³⁰

A great believer in the flamboyant gesture, he once bought 200 tons of linseed cake and sent the same number of carts to St Ives to bring it back, the horses decorated with red, white and blue ribbons. ‘I was the greatest advertiser the world has ever known,’ he declared; ‘the more they talked about me the more they bought shares when I floated a company.’³¹ One or two farms were not enough, however, and ultimately he owned about twenty. He later estimated that he was living at the rate of £100,000 per year, of which £10,000 was losses on farming.

Soon after moving in to Papworth he met the under-sheriff of Cambridgeshire and Huntingdonshire, which gave him the idea of becoming sheriff himself. Enquiries were made, strings were pulled, and no doubt money changed hands. Within three months of his arrival Hooley was high sheriff and deputy lieutenant of the two counties, and a magistrate. He was also able to acquire the position of lieutenant of the City of London, a nominal post that required him on public occasions to wear a uniform consisting of a scarlet tunic, blue trousers, a tricorn hat with a white plume and a sword. Some of his titled acquaintances thought he should have a London residence, so he rented 33 Hill Street, Mayfair, for £2,000 per annum, where he entertained all-comers. ‘I made millions and I spent them as though my wealth was inexhaustible,’ he said later.³²

This reckless extravagance also informed his business life. He often entered into contracts only to back out of them, and was therefore obliged to pay compensation. He was not the only man to pay newspapers to ‘puff’ his promotions, but the sums he offered were foolishly large. Later he claimed that he had been blackmailed. Other people preferred to see it as bribery.

Whether or not a financial genius, Hooley was now well enough known to feature as such in music hall and pantomime songs:

He walks into the Stock Exchange, and everybody there
Cries ‘Look out! Here comes Hooley, the famous millionaire!’
He can buy a share for twopence, and sell it for a pound,
When he’s bought St Paul’s Cathedral, he’ll buy the Underground.

It’s Hooley this, and Hooley that, and Hooley everywhere,
And it’s ‘here comes Mr Hooley, the famous millionaire!’³³

His reputation for being able to conjure up money had spread abroad. Early in 1897 he was approached by an American visitor representing a syndicate who wanted to raise a loan to purchase Cuba, the amount being between $150,000,000 and $200,000,000 (about £30 to £40 million today): ‘the Americans had read so much about [Hooley] in the papers they must have thought him capable of anything’.³⁴ Even Hooley knew that the Cuba loan was too big for him, but in August 1897 he was tempted by an approach from the Chinese government asking if he could provide a loan of £16,000,000. A possible £1 million was payable in commission. Excited by the vista that opened before him, Hooley sent agents to China to open negotiations. For two months it looked as though the deal was as good as settled, when quite suddenly it fell through: the arch-bluffer had been bluffed. The Chinese had probably always intended to borrow from the Hong Kong and Shanghai Bank and had sought an advantage by playing off one negotiator against another.

Hooley’s ultimate ambition was to enter parliament and become Minister of Agriculture. In March 1897 he was adopted as Conservative candidate for Ilkeston, and a handsome donation to party funds ensured his admission to the Carlton Club. He was also hoping for a baronetcy in the Queen’s Diamond Jubilee honours list. Since he did not think it would come to him for nothing, he decided to purchase it with good works. He made a donation of a solid gold communion set, profusely decorated with cherubs, to St Paul’s Cathedral (later restoration considerably simplified the design, which had made it impossible to clean) and made a great splash with newspaper interviews about setting up a Jubilee charity fund. He claimed to have set aside £400,000, the annual income of which, amounting to £15,000, would be devoted to the relief of the poor in his district. In fact he did not set aside the money, since ‘fortunately for me nobody felt inclined to come forward and demand the payment of the full amount forthwith’, he admitted. ‘Everybody believed me in those days, which was just as well.’³⁵

Shortly before the Jubilee he promised to give £10,000 to the Nottingham General Hospital Victoria Fund provided that a corresponding sum was subscribed in Nottingham. Hooley had provided £2,000, and, as the collection approached its target, the committee asked for the remainder. The Jubilee over, and no baronetcy in sight, Hooley did not see why he should part with any more money and tried to claim that he had only promised to match funds subscribed by working men. After prolonged and acrimonious negotiations, in December 1897 Hooley was eventually obliged to provide a further £5,220. It must have been a wrench, for by then his account with Lloyds Bank was overdrawn. Careless extravagance in both his personal and business life had finally taken its toll.

