London, Volume 6

Knight, Charles


CXLIV.--The Stock Exchange.

CXLIV.--The Stock Exchange.




This country,

said the late Mr. Rothschild, in ,

is, in general, the Bank for the whole world--I mean, that all transactions in India, in China, in Germany, in Russia, and in the whole world, are all guided here, and settled in this country.

The centre of these operations, the heart, as it were, of this

Bank for the whole world

is a circumscribed spot lying eastward of the . Passing this Palace of the King of the City we are in an open space which it is intended to embellish by an equestrian statue of the great warrior of the age, and the and the are immediately before us. The streets which branch off from this point are and on the right, in the centre, and on the left, the north side of the latter street being formed by the , and the south side partly by the . on the western side of the Bank, at its north-western angle, , side of which is formed by the Bank, and , which is bounded on side by the whole of the eastern front of the Bank, partake also of the character which is peculiar to this neighbourhood, and which differs nearly as


much from that of the streets of fine shops as the Temple differs from . On each side of , , and the other streets we have mentioned, there are numerous passages, apparently leading to some private house, but which, in reality, are busy thoroughfares, along which the passengers hurry to and fro with an eagerness peculiar to this part of the City. We have here marked out the district in which the largest monetary and commercial transactions of London take place. Here are the Bank and the , the Stock Exchange, the great private and Joint-Stock Banks, the offices of the bullion, bill and discount brokers, and of the stock and share brokers. years ago, in pulling down the French church in , there was exposed to view a tesselated pavement, which, at least centuries ago, had borne the actual tread of Roman feet; and the immediate neighbourhood was probably the most opulent part of Roman London.[n.289.1]  A greater power than the Roman, a power of which the masters of the old world had no conception, now reigns supreme on this very spot. As a witty writer remarks-

The warlike power of every country depends on their


per Cents. If Caesar were to re-appear on earth, Wettenhall's List would be more important than his Commentaries; Rothschild would open and shut the Temple of Janus; Thomas Baring, or Bates, would probably command the Tenth Legion; and the soldiers would march to battle with loud cries of Scrip and Omnium Reduced, Consols and Caesar.


centuries ago the centre of the money power of Europe was at Antwerp. But, in , Clough, the agent of Sir Thomas Gresham in the Low Countries, expressed an opinion that, were proper means taken to create confidence,

there would be more money found in London than in Andwerpe, whensomever the Queene's Majesty should have heed;

and in Gresham proceeded to act upon this opinion. Writing to Cecil, he urged upon him the expediency of raising the necessary supply of money for the Queen from her own subjects,

wherebie all other princes maie see what a Prince of power she ys.

A loan was therefore proposed to the Merchant-Adventurers, who referred it to a common hall, where it was negatived by a show of hands, a proceeding not very imprudent, considering the bad faith of Her Majesty as a borrower of money. Gresham affected to be surprised at the unwillingness of the merchants, and by dint of persuasion and remonstrance he was enabled to take up in the City, from of the principal merchants and aldermen, , and in the following month, from others, more, to be repaid in months, with interest at the rate of per cent. per annum. When these sums became due they were renewed on the same terms; and as the confidence of the merchants increased loans were afterwards frequently negotiated between them and the State. This was a great improvement on the practice which Elizabeth had been in the habit of resorting to for raising the most paltry sums, which she was accustomed to demand peremptorily of or other of the City Companies. On occasion the Ironmongers were directed, if unprovided with the amount she required (the large sum of ), to borrow it for her immediately and pay the interest themselves.

The growth of the National Debt, and with its increase the extraordinary development of the financial capabilities of the country and its high credit, would


astound the men who lived only a century ago, while to us the wonder is that less than a century and a half since (in ) the public debt of the nation was little more than millions sterling. Such a debt as this could now be paid off at a day's notice. In the debt did not exceed millions; in (not years ago) it amounted to about millions; in (within the memory of persons living) it was no more than millions. The American war raised it to millions; and the war with France, ending with the Peace of Amiens, increased it to millions. At the conclusion of the Peace in , the debt was hundredand millions; and after nearly years' peace it now exceeds millions. In the entire public expenditure, including the interest of the debt, was under millions; and, in , for that year, it exceeded millions; while from to the average was above millions. The excess of expenditure over income in these years of war was upwards of millions sterling. Large fortunes were made during this period by loans and stock-jobbing. At the commencement of the great struggle with France nothing could exceed the energy and spirit of the country. In , a loan of was raised with extraordinary rapidity. Negotiations for peace had been for some time pending between the British government and the French Directory. The French authorities seemed to be unwilling to come to terms, and their reluctance was supposed in this country to arise from an opinion that the pecuniary resources of England were crippled, or, perhaps, nearly exhausted. Mr. Pitt, who was then minister, to show that his power of raising money was as great as ever, asked for a loan of for the service of the ensuing year (). The plan by which this large sum was to be raised he communicated to the Bank Directors in the following notice :--

Every person subscribing


to receive




per cent. stock, to be irredeemable, unless with the consent of the owner, until the expiration of


years after the present


per cents. shal-l have been redeemed or reduced, but with the option of the holder to be paid at par, at any shorter period, not less than


years from the conclusion of the definitive treaty of peace. Payment in either case to be made in money, or, at the option of the holder, in a


per cent. stock valued at


, liable, if wished, to be converted for a certain proportion into a life annuity. The


payment on the

13th of January

, the


in March, the remaining instalments between March and the October following. The receipts not to be issuable till after the


instalment, or till after


has been deposited on each


Discount, as usual, on prompt payment.

