A XIX Century Scamme Artist’s Adventures in Honduras
Gregor MacGregor was as a colorful scammer as you get. From a good Scottish family and seemingly trustworthy, this XIX century adventurer capitalized on the gullibility of his fellow Scotsmen who didn’t understand the realities of Central America.
Honduras had just freed itself from Spain making it the perfect time for MacGregor’s scam. Spain’s ex-colonies were becoming independent countries on an almost monthly basis so it was hard to keep track of new countries on the map. Taking advantage of the confusion, the Scotsman invented a fictional country named Poyais and placed it on the north shore of Honduras, just a hundred miles from Roatan.
Gullible European investors, lured by the fast-talking, charming entrepreneur who brought them news of how to make a quick buck quickly fell for the scam. MacGregor appointed himself a “Cacique” of Poyais and sold government positions in his nonexistent country, he also sold fictional government bonds and land certificates for shillings an acre. While this might seem like a strange and unbelievable thing today, thousands of educated and idealistic people fell for it. MacGregor even managed to convince 250 British and French nationals to move to Poyais. Half of the settlers died in the process.
MacGregor’s reputation lives on as that of one of the most astoundingly confident conmen in history, far surpassing the likes of Charles Ponzi in the XX century and Bernie Madoff in the XXI. Oddly, MacGregor, who is buried in the Caracas Cathedral, and was the first fraudster to besmirch Honduras’ name, is virtually unknown in Central America. Edmund Burke told us that “those who don’t know history are destined to repeat it.” As we walk the Honduras shores let us learn from MacGregor’s feat.
by Thomas Tomczyk
La Mosquitia, starting approximately 80 miles east of Roatan, had lain uninhabited, save for its local Indian population, since 1786, when The Treaty of Paris caused the possession to relinquish their claims to the region and the Bay Islands in exchange for the right to settle in British Honduras. It would provide the stage for the largest and most bizarre real estate scandal ever witnessed in the Caribbean.
The setting for the fraud was William Pitt’s old settlement at Black River, the site of the largest battle ever fought between the Spanish and British armies in Honduras in 1781. The perpetrator of the scam was a Scotsman named David MacGregor, who was born in 1786 in Glengyle, Stirlingshire, just 15 years before the flamboyantly named Misquito general, Perquin Tempest, had slaughtered most of the new, hated Spanish settlers in the area, leaving the town a smoldering ruin.
MacGregor became a mercurial career soldier and rapidly rose through the ranks, mostly through bribery and trickery. He attained the rank of major at only 23 years of age. By the age of 25, the vain, cigar smoking, hard drinking, gambling and womanizing Scotsman had moved to London where he invented the rank of colonel for himself and frequented the gaming rooms and clubs around Piccadilly. He furthered his cause by claiming that he was the chief laird of the venerable MacGregor clan, changing his first name from David to Gregor, to add gravitas to his web of lies. Furthermore, he also claimed that his mother was a Peruvian princess.
With the independence movement sweeping through Central and South America, MacGregor saw his opportunity as a soldier of fortune, and sold off his possessions in Scotland, moving first to Nueva Granada (present day Colombia) and then to Venezuela. There, at the age of only 26, he promoted himself to Brigadier General and took a commission in the revolutionary army of Simon Bolivar where he served without much distinction in the rear lines. However, he further advanced himself by marrying Bolivar’s beautiful and rich young cousin Josefina Antonia Andrea Aristeguieta y Lovera.
After several years of mixed military fortunes under Bolivar, during which time he cemented his reputation as a liar and a braggart, MacGregor sailed for Florida in June 1817 with Louis D’Aury, a Frenchman best remembered as the designer of the independent flags of the countries of Central America.
They captured Amelia Island from the Spanish and MacGregor immediately proclaimed himself as Governor of Florida, having his own embroidered flag hoisted above the new republic. However his luxurious lifestyle and his poor treatment of fellow officers won him few friends and he was forced to flee to the Bahamas in September of the same year.
Nobody was there to
welcome them to their new country.
With more and more countries across Central and South America declaring independence, and with Spain fast retreating, MacGregor found himself at a loose end. He had heard that the vast region of La Mosquitia, was up for grabs now that the meddlesome Spanish had abandoned it. Having first visited the region in 1820 and befriending the King of the Misquitos, known grandiosely as George Frederic Augustus the First, MacGregor decided to return.
