World War One’s Great Shanghai Swindel – The Timmerscheidt Scandal

Richard Adam Timmerscheidt had lived for a time in Shanghai and Hong Kong claiming he was an American and during the First World War vocally opposed the Kaiser in China to anyone who would listen. In actual fact he was a German who had fraudulently obtained American citizenship just four months before the war broke out which allowed him to continue to operate within the American and allied world of Shanghai. He had earlier resigned from his job with the China offices of the German brokerage firm Ladenburg, Thalmann and Company to work briefly for a finance firm in Berlin before returning to the Far East and taking up the influential post of Manager of the Hong Kong branch of the German Asiatic Bank which was closely connected to the Qing Imperial Government in Peking. It was during this period he got to know many prominent Shanghailanders from all sides of the tracks.

 

After the war broke out Timmerscheidt moved to New York to run the Manhattan operations of the German Asiatic Bank. While in America he contacted many of his old Hong Kong and Shanghai acquaintances persuading them to invest money with him and promising big returns. Many did; including several quite wealthy American women. Most invested just shy of US$20,000 (roughly US$420,000 in today’s money) with Timmerscheidt displaying just how wealthy some Shanghailanders were at the time.

In 1917 America joined the war on the side of the Allies against Germany and Timmerscheidt came under suspicion for both financial fraud and for having lied to get American citizenship. Realising the game was up Timmerscheidt returned to his luxurious apartment on West 59^th Street in Manhattan, slashed his wrists and then impatient at how long it was taking him to die threw himself out of the apartment window in July 1917.

 

The story became curiouser when it appeared that Timmerscheidt had been in contact with Berlin and was using his inside knowledge of German strategies in the war to try and profit from the stock market in advance of big falls or rallies. For a time the strategy worked but then America’s entry into the war led to a drastic fall in the stock market and Timmerscheidt was largely wiped out. Those back in Shanghai who’d been ripped off argued in the American courts for years to try and reclaim their stakes. Some did eventually get some of their money back as Timmerscheidt had invested heavily in buying copper to hoard and sell to Germany. After the war  there was a shortage forcing copper prices high. A few did receive a payment eventually in the 1920s, but it had seriously dented their nest egg with endless legal wrangling, high lawyers fees and the necessity of leaving Shanghai and their businesses to be based in New York for months to attend court in Manhattan.