The hopes of the nation were strong that by a great demonstration of the unexhausted power of England to continue the war, they would destroy the unfounded notion of the French Directory, and thus accelerate the conclusion of a definitive treaty of peace.

The subscription was opened on Thursday, . The Bank, in its corporate capacity, subscribed million sterling, and each of the directors individually When the books were closed the day millions had been subscribed, and when they were closed on Friday, the day, the subscriptions amounted to and upwards. The eagerness to subscribe was not less on the Saturday. On Monday the the country


subscriptions were entered , before the doors were opened, and when this was done little remained to complete the eighteen millions. The lobby was crowded. When the doors were opened at o'clock as usual, numbers could not get near the books at all, and many persons called to those who were signing to enter their names for them. So great and so general was the desire to subscribe, that the room was a scene of the utmost confusion. At minutes past the subscription was declared to be full, and great numbers were compelled reluctantly to go away without having subscribed. Persons continued to come long afterwards, and a vast number of orders were sent by post which were too late to be executed. It is a curious fact that the subscription for.this enormous sum was completed in hours and minutes, that is, , hours; , hours; , hours; , hour and minutes. Most of the corporations in the City ( of which, about centuries before, reluctantly raised for Queen Elizabeth) subscribed , and most of the bankers The loan, from the stimulus of national excitement under which it was raised, was designated

The South Sea Bubble created so much prejudice against speculators in the public securities that, in , the passed a vote without opposition to the effect

that nothing can tend more to the establishment of public credit than preventing the infamous practice of stock-jobbing.

A pamphlet, published in , entitled

The Anatomy of Exchange Alley,

shows that all the ordinary artifices for raising or depressing the prices of stocks by false rumours were in full practice by the ingenious speculators of that day.

If they meet with a cull, a young dealer that has money to lay out, they catch him at the door, whisper to him,

Sir, here is a great piece of news; it is not yet public; it is worth a thousand guineas but to mention it. I am heartily glad I met you, but let it be as secret as the black side of your soul, for they know nothing of it yet in the Coffee House; if they should, stock would rise ten per cent. in a moment, and I warrant you South Sea stock will be at 130/. in a week's time after it is known.


says the weak creature,

prithee, dear Tom, what is it?

Why, really, sir, I will let you into the secret upon your honour to keep it till you hear of it from other hands. Why, 't is this; the Pretender is certainly taken, and is carried prisoner to the Castle of Milan.



is referred to the Secretary of State's office, and there, according to the pamphlet, a confederate meets him and gives a pretended confirmation of the rumour. In the end the unwary man is


At this period the great resort of the speculators was Jonathan's Coffee House, in Change Alley, or

the Alley,

as it was called. In , an action was brought against the proprietor of Jonathan's for pushing the plaintiff out of the house; and it being proved that the place had been a market, time out of mind, for buying and selling Government securities, the jury, under the direction of Chief Justice Mansfield, brought in a verdict in the plaintiff's favour, with damages. As the business of stock-jobbing increased, a more commodious room was opened in , to which, as we are informed, admission was obtained on payment of sixpence. The Bank Rotunda was, at period, the place where bargains in stocks were made. Towards the close of the last century the increased scale of transactions in the Funds, and the new loans which were continually being raised, induced the principal frequenters of the


stock-market to subscribe for the erection of a building for their accommodation. , on the east side of , once the residence of Sir William Capel, Lord Mayor in , was fixed upon as a convenient situation for the purpose. The stone was laid on the , and contains an inscription, which states, for the information of remote posterity, that the national debt was then upwards of millions. This building, which is the present Stock Exchange, was opened in . The entrance to is nearly opposite the door at the east end of the Bank, leading to the room in that building called the Rotunda.

