First mention of the Stock Exchange—Attempt at hoax—Daniel’s fraud—Berenger’s fraud—Bubbles of 1825—The Railway Mania—30th Nov. 1845 at the Board of Trade—The fever at its height—The Marquis of Clanricarde pricks the bubble.

In 1734 an Act was passed (7 Geo. II., c. 8) entitled “An Act to prevent the infamous practice of Stock jobbing,” which provided that no loss in bargains for time should be recoverable in the Courts, and placed such speculations outside the Law altogether. It was a dead letter, but was in force till 1860, when it was repealed.

The first mention of the Stock Exchange as such, is in the Daily Advertiser of Thursday, July 15, 1773. “On Tuesday, the Brokers and others at New Jonathan’s came to a Resolution that, instead of its being called New Jonathan’s, it is to be named the Stock Exchange, which is to be painted over the door.” And here they abode until, in 1801, the Stockbrokers laid the first stone of a building of their own: having purchased Mendoza’s boxing room, the Debating Forum of Capel Court, and buildings contiguous to that site.

On May 5, 1803, an attempt was made to hoax the Stock Exchange, which was partially successful. On that day, at half-past eight in the morning, a man, booted and spurred, and having every appearance of having come off a long journey, rushed up to the Mansion House, and inquired for the Lord Mayor, saying he was a messenger from the Foreign Office, and had a letter for his lordship. When he was told he was not within, he said he would leave the letter, and begged the servant to place it where the Lord Mayor should get it the moment of his return; which duly happened. The letter ran thus:

“Downing Street, 8 A.M.

“To the Right Hon. the Lord Mayor,—

“Lord Hawkesbury presents his compliments to the Lord Mayor, and is happy to inform him that the negotiations between this country and the French Republic have been amicably adjusted.”

Thinking it genuine, the Lord Mayor published it, and wrote to Lord Hawkesbury, congratulating him; but the forgery was soon exposed.

Meanwhile, Consols opened at 69, and, before noon, were over 70, only to fall, when the truth came out, to 63. Of course, all transactions, that day, were made null and void. Although £500 reward was offered, nothing was ever heard of the perpetrators of this swindle.

Under date of Aug. 20, 1806, the Annual Register says: “A most atrocious fraud was committed on a number of gentlemen at the Stock Exchange, it being the settling day, by a foreign Jew, of the name of Joseph Elkin Daniels, who has, for a long time, been a conspicuous character in the Alley. Finding that, in consequence of the great fluctuation of Omnium, he was not able to pay for all he had purchased at an advanced price, he hit upon a scheme to pocket an enormous sum of money, and with which he has decamped; £31,000 Omnium was tendered to him in the course of Thursday; in payment for which he gave drafts on his bankers, amounting to £16,816, 5s., which were paid into the respective bankers of those who had received them, to clear in the afternoon. Having gained possession of the Omnium, he sold it through the medium of a respectable broker, received drafts for it, which he cleared immediately, and set off with the produce. On his drafts being presented, payment was refused, he having no effects at his bankers.”

A hue and cry was raised after him, and he was soon discovered in the Isle of Man, whence he could not be taken without the Governor’s consent. This was obtained, but there were so many similar rascals taking sanctuary in the Island, that it was not deemed prudent to execute the warrant in the daytime, and Daniels was arrested at night. Great was the uproar in the morning when the rogues found their companion had gone, and an indignation meeting was held to protest against the violation of their rights. He was brought before the Lord Mayor on 16th Sept., but, owing to some technicalities, he was let go, although he had to make his appearance at a Commission of Bankruptcy.

In 1814 there was an attempted fraud on the Stock Exchange, which was the most daring ever perpetrated. It was executed by one Charles Random de Berenger, a French refugee, and an officer in one of the foreign regiments. It was alleged that, with him, were associated Lord Cochrane, the Hon. Andrew Cochrane Johnstone, and several others. It appears from the evidence on the trial, that, early in the morning of the 21st of February, a gentleman, dressed in a grey greatcoat over a scarlet uniform, on which was a star, knocked at the door of the Ship Inn at Dover, and said that he was the bearer of very important despatches from France. This gentleman, all the witnesses swore, was Berenger.

He sent a letter, signed R. Du Bourg, Lieut.-Colonel, and Aide-de-Camp to Lord Cathcart, to Admiral Foley, the Port Admiral at Dover, advising him that he had just arrived from Calais with the news of a great victory obtained by the Allies over Bonaparte, who was slain, in his flight, by the Cossacks, and that the Allied Sovereigns were in Paris. Berenger posted up to London, which he entered, having his horses decked with laurels, in order to make a stir. It was felt on the Stock Exchange. Omnium, which opened at 27-1/2 rose to 33; but, as the day wore on, and no confirmation came of the news, they receded to 28-1/2. Business in that Stock was done, that day, to the tune of half a million of money. Lord Cochrane and others had, previously, given instructions to sell Omniums for them, on the 21st of February, to an enormous amount. One deposed that, on that date, he sold—

And he further deposed that he always considered that any business he did for Mr Butt was to be placed to Lord Cochrane’s account.

