Hard labour: the Croydon Mayor, dodgy deals and bankruptcy

Town Hall reporter KEN LEE on a tale from Katharine Street’s history which resonates strongly today

New Year may be a time for looking forward, but it can also be most useful for taking a backward glance, perhaps to learn from the mistakes and hubris of others.

Jabez Spencer Balfour in his pomp, as portrayed by Sir Leslie Ward (“Spy”) for Vanity Fair in 1892

Because for all the tumult of 2020, with the council’s financial crash, it is worth noting that Croydon has been here before.

If only Tony Newman and his numpties had bothered to read the biography of Jabez Spencer Balfour, the Charter Mayor of Croydon in 1883 to 1884, they might never have embarked on the costly misadventure that we know as Brick by Brick.

Balfour was decried, in the pages of The Times no less, as “One of the most impudent, heartless business scoundrels on record”, following the 1892 collapse of his Liberator Building Society, leaving thousands of ordinary savers penniless.

In many respects, Balfour operated a forerunner of a Ponzi scheme. Instead of advancing money to home buyers, the Society lent money to property companies to buy properties at above market rates… properties that just happened to be owned by Balfour.

When the swindle was discovered, Balfour did a bunk to Argentina, but that didn’t stop him being extradited, tried and found guilty, sentenced to 14 years hard labour.

On release, he was said to be a changed man: he even turned his hand to journalism (yeah, yeah, we know…).

The downfall of Croydon’s first Charter Mayor (the nominee for the council’s first citizen in the first year of a borough’s incorporation; Croydon next had a Charter Mayor in 1965, when it became the London Borough of Croydon), though, contains many lessons for the present day.

Balfour’s Croydon home, Wellesley House. It was demolished in the ‘transformation’ of Croydon in the 1960s

The story of Balfour – Jabez in his youth and in his late notoriety, but always J Spencer Balfour when he was in his prime, is contained in an award-nominated 2004 book by David McKie, the former deputy editor of The Guardian.

Born in September 1843, to a high-profile, upper middle-class family, he worked as a political agent at Westminster before becoming the Member of Parliament for Tamworth in 1880, taking the constituency of the former Tory Prime Minister, Sir Robert Peel and joining the Liberals led by Sir William Gladstone.

After losing that seat through boundary changes in 1885, he represented Burnley from 1889 to 1893.

Balfour and his family had lived first in Redhill, but in 1869 moved to the grand Wellesley House on Wellesley Road, Croydon in 1869. Wellesley House survived the Luftwaffe and the Blitz, but it did not survive Croydon’s planners in the 1960s.

A man of some social standing, Balfour set himself up as chairman of the board of the Liberator Building Society, which had offices on Katharine Street, and became a local councillor.

The building company was a joint venture between Balfour and James William Hobbs, who was born in Croydon 1843 who had a builders’ merchant business in Morland Road.

In the 1880s, Hobbs bought the Norbury Park Estate, and had a cricket ground adjacent to his house there. Surrey County Cricket Club, where Hobbs was a director, would sometimes play there. Hobbs would also become Mayor of Croydon, in 1886-1887, the borough’s fourth mayor.

Balfour and Hobbs between them embarked on many building projects using both City of London and Liberator finance. They borrowed a fortune from their own building society to fund his development company which in turn funded his building company. It was an arrangement which, in the language used by Croydon Council’s present-day auditors, was somewhat “circular”.

Balfour was Croydon’s first Charter Mayor in 1883

The projects included Brading Harbour on the Isle of Wight. It was originally built during the reign of James I, when there was a rapid expansion of naval activity as England and Scotland looked to the New World for territory and riches.

But by the 19th Century, Brading Harbour had been long-abandoned, and Balfour and Hobbs stepped in with grandiose plans for a new resort with a large hotel, to Sandown and Shanklin, as the island became increasingly popular while used by Queen Victoria at the Prince Albert-designed Osborne House.

They did not have much good luck, with the harbour being washed away in a high tide. But they succeeded on their second attempt.

Balfour and Hobbs pressed on with their money-making schemes. Hyde Park Court and Whitehall Court were other projects that they developed in London.

When the buildings were completed they were sold at an inflated price back to Balfour’s development company, who then raised further mortgages from the building society on those buildings.

Having lost his Tamworth parliamentary seat (after some typically craven gerrymandering by the Conservatives of the time), in 1885 Balfour sought to persuade the Croydon voters to elect him as the new constituency’s first MP. He lost, with William Grantham, the Tory candidate, taking the seat. Balfour, “a person of consequence” in Croydon, according to his biographer, settled to be the town’s first Mayor.

As McKie, explains, “He moved in 1869 with his wife and young family to the greater stage that was Croydon, where he soon established himself as a person of consequence.

