Watchdog financial journalism is nearly 200 years old

One of the continuing arguments about the quality of financial journalism is that in the past it wasn’t as tough as it should be in uncovering unscrupulous companies and fraud.

However, new research by a British professor — James Taylor of Lancaster University — shows that the financial press during the Victorian era played a more active role in exposing and reporting fraud than what has been previously thought, lending credence to the argument that business journalism has a long history of serving as a corporate watchdog.

Taylor’s work, published earlier this week by the Institute of Historical Research at the University of London, focuses on coverage of the Independent and West Middlesex Fire an Life Assurance Company, which was exposed as a Ponzi scheme 80 years before the Boston media discovered Charles Ponzi. The company collapsed in 1841, and its executives disappeared, after critical coverage

“No reader of the nineteenth-century press can fail to be struck by the sheer volume of coverage given to the subject of white-collar crime,” writes Taylor.

Taylor notes that some British newspapers did not write laudatory articles about the insurance company, which was a large advertiser in its issues. But many papers did examine its operations, including one — the Scotch Reformers’ Gazette — that hired detectives to investigate the company and then ran a series of articles in 1839 based on what was discovered.

The insurer tried to quiet some of the journalists by offering bribes, which were refused. It also began libel proceedings against some papers. But after The Times sent a clerk to its offices to collect payment on an advertising bill and found the office empty in early 1841, most of the London papers wrote extensively about the company’s demise.

By 1843, after exhausting its investigation into the insurer, writes Taylor, “There is evidence that the mainstream London press was already beginning to envision a more active role for itself in tackling company fraud.”

He found stories that called companies “a worthless bubble” and a “jobbing company.” The Times became especially aggressive, found Taylor.

“In the aftermath of the I.W.M., London’s financial journalists staked a claim to respectability and status not so much on the strength of their knowledge, their contacts or their literacy skills, but on their willingness to expose fraud,” concluded Taylor.

I’ve long argued that there’s plenty of evidence that business journalism in the United States has been a watchdog for much longer than people are willing to admit, dating back to Ida Tarbell’s writing about the Standard Oil Co. in the first decade of the 20th century and Henry Demarest Lloyd’s writing in the Chicago Tribune in the 1870s about robber barons.

Taylor’s research pushes the beginning of watchdog financial journalism back to an even earlier time.