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Walter
Watts
(1817-1850)
Although he was
not literally the first employee of an
international corporation to figure out a way to defraud his employers,
because
of the unusual manner he chose to spend the money he obtained and
because his
happened to be the first of a series of spectacular frauds that rocked
London’s
financial establishment in the 1850’s, Victorian journalists credited
Walter Watts
with having invented what we today call “white collar” crime.
Both Watts and his
father worked as clerks for the Globe
Insurance Company. Testimony given at Watt’s trial indicated that
Watts’ father
had worked for the company almost since its establishment in 1826. No testimony was given as to exactly how long
Watts’ himself had been employed, but in 1833, he appears as a witness
in the
forgery trial of Robert Byers and identifies himself as a Globe
Insurance
company clerk.1 Although he never rose higher than the rank
of
assistant clerk and was paid a modest salary of around £200,
Watts was in charge of
what was, in hindsight, the ridiculously under-supervised task of
keeping the
company’s passbook. When the bank would
return checks made on payments to the company, it was Watts’ job to
match the
cancelled checks against the company’s accounts and then store them for
record-keeping purposes.
At some point in
time, Watts noticed that there was no one in
the company auditing his work. Patiently and methodically, he began to
erase
and alter the amounts on the cancelled checks, balance the difference
with
accounts payable from fire and life insurance claims that he had access
to in
the passbook and then write checks to himself for the difference.
According to David
Moirer Evans’ 1859 account of the scandal
in Facts, Failures, and Frauds:
Revelations Financial, Mercantile and Criminal, J.E. Coleman, the
accountant brought in by the Globe to investigate Watts’ wrongdoing,
estimated
that he took somewhere around £70,000 from the
company.2 However because it is
unclear how long Watts
was removing funds, how carefully he maintained a balance between
accounts, and
what an embarrassing public relations disaster the crime was for Globe
Insurance, the full extent of his fraud is unknown.
In hopes of
covering himself against prosecution should his
pilfering be discovered, Watts purchased two shares of Globe Insurance
stock.
His reasoning seems to have been that under British law, shareholders
in a
company cannot be charged with stealing from that company.
Court records show that his lawyer, Sir Alexander
Cockburn , (who would go on to become England’s Lord Chief Justice) made this
argument
rather forcefully in a motion to dismiss at his trial.3 The
prosecution was limited in charges they could bring against Watts
because he
was a shareholder. In the end, instead
of prosecuting an embezzlement case against him, Watts was charged with
forging
a check for £1400
and stealing the piece of paper (the check) it was written on.
There is a
tradition in the theatrical community that Watts
bought the two shares in the Globe Insurance Company from Maddison
Morton.4 Morton was the author of popular farce titled Box and Cox. A version of this comedy
would be set to music by composer Arthur Sullivan and is still
sometimes
performed as part of Gilbert and S ullivan celebrations to this day.
Although
this makes for an interesting bit of name-dropping, it’s more likely
Watts
simply purchased the shares on his own.
Watts’ involvement
in the London theatre scene, however, was
no myth. In stark contrast to the quiet, methodical, unassumingly
anonymous
manner he had adopted to acquire his funding, Walter Watts spent the
money he
obtained in a fashion that was gob-smackingly spectacular. In Crimes and Criminals of Our Century,
Sir Willoughby Maycock describes the figure that Watts cut as follows:
It was in the year
1844, and at a time when Walter Watts was
about in his twenty-seventh year, that he became associated with
fashionable
life in London. He had a fine house in St. John’s Wood, and another at
Brighton, at both of which he dispensed unbounded hospitality. He was a
connoisseur in wine, and stocked his cellars with the best vintages,
regardless
of cost. Among the fair sex, and the frailer too, he spent a deal of
time and
money. His equipage was faultless, and his horses and “Tiger” the
object of
envy in Rotten Row. 5
Most
extravagantly, he bought the lease for not one, but two
West End theaters – the Marylebone and the Royal Olympic. Watts was no
absentee
landlord or mere spend-thrift dilettante, but took the job of theater
manager
quite seriously and enjoyed a certain measure of popularity among his
employees
as this frequently quoted passage from dramatist and journalist Edmond
Yates
attests:
Who was Mr. Walter
Watts? Personally, a cheery
light-whiskered, pleasant little man, of convivial and
champagne-supper-giving
tendencies. What was he? Actors in
those days were, as a rule, not very clear about business matters: they
knew he
was not an actor; they thought he was “something in the City.” He was
an
excellent paymaster, very hospitable to all authors and critics, drove
in a handsome
brougham, and made elegant presents to the “leading ladies,” whom he
admired. “Something in the City,” it was
opined, must be a good berth.6
Although as it is
frequently pointed out, Watts had no
background or training in the dramatic arts, he was a real theatre
aficionado
who used his unlimited funds to experiment and innovate in his
theaters. He
wrote and produced several of his own plays during his tenure at the
Marylebone
and the Olympic. These included “The Irish Engagement,” (Marylebone,
1848),
“Dream of Life” (Marylebone 1848), and “Harlequin Fairy-land”
(Marylebone,
1850). “The Irish Engagement” is a one-act
farce that features a rather feckless and unrepentant servant assuming
the
identity of a nobleman and comically abusing an obnoxious blustery
patrician
father to win the hand of his master’s and his own lady love. The work
is in
public domain and is available online . There is even a student production of the farce on YouTube. Even in the hands of amateur
performers, a viewer can see how the audience responds to the play’s
broad
slapstick comedy and role-reversal as the wily servant out-foxes and
humiliates
the lord of the manor and even manages to steal kisses from his
master’s
fiancée under his very nose. The audience roars with laughter, never
realizing
this comedy was composed by an insurance clerk who was living a second
life as
a millionaire theater manager.
