The failure of the Tipperary Bank

NOTE: This story interests me because of its likely impact on a young Thomas Jackson. He was a son of Irish tenant farmers in South Armagh, and grew up to be the most powerful banker in the Far East in the late 1800s. Parts of this post will be included in my upcoming book. Thanks to Wendy Jack and Peter K. Fenton whose research was essential to this piece. Any errors are mine, and mine alone. Help with corrections is always appreciated.

On the morning of Saturday February 17, 1856, John Sadleir must have realized – finally - that he could no longer continue to dupe his creditors by forging notes, kiting cheques, and inventing fictional people with fictional funds to replenish the money that he had swindled from the Tipperary Bank, a bank that he had founded with two other directors a couple of decades earlier. Mid-day, he ordered his butler to procure a half-pint bottle of Essential Oil of Bitter Almonds aka prussic acid. In the evening, he went to his club as usual, and then came home to write four letters before heading out past midnight. The next morning, his body was found in a field behind an historic inn known as Jack Straw’s Body. A fitting place for such a death. The silver cream jug lying by his side showed traces of the poison.

The Tipperary Bank failed within days. Thomas Jackson was fourteen years old at the time, and a student at Morgan’s School in Dublin. All the ins and outs of the fraud were not only described in several Irish papers, but Sadleir's life story was also transformed by Charles Dickens, an author that young Jackson avidly read, into a compelling character in Little Dorrit. Mr. Merdle, the banker-character that Dickens created, was one of several such characters inspired by Sadleir. The real-life character had not only been an accomplished swindler, but also an MP, a cofounder of the Catholic Defense Association, a junior lord of the Treasury, and a leading figure in the Independent Irish Party. In 1851, Sadleir had even founded his own Dublin newspaper, The Weekly Telegraph - a sure-fired way for a banker and politician to guarantee himself good press.

Although there is a full account of how Sadleir rose to power (see: Fraudsters and Charlatans: A Peek at Some of History's Greatest Rogues), it was Dickens who first captured his essence in a single paragraph:

Mr Merdle was immensely rich; a man of prodigious enterprise; a Midas without the ears, who turned all he touched to gold. He was in everything good, from banking to building. He was in Parliament, of course. He was in the City, necessarily. He was Chairman of this, Trustee of that, President of the other. The weightiest of men had said to projectors, 'Now, what name have you got? Have you got Merdle?' And, the reply being in the negative, had said, 'Then I won't look at you.'

Runs on banks are never played out like a Mary Poppins movie, ending with a rousing chorus of Lets Go Fly a Kite. In the case of the Tipperary Bank failure, several small farmers attacked one of the branches armed with crowbars, pickaxes, and spades, and …[they] kept driving and delving at the doors, bars, and bolts of the bank buildings, and when these gave way, at its strong safes….  Not surprisingly, the safes were empty. The cost to men like them – and their families - became known all over the world. An Australian newspaper in Melbourne included an impassioned account of the coroner’s inquest into Sadleir’s death:

What will be the verdict upon the poor Irish woman whose husband "beat her to death," in his rage at the loss of some of his money sacrificed by the Sadleir operations-money which the poor creature had dissuaded him from taking out of The Tipperary Bank?

June 16, 1856 The Argus,

Another account, written a few decades later, added even more colour:

Old men, some of them, moved about as though demented, and gasped, unable to breathe, in the extremity of their emotion; others with heads uncovered and their snowy locks waving in the air, worked continually with their fingers and, mute in despair, gazed into vacancy; widows, their bereaved condition known from their dress, knelt in the streets and, wringing their hands, asked aloud of God, whether it could be true that all their means of support were gone, and that they were beggars; strong men, their brows knitted, their cheeks ashy pale, and their dark eyes flashing fury, and gripping in their hands great blackthorn sticks, vociferously shouted that they would have vengeance upon those whom they had trusted to their undoing. "To the bank, to the bank!" yelled out a multitude.  

The English Household Magazine No 1 Vol 11 1881

The bank’s failure would have been a hot topic in the Jackson family, in part because they were related to one of the two surviving directors: Wilson Kennedy. They knew him to be an honest man. Rev. Daniel Gunn Browne, an uncle of young Thomas Jackson, was one of many who had been deeply appreciative of Kennedy’s long-term commitment and work on behalf of the Presbyterian Church. Even though Kennedy was forced to make a new start in Canada as a result of the bank failure, his reputation in the eyes of Rev. Browne probably still held.

