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The disorder of the phoenix

Hannah Nairn
Investment Associate

Clarence Hatry was a driven but reckless company promoter whose financial chicanery ended in a spectacular bankruptcy, rattling markets just before the great crash of 1929. His punishment was swift and severe,  but Hatry was remarkably resilient and ultimately found redemption –  as a bookseller with a royal warrant.

Hatry’s story begins – as it was to continue – with chaos and renewal. His father, Julius, was a Jewish emigrant from Lorraine, who fled war and persecution in his homeland and arrived in England in 1871.1

Julius was a hatmaker, and Hatry s hattery began producing silk top hats, the essential male status symbol in Victorian England. The wealthy émigré communities in London took to the toppers, and his business prospered. He married, was granted British citizenship and moved to affluent Belsize Park where, in 1888, Clarence was born.


Yet the Hatrys’ fortune soon ran thin. The fashion for silk toppers turned in favour of cheaper, more practical styles. When Julius died suddenly in 1907, the ailing family business passed to Clarence, then barely an adult, and his brother Gerald. Within three years, Gerald absconded, leaving Clarence with sole responsibility.

Clarence struggled in vain to revive his father's business. After taking out an illegitimate loan from conmen, Hatry and his mother were declared bankrupt and lost their Belsize Park home. The family business failed soon after.

This sudden loss of hard won status kindled in Clarence a lifelong desire to restore the family's fortunes. The financial sector would provide the arena.

Some migrants crossed the Atlantic, only to be refused entry at Ellis Island. Hatry's eureka moment: this was an insurable risk.


Hatry entered the world of insurance after a chance encounter with a successful broker, Deighton Patmore. Working for Patmore's company, Hatry soon gained a reputation as an innovative problem solver. But his hard work was not limited to his professional life. Hatry’s office was near the Cavendish Hotel, the ‘room where it happened’ for high society, and Hatry networked with zeal to ingratiate himself.

Hatry again became wealthy, and this opened up new opportunities. One such played to Hatry's heritage. Before the First World War, there was a wave of emigration from Eastern Europe to the United States. But some migrants crossed the Atlantic,only to be refused entry at Ellis Island. Hatry's eureka moment: this was an insurable risk. He devised an insurance policy to cover the cost of return travel for migrants who had been rejected. The creation and sale of the Union Emigrants Association marked the start of the next phase of Hatry's career: as a company promoter.

Company promoters operated in the middle ground between today's investment banker and venture capitalist. They conceived new ideas for companies, raised cash from investors and managed flotations. But the UK stockmarket was far more lightly regulated than its European counterparts, with little transparency into companies’ finances. That gave promoters numerous opportunities to “palm off something unsound on the public", as one admitted.2


The outbreak of the First World War in 1914 brought an entirely new opportunity set for Hatry, who had secured an exemption from active service on medical grounds. Wartime financial controls made it difficult to form new companies, so Hatry turned to acquisitions. In December 1916, Hatry bought the Commercial Bank of London, which would be the cornerstone of his promotion enterprise. He proved adept at identifying future beneficiaries of the post war environment. Hatry also led a new wave of industry amalgamations, combining groups of disparate businesses into one company, which created even greater opacity for investors. Leaping frenziedly from one successful promotion to the next, he amassed a sizeable fortune.

Which he was not shy of displaying, ostentatiously adopting all the fashions and pursuits of the British upper class. “Hatry was so flamboyant it was said that he even had the bottom of his shoes polished.3 His mega yacht, Westward, was reportedly the fastest racer of its time. Hatry and his family settled in Mayfair, but also kept a stable of racehorses in the country. However, one prize remained beyond his grasp: a title. Hatry shamelessly used his network to campaign for a baronetcy, but that proved a step too far, even for then Prime Minister Lloyd George.


At the start of the 1920s, economic conditions turned more challenging. Mainland Europe remained impoverished by the war. In the UK, inflation took hold, necessitating higher interest rates. By mid 1921, the country found itself in a deep recession. 

Hatry's businesses were not immune. The Commercial Bank's difficulties were exacerbated by his exuberant profit predictions and overcapitalisation of its businesses. As profits slackened and dividends were cancelled, investors began to liquidate holdings in Hatry s companies. In 1923, the Commercial Bank collapsed. For the second time, Hatry found himself  in professional disarray.

However, he was far from finished. By 1925, the economy was in better shape, and Hatry rose from the ashes like a financial phoenix. He persuaded some bullish investors to give him £100,000 to set up a new company, the Aylesbury Trust, which enabled Hatry to launch a new wave of promotion and amalgamation.


Not all of the financial community were supportive. Hatry's activities aroused the suspicion of Montagu Norman, the Governor of the Bank of England, who would ultimately prove instrumental in Hatry's downfall. Norman distrusted Hatry's activities in general, but particularly disliked his undercutting of the network of incumbent stockbrokers.

Unfazed by Norman's disapproval, Hatry embarked on some of his biggest projects as the economy started to boom, constructing a house of cards, thanks to his extraordinary ability to keep attracting new capital from investors. He created a national group of department stores, the Drapery Trust, which he sold to Debenhams in 1927.

At the time, technology companies were a hit among investors on both sides of the Atlantic. For example, shares in radio and electronics company RCA rose tenfold in the later 1920s. Taking advantage of this enthusiasm, in 1928 Hatry floated the Photomaton Group, which produced and distributed photobooths.

But Clarence had not learnt the lessons of the immediate post war years: the investments he promoted were still based on unattainably high profit projections and the businesses were overcapitalised. 


