The Great Cat Massacre (17 page)

What a scoop! Hitler’s personal diaries, which the monotesticular madman wrote in his own hand between 1932 and his suicide in 1945.

It was the German magazine
Stern
that gave the world the most famous forgery since the Turin Shroud, paying £2.5m for the privilege of being utterly humiliated in every town from Frankfurt to Sydney. And it was the
Sunday Times
that brought them to Britain, in the process massively undermining the British people’s confidence in journalism.

The forgeries were all the work of one man, Konrad Kujau, a small-time forger whose main product was fake luncheon vouchers; but he couldn’t have been successful without the collaboration of a
Stern
journalist, Gerd Heidemann. Like many corrupt and incompetent reporters, Heidemann had won awards for his journalism.

Alongside the luncheon vouchers, Kujau sold fake antiques, especially war memorabilia certified genuine by
equally fake documentation. His method of ageing these documents was literally schoolboy – soaking them in tea to give them a yellowish tint.

Before the diaries, Kujau, who had once been arrested for stealing a microphone from a youth club, was happily knocking out paintings supposedly from the Fuhrer’s own brush. One of his favourite clients was Fritz Stiefel, so in 1978 Kujau decided to treat him to something special: Hitler’s war diary.

This is where Heidemann, a dim-witted Nazi ‘enthusiast’, entered the scene. In 1980 he got wind of the story, began investigations into whether the diary was plausible and found that a courier plane carrying some of Hitler’s papers from Berlin had crashed near the Czechoslovakian border at the end of the war so the diary could, conceivably, have been among them. Heidemann told his editor that Kujau had acquired the diary from an East German contact who had found it in a hayloft – odd, but not entirely impossible.

The added interest from Heidemann meant that Kujau, understandably, didn’t want to sell just one egg from this golden goose so he set about fabricating Hitler’s thoughts left, far right and centre. Over the next two years, he created no fewer than 61 further volumes and was paid 2.5m Deutsche marks.

But what of the experts? Did no one smell a Nazi rat? Well, during this time,
Stern’
s management went about making it difficult for their own experts to verify if the documents were genuine. The magazine, for instance, gave selected historians a single page from the diaries without
telling them what it was supposedly from, thus making it near-impossible for the readers to decide if it was real.

In 1983 the
Sunday Times
sent its own historian, Hugh Trevor Roper, to authenticate the diaries. He declared: ‘I am now satisfied that the documents are authentic; that the history of their wanderings since 1945 is true; and that the standard accounts of Hitler’s writing habits, of his personality and, even, perhaps, of some public events, may in consequence have to be revised.’ But at a later press conference to launch the
Sunday Times’
s serialisation of the diaries, he declared that he wasn’t so sure after all.

Still, it was only after
Stern
and the
Sunday Times
had begun publishing the diaries that, as an afterthought,
Stern
sent the diary to experts at the German national archives, who tested the paper and said it was post-war and soaked in tea. These were ‘grotesquely superficial fakes’ peppered with historical inaccuracies, and largely copied from a book of Hitler’s speeches, with a few additions by Kujau. Apparently,
Stern’
s hard-nosed investigative journalists hadn’t thought it at all strange that the diaries were stamped ‘FH’ instead of ‘AH’ on the covers – a result of Kujau buying the wrong letter from a Hong Kong printer.

Kujau and Heidemann were both arrested. Heidemann was charged with defrauding
Stern
, which had paid him 9m Deutsche marks for the diaries. Throughout his 11-month trial, which ended in August 1984, he maintained that he was an innocent dupe. Kujau, on the other hand, didn’t just admit his guilt: he revelled in it, seeming to love every minute of the trial. It came out that he had once given an overjoyed Heidemann, who also possessed a pair of pants
once worn by genocidal Ugandan dictator Idi Amin, some ashes collected from the local crematorium and claimed they were Hitler’s last remains.

Kujau and Heidemann were both found guilty. As a result, Kujau received four-and-a-half years inside; Heidemann (who was possibly a Nazi sympathiser as well as a fool) received five.

Following the scandal, the
Sunday Times’
s editor, Frank Giles, was removed from his post and made ‘Editor Emeritus’. When he asked the owner, Rupert Murdoch, what that meant, Murdoch replied, ‘It’s Latin. The “e” means you’re out and “meritus” means you deserve it.’

