May 4, 1838 King of Cons

In January 1848, a carpenter and sawmill operator named James Marshall discovered gold on the American River near Coloma, California.  Some 300,000 flocked to the “Golden State” over the next few years from the United States and abroad, in search of fortune. For most, the “California Gold Rush” was tedious, dirty and difficult work.  For Jefferson Randolph “Soapy“ Smith and his merry  band of grifters, it was easier simply to fleece the miners out of their hard won gains through rigged poker games, scam three-card Monty and a catalog of petty deceits. 

Between 1869 and 1872, the German actress and amateur “banker” Adele Spitzeder became the wealthiest woman in Germany, handsomely rewarding suckers…err…investors, with cash derived from new marks. Sarah Emily Howe ran the same con throughout the 1870s and ’80s through the “Ladies Deposit Company”, of Boston.

In the 1920s, Italian swindler Carlo Ponzi elevated this “rob Peter to pay Paul” scheme to such heights as to have the scam, named after himself. In the classic Ponzi scheme, early investors are paid above-average returns with the proceeds coming from new investors.

The wisely skeptical among us may question the legitimacy of consistently spectacular returns on investment but the money is real. Until it isn’t, and then heaven help the person left without a chair, when the music stops. For investors with Bernard L. Madoff Investment Securities company, the music stopped in 2008 with early losses estimated at $18 billion dollars.

For New York’s Tammany Hall, the machinations of William Magear “Boss” Tweed elevated political corruption to such dizzying heights that the cost to taxpayers of building a single courthouse, nearly doubled that of the Alaska purchase.

Yet, in all the annals of humbuggery these are as nothing, a mere spark compared with the rising of a malign sun that was the “Cazique of Poyais”, Gregor MacGregor, the man who “sold” a continent. Or at least, part of one.

Between 1807 and 1814, a coalition of Spain, the United Kingdom and the Kingdom of Portugal went to war with the French forces of Napoleon Bonaparte for control of the Iberian peninsula.

In 1810, a running feud with a superior officer caused MacGregor to resign his commission and receive a refund of the £1,350 he’d paid to become an officer. In 1811, actions of 57th Foot soldiers at the Battle of Albuera earned considerable prestige for the regiment and the nickname, “Die-Hards”. MacGregor would make much of his association with his former unit even though the man had been gone by this time, for a year.

The now 23-year old MacGregor moved into a house rented by his mother in Edinburgh for a time where he adopted the title of “Colonel”, and took to referring to himself as “Sir Gregor MacGregor, Bart“.

The latter is a term of nobility equivalent to a Baronet, indicating chieftainship among the clan, Gregor.

Maria Bowater MacGregor died that December. With her went the income and the support of the influential Bowater family. Most especially Maria’s father the Admiral who wasted no time in punting his now-former son in law.

For Gregor MacGregor, options were limited. Too soon to announce an engagement with any sense of decency to another heiress, a return to soldiering made sense. But not with the home team. Not after that ignominious departure, back in 1809. So…what about South America?

It’s unclear whether the two met at this time but, for MacGregor, this was the answer. Gregor MacGregor arrived in Venezuela in April 1812 and headed directly for Caracas. There, Miranda was delighted to entertain such an accomplished British military officer…a member of the famous “Die hards”, no less.

Now “Colonel” MacGregor skedaddled with Josefa to the Dutch island of Curacao and on to Jamaica before returning to South America and accepting the rank of Brigadier General in service to New Granada, Venezuela’s neighbor to the west.

MacGregor’s South American military career is best remembered for a 34-day nation-wide retreat pursued by two Royalist armies and a hare-brained invasion of Amelia Island in Florida, resulting in the short-lived “Republic of the Floridas”. Then there was that time under fire in Porto Bello Panama, when he paddled out to his ships on a log and sailed away, abandoning his men to a miserable life, in captivity.

Even then there were those who proclaimed the “New Xenophon”, a latter-day Hannibal come forth to liberate the new Carthage. One of the more perspicacious New Granadan officials took the opposite view: “I am sick and tired of this bluffer, or Quixote, or the devil knows what” he wrote in a letter to a friend. “This man can hardly serve us in New Granada without heaping ten thousand embarrassments upon us“.

In 1820, MacGregor happened upon the Mosquito Coast (aka “Miskito), a swampy and inhospitable wilderness spanning the coasts of modern day Nicaragua, and Honduras. There, MacGregor persuaded a leader of the indigenous tribes to grant him land, to found a colony.

Besotted with dreams of empire, MacGregor told tales back on British soil, of the independent Kingdom of “Poyais”. A land of vast wealth and welcoming natives where a man might work for a day and provide for his family, for a week. A land where he himself was “Cazique” or Royal Prince, a prestigious honor bestowed by none other than King George Frederic Augustus himself, of the Mosquito Coast.

The Cazique of Poyais set about recruiting settlers and investors, raising a dizzying £200,000, a sum equivalent to nearly 12 million, today. Settlers were invited to exchange their pounds sterling for Poyais dollars, the notes conveniently printed by none other, than Gregor MacGregor.

Seventy settlers departed England in the Autumn of 1822 bound for the tropical paradise, of Poyais. Another 200 followed a few months later only to be met by desperately poor natives, the bedraggled survivors of the earlier expedition and two American hermits.

Some evacuated to Honduras while fifty returned to England arriving in October, 1823. Inexplicably, most refused to blame MacGregor for the disaster. Even so, with Poyais dominating the headlines, the Cazique wisely performed a disappearing act. Across the channel to France where he ran the very same scam, this time raising £300,000.

French authorities got wind of the racket, impounding the ship and trying MacGregor, for fraud. Still unrepentant, the man was acquitted while an “associate” was convicted, in his stead.

Back in England, MacGregor was re-arrested but released in a week, without charges. He persuaded the firm of Thomas Jenkins & Company to issue a new bond in the amount of £300,000, many believing the earlier debacle to be the result of someone else’s embezzlement. There followed another bond issue, this time amounting to £800,000. It was generally regarded as a humbug by this time, not that anyone ever thought to doubt the existence of Poyais itself. It’s just that those previous bonds, had failed to generate a profit.

Back in Scotland, the Glenorchy Kirkyard near Loch Katrine has served as the ancestral burial ground for the Gregor clan, since 1390. There you will find an “octagonal-shaped Gothic church with its square tower and pointed stained-glass windows [set] in a peaceful graveyard on top of a knoll” according to find-a-grave.com. There is no mention of Gregor MacGregor nor of the tropical paradise, of his invention.