Hooley’s reputation was safe as long as the businesses he promoted did well and people were willing to pay inflated prices, but by May 1897 the cycle boom was ending. Foreign imports and overproduction meant that supply began to exceed demand. Even if Hooley took no interest in a company after he had floated it, city analysts were beginning to take a critical look at his record. In July The Economist was reporting that the market in cycle shares had been at a low ebb for some time and many of the companies that had been floated at the height of the boom were unsaleable. Not only had Dunlop shares declined in value, but other industries had suffered – the £1 Bovril shares stood at 17s and Schweppes also saw its premiums shrinking. ‘In the past, no doubt, the mere fact that Mr Hooley was known to be interesting himself in any joint-stock undertaking acted as a powerful lever in the movements of prices. . . . But this personal influence is distinctly on the wane.’³⁶ The Economist was less surprised at the shrinkages as ‘that there should ever have been any premiums upon capital which were obviously greatly inflated at the outset’.³⁷ By August it was reporting that ‘people here have learned to look askance upon Mr Hooley’s peculiar method of regenerating home industrial undertakings by loading them with heavy additions to their capital accounts that represent nothing but the intermediary profits of himself and his financial associates’.³⁸

The Beeston Tyre Company did not survive the downturn and went into liquidation in the following year. Grappler survived a little longer and was eventually reconstructed as New Grappler, with Mr Tumulty still in the chair.

As 1898 opened, Hooley was still riding high in public opinion. A supplement called ‘Men of Millions’ published by the Financial Times in February described him as ‘a young man who has come upon the City during the last two or three years like a whirlwind, and literally carried all before him’.³⁹ His close associates had by now realised that his day was almost done, and the early months of 1898 were unhappy ones in which he did very little business and saw court cases erode his reputation. Many of the visitors to the Midland Grand were creditors, and so Hooley stayed away, preferring to hold business meetings at the Hotel Victoria.

On 12 February, despite knowing that he was on the brink of bankruptcy, Hooley was at Wolferton stud farm near Sandringham with the Prince and Princess of Wales, the Duke of York and an array of earls, lords and ladies, where he bought a brood mare for 360 guineas and was narrowly outbid on his offer of 1,100 guineas for the popular filly Sea Breeze. His outward good humour was a mask for anxiety about a pressing load of litigation, but for a time his reputation was enough to ensure that, when charged with fraud, he would be given the benefit of any reasonable doubt.

On 27 March Thomas Bayley MP brought an action against Hooley for false representation. He had bought some shares in a Hooley promotion, Fairbanks Wood Rim, on the strength of a draft prospectus which had portrayed a substantial factory premises. The final prospectus as issued to the public showed that the company occupied only a small part of that impressive building. The shares had been purchased from a Mr Thomas Lambert, who denied that he was acting as an agent for Hooley, and as a result the case was dismissed.

In Dublin on 8 May a Mr J.H. Naylor, licensed vintner, brought an action for conspiracy to defraud against a group of alleged co-conspirators – Hooley, Harvey du Cros, the managing director of Dunlop, Hooley’s stockbroker, Bulger, and Frederick McCabe of the Field. The action was to recover damages for fraudulent misrepresentation on the formation and floating of the Component Tube Company. This was a small concern that Hooley had bought and then dismissed from his memory; subsequently, in November 1896, Bulger and McCabe had taken over the promotion from Hooley. It was alleged that three of the contracts mentioned in the prospectus were fictitious, and the claim that the company was prosperous was false. Hooley, although served with a subpoena, failed to attend court and later protested that he had nothing to do with the wording of the prospectus. The court found for the defendants.

