Lloyds Bank bankrupted 4th Lord Sudeley in 1893

For 4th Lord Sudeley’s bankruptcy see the paper in The Sudeleys-Lord of Toddington by Dr. Stanley Chapman, economic historian of international reputation and an inspired choice. The most important references since then are 4th Lord Sudeley’s Memorandum; R. W. Sidwell’s article on 4th Lord Sudeley’s great orchards for Country Life in October 1989; articles by John McQueen of the Bankruptcy Association in Business and Assets for 8 and 22 June 1990; my article on the Sudeley Bankruptcy in the June 1999 issue of London Miscellany, edited by a leading accountant, Christopher Arkell of 32 Addison Grove, London W4; my pamphlet of Usury for the Monday Club of which Chairman, with various contributions, especially from Parliamentarians; and my pamphlet on Usury for a Parliamentary Group, the Forum for Stable Currencies, copies to be obtained from Sabine McNeill on 21 a Goldhurst Terrace, London NW6.

Banks are alive now to the need to explain especially to women what is implied in Guarantees. Much of 4th Lady Sudeley’s fortune disappeared with the Guarantee to Lloyds Bank. She had inherited half of the large fortune of her uncle Algernon Tollemache, money lender in New Zealand who had made many settlers into minor Gentry. There are large archives of his correspondence both with myself and the National Library of New Zealand in Wellington.

The effect of the repeal of the Corn Laws which removed protection for agriculture was delayed for a generation till 1879 when we were unable to compete with the import of wheat grown on the virgin soil of the North American prairies, refrigerated meat from the Argentine, promoted by the Vesteys, butchers in Liverpool, and later butter and wool from New Zealand, which particularly affected Welsh landowners. It was impossible then to re-introduce protection for agriculture because we had become a democracy. Any Government which put up the price of food would be voted out of office. Democracy may be a clean word now but it does mean the failure to protect minority interests, in this instance farming, which could not have happened in the mediaeval body politic. Then, where the various interests or liberties of the land happened to conflict, the Monarch acted as an Arbitrator.

It became impossible to hold a landed estate together without the injection of capital from an outside source. Much agricultural land was abandoned, and many farmers emigrated to the USA.

The movement at the time in Wales where most of our land lay for tenants to enfranchise was a strong one, and if that had happened it would have been the best thing for 4th Sudeley. I do not understand why he joined his cousin Lord Penrhyn’s North Wales Property Defence Association which resisted enfranchisement. In Ireland, where tenants were enfranchised under the Wyndham Land Act of 1903, compensation for landowners, was very reasonable.

To help his tenants at Gregynog who were mostly sheep farmers, 4th Lord Sudeley invested in a woollen industry nearby at Newtown. It was the guess of Peter Lewis, who started the Welsh Textile Museum at Newtown (now moved to Welshpool) 4th Lord Sudeley overlooked that if you are to sell woollen goods you must have a constant source of supply to manufacture them when sheep are shorn only once a year. So he lost heavily. It is to be suspected of our successful rivals in the textile industry in Newtown, the Pryce-Joneses who innovated mail order, that much of their wool came from outside Wales.

4th Lord Sudeley borrowed heavily to rehabilitate his estates with drainage and so on, but without any capital return because of the agricultural depression. By 1893 the debt amounted to about half; and at this point the proper object of bankruptcy proceedings would have been rescheduling to sell unprofitable assets and keep or diversify into profitable assets. 4th Lord Sudeley already had such a strategy in hand to sell the Gregynog estate and plant his great orchards at Toddington-600 acres, no such area had ever been planted with fruit before – when fruit was not affected by the agricultural depression. Apart from Sidwell’s article, in Country Life, Charles Whitehead’s article, in the Journal of the Royal Agricultural Society (October 1883) on The Progress of Fruit Farming has some special reference to 4th Lord Sudeley’s orchards and explains how he seized a great economic opportunity. Edward Wilson, Fellow of Worcester College, Oxford, is working on George Bunyard to whom the 4th Lord Sudeley gave his order for fruit trees.

Before the orchards came into full bearing, Lloyds Bank, unlike the Bank of England and a low down on 4th Lord Sudeley’s list of creditors, filed for bankruptcy to force the immediate payment of the debt on the nail. In his Memorandum of this affair 4th Lord Sudeley wrote the possibility of dire financial disaster coming to him was overlooked. In 4th Lord Sudeley’s time it was the custom of the Aristocracy under their Tudor predecessors who were very mercenary, not o look too closely into their own affairs, that was left to their man of affairs; and in 4th Lord Sudeley’s time it was solicitors who occupied a superior position to now as general financial advisers. Why did 4th Lord Sudeley’s solicitors Godden Holme whom I inherited when I came of age and who I am convinced knew more than they gave out, not warn 4th Lord Sudeley of what could happen? Were they acting for both sides? The other party should have been horsewhipped, was treachery involved? Granville Barker’s play The Voysey Inheritance shows how solicitors can ruin you. Show me a solicitor, show me a thief.

