Tuesday 16 July 2019

A millionaire, a market crash and a murder

Bryan MacMahon on the life and mysterious death of Irish economist Richard Cantillon, who became one of the wealthiest men of the 18th century

Bryan MacMahon

He may have been dubbed the founding father of economics, but, when he was alive 300 years ago, banker Richard Cantillon drew the fury of angry investors who lost money in schemes he had recommended.

He was jailed briefly, but emerged with the millions he made from share dealing and currency speculation intact. Sound horribly familiar?

The story of Richard Cantillon has such resonance today that he will be the subject of a conference on enterprise and the economy next week. His internationally acclaimed economic theories will inspire the upcoming 'Forum for Fresh Thinking', but eyebrows will be raised at the devious banking practices that made him one of the world's richest men in the 18th century.

Cantillon was the first to use the term 'entrepreneur', describing the vital role of risk-takers and speculators in generating economic growth.

He practised what he preached, and the financial risks he took made him one of the wealthiest men in the Europe of his day.

Cantillon was born in Ballyheigue in Co Kerry in the 1680s and left for France, where he became a citizen in 1708. There was a kind of Kerry mafia in the upper echelons of business life in Paris at the time.

His next move was to Spain, where he made his reputation during the War of Spanish Succession. He gained valuable practical financial experience there.

In 1714 he returned to Paris, where his cousin, the Chevalier Richard Cantillon, was a banker, and, with his help, the younger man had a meteoric rise in financial circles. One of Cantillon's successful ventures was in foreign exchange, and he was engaged in the transfer of large sums of money between Paris and London.

He was putting theory into practice – and profiting handsomely from it.

In 1720, Scotsman John Law had total control of the ailing French economy and it is a measure of Cantillon's standing and reputation that Law invited the Kerryman to assist him in developing a new financial system to rid France of its crippling debt.

Their relationship was not always amicable, however, and on one occasion, when Cantillon refused to co-operate with him because he could see the inherent defects in Law's scheme, Law threatened to have him imprisoned in the notorious Bastille.

Nevertheless, Cantillon invested in Law's Mississippi Company, which was set up in late 1718 to establish a colony in Louisiana to develop a trade in minerals and tobacco with the New World.

The value of shares in the Mississippi Company soared to exorbitant heights as people rushed to invest, and Cantillon made a huge amount of money – an incredible £50,000 in the summer of 1719 alone, worth approximately €5m today.

He was one of 25 so-called 'Mississippian millionaires', having made 20 million livres, or £630,000, the equivalent of about €60m today. He became one of the wealthiest private citizens in the world.

In another venture, the South Sea Bubble of 1720, Cantillon again made a fortune. The stock of the South Sea Company in London rose to phenomenal heights and people rushed to invest in it.

However, Cantillon was well aware of the risks and said, "there is a melancholy prospect for those who shall stay last".

When shares fell dramatically, there was consternation in the markets. The Mississippi Scheme and the South Sea Bubble are now cited as classic examples of irrational, frenzied speculation built on sand.

The shrewd Cantillon came out very well, having sold his shares early, but there was great resentment towards him from those who had lost large amounts. People laid charges of theft, usury – and even attempted murder – against him.

The Irish community in Paris was astonished when the great banker was ignominiously arrested on the street and jailed in December 1728; he was released within hours, however. Despite constant and prolonged litigation throughout the 1720s, he ultimately escaped any conviction.

Cantillon always travelled widely throughout Europe and was said to have owned a house in seven European capitals. He certainly moved frequently between London, Paris and Amsterdam.

As Professor Antoin Murphy of Trinity College, Cantillon's biographer, puts it: "Cantillon moved in mysterious ways all through his life, ever mindful to cover his tracks and maintain a low profile in the society in which he mixed."

Others say he was devious and unscrupulous, and that he certainly engaged in sharp practice, if not outright illegality.

However, it must be said that the speculative booms of the 1720s were unprecedented and, in those early days of banking, foreign exchange and share trading, there were no hard-and-fast regulations or codes of ethics. So, Cantillon cannot really be compared with dishonest bankers of recent times – although parallels are clear.

And he still has many admirers. A modern US economist Dr Mark Thornton declared: "The title of best economist in history I would give to Richard Cantillon."

In affairs of the heart, Cantillon favoured daughters of the Wild Geese on the continent. He was one of the lovers of Olive Trant of a Castleisland family, but he married Mary Anne O'Mahony in London in 1722. She was a beauty of about 20, considerably younger than he was.

But there are signs that all was not well in the marriage, as Cantillon sent his wife to a convent for some years. However, he did commission a fine painting of her from the court painter, Largilliere. They had one daughter, named Henrietta, and a son who died in childhood.

In 1734, Cantillon was living in fashionable Albemarle Street, London, next door to Lord Bolingbroke. On May 14, he was last seen retiring to his room with a book and a candle. There was a fire in the house that night and he was found dead in bed.

It seems likely that Cantillon was killed by his cook, Joseph Denier, whom he had dismissed some days previously. Denier is believed to have set the house on fire to make the death look accidental. He escaped arrest, but three other servants were tried at the Old Bailey for Cantillon's murder. All were acquitted. There is a record of Cantillon's burial in Old St Pancras churchyard in the London Borough of Camden.

A year later, a man turned up in the Dutch colony of Surinam in South America with many of the papers of Cantillon in his possession. This could have been Denier, but there is a possibility that it was Cantillon himself, who could have faked his death in order to escape from the mountain of litigation facing him.

The final mystery about a mysterious man has never been solved.

Irish Independent

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