Adolph Drucker MP, whose lack of business acumen and fondness for alcohol had led Hooley to regard him as a fool who could be milked of his money, finally saw the light and on 10 May sued Hooley for fraudulent misrepresentation. Hooley had offered to relieve Drucker of some ‘practically worthless’⁴⁰ shares in return for others he claimed were worth £8,000. Drucker later found that Hooley had been selling the supposedly worthless shares at a profit, while those he had received in exchange were unsaleable. Drucker had gone to see Hooley to demand his shares back. Hooley refused, but suggested that if Drucker would call upon him the next day he would ‘fix things up’.⁴¹ Drucker later received a telegram from Hooley saying that he could do nothing for him. The court took the view that, while Drucker had made a bad business deal, there was no evidence of fraud.

If Hooley had forgotten all about the unfortunate shareholders in Grappler, they had certainly not forgotten about him. On 17 May Mr Robert C. Reid, a Belfast merchant, brought an action again Hooley and Rucker, claiming damages for ‘fraudulent conspiracy’ and ‘fraudulent misrepresentations’ aimed at inducing him to buy shares in Grappler.⁴² In 1896 Reid had read in the newspapers about Hooley’s offer for Grappler and had bought 100 shares at prices ranging between 37 and 50s. In May 1898 Grappler shares were being quoted at 6s.

Counsel for the plaintiff was Sir Edward Clarke QC. When he revealed Hooley’s and Rucker’s offer to buy Grappler shares at £4, a burst of laughter was heard in court. There could be only two explanations, said Clarke. ‘Either they wanted, having got hold of a lot of shares, to create a market, so that they could get rid of them at a profit, or secondly, that they had got hold of some secret information regarding the prospects of the company and were anxious to secure a good thing.’ Sir Edward suggested that the former was the true explanation.⁴³

Crucial to the defence was whether Tumulty had misled Hooley and Rucker into believing that Grappler’s licence was transferable had Hooley bought the company. Cross-examined by Hooley’s counsel, Mr Stanger, Tumulty admitted that at the time of the meeting in early May 1896 he had known about Hooley’s Dunlop venture and was well aware of the importance of establishing a monopoly over licences to produce Dunlop tyres. Asked if he had told Hooley and Rucker that the Grappler licence was unconditional, he replied evasively: ‘I cannot say that I put it that way.’⁴⁴

Clarke was also careful to question Hooley about the Beeston Tyre offer. Either of the cases examined in isolation might have been looked at leniently, but together there was evidence of a systematic campaign to rig the market, and the court cannot have been unaware of the other cases against Hooley, both those in which he had been given the benefit of the doubt and those still pending.

In his summing-up the Lord Chief Justice made the point that the case was of far greater importance to the defendants than to the plaintiff, in that, if the verdict went against Hooley and Rucker, ‘they would not be entitled hereafter to the reputation and character of honourable men’.⁴⁵ The most important question the jury had to consider was whether the agreement to purchase was bona fide. The one thing that ‘passed his comprehension’ was how the agreement ‘could have been come to with the assent of any legal mind. . . . there had, in fact been no real investigation as to whether there was a licence at all or not.’⁴⁶

On the third day of the trial, the jury, who must have felt their responsibilities weighing upon them heavily, retired shortly before 5 p.m. At 5.10 p.m. they sent out a note: they were unable to agree. The Lord Chief Justice asked if counsel would take a majority verdict, but Stanger said he did not think so and the foreman thought there was no possibility of an agreement after further discussion. The jury was discharged. It was a victory for Hooley, but a brief and bitter one. More than any other case, the Grappler dispute, which was reported in detail, exposed the unpalatable foundations of his dealings: ‘the case has thrown such a strong light upon the financial methods of Mr Hooley and his associates that it has naturally attracted a large amount of public attention,’ commented The Economist.⁴⁷

Although Hooley was victorious over Naylor, the Component Tubes case gathered momentum as increasing numbers of shareholders sought compensation. In mid-May it was reported that nine new actions had commenced and another seventy were pending. By 2 June there were 150, and the numbers were still growing.

