Chronicles and characters of the stock exchange

by of the Bank of England John Francis

A few months evinced the uncertainty of the peace. Jealous and watchful, both powers stood ready to renew the combat. The First Consul insulted our ambassadors; dismantled fortresses; annexed whole countries to France; sent armies against the free citizens of Switzerland; demanded the banishment of French emigrants, and the abridgment of the liberty of the press; until, unable to subdue their passions, the love of peace which had once swayed men’s minds changed to a fierce desire for war. In May, 1803, the English ambassador demanded an explanation, and was insolently told that Great Britain was unequal to cope with France.

During this period great anxiety prevailed throughout London, concerning the completion of a negotiation on which so much depended. The more thoughtful hoped that the peace of the world would not be disturbed; and great was the pleasure, therefore, of these good citizens, when, on the 5th of May, 1803, in passing the Mansion House, their attention was arrested by the following letter, conspicuously displayed in the place usually allotted to important information. It was short, but to the purpose:—

“Lord Hawkesbury presents his compliments to the Lord Mayor, and has the honor to acquaint his Lordship, that the negotiation between this country and the French republic is brought to an amicable conclusion.”

The glad tidings soon reached the Stock Exchange, and the funds rose to seventy on the opening of the market. In a short time, however, suspicion was aroused. Men doubted, though they scarcely knew why; and the price fluctuated, with a downward tendency. Many of the members, as they arrived from their residences at the West, where the news ought to have reached, were utterly ignorant of the intelligence. The faith of the bulls failed them, and the boldness of the bears increased. It soon became confidently asserted that the news was fictitious; and when the treasury received information of the report and its origin, a letter was sent by the authorities, terming the important document a scandalous forgery. Amid a confusion, an uproar, and a noise, at that period unprecedented, the Lord Mayor communicated in person the contents of his second letter. Business was immediately suspended; the guilty and the guiltless were alike suspected; and when a price was named, it was at a reduction of seven per cent. A subscription was entered into to assist in discovering the parties implicated; all bargains were declared void; and the only important result was in a number of actions at law, the benefit of the legal profession, and the impunity of the projectors.

The 16th of May was a memorable period for the country and for the Stock Exchange. The personal insult offered by the French Consul to the representative of his Majesty; the evident determination of the same people to break all ties and truces, rendered an appeal to arms once more necessary; and on that day the fierce and fatal war which followed the truce of Amiens,—which desolated the fairest fields of Europe,—which crushed the ambitious man who provoked it,—and which added two hundred and sixty-three millions to the national debt,—was proclaimed.

In 1806, Joseph Elkin Daniels, a conspicuous character in the Alley, and known for some time as a dealer in securities, availed himself of the confidence of the members of the Stock Exchange, to perpetrate a fraud as novel as it was notable. As a dealer in the funds for time, he was well known; and his frequent transactions, combined with the trust which his character had achieved, gave his broker a confidence in his proceedings of which he proved utterly unworthy. The time was an important one. The Continent was struggling against the iron yoke of Bonaparte. Austria was making that last great struggle with her enemy which ended at Austerlitz; rumors were plentiful, and the price of stock varied greatly, when the man Daniels came to the broker, and desired him to buy omnium on account. The price was high, but his request was complied with. Omnium continued to advance, and Daniels continued to buy, although the price increased from ten to thirteen premium. When the broker had completed his orders to the amount of £30,000, he grew anxious for his money, and applied for payment. Daniels, however, quieted him by saying, he was so sure the price would rise, that his friends would lend him on the security of the stock, to enable him to make the most of his speculation, and that he should, therefore, hold the entire amount. The statement seemed a fair one. Daniels was believed to be honest, and the broker handed him £30,000 omnium, for which Daniels gave him his draught on Smith, Payne, & Smith.

The first part of this man’s fraudulent scheme was now acted. He knew the check would not be presented until the afternoon, and that he was, therefore, free from danger for a few hours. He immediately took the omnium to other brokers, represented to them an urgent necessity for money, sold it, and having been paid checks for the amount, immediately presented them to the bankers on whom they were drawn, and received the amount in cash. He then went to all whom he knew, or would trust him, borrowed money on the security of his own checks,—a common practice on the Stock Exchange,—with remarkable boldness, remained in London until near the hour when he knew his own draught would be presented and refused, and then left, laden alike with gold and a guilty conscience.

The total amount of fraud was estimated at £50,000. Telegraphic notices were transmitted to the principal ports of the United Kingdom; the Lord Mayor despatched officers in all directions; the chief sufferers went express to various places, on the chance of detaining him; and every exertion was made to bring to justice the man who had violated every principle of common honesty, and so greatly shaken the honorable confidence of the members of the Stock Exchange. Two thousand seven hundred pounds which he had strangely left at his banker’s, were attached; two hundred guineas were offered for his apprehension; his lodgings were examined, and the property found was seized by the officers of justice.

The search was too active not to be successful; and Daniels was discovered in the Isle of Man. Here a new difficulty arose. The Manx laws protected the culprit, the governor’s permission being required to apprehend him; and, when procured, so numerously was the island peopled with men like Daniels, that the officers, afraid of arresting him in open day, took advantage of night to remove their prisoner. The proceeds of the robbery were found; and when his departure was known, the island rose tumultuously at the violation of a right on which the safety of half the population depended.

Great excitement was caused by his arrival in England; but, after a careful legal consultation, it was decided that he could not be convicted on any criminal charge; and Joseph Elkin Daniels escaped the legal penalty of that fraud which gave so severe a shock to the members of the Stock Exchange.