Select Page

History’s most audacious investment scam – the Prince of Poyais

by | 17 Jan, 2018

Nordstrom Kohl's Target Macys

A Bank of Poyais “dollar”, printed in Scotland. MacGregor bartered these worthless notes to his would-be settlers, taking their real British money in exchange.

History is littered with examples of investors being ripped off by confidence tricksters and conmen. One of the greatest of all concerns Scotsman Gregor McGregor.

In the early 19th century, Britain was growing rapidly in wealth due to large scale industrialisation. Manufacturing capacity was expanding to such a great extent that those in the business were becoming increasingly rich, and wanted somewhere to invest their money. Foreign bonds seemed to be an appetising option because they offered better returns than domestic debt.

Investor confidence towards Latin America had begun to surge in London after a number of Latin American states gained independence from Spain. Amidst this increasing interest in Latin American bonds, Gregor McGregor, a Scottish veteran of the Napoleonic wars who had also fought in Venezuela, dreamed up a fictional territory called ‘Poyais’, which he claimed was an idyllic, fertile and lucrative area in Central America. Poyais never actually existed as anything except as a plot of undeveloped jungle on Central America’s Mosquito Coast, but he named himself as its ruler, and convinced investors to get involved.

Having convinced the general public of the merits of his fictional country as an investment location, MacGregor cashed in by floating a £200,000 Poyais bond in the London money market, which was lapped up by investors. Over his lifetime, his bond-market frauds ran to £1.3m (as a share of Britain’s economy, around £3.6 billion today). The worst of all was that 7 ships worth of settlers set sail for fictional Poyais. When they arrived they found nothing but wasteland, and only one third of them made it back to Europe alive.

Related: UBS say worries on China’s debt levels are overblown as it sets up exclusive investment fund

Want to learn more about the markets and how to become a better investor?

Download the Invstr App now.

All emails ​include an unsubscribe link. You ​can opt-out at any time. ​See our privacy policy.

 

ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

Download on the App Store           Download on Google Play

ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

Share This