Chronicles and characters of the stock exchange

by of the Bank of England John Francis

So important to our financial department was the close of this war, that the decrease of the expenditure was at once declared to be two millions per month; and, accustomed as the money power of England had been to loan succeeding loan, the Stock Exchange could scarcely understand the declaration of the Chancellor, that he neither intended to ask for money, nor to touch the sinking fund. The immediate effect of the battle of Waterloo on the funds was only three per cent., nor was it until the capture of Napoleon became positively known, that they rose to their previous price.

It is not unworthy of remark, that, from 1688 to 1814, sixty-three years witnessed bloody and expensive wars, while only sixty-one years were employed in recovering from the effects of so demoralizing a system.

The well-known attempt to defraud the Stock Exchange occurred in 1814; but the features of the hoax were so like that of 1806, and its effects so similar on the members, that a brief notice is deemed sufficient. Prior to February, 1814, various brokers were employed by persons, some of whom were not accustomed to speculate in Capel Court, to purchase government securities to the amount of £826,000. Among other and less important individuals, were Lord Cochrane and Mr. Cochrane Johnstone, M. P., who, when information arrived that some French officers had landed at Dover, with the news of Bonaparte’s death, took advantage of the consequent rise, to sell the stock they had previously purchased. In a short time, however, it was discovered that the “French officers” were fictitious, and that the news was false. Every endeavour was made to discover the inventors of the plot; suspicion was pointed at persons who had bought so largely and sold so well; and Lord Cochrane, Mr. Johnstone, M. P., with several more, were tried for conspiracy, and found guilty. The committee of the Stock Exchange did not, as in the previous case, cancel the bargains made, but left the parties to the remedy which the law provided. Mr. Johnstone fled from the country, and Lord Cochrane was dismissed from the navy. But public opinion has reversed the decree, and reinstated his Lordship in that service of which he was the pride and the ornament.

In consequence of the above fraud, it became necessary to serve certain law processes on many of the members; and an attorney’s clerk, ignorant of the custom of the Stock Exchange, or confident in the sanctity of his mission, ventured boldly in. The solemn character of the law was no defence, and scarcely was his errand known, when he felt as willing to retire as he had been anxious to enter. The disgraceful mode in which a stranger is usually treated by the jobbers and brokers was carried out in its fullest extent, and it was not until he had received his initiation into the manners of the members that he was allowed to leave the mart dedicated to Mammon.

In 1815, the first French loan was negotiated in London. The fall of Napoleon, the return of Louis le Gros, the personal expenses of the monarch, and the pecuniary concessions of the government, demanded a supply to which French capitalists were unequal; and a successful attempt was made to borrow in the English market.

In the following year an act was passed, authorizing the transfer of stock upon which no dividend had been claimed for ten years, to the commissioners for the reduction of the national debt.

It has been the writer’s duty in another work to advocate the cause of the holders of unclaimed dividends. The unfairness with which they are treated is neither to be palliated nor justified. The eagerness and anxiety of government to obtain money is too often gratified at the expense of morality; and it is thus with the unclaimed dividends. Every difficulty is thrown in the way of the public; and, though the above act distinctly ordains that, immediately after the transfer, the names, residences, descriptions, and amount shall be kept open for inspection at the Bank, it is useless for the public to apply, as they are politely, but peremptorily, refused all information. It is only fair to conclude that this is at the instance of government, as the Bank receive no benefit from their violation of the act of Parliament.

It is not often that the repudiation of a dividend causes a rise in the price of the stock; such, however, was the case in a loan of five millions to Austria, the interest of which was to be remitted by the Emperor. Shortly before it became due, intelligence arrived that Austria was unable to meet the claim. The stock at once rose two per cent., as it was known that the faith of England was pledged to the fundholder, and that henceforth the interest must be provided by the English government.

A laudable endeavour was made in 1821 to abolish the system of gambling known as options; and, after a serious consideration, the committee of the Stock Exchange resolved, that any member guilty of the practice should be expelled the house. It was soon found that rules are more easily made than followed; and a powerful opposition was organized, in which the Hebrew party took the lead. Large sums were subscribed towards the erection of a new building; and the schism grew so serious, and numbered such important parties in its ranks, that the committee deemed it wise to make an amicable arrangement, and abandon the resolution they had so hastily made.

Up to 1822, the Royal Exchange was the theatre in which business in the foreign funds was transacted. When, however, this business became a feature of sufficient importance, a foreign Stock Exchange was formed in connection with Capel Court.