On 27 May the Pall Mall Gazette published a devastating analysis of the performance of Hooley promotions. ‘Do the public realise what they have lost by reposing confidence in Mr Hooley?’ it asked,⁴⁸ providing a tabulated list of seventeen companies floated by Hooley that showed a loss in value of £4,300,000 on a total capital of £8,500,000, while shares in other Hooley-promoted companies were unsaleable. The fault was not entirely a result of the downturn in the cycle trade. ‘Over-capitalisation has been the bane of nearly every concern touched by this particular promoter.’⁴⁹ The public had already come to the same conclusion. None of Hooley’s 1898 promotions was successful. In two cases, the take-up of shares was so poor that the subscriptions had to be repaid.

By the end of May Hooley had been warned not to draw from his account at Lloyds Bank, but he took no notice and a number of small cheques were returned. He was asked for an immediate settlement of £3,000 for work done to one of his estates. The man who had once dealt in millions was unable to pay. The Component Tubes writs were piling up – there were eventually to be over 300 – and there was only one way to cock a snook at his creditors: on 8 June Ernest Terah Hooley filed for bankruptcy. To those in the know, the only surprise was that it had happened earlier than expected.

The Economist commented:

Mr Hooley, on his own showing, was very far from being a financial genius. He had a certain boldness of conception, but he was entirely lacking in organising and directing power, and although he obtained millions of profits out of his flotations, at the expense of the public, he became a mere channel through which those profits found their way into the pockets of much cleverer people than himself. Whatever the investigation does, it has undoubtedly shattered the idea that Mr Hooley was a serious financier.⁵⁰

There was initially some public sympathy for Hooley. At the Palace Theatre Miss Julie Macey sang:

Terah–rah Hool–ey–ay!
Terah–rah Hool–ey–ay!
Tear not your wool–I–ay!
Don’t fret and mope–I–ay!
But live and hope–I–ay!
You may yet rule–I–ay!
Terah–rah Hool–ey–ay! ⁵¹

There were suggestions that the St Paul’s communion set should be handed back to help pay off Hooley’s creditors, but Canon Scott-Holland wrote:

Hooley represented a more genial and rowdy type of daylight gambling; popular, loud, open-handed, showing his hand, sharing his spoils, working hard for his money, with a strange perverted British–Philistine belief in the rightness of his cause. There is nothing sinister or crafty about the man. . . . He simply uses, with blunt force, all the advantages which a loose money-market allows him . . . ⁵²

Hooley’s explanation for his plight was that he had been too generous to others, had paid away huge sums in blackmail, and had been ‘surrounded by incompetent men’.⁵³ He remained confident that he would win over the public again, although when a Telegraph reporter asked about the man who bought shares on the strength of his name, ‘Well, he was a fool,’ said Mr Hooley, curtly. ‘That’s the truth.’⁵⁴ Unsurprisingly, his legal representatives warned him to give no more interviews.

Mr Brougham, the Official Receiver, soon found he had some difficulties. Hooley’s books of account were ‘imperfect and incomplete’.⁵⁵ There was no proper cash book, no ledger showing the dealings with his creditors, no account of his personal expenses and drawings, neither had he ‘prepared a profit and loss account or balance sheet at any time’.⁵⁶ ‘I suppose I might as well admit’, Hooley confessed in his 1924 memoirs, ‘that I never made the slightest attempt to keep any proper books.’⁵⁷ The claims against him, most of which he repudiated, exceeded the value of his estate by about £1 million.

When Hooley appeared at his public examination before Mr Registrar Hood, it was with a cheerful determination that, if he had been ruined, then he was going to take everyone else with him. Declaring that the chief cause of his failure was the withdrawal of capital by Rucker, he claimed to have paid substantial amounts to his associates in inducements, inflated commissions and bribes, and he was happy to stand in court and name names. On the Dunlop promotion alone, he said he had paid away £50,000 to Earl de la Warr, of which half was for distribution to other directors. His solicitors had received £20,000 each, and he had spent £63,000 on supplying newspaper representatives with options to buy shares at par. Some of these claims were probably true – the counterfoil of a cheque for £1,250 bore the legend ‘quieting papers generally on the pneumatic’.⁵⁸ He also claimed to have paid the Financial Post £1,000 for the privilege of writing his own article, which the editor immediately denied, and indeed the correspondence pages of The Times were, for a period, filled with letters from solicitors, nobility, the press and many others who had had dealings or acquaintance with Hooley, angrily denying either that they had been paid anything at all, or stating that money received had been for demonstrable bona fide business purposes. J. Lawson Johnson announced that, so far from receiving money from Hooley as alleged, he and his co-director had advanced Hooley funds of £130,000. Earl de la Warr was especially aggrieved. He had taken his duties as a director seriously and had had to chair meetings of angry shareholders in cycle companies Hooley had promoted. He said that he had not received anything like the sums Hooley said he had paid, and those he had received he considered he had earned.