No is allowed to transact business at the Stock Exchange unless he is a member. If a stranger unluckily wanders into the place he is quickly hustled out. There are about firms of stock-brokers in London, whose places of business are situated in the streets, courts, and alleys within minutes' walk of the . To these we must add or bullion, bill, and discount brokers. All the more respectable of these moneydealers are members of the Stock Exchange, and the total number of members is at present about . The admission takes place by ballot, and the committee of the Stock Exchange, which consists of members, is elected in the same manner. Every new member of the


as it is called, must be introduced by respectable members, each of whom enters into security in for years. At the end of years, when the respectability of the party is supposed to be fairly ascertained and known, the liability of the sureties ceases; but, as each member of the house is re-elected every year, if in the course of the preceding twelvemonth there is anything discreditable in his conduct, he is not re-elected. If a member becomes a defaulter, he ceases to be a member; though, after inquiry, he may be re-admitted on paying a certain composition; but he must be re-admitted, if at all, by vote of the committee. When a member becomes unable to pay his creditors there are certain official assignees who receive all the money due to him and divide it amongst his creditors. No man can be re-admitted unless he pays in the pound, from resources of his own, over and above what has been collected from his debtors. As some of the practices of the Stock Exchange are contrary to law, and cannot be enforced in the courts, the members are only to be held to them by a sense of honour, and such restraints in the way of exposure and degradation as the governing committee may be authorised to apply by the general body of members. Cases of dishonourable or disgraceful conduct are punished by expulsion. The names of defaulters are posted on the

black board,

and, in the language of the Stock Exchange, they are then technically called

lame ducks.

In short, the committee have the power of effectually destroying the credit of a member whose transactions are of a dishonourable nature. They investigate the conduct of members whenever called upon by other parties, and give their award according to the evidence.

The leading classes of men who have dealings on the Stock Exchange are the jobbers and the brokers, though the business peculiar to each is not unfrequently transacted by person. Some members deal for the most part in English stocks, others in foreign, and many confine their attention principally to shares in mines, railways, canals, joint-stock banks, and other public companies;


some call themselves discount-brokers and money-dealers, and transact business to a large extent in commercial securities--that is, in bills drawn by merchants and tradesmen on mercantile transactions. Bargains are made in the presence of a party, and the terms are simply entered in a pocket-book; but they are checked next day, and the jobber's clerk (their clerks are members also of the house) pays or receives the money, and sees that the securities are correct. There are but or dealers in Exchequer Bills, and the greater number of these securities pass through their hands. The majority of the members of the Stock Exchange employ their capital in any way which offers the slightest chance of profit, and keep it in convertible securities, so that it can be changed from hand to hand almost at a moment's notice. The brokers are employed to execute the orders of bankers, merchants, capitalists, and private individuals; and the jobbers on 'Change are the parties with whom they deal. When the broker appears in the market he is surrounded by the jobbers. of the


of the Stock Exchange is

Borrow money? borrow money?

a singular to general. apprehension; but it must be understood that the credit of the borrower must either be -rate or his security of the most satisfactory nature; and that it is not the principal who goes into this market, but his broker.

Have you money to lend to-day?

is a question asked with a nonchalance which would astonish the simple man who goes to a


with such a question in his mouth.


may be the reply.

I want




On what security?

for that is the vital question; and that point being settled, the transaction goes on smoothly and quickly enough. Another mode of doing business is to conceal the object of the borrower or lender, who asks,

What are Exchequer?

The answer may be,





That is, the party addressed will buy at , and sell at The jobbers cluster around the broker, who perhaps says,

I must have a price in


If it suits them they will say,


with me,


with me,


with me,

making ; or they will say each,


with me ;

and it is the broker's business to get these parties pledged to buy of him at , or to sell to him at , they not knowing whether he is a buyer or seller. The broker then declares his purpose, saying, for example,

Gentlemen, I sell to you





and tht sum is then apportioned among them. If the money were wanted only for a month, and market remained the same during that time, the buyer would have to give in the market for what he sold at , being the difference between the buying and the selling price; besides which he would have to pay the broker Is. per cent. commission on the sale, and Is. per cent. on the purchase again on the bills, which would make altogether per cent. If the object of the broker be to buy Consols, the jobber offers to buy his at , or to sell him that amount at -, without being at all aware which he is engaging himself to do. The same person may not know on any particular day whether he will be a borrower or lender. If he has sold stock and has not repurchased, about or o'clock in the day he would be a lender of money; but if he has bought stock, and not sold, he would be a borrower. Immense sums are lent on condition of being recalled at the short notice of a few hours. These loans are often for so short a period, that the uninitiated, who have no other idea of borrowing than that which the old proverb supplies, that

He who goes a-borrowing goes a-sorrowing,

would wonder that any man should borrow


or for a day, or at most a fortnight, and which is liable to be called for at the shortest notice. The facilities which the Stock Exchange affords for the easy flow of capital in any direction where profit is to be secured will explain the mystery. The directors of a railway company, whose receipts are or per week, instead of locking up this sum every week in their strong-box, as a premium for the ingenuity of the London thieves, authorise a broker to lend it on proper securities. Persons who pay large duties to government at fixed periods, and are--in receipt of these duties from the time of their last payment, make something of the gradually accumulating sum by lending it for a week or . A person whose capital is intended to be laid out in mortgage on real property finds it advantageous to lend it out until he meets with a suitable offer. The great bankers have constantly large sums which are not required for their till, and they direct their brokers to lend this surplus cash on the Stock Exchange. banker lends about to the jobbers on every settling day. Bankers are also borrowers at times, as well as lenders. The sometimes, and also the East India Company, employ their brokers to raise money on the Stock Exchange. Some members of the Stock Exchange call themselves, appropriately enough,

managers of balances.

