Double Your Money – Part Twenty Seven
Sir Humphrey Mackworth (1657 – 1727)
Shropshire born Mackworth set out to revive the fortunes of the mining industry in the Neath region of South Wales. Soon the mines were bringing him in as much as £600 per annum but Mackworth wasn’t stopping there. He revived the disused copper-smelting works at nearby Melicrythan and was soon on the look-out for a way in which he could combine mineral extraction and production.
In 1690 rich mineral deposits were discovered in the Goreddan estate , the lease to which was held by Sir Carbery Pryce. Pryce’s death in 1694 gave Mackworth the opportunity to acquire rights to the site and utilise his works to smelt the copper and silver, the furnaces to be fuelled by the coal extracted from his mines. The only problem was that to set this all up required more capital than Mackworth could muster. He came up with an ingenious solution to the problem in hand.
Mackworth established a joint stock company called The Company of Mine Adventurers. He rented an office in London’s Lincoln’s Inn and, in order to give his venture the patina of respectability, invited the Duke of Leeds, Sir Thomas Osborne, to be its chairman. The publicity machine then went into overdrive, likening the deposits in the Cardiganshire countryside to the fabulous silver deposits in the Cerro Rico in Bolivia. All subscribers were assured of fabulous wealth. Some of the pamphlets even emphasised the philanthropic side of Mackworth’s venture – a fortieth of all profits would be set aside for the erection of a hospital and workhouse and would subsequently fund such good works as employing a clergyman to preach to the workforce (lucky them), to assist poor vicarages, fund missionaries to go out to the West Indies – you get the picture.
Mackworth devised an ingenious lottery stock scheme to raise capital. In essence, subscribers were not guaranteed to secure shares in the company – whether they did or not was decided by ballot – but their monies were held by the company, whether they were successful or not. In this way the company had more capital than the value of the shares issued. Thomas Baston, writing in 1705, describes Mackworth’s modus operandi down to a tee, even if he doesn’t name the malefactor directly. “The projectors would alight upon some fair project, such as getting silver out of the mountain of Wales. Afterwards, he procures a patent, opens books for subscriptions, promising prodigious and incredible advantages to all that will venture their money on this project…and in order to support the stock price they use “many other tricks and rogueries as publishing books and advertisements which are stuffed with monstrous absurdities and lies.”
The company received its Royal Charter in 1703 but, as you might expect, not everything was as it was cracked up to be. The extravagant claims surrounding the size and quality of the mineral deposits were not realised and the company soon began to hit financial difficulties. To maintain the façade of financial stability, Mackworth began to pay interest on bonds using borrowed money or out of capital. Shares were sold without authorisation and, worse still, Mackworth diverted company funds for his own use.
Although Mackworth had introduced some interesting innovations such as using wooden waggon ways to transport coal to Neath’s wharf, matters were not helped by his disputatious character. He got into a number of bitter disputes with a number of local coal proprietors, principally Sir Edward Mansel. The company, which was built on what was described as a honeycomb of fraud, finally collapsed and declared bankrupt in 1709, all of its investors losing their money. A committee of the House of Commons investigated the company in the following year and declared that Mackworth was “guilty of many notorious and scandalous frauds.”
The fall of the Whig administration that year saved Mackworth’s bacon and the irrepressible fraudster set up the Company of Mineral Manufacturers in 1713, which lasted six years.
