On a recent visit to the British Museum, in the “History of Money” section, I came across a small side exhibition on “Bubbles and Bankruptcy”. The main exhibit was a chart documenting the Dutch tulip craze, a well known economic bubble of the buying and selling of tulip bulbs. However, the piece that most intrigued me was a document regarding the issue of a £200,000 bond to a Scot called Gregor MacGregor who claimed to be the Prince of the sovereign territory of Poyais in Central America in the early 19th century. MacGregor was raising money for the colonization of this new land he claimed to rule. The entire enterprise would turn out to be one of the greatest frauds in history, there was no such place as Poyais. Hundred of thousands of pounds would be lost and hundreds of would-be-settlers would lose their lives on this scheme and yet MacGregor himself would never face justice. The fraud itself would continue for several decades despite clear warnings that it was a hoax.
Gregor MacGregor was born on Christmas Eve 1786 in Glengyle, Scotland, the son of an East India Company sea captain and a doctor’s daughter. Very little is known about his early life other that he had at least one sister. At the age of 16 (1803) MacGregor joined the British Army, serving in the 57th Foot Regiment. His military career showed much promise as he rose quickly through the ranks to the position of Lieutenant in 1804 (probably through purchase of the rank as was usual at the time). In the same year he married Maria Bowater, an Admiral’s daughter, but was stationed to Gibraltar the following year (she remained in London).
In July 1809 the 57th Foot were sent to Portugal as reinforcements for the Duke of Wellington who was in the process of driving the French out of Spain. MacGregor was seconded to the Portuguese army and promoted to the rank of Major. In 1810, only a year later, MacGregor bought himself out of the British Army and returned home. Adopting the rank of “Colonel” for himself, MacGregor and his wife settled in Edinburgh. The adoption of the rank of Colonel was but the first in a long line of lies that MacGregor would spin for himself. He soon claimed that he was a direct descendant of Rob Roy MacGregor and that as such he was the head of Clan MacGregor, a claim that was never substantiated.
It was around this time that MacGregor started to become interested in the independence movements that were springing up in Latin America, Venezuela in particular. Tragedy struck in 1811 when his wife, Maria, died prematurely. This sad end to his first marriage resolved MacGregor to go to Latin America to aid the independence campaigns. In 1812 MacGregor sold his modest estates in Scotland and his house in London and bought passage to Caracas, arriving in the spring of the same year. Whilst in Caracas he struck up a relationship with Josefa Antonia Andrea Aristeguieta y Lovera, a cousin to Simon Bolivar. The two were married on the 10th June 1812 and would have three children (Gregorio in 1817, Constantino in 1819, and Josefa Anna Gregoria in 1821).
In Caracas MacGregor was enlisted by General Francisco de Miranda, Commander-in-Chief of the Venezuelan Republican Army and Dictator, as a colonel. Almost immediately MacGregor proved his worth to the cause. At the time Venezuela was in a state of civil war between the pro-independence republicans and the pro-Spanish royalists. MacGregor managed to win a series of key skirmishes against the royalists which earned him a promotion to brigadier-general after only a few months of service (outranking Bolivar who was only a colonel at the time). However, the republicans were struggling to bring the royalist under control. Miranda sought to negotiate a truce, a treasonous act in the eyes of Bolivar. Bolivar and his fellow officers initiated a coup d’etat and arrested Miranda. Bolivar initially wanted to shoot the former Dictator but eventually decided to hand him over to the royalists instead. Miranda would die in prison and was buried in a mass grave.
Following Miranda’s arrest MacGregor was forced to flee to British-held Jamaica having been in Venezuela for less than a year. MacGregor left his new wife in Jamaica and proceeded to New Granada to aid the independence movement in Colombia. He was placed in charge of the district of Socorro on the Venezuelan border where his only contribution was to aggravate his fellow soldiers. One local official wrote of him: “I am sick and tired of this bluffer, or Quixote, or the devil knows what. This man can hardly serve us in New Granada without heaping ten thousand embarassments upon us.”