King George had been educated in Jamaica and was fluent in English. He had inherited the title in his early 20s after his father was poisoned by his brother Stephen in a family dispute. Unfortunately King George was an alcoholic, and his short reign would be marred by drunkenness, incompetence and sex scandals (he was once accused of raping one of his chief naval officers Admiral Earnee’s wife.) He was the perfect puppet for MacGregor to manipulate, and the Scotsman returned to London in mid 1821, claiming that he had been made Cacique, or Chieftain, of the mythical independent country of Poyais, inside the Mosquitia region, whose name MacGregor invented based on the existence of Payaor Poyers Indian tribes in the region. His claim was given some credence, when he produced the title deeds for over 12,500 square miles of land, which King George Frederic had imprudently signed over to him after a monumental three day drinking binge.
MacGregor, accompanied by his exotic wife, now set up court in the “Poyasian Embassy” in London, where they entertained foreign ministers, politicians, ambassadors and high ranking military officers. He was even honored as “The Prince of Poyais” at an official reception given by the Lord Mayor of London.
MacGregor explained his new self-given title to would-be investors by telling them that he had been made a Prince for single handedly expelling the Spanish from Poyais. His little Poyais he now expanded to an incredible eight million acres – approximately the size of Wales. Using the long defunct and formally thriving Black River Settlement as a template (it had been the largest town on the north coast of Honduras, and an economic powerhouse, for over 50 years, from 1734 until 1786). MacGregor painted a tempting picture of a bucolic, English speaking, Caribbean country with its own government, army, navy and a capital city named St Joseph with a population of 25,000 inhabitants. MacGregor’s carefully constructed portrait bordered on perfection. The weather in Poyais was never inclement, the rivers teemed with large game fish, and were full of gold. The Poyais soil was excellent for farming and could produce three crops of corn per year. With the Spanish now gone, so also were their trading embargoes. British merchants and investors were keen to tap into the Misquito coast’s resources: chiefly hardwoods, flax and turtle shell used for frames for glasses and pens.
MacGregor’s fantasy tales of a utopian paradise ripe for the taking, became the toast of London society. Now, his publicity machine went into overdrive, and he published a 350 page book. In it he sang the praises of Poyais and explained the advantages of investing there. In all fairness to MacGregor (who wrote the book himself using the fictitious penname Colonel Strangeways) the book is a fairly accurate description of the Black River region.
Posters and billboards were hung in all the major cities and towns in Britain, flyers and pamphlets were distributed as well, and special ballads and poems were composed in praise of the idyllic country of Poyais. A fine Royal flag of Poyais was unfurled and several hundred thousand banknotes of “The hard Poyasian dollar “were printed, though they had as much value as Monopoly money.
Settlers sailed up the coast in a home made boat to Roatan in search of help.
In late 1821, at the time of MacGregor’s sales drive, England was reeling from the high cost of fighting the Napoleonic wars the country was in a state of depression and rife with unemployment. To many people, especially his native Scotsmen, the flamboyant, larger-than-life, and seemingly wealthy MacGregor was something of a hero figure. Hundreds of people were lured into investing their life savings with him in the hope of buying into the dream of starting new lives in the Caribbean. Tens of thousands of acres were sold to them at between three and four shillings each– an extraordinary deal as the average weekly wage at the time was around one pound, which was made up of twelve shillings. Positions were sold in the fictional government of Poyais, as were commissions in the non-existent Poyasian Royal army.
Based on projected sales, MacGregor raised a huge loan of UK£200,000 ($16 million today) in the form of 2,000 Poyasian bearer bonds sold at UK£100 each. In September 1822, first transport ship, “The Honduran Packet”, left England with seventy settlers, followed in January 1823by the ship “Kennersley Castle”, with a further two hundred settlers. Most, acting on MacGregor’s advice, had exchanged their British money into bogus “Hard Poyaisian” dollars, at his Poyaisian Embassy in Pall Mall, London.
The disaster had now turned into tragedy.
