Dendry Machin won a bet and became a capitalist. It may be more correct to say that he became a rent collector and moneylender, both opportunities made possible with his newly acquired capital. Capital that enabled Dendry to become self employed as a rent collector, which provided him with an income and allowed him to preserve capital. It was the money-lending that provided an opportunity for Dendry to increase his wealth by investing his capital and accruing interest on his investments. Like all financial ventures the opportunity was not risk free – quite the opposite – Dendry set upon a very high risk financial venture. He loaned money to the poor.
Arnold Bennett’s book The Card (A Story of Adventure in the Five Towns)* recounts the rise to local fame of its fictional protagonist Dendry Machin. Dendry’s change of fortune begins around the last decade of the 19th century when he won £5 on a bet. A bet made at the municipal ball – to which he had not been invited – with money he did not have. Being merely a clerk having little status in the municipality Dendry was not on the guests list, however when an opportunity arose to add his own name to it Dendry did so. Little knowing that this act of bravura would quite literally change his fortune.
In terms of economic power Dendry’s £5 converts to approximately £6,000 some 130 years later. A sum that allowed Dendry to recognise and seize an opportunity; this being, to offer his employer’s client a better deal on the collection of rent monies. Discovering that not all of the tenants regularly paid their rent money when it was due and that many of the tenants were in arrears, he hit upon the idea of using his £5 capital to allow those tenants in arrears to pay off their debts. He would loan the tenants half a crown (12.5p) and charge them 40 per cent interest per month, which, when compounded, equalled 500 per cent per annum. He secured these loans with the tenants fear of the bailiffs and the workhouse should he not mark their rent book as paid.
A five-pound note – especially a new crisp one, as this was – is a miraculous fragment of matter, wonderful in the pleasure which sight of it gives, even to millionaires; but perhaps no five-pound note was ever so miraculous as Dendry’s.
[The Card, a Story of Adventure in the Five Towns]*
In a previous post ‘Strapped for cash’ debt was mentioned only with respect to that offered through credit and debit cards. This was quite deliberate, as it’s difficult to give a short account of the effect that poverty has on access to debt and on the consequences of debt on the poor. At its most simple, poverty increases the interest incurred on debt to compensate the lender for the increased risk of a default on the loan. Further impoverishing the already impoverished. Ethically Dendry may qualify as a 19th century loan shark (ethics never being his strong point) but although his interest rates were high the transactions were legitimate. Dendry charged higher interest rates on loans than those offered by many legitimate loan providers today and would now require a licence to operate. A licence only serving to make the transactions legal, setting no regulations on the loan interest charged.
Despite the welfare reforms of the 20th century, there are still those whose debt situation drives them – often unwittingly – to contemporary loan sharks. Much has changed in 130 years, particularly societies perception of the indigent and the role of the state. Were he alive today and in a similar line of business, Dendry Machin would most likely open a shop on the high street.
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