A swindling MP and property developer who conned ordinary working people in Chingford is partly responsible for the area's unusual mix of Victorian and Edwardian housing, a historian has discovered.

Retired British Library curator Morna Daniels, of the Chingford Historical Society, uncovered the reasons behind the area’s varied streetscapes and the role played by Jabez Balfour as she researched her forthcoming book on local architecture.

Balfour was the well-respected Liberal Party MP for Burnley from the 1880s, but is better remembered for the so-called Liberator Crash, a scandal similar to the famous Ponzi scam in America.

The entrepreneur bought up nearly the entire north Chingford estate through his Liberator Building Society in the 1870s, after the rise of the railway saw wealthy London workers looking for houses on the edge of the countryside.

He began persuading poor shopkeepers and others to invest their pension savings while also encouraging ministers at the United Reformed Church in Buxton Road to convince their congregations to invest.

Mrs Daniels, 65, of Keynsham Avenue in Highams Park, said: “He saw this gap in the market, he was an opportunist. He was brought up a non-conformist but he used it as a way to get people’s money.

“He could really turn on the charm when he had to, he was very clever at doing that. And the ministers got a bonus for getting new investors, maybe they saw it as a good way to increase church funds.”

Balfour’s business was supposed to advance cash to people to buy their own properties, but instead he passed on large sums to builders and property companies at a healthy interest rate, who would build and rent out the homes.

He would then invest his profits with a small group of cronies who were in on the scam, at one point claiming the business was worth £8million with similar schemes across London.

This justified huge payouts to colleagues, and investors were kept happy with above-average returns each year.

Mrs Daniels said: “He was found out in 1892. A recession bit and people started to withdraw money that wasn’t there.

“People were horrified at the huge sums of money they had lost. It was a national scandal. He ruined ordinary working people.”

By the time of the crash less than 20 houses had been built because of Balfour’s pocketing of investors’ money.

Because of a recession the next big house-building programme did not start until 1900, and more modest Edwardian houses were created next to the elaborate Victorian ones.

Balfour fled the country and police spent three years tracking him down, with appeals across national and foreign media.

However, when he was finally traced to Argentina the authorities were powerless to act as there was no extradition agreement with the UK.

But public pressure led inspector Frank Froest of Scotland Yard to effectively kidnap Balfour in 1895 – forcing him on to a boat bound for England.

Balfour was later tried at the Old Bailey and sentenced to 15 years in jail, dying a decade after his release.