CHAPTER 5

FINANCE

L
ike most holy books, the Bible is extensively and popularly misquoted to serve the interests of pressure groups, madmen or those with violent tendencies. For one thing, it doesn’t say that money is the root of all evil but rather ‘the love of money’. Pursuing lucre, it claims, blinds you to what is so obviously going on around you, including the crumbling of your prospects. Declaring this, St Paul could have been writing about any financial scandal over the last 300 years. If there is one area where the same mistakes are made over and over again, to the point where you want to hand out copies of a history textbook, it’s in financial speculation.

Stock market boom and bust is nothing new. In the early eighteenth century, apparently sensible middle-class
merchants as well as idiot sons of the gentry threw their life’s savings onto the massive funeral pyre known as the ‘South Sea Bubble’. They all stood about, warming their hands and waiting for the cash to magically rise, phoenix-like, from the flames. A little bit later, they began poking about in the ashes, wondering where it had gone.

At least they could blame the Spanish – because it was all their fault. If they hadn’t been dragging sackloads of gold and silver back from South America, which had been handed over as going-away presents by the Incas during most of the previous century, the English might never have felt like getting a foothold in that malaria-infested part of the world best known for having thousands of things that could kill you. But when the Iberian menace was finally defeated in 1714 after the War of the Spanish Succession, Britain got a concession – the Asiento, which allowed one British ship to trade with South America each year. (Making it even less attractive, the shipowners also had to pay a quarter of the profits to the King of Spain in tax.) ‘Don’t worry, Juan, we’ll stick to that agreement. One ship per year is
definitely
all we want,’ replied the British. ‘And that whole tax thing seems perfectly fair. There is
no way
we will try to get out of it.’

The British thought that before long they would be screwing over the Spanish. In fact, in even less time they would be screwing themselves like there was no tomorrow.

All the wars of the previous 100 years had left the British government in some financial difficulty. With Teutonic efficiency, George I sensibly thought paying down some of the national debt might be just the thing to do and the
Asiento could be part of the solution. Not sure how to do it himself, he invited suggestions from the two leading financial institutions of the age: the Bank of England and the South Sea Company. The South Sea Company, which been created in 1711 by the Earl of Oxford and had soon been granted monopolies on British trade in the South Seas, came up with the best wheeze: instead of the government paying its debts with real money, the company would take on £31m of the total public debt (representing three-fifths of the debt) by exchanging it for shares in the company which would be exploiting the Asiento; and would raise £2m by public subscription. That would put the public finances on a much better keel. The public would be guaranteed to pump their hard-earned cash into the South Sea Company because everyone knew it was a one-way bet.

But just to make sure the government was behind the scheme, the company – which was going all-out for fraud from the very beginning – bribed a few key members of the administration, including Charles Stanhope, Secretary to the Treasury. What they were playing down was the fact that the South Sea Company actually had very little trade going on with the lands of South America. The attraction was all in the legends and myths of the continent – people were basing their investment decisions on travellers’ tales of El Dorado. And one thing the company directors forgot to mention was that the sole trading ship that the Spanish were allowing had set sail in 1717 and the following years’ had been cancelled due to worsening relations with Spain.

The House of Commons was taken in too. A few
members of the Lords spoke out against it – Lords North and Grey declared the bill unjust in its very nature, designed as it was to make a few rich and many poor. Earl Cowper compared it to the Trojan Horse – accepted with great joy and public acclamation, but hiding a dark, treacherous secret that would destroy them all. Those who voted for it would soon rue the day, he said. But on 2 February 1720 Parliament adopted the financial plan based entirely on the sort of breathless adventurism more commonly found in a novel by H. Rider Haggard.

We are used to financial market bubbles now – the technology bubble of the late 1990s, the mortgage market bubble over the following years. But back then, when the South Sea Company share price trebled in a single day everyone simply thought that that was what it was worth. At the beginning of the day the company was worth a certain amount of money, and then eight hours later it was somehow worth three times that. As a popular saying noted soon after, ‘Every fool aspired to be a knave’. In other words, they knew someone was going to get screwed, they just never thought that it would be them.

Some people stood back, took a deep breath and asked all those rushing to buy shares in the company if they really knew what they were doing. Whig politician Robert Walpole, soon to be the first Prime Minister,
*
shouted the odd warning at the hordes rushing to their stockbrokers to throw away everything they had ever worked for. He said the bill encouraged ‘The dangerous practice of stock-jobbing,
and would divert the genius of the nation from trade and industry. It would hold out a dangerous lure to decoy the unwary to their ruin, by making them part with the earnings of their labour for a prospect of imaginary wealth. The great principle of the project was an evil of first-rate magnitude; it was to raise artificially the value of the stock, by exciting and keeping up a general infatuation, and by promising dividends out of funds which could never be adequate to the purpose.’

