Fraudsters and Charlatans (25 page)

Beeston shares continued to ride high, and Hooley further enhanced their value by backing a deal in which Beeston made a profit of £30,000 paid in shares. On 7 May, on the basis of this paper profit, Beeston declared a 100 per cent dividend of £30,000 and borrowed the necessary cash through Hooley. Meanwhile, the demand for Beeston shares had enabled Hooley to dispose of his holdings, and by 16 May he had sold all 20,000, making a personal profit of over £80,000.

The Irish-based Grappler Company had been formed in April 1893 with capital of £75,000 in £1 shares. By April 1896 a great deal of its capital had gone, it had never paid a dividend and was trading at a loss. The shares were then quoted at between 1
s
9
d
and 4
s
. From that time on, however, and for no very obvious reason, the price began gradually to creep up and eventually reached the wholly unwarranted heights of 14
s
. Someone, it seemed, was quietly buying up Grappler shares. Although it was never proven, the buyer was almost certainly Hooley, who had arrived in Dublin with Rucker on 13 April 1896. How much Rucker knew of Hooley's real intentions regarding Grappler has never been established.

Hooley's plans appeared to be marching on without hindrance, but he reckoned without the persistent plain-speaking of Frederick Faber McCabe, editor of the
Irish Field and Gentleman's Gazette
, a weekly paper devoted to the manly pastimes of hunting, fishing, racing and cycling, with a regular financial column called ‘City Notes'. McCabe focused a great deal of his attention on share dealings in the bicycle trade, and became alarmed at the Grappler developments. In March 1896, when the company tried to increase its capital by an appeal to the shareholders, the
Field
commented:

with Irish shareholders the more unsuccessful a company has been the longer they stick to it, provided only that the directors hold out some hope, and
continue to ask
for more money. Such has been the history of the Grappler Pneumatic Tyre Company. . . . We have repeatedly told the shareholders to close their pockets to these appeals.
¹⁵

This enraged Grappler's chairman, Joseph Tumulty. The
Field
's city column was highly influential and its criticisms of the performance and prospects of Grappler were instrumental in slowing the rise in share prices. McCabe was at some pains to highlight those occasions where Tumulty had been sparing with the truth. While Tumulty had told the shareholders that the company was making profits, these, the
Field
pointed out, were only gross profits, that is, the difference between cost and sale price. The statement had not taken into account contingent liabilities, notably the expense of repairs carried out under guarantee.

In April rumours began to fly around Dublin, first that Mr Dunlop himself (who was long retired from the tyre business) had joined the Grappler board, then that the Grappler patents were to be bought by Pneumatic. On the basis of these rumours the shares shot up to 30
s
, but once the reports were found to be untrue, the price fell back to 10
s
. Quite who was spreading these stories was never discovered. It could have been either Hooley or Tumulty – although it was more Tumulty's style to omit unpalatable truths than to concoct lies. In any case, on 18 April the
Field
strongly advised investors to sell their Grappler shares.

On 30 April Hooley and Rucker, together with their Irish stockbroker Mr Daniel Bulger, went to the Dublin Stock Exchange, where Bulger bought up as many Grappler shares as he could. Rucker later denied that he had ever bought any such shares or even that he had understood what was going on. They then proceeded to the Grappler offices, where they met Russell Dowse, the managing director. Rucker, introducing Hooley as the man who had bought up Pneumatic, got straight to business, saying that it was no good beating about the bush but they had come to buy the company and asked that a board meeting be held. Hooley questioned Dowse about Grappler's capital and debentures, made some notes and offered to buy out the company at £4 a share, a price that caused Dowse to open his eyes wide in astonishment.

