By the end of the 19th century, Britain was a country transformed. Economically, the Industrial Revolution and the ever-expanding empire had turned minor towns into huge cities with an abundance of factories producing new goods en masse and employing hundreds of workers who had long left behind their rural lives in small villages and towns. But innovation had also brought with it a new way of getting rich: the stock market. Ordinary shopkeepers and the more successful members of this new working class – like shopkeepers or factory foremen and managers – were able to ascend the ranks through seemingly get-rich-quick schemes; in many ways, the speculative stock market was just as transformative as the factories and cities which we often think of as characterising the Industrial Revolution.

A world transformed
Politically speaking, changes like the 1832 Reform Act meant not only were more people able to vote and that Parliament took on more power from the monarch, but members of this new middle class were able to use their influence and business prowess to enter the Commons as MPs. But while there were many legitimate business men and philanthropists who were keen to use their new status for good, the vested interests and respectability of their new position gave some the opportunity to commit and hide huge frauds.

The Yorkshire railway entrepreneur and Tory MP George Hudson, whose companies built many of Britain’s biggest lines and grandest stations using the money from public subscriptions in the 1840s, was one example. While GDP rose to one of its highest-ever levels and those who invested in his lines became very rich to begin with, he created a speculative bubble, deceiving subscribers and the stock market as to the true value of his companies and using his position of his parliament to approve the building of his own lines and generally look after his own commercial interests. The bubble soon collapsed and Hudson fell from grace.

Temperance
Forty years later, history seemed doomed to repeat itself as another charismatic chancer, Jabez Balfour, a Liberal MP, was able to commit a similar speculative fraud, banking on his respectable political credentials to hide his crimes.

Jabez was born in 1843 as the son of two workers from the temperance movement. This was not just about reducing or prohibiting the drinking of alcohol but, increasingly during the second half of the 19th century, a political movement that had links with the Liberal Party, women’s suffrage and religious non-conformity. Jabez’s mother, Clara, was a prolific writer and campaigner, influenced by her husband’s heavy drinking and her own precarious financial situation. Her career took off when she started to lecture publicly. Jabez’s father James also entered had links with politics, working as a parliamentary aide.

It was into this middle-class intellectual environment that Jabez was born and it perhaps came as no surprise that he became attracted to pursuing a career in politics. He started off as a parliamentary agent: essentially a lobbyist who helped get bills raised in Parliament from private companies and individuals.

The chancer of Croydon
In 1869, Jabez moved to Croydon with his wife Ellen, whom he had married three years earlier. It was here that his political career really began. Perhaps in a bid to shore up his position before moving to the national stage, he involved himself in local politics. He was elected to the school board in 1874, served as mayor from 1883 to 1884 and was involved in local philanthropy.

Although Croydon was clearly where his heart was, he became one of two MPs for Tamworth in the Midlands in 1880, which had once been held first by Conservative Prime Minister Sir Robert Peel and then by his son of the same name. In 1884 Tamworth was reduced to having just one MP and, in the subsequent general election, Jabez lost out to the Conservatives. He did not get a chance to contest another seat until 1889, when he was elected to Burnley, Lancashire. He was passed over for ministerial office by the Liberal Prime Minister, William Gladstone. According to David McKie, author of Jabez, The Rise and Fall of a Victorian Rouge ‘he might have ended up knighted, possibly ennobled, even a member perhaps of the Privy Council’, had he not been engulfed by the crisis of 1892.

Politics and business
Jabez’s political career was typical of many MPs, even today: extremely. unpredictable His job as an MP was subject to various factors, not just the electorate themselves who could vote him out, but changes to boundaries and wider issues with the national party over which he might have little control. But in the 19th century, becoming a career politician was made harder because MPs were not paid. The first annual salary of £400 was not introduced until 1911, ensuring members from low-income families were able to compete with candidates from wealthy backgrounds but also perhaps partly to try to temper the conflicts of interest which peppered people like Jabez’s careers.

Alongside his political career, Jabez took over the Liberator and turned it into the largest building society in Britain. Most of those invested their money were Nonconformists: one might argue he was trading off his family’s reputation for fighting Nonconformist and liberal causes. With the savings of ordinary people, he invested in property, built some of London’s finest hotels and set up other companies. But he was, to put it in Andy Hughes’ blunt words, ‘cooking the books, and borrowing from Peter to pay Paul’: moving his assets around from company to company. As John Richard Edwards and Stephen P Walker explain, Jabez was ‘orchestrating inter-company transfers to facilitate payment of dividends out of non-existent profits’; his auditors were turning a blind eye. The crisis came in September 1892 when the London and General Bank stopped payments on Jabez’s companies and they all filed for bankruptcy.

There was no question of the government – ideologically laissez faire – bailing out a private company to protect those who had invested their life savings, as they did during the recent 2008 global financial crisis. Those who had banked on Balfour’s reputation as a respectable local politician and businessman saw their lives ruined and some even committed suicide.

It could be argued that if the market had continued to boom, his companies may have eventually started to make a profit and no one would be any the wiser. Instead this game of confidence and chance backfired. Balfour’s directors were arrested in quick succession but as public outrage grew, Balfour himself was nowhere to be found. His wife was given power of attorney overnight and he was spirited away, out of the country.

To catch a crook
In December 1893, as the authorities moved in and his empire came crashing down Jabez disappeared. The Times reported how he had left suddenly, without telling anyone where he was going, including his housekeeper or his brother. The press also speculated that he had boarded the Royal Mail steamer ship Magdalena to Brazil, though his name didn’t appear on the list. The boat was making a stop in Spain though where Balfour could have boarded. Indeed, it was soon confirmed that he was indeed on board the boat and had settled first in Buenos Aires, living under the assumed name J Butler, and then in Salta. Yet seemingly nothing could be done as Argentina had no extradition agreement with Britain at that time.

Back in London things were moving fast. Balfour’s son James was being pursued for his father’s debts and forced to declare bankruptcy, Balfour’s former co-directors were all put on trial and in Parliament questions were put to the Home Secretary about what steps the Director of Public Prosecutions was taking to append Balfour. Argentina, however, refused any extradition request.

This was clearly a case that captured the public imagination as there was even a waxwork of him at Madame Tussaud’s on Baker Street.

By 1894, his luck had run out. The Argentinian government finally caved to pressure from the British authorities and arrested him. Despite the amount of money he owed and the sticky situation he had left his son in, he had even managed to buy a brewery in Argentina. Although Argentina arrested him, difficulties still ensued, one of which was the distance of Salta (1000 miles) from the capital of Buenos Aires and Balfour’s ability to challenge the ruling of the extradition proceedings in the Supreme Court.

By 1895, the British government had lost patience. It is said that the police inspector sent out to escort him back from Argentina in the end simply bundled him onto the ship and set sail for England.

Balfour was sentenced to 14 years’ imprisonment with hard labour in 1895. Released in 1906, he died ten years later, virtually forgotten about. Today, however, he is often characterised as a loveable Victorian rogue; yet this is a man who destroyed people financially through his own greed. Perhaps the burning question of legacy – as is the case with any criminal – is how far he was responsible for his actions or how far was he a product of the age in which he lived: the excessive, boom-or-bust, everything-or-nothing, later Victorian era.