William Snow was born in 1807, going on to study at Eton and Cambridge before changing his name to William Strahan in 1830 in order to inherit a large fortune of around £200,000 (equivalent to £18m today) from his great uncle. Two years later he joined the family bank (then known as Snow, Snow, Strahan, Paul and Paul) as a partner. Over the next two decades his wealth and social position led to his being granted the honorary title of High Sheriff of Surrey as well as being appointed to the boards of various companies.
What was the scam?
By 1850 the bank was barely solvent, even taking into account the partners’ personal assets. Over the next few years things got even worse as they made large loans to support various unsuccessful projects, including railways in France and Italy, as well as a colliery in Mostyn in Wales, which ended up requiring increasing amounts of cash. In desperation they sold bonds that they were keeping on behalf of clients, hoping that they would be able to buy them back before the clients noticed that they were missing.
What happened next?
By 1854 Strahan and his two other partners, John Dean Paul and Robert Makin Bates, had run out of money to steal and rumours were flying around London that the bank was insolvent. John Griffith, canon of Rochester Cathedral and one of the bank’s oldest clients, went to the bank’s offices and demanded to withdraw £5,000 (£472,000 today) in bonds that they held on his behalf. Strahan confessed that the bonds had been sold, along with other bonds totalling £100,000 (£9.45m). Strahan and the other two partners were arrested, convicted and sentenced to 14 years in prison (though this was later reduced to three years).
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lessons for investors
By the time the bank collapsed, its liabilities were £652,593 with only £127,670 in assets, leaving a deficiency of £524,923 (£49.5m). The bank’s depositors and creditors got some of their money back through the liquidation of the partners’ estates, but they would have to wait more than two decades, and even then would only get a fraction of what they were owed. Given that the bank’s dire position was mostly due to bad loans to two firms totalling £483,000 (£45.7m), the bank’s lending portfolio was clearly not diversified enough. The bank should also have been more ruthless in cutting its losses, rather than lending more money to doomed projects.
-
Zoopla: House sales fall for first time in two years as buyers wait for Autumn BudgetThe average price of a house in September was £270,000, down £1,000 from August as the housing market’s Christmas slowdown came early, Zoopla says
-
Number of high-earning women jumps 12% – how to convert income into pensionsMore women than ever are paying the highest rate of tax as record numbers succeed in high paying professional roles. But their pension saving still needs to catch up
-
Yoshiaki Murakami: Japan’s original corporate raiderThe originator of Japanese activism, Yoshiaki Murakami, was disgraced by an insider-trading scandal in 2006. Now, he's back, shaking things up
-
Albert Einstein's first violin sells for £860,000 at auctionAlbert Einstein left his first violin behind as he escaped Nazi Germany. Last week, it became the most expensive instrument not owned by a concert violinist
-
Who is Rob Granieri, the mysterious billionaire leader of Jane Street?Profits at Jane Street have exploded, throwing billionaire Rob Granieri into the limelight. But it’s not just the firm’s success that is prompting scrutiny
-
David Ellison: America's new media mogulDavid Ellison is building a mighty new force in old and new media. Critics worry that he will prove to be a Trumpian patsy. Is that fair?
-
Alok Sama on AI and how to invest in the future of technologyInterview Alok Sama, the former president and chief financial officer of Masayoshi Son’s investment vehicle SoftBank Group International, explains AI’s potential
-
Pierre-Édouard Stérin wants to make France great againConservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
-
Jair Bolsonaro, the 'Trump of the Tropics', sentenced to 27 years in prison for staging a coup in BrazilJair Bolsonaro, the US president’s friend and fellow right-wing populist, has been handed a 27-year prison sentence in Brazil. But the drama looks far from over
-
Prabowo Subianto: Indonesia’s Deng XiaopingPrabowo Subianto, like his Chinese hero, is taking power in his 70s with big ambitions for his country. Yet many view his return to politics with dread
