IX Curious Stories of the Stock Exchange
In the Weekly Journal of January 2, 1719-20, can be read: ‘It was the observation of a witty knight many years ago, that the English people were something like a flight of birds at a barn-door. Shoot among them and kill ever so many, the rest shall return to the same place in a very little time, without any remembrance of the evil that had befallen their fellows.’ The pigeons at Monte Carlo, whom the cruel-minded idiots who fire at them have missed, instead of flying at once and for ever from the murderous spot, perch on the cage in which their fellows are kept, and are easily caught again, to be eventually killed. ‘Thus the English,’ the Weekly Journal concludes, ‘though they have had examples enough in these latter times of people ruined by engaging in projects, yet they still fall in with the next that appears.’ And thus the Stock Exchange flourishes. That desolation-spreading upastree was planted in the mephitic morass of the national debt. It is considered deserving of blame in an individual to get into debt, yet sometimes his doing so is unavoidable—his means are insufficient for his wants. But a nation has no excuse for taking credit and getting into debt. There is wealth enough in the country to pay cash for all it requires; and if it borrows money merely to subsidize foreign tyrants to enchain their own subjects, it commits a criminal act. But nearly the whole of our national debt has such an origin, and its poisonous produce is the Stock Exchange. The word ‘stock-jobber’ was first heard in 1688, when a crowd of companies sprang into existence, and it was then that the Stock Exchange was first established as an independent institution at Jonathan’s Coffee-house, in Change Alley, in or about 1698. Before then the brokers had carried on their business in the Royal Exchange. London at that time abounded—at what time does it not?—with new projects and schemes, many of them delusory, consequently the legitimate transactions of the Royal Exchange were inconveniently interfered with by the presence of so many jobbers and brokers—that pernicious spawn of the public funds, as Noortbouck calls them—and they were ordered to leave the Exchange. They just crossed the road and went to Jonathan’s, ’and though a public nuisance, they serve the purposes of ministers too well, in propagating a spirit of gaming in Government securities, to be exterminated, as a wholesome policy would dictate.’ There, at Jonathan’s, ‘you will see a fellow in shabby clothes,’ as we read in the ‘Anecdotes of the Manners and Customs of London,’ ‘selling £10,000 or £12,000 in stock, though perhaps he may not be worth at the same time 10s., and with as much zeal as if he were a director, which they call selling a bear-skin.’ Thus this latter expression seems very old. The business of stock-jobbing increased, in spite of some feeble repressive attempts on the part of Government in 1720, the House of Commons passing a vote ‘that nothing can tend more to the establishment of public credit than preventing the infamous practice of stock-jobbing’; and also passing at the same time an Act enabling persons who had been sufferers thereby to obtain an easy and speedy redress.2 In spite of this the brokers contrived to thrive to such an extent that they found it necessary to take a more commodious room in Threadneedle Street, to which admission was obtained on payment of sixpence. The Bank Rotunda was at one period the place where bargains in stocks were made; but there the brokers were as great a nuisance as they had been at the Royal Exchange, and were turned out. It was then they took the room in Threadneedle Street, and in the year 1799 they raised £12,150 in 1,263 shares of £50 each, and purchased a site in Capel Court, comprising Mendoza’s boxing-room and debating forum and buildings contiguous, on which the present Stock Exchange was erected, and opened in 1801. Capel Court was so called from the London residence of Sir William Capel, Lord Mayor of London in 1504. Within the last decade the building has been considerably enlarged and beautified.
Stockbrokers are supposed to lead very harassed and restless lives—yes, if they speculate on their own account and with their own money, a folly which no experienced broker ever thinks of committing. He speculates for other people, and with their money, and, well, if before the official hour of opening—viz., eleven o’clock—a chance presents itself of a deal with a customer’s stock on the broker’s account, by which a little benefit accrues to the latter, the customer knows nothing about it, and what you are ignorant of does not hurt. The broker is, in this respect, very much like the lawyer. Neither the broker nor the lawyer can be expected to share their clients’ anxieties concerning investments or disputed interests, and they don’t. When either of them leaves his office for his suburban villa or Brighton breezes, he leaves all thoughts of business behind him in the office, considering that the freedom from care he enjoys at home is honestly earned, and no doubt it is—in his estimation.
Until within the first quarter of this century a singular custom concerning the admission of Jews to the Stock Exchange was in existence. The number of Jew brokers was limited to twelve, and these could secure the privilege only by a liberal gratuity to the Lord Mayor for the time being. ‘During the Mayoralty of Wilkes, one of the Jew brokers was taken seriously ill, and Wilkes is said to have speculated pretty openly on the advantage he would derive from filling up the vacancy. The son of the broker, meeting the Lord Mayor, reproached Wilkes with wishing his father’s death. ‘My dear fellow,’ replied Wilkes, with the sarcastic humour peculiar to him, ‘you are in error, for I would rather have all the Jew brokers dead than your father.’
