Chronicles and characters of the stock exchange

by of the Bank of England John Francis

The excitement of 1824 and 1825 has usually been considered in reference to banking and the Bank of England. It is the writer’s present purpose to draw attention to the social and moral evils of the period; and, by a simple detail of some curious incidents and dangerous adventures arising out of it, to draw attention to the great and crying iniquities which obtained.

The readiness with which shares were attainable first created a class of speculators that has ever since formed a marked feature in periods of excitement, in the dabblers in shares and loans with which the courts and crannies of the parent establishment were crowded. The scene was worthy the pencil of an artist. With huge pocketbook containing worthless scrip; with crafty countenance and cunning eye; with showy jewelry and threadbare coat; with well-greased locks and unpolished boots; with knavery in every curl of the lip, and villany in every thought of the heart; the stag, as he was afterwards termed, was a prominent portrait in the foreground. Grouped together in one corner might be seen a knot of boys eagerly buying and selling at a profit which bore no comparison to the loss of honesty they each day experienced. Day after day were elderly men, with shabby faces and huge umbrellas, witnessed in the same spot, doing business with those whose characters might be judged from their company. At another point, the youth, just rising into manhood, conscious of a few guineas in his purse, with a resolute determination to increase them at any price, gathered a group around, while he delivered his invention to the listening throng, who regarded him as a superior spirit. In every corner, and in every vacant space, might be seen men eagerly discussing the premium of a new company, the rate of a new loan, the rumored profit of some lucky speculator, the rumored failure of some great financier, or wrangling with savage eagerness over the fate of a shilling. The scene has been appropriated by a novelist as not unworthy his pen. “There I found myself,” he writes, “in such company as I had never seen before. Gay sparks, with their hats placed on one side, and their hands in their breeches pockets, walked up and down with a magnificent strut, whistling most harmoniously, or occasionally humming an Italian air. Several grave personages stood in close consultation, scowling on all who approached, and seeming to reprehend my intrusion. Some lads, whose faces announced their Hebrew origin, and whose miscellaneous finery was finely emblematical of Rag-fair, passed in and out; and besides these, there attended a strangely varied rabble, exhibiting, in all sorts of forms and ages, dirty habiliments, calamitous poverty, and grim-visaged villany. It was curious to me to hear with what apparent intelligence they discussed all the concerns of the nation. Every wretch was a statesman; and each could explain, not only all that had been hinted at in Parliament, but all that was at that moment passing in the bosom of the Chancellor of the Exchequer.”

The entrance to the Stock Exchange became at last so choked up, that nothing but a fine of £5 on those who stopped the way had any effect in dispersing the nuisance.

Among the companies which sprung up daily was one to make gold; and success was declared to be undoubted. The shares were all greedily taken; and it was then advertised, that, as the expense of producing one ounce of gold would cost double the value of the produce, the company would be dissolved, and the deposits kept to pay expenses.

The capital of a mining company was divided between fifty proprietors, whose advertisements and puffs were disgraceful. The meanest utensils of the peasantry were declared to be silver; and, although there were but ninety-nine mines in the whole district, the company professed to have purchased 360. In a place containing 5,000 inhabitants, it was affirmed the projector possessed 3,000 mines; and, although they had been previously abandoned after a loss of £170,000, they were purchased at a high price, and puffed to an enormous premium.

The Equitable Loan Company was another specimen. In paragraphs calculated to excite the sympathy of the public, the directors denounced the profits of the pawnbroker, arraigned his evil practices, and delicately concluded by hinting that a company formed upon the most philanthropic principles, and paying forty per cent., would soon be formed. The philanthropy might have been proclaimed for centuries, but forty per cent. was irresistible. The Duke of York good-naturedly lent his name; members of Parliament were bribed with shares; and when it was honestly said by one, that the bill would never pass the House, the triumphant reply given was, “O, we have so many on the ministerial, and so many on the opposition side, and we are sure of the saints!” The shares, however, went to a discount; both opposition and ministerial members lost all interest in the nefarious doings of the pawnbrokers, and the philanthropy of the saints faded with the fading vision of forty per cent.

The Bolivar Mining Company boasted of “mountains, not mines,” of metals. A railroad was projected to cross from Dover to Calais. A loan of £225,000 was proposed for Patagonia; another in derision advertised for the Lilliputians and Houyhnhnms of Swift’s political satire; and, to assist them all, a parliamentary steam company announced to pass more rapidly the bills before the House.

At the formation of another mining company, the utmost magnanimity was evinced. Rules were passed that none of the directors should hold more than 200 shares, that all which remained should be brought honestly into the market, and that every thing should be fair. But this moderation waxed weaker as their power increased. Thousands of shares were allotted among the managers, and locked carefully up. A resolution was passed, that no director or officer should be required to pay deposits; and then, employing the most respectable brokers to purchase 1,000 shares with the money of the company, they created a sensation in the market, and sent them to a premium. The person who sold the mines to the company was employed to report upon their value. Opinions the most flattering were given of property absolutely worthless; and, as a proof of the greediness of one party and the incapacity of the other, it may be mentioned that a mine, the full value of which was £400, was purchased at £11,000; and that £121,000 were paid for some which, in almost every instance, were exhausted.

When the Lower Rhine Steam-Navigation Company was announced, it became a great favorite. Large quantities were sold for the account; and, as the settling time approached, the premium rose to 28. The sellers were unable to deliver the shares, and their difficulties became serious. To meet them, new receipts were printed, closely imitating the old, the name only of the banker being changed. The deceit was discovered. A committee sat to elucidate the fraud, and the supposed concoctor was expelled from the Stock Exchange. The circumstance excited great attention at the time; and many more were said to be implicated than it was in the power of the committee to reach.

Another peculiar feature of the period was to be found in the loans which preceded and accompanied the memorable era when the public was wild to lend its capital to foreign states, and the resources of the borrowers were scarcely regarded. The dividends of the English funds were scoffed at; the general rate of percentage was increased in the eyes of the many; Patagonian or Lilliputian securities, which promised eight per cent., were eagerly looked for; and solid loans were followed by visionary dividends.