Was it Jewel Theft or Insurance Fraud? by Michael Waxenberg

It is my contention that "The Blue Carbuncle," first published in 1892, is not a case of a jewel theft. It is a case of insurance fraud.

Similarly, "The Adventure of the Six Napoleons" (published1904), is also not a case of jewel theft. It is another case of insurance fraud.

In both cases, Sherlock Holmes gets involved in situations that appear to be the theft of important jewels from high-ranking members of the noble class; the Countess of Morcar in "The Blue Carbuncle," and the Prince of Colonna in "Six Napoleons." This monograph might convince you that in each of those cases, the jewel was taken away and hidden so that the owner could recover payment from insurance. In other words, the owners were engaging in insurance fraud. Read further to consider why Dr. Watson does not explain the insurance fraud, leaving it to us to deduce the real crimes.

A countess and a prince are obviously nobility. These are very high noble ranks. A countess in the British peerage system is the third highest rank below the royal family, below a duke/duchess and below a marquess/marchioness, but higher than viscount/viscountess and baron/baroness. The British system does not use the title of “count,” although other European nobility use the rank of count. The British equivalent is an earl. Thus, a British countess is the wife of an earl. There is no feminine form of earl, thus countess is used. Regarding the Countess of Morcar, it is possible that she was a foreign noblewoman, because Dr. Watson does not give us enough data to conclude if the Countess was foreign or British. Either way, she is of high rank.

The Prince of Colonna is clearly of very high rank. A prince is generally descended from a monarch, and likely to be in the line of succession to a throne. The Colonna family is prominent in Italian history, forming part of papal nobility over 1,000 years ago, holding many noble and prominent positions throughout Italian history, and having descendants living today. In the sources I consulted, I cannot find a “Prince of Colonna” outside of the Canon, and thus I conclude that this is an example of Dr. Watson changing a name to conceal the true identity of someone. That is singularly apt in this instance, since this Prince was likely engaging in insurance fraud.

In 1892 and 1904, the ancient noble families, in Italy and in Britain, were not always wealthy. They may have inherited lands, along with houses, artworks, jewelry, and other assets, but many of them did not have a reliable, steady source of cash income. At least not enough income to support their high, luxurious lifestyle. Merely owning their ancient family lands no longer provided an adequate cash flow, as it did in early feudal times. A common way to address the lack of cash was to marry for it. An example of that is found in the Canon in "The Adventure of the Noble Bachelor" (published 1892), in which Lord Robert St. Simon, who is described as in great need of funds, was planning to marry an American heiress, the only child of a very rich American man. Another example of a nobleman marrying for money is Jeanette Jerome, who became Lady Randolph Spencer-Churchill and the mother of Winston Churchill. A fictitious example is in Downton Abbey. The practice was so common that the rich American women who married into titled European families were disparaged with the term “Dollar princesses.” 

Another way for a cash-strapped member of the nobility to get hold of funds was to sell off family assets, such as land, artworks, or jewelry. That depletes the family inheritance and makes those sold items unavailable for future heirs. A temporary way to raise funds was to pawn family assets to get a loan. An example in the Canon of using a family heirloom to raise short-term cash is in "The Adventure of the Beryl Coronet." Commentators have debated about where or not the royal person who gave the eponymous beryl coronet as security for a personal loan had the legal right to do so. But we can agree that pledging an asset for a loan can be a legal way to borrow money.

A clearly unlawful way for a needy noble to raise cash is to use the family’s valuable assets to commit insurance fraud. Hypothetically (I used hypotheticals because I do not want the Countess of Morcar or the Prince of Colonna to sue me for defamation), the aristocrat who needs cash takes a valuable item, such as a hypothetical blue carbuncle, or a hypothetical black pearl of the Borgias, and hides it. Then, in concert with some trusted confederates, they stage the scene to look like a burglary, and a confederate takes the jewel to temporarily conceal it where the police will not find it. They then make a false report of a burglary, make a claim on their property insurance, and collect the insurance proceeds, all the while never relinquishing the valuable and insured asset.

The scheme to defraud the insurance company while keeping the supposedly stolen asset can unravel if a co-conspirator runs off with the jewel, or if the jewel gets lost. The blue carbuncle ended up in a lost goose, and the black pearl ended up in a lost plaster bust of Napoleon. To paraphrase the Bard, the course of true crime never did run smooth. Sherlock Holmes and Dr. Watson were able to find the lost jewels. But Watson’s reports of those cases both end abruptly, and we do not read whether or not the jewels were returned to the original owners. I contend they did not, because the owners had collected insurance payouts as part of a fraudulent scheme. Why does Watson not give us the final resolution? And why does he fail to even mention insurance at all? 

The subject of insurance is mentioned in the Canon, barely, in two passing moments. In "The Five Orange Pips" (published 1891) Holmes reports that he spent an entire day in the Registry of Lloyd’s to look up shipping schedules. Lloyd’s of London was the first large and famous commercial insurance company in Britain, if not in the world. It started centuries earlier insuring ships, and as part of that, kept meticulous records of the voyages and cargos of commercial ships. In the 1800’s, Lloyds expanded into insuring other assets, such as buildings and personal property including valuable items that could be easily stolen, such as jewels.

The only other explicit mention of insurance in the Canon is in The Sign of Four (published 1890), where Holmes mentions “…that the most winning woman I every knew was hanged for poisoning three little children for their insurance-money…” Murder to get payments from life insurance is criminal. Murder is a violent crime, but the motive for murder in that case was financial, and the underlying crime was financial, i.e. insurance fraud. The death by murder of the insured was not accidental or natural, it was an inside job by someone who wanted to cash in the policy.

And speaking of inside jobs, the 1868 novel The Moonstone, by Wilkie Collins, involves the apparent theft of a priceless jewel from a wealthy family. Not to spoil the novel for anyone who has not yet had the pleasure, but it turns out to be an inside job. This early example of detective fiction may have been one source of inspiration for Dr. Watson in his style of writing the true crime exploits of Sherlock Holmes.

The Sign of Four was published before either "The Blue Carbuncle" or "Six Napoleons." Thus, we have evidence that Dr. Watson was aware that insurance fraud was a type of financial crime, and the motive of getting money unlawfully could lead to acts of violence. Yet Watson does not mention insurance in those two cases, or in any other cases in the Canon. Why not?

Perhaps Dr. Watson’s first draft of "Blue Carbuncle" and "Six Napoleons" gave the full account of insurance fraud, and maybe even some detail of how much Holmes got paid by the insurance companies as reward for recovering the jewels for which the owners were paid large sums of money. But somewhere between writing the first draft and publication, the reports were edited to remove mention of insurance fraud. Perhaps Dr. Watson himself did not want to give the public a blueprint of how to commit insurance fraud, complete with the mistakes in these cases which led to the perpetrators getting caught, and so educating the public about what mistakes to avoid, to commit more perfect crimes. If not Watson, some other person or persons may have requested the removal of any description of the insurance scam, maybe the publisher or editors at The Strand, the Literary Agent Arthur Conan Doyle, a Scotland Yard official, or even the great man Sherlock Holmes himself. None of them would want Watson to teach the world how to commit more perfect crimes.

QED