In 1814 the republican forces were routed by the royalists. MacGregor and the rest of the republican forces fled to Cartagena where he helped organise the city’s defenses. The city was subsequently besieged by the royalist forces. MacGregor managed to organize a mass escape from the doomed city aboard gunboats than managed to break through the blockade and escape to Jamaica.
MacGregor would spend the next 6 years assisting Bolivar and even proclaimed independence for Florida from the Spanish Empire, although this campaign would ultimately end in failure.
MacGregor returned to London in 1820 as a celebrated war hero and he quickly set about using his new-found fame for one of the most audacious frauds in history. MacGregor claims that his escapades in the Caribbean had taken him to the Bay of Honduras. There he claimed to have befriended the chieftain-king of the Miskito people, George Frederic Augustus I (both king and people are real). MacGregor claimed that the king had granted him the principality of Poyais, a 12,500 miles² area on the bay of Honduras. MacGregor claimed that the land was fertile, with untapped resources and inhabited by “cooperative natives who were eager to please”.
MacGregor had tapped into a British desire to colonize areas of South America and tap into the lucrative trade that had largely been denied to them by the Spanish. As such his scheme was embraced by London high society. The Lord Mayor even organized an official reception for him at the London Guildhall. MacGregor opened an office for the Legation of the Territory of Poyais at Downgate Hill in London where he would host banquets for government ministers, foreign ambassadors and senior military officers.
However, MacGregor was primarily interested in luring the Scots. He had been inspired by the Darien Scheme, Scotland’s failed attempt at colonizing Panama in the 1690s. MacGregor claimed that he was a direct descendant of one of the survivors of the Darien Scheme and said that he wished to extend his new territory to the Scots first in compensation for the Darien Scheme. In Edinburgh he started selling tracts of land for 3 shillings and 3 pence per acre. This was at a time when the average worker’s wage was 1 shilling per week. The price would soon rise to four shillings as people became more interested in MacGregor’s scheme. MacGregor also managed to secure a loan of £200,000 to the government of Poyais on the promise of untapped gold and silver mines and a place free of tropical diseases.
The Legation of Poyais chartered a ship in 1822 for the first 70 would-be settlers (MacGregor had them all convert their money into Poyais dollars before they left) who included not just workers but bankers, lawyers and various people recruited to the Poyais civil service.
The following year another ship was sent with 200 would-be settlers. Upon arriving in the Bay of Honduras the ship spent two days looking for a port before finally stumbling upon the previous year’s ship. The settlers found only untouched jungle. The settlers tried to make a settlement out of the jungle but soon arguments and tropical diseases broke out. Eventually the governor of British Honduras sent a sent a ship to rescue the survivors. Of the 270 original settlers more than 180 died and less than 50 would return to Britain.
Surprisingly, few of the survivors blamed MacGregor for their ill-fated journey. Instead they blamed his advisers and claimed that had MacGregor gone with them things would have turned out better. Even had they wished to sue MacGregor they would not have been able to as he had fled to Paris on the news of settlers returning.
In France, MacGregor contacted the trading company La Compagnie de la Nouvelle Neustrie and commissioned it to solicit more money. In France he would manage to raise a further £300,000 and some more settlers. However, French suspicions were aroused by an influx of people requesting passports to travel to a country they had never heard of. MacGregor and his associates were arrested by the French and taken to court. The trial, in 1826, lasted for four days. MacGregor’s lawyer was able to shift the blame onto everyone except MacGregor himself. The only one who had to face prison was the director of la Nouvelle Neustrie.
MacGregor returned to Britain where he would spend the next eleven years trying to raise loans and sell land in Poyais. Despite the overwhelming evidence against him he continued to garner support but faced competition from other charlatans setting up rival Poyais Offices. He is last reported as trying to some land certificates in 1837. In 1839 MacGregor would return to Venezuela where he would be given a general’s pension and citizenship in recognition for his services to Simon Bolivar. He died in Caracas on December 4th 1845.