The self styled “Cacique of Poyais” did not sail with the settlers. He was not found waiting to greet them at the non-existent dock of the Rio Sico (Black River) upon their arrival. In fact nobody was there to welcome them to their new country. Instead, they found themselves dumped off on the beach, after crossing the treacherous mouth of the river in rowing boats. After tramping through the rain-sodden jungle expecting to find the prosperous capital city of St Joseph, with its boulevards, theatres, and opera house, they found instead the charred remains of William Pitt’ once thriving community abandoned 36 years previously, which the Spanish, upon taking possession, had renamed Palacios, on account of the grand mansions that they had found there. The shell shocked settlers had no choice but to pitch some tents made of sail canvas, and went to work on constructing rudimentary huts, with the help of some friendly Garifunas, and a sole American hermit, who was the only resident of the destroyed town.
The whole venture was a total disaster. The would-be settlers found themselves abandoned in a strange country with no infrastructure to support them, let alone food to eat. Their transport ships had departed, leaving them stranded and the ships’ captains had taken most of their provisions, weapons and ammunition in lieu of payment for passage, which MacGregor had promised would be paid on arrival in Poyais.
When the boats eventually returned to England, the owners complained to maritime authorities of the scam and British Naval vessels were immediately dispatched to intercept five further transport ships, which had unwittingly departed for Poyais. All the ships were diverted back to Britain, except one, which was lost in the Atlantic with the loss of over two hundred settlers and crew.
To add to the misery of the surviving settlers, they had nothing to barter with, and the local Misquito Indians, who loved the rum, weapons and gunpowder that the British had previously brought for them, turned hostile and, not surprisingly, refused to accept the Poyaisian dollars in return for food and services. Furthermore, King George Frederick sobered up long enough to travel to Trujillo where he prudently rescinded the huge land grants which he had drunkenly signed over to MacGregor.
Many of the settlers succumbed to tropical diseases and poisonous snake bites, and at least one man was killed by alligators. The Scotsman, who had given MacGregor his life savings in order to take the directorship of the St Joseph opera house, committed suicide by shooting himself in his tent. Finally, five of the remaining settlers sailed up the coast to Roatan in a makeshift boat in search of help. During the voyage, two of them were murdered by their Miskito guides and thrown overboard. Upon arrival in Roatan, a boat was immediately dispatched to British Honduras and “The Mexican Eagle” was dispatched from what is now known as Belize City, to rescue the surviving bedraggled and dispirited colonists from the Miskito shore. Of the two hundred and seventy original would be settlers only a group of fifty would return alive to England.
Upon their arrival in London news of the extensive fraud broke, newspapers exposed the full extent of the hoax and lawsuits started to fly. Gregor MacGregor and his wife, however, were nowhere to be found. They had closed the Poyaisian Embassy and fled to France where, incredibly, they attempted to duplicate the whole scheme again, this time to unsuspecting Parisians. Fortunately, they and their fellow fraudsters were undone after French officials became suspicious when they saw that an unusually large number of people had applied for passports to visit the previously unheard of country of Poyais. MacGregor was jailed for ten months, before being deported back to England, where once again he attempted to promote more land sales in his non-existent principality, this time issuing a loan bond scheme valued at UK£800,000 (64 million British pounds today). Not surprisingly, there were no takers.
MacGregor would spend a further eleven years in Britain trying to sell land in Poyais, before returning to Venezuela with Josefina. In 1845 he died at the age of 59. He was buried with full military honors, close to Simon Bolivar, in the Pateon National Mausoleum in Caracas, leaving the Black River Settlement and “Poyais”to be once again reclaimed by the jungle.
MacGregor’s many creditors, whom he had duped out of their life savings, did not give up as easily as he may have hoped. For over thirty years after his scam was unraveled, dozens of his investors, showed up in Trujillo and Roatan to claim land purchased from the Rio Tinto Commercial and Agricultural company, another bond lease boondoggle. After this venture failed the short lived Central America Commercial and Agricultural company took its place and sent their directors to Guatemala City. It was their attempt to win the approval of the newly formed Central American States Federation and add some gravitas and legitimacy to their latest fraudulent scheme. Much to their surprise, the President of Guatemala, Mariano Galvez, eager to attract wealthy British investors to his country, awarded them a massive 13 million acre land concession in the Rio Polochic region. The attempts to colonize the remote region by the former Poyaisian investment groups, now going under the guise of the British Central American Land company and the Yorks and Lancashire land company, failed completely.
So ended the largest and saddest real estate fraud ever seen in the Caribbean. It would not be the last in a long line of failed hopes and broken dreams in the world of real estate investment on the Honduran mainland and the Bay Islands, which continue through into the 21st century, nearly two hundred years after MacGregor’s crimes.