In 19th century Ireland, wealth was defined by one thing and one thing only, and that was land.

Entrepreneurial fortunes such as those amassed today by individuals like Denis O’Brien, Larry Goodman and the Collison brothers were non-existent, and had they been, would have been frowned upon. Land alone determined wealth, conferred privilege, and granted social and political status and influence. At their height, in the period of the Napoleonic Wars (1803-15), 10,000 or so of these “masters of the universe” such as the Duke of Leinster, Lord Lansdowne and the Marquis of Conyngham owned well over 90% of the land of Ireland and controlled almost every aspect of Irish life.

So where are they now and how come they and their descendants are no longer a significant feature in Irish life?

Building boom

Readers of my series of articles earlier this year on Irish land ownership will be familiar with how this changed over the centuries. The land confiscations of the 12th (the Norman conquest) and 17th (Cromwellian and Williamite plantations) centuries gave rise to a largely alien landlord class. Often viewed as an “English Garrison” they represented an aristocracy or ascendancy class that sought to mirror their “mainland” equivalents. A growing population, coupled with an increased demand for agricultural produce, due to a war-torn Europe, and the needs of an ever-increasing urban demographic particularly in England, fuelled the demand for land in the early 19th century. As so often happens when life seems at its best, you are most vulnerable. And so, it was with Irish landlords.

Fuelled by economic prosperity, the early 19th century saw a boom in “great house” building which to quote historian Terence Dooley, “were built to inspire awe in social equals and deference in the lower social classes.” The newfound status and lifestyle came of course with a price tag which when economic recession hit post the Battle of Waterloo in 1815, many landlords found themselves heavily indebted and struggling to make ends meet. The solution was more borrowings, which further undermined their financial stability.

By the time of the Great Famine in 1847, many of these highly indebted landlords were unable to cope with the inability of their tenants to pay rents. The Government response was the creation of the Encumbered Estates Court, through which over 3,000 landlords disposed of their estates.

Land purchase acts

The advent of the Michael Davitt-inspired Land War in 1879 and the Plan of Campaign in 1886 made life very difficult for landlords and Government alike. The latter’s response was a series of land acts or more particularly a number of land purchase acts between 1885 and 1909, whereby landlords were encouraged to sell their estates to their tenants. Under these acts over 80% of Irish land changed hands and tenants became landowners and landlords became rentiers living off the returns generated from the proceeds of the sale of their estates.

Most of these sales occurred following the introduction of the Wyndham Land Act 1903. This act made the then colossal sum of £100 million (£10 billion in today’s money) available for land sale and purchase. It can be argued that Wyndham’s great measure was a “bailout” for landlords because at the time there was little or no market for land. Payments of between 20 to 24 times annual net rents coupled with a further 12% top up bonus were generous to say the least and were designed to encourage even the most recalcitrant of landlords to sell. Wyndham’s plan was that if invested wisely- meaning generating a return of 3.5% per annum- a landlord could obtain the same level of net income he previously received from rents; without of course having to deal with troublesome tenants. The result was that well over 5,000 of the remaining 7,000 landlords availed of this scheme between 1903 and the outbreak of war in 1914 when it effectively came to an end.

Spending and investing

So, what did these landlords do with the money they received from the sale of their estates? While it would be very entertaining to give the reader stories of mad spending orgies, the reality was much less dramatic. Yes, there were some who indulged their appetites by purchasing that newest of status symbols, namely a motor car. Reginald Bence Jones bought himself a Mercedes fully loaded with matching silver flowerpots. The Marquis of Sligo, on the other hand, spent a not insignificant fortune upgrading Westport House by installing electricity and adding 12 guest bathrooms with the then ultimate luxury of hot and cold running water. But most acted in what they thought at the time was both responsible and prudent. Research carried out by this author shows that many of the former landlords acting on the advice of their solicitors and stockbrokers invested the bulk of the proceeds of sale in portfolios of income generating quoted securities such as domestic and international government and municipal bonds, and railway and utility debentures.

While appearing very proper at the time, investment portfolios such as these contained several fundamental and fatal flaws that would manifest themselves over the following 20 years as the world went through multiple economic and political convulsions. The over-reliance on income generating securities provided no hedge against inflation, when, for the first time in almost 100 years, it became a feature on the outbreak of war in 1914. The effect of inflation was that, to maintain standard of living it was necessary on occasions to supplement income by selling investments, which meant eating into capital. The huge decline in the value of railway stocks due to the advent of road transport in the post war years saw very high levels of capital erosion. Add to this the turmoil caused by the Wall Street Crash in 1929 and the impact of rising death duties and it is easy to see why so many of these once mighty portfolios were whittled away.

That so many fortunes were squandered and eroded is not of course the preserve of the former Irish ascendancy class. Recent research in the USA and backed up by anecdotal evidence in Ireland and elsewhere, shows that by the time the second generation succeeds to inherit, 70% of all fortunes are depleted and by the third generation, this increases to 90%. This means that nine out of 10 great-grandchildren of wealthy families can expect to inherit nothing. But as they say, sin scéal éile!

Next week

Withholding the Land Annuities: Good politics, bad economics?

About the author

Tony McCarthy received his PhD from Maynooth University in 2017. Since then he has published widely and his latest work is a collaboration with Prof. Terence Dooley of Maynooth and Prof Annie Tindley of Newcastle University on Irish Land Reform will be published later this year by McGill University Press.