Ending the Abuse of the Aristocrats
The history of tenant abuse by aristocratic landlords goes back in the UK for a thousand years. But the twentieth century turned out to be the Revenge of the Downtrodden.
Beginning immediately after World War I, which decimated Britain’s male aristocrats, the Brits determined to destroy their aristocracy, and destroy it they did. Certainly the Montrose family was crushed.
Consider the example of Lady Jean herself. Her parents, the Duke and Duchess of Montrose, lived in a castle (Buchanan Castle) that boasted 40 rooms and 27 servants. (And one bathroom.)
But Lady Jean, who was born just after the war ended, lived in a smallish house without central heating. Even so, she had to let out the back part of the house to produce income.
Among the many weapons deployed by the House of Commons to exterminate the aristocracy were very heavy death duties. Everyone knew that the “landed aristocracy” owned just that—land. They were cash-poor and no amount of estate planning could deal with the ruinous taxes due as soon as a family member died.
In Lady Jean’s case, her mother, the Duchess, died in 1957, and the only way to discharge the death duties was to donate Brodick Castle to the Scottish National Trust in lieu of taxes. Even then, the Trust demanded that Lady Jean also provide an endowment to handle maintenance on the castle—an absurdly impossible request for a woman who had no cash whatever. (This unhappy transaction was negotiated by Lady Jean’s former bozo lawyers.)
Fortunately, one of Lady Jean’s new attorneys found a clever way around the endowment demand, but even so, as noted earlier, Lady Jean was tossed out of the castle with the clothes on her back.
Just in case the death taxes weren’t sufficient to wipe out the aristocracy, the clever boys and girls in the House of Commons had a few other aces up their sleeves. Most of these were aimed at landlords, since that’s what the aristocracy were. There was, for example, the bizarre Rent Restriction Act, which froze rent payments at the level that prevailed in August of 1914.
As an example of the preposterousness of this piece of legislation, Lady Jean owned about 20 cottages in the town of Brodick (the so-called “Douglas Place” cottages). These were small-but-charming homes that would normally have rented out at about £150/year. Under the Act, the annual rent was fixed at £5.
Needless to say, it was impossible for Lady Jean to maintain—much less improve—the cottages at this rental rate. And, of course, the tenants weren’t going to fix the places up since they didn’t own them. Therefore, the small-but-charming cottages quickly morphed into small-but-collapsing slums.
The same thing happened, under the burden of other laws, with all the rest of the land on Arran. Either the rent rates were fixed at ludicrously low levels or the use of the land was severely circumscribed by law.
The results of all this Revenge of the Downtrodden were two-fold. First, the aristocracy was duly destroyed. Second, the UK was in the process of being duly destroyed itself until Margaret Thatcher came along and repealed most of the sillier laws.
But it was pretty much too-little-too-late for Lady Jean. The destruction of all incentives to improve land and property on Arran had led to the phenomenon I’ve already mentioned: it was still 1835 on the island. While Western Europe and the United States were entering an era of undreamed-of affluence, the people of Arran remained poor and backward.
Negative subtle maneuvers
Faced with 75 years of destructive nonsense on Arran, we decided that it was time to take off the gloves—no more Mr. Nice Guy for us. We abandoned the world of positive subtle maneuvers and entered the dark land of negative, not-so-subtle maneuvers.
We began by presenting Lady Jean with three of the most egregious instances in which people had not merely ripped her face off, but bragged about it afterwards. Lady Jean was—well, “incensed” barely begins to describe the towering rage of a substantial woman who was towering even when she wasn’t incensed.
And yet, believe it or not, Lady Jean refused to sue the bastards. Maybe it was the memory of the Clearances rearing its ugly head again, or maybe it just wasn’t possible, in Lady Jean’s mind, for an aristocrat to come down hard on a commoner. But it was certainly possible for a commoner to come down hard on a commoner.
Therefore, we had Lady Jean transfer her rights in those three egregious cases to a newly formed Swiss company called Arran Isle Improvement Association, AG. AIIA AG’s UK legal counsel—the aforementioned Freshfields—then drafted spine-tingling lawsuits against the three miscreants and let them know that we planned to launch the actions in 30 days.
These potential lawsuits were met with instant indignation and outrage, but the indignation and outrage didn’t last very long, for three reasons.
First, the miscreants knew they were in the wrong—hell, everyone on Arran knew they were in the wrong. Second, AIIA AG had very deep pockets and could litigate till the cows came home, while the miscreants had shallow pockets and could barely afford to hire lawyers. Third, the miscreants were represented by local shysters, while AIIA AG had Freshfields in its corner.
It was, as Lady Jean’s factor put it, like the Nazis beating up on Belgium and then waking up to find Eisenhower on their doorstep.
Still, while negotiations were underway, the shysters—to our astonishment—engaged legal counsel in Zurich in an attempt to find out who was behind AIIA AG. The apparent purpose of this was to embarrass Lady Jean by… what? Revealing that she was herself behind the company? That some other aristocrat was helping her out, coming down hard on the hapless commoners?
Whatever the rationale for this quixotic ploy, it was doomed from the outset, as we’ll see next week.
Gregory Curtis is the founder and Chairman of Greycourt & Co., Inc., a wealth management firm. He is the author of three investment books, including his most recent, Family Capital. He can be reached at gcurtis@greycourt.com. Please note that this post is intended to provide interested persons with an insight on the capital markets and is not intended to promote any manager or firm, nor does it intend to advertise their performance. All opinions expressed are those of Gregory Curtis and do not necessarily represent the views of Greycourt & Co., Inc., the wealth management firm with which he is associated. The information in this report is not intended to address the needs of any particular investor.