“The town’s population had grown from 6,000 in 1801 to well over 50,000 by the time the Balfours arrived, and Jabez and Liberal businessmen like him believed it was time it was thoroughly modernised and given its independence from the county of Surrey.

“Though motivated by a high local patriotism, they also scented a political advantage. Ratepayers excluded from voting under the old limited vestry system would be enfranchised if Croydon attained borough status, and that would push up the Liberal vote.”

The town, with its close connections to the Church of England through the Archbishop of Canterbury’s palaces – first the medieval Old Palace, now a girls’ private school, and by the 19th Century, at Addington Palace – was effectively run by what historians have called an “Anglican oligarchy”.

The collapse of Liberator saw contemporary reports compare the company to an octopus, with tentacles everywhere…

“That Croydon was given borough status in 1883,” McKie writes, “might have been partly due, Balfour suggested, to the influence he had deployed as a backbench Liberal MP.” The public were suitably grateful.

In the 1880s, the role of mayor was much more important than the largely ceremonial function that today’s Croydon mayor carries out. It was more like that of a directly elected mayor…

According to McKie, Balfour performed this role “with such energy, enthusiasm, generosity and swagger that the aldermen and councillors voted to keep him on for a second term”.

That second year was less successful, though, as operational and financial problems over a tramway system, which Balfour ran with some Liberal colleagues, dented his reputation.

Worse was to follow when Balfour’s dodgy housing investment schemes were exposed.

Until then, Balfour had been “a figure of increasing national reputation,” according to McKie.

“Under his guidance, the Liberator building society… established itself as the biggest society in the land, offering families who had seen no such hope before the chance to liberate themselves from the suzerainty of landlords.”

When property prices collapsed in the early 1890s, Balfour’s companies crashed, as the development company could not meet its liabilities to Liberator, which in turn failed. It was all positively Maxwellian, with contemporary reports comparing Liberator to an octopus, with tentacles everywhere.

The financial collapse saw Liberator’s investors, many of them Croydon residents, lose money, often their entire life savings. “Many hundreds were ruined,” McKie writes. “Some killed themselves; some went mad; some died from grief and despair.”

Balfour, after his release, wrote a shocking account of prison life

On Sunday December 11, 1892, Hobbs was arrested at Norbury Park House and charged with false accounting and fraud. The Official Receiver brought the charges to which Hobbs would plead guilty.

On learning of Hobbs’ arrest, Balfour jumped on the first train to Dover and then, by ferry, train and boat, journeyed to Buenos Aires, Argentina, where there was no extradition treaty.

His whereabouts were traced by Scotland Yard, as four cheques drawn on a Croydon bank were cashed. In 1895, he returned to England voluntarily and Balfour stood trial with Hobbs and others.

Sir Edward Marshall Hall KC, who would go on to become a pre-eminent defence barrister of the Edwardian age, represented one of Balfour and Hobbs’ co-defendants (as an aside… Hall was a famous wit and, in one case when he was defending an Irish labourer, he was asked by a rather pompous judge, “Is your client not familiar with the maxim res ipsa loquitur?”. Hall replied, “My lord, on the remote hillside in County Donegal where my client hails from, they talk of little else.”).

But even a lawyer as skilled as Hall could not get Balfour or his mates off the hook in the Liberator case.

Balfour was convicted for false accounting and fraud and was sentenced to 14 years with hard labour. Hobbs received a lesser sentence.

“You will never,” Balfour was told by the judge, “be able to shut from your ears the cries of the widows and orphans you have ruined.”

Balfour was released after serving 10 years and four months of his sentence. Released in April 1906, he was hired by the Northcliffe Press to write an account of his prison experiences, which led the Weekly Despatch for 26 weeks and was later published as a book: My Prison Life.

Fast forward 130 years: for Liberator Building Society on Katharine Street, read Croydon Council. For Balfour’s development company, perhaps read Brick by Brick?

How things have changed – in the case of the financial collapse of the council, there have been no charges brought and no hard labour, just a £440,000 pay-off for failure to the erstwhile chief executive, while the Council Taxpayers of Croydon – like the “widows and orphans” ruined by Balfour – left to suffer the consequences of their Town Hall leaders for years to come.

  • Jabaz – The Rise And Fall of a Victorian Rogue by David McKie was published by Atlantic Books in 2004 and shortlisted for the Whitbread Prize for biography

Read more: Council forced to declare itself bankrupt
Read more: £36m Brick by Brick ‘risk’ helped to trigger Croydon’s S114
Read more: ‘One of the biggest casualties of council crisis is our trust’

About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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1 Response to Hard labour: the Croydon Mayor, dodgy deals and bankruptcy

  1. Kevin Croucher says:

    Friedrich Hegel: “The only thing we learn from history is that we learn nothing from history.”

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