 “Dream of Life”
was a temperance play in which an alcoholic
was shocked back to sobriety by a vivid dream. “Harlequin Fairy-Land”
was a
Christmas pantomime co-written with Richard Nelson Lee who went on to become the manager of the City of London Theater. Lee is estimated to have written over two
hundred such Christmas pantomime plays over the course of his prolific
career. Both of these were primarily
“special effects” productions and were meant to show off technically
challenging lighting and staging transformations that Watts and his
crew could
achieve on the Marylebone’s extra deep gas-lit stage.
Watts himself
might not have had a great deal of expertise,
but he was willing and able to pay to surround himself with people who
were experts. This approach was especially
true for his company of actors. He used his unlimited funding to
attract a
group of stars like young tragedian Gustavus Brooke,
comedians Robert and Mary Anne Keeley, and perennial audience favorite T.P. Cooke. Watts’ favorite “catch,” though, were the two popular young American actors he lured away
from the successful run they were having at the Princess Theater – E.L.
Davenport and Anna Cora Mowatt.
There were
persistent rumors both before and after Watts’
death that he was attracted to Mowatt. She was a beautiful, spirited,
intelligent young wom an with an older, sickly husband. Given that she
was a
novice performer with limited experience, Watts was extraordinarily
generous
and supportive of her career. Then again, money was no object with him. Before he took over management of the Olympic
Theater, he lent Mrs. Warner £1000 for its
renovation. He also kept
Gustavus Brooke out of prison by paying off a substantial debt to a
costumer
the tragedian had incurred. Those examples of generosity did not lead
to either
of them being linked romantically to Watts. The manager signed Mowatt
to a
long-term contract and produced sumptuous productions of two of her
plays –
“Fashion” and “Armand.” This decision,
however, seems to be in keeping with his policy of attracting new
playwrights
to the Marylebone as part of what seems to be a long-term strategy for
building
an audience for the struggling theater in a decidedly unfashionable
part of
town – Get the audience in by offering limited runs of clever
productions of
favorites like Shakespeare and popular shows such as “The Black-Eyed
Susan”
with an ensemble cast of beloved actors, then lure them back to see
spectacular
stagings of new shows they couldn’t see anywhere else in town with that
same
cast of stars. It wasn’t a bad
tactic. If Watts had had a couple
decades to implement his ideas instead of a couple years and if he had
been
millionaire’s son instead of an insurance cashier’s son, theatre
history might
remember him very differently.
Mowatt, in
sentimental Victorian style, was sweetly effusive
in her public expressions of appreciation for Watts’ grand gestures as
she is
in this dedication to him of this 1849 publication of the play “Armand:”
My
acknowledgements are due and cheerfully paid to Mr.
Watts, the Manager of the Marylebone Theatre, for the liberality
evinced in
putting the play upon the stage, and in all his other arrangements…7
Her gracious
public acknowledgements of Watts’ beneficence
did nothing to squelch the rumors that there might be something
excessive about
the manager’s attachment to Mrs. Mowatt. Although rumors say that he
was “fond
of the ladies” and gave expensive gifts to women, Watts’ name is never
linked
to any other specific woman other than Anna Cora Mowatt. I have written
a great
deal about how she became entangled in the scandal that ensued after
his crime
was discovered both on this website and on my
blog
.
