Tag Archives: John Ellerman

John Ellerman

When John Ellerman died in 1933 he was by far the richest man in Britain.

John Reeves Ellerman (1862 – 1933) was born in Hull, a large port 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 1850.

When his father died in 1871  he left a relatively modest estate of £600. Ellerman subsequently spent much of his childhood in France. He was then educated at the King Edward VI School in Birmingham.

Ellerman received a modest inheritance from his maternal grandfather, and 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 ever had, and offered him a partnership, which he turned down to set himself up independently as J R Ellerman & Co of Moorgate Street in the City of London from 1887. Soon his annual income reached 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 Leyland 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.

Ellerman gave up his accountancy business from 1895. Hard work, shrewdness and good luck, saw Ellerman amass great wealth. No great investor had ever had accountancy training before, and this afforded Ellerman a great financial and legal advantage.

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.*

A caveat of the deal was that Ellerman had to leave the Atlantic shipping trade alone for fourteen years, so he redirected his attention towards the East.

Ellerman established the London, Liverpool and Ocean Shipping Company with a share capital of £1.3 million. He invested £500,000 of capital.

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 nearly £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 was a quiet, unassuming figure. He avoided leading an ostentatious lifestyle and spent just five percent of his income, and reinvested the remainder. He was a modest man with great attention to the smaller details of a large business. He was remarkable for his kindness in offering business advice towards those who sought it. He retained the most highly skilled managers from the lines he acquired, and respected the decisions that they took when he was unavailable.

In 1904 Ellerman became the largest shareholder in the Financial Times and, an admirer of Lord Northcliffe (1865 – 1922), one of the largest shareholders in the Daily Mail.

In 1907 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.

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.

In 1912 he became the third largest shareholder in The Times.

In 1913 Ellerman acquired a large interest in the Illustrated London News and Sketch. He also acquired the Sphere and Tatler. William D Rubinstein (born 1946) has suggested that his motivation for the acquisitions was to avoid attacks on his German ancestry by taking control of a large portion of the British media.

During the First World War, Ellerman rendered valuable assistance to the Ministry of Shipping. He also equipped and maintained the Ellerman Hospital at St John’s Lodge, Regent’s Park, London.

1916 saw his greatest purchase, the acquisition of the Thomas Wilson & Co of Hull from Lord Nunburnholme (1875 – 1924) for £4.1 million. With a fleet of 70 ships, Thomas Wilson & Co was the largest private shipping line in the world.

The Ellerman controlled lines owned 134 ships, and the Wilson purchase brought the total to 204.

By 1916 Ellerman was the richest man in Britain, worth, at his estimate, £20 million. His income that year was estimated at £3 million.

By 1917 Ellerman owned one eighth of British mercantile shipping tonnage.

Unfortunately, the Wilson purchase was to prove a rare misstep for Ellerman, due to a global slump in world shipping after the First World War.

Ellerman sold his controlling interest in the St Clement’s Press, which owned the Financial Times, to the Berry brothers in 1919. He sold his holding in The Times in 1922 to John Walter and John Jacob Astor (1886 – 1971).

In the early 1920s, the publicity-shy Ellerman informed the Eastbourne Town Council that if they introduced double-decker buses, which might allow people to see into his home, he would move houses. The buses were introduced, and Ellerman, true to his word, relocated.

In 1926 he divested his weekly papers, which included the Sphere, Tatler and Eve to the Inveresk Paper Company for around £3 million.

In 1927 Ellerman controlled over two million tons of shipping and was the third largest owner of shipping in the world.

A 1929 assessment by the Inland Revenue ranked him as easily the richest man in Britain, more than twice as wealthy as his closest rival.

Ellerman died in 1933 with an estate valued at £17,224,425.

Notes

  1. ‘J P Morgan in London and New York before 1914’ by Leslie Hannah (2011).