Two centuries ago, an entrepreneurial Scot used his imagination to mint great profits, only unlike the inventors and industrialists who characterized that era, he was a con man. Gregor MacGregor was an adventurer chasing money and fame and he separated many from their hard-earned money with tales of riches in a faraway place called Poyais. He turned this wild strip of Central American coastline into a legendary place; a country where gold allegedly flowed in streams of otherwise pristine water. Many in his native Britain poured money into Poyaisian land, bonds, and currency, all of it fake, much like the tales of Poyais itself. Well over a hundred even lost their lives attempting to settle in this mythical country.
Gregor MacGregor was born at Loch Katrine on the southernmost edge of the Scottish Highlands in 1786. His father was an East India Company captain and some of his other ancestors made a name for themselves in military service. Gregor MacGregor himself served in the British army from age 16, fighting under the Duke of Wellington in Spain and Portugal. After returning to Britain, he was captivated by the martial opportunities awaiting in Latin America, which was rebelling after centuries of Spanish rule. So, in 1812, MacGregor left Scotland to participate in the Venezuelan War of Independence. His contributions as a colonel there were well-received and judged as valuable. He ingratiated himself with the revolutionary leadership in Venezuela, even marrying a cousin of the Venezuelan ‘liberator’ Simon Bolivar.
The war in South America still underway, MacGregor turned his attention to the Caribbean, where he led raids on Spanish outposts. After debacles there and under unknown circumstances, MacGregor wound up in an area of Honduras and Nicaragua then known as the ‘Mosquito Coast’. It is here in 1820 that his fictitious nation of ‘Poyais’ was founded. MacGregor was welcomed by the local Miskito people who acknowledged British sovereignty over the area in exchange for their protection from the Spanish. The British crowned the local kings; ruling at the time of MacGregor’s landing was King George Frederic Augustus I. Perhaps in exchange for whiskey and rum, the Miskito ruler granted MacGregor a 12,500 square mile tract of land. Poyais was born.
This 8-million-acre parcel of malaria-infested jungle was transformed by MacGregor into a supposedly lush Eden with a made-up name. When he returned to London the next year, he demanded to be called by his made-up title, the ‘Cazique of Poyais’ and even published a 350-page guidebook about his new land in 1822. Allegedly authored by an aid-de-camp named Thomas Strangeways, it was really written by MacGregor himself. The book, called the ‘Sketch of the Mosquito Shore’, made the place out to be heaven on earth and a place where riches awaited.
“Many of the rivers, by washing the sands in fine sieves, furnish the native globules of pure gold … at the junction of two of the branches of the Black River, or Rio Tinto, and in latitude 15° 8′ are two springs, the one hot, the other cold; they are situated close to each other at the base of a ridge of mountains, which contain, according to report, several rich mines of gold” – ‘Thomas Strangeways’ in Sketch of the Mosquito Shore
Back in Britain, MacGregor described Poyais as a paradise on Earth. He reported that the land was full of untapped gold mines and fertile soil. The weather was cooperative enough to support three full corn harvests a year. There was said to be an abundance of fresh water pouring from streams carrying along gold from their sources. The forests were supposedly full of wild game and trees carried all kinds of exotic fruits. MacGregor even invented a national flag, a currency, and maps outlining his territory.
The Scottish trickster was also keen to make the distant land seem hospitable to Britons in particular. Poyais had a developed government, according to MacGregor; there was a civil service, a banking and monetary system, and a parliament. The capital city, St. Joseph, was designed like any other European capital; it had a cathedral, a royal palace, a parliament building and even an opera house. Better yet, Poyais had pleasant weather, was free of tropical diseases, and had local natives eager to work, especially for Englishmen.
The Cazique of Poyais went about selling land in his principality starting at two shillings and three pence per acre in 1822. He also recruited settlers, both from England and from his native Scotland, to emigrate to Poyais. There were profit opportunities for MacGregor here too; after selling them land in his fictitious country, he sold them offices and military posts and then converted their savings in British pounds into fake Poyais dollars, of which 70,000 notes were printed in Scotland. Around 250 settlers were recruited and made it to Poyais, where they found a barren coastline. After being stranded on the coast of Honduras for months, they were rescued and transported to Belize before being sent back to London; by then, two-thirds had died.