Whatever the market rate of interest may be, it is more advantageous to a capitalist to employ his resources at the smallest rate of profit rather than that it should remain idle. Sometimes the jobber, at the close of the day, will lend his money at I per cent. rather than not employ it at all. But the extraordinary fluctuations in the rate of interest, even in the course of a single day, are a sufficient temptation to the moneylender to resort to the Stock Exchange. During the shutting of the stocks money is invariably scarce; but as soon as the dividends become payable, it is again abundant. At other times, on day the rate of interest will be per cent., and the next day only . The rate of interest offered in the morning will also frequently differ from that which can be obtained in the afternoon. Instances have occurred in which every body has been anxious to lend money in the morning at per cent., when about o'clock money has become so scarce that it could with difficulty be borrowed at per cent. For example, if the price of Consols be low, persons who are desirous of raising money will give a high rate of interest rather than sell stock. Again, an individual wants to borrow on Consols, but they happen to be in great demand, and the jobber may borrow on them at per cent., and lend the very same money on another description of Government security at per cent. The constant recurrence of these--opportunities of turning capital is of course the life and soul of the Stock Exchange.

The profit of the jobber, after he has concluded a bargain, depends upon the state of the market, which may be depressed by extensive sales, or by the competition of buyers. These jobbers are middle men, who are always ready either to buy or sell at a minute's notice, and hence a broker, in dealing for his principal, who wants to borrow money, has no need to hunt after another broker, who has money of another principal to lend, but each resort to the jobber, who is both a borrower and lender. The following information as to the extent of the transactions of a firm of stock-brokers, or, perhaps, more properly speaking, of moneydealers, or, to use the technical phrase,

managers of balances,

is official, and may be fully relied on :--

Our business, in addition to that of mere stock-brokers,

extends to the dealing in money, that is, borrowing of bankers, capitalists, and others, their surplus or unemployed noneys, for the purpose of lending again at advanced rates, the difference of rate being our remuneration for the trouble and risk attendant thereon. By the general facility thus afforded, from our being almost always ready either to borrow or lend, we have become, as it were, a channel directly or indirectly for a great. portion of the loans between

Lombard Street

and the Stock Exchange; and the magnitude of our money-dealings will be at once understood when I state that we have both had and made loans to upwards of


at a time with


house; that the payments and receipts through our banking account on each side amount to eighteen or


millions per annum, but our loan transactions far exceed that sum, and extend to the vast amount of from




millions a-year. Our loans for the year ending

October, 1841

, exceeded


millions, being an average of


millions a-month, or


a-day; and generally, upon




days in every month, the loans have amounted to










, and even


in a single day.

Notwithstanding the magnitude of the business created by the national debt, amounting to , and an income of a-year from the taxes, an annual circulation of Bills of Exchange amounting to between and , a circulation of Bank notes of , the perpetual transfer of shares in Railways, in which capital to the amount of above millions has been embarked, besides the traffic in shares in canals, banks, insurance offices, and public companies, and in the foreign funds, the gentlemen of the Stock Exchange would scarcely find sufficient employment, if all the transactions which take place there were absolutely of a character, and led in every case to an actual transfer of the property which was the object of speculation.


fill up their leisure, and the excitement which attends such transactions is rather agreeable than otherwise to those who are accustomed to the atmosphere of the Stock Exchange. The origin of these transactions was legitimate enough. At certain periods, which occur half-yearly, the transfer-books at the Bank are


for several weeks, in order td afford time for the preparation of the dividend warrants. During this interval a person who buys or sells stock must necessarily do so speculatively,

for the opening,

that is, for transfer on the day on which the transfer-books are re-opened. These half-yearly opportunities for speculative transactions were not sufficient to gratify the desire for

doing business

which prevails amongst speculators, and, accordingly, periodical dates have been fixed upon by the Committee of the Stock Exchange similar to the


at intervals of about weeks, making altogether about settling days, as they are called, in the course of the year, of these

settling days

corresponding with the days of the opening of the Bank books for public transfer. The price at which stock is sold to be transferred on the next settling day is called the price

on account.

A party engages to sell to another for a certain sum a certain amount of stock on the next