There were various
explanations for how Watts’ crime was
detected. Some versions have savvy actors spotting suspicious checks in
the
manager’s office and somehow extrapolating the existence of Watts’
double life
as a clerk and his manipulation of the company’s passbook intuitively.
Another
version has a country parson come into the Globe office to try to pay
his life
insurance bill only to discover that Watts’ creative tampering with
accounts
paid and accounts receivable has rendered him legally deceased. In my
favorite
unlikely scenario, an author has William Makepeace Thackeray
and his friend Matthew James Higgins
decide that they don’t like the look of Watts and tail the manager’s
carriage
all over London until it winds up at the doorstep of the Globe
Insurance
Agency. 8
 From court
records, it’s clear that the obvious thing
happened. Someone at the Globe Company finally noticed that Walter
Watts had
too much money. He owned two mansions. He travelled in two of the most
expensive type of vehicles of the day. He dressed to kill.
The check that he was prosecuted for was
written for £1400.
That amount is seven times his yearly salary. He had been warned by his
supervisor that his theatrical pursuits seemed inappropriate for
someone with
his sort of job. Watts was no longer flying quietly under the radar. He
was
under suspicion. In the fall of 1849 he was being watched. Almost
inevitably,
he wrote a very big check to himself and got caught.
On
March 6, 1850,
Watts was arrested. The Marylebone and Olympic Theaters were closed.
Their
companies were dispersed. Despite the
sensational nature of the case, there is surprisingly little coverage
of it in
the press. Most of the stories are
short, blunt, and strictly factual as this brief notice from”The
Examiner”:
Mr. Walter Watts,
charged with stealing a check for £1400,
the property of the Globe Insurance Company, has again remanded, till
next
Tuesday.9
This brevity and
lack of coverage could have been due to
confusion in the press over the facts of the case.
In addition to Watts’ dual identity taking
everyone by surprise, the Globe Insurance Company was having unforeseen
difficulty ascertaining just how much of their funds had disappeared.
Because
of Watts’ gambit of buying shares in the company, they found themselves
having
to take an unusually circuitous and weak-looking route to prosecution. It all added up to a public relations
nightmare for the company. As a result,
it’s possible that the Globe might have been actively lobbying any
friends they
had in the press to squelch the story.
The story did not
escape all notice however. The actor
William Macready noted in his diary:
Newcastle,
March 10th. – After
dinner looked at the Times, and saw
noticed the defalcation of a clerk in the Globe Assurance Office
connected with
some theatres which closed in consequence. I looked to the
advertisement for
the Olympic and Marylebone. They were not there! This is a sad
business, as
Mrs. Mowatt sinks inevitably in the wreck.10
Legal maneuverings
dragged on behind the scenes for four
months. For a time, it looked like Watts’ shareholder strategy might
prevail
and he might get off with a slap on the wrist for the weak charge of
stealing a
piece of paper that the prosecution had been able to mount. However the Judge decided that
sentencing
should be in accordance with the crimes that it was probable that Watts
had
committed not just what the jury actually found him guilty of and
sentenced him
to ten years transportation.
Watts, stunned by
this unexpectedly harsh outcome, committed
suicide by hanging himself in the prison’s infirmary that night. “The
Leader”
wrote on their front page of his death:
At home the
suicide of Walter Watts will have brought more
pain than that of the ordinary criminal. His turpitude, indeed, was not
of a
very deep dye, though very necessary to be checked in a commercial
country:
many a man gets through life with impunity who commits far blacker
acts; and
Watts had qualities which made him liked. His summary escape from final
disgrace and exile provoked rather a needless surprise. He was
“cheerful” to
the last, and some say that they should have thought him “the last man
to do
such a thing.” He had, however, unnerved himself by the lavish resort
to
stimulants. Besides, these “last men” to do a thing hypothetically are
often
the first men to do it practically. Your vivid enjoyment of life is
mostly
accompanied by vehement revolt from its reverses, if not by a spirit
that will
rather meet adversities with resistance than with submission, -- “and
by
opposing, end them.”11
People personally
and professionally connected to Watts did
what they could to restore order to their lives, careers and finances.