The funds are much affected by political events; that goes without saying. Their rise or fall may be very rapid. It was exceptionally so in the early period of the French revolutionary war. In March, 1792, the Three per Cents, were at 96, in 1797 they were as low as 48, the lowest they ever fell to. The possession of prior or exclusive intelligence enables persons to speculate with great success. A broker who casually became acquainted with the failure of Lord Macartney’s negotiation with the French Directory, made £16,000 while breakfasting at Batson’s Coffee-house, Cornhill, and had he not been timid, might have gained half a million, so great was the fluctuation, owing to the news being entirely unexpected.
But the magnates of the money market did not rely on casual intelligence. They left no stone unturned to obtain reliable information in advance even of Government. Thus Sir Henry Furnese, a bank director, paid for constant despatches from Holland, Flanders, France and Germany. He made an enormous haul by his early intelligence of the surrender of Namur in 1695. King William gave him a diamond ring as a reward for early information; yet he was not above fabricating false news, and he had his tricks for influencing the funds. If he wished to buy, his brokers looked gloomy, and, the alarm spread, they concluded their bargains. Marlborough had an annuity of £6,000 from Medina, the Jew, for permission to attend his campaigns. During the troubles of 1745, when the rebels advanced towards London, stocks fell terribly. Sampson Gideon, a famous Jew broker, managed to have the first news of the Pretender’s retreat. He hastened to Jonathan’s, bought all the stock in the market, spending all his cash, and pledging his name for more. This stroke of business made him a millionaire.
During the last years of the French wars a difference of 8 per cent., and even 10 per cent., would occur within an hour, and thus great fortunes might be won or lost within that short time. It was also a period of gigantic frauds, but of these later on.
Of all the sons of Maier Amschel Rothschild, Nathan, born in 1777, was undoubtedly the most prominent. Inheriting his father’s spirit, he left his home at the early age of twenty-two, and in 1798 opened a small shop as a banker and money-lender at Manchester. He had left Frankfurt, where his father’s house had just been knocked into ruins by the bombardment of Marshal Kleber, with only a thousand florins in his pocket. But the cotton interest was just then beginning to develop itself, and Nathan took such clever advantage of the opportunities this offered him, that at the end of five years he came from Manchester to London with a fortune of £200,000, where he became the son-in-law of Levi Barnett Cohen, one of the Jewish City magnates. The report of his Manchester successes had preceded him to the Capital, and he immediately engaged largely in Stock Exchange speculations. Whilst houses of the oldest standing were tottering or falling, owing to the State loan of 1810 having turned out a failure, and the fortunes of the Peninsular War seemed most doubtful, some drafts of Wellington to a considerable amount came over here, and there was no money in the Exchequer to meet them. Nathan Rothschild, satisfied as to England’s final victory, purchased the bills at a large discount, and finally found the means of redeeming them at par. It was a splendid speculation, which resulted in his entering into closer intercourse with the Ministry, and he was chiefly employed in transmitting the subsidies which England furnished—most foolishly indeed—to the Continental Powers. The circumstance that Nathan was supplied by his brothers at Frankfurt and elsewhere with the earliest and most reliable intelligence, and his trustworthy connections and arrangements in London, enabled him to turn such knowledge to immediate and profitable account. But there being then neither railways nor telegraphs, news was slow in coming. Nathan trained carrier pigeons, and organized a staff of agents, whose duty it was to follow the march of the armies, and daily and hourly to send reports in cipher, tied under the wings of the pigeons. His agents, by means of fast-sailing boats, taking the shortest routes, indicated by Nathan himself—the mail-boats between Folkestone and Boulogne of the present day follow one of these routes—carried large sums between the coasts of Germany, France, and England. And when events on the Continent were coming to a crisis, Nathan on more than one occasion hurried over to the Continent to watch the course of affairs. It is said that Nathan Rothschild, on June 18, 1815, was on the field of Waterloo,3 and watched the battle till he saw the French troops in full retreat, when he immediately rode back to Brussels, whence a carriage took him to Ostend. The sea was stormy; in vain Nathan offered 500 francs, 600 francs, 800 francs, to carry him across; at last a poor fisherman risked his life for 2,000 francs, and his frail barque, which carried Cæsar and his fortunes, landed Nathan in the evening at Dover. When he appeared on June 20, leaning against his usual pillar in the Stock Exchange, everything and everybody looked gloomy. He whispered to a few of his most intimate friends that the allied army had been defeated. The dismal news spread like wildfire, and there was a tremendous fall in the funds. Nathan’s known agents sold with the rest, but his unknown agents bought every scrap of paper that was to be had. It was not till the afternoon of June 21 that the news of the victory of Waterloo became known. Nathan was the first to inform his friends of the happy event, a quarter of an hour before the news was given to the public. The funds rose faster than they had fallen, and Nathan still leant against his pillar in the southern corner of the Stock Exchange, but richer by about a million sterling. From that day the career of Nathan was one of ever-increasing prosperity; his firm became the agents of all European Governments; he made bargains with the Czar of Russia and with South American Republics, with the Pope and the Sultan. About the morality of the Waterloo episode the less said the better, but peers and princes of the blood, bishops and archbishops, partook of his sumptuous banquets, whilst he calculated to a penny on what a clerk could live!
