Since so many of us now distrust or despise the City of London, regarding it as a den of thieves and shysters, this book should confirm our prejudices. It’s a rattling good story, well-told and written with such lucidity that even readers normally bemused by the financial pages can grasp what went on. The author, Martin Vander Weyer, writes with the authority of an insider. He has been an investment banker himself, which you shouldn’t hold against him, and now as business editor of the Spectator weekly casts a sceptical eye on the goings-on of the money men.
The rogue in question, Gerald Lee Bevan, was not actually quite blue-blooded – that is publisher’s licence. His family were among the founders of Barclay’s Bank and his father was its chairman when it went public. Though his elder brothers were welcomed into the bank, Gerald wasn’t deemed suitable. However, he married well; his wife, Sophie Kenrick, belonged to one of the great families of Birmingham industrialists allied by several marriages to the Chamberlain political dynasty (Joe, Austen and Neville). Sophie became eccentric – Vander Weyer stops just short of saying she was loopy to the tonsils – but the marriage survived while Bevan was riding high. Meanwhile he consoled himself with showgirls and Chinese porcelain. Excluded from the bank, he became a successful stockbroker. Then, in collusion with Clarence Hatry, a bit of a wideboy given to sailing the wrong side of the wind, he took over the City Equitable, a fire reinsurance company, just before the 1914 war. Bevan prudently provided himself with a board of directors, mostly ignorant of financial affairs, happy to take their fees and dividends and ask no questions.
For a time both the stockbroking firm and City Equitable flourished and Bevan was regarded as a financial genius. Then he over-reached himself, and, in the post-war slump he resorted to fraud, shuffling money about, padding the balance sheet, issuing false prospectuses, rooking the suckers. Vander Weyer makes the point that Bevan’s was a genuine business, not a Ponzi scam like Bernie Madoff’s. Eventually one of the City Equitable’s directors whom Bevan had inherited, an Aberdeen advocate of the firm of Davidson and Garton (I think this is a misprint for Garden) smelled a rat, confronted Bevan, and demanded an independent examination. The house of cards collapsed.
Bevan went on the run, first to Paris with his French mistress, then, provided with a false passport, for Austria. Austrian police arrested him. He returned to England, stood trial and was given seven years. On release he married his French mistress and became manager of a distillery in Havana, where he died.
The details of the story are fascinating and Vander Weyer has interesting things to say about the nature of fraud. There was, he thinks, “something false within Bevan… Too conceited to admit his misdealing when there might still have been time to save the City Equitable, he multiplied the deceits and the promises that could never be kept, and scammed a new set of investors.” His descent into criminality was made easier by the complaisance of his fellow directors and very lax regulation.
Martin Vander Weyer provides a literary footnote to Bevan’s story, suitably enough since Bevan had a book of verse published by Duckworth, the firm which brought out Virginia Woolf’s first novels. John Galsworthy made use of the Bevan case in The White Monkey. In the novel, Soames Forsyte plays the part of the Aberdeen advocate who precipitated Bevan’s downfall. Galsworthy, however, allows the delinquent manager of his insurance company to make his getaway. Gerald Lee Bevan was not so lucky and didn’t deserve to be.
This well-researched and well-written book is more than the story of a City scandal. It is a fascinating slice of social history and a rumination on fraud and folly. As Vander Weyer writes: “In good times, when markets are soaring, the incorrigibly unscrupulous never miss the opportunity to take advantage of the gullible. In bad times … the previously straight often resort to deception to try to save themselves from ruin. It is a pattern of behaviour that no regulatory regime or surveillance system has ever succeeded in eradicating.” One can only add: and probably never will. It is not only the poor who are always with us.
• Fortune’s Spear by Martin Vander Weyer, Elliott & Thompson, 337pp, £18.99