Nearly a
decade passed. During this time, other “gentleman fraudsters” such as
Leopold
Redpath, William Robson, and William Pullinger screamed into the headlines of
Victorian London. It began to seem that
Watts’ misdeeds were the beginning of a stunning new crime wave. This
impression solidified in 1859 with the publication of financial
journalist
David Moirer Evans’ book Facts,
Failures, and Frauds: Revelations, Financial, Mercantile, and Criminal
that
put Walter Watts’ name at the top of the list of a new breed of
miscreant –what
today we would call the “white collar” criminal -- who attacked the
system from
within. John Hollingshead, writing in Charles Dickens’
All
the Year Round
cements Watts’ position as unknowing patriarch of this new genealogy of
crime
in his article June 6, 1860 article, “Convict Capitalists,” writing,
The fate of Walter
Watts in 1850 was powerless, so it seems
to deter others from following in his footsteps, and benefiting by
discoveries
which his keenness and industry had made. The loss of seventy thousand
pounds
sterling by the Globe Insurance Company was also powerless, so it
seems, to
improve the character of auditors, and elevate them into something less
practically worthless than men of straw.12
Hollingshead’s
condemnation of the Globe, even though delayed by almost a decade, is
typical
of the pent-up ire unleashed in some of these re-tellings of Watts’
story. This
writer reviewing David Moirer Evans’ book on the scandals captures a
sense of
the real indignation directed towards the Globe Insurance Company and
other guardians
of “the City” in the wake of the full revelation of the extent of
Watts’ fraud:
If the late Samuel
Taylor Coleridge, poet and opium-eater,
had been perpetual chairman of the Globe Insurance Company, with his
friend
Charles Lamb, unstinted in his favorite drink, to face him as vice
chairman,
with the board-room furnished, for the sake of appearance, with lay
figures of
eminent city merchants, and with two clowns selected from any theatre
to act in
their pantomimic capacity as auditors, it would not
have been surprising that Walter Watts, a
young man of not particular ability, who was acting as a check-clerk in
the
same establishment, with a salary of less than two hundred a year
should have
been able, between August, 1844, and February, 1850, to defraud his
employers –
the Globe Insurance Company – of seven
hundred thousand pounds! When,
however, we find this old, this large, and this flourishing company
(flourishing it must have undoubtedly have been to be robbed of nearly
three-quarters of a million sterling, without feeling any premonitory
symptoms
of insolvency) not under the guidance of a few poets, rhapsodists,
opium-eaters, dummies, and clowns, but managed by a board of the first
men in
the City, we feel more inclined than ever to shake such guardians of
property
by the hand to welcome them in dream-land as men and brothers. During
the whole
of that eventful six years when their finances were being undermined,
their
adventurous and unscrupulous clerk was constantly under their notice.
They knew
his origin, and family expectations, for his father was an old and
faithful
servant in their office. They heard vague reports of his mansion at St.
John’s
Wood, and his other mansion at Brighton, and still there was nothing to
arouse
their suspicion, and the lotus-eaters requested to be let alone. They
heard
that in his over-time he had become the lessee of a suburban theatre,
and that
the legitimate drama was even now looking to him as to on who was to
breathe into
it the breath of new life, -- and still the City lotus-eaters requested
to be
let alone. They heard that to the
managerial cares of the Marylebone he had added the lesseeship of the
Olympic
Theatre, and that every rejected dramatic author in London was busy
recopying
his dusty manuscripts for the theatrical millennium that had come at
last, --
and still the City lotus-eaters requested to be let alone.
They must have seen the well-appointed
carriage or brougham that used to bring their humble check-clerk to his
duties
every morning, -- and yet the City lotus-eaters closed their filmy
eyes, and
requested to be let alone.
How the bubble
burst, and the heavy dream was broken; how an
investigation led to a public trial; how the trial resulted in a
verdict of ten
years transportation against Mr. Walter Watts; and how he committed
suicide by
hanging himself in Newgate, are facts that are pretty familiar to every
reader
of the newspaper press. How the fraud was effected by false entries,
fictitious
claims and other means, is tolerably well known; but how the system
should so
long remained undiscovered, with a banker’s book which presented a mass
of
erasures and alterations, is not so clearly known; and it is
sufficient, in our
opinion, to remove from the directors and auditors that stigma of being
hard,
practical men which has clung to them – and all their class – so
reproachfully,
and so long. 13
Other writers
chose to use Watts as an illustration of what
they saw as the declining moral character of their day.