But no one listened. Not only did they not listen, but they actually went out of their way
not
to listen. Whenever it became known that Walpole was going to make a speech in the Commons about the South Sea Company, everyone in the chamber would leave so that they wouldn’t have to listen to any doom-mongering from old misery guts: they were all going to be rich.

Luckily, the directors of the South Sea Company really knew their business – and their business was lies and deceit. They put it about in the coffee shops (where all the serious news of the day was exchanged) that significant trade treaties had been signed with Spain, meaning the gold would arrive any minute now. They claimed that for some unfathomable reason the Spanish had decided to give the company the Potosi silver mine (in modern-day Bolivia), which was churning out more of the shiny metal than the Spanish knew what to do with. Not content with handing over silver mines, the Spanish were apparently planning to give Britain the whole of South America in return for Gibraltar, that near-barren rock that Britain had captured a few years before. On 21 April, they publicly declared the
midsummer dividend on all stock would be 10 per cent. If anyone asked where the money would come from to pay this huge sum, they were presumably met with embarrassed glances. It was the economics not of the madhouse, but of the playground.

But up and up went the company’s shares, like a hot-air balloon on a sunny day. The shares had cost £128 on 1 January 1720, rose to £500 as soon as the stock conversion scheme opened in May, and were up to £1,050 on 24 June. Every man, woman, child and domestic animal in London now had shares in the South Sea Company. The streets around Exchange Alley – where the coffee houses served as the ancestors of the Stock Exchange – were crowded with carriages and happy onlookers dreaming of huge houses and fat bellies.

The fun didn’t end there, though. Half the con-men in England swapped from three-card tricks on the street to setting up joint-stock companies – known as ‘bubbles’. Often they were listed on the Stock Exchange one day, and gone the next. But people poured money into them because, as everyone was making so much cash on the South Sea Company, the others were guaranteed to be profitable investments too. Everyone wanted in on the ground floor, and if they were to hang around asking silly questions such as ‘And what do you actually
do
?’ they would miss a golden opportunity.

Some of the business plans were extraordinary. Who on earth would put money into a company that said its plan was to create ‘a perpetual motion wheel’? Or Puckle’s Machine Company’s plan to create a weapon for ‘discharging round and square cannon balls and bullets, making a total revolution
in the art of war’? Or the simply mind-boggling ‘company for carrying on an undertaking of great advantage but nobody to know what it is’? The answer, apparently, was ‘everyone’. They mortgaged their homes, pawned their jewellery and raided their piggy banks. The founder of ‘the company for carrying on an undertaking of great advantage but nobody to know what it is’ opened an office on the Cornhill one morning, advertised his scheme, took in £2,000 and closed up at three o’clock in the afternoon ‘nobody to know where he had gone’. He promised that he would be back in a month to reveal all: his shareholders are still waiting.

Equally absurd were the Globe Permits. These were square pieces of playing cards with a wax seal bearing the sign of the Globe Tavern, which was near Exchange Alley. The cards were inscribed with the legend ‘Sail Cloth Permits’. They were bought on the basis that possession of them allowed the owner to buy shares in a possible future venture to maybe make sail cloths. In other words, they were inherently worthless, but they went for up to 60 guineas apiece.

The answer to the Globe Permits was the Bubble Cards. These were satirical playing cards that ridiculed many of the schemes popping up. They were emblazoned with images of fools throwing themselves out of trees into the South Sea. The eight of spades, for instance, featured Puckle’s Machine Company with the ditty:

The nine of hearts attacked the English Copper and Brass Company:

In total, more than £300m was invested in the bubbles.

Jonathan Swift, best known for the biting satire
Gulliver’s Travels,
wrote a nice poem on the subject:

The bubblemasters would often rope in a famous name or two to lend credibility to an otherwise ludicrous scheme. The Prince of Wales even became governor of one bubble, made a £40,000 profit on it and then left through the back door before any of the investors started asking difficult questions.

One interesting question is just how many of those involved in the trade were actually taken in by it – sure, the directors were all bent as a three-bob note, but presumably so too were many of the shareholders who were just praying to any god they could find that they would be able to buy their stock and flog it on to some schmuck before it dropped like a shot pheasant.

At the height of the madness, there was such chaos that shares in a scheme would often be sold for 10 per cent higher
at one end of Exchange Alley than at the other end. If you were a fast runner, you could make money just by legging it from a seller to a buyer at the other end of the street.

Persuaded to come to his senses, the King eventually declared the bubbles illegal. But by that time the market had already been saturated and the big fraudulent players had made their money and disappeared back into the woodwork.