--settling day,

the calculation of the seller being that by the day in question the market-price of stock will be lower than the price agreed upon; that of the. buyer, that it will be higher. The matter, however, instead of being arranged by an actual transfer of stock, is settled simply by the losing party paying the


that is, the seller, in case of the price on the

settling day

turning out to be below that


stipulated for, gains by the difference between the sums, and the buyer loses; but, if the price rises above that stipulated for, exactly the reverse would happen. The whole transaction is founded on the anticipation of a rise by party and a fall by the other, and is, in fact, essentially a bet. The amount of the bet which is won and lost is the difference between the price agreed upon and the actual selling price. These bargains are illegal, and cannot be enforced by law. The jobbers, therefore, depend upon each other's honour. The terms




which are familiar to every reader of a newspaper, are used, the former to designate those who speculate for a rise, and the latter for those who endeavour to effect a fall in prices, as the bull tosses the objects of its attack in the air, and the bear endeavours to trample it under foot. The


who buys Consols for the settling day, or

for the account,

as it is technically called, endeavours to sell them again in the interval at a higher price; and, on the other hand, the


would endeavour to sell the (which, nevertheless, he does not possess, as no transfer actually takes place)

for the account,

with a view of buying them in for the purpose of balancing the transaction at alower price than he originally sold them at. Wars and rumours of wars, favourable turns of the public fortune, every circumstance which can affect the most sensitive of political barometers, re-acts upon the interests of either the speculator for a rise or a fall in the public funds. When the account is not closed on the settling day the stock is carried on to a future day, on such terms as the parties may agree on. This is called a


which is nothing more than interest for money lent on security of stock, which fluctuates in the most agreeable manner for a speculator, according to the scarcity or abundance of money. Operating upon the


is a favourite mode of speculation amongst those who can command large capitals, and the foreign stocks offer the most tempting inducements to this kind of enterprise, as they are subject to greater fluctuation than the English stocks; and though the security is not so good, the rate of interest is higher, being sometimes equal to per cent. per annum.

Of all the means of making a fortune none is so rapid as speculation in the Funds,--if good fortune do but smile on the speculator, nor any more uncertain. No Stock Exchange in Europe affords such facilities for speculation as that of London, for the dealings are not confined to English Government Securities, but embrace every description of transferable security, shares in Railways, Mines, Canals, Insurance Companies, Joint-Stock Banks, and indeed all property, the sign of which can be passed from hand to hand, besides including every description of foreign Funds. The foreign capitalist is attracted from every capital in Europe to the English Stock Exchange, and the Jews flock to it from every quarter under heaven. of the most productions we have seen for a long time is the letter of a Jew of Mogadore, who wished his friends to provide him with the means of going on the London Stock Exchange, where he was certain of making a


The letter, which reads almost as if it were written by the

Turkish Spy,

was produced in evidence in the Bankruptcy Court, dated London, , and is as follows:--

Unfortunately at present there is little business to be done without a large capital to speculate with. Now I am much inclined, and am encouraged to hope making my fortune in the public Funds, for you are aware that

loans are negotiated here for all nations, and the value of each nation's


is regulated by its credit, so that the prices rise and fall according to the intelligence which arrives. The Governments of Europe are not like that of our Emperor [of Morocco], who has sacks full of doubloons buried under ground, for they are poor, and indebted to the public. The English Government are indebted to the public

eight hundred

millions sterling, which are


million dollars! and all this capital is in the Funds, and bought and sold transactions are in it daily effected, so that


may make a fortune in a few days, as many have done, for the riches of R-- and M-- were all acquired in the Funds; therefore I am urging my dear Judah to become guarantee for me with a broker who deals in this business. and I have a friend, who is named Moses Abitbol, of Mogadore, a man of great sagacity, who understands this business, and is skilful in Government matters; he has been in London more than


years, and he is desirous of placing me in this business; but as I am not known, and my dear Judah is very well known, Abitbol tells me that I must ask my dear Judah to be answerable for me, and then he will assist me and put me in the way how to act. Now I have already spoken to Judah, who tells me

he is unwilling to enter into matters which are foreign to his business,

and that

it is not creditable for a merchant to negotiate in the Funds,

and he

does not wish to have too much to think of.

That it will be better to import articles from places and gain

four pounds


five pounds

at a time, than to run risks, as I might perhaps lose. Pray, therefore, write to him in my behalf, and request him to assist me in this matter, as I can assure you that I am confident, with the blessing of God and the assistance of this Mr. Abitbol, to make my fortune. I read the newspapers every day, as I understand the English language, and see by them that from


week to another the public Funds rise


per cent., and I am acquainted with everything about them, and what I ask of my dear Judah to be responsible for me is no great thing--the utmost will be




, as I am not going to risk anything which might turn out very detrimental, and, with the Divine aid,


may be gained with


, so Mr. Abitbol tells me, who likewise says that I may gain


a-year. I am in hopes that if you will write and request my dear Judah he will do the needful out of respect for you, and I beg that you will not lose any time so soon as you receive this.

We have heard of firm of stockjobbers, or rather money-dealers, who would have made a-year on their transactions at per cent. Money-jobbers would, in fact, grow rich if they were sure of realising . per cent. on all their transactions, that is only per ; but the way to wealth is not so easy. After having concluded a bargain the market changes, and the speculator may


a loss on the transaction. The Mogadore Jew would not find it so easy to gain with a capital of . There is no doubt, however, that large fortunes have been gained on the Stock Exchange by persons who have begun with transactions on the humblest scale; but then how many large fortunes have been lost Apparently, however, the life of a member of the Stock Exchange would seem to be of continual excitement. He rushes up from Brighton by the Express Train in an hour and a half, transacts his business, and leaves town again for the coast soon after o'clock, having, it may be, netted some hundreds of pounds by his clearheaded speculations, or by a fortunate turn in the chapter of accidents. Some of


the prettiest villas all round the metropolis are inhabited by members of the Stock Exchange, who here may tranquillise their nerves in the long summer evenings by those pursuits which seem so congenial to the happy-looking spot.