Hollingshead, writing in “Convict Capitalists,”
saw Watts and the others who followed him as men who had perverted his
generation’s passion for self-help into an opportunistic propensity for
“helping himself” to other people’s money. Moralists took the story of
Watts’ downfall
as a parable to be used to illustrate the spiritual and ethical vacuity
of
contemporary urbanites as in the following:
“Who is he?” was
many times asked with surprise and a little
prying curiosity, of a man whose means few could ascertain; whose
meanness in
due time came to light. Who is he? He has his box at the opera, and
gives grand
dinners and balls, and sparkling wines, champagne, pain,
sham, and real, in strange
mixture. He is lessee
of two metropolitan theatres, has a fashionable residence at the West
End, and
a genteel villa at Brighton; whose horses are the admiration of Rotten
Row,
whose carriage comes regularly every morning to the foot of Cornhill,
from
which a mysterious gentleman alights, winds his way to an insurance
office,
where he receives the whole of £199 20s. per
annum, about enough to
pay his wine merchant’s bill. But then there is the £
12,000 per annum
“parquisites,” or to speak more charitably, borrowed money, which he
will
refund when his theatres pay. Who is he? A felon at Newgate, committing
suicide
the day after he is sentenced to ten years’ penal servitude. Poor man,
this
Walter Watts, who died 10th July, 1850, more egregiously
mistaken in
the purpose of life than if the orb of day should become bankrupt in
buying
“farthing candles” to add to its light.14
 One wonders if
perhaps, Walter Watts, with his penchant for
the dramatic, might have appreciated the way theater critic Godfrey
Turner
framed the last act of his life theatrical terms:
The Ides of March
had come for Mr. Walter Watts, and all but
gone. He had carried on his game at the
insurance office to the tune of seventy thousand pounds before the
trick was
“blown.” Then was Mr. Watts endowed very suddenly by a plains-clothes
constable
with iron bracelets. The Olympic closed its doors just when Douglas
Jerrold had
a five-act play in rehearsal – there was quite a Jerroldmania at the
time –
while a tragedy by Westland Marston had
been accepted; and poor, knavish, light whiskered, light hearted,
convivial Mr.
Watts was called upon to appear on another scene, and to be the central
actor
in another tragedy.15
Whether or not
there was any truth at all to the rumors that
there was anything more between them than a warm professional
relationship, it
is probable that Walter Watts would have appreciated most the tribute
paid to
him by his favorite actress in her dedication to the play, “Fashion”
that was
published after his arrest in 1850:
One of the most
liberal supporters of the Drama, whose
desire to elevate and purify it – whose appreciation and patronage of
its
humblest as well as highest talent – whose liberality and consideration
to all
with whom the profession connects him – and whose efforts to establish
harmony
amongst them, while he promotes the interests of all, are beyond
eulogium, the
Comedy of “Fashion” is respectfully dedicated, with the grateful
acknowledgments of Anna Cora Mowatt.16
Notes
1.
Old Bailey Proceedings Online (https://www.oldbaileyonline.org/browse.jsp?id=t18330411-199-defend1492&div=t18330411-199#highlight
) Trial of Robert Byers (t18330411-199). 1859.
Page 82-83.
2.
Evans, David Moirer. Facts, Failures, and Frauds: Revelations, Financial,
Mercantile, and
Criminal. London: Groombridge. P 91.
3.
Ibid, p 98.
4.
Pearce, Charles E. Madame
Vestris and her Times. London: Stanley Paul & Co. 1900.
Page 295.
5.
Maycock, Sir Willoughby. Celebrated Crimes and Criminals. London: Temple Co. 1890.
Page 74.
6.
Yates, Edmund Yates. His Recollections and Experiences, Vol I.
London: R. Bentley and Son, 1885. Page 195.
7.
Mowatt, Anna Cora. Armand:
The Peer and the Peasant. New York: Stringer and Townsend.
Page 8.
8.
Escott, T.H.S., City
Characters Under Several Reigns. London: Effinham Wilson:
1922. Pages 54-57
9.
“Town and Country Talk.” Examiner (April 6, 1850). Page 219.
10.
Toynbee,
William (ed) The Diaries of William Charles MacReady
(1833-1851).
(London: Chapman and Hall) Vol II, p. 461.
11.
“News of the Week.” The Leader, No. 17. Saturday, July 20, 1850. Page 386.
12.
Hollingshead, John. “Convict
Capitalists.” All the Year Round Vol 3-4. June 9,
1860. Page 203
13.
Review.
Facts, Failures, and Frauds: Revelations, Financial,
Mercantile, and
Criminal. The Athenaeum. No 1632,
Feb. 5, 1859. Page 184. Col. 1
14.
Cheshire, Thomas. Shams
and Realities in Dress, Manners, and Religion. London: Elliot
Stock, 1873. Page 19.
15.
Turner, Godfrey. First
Nights of My Young Days. (London, 1877). Page 124
16.
Mowatt, Anna Cora. Fashion;
or Life in New York. London: W. Newberry, 1850. Page 7.
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