Born in 1814, Wilson Kennedy was the grandson of Rev. James Jackson Birch and Mary King. His family were part of the linen-merchant community from Dromora, Co. Down. He and his older brother, a solicitor - James Birch Kennedy, had business enterprises in Dublin and elsewhere. James had leased office space in the mid-1800s at 50 Dame Street in Dublin, a few steps away from the office of Samuel Brown, another close relation of the Jacksons, a woolen merchant from Co. Monaghan whose office was at 40 Dame Street. 

In the late 1960s, when I learned that the younger sister of a friend of mine knew so many of the same people that I did, I made the knee-jerk comment: It’s a small world. As the Marxist-Leninist that she was, she responded: No, Sharon. It’s a small class. 

This kind of insularity was even truer of the Presbyterians of mid-1800s Ireland. It is useful, when thinking of their inter-connections, to imagine their family trees looking something like a banyan tree. It propagates by dropping roots from its branches which then grow into trunks. These trunks may look like separate trees, but aren’t. One single banyan tree at Lahaina in Maui covers an entire city block, and that tree only took a hundred years to spread that far. In comparison, by the mid-1800s, Presbyterians had already been rooted in Ireland for a couple of centuries. 

January 2015. Banyan tree.

In 1850, six years before the bank failure, Kennedy served as an Elder in his local church at Clonmel, Co. Tipperary, and even more importantly he was lauded at the national level for his manly and vigorous defense of Presbyterian principles [The Belfast Newsletter July 5, 1850]. He had just won a significant legal case over the government’s right to limit a grant known as the Regium Donum. It was significant to Presbyterian congregations for both financial and symbolic reasons. In 1690, King William III had increased it in recognition of their military and financial contributions. It meant more than just money, although the money was not to be sneezed at. It also confirmed their status as being midway in the pecking order - somewhere between the Church of Ireland, which benefited from tithes, and the Catholics, Quakers and other religious communities who received no government grants at all. 

The case arose because Rev John Marcus Dill, the minister of Wilson Kennedy’s church in Clonmel, decided to fight a decision of George Matthews alias Duncan Chisholm. Matthews was a Clerk in the Chief Secretary’s Office in Dublin, and was trying to curtail the right to this grant. The fact that Dill had referred to Matthews as “a junior clerk at the Castle of Dublin” deepened the pool of bad blood between them, but Dill, when it came to tactical advantages, knew that he had the edge. He was related to at least twelve Presbyterian ministers, and had financial backing.

Matthews, on the other hand, was a failed solicitor and leather merchant. He had come to Ireland after enlisting as a foot soldier under the false name of Matthews. At the time, he was escaping several creditors in Scotland who had offered a large reward for his capture. Much of this background came out in the trial, which meant that Matthews lost on more than one front.

At a dinner held in Kennedy’s honour at the Commercial Buildings in Belfast on June 24^th, 1850, Rev. Daniel Gunn Browne was one of the dozens of Presbyterian luminaries who gathered to toast his success. Kennedy was presented with a silver salver - now a prized possession of one of his descendants in Toronto. 

Thomas Jackson was only nine years old at the time, and would not have been at the event, but Rev. Brown had always included him in conversations which covered all aspects of politics, religion, and money. The politics of the Regium Donum would have been no exception. The life of Wilson Kennedy would have been presented to young Thomas as the life of a hero.

It was only six years later that Kennedy would become utterly ruined by John Sadleir’s frauds. When Sadleir had founded the Tipperary Bank in 1839, he was only twenty-seven years old, and Wilson Kennedy had been twenty-five. In the same way that young men in our era are known for dot.com startups, these two young men not only started this bank, but also served as directors and shareholders. The protection of limited liability had not been an option available to them. This meant that Kennedy faced not only breach of trust but also personal bankruptcy. He was the only one with assets of any substance. The press was understandably brutal:

… "there was no one connected with the bank more culpable than Mr. Kennedy, as he knew the position of its affairs, and concealed them from Mr. Vincent Scully and others, who were anxious to have them settled." Kennedy knew that John Sadleir had improperly drawn £140,000 from the bank; if he had informed Mr. Scully, Sadleir might have been stopped, and the bank saved. Even when Kennedy became "troublesome" to Sadleir, he was silenced by being bought out, by an informal transfer of shares, by which Kennedy was to get 100; thus Sadleir was enabled to go on drawing money from the bank, till he had taken £285,000, and then came the crash. There was not a creditor or shareholder but had reason to complain of Kennedy as having been guilty of the grossest breach of trust. The Spectator Archive. June 21, 1856.