Even though once it had been filed, Lloyds Bank withdrew their petition for bankruptcy, the effect of its ever being filed destroyed 4th Lord Sudeley. It destroyed his capacity to borrow except on the most onerous terms to allow him enough time to sell his some assets only at a comfortable pace to fetch their proper value. With assets going for decimated value we lost everything and our creditors got next to nothing. If the bank had handled the matter properly much would have been saved; it was ridiculous. Even Mr, Chapman concludes 4th Lord Sudeley should have been mindful of the old cardinal rule of business that liquidity or cash flow is more important than capital. This rule now is overboard. Just over a century later a similar case arose with Lloyds Bank and a company Heritage plc, distributor of household wares, which had ample assets but which the bank destroyed because they demanded the return if their loan within the space of two bankng hours. This case became the subject of an Adjournment Debate introduced in the House of Commons by Dr. Rudi Vis with the result that from April 2001 in situations of this kind a grace period of 28 days was allowed to realise assets. Yet the Government missed the mark and this large change in the law did not take hold for the technical reason that Insolvency Practitioners apply as individuals, so if they fail have a personal liability. So the Government had to go back to the drawing board with the Enterprise Act where, an Administrator (who performs Surgery) is appointed not only by the bank but by all the other creditors, and only if that does not work out within a year an Administrative Receiver st appointed to commit murder.

In this area I always understood change in the law would be achieved as it has been, retro-active justice never. Of course the chief parties in debt are the banks themselves, lending way beyond their own reserves in a proportion sometimes given in a proportion sometimes given as 10 to 1, but in reality with hedge funding far higher.

A further abuse in our case which is not unique, there are other cases including the Inland Revenue – was of creditors enlarging their claims, in our case they were doubled – because these claims were not independently and adequately audited. This I discovered through a document at the Public Record office to do with 4th Lord Sudeley’s Deed of Arrangement with his creditors. It is difficult to see here anything else but Fraud, regarded as so abhorrent there is no Statute of Limitations to prevent the recovery of property so taken after any period of time. This is a matter to which SAFE should attend if Parliament does not get rounds to it, hopefully an innovative judge as Lord Denning was will clean it up.

None of this would have happened without Usury in its old sense of lending money without taking a share of the risk. Banks should take an equity or participates in business enterprises. Usury was condemned by the best thinkers in the past, the Jews in the Old Testament (who never practised it on one another, only on the Gentiles, when Israel came into contact with a wider world), Aristotle, Mohamed, St Thomas Aquinas and Dante. Aristotle got it in one, to say Money is a medium of Exchange, not the Mother of Interest, so should not breed of its own right. For that reason Dante, his poetry rich in sorrow, put the Usurers and the infertile Sodomites in the same quarter of Hell. As so well explained in R.H. Tawney’s classic work, Religion and the Rise of Capitalism, all that was reversed by Calvin. With banks being such a powerful vested interest and people always wishing to borrow no matter how obnoxious the terms, we are unlikely to eradicate Usury altogether, but we should anticipate the right piecemeal effect in the way the cells of early Christianity were formed, when we have to note, that in the second half of the 19th century there was great prosperity in the opening up of the American West on debt or interest free money with President Lincoln’s Greenbacks; even now in the USA the amount of money controlled by the banking system is less than that in the hands of the mutual fund industry; Malaysia provides without Jury; and so on. It is unfortunate that in the UK, where banks are more dominant than in the USA, most Parliamentarians shy away from the issue of Usury and Austin Mitchell, well known Labour MP with the right view on Usury, finds himself to be unorthodox when it should be the other way round and in a minority of one in the House of Commons.

Appendix I in the 2nd Edition of The Sudeleys-Lords of Toddington will give the entry from Lloyds Bank Board Minute Books regarding their filing the petition for bankruptcy against 4th Lord Sudeley. Appendix II will give the letter to me from a previous Chairman of Lloyds Bank, Sir Jeremy Morse, excellently dealt with by Kenneth Rose in the Albany column of The Sunday Telegraph, to say he has no more information than is given in Appendix I. He remarks that the further back you go the bearer the records become when I think it is the other way round Banking is about keeping records; without records banks would not make any money. Banks are in total control of their own information, yet the law libel, pure roulette in its operation, constrains us from suggesting Lloyds Bank is hiding anything. If the middle classes resort to libel actions, the aristocracy fought in duels and the working classes knock each other down.

