A 1719-1720 first edition of The Life and Strange Surprizing Adventures of Robinson Crusoe of York, Mariner by Daniel Defoe is displayed for photographers at Sotheby's auction house in London, July, 5, 2019.Natasha Livingstone/The Associated Press
Before Daniel Defoe (1660-1731) wrote Robinson Crusoe, Moll Flanders, A Journal of the Plague Year and other great literary works, he tried his hand at business and investing. There isn’t much to learn from his endeavours, except perhaps some lessons on what not to do – and the importance of keeping one’s money at a safe distance from scoundrels of the likes of Defoe.
Defoe became preoccupied in his early 20s with get-rich schemes. Over the next dozen years or so, he traded in cows, bricks, tobacco, hosiery, honey, land, wine and other commodities. In what spare time was available, he donned the robe of a venture capitalist.
He was riding madly off in all directions, like Stephen Leacock’s horseman. By his mid-30s, the disarray in his affairs had depleted his wife’s sizable dowry and left behind debts of £17,000. Bankruptcy came more than once, but the slate was never swiped clean – creditors pursued him to his last days.
The diving bell investment
One of his big investing moves was to buy shares in a fledgling company that had a patent for a diving bell. He also became treasurer of the company.
Large in size, the diving bell trapped a pocket of air when lowered into a body of water, allowing persons inside the bell to descend into the depths and visit submerged objects. Of particular interest were shipwrecks laden with sunken treasure.
A few years before, in 1686, Sir William Phips retrieved a king’s ransom of gold, silver and jewellery from sunken vessels in the Caribbean. The booty was of sufficient proportions to pay his shareholders a 10,000-per-cent dividend.
This big strike ignited a crescendo of feverish speculation. One sign of the mania: 11 out of the 61 patents issued in England between 1691 and 1693 were for diving bells (according to the November, 1986, edition of The Economic History Review).
However, Defoe’s company never got off the ground, owing to insufficient capital. It might be supposed there wasn’t enough interest in its offering of shares. But what happened was this: Company funds were misappropriated by Defoe (as noted by Katherine Frank in Crusoe: Daniel Defoe, Robert Knox and The Creation of a Myth).
The company’s founder filed a lawsuit against Defoe, demanding the return of funds. But compliance was not forthcoming, possibly because Defoe’s pressing debt obligations had higher priority.
The civet-cat investment
Another large investment was made in a civet farm. Civets originate from Asia and loosely resemble large house cats. They were valued for their anal glands, which contain an oily substance that can be turned into perfume. These days, civets are better known for their links to transmissible diseases, such as SARS.
Defoe borrowed money to buy about 70 civets. The money went instead to pay off some of his urgent debts. But he still got his civets, on credit from the vendor.
Alas, the civets didn’t generate income fast enough to bring down his indebtedness to manageable levels before sheriffs moved in and seized the civet farm in lieu of debt payments. Accountants appraised the assets at about half the price Defoe paid.
Sued by his mother-in-law
When creditors put the farm up for sale, Defoe persuaded his mother-in-law to lend money to reclaim it. She agreed. But it seems her money went to pay off another round of debt, and Defoe’s plans to otherwise regain the farm fell though. She then sued her son-in-law for her money (as reported in court documents studied by Theodore Newton in the January, 1937, issue of The Review of English Studies).
Tumultuous times
Defoe’s disposition and fortunes were affected by the tumultuous era he lived in. There was the Great Plague of London (a quarter of the population killed), Great Fire of London (three-quarters of residents’ homes destroyed) and The Great Storm of 1703. Religious intolerance also denied Protestant Nonconformists like Defoe many opportunities. He ended up in the pillory and jail several times, on charges including libel and sedition. Wars and uprisings often disrupted his commercial plans.
Writing books to escape his miseries
The “torment of mind” suffered by Defoe because of his times and dire finances "condemned him to a lifetime of misery, fear, loneliness and remorse,” Richard West says in his book, Daniel Defoe: The Life and Strange, Surprising Adventures. He could only escape “through prayer … and by writing books.”
Larry MacDonald is an author, journalist and economist at mccolumn@yahoo.com.