It would scarcely be possible to arrange under any number of general heads all the

skyey influences

that are capable of elevating or depressing the Funds, which fluctuate with every breeze of popular exhilaration or nervous despondency, every fit of suspicion or confidence, every hope and fear, almost every hope, passion, or caprice of the human breast. In the prospects of this country, owing to the successes of the French, the mutiny in the fleet, and other adverse circumstances, were so unfavourable, that the price of the per Cents. sunk on the , on the intelligence transpiring of an attempt to negotiate with the French Republic having failed, to -, being the lowest price to which they have ever fallen. The same Stock is now at . Such events as the battle of Leipsig, the escape of Napoleon from Elba, the battle of Waterloo, which influenced the hopes and fears of mankind throughout the civilized world, are not likely to occur in these times, and we must content ourselves with a more prosaic life.

During the war many frauds were practised on the Stock Exchange, under various forms of false intelligence; but of the most daring, complicated, and complete, was executed in . The parties implicated in this transaction were Sir Thomas Cochrane (commonly called Lord Cochrane), Andrew Cochrane Johnstone (his uncle), Charles Random de Berenger, Richard Gathorne Butt, John Peter Holloway, Henry Lyte, Ralph Sandom, and Alexander M'Rae. Lord Cochrane, the present Earl of Dundonald, had recently been appointed to the command of a ship of war, and was Member of Parliament for . Johnstone was Member of Parliament for Grampound. Butt had been formerly a clerk in the Navy-Office. Holloway was a wine-merchant in London. Sandom was a spirit-merchant at Northfleet, near Gravesend, but was then in the Rules of the King's Bench. De Berenger, the main agent in executing the plot, was a foreigner who had long resided in this country, and for the previous or months had been in the Rules of the King's Bench. Lyte was a small navy-agent. M'Rae was a man in distressed circumstances, who resided at , .

The series of extraordinary military operations by which Bonaparte, in January and , kept the allied armies in check had a very depressing effect on the Funds. This country was in a state of the greatest anxiety, and the intelligence of the battle of Montmirail, which was received in London on the , reduced Omnium to , which, before the opening of the campaign in January, had been as high as .

The plot of this imposture, there is little doubt, originated with Johnstone, Butt, and Holloway. Lord Cochrane was implicated, perhaps unconsciously, as he always affirmed. The rest were employed as performers. Of these the principal was De Berenger, and he performed the and chief part of the plot himself. The subsidiary part was left to Sandom, Lyte, and M'Rae, whose immediate employer was Holloway.

Johnstone and Butt commenced their speculations in the stocks on the ; Lord Cochrane on the . Holloway had long been a speculator


in the Funds. On the Saturday preceding the Monday on which the fraud was executed these individuals possessed stocks as follows:--
Andrew Cochrane Johnstone£ 141,000 Omnium.
Andrew Cochrane Johnstone 100000 Consols.
Richard Gathorne Butt224,000 Omnium.
Richard Gathorne Butt168,000 Consols.
John Peter Holloway20,000 Omnium.
Richard Gathorne Butt 34,000 Consols.
Lord Cochrane139,000 Omnium.
Total£ 826,000

The necessary preparations had been made,and everything was now in readiness. The performance commenced a little after midnight at Dover. A person knocked violently at the door of the

Ship Hotel.

He was admitted. He was dressed in a grey military great coat, a scarlet uniformirichly embroidered with gold lace (like a staff-officer), a star on his breast, a silver medal suspended from his neck, a dark fur cap with a broad band of gold lace, and a small portmanteau. This was De Berenger, in the assumed character of Lieut.-Col. Du Bourg, aide-decamp of Lord Cathcart, just arrived from Paris, and the bearer of the glorious news that a decisive victory had been gained, that Bonaparte had been killed, and that the allied armies were then actually in Paris. With the appearance of great haste and excitement he wrote the following letter:--

To the Rt. Hon. T. Foley, Port Admiral, Deal.


I have the honour to acquaint you that l'Aigle, from Calais, Pierre Duquin, master, has this moment landed me near Dover, to proceed to the capital with dispatches of the happiest nature. I have pledged my honour that no harm shall come to the crew of l'Aigle. Even with a flag of truce, they immediately stood for sea. Should they be taken, I entreat you immediately to liberate them. My anxiety will not allow me to say more for your gratification than that the allies obtained a final victory; that Bonaparte was overtaken by a party of Sachen's Cossacks, who immediately slaid him and divided his body between them. General Platoff saved Paris from being reduced to ashes. The allied sovereigns are there, and the white cockade is universal. An immediate peace is certain. In the utmost haste I entreat your consideration, &c. Signed, R. Du Bourg, Lieut.-Col., and Aide-de-Camp to Lord Cathcart.