The time bomb was ticking. Earnings reports successively disappointed, and the share prices of the stocks in which Hatry retained a stake continued to fall. Rather than retrench and focus on business recovery, Hatry continued to play a game of pecuniary snakes and ladders in his search for cash. 

A temporary reprieve was provided by an old friend. In 1925, Hatry had assisted in raising funds for the Borough of Wakefield, and the town clerk, Abram Allibone, returned in 1928 for further assistance. Hatry convinced Allibone not to postpone the proposed bond issue until the next year, when the funds would be needed. Instead, he recommended the council issue the debt immediately and leave the funds with Hatry to invest on its behalf. Hatry had effectively got himself a desperately needed one year loan.

Rather than retrench and focus on business recovery, Hatry continued to play a game of pecuniary snakes and ladders in his search for cash.


Undaunted, Hatry embarked on his biggest project yet, the rationalisation of the British steel industry. He sought to form a syndicate to provide the upfront capital needed to acquire companies for restructure. At the same time, he needed to persuade companies to become founding members of the combine. Hatry’s proposals initially fell on deaf ears, but eventually United Steel showed interest.

Two options were provided to existing United Steel shareholders: to be paid in cash or in shares of the future combine. Faced with the characteristically scant information provided by Hatry and an obviously risky project, most opted for cash – a further financial burden for Hatry. Montagu Norman complicated matters, by warning potential financiers of the unreliability of Hatry and his schemes. As if that wasn t bad enough, the General Election in May 1929 brought to power a new Labour government, creating jitters in the City.

Hatry sought to reassure the largest participants in his scheme, but he found the audience much less receptive in this new environment. Unwilling to admit failure, Hatry and his associates set about finding cash from elsewhere.


The carousel was spinning at dizzying speed. Investors’ concerns intensified when he asked for extensions on existing loans. With Montagu s warnings ringing in bankers ears, Hatry could not source liquidity. Soon, bankers started selling shares in Photomaton, which were held as security. This pushed down the share price, creating a further drain on Hatry's resources. The due date for the Wakefield loan was looming, and the demands of Hatry s creditors were growing.

Hatry's descent into criminality was in some ways a natural step, the last option to prevent the collapse of his entire project. He and his associates faked receipts for cash from investors and used them as collateral to obtain additional loans. Perhaps he viewed these as a temporary measure.

But Hatry would not have the chance to rectify his wrongs. A last ditch effort to obtain funds in Paris was picked up by the press, prompting a further sale of Photomaton shares, withdrawals from remaining backers and the announcement of an investigation into Hatry’s business.


Icarus had flown too close to the sun. In mid September 1929, with scant warning for the general public, Hatry announced the group was insolvent. He admitted the use of fraudulent notes, for which he took full responsibility.

The Hatry group collapsed spectacularly, on the scale of the Enron scandal of modern times.4 Some have even suggested that it was one of the proximate causes of the Great Crash of Wall Street the following month.In the lore of 1929, the unmasking of Hatry in London is supposed to have struck a sharp blow to confidence in New York.5

Hatry s part in the crash should not be overstated: a massive speculative bubble had built up over a decade, and its collapse was inevitable. But his downfall certainly provides a cautionary tale of the dangers of financial excess and the depths individuals will plumb in seeking to avoid exposure and catastrophe.

At his sentencing in January 1930, his actions were described as “the most appalling frauds that have ever disfigured the commercial reputation of this country.6 Hatry was sentenced to 14 years in prison, with two of hard labour. Justice was swifter – and more punitive – in those days.


Hatry was nothing if not resilient. He served nine years of his sentence, ending up as prison librarian. On his release, he put this newly acquired expertise to use in classic Hatry style. He bought Hatchards, England s oldest bookshop, for £6,000. Despite the onset of another world war and his own advancing years, he managed to turn round the ailing business: Hatchards remains a British institution to this day. Once again, Hatry had restored his fortunes – and, this time, there would be no reversal.

  1. Swinson (2019), Share Trading, Fraud and the Crash of 1929: A Biography of Clarence Hatry

  2. Robb (1992), White-Collar Crime in Modern England

  3. Ahamed (2009), Lords of Finance

  4. Ibid

  5. Galbraith (1955), The Great Crash 1929

  6. Robb, White-Collar Crime in Modern England

This article first appeared in The Ruffer Review 2023.

Past performance is not a guide to future performance. The value of investments and the income derived therefrom can decrease as well as increase and you may not get back the full amount originally invested. Ruffer performance is shown after deduction of all fees and management charges, and on the basis of income being reinvested. The value of overseas investments will be influenced by the rate of exchange.

The views expressed in this article are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument, including interests in any of Ruffer’s funds. The information contained in the article is fact based and does not constitute investment research, investment advice or a personal recommendation, and should not be used as the basis for any investment decision. References to specific securities are included for the purposes of illustration only and should not be construed as a recommendation to buy or sell these securities. This document does not take account of any potential investor’s investment objectives, particular needs or financial situation. This article reflects Ruffer’s opinions at the date of publication only, the opinions are subject to change without notice and Ruffer shall bear no responsibility for the opinions offered. This financial promotion is issued by Ruffer LLP, which is authorised and regulated by the Financial Conduct Authority. Read the full disclaimer.

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80 Victoria Street
London SW1E 5JL
31 Charlotte Square
Edinburgh EH2 4ET
103 boulevard Haussmann
75008 Paris, France