I doubt that Sadleir had chosen Kennedy only because both of them came from Clonmel, had business savvy, and were both of a similar age. I suspect that it was also because Sadleir had the finely honed spider-sense of a psychopath, and had his eye on playing the long game.

Psychopaths succeed in business and other professions more often than we might wish to acknowledge.  In October 2005, a neuroscientist, James Fallon, accidentally discovered that his own brain scan and DNA mirrored that seen in people which his very own research had labeled as psychopaths. He came to believe that not only was he one himself, but that he had been spared living out the worst of it only because of mix of luck and love. He tells the tale himself in The Psychopath Inside: A Neuroscientist’s Personal Journey Into the Dark Side of the Brain. 

It would not be much of a stretch to suppose that John Sadleir, charming as he was, was born with similar genetic wiring. Let’s assume that he was. If so, it then makes total sense that he would include a Presbyterian as a director of a bank where the other two directors – himself and a cousin - were both Catholics. This would open the doors to a whole new flock to fleece. Many of the Presbyterians who were part of Kennedy’s social and family circle were successful farmers and merchants. There was lots of fleece. The question is, was Sadleir also playing the long game when he was an MP and had helped Kennedy to win his legal case on the Regium Donum. It would not be much of a stretch to assume that he was grooming a future victim.

At age nineteen, four years after the failure of the Tipperary Bank, Thomas Jackson started work at the Bank of Ireland in Belfast. This bank had been hit hard as a result of the Tipperary Bank failure, and this particular failure continued to be a cautionary tale with considerable resonance. Thomas left Ireland in 1863 to work in Hong Kong, but he would still experience one more bank failure. This one struck even closer to home: the Agra and Masterman’s Bank. It was Jackson’s first employer in Hong Kong. 

On the plus side, Jackson’s future employer, HSBC, benefitted from the lessons that young Jackson learned from these two bank failures. He was at the helm of HSBC in the late 1800s in Hong Kong, a time when a huge number of banks were forced to shutter their doors. HSBC was one of the very few that didn’t.

NOTE: Coincidentally, there is a connection of the Rev. John Marcus Dill of Clonmel Tipperary to the history of Hong Kong. The Reverend was both the namesake and a second cousin of Dr. John Marcus Dill. Dr. Dill was a son of another of the Presbyterian Dill ministers, Rev. Francis Dill of Co. Down. He was the first medical doctor in the new British colony of Hong Kong, and died in Hong Kong of fever in 1843, after tending to sailors sick with either the plague or some other communicable disease. He was buried at Happy Valley cemetery. As my Marxist-Leninist friend would say – small class.

OTHER BITS

·       A bio of James Scully includes some excerpts from the diary of James Hackett which shed light on the local experience of the Bank’s failure.

·       Parliamentary Papers: House of Commons and Command. Volume 49 has a whole section on the Clonmel case of the Regium Donum, and includes many letters from Wilson Kennedy.

·       John Sadleir on Wikipedia.

·       Genres of the Credit Economy: Mediating Value in Eighteenth- and Nineteenth Century Britain. Mary Poovey. University of Chicago Press. 2008. This book makes some interesting points on how fiction was both read and written when it came to framing issues of morality.

·       When a Bank goes Burst. Father Gabriel Michael Murtagh. This blog post is about the Tipperary Bank. Father Murtagh is the brother of Aiden Murtagh whose B&B I stay at when I visit Crossmaglen. The Murtaghs of Crossmaglen would have been well known to the Jacksons.

·       The Sydney Morning Herald. March 21, 1859. A contemporary account of the legal and financial aftermath of the failure of the Tipperary Bank.

·       The Bankers Magazine, Volume 16.