STOCK EXCHANGE GAMBLING
By A. J. Wilson
Nothing is easier than to heap abuse upon the Stock Exchange and to place to its debit every crime of which the gambler can be guilty. And all the abuse would have a sediment of truth beneath it, for infinite are the evils that have grown up and spread their roots far and wide through all strata of modern society since the day when dealing in stocks and shares first became a passion or a habit. True as this is, and numberless as may be the demoralising consequences of indulgence in the habit of stock and share “bulling” and “bearing,” it would be none the less false and unjust to lay upon Stock Exchanges and their members all, or even half, the blame for the moral undermining of society that may ensue from subjection to the hazards of the play. In many of its functions the Stock Exchange has always done admirable service to civilised mankind, and the great majority of the members of all such institutions are men as upright, as humane and high-principled as could be found among any body of merchants in the world. It is not their fault but often their misfortune that the spirit of unbridled lust after unearned wealth should so continually strive for the mastery and so often become dominant in their business.
From the point of view, however, of the highest ideal of national morality, it is unquestionable that the trade of the stockbroker is of tainted origin. In this country the business began in an organised sense when William III. founded the National Debt and called the Bank of England into existence to furnish him easily with the means to carry on his Continental wars; and an evil day surely it was for the peace of the world, for the progress of mankind and civilisation, for the masses of those who toiled in all countries endowed with a settled form of government, when national debts were invented—debts laid upon the shoulders of the people without either the intelligent or deliberate sanction of those called upon to bear the load, or adequate estimate of the consequences in any direction.
We must, however, in most things take the world as we find it, and in spite of my hatred of all debts, and of my belief that debt never paid off in the long run ruins the debtor, whether individual or state, it has to be admitted that good of many kinds came out of evil in this instance. Debt, by the intermediary of the banker, begat credit; and credit, based upon a security which was reliable, the fruits of a nation’s labour and enterprise, gave an irresistible impetus to that industrial and mercantile expansion which has carried the prosperity of the United Kingdom to heights never before seen on earth, and changed the course of human progress everywhere. Imagine what might have happened if the banker’s utilitarian fiction, which treated the symbols or book entries of moneys spent in wars as so much realised wealth, capable of being utilised to call still more wealth into existence, had never been allowed to have free play. The nation would have perished beneath the dead weight of its obligations. Called upon to find the interests of the debts imposed upon it, out of resources suffering continual depletion, unstimulated by any new capital beyond what the minority might or might not have been able to furnish at the moment out of its savings, it would have sunk lower and lower in poverty, until its condition might have become one of hopeless anarchy.
The banker and the stock-jobber between them saved England from that fate—unconsciously, perhaps, but they none the less saved it. Their operations often exhibited a kind of inverted, topsy-turvy communism. Gravely treating the promises to pay emitted by governments of all degrees of irresponsibility as the inviolable obligations of the people at large, they used these promises and symbols of wealth already dissipated as the bases on which to rest further credits granted to joint-stock enterprises—to South Sea bubbles no doubt, but also to East India companies, Hudson Bay companies, mining companies, canal companies, adventures of all kinds, some of which outlived the manias amid which they came into existence, and survive in one form or another to this hour. Throughout modern history, the part played by debt in engendering credit, in calling capital into existence as it were out of nothing, and providing the means to carry out great undertakings by whose completion alone could the credit-born capital become living and real, has been such as to transform the world, girdle and seam it with railways, bind it together by electric cables, and cover its oceans with ships almost as sure and safe in their comings and goings as a suburban railway train. In ways almost infinite, credit was created to represent assets not yet in being; and, by putting in pawn of previously existing debts, and through the intermediary of banks, it drew out hoards from the keeping of the thrifty. Dead capital—capital spent—came to life again as it were, and was a potent agent for the advancement of mankind in civilisation. By this means modern nations not only stimulated their manufacturing industries, awoke and encouraged inventiveness, spread their productions over the whole world, but developed cities at home and made life bearable for aggregates of population whose healthy existence would have been impossible under the conditions prevalent, say, at the close of the Napoleonic wars and for long after.
Many other forces doubtless were at work so far as England alone is concerned—wealth drawn from India, the tireless energy of the race, the backwardness of other nations—but it was in no small measure the impetus supplied by those portions of our otherwise intolerable National Debt, utilised as a means of creating credit through our banks, that the resources and energies of the nation, and such forces as it drew from the yearly accretions of its savings, the ever-increasing fruition of its accomplished enterprises, were given full scope. In this development the Stock Exchange played a leading part. Without it as intermediary, little progress could have been made. Human nature rather than the share market must therefore be blamed for the manias and delirious gambling by which every step in the triumph of man over the forces of nature, of time and space, has been accompanied. The younger generation does not remember the days of the railway mania, when men went demented over wild and hopeless-looking projects, and rushed worthless shares to fantastic premiums in the height of the disease; but amid that insanity the warp and woof of our present network of roads came into being. There were enormous losses inflicted upon the multitude by the collapse, the always inevitable collapse; but good work was none the less done, progress made. Again, I may say, had the masses of mankind been capable of obeying high ideals, all this could have been avoided. It is possible to conceive a state governed by a spirit of mutual help and wholesome brotherliness in citizenship, wherein all would have been united according to their means to build these new iron highways for the good of the whole community, not for private gain; but it is vanity to think thoughts like these, men being what they are. The one effective force that could be relied on to attract the necessary capital to any enterprise is cupidity in one degree or another, the desire for individual profit. It may be the restrained and wholesome acquisitiveness of the man who merely seeks a safe repository for the fruits of his thrift, but more often it is the greed which cherishes the desire and hope of excessive and untoiled-for profit.
A subject full of temptation to the student of human passions is provided by the history of Stock Exchange furores, but I cannot pursue it. I will only cite some characteristics as ground for suggestions towards the abatement of admitted evils. Their eradication, I fear, is beyond hope until the spirit of mankind changes and its ideals. Certain characteristics stand out prominently to distinguish Stock Exchange gambling of the present day from that prevalent before the first Limited Liability Act, that of 1862, came into force. Previous to that date gambling in stocks had been confined to a limited class of the wealthy, whether aristocratic or professional—to the narrow, plutocratic classes and their immediate flunkies and hangers-on; but after the Limited Liability Act of 1862 gave definite form to this kind of joint-stock enterprise and enlarged the field of operations, speculation gradually became the fashion with classes of people hitherto unfamiliar with it, and the fascinations of the play attracted wider and ever-widening circles of society. After 1870 education came to the help of the share manufacturer, and by and by the financial newspaper, the professional tipster, the “bucket-shop” agencies outside the Stock Exchange, conducted with the avowed purpose of guiding the play so as to bring wealth to the gamblers, exercised their malign influence. Then came the £1 share, fully paid up, with no further liability, as the most attractive speculative instrument of them all. When I first knew the City, more than thirty years ago, no joint-stock undertaking whose projectors wished to be thought respectable could have been launched with a capital composed of £1 shares, whereas now very few companies of any sort are constructed on any more substantial-looking foundation. Mines, even gold-mines, in the early days of limited liability were rarely launched as joint-stock undertakings with shares of merely £1 nominal value. Nowadays, shares of 5s. nominal value are not uncommon in the case of such companies, and a few months ago the shares of several prosperous Indian gold-mines were subdivided into half-crown units, really in order to facilitate market dealings, i.e. gambling, in them over a wider field.