MacGregor fled to France in 1823, just as some of the survivors of his scheme were returning home. There, he attempted to recruit French settlers. The state caught on though when people began requesting passports to visit a country that didn’t exist. MacGregor was then arrested two years later and charged with fraud. He was acquitted however after his associates had successfully fled and took any implicating evidence with them.
After becoming persona non-grata in France, MacGregor returned to London where he was again arrested but released without charge. By now, the surviving Poyais settlers had long since returned to London but MacGregor kept trying to sell land in Poyais. For those who missed out on the opportunity the first time around, MacGregor was not keen on offering any discount. An acre of land in Poyais would now set you back five shillings. This second round of land sales unsurprisingly floundered. With limited success, the Cazique left for Venezuela where he received a pension from his war service and died in 1845.
Part of the financial legacy of Poyais are its bonds. Indeed, MacGregor successfully contracted London banks to raise money for his fictitious fiefdom by selling bonds. It helped that this was an era of speculative excess in Britain’s financial markets, particularly in emerging market debt. The early 1820s were characterized by falling interest rates in Britain along with a bout of deflation that accompanied the post-Napoleonic depression, a period of economic contraction that followed the end of Britain’s wars with France. Yields on 3% British consols, the benchmark bonds of the era, had fallen from around 5% at the end of the war in 1815 to just above 3.5% in 1822. Further, the newly independent countries in Latin America were conducting inaugural bond issues in London. There was thus a boom in emerging market debt issuance given the new countries’ demand for money and British investors’ reach for yield.
MacGregor was fraudulently raising money amidst these favorable circumstances. The Cazique of Poyais first approached the London bank Perring & Company to inquire about floating bonds. With their backing, and questionable due diligence, £200,000 in Poyaisian bonds were issued in October 1822. The instruments carried 6% coupons, twice the rate of British consols and the same rate offered on the bonds of newly independent Mexico. There must have been some skepticism of course as they were issued at 80% of par value. Regardless, prices sank further from there as people caught on to the scheme. The bonds had slipped 16% by the end of 1822 and prices had fallen to 10% of face value by late the following year.
This offering, successful as far as MacGregor was concerned, was not the last attempted. In 1825, while in France, MacGregor contacted another London bank, Thomas Jenkins & Company, about raising a £300,000 loan backed by non-existent gold mines. Then, in 1827, soon after he had returned to London and after having avoided imprisonment in France and Britain, he brazenly attempted a third bond offering, and for £800,000 no less. The Cazique’s schemes generated little interest by then. However, some of his original creditors may have wished they had; part of the proceeds was allegedly intended for redeeming past Poyais bonds.
The financial circumstances of Britain in the early 19th century perhaps facilitated MacGregor’s fraud. Low interest rates, laissez-faire, and speculative fervor could only have made it easier to part ignorant dreamers from their money, but this cannot explain all of MacGregor’s success. After all, this was the 1820s, not the 1520s. By this point the Americas were already pretty well mapped; anyone should have been able to pick up an encyclopedia or an atlas, both of which existed, and discovered that Poyais, as he described it, did not exist. Yet, people believed. Because the story of Gregor MacGregor and Poyais is so unbelievable, even given the times, it perhaps says something more general and timeless: that money can never be any better than those in whose hands it is entrusted, whatever the time and place.
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2. Andrews, Evan. “The Con Man Who Invented His Own Country.” History.com, A&E Television Networks, 12 Oct. 2016.
3. Konnikova, Maria. “Future – The Conman Who Pulled off History’s Most Audacious Scam.” BBC Future, BBC, 28 Jan. 2016.
4. Strangeways, Thomas. Sketch of the Mosquito Shore Including the Territory of Poyais. Sold by W. Blackwood, 1822.
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6. “The King of Con-Men.” The Economist, The Economist Newspaper, 22 Dec. 2012.