On the secrecy of the City and frequent evasiveness of banks in disclosing information from their records, see generally Dr. Chapman’s article on City Archives: Debits and Credits in The Times Literary Supplement for 18 January 1985. Also on the keeping and disclosure of Banks Record see my Amendment No. 97 on 27 June 1994 to the Deregulation and Contracting Out Bill.

To have no more information than is supplied by Lloyds Bank’s Board Minute Books is very galling. We need to know about the information on which the bank’s decision to file for bankruptcy was based and the discussion which ensued – to be provided by internal memoranda, reports to directors and so forth

Foreclosure is a dirty business. Sometimes it is suggested Lloyds Bank acted as it did because it was in collusion with outside parties to acquire assets at decimated value. Hard though it may be to establish this, we hope Parliament will be sagacious enough to recognise that this does happen because it could. There is the curious period between the bank’s filing for bankruptcy in 1893 and 4th Lord Sudeley’s official bankruptcy in 1900 when the ownership of Toddington is obscure – we need to know more about the root of title – but somehow the well known shark Ernest Terah Hooley was involved. 4th Lord Sudeley sold to Hooley his reversionary interest in the Toddington estate. After 1893 the value of the Toddington estate tumbled from £245,000 to £59,000. Hooley gave a set of Gold Communion Plate to St Paul’s Cathedral to celebrate Queen Victoria’s Diamond Jubilee. When Hooley himself became bankrupt the Church of England insisted on returning it to satisfy Hooley’s creditors. The celebrated reactionary priest Monseignor Gilbey – everything had to be according to his right not rite – said the Church of Rome would have made no such gesture.

Curiously then Quaker Lloyds who in the 19th century founded their bank in Birmingham were one of Montgomeryshire’s oldest families, related in the early 15th century to the Blayneys from whom in 1795 we inherited our second property of Gregynog in Powys.

Sometimes it is suggested the reason for Lloyds Bank filing for bankruptcy against 4th Lord Sudeley was not economic but political. In the Liberal Party the Whig Aristocracy espoused reform to exercise a restraining hand over it. This introduced a sharp rift within the Liberal Party between the old Whig aristocracy and the middle class Radicals, headed by Joseph Chamberlain, who was powerfully motivated by class jealousy and here not a pleasant piece of work. Banks are sensitive to political pressure; Joseph Chamberlain was a very powerful politician; his power base lay in Birming¬ham where Lloyds Bank was founded and which he helped to build up into one of the big Five; and it is suggested it was due to him Lloyds Bank filed for bankruptcy against 4th Lord Sudeley because Sudeley’s principal creditor was the Grosvenor Lord Stalbridge, Treasurer and Chief Whip of the Liberal Party for whom Chamberlain conceived a particular animosity, and who in consequence of Sudeley’s bankruptcy had to leave politics and go into railways (see Nellie – Letters from Africa by Lord Stalbridge’s grand-daughter Elspeth Huxley).

But this convincing explanation of what went wrong for us, that Joseph Chamberlain effectively removed Lord Stalbridge from politics and we were carried out on the way, cannot be shown to satisfy the lawyers. Medicine has many cases where doctors are convinced of the cause of a patient’s sickness without being able to show it, and with their advice the patient is cured. When I became ulcerated owing to the stress induced by my first wife’s schizophrenia, my doctor was convinced without being able to show it that the ulceration was caused by the schizophrenia. He was right. After we separated I recovered. Why should the lawyers be allowed to win the day, they are not very practical people to make everyone their poltroon.

It may also come into the picture that in 1886 Chamberlain in his disagreement with Gladstone over introducing Irish Home Rule crosses over to the Conservative Party, the Whig aristocracy in the Liberal Party disappeared, but Lord Stalbridge and 4th Lord stayed behind as Liberal Unionists.

It cannot be the proper purpose of bankruptcy proceedings to pursue a vendetta, but sometimes they are so used, the punishment by the Grosvenor Duke of Westminster of his relative Earl of Beauchamp for homosexuality being a famous example. Chamberlain understood bankruptcy exceptionally well, since he was responsible for the Bankruptcy Act of 1883 on which our present law is based. But we would have had to play his cards close to his chest, since the Establishment was still very powerful. It will not suit the image of Lloyds Bank to be exposed for bankrupting someone rather than economic purposes.

Buddha said: “Believe nothing where you read it or who said it, not even if I have said it, unless it agreed with your own reason and your own common sense.”