The Thirties: An Intimate History of Britain. Juliet Gardiner

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       CODA The ‘Hatry Crash’

      In 1935 the body of a Woking magistrate, Francis Wellesley, was found floating face-down in the river Wey. ‘Another Hatry Crash Victim’, decided the headline of a national newspaper, though in fact the death turned out to be an accident rather than suicide. Furthermore, Mr Wellesley had never been an investor in any of Clarence Hatry’s companies. But the dapper, Chaplinesque Hatry, the son of a silk-top-hat manufacturer who was always so well turned out himself that it was put about that the soles of his shoes were polished as well as the uppers, had become — at least to some — the personification of an attenuated British version of the Wall Street crash, when share prices plummeted and many fortunes were wiped out. And indeed it was on the day after ‘Black Thursday’, 25 October 1929, that Clarence Hatry had been remanded to Brixton Prison in South London to await trial on charges of fraud and forgery.

      Hatry’s spectacular business career — and its demise — mirrored the boom-and-bust economy of the 1920s. Given the frenzy of concern about speculation, unstable money and the financial integrity of the City of London in the shaky world economy, it was no surprise that when he and his three fellow defendants faced the formidably ‘icy’ Mr Justice Avory in the dock of the Old Bailey in January 1930, the prosecution was led by the Attorney-General himself, Sir William Jowitt.

      The case was a complicated one, but again Hatry’s story embodied another concern — or in this case a suggested panacea — of the times: rationalisation. Almost Edwardian in his spending habits, at various times he had owned racehorses, one of which, Furious, won the Lincolnshire Handicap at wondrously long odds; a yacht which cost £15,000 (almost £700,000 in today’s money) a year to keep afloat; and a magnificent house off Park Lane which his wife described as ‘a palace in miniature’, but which the Observer would later sneer at as ‘a palazzo in Mayfair with its classical swimming bath above and its sham Tudor cocktail bar below’. Hatry had built and lost his various fortunes largely by consolidating businesses, which was exactly what many economists and industrial pundits were recommending as the way forward for outdated, undercapitalised British industries. While Jute Industries, which he formed in 1920, was a success, there was little ‘strategic logic or managerial vigour’ in such creations as British Glass Industries or Amalgamated Industrials, ‘a hodgepodge of cotton spinning, shipbuilding, and pig farming’, according to his biographer.

      However, Hatry sold the London department stores (including Swan & Edgar) he had bought and combined into the Drapery and General Investment Trust to Debenhams at a handsome profit, and merged the majority of London’s private bus companies, before selling them to London General Omnibus Co., which would eventually become the nucleus of London Transport. He also financed rather less successful ventures, such as the Photomaton Parent Corporation (which operated photographic booths) and the Associated Automatic Machine Corporation (operating vending machines, mainly on railway platforms), both of which perhaps spoke more to his weakness for gizmos than his financial acumen, and leaked funds.

      Nevertheless, by 1928 Hatry appeared to be successfully juggling his activities as a proto-asset-stripper under his umbrella company Austin Friars Trust, ‘a £300,000 finance house which was to be the linchpin of his later enterprises and the central company in a complicated network of interrelated investment and industrial enterprises’, buying companies, amalgamating them, liquidating then reconstructing them under a new name. At his trial, however, the liquidator, Sir Gilbert Garnsey, alleged that the whole group had been insolvent from the very start in May 1927.

      Within that cavernous enterprise one particularly successful amalgamation was Allied Ironfounders, a combine of light castings manufacturers, and this gave Hatry the idea of pulling off a similar feat in the ailing steel industry. In April 1929 he acquired control of the United Steel Companies, but the next month the general election returned a Labour government. ‘This is ruination,’ Hatry lamented to Hubert Meredith of the Daily Mail. ‘How can I possibly carry through my steel scheme now?’ And indeed, in the bear market that followed what might have been anticipated as the beginning of a full-frontal attack on capitalism, Hatry saw the value of his securities take a severe hammering.

      To achieve his ‘steel scheme’ he needed a large amount of money — probably nearly £8 million — but he had a shortfall, and one that he was finding increasingly difficult to bridge, not least because Montagu Norman, the Governor of the Bank of England, was implacably opposed to both Hatry’s scheme and its promoter. ‘I say he shd stand aside as long as Hatry controls,’ Norman advised a director of the merchant bank Morgan Grenfell, which had been approached for a loan.

      To raise the £900,000 (more than £40 million in today’s currency) necessary to float Steel Industries of Great Britain Inc., Hatry, at the suggestion of one of his directors, an Italian called John Gialdini, tipped from dextrous dealings and sailing close to the wind into illegality. A few years earlier he had audaciously managed to break into the lucrative corporations loans business, and by the end of 1928 he had cornered 90 per cent of the market. Now, in a manoeuvre ‘intended to rob Peter to pay for Paul and to reimburse Peter from the profits of selling Paul’ he agreed to forge corporation scrip certificates (receipts and contracts) for three of the municipalities with which he had dealings, Gloucester, Swindon and Wakefield, thereby providing security for further loans from the banks until the steel combine was floated, whereupon the forged certificates could be redeemed.

      It didn’t work. The City’s confidence in Hatry, already ebbing, went into free fall, partly as a result of the excessive number of scrip certificates that seemed to be in circulation, and the Stock Exchange suspended dealings in Austin Friars Trust. Gialdini had already done a runner back to Italy when on 19 September 1929 Hatry, who was by now being investigated by Sir Gilbert Garnsey of Price Waterhouse on behalf of worried creditors, and his three other directors confessed to the Chairman of his companies, the 16th Marquess of Winchester, in the Charing Cross Hotel, that there were ‘irregularities’. The four then piled into a СКАЧАТЬ