Hooley’s accusations were so numerous that Hood departed from the usual practice in bankruptcy hearings and permitted those men who had been named to appear in court and make their denials. This happened on 10 August, when Mr Hooley was absent on grounds of ill health. Mr Mackworth Praed of Lloyds Bank commented that on one occasion when Hooley came to the bank for an advance he had said: ‘You know, Mr Praed, that I have lied to everybody, but have always told you the truth.’⁵⁹

On 28 July Rucker went to see Hooley at the Brunswick Hotel, in response to a telegram requesting him to do so. Hooley, representing that his wife and children were in danger of starving, said that unless the Humber directors helped him he would ‘make it very hot for them’⁶⁰ on his next examination. A payment of £1,500 was ultimately agreed, but four days later Hooley claimed in open court that he had been approached by Earl de la Warr, Rucker, Broadley and Bradshaw, a broker and creditor, on behalf of the Humber directors, who offered him a bribe to commit perjury. He also accused Broadley of having diverted company money to his own use. All four gentlemen were subject to an order to commit them to prison for contempt of court.

Mr Justice Wright commented on Hooley:

so far as I have had an opportunity of observing him in the box on this and other occasions . . . he is not a witness on whose evidence it would be safe to rely. He is rash, reckless and inaccurate, and sometimes seems to be under illusions which he treats in his evidence as if they were real. So much that is unfounded is mixed up with what is true in his statements that it is hopeless to attempt to disentangle what is true from what is not.⁶¹

The case against Bradshaw was dismissed for lack of evidence, and Broadley and de la Warr were simply asked to pay costs. Rucker had undoubtedly agreed to pay Hooley money, though Wright, accepting Rucker’s explanation, was obliged to wonder if an offer of money to induce someone to tell the truth was indeed a contempt of court. Rucker was fined £200.

On 1 March 1899 Mr Brougham submitted a report revealing that ledger number 1, which recorded Hooley’s dealings with ‘certain persons’ and last seen in his possession in February 1898, was missing, and books 2 and 3 had been clumsily renumbered to conceal its absence. Ledger 2 – now renumbered 1 – which contained details of the Beeston deal, had been removed from the London office by Hooley in April 1898 and was nowhere to be found. A cash book had been recopied omitting all reference to the missing ledgers, the new pages rebound in the old covers. A petty cashbook and a diary for 1898 both seemed to have been destroyed, and the counterfoils for some cheques had been cut out. Hooley, he said, had ‘concealed, destroyed mutilated or falsified . . . certain books or documents’ and he recommended that ‘an order should be made to prosecute the bankrupt accordingly’.⁶² Ultimately, however, for reasons that were never made clear, the Treasury took no action against Hooley. Perhaps there were too many titled gentlemen who did not want their names mentioned in court. The estate was not realised until May 1903, when, after expenses were paid and mortgages redeemed, the 355 unsecured creditors eventually got a payout of 4s 4d in the £1.

Hooley was able to retain both Risley and Papworth, which he claimed had been transferred to his wife as presents by some friends, and lived the comfortable life of a country gentleman, although he often complained that all his aristocratic friends had deserted him, for reasons he seemed unable to comprehend. He bought and sold estates in the names of nominees, and had resolved to have no more to do with company promotions, but in 1900 the lure of millions proved too strong and he bought out a number of companies which he claimed would win him back everything he had lost.