A special messenger was immediately dispatched with this letter to the Port Admiral at Deal, in the expectation that he would have communicated the news by telegraph to the Government in London. The letter was delivered between and o'clock. The morning, however, happened to be hazy, the telegraph could not be worked, and this part of the plot therefore entirely failed.

Meantime, De Berenger ordered a post-chaise to be got ready without delay. He offered to pay with napoleons, which the landlord scrupled to take, and he then took out some -pound notes, paid his bill, and started for London. When he changed horses at Canterbury, Sittingbourne, Rochester, Dartford, he spread the news, and when he dismissed the post-boys rewarded each of them with a napoleon. When he arrived at Bexley Heath he learned from the post-boys that the telegraph could not have been worked, and then told them that they need not drive so


fast. The boys walked by the side of their horses up Shooter's Hill, and De Berenger then informed them that the French were beaten, that Bonaparte was killed, and that the Cossacks had actually torn his body in pieces, and had contended for the parts. He stopped at the Marsh Gate, in , got out, entered a hackney coach, and gave each of the post-boys a napoleon, who drove off rejoicing to spread the news as they went. This was about o'clock on Monday morning. De Berenger was driven in the hackney-coach to No. , , , where Lord Cochrane resided, in furnished apartments which he had taken days previously.

The news reached the Stock Exchange a little after , either through the post-boys, or by express sent up from Dover or some of the towns where De Berenger had changed horses. The price of Omnium had commenced at extremely flat; but when it was communicated that an officer had come from Paris, arrived at Dover, and reached London in a post-chaise and , bearing dispatches for Government, Omnium rose to , , , . No communication having been made from the Secretary of State to the Lord Mayor, at doubts began to be entertained, and the funds fell to .

The auxiliary plot now came into operation. Between and a postchaise and drove over , and made a sort of triumphal procession through the City. There were persons in it, of them dressed like French officers, in blue great-coats with white linings, and having white cockades. The horses were decorated with laurel. Small billets were scattered as they proceeded. They passed over , and then drove rapidly to the Marsh Gate, where the persons got out, folded up their cocked hats, put on round ones, and walked away. The post-chaise drove rapidly back down the .

The funds now rose from to , , , , ; but persons having been sent to the office of the Secretary of State, and it having been found that no messenger had arrived there, the deception was discovered, and the funds fell to their original level. Large sales, however, had been made, and the whole of the which had been bought by Johnstone, Butt, Holloway, and Lord Cochrane, had been sold.

The members of the Stock Exchange, who had been thus defrauded, appointed a committee, by whom it was discovered that the post-chaise had been brought from Dartford early in the morning, and had started from Northfleet with post-horses, bearing Sandom, Lyte, and M'Rae.

It was ascertained that De Berenger, who was the chief agent, was paid a large sum. He was arrested at Leith as he was on the point of leaving this country. His military coat was accidentally fished up from the Thames, in which he had sunk it. Johnstone escaped to the Continent. M'Rae received /. It was also proved in evidence on the trial, that he brought into his lodgings in on Saturday, , a couple of great coats, blue lined with white; he had white cockades made up by his wife; and, in reply to inquiries as to the use to which the coats and cockades were to be applied, he said, they were

to take in the flats.

He quitted his lodgings in the afternoon of Sunday, stating that he was going down the river to Gravesend, and he returned about o'clock on Monday, after having got out of the post-chaise at the Marsh Gate.



The profit on the sales of stock was ascertained to have amounted to about If the telegraph had worked, so as to have ensured a communication from the Government to the Lord Mayor, the profit would probably have been not less than The sales were mostly made by Mr. Fearn, a stockbroker. Butt was active manager; but Johnstone was at the office, which he had taken on purpose, and which was just by the side door of the Stock Exchange.

The trial came on , at the Court of King's Bench, , before Lord Ellenborough. Gurney was the leading counsel for the prosecution, and the prisoners were severally defended by the lawyers of the day, Brougham, Denman, and others.

All the prisoners were found guilty, and they were all sentenced to months' imprisonment in the Marshalsea. In addition to this, Lord Cochrane and Butt were fined each, and Holloway Lord Cochrane, De Berenger, and Butt were also sentenced to stand hour in the pillory, in front of the . The matter, however, was taken up in Parliament, and this ignominious part of the sentence was remitted.

The effect of the great panic of upon the public funds was more astounding than the news of Napoleon's escape from Elba. In , the per Cents. were above , and months afterwards they were under . A brief account of this


has been already given.[n.301.1]  The daily newspapers commenced giving at this period an article under the head of

Money Market,

which is now an indispensable feature in every newspaper, daily or weekly. In the


newspaper did not even give the price of stocks.