Hooley's intentions at that point may be judged from a telegram he sent on his return to London on 1 May to Mr William J. Watson, a Nottingham solicitor who had acted for him in a few small matters. ‘Think you might buy yourself a few Grappler Tyre ordinaries for a sharp turn.'
¹⁶

On the following day Hooley and Rucker met Dowse and Tumulty in the presence of Grappler's solicitor Mr Clay, at Rucker's office in Ely Place, Holborn, where Hooley repeated the offer. Four pounds was a ridiculous price, but Tumulty knew about the Beeston negotiations and thought he could get more. He was careful not to express any doubts about the licences. If Hooley thought they were valuable to him, Tumulty was not the man to argue. Eventually a price was agreed of £385,000 for all the shares and assets of the company. A deposit of £10,000 was payable, with a further £15,000 when the shareholders had confirmed the agreement. An appointment was made for later that afternoon for Mr Hooley's solicitor to finalise the paperwork, but the solicitor did not arrive and another appointment was made for later the same day. Once again the closure of the deal foundered as Hooley wired that the solicitor could not come. Soon afterwards, Hooley sold all his Grappler shares.

The
Field
must have had good sources of information, for by 2 May its message to its readers had taken an unexpected direction. While the editor had not changed his opinions on the long-term future of Grappler, he suggested that investors who liked a gamble should buy Grappler shares for a ‘short turn',
¹⁷
but understandably did not reveal his reasons. These became obvious when Hooley's solicitors, just in case no one had heard about the remarkable offer, published details in the Dublin newspapers. The share prices jumped again.

Tumulty waited for the deal to be concluded. He also waited for the deposit. An appointment was made for Hooley to go to Dublin, but he sent a telegram saying that his solicitor would be unable to attend. As time passed and nothing happened Tumulty showed himself to be more than equal to the dubious prevarications of Hooley. On 7 May, just five days before the Dunlop floatation, he wrote to Hooley through his solicitors saying that, unless the matter was settled on the following day, he would conclude that the offer was a bogus one and that it had never been the intention of Hooley and Rucker to buy the company. This he threatened to explain to the meeting of the shareholders on the following day.

Hooley called his bluff, but Tumulty was as good as his word, and the shareholders, many of whom had bought up Grappler shares for a ‘short turn', heard that Hooley and Rucker were trying to get out of the bargain and had only made the offer in order to rig the market. Soon, allegations were published in the Dublin newspapers that warrants were out for Hooley's and Rucker's arrest. Telegrams flew back and forth between London and Dublin, and it became common knowledge that those people who had been induced to buy Grappler shares on the basis of the report that the company was to be sold had instituted a criminal prosecution in the event of the agreement not being signed.

Late in the evening of 11 May, Mr Clay went to see Hooley at the Midland Grand Hotel. Rucker was sent for, as was Mr du Cros, director of Pneumatic, and Hooley's solicitor. Reports of the encounter naturally vary depending on who told the story. Hooley later claimed that he and Rucker were threatened with arrest, but according to Clay he had said only that it would be a dishonourable thing for them to back out of the deal. Clay agreed to wire Dublin on their behalf to find if there was any truth in the rumours that warrants had been issued. At first Hooley refused to sign the papers on the grounds that there was some doubt about the licences, but eventually, at 1 a.m., afraid that their arrest could ruin the Dunlop venture later that day, Hooley and Rucker signed the agreement and paid the £10,000 deposit. At 10 a.m. Clay received a wire confirming that the rumours about the warrants were untrue, but by then he had the signed agreement and the cheque.

Tumulty must have thought he had won, but the
Field
was blunt. The deal, it said, could never go through because Pneumatic did not grant transferable licences. This was the last thing either Hooley or Tumulty wanted to be made public, Hooley because this was his bargaining card for getting out of the deal at the right time, and Tumulty because he knew that the finalising of the deal would be threatened by the information. On the Stock Exchange, Grappler shares ‘bounced up and down in the wildest manner',
¹⁸
rising to £4 then falling back to £1 5
s
.

On the morning of 12 May 1896, with a massive fanfare of advertising, the Dunlop Pneumatic Tyre Company Limited subscription list was open to the public. There was an immediate rush for shares, 4 million at £1 apiece and £1 million in debentures.