In 1903 an investment unexpectedly matured. Adolph Drucker, who had been made bankrupt in 1901, had declined into alcoholism. Some years earlier his associates had used a crooked agent to insure his life for £100,000, but they soon found the premiums too expensive. Just as the policy was about to expire, Hooley had agreed to take it on, and thought no more about it. In December 1903 Drucker collapsed in a New York street, and died shortly afterward in hospital. Allegations that he had been murdered were later believed to be unfounded. Hooley described the incident as ‘the best bit of luck I’ve had in years’.⁶³ The luck was short-lived. His new businesses failed, and in 1904, after selling shares in a worthless gold mine, he was tried for conspiracy to defraud, but was acquitted.

Hooley had agreed to provide the trustee of his estate, Duncan Basden, with regular financial statements, but by 1911 Basden realised that these would never be forthcoming and he had Hooley committed to Brixton Prison for five weeks for contempt of court. Hooley was obliged to sell Papworth Hall. In 1912 he was in court again on a charge of obtaining a £2,000 advance on a land deal with a fraudulent statement. Extraordinarily, given his long career, this was the first time he was found guilty of fraud, and he was sent to Wormwood Scrubs, where he served nine months. He observed: ‘though I knew that a sentence of imprisonment practically meant the end of my career, I was philosophical enough to realise in my heart of hearts that I was more sinned against than sinning.’⁶⁴ There were then claims against him of £250,000 for property deals he had been unable to complete. ‘I had no money to pay any of my creditors, and, furthermore, I hadn’t the slightest intention of finding any,’ he wrote.⁶⁵ Hooley became bankrupt again, and was obliged to sell the Risley estate.

Despite these setbacks, in 1919 he was once again entertaining in style at the Midland Grand Hotel. This time it was the boom in cotton that had attracted his attention, and he floated Jubilee Cotton Mills Ltd, a company whose failure landed him in court once again in 1922 on charges of conspiracy to defraud. He was sentenced to three years in prison and became bankrupt for the third time.

Martin Rucker’s career had also declined. The large sums he had received during his association with Hooley were squandered in unwise specula-tions, and he became a commission agent selling patents from an office in Fenchurch Street. In 1905 he filed for bankruptcy. He died in 1922, aged 67.

When Hooley came out of Parkhurst in 1924 he declared that if he had his time over again he would live the same life. He saw himself as a great public benefactor: ‘if I had done a certain amount of harm to my fellow-beings, at any rate I had also done a very considerable amount of good.’⁶⁶ ‘I am the man who put cycling all over the world,’ he claimed,⁶⁷ and by setting the fashion of appointing ornamental directors, ‘I saved many a noble family from ruin.’⁶⁸ Even in prison he had obtained some consolation from the thought that ‘I had left my mark on the history of the world. . . . I boomed the pneumatic tyre, I had a great deal to do with the coming into being of the motor car. . . . it was I who established Bovril as a world-wide food.’⁶⁹

Hooley’s actual impact on society, stated the editor of Money, was that ‘thousands of investors are now saddled with shares bought at a high price which are now either unsaleable or only realisable at alarming discounts’. He continued:

The common type of the genus promoter is a plausibly clever person, of small education, and a large amount of self-conceit. He deals in but one commodity – money – the very lowest form of industry. His plan of operations is to buy something – it does not matter what – at a very low price, and to sell it for a high one. He may pose as the heaven sent friend of the inventor or as the man who lays the foundation of a new industry. In reality he adds nothing to the world’s wealth, nor one iota to its productiveness. . . . His one mistake is that he never knows when to stop.⁷⁰

Hooley continued dealing in a small way almost to the end of his life, although his final years saw him in very reduced circumstances. No longer the owner of a landed estate, he had returned to his roots and was living at 197 College Street, Long Eaton. His fourth and final examination for bankruptcy took place shortly after his eightieth birthday, when he cut a somewhat pathetic figure. Reminded of his glory days, he commented: ‘I have descended in the financial world since then.’⁷¹ He was still running a small property-dealing business five years later. He died in 1947, aged 88.

Whether the public learned caution from Hooley and his like is doubtful. The editor of Money further commented: ‘When the Hooley fiasco has been forgotten the next big promoter will be able to do the same thing, and to do it with impunity. A new generation of investors will have arisen who knew not Hooley, and the same game will be played out with another set of puppets.’⁷²