Chronicles and characters of the stock exchange

by of the Bank of England John Francis

But the market became overloaded, and holders began to realize. Every packet from abroad bore foreign securities, and the price drooped. During the fever, Spanish Cortes stock, which in 1833 was 16½, was forced to 72. Portuguese was done at 102, and every foreign stock rose in proportion.

By May, 1835, the market became overloaded; all were sellers; the price drooped; and on the 21st the panic commenced. Spanish stock fell at once sixteen per cent.; the scrip went to three discount; and the lower the price, the more anxious were the holders to sell. Every one grew alarmed; and those who had bought as a permanent investment parted with all their interest. Private gentlemen, who had been tempted to buy, hurried with heavy hearts to their brokers; and the Stock Exchange may be said to have groaned beneath the burden.

To add to the distress, the greatest holder turned bear; and it is difficult to describe the confusion with which the market closed on the evening of the 21st of May. Some were rejoicing at their deliverance, though suffering a large loss, while others were absolutely ruined. In many panics there had been hope. They were known to be alarms which time would rectify; but there was no hope for the holder of foreign stock; it was worthless, and it was known to be worthless. Every one felt assured that no dividend would ever be paid upon it; and when this was remembered, men cursed the fatuity which had led them to buy waste-paper, and execrated the greediness which had lured them to ruin. Those who the week before possessed securities which would have realized hundreds of thousands, were reduced to bankruptcy. Brokers who had kept to their legitimate business were defaulters; most who had bought for time were unable to pay their differences; while respectable men, who had laughed at speculation, and thought themselves too clever to be taken in by companies, had ventured their all on the faith of foreign governments. Establishments were reduced, families were ruined, delicately-nurtured women were compelled to earn their bread. Death ensued to some from the shock, misery was the lot of others, and frantic confusion once more marked the alleys and the neighbourhood of Capel Court. Consternation reigned paramount, and almost every third man was a defaulter. All foreign securities were without a price; the bankers refused to advance money; the brokers’ checks were first doubted, and then rejected; nothing but bank-notes would be taken; and, with a desperation which will never be forgotten, the jobbers closed their books, refused to transact any business, and waited the result in almost abject despair. The stocks bore no price, the brokers ceased to issue their lists, and the blackboard was found inadequate to contain the names. Differences to the amount of ten millions were declared; and the entire wall would have been insufficient to contain the names. The practice was, therefore, dispensed with, and an additional time allowed to settle the accounts.

To mitigate the evil, the principal holders of foreign securities formed themselves into a society to purchase all stock below forty; but it was found inadequate to meet the catastrophe in the house, while out of it the excitement in Spanish, Portuguese, and other foreign funds created evils which never met the public eye, but which are yet felt by innumerable private families.

During this period, the Royal Exchange, previous to the assembling of the merchants, witnessed a curious scene, and beheld a motley group of speculators; and, says Mr. Evans, in his work on the city, such was the rage for shares in companies which had arisen out of the general excitement, that the beadle was obliged to drive them away, as the frequenters of ’Change could not get to their places. In the height of this speculation, some of the dabblers made a price of one farthing per share on a railway now promising to be the first in the kingdom, but of which there were then no buyers.

With the above panic the present chronicle of the Stock Exchange closes. To have brought it to 1849 would have involved living men and their actions, and to some future historian must be left the many whose names assume so important a position in English financial history.

FOOTNOTES:

[7] “The prince of Hesse Cassel,” said Rothschild, “gave my father his money. There was no time to be lost; he sent it to me. I had £600,000 arrive unexpectedly by post; and I put it to such good use, that the prince made me a present of all his wine and linen.”

[8] In 1824, it was said that public attention was so entirely absorbed by financial operations, that the movements of Mr. Rothschild and a few London capitalists excited an intensity of expectation scarcely inferior to the march of armies.

[9] The intelligence of this gentleman was so good, that he was the first to announce the Paris revolution of July to Lord Aberdeen, and the victory of Waterloo was known to him some days before it was made public.