Another financier, who almost rivalled Rothschild as a speculator, was Abraham Goldsmid, who was ruined by a conspiracy. He, in conjunction with a banking establishment, had taken a large Government loan. The conspirators managed to cause the omnium stock to fall to 18 discount. The result was Goldsmid’s failure and eventually his suicide, whilst the conspirators made a profit of about £2,000,000.
Among other notable stockbrokers we must not omit Francis Bailey, F.S.A., President of the Royal Astronomical Society, who retired from the Stock Exchange in 1825. In 1851 he repeated at his house in Tavistock Place, Russell Square, the Cavendish experiment of weighing the earth, and calculating its bulk and figure, and at the same time verifying the standard measure of the British nation, and rectifying pendulum experiments. In the garden of the house a small observatory was erected for those purposes, and is, we believe, still standing.
We alluded a little while ago to some gigantic frauds in Stock Exchange operations. One of the most extraordinary and elaborate of such frauds was that carried out by De Berenger and Cochrane-Johnstone in 1814. Napoleon’s military operations against the allies had greatly depressed the funds. On February 21, 1814, about one o’clock a.m., a violent knocking was heard at the door of the Ship Inn, then the chief hotel at Dover. When the door was opened, a person in a richly-embroidered scarlet uniform announced himself as an aide-de-camp of Lord Cathcart (who was aide-de-camp to the Duke of Wellington in 1815), and as the bearer of important news. The allies had gained a great victory, and entered Paris; Napoleon had been captured and killed by Cossacks, who had cut his body into a thousand pieces. Immediate peace was now certain. The stranger ordered a post-chaise, and departed for London, but before leaving, he sent a note containing the news to the Port Admiral, who received it about four a.m.; but the morning being foggy, the telegraph could not be worked. The sham aide-de-camp—really De Berenger, an adventurer, afterwards a livery stable-keeper—dashed along the road, throwing napoleons to the post-boys whenever he changed horses. At Bexley Heath it was clear to him that the telegraph could not have worked, so he moderated his pace, spreading at the same time the news of Napoleon’s defeat and death. At Lambeth he entered a hackney-coach, telling the post-boys to spread the news, which reached the Stock Exchange about ten o’clock, in consequence of which the funds rose, but fell again when it was found that the Lord Mayor had had no intelligence. But about twelve o’clock three persons, two of whom were dressed as French officers, drove in a post-chaise over London Bridge; their horses were bedecked with laurels. The officers scattered papers among the crowd, announcing the death of Napoleon and the fall of Paris. They then paraded through Cheapside and Fleet Street, passed over Blackfriars Bridge, and drove rapidly to the Marshgate, Lambeth, got out, changed their cocked hats for round ones, and disappeared as mysteriously as their confederate, De Berenger, had done a few hours earlier.
The funds now rose again, but when, after hours of anxious expectation, it was discovered that the news, on which many bargains had been made, was false, there was, of course, wailing and gnashing of teeth. A committee was appointed by the Stock Exchange to track out the conspiracy, as on the two days before stocks to the amount of £826,000 had been purchased by persons implicated. One of the gang had, for a blind, called on Lord Cochrane, and Cochrane-Johnstone, a relation of his, had purchased Consols for him, that he might unconsciously benefit by the fraud. The Tories, eager to destroy a political enemy, concentrated all their rage on him, and he was tried, fined £1,000, and sentenced to stand for one hour in the pillory; but this latter part of the sentence was not carried out, as Sir Francis Burdett had declared that if it was done he would stand beside his friend on the scaffold of shame. Cochrane was further stripped of his knighthood, and his escutcheon kicked down the steps of St. George’s Chapel at Windsor. But in his old age his innocence and the injustice done to him were recognised, and his coronet restored to him unsoiled. But could this atone for all the wrong inflicted, and all the misery endured? Those who wish to know all the details of this remarkable fraud will find them in the two volumes of the Gentleman’s Magazine for 1814. The first volume gives a full account of the evidence produced at the trial.
Notes
2 An Act passed in 1734 forbade time bargains under a penalty of £500 on brokers and their clients, and of £100 for contracting for the sale of stock of which the person was not possessed. Both these statutes were repealed circa 1860.
3 To an article I wrote twenty-five years ago on this topic I find appended the following note: ‘We give the following on the authority of Martin, but must add that a private friend, who formerly filled an office of trust in the firm of Rothschild Brothers, declares the whole to be a fiction.’ But who this friend was we cannot now remember.