STOCK EXCHANGE MORALITY.
Perhaps there are few institutions possessing attributes more diametrically opposed to one another than the Stock Exchange. Undoubtedly useful in its way, it nevertheless abounds in gross abuse. It is a necessity to the bonâ fide investor, as indicating the locality where he can on the instant purchase or find a market for almost any stock in the world; yet it becomes a very hotbed of vice in the hands of the professional speculator. We apply this term to the man who fraudulently buys without the intention of paying, and worse still, sells what he does not possess. The method of so doing was fully explained in an article on ‘Corners’ in [No. 19] of this Journal. Take a quite recent illustration of the two evils. Only a short time ago, a letter purporting to come from Mr Gladstone’s private secretary, addressed to the Secretary of the Exchange, was received by him, and posted up in the House. It stated that certain unexpected interests would be paid to the Peruvian bondholders. The price went up over thirty per cent. in a few moments, so that any one having bought ten thousand pounds-worth the day before, could have then sold them for nearly fourteen thousand pounds. It is more than probable that the writer of the forged letter had previously purchased without any intention of paying or ‘taking them off,’ and on the imposition taking effect, at once sold out not only those he possessed, but also more that he did not possess. Within half an hour, the forgery was discovered, when the price immediately fell the thirty per cent. it had just risen. Thus this impudent adventurer would not only secure an enormous profit by the rise, but by buying back on the fall the extra quantity he had sold on the rise, reap an additional profit.
Now, it is this class of gambling, particularly the selling of what one does not possess, for the purpose of depressing the value of a certain stock to the prejudice of real holders, that constitutes the most unwholesome element of our Stock Exchange. Every conceivable artifice, the most consummate cunning, the most unblushing lies, are employed to depreciate a security which has either risen to a high figure on its merits, or else been puffed up artificially beforehand. Syndicates, as they are called—combinations of unprincipled men usually—are formed for the purpose, and there are indeed very few stocks existing at the present day that are not honoured by their especial syndicate. On any unfavourable rumour, more often concocted than otherwise, these eagle-eyed monsters swoop down upon their unsuspecting and inoffensive prey, attacking with the ferociousness of a bear, until, in sheer desperation, one victim after another succumbs, and sells out to the ‘bear’ at an enormous sacrifice, in order to save the remnant of his dwindled inheritance. If, as they were uttered in it, the falsehoods of a single day could but glue themselves to and stick on the walls of that building, it would be a feat impossible of achievement for a fly to crawl unscathed between them! Monte Carlo is bad; but an institution where more fortunes are dishonestly lost and won in a day than at that notorious gambling-place in a week, must be at least no better, if not infinitely worse.
That there are men of integrity on ’Change, men of known principle, gentlemen in every sense of the word, admits of no doubt; and it is they who would first appreciate any effort, legislative or otherwise, for the suppression of the practices alluded to here. An act called ‘Leeman’s Act’ was passed some years ago for the special protection of shareholders in banking establishments, which made it illegal to sell shares of any bank without first proving yourself to be a bonâ fide holder of its shares, giving their respective numbers, &c. The same protection should be afforded to every shareholder, no matter of what stock; and the time has now arrived for the legislature to take the matter seriously in hand. The blessings conferred thereby would be inestimable.