Lords of Finance: The Bankers Who Broke the World

by Liaquat Ahamed

In 1929, with grand plans to rationalize the British steel industry, he acquired a major manufacturer, United Steel Limited, for $40 million in what would today be called a leveraged buyout. In June, his bankers withdrew their financing at the last moment. He spent the next few weeks scrambling for cash, even approaching Montagu Norman, for Bank of England help. Needless to say, Norman, who would have found a man like Hatry highly distasteful, refused, telling him that he had paid too much for United Steel. Having borrowed as much as he could against all of his companies, Hatry eventually resorted to petty fraud: forging a million dollars worth of municipal bonds to post as collateral against additional loans. Early in September, as rumors circulated that he was massively overextended, his companies’ shares plunged, and his bankers called in their loans. Recognizing that the game was up, Hatry went under in true British fashion. On September 18, he called upon his accountant, Sir Gilbert Garney, and told him of the forgery. After hearing him out, Sir Gilbert telephoned his old friend Sir Archibald Bodkin, the director of public prosecutions, to say that he had a group of City men who wished to come in to confess to fraud of a “stupendous” magnitude. Sir Archibald, after hearing that the sum involved was as high as $120 million—equivalent as a percentage of the British economy to the Enron imbroglio of 2001 in the United States—arranged for them to turn themselves in at his...