Perhaps the next circumstance in point of interest connected with the money market, in the last years, was the extraordinary forgery of Exchequer Bills by Beaumont Smith, discovered in . This case is remarkable not only for the large amount of money obtained, but for the length of time during which it escaped detection, that is, from the spring of to the middle of .

Beaumont Smith was the senior clerk in the Issuing Office of . His confederate was Ernest Rapallo, a foreigner who had been long resident in this country. This fraud related exclusively to the species of Exchequer Bills called Supply Bills, which are issued from under authority of successive acts of Parliament. The periods of issue are March and June, and each bill is either paid off or exchanged, at the option of the holder, at the office of the Paymaster of , after the expiration of a year. There are therefore exchanges of Exchequer Bills every year--in March and June. The bills have a blank left for the name of the payee, which, however, is rarely filled up, and they pass, like a bank:note, by mere delivery; they are numbered, in each successive issue, in regular progression, and are signed with the name of the Comptroller-General of , but in practice the signature was generally made by the Deputy-Comptroller. As a check to forgery, they are cut from a counterfoil, by comparison with which their genuineness may be ascertained. The number of these forged bills was , and they were generally made out for


the sum of In paper, stamp, and every other particular, they were genuine, with the exception only--of the signature, which was an imitation of that of the Ieputy Comptroller-General. Each of the forged bills was a duplicate of a genuine bill; so that suspicion was only likely to arise in the case of of the same number coming into the hands of the same person. All the forged bills emanated from Smith, and were passed through Rapallo.

In raising money on these instruments it was essential to abstain from sale; for, if thus brought into general circulation, there would not only be a great probability of duplicates falling into the hands of the same person, but a certainty of being carried at the regular periods of exchange to the office of the Paymaster, where the duplicates would of course come also, and thus infallibly lead to detection. Besides this, there is a great advantage in borrowing money on bills rather than selling the bills and replacing them by purchase. Suppose a banker requires to use his money for a week, if he sells those bills, and at the end of the week repurchases them, he has to pay broker's commission, which is a shilling on . bill (if he is a banker he has to pay half); and he also has to pay the difference between buying and selling prices, which generally is per cent., which would make a loss in the week's work, selling those bills and replacing them, of on every bill; whereas, if he came upon the Stock Exchange, and borrowed the money even at per cent., which is a higher rate of interest than that on Exchequer Bills ( per cent. is threepence farthing a day, and he receives upon Bills twopence farthing from the Government), his loss during the week is a penny a day, making sevenpence for the week; whereas if he sells and repurchases the bills it is . That is the reason why many bankers bring their bills into the market, and borrow upon them, instead of selling. The plan adopted by Smith and Rapallo, in every case, was to raise the money upon loan, and before the next period of exchange came round to redeem it by payment of the money, or to exchange it for another bill of more recent date. This method rendered it necessary to repay in every case the money advanced, as well as to pay the interest due upon the loan; but the opportunity which it afforded of employing large sums of money in extensive speculations in the stock market probably flattered the confederates with the hope of realizing large fortunes as the result.

In carrying the plan into effect, the mode of operation was the following: at the commencement of the transactions, and for some years afterwards, Rapallo delivered over the bills which he received from Smith to Angelo Solari, another foreigner, resident in this country, between whom and Rapallo there had previously been a connection; and Solari raised money upon the bills. This service he effected in part through connections formed by the assistance of Messrs. William and James Morgan, stock-brokers. They introduced him to the banking-houses of Ransom and Co., and Jones Lloyd and Co. From the former he obtained from time to time large sums of money on the deposit of the forged bills. He also obtained similar loans from Price and Co. Messrs. W. and J. Morgan likewise received from Solari the forged bills; and on the deposit of these, in their own names, as the apparent borrowers, they obtained large sums of money, out of which, according to the directions of Solari, they purchased for him foreign


bonds or shares, or paid losses incurred by him in the stock-market. They also, from time to time, paid over to him large sums of money, and paid off the principal and interest which became due on the loans; and received from him, on the other hand, large sums, and sold foreign bonds, and so on, charging the usual commission.

These dealings lasted till the death of Solari, in , when Rapallo continued them as the agent of Solari's widow. Solari and Rapallo carried on similar dealings with Mr. William Mariner, who was then secretary to the National Brazilian Mining Company. Mr. Mariner employed as his stock-broker Mr. F. T. De Berckhem. The advances procured from Messrs. Morgan amounted to about ; from Mariner and De Berckhem to about

At length the discovery was made. On the , De Berckhem employed a person to borrow /. for him on the deposit of Exchequer Bills for months, at per cent. The application happened to be made to a member of the Stock Exchange, who had just lent money on a similar deposit at per cent., and this appeared in all its circumstances so remarkable that he deemed it right to enter into communication with the Chancellor of . Other bills were then obtained from De Berckhem, and on comparison with the counterfoils, the whole were found to be forged. Smith was taken into custody on the ; and the fraud then became known to the public.


[n.289.1] Vol. I. p. 290.

[n.289.2] Rev. Sydney Smith.

[n.301.1] Vol. iv., p. 17.