Meanwhile, Mr Tumulty was trying to finalise the Grappler sale. He was still at odds with the
Field
, which published an article on 16 May suggesting that the shareholders ought to appoint new directors, since the current ones did not understand the cycle trade. In vain did
The Economist
of the same date warn investors against companies whose shares had recently been worth a few shillings apiece and were now valued in pounds because of industriously circulated rumours.

On 27 May, by which time Grappler shares had risen to over 40
s
, Tumulty told a meeting of shareholders that there was no reason to believe the agreement would not be carried out, which must have been a relief, as many of them had bought in recently at high prices. The
Field
, he said, was ‘a relatively unknown publication . . . either praise or censure from such a quarter is not worth noticing',
¹⁹
and promised that in a very short time the market value of the shares would be much greater. He revealed that the company had made a gross profit of £4,000 in the last four months. A voice from the floor cried out ‘What are the net profits?'
²⁰
‘I am dealing with gross only,' he responded. ‘I think that is sufficient for the present purposes.' He advised the shareholders to ‘hold onto your shares hard and fast'.
²¹
The meeting voted unanimously to ratify the agreement with Hooley and Rucker. Again, the
Field
insisted that the deal would not go through. ‘Messers Rucker and Hooley are shrewd men of business, but they must have been led into error in some incomprehensible way.'
²²

At another meeting, held on 11 June to discuss the liquidation of the company in preparation for the sale, shareholders were again told to take no notice of rumours. By 20 June the second instalment of the deposit had been paid, and Tumulty was claiming that the Grappler shares were worth even more than the offer price, but there followed a long delay, and the remaining £360,000 did not appear.

On 18 July the
Field
, which had had its ear to the ground to pick up all the rumours, reported that Hooley and Rucker, claiming that the directors of Grappler had misled them as to the nature of the licence, were pulling out of the deal and taking legal action for the return of the £25,000. On reading this report, many of the shareholders sold their Grappler shares. Tumulty was furious, and on Monday 20 July he was in court obtaining permission to bring a libel action against the newspaper, which he said had written a false and malicious article with the sole intention of depreciating the shares. The case was heard on Thursday 23rd, and the
Field
, which had no supporting evidence for its allegations, was obliged to make a contrite apology, withdraw the article and pay the costs. Tumulty was triumphant, but only briefly. On 24 July Hooley's solicitors wrote to Tumulty saying that the deal would not be completed on the grounds that the nature of the licence had been misrepresented. On the 25th, the same day the
Field
published an account of its defeat in court, Tumulty was obliged to send a circular to all the shareholders advising them of the letter. The circular and the letter were published in the
Field
of 1 August entirely without comment. Grappler shares fell to 20
s
. The reaction of the shareholders is unrecorded. Many may have believed that they would prosper even without Hooley, and continued to ride the cycling boom as if it would never end.

Hooley's £25,000 deposit was never returned. Whether or not he made money from selling his Grappler shares at the top of the market – and it was never proven that he was behind the initial rise in share prices – his interest in the company had undoubtedly raised the value of Dunlop. As was his usual practice, he sought only to make a cash profit from the Dunlop venture and retained no personal investment in the company.

For a time the investing public was enthralled by the romance of Hooley's success. ‘The daring manner in which he treated millions dazzled them,' observed the
Pall Mall Gazette
, ‘and they were ready to believe that he would extend to them, by means of some strange power that they did not altogether understand, the same capacity for amassing wealth that he undoubtedly showed in his own case.'
²³
It was not only the public who regarded Hooley in this light: ‘the millions I had made before I was forty had turned my head,' he later admitted. ‘I fondly imagined there was nothing I could not do.'
²⁴

Hooley now took a suite at the Midland Grand Hotel, which he established as his London centre of operations. The rooms were in a constant bustle. Everyone wanted to see Mr Hooley. He would breakfast usually with several visitors, then hurry off to examine the post. Printer's devils brought in proofs of prospectuses, lawyers arrived for consultations, wires went to and fro, transfers were effected and cheques written, with Hooley darting back and forth between the different rooms. Coordinating all this scurrying about was Broadley Pasha.