John Ellerman was by far the richest man in Britain. How did he become so wealthy, and why has he been forgotten?
John Reeves Ellerman (1862 – 1933) was born in Hull, a large port town on the Yorkshire coast. He was the son of Johann Herman Ellerman (1819 – 1871), a shipbroker and corn merchant who had emigrated from Hamburg in the 1840s.
His father died in 1871, and left a relatively modest estate of £600. For reasons that remain obscure, Ellerman subsequently spent much of his childhood in France. He was then educated at the King Edward VI School in Birmingham.
Ellerman inherited around £14,000 from his maternal grandfather in 1879, and with this money was able to train as a chartered accountant under William Smedley of Newhall Street, Birmingham. Smedley was a successful speculative investor, and almost certainly inspired the young Ellerman.
Ellerman subsequently became an accountant at Quilter Ball & Co, headed by Sir Cuthbert Quilter (1841 – 1911), one of the great accountants of the era. Quilter regarded Ellerman as one of the most promising accountants he had ever employed. Ellerman was offered a position as partner, but declined in order to establish himself independently.
J R Ellerman & Co, accountants of Moorgate Street in the City of London, was established in 1887. Ellerman soon enjoyed an annual income worth thousands of pounds.
Frederick Richards Leyland (1832 – 1892), owner of the Leyland shipping line, died suddenly in 1892. Ellerman capitalised on the opportunity, and with a group of investors acquired the line for £770,000. This was an excellent price, as profits during the previous four years had averaged £121,159.
The new company had a share capital of £450,000. The assets acquired were excellent, and the modern fleet boasted a gross tonnage of 60,511. Existing management was continued.
Hard work, shrewdness and good luck would see Ellerman amass great wealth. He divested his accountancy business in order to focus on capital investment from 1896. Ellerman was the first prominent investor to have received formal accountancy training, and this was to afford him a significant advantage with regards to financial and legal knowledge.
The Leyland shipping line was sold to J P Morgan (1837 – 1913) in 1901. Morgan was paying “reckless prices”, and Ellerman gained £1.2 million in cash for his stake, a sale that represented a 33 percent premium over market prices.*
Ellerman established the London, Liverpool and Ocean Shipping Company with a share capital of £1.3 million. He invested a capital of £500,000.
Ellerman acquired the Leyland Mediterranean fleet of eleven vessels. He also acquired the Papayanni Steamship Co of Liverpool. Both assets were significantly undervalued. These lines formed the basis of the Ellerman shipping line.
Ellerman then acquired the City line, which ran between Glasgow and the West Indies, and controlled 400,000 tons of shipping. It was estimated that the purchase cost at least £1 million.
Later in 1901 Ellerman acquired the Hall line and the Westcott and Lawrence line (with nine steamers and a gross tonnage of 15,000 tons).
Ellerman extends his interests to include brewing and the media
Ellerman was a quiet, unassuming figure. He spent just five percent of his income, and reinvested the remainder. TIME magazine described his lifestyle as one of “almost miserly simplicity”. He paid great attention to the smaller details of business. He was remarkable for his kindness in offering advice towards those who sought it. He retained the most highly-skilled managers from the businesses he acquired, and respected the decisions that they made when he was absent.
Ellerman identified the brewing industry, with the exception of the global brands of Bass and Guinness, as stagnant. Perceiving the industry as undervalued, he began to invest in breweries from 1897.
Ellerman became the largest shareholder in the Financial Times and one of the largest shareholders in the Daily Mail in 1904.
Ellerman was created a baronet in 1905.
Ellerman acquired the Bucknall line, which had 28 vessels and a large freight trade with South and East Africa, in 1908. Following the purchase Ellerman controlled 108 vessels with a combined tonnage of over 420,000.
Ellerman became the third largest shareholder in The Times in 1912. He also acquired the Sphere and Tatler.
Ellerman acquired over a third share of the Illustrated London News and Sketch in 1913.
Ellerman rendered valuable assistance to the Ministry of Shipping during the First World War. He also equipped and maintained the Ellerman Hospital at St John’s Lodge, Regent’s Park, London.
Ellerman made his most significant purchase with the acquisition of Thomas Wilson & Co of Hull for £4.1 million in 1916. Thomas Wilson & Co was the largest privately-owned shipping line in the world, with a fleet of 70 ships.
Following the Wilson & Co acquisition, Ellerman-controlled lines owned 204 vessels.
Ellerman was the richest man in Britain by 1916, worth, at his own estimate, £20 million. His income that year was estimated at £3 million.
Ellerman owned one eighth of British mercantile shipping tonnage by 1917.
Unfortunately, the Wilson purchase was to prove a rare misstep for Ellerman, due to a slump in global shipping following the First World War.
Ellerman was extremely shy of publicity. He sold his house in Eastbourne in the early 1920s after double-decker buses were introduced which would have allowed passengers to glimpse a view of his home.
Ellerman sold his controlling interest in the St Clement’s Press, owner of the Financial Times, to the Berry brothers in 1919. He sold his holding in The Times to John Walter and John Jacob Astor (1886 – 1971) in 1922.
Ellerman divested his illustrated newspapers, which included the Sphere, Tatler and Eve to the Inveresk Paper Company for around £3 million in 1926.
Ellerman controlled over two million tons of shipping and was the third largest owner of shipping in the world in 1927.
The Inland Revenue privately assessed Ellerman as easily the richest man in Britain in 1929, with a fortune valued at more than twice that of the next wealthiest individual.
Ellerman died in 1933 with a British estate valued at £36,684,994. It was estimated that he paid between £17 million and £20 million in wealth taxes during his lifetime.
- ‘J P Morgan in London and New York before 1914’ by Leslie Hannah (2011).