Another stockbroker sold for the same three gentlemen £565,000 Omnium. Another had sold £80,000 on their account, and yet another had had instructions to sell a very large sum for the same parties, but had refused.

In the end, Lord Cochrane and Mr Butt were condemned to pay to the King a fine of a Thousand Pounds each, and J. P. Holloway Five Hundred; and these three, together with De Berenger, Sandon, and Lyte, were sentenced to imprisonment in the Marshalsea for twelve calendar months. Further, Lord Cochrane, De Berenger, and Butt were to stand in the pillory for one hour, before the Royal Exchange, once during their imprisonment. This latter part of their punishment was, afterwards, remitted. Lord Cochrane’s name was struck off the Navy List, he was expelled from the House of Commons, his Arms were taken down from his stall, as Knight of the Bath, his banner torn down, and kicked ignominiously out of Henry VII.’s Chapel in Westminster Abbey.

By very many he was believed innocent, and, on his seat for Westminster being declared vacant, he was enthusiastically re-elected. He escaped from custody, was captured, and had to serve his time. On June 20, 1815, he was told his imprisonment was at an end, if he would pay the fine imposed upon him; and, on July 3rd, he reluctantly did so, with a £1000 bank note, on the back of which he wrote:—“My health having suffered by long and close confinement, and my oppressors having resolved to deprive me of property, or life, I submit to robbery, to protect myself from murder, in the hope that I shall live to bring the delinquents to justice.”

On the very day he was released, he took his seat again in the House of Commons; and, in 1832, he received a “free pardon,” was restored to the Navy List, gazetted a rear-admiral, and presented at a LevÉe!

The year 1825 was remarkable for the number of bubble companies which were floated or not, and for the dreadful commercial panic which ensued, during which over seventy banks collapsed in London, or the country. Over £11,000,000 were subscribed to foreign loans, and £17,500,000 to different companies. In Parliament there were presented 439 private bills for companies, and Acts were passed for 288. Horace Smith sings of them thus:

“Early and late, where’er I rove,

In park or square, suburb or grove,

In civic lanes, or alleys,

Riches are hawked, while rivals rush

To pour into mine ear a gush

Of money making sallies.

‘Haste instantly and buy,’ cries one,

Real del Monte shares, for none

Will yield a richer profit;

Another cries—‘No mining plan

Like ours, the Anglo-Mexican;

As for Del Monte, scoff it.’

This, grasps my button, and declares

There’s nothing like Columbian shares,

The capital a million;

That, cries, ‘La Plata’s sure to pay,’

Or bids me buy, without delay,

Hibernian or Brazilian.

‘Scaped from the torments of the mine,

Rivals in gas, an endless line,

Arrest me as I travel;

Each sure my suffrage to receive,

If I will only give him leave

His project to unravel.

By fire and life insurers next,

I’m intercepted, pestered, vexed,

Almost beyond endurance;

And, though the schemes appear unsound,

Their advocates are seldom found

Deficient in assurance.

Last, I am worried Shares to buy,

In the Canadian Company,

The Milk Association;

The laundry men who wash by steam,

Railways, pearl fishing, or the scheme

For inland navigation.”

In 1845 began the most wonderful era of gambling in modern times, the Railway Mania, which rose to such a height that it was noticed on Oct. 25. “During the past week there were announced, in three newspapers, eighty-nine new schemes, with a capital of £84,055,000; during the month, there were 357 new schemes announced, with an aggregate capital of £332,000,000.”

On 17th Nov. The Times published a table of all the railway companies registered up to the 31st October, numbering 1428, and involving an outlay of £701,243,208. “Take away,” it said, “£140,000,000 for railways completed, or in progress, exclude all the most extravagant schemes, and divide the remainder by ten, can we add from our present resources, even a tenth of the vast remainder? Can we add £50,000,000 to the railway speculations we are already irretrievably embarked in? We cannot, without the most ruinous, universal and desperate confusion.”

The Annual Register for 1845 gives a graphic account of an incident in the Railway Mania. “An extraordinary scene occurred at the office of the Railway Department of the Board of Trade, on this day (Sunday, 30th Nov.), being the last day on which the plans of the new projects could be deposited with the Railway Board, in order to enable Bills to authorise them, to be brought before Parliament, in compliance with the Standing Orders.

“Last year, the number of projects in respect of which plans were lodged with the Board of Trade, was 248: the number, this year, is stated to be 815. The projectors of the Scotch lines were mostly in advance, and had their plans duly lodged on Saturday. The Irish projectors, too, and the old established Companies, seeking powers to construct branches, were among the more punctual. But, upwards of 600 plans remained to be deposited. Towards the last, the utmost exertions were made to forward them. The efforts of the lithographic draughtsmen and printers in London were excessive; people remained at work night after night, snatching a hasty repose for a couple of hours on lockers, benches, or the floor. Some found it impossible to execute their contracts; others did their work imperfectly. One of the most eminent was compelled to bring over four hundred lithographers from Belgium, and failed, nevertheless, with this reinforcement, in completing some of his plans. Post horses and express trains, to bring to town plans prepared in the country, were sought in all parts. Horses were engaged days before, and kept, by persons specially appointed, under lock and key. Some railway companies exercised their power of refusing express trains for rival projects, and clerks were obliged to make sudden and embarrassing changes of route, in order to travel by less hostile ways. A large establishment of clerks were in attendance to register the deposits; and this arrangement went on very well until eleven o’clock, when the delivery grew so rapid, that the clerks were quite unable to keep pace with the arrivals. The entrance hall soon became inconveniently crowded, considerable anxiety being expressed lest twelve o’clock should arrive ere the requisite formalities should have been gone through. This anxiety was allayed by the assurance that admission into the hall before that hour would be sufficient to warrant the reception of the documents. As the clock struck twelve, the doors of the office were about to be closed, when a gentleman, with the plans of one of the Surrey railways, arrived, and, with the greatest difficulty, succeeded in obtaining admission. A lull of a few minutes here occurred; but, just before the expiration of the first quarter of an hour, a post chaise, with reeking horses, drove up to the entrance, in hot haste. In a moment, its occupants (three gentlemen) alighted, and rushed down the passage, towards the office door, each bearing a plan of Brobdingnagian dimensions. On reaching the door, and finding it closed, the countenances of all dropped; but one of them, more valorous than the rest, and prompted by the bystanders, gave a loud pull at the bell. It was answered by Inspector Otway, who informed the ringer it was now too late, and that his plans could not be received. The agents did not wait for the conclusion of the unpleasant communication, but took advantage of the doors being opened, and threw in their papers, which broke the passage lamp in their fall. They were thrown back into the street; and when the door was again opened, again went in the plans, only to meet a similar fate. In the whole, upwards of 600 plans were duly deposited.”

Mr Francis, in his “History of the English Railway,” says: “The daily press was thoroughly deluged with advertisements; double sheets did not supply space enough for them; double doubles were resorted to, and, then, frequently, insertions were delayed. It has been estimated that the receipts of the leading journals averaged, at one period, £12,000 and £14,000, a week, from this source. The railway papers, on some occasions, contained advertisements that must have netted from £700 to £800 on each publication. The printer, the lithographer, and the stationer, with the preparation of prospectuses, the execution of maps, and the supply of other requisites, also made a considerable harvest.

“The leading engineers were, necessarily, at a great premium. Mr Brunel was said to be connected with fourteen lines, Mr Robert Stephenson with thirty-four, Mr Locke with thirty-one, Mr Rastrick with seventeen, and other engineers with one hundred and thirteen.

“The novelist has appropriated this peculiar portion of commercial history, and, describing it, says, gravely and graphically: ‘A Colony of solicitors, engineers and seedy accountants, settled in the purlieus of Threadneedle Street. Every town and parish in the kingdom blazed out in zinc plates over the doorways. From the cellar to the roof, every fragment of a room held its committee. The darkest cupboard on the stairs contained a secretary or a clerk. Men who were never seen east of Temple Bar before, or since, were, now, as familiar to the pavement of Moorgate Street,[63] as the Stockbrokers: ladies of title, lords, members of Parliament, and fashionable loungers thronged the noisy passages, and were jostled by adventurers, by gamblers, rogues and impostors.’

“The advantages of competition were pointed out, with the choicest phraseology. Lines which passed by barren districts, and by waste heaths, the termini of which were in uninhabitable places, reached a high premium. The shares of one Company rose 2400 per cent. Everything was to pay a large dividend; everything was to yield a large profit. One railway was to cross the entire Principality without a single curve.

“The shares of another were issued; the company formed, and the directors appointed, with only the terminal points surveyed. In the Ely railway, not one person connected with the country through which it was to pass, subscribed the title-deed.

“The engineers, who were examined in favour of particular lines, promised all and everything, in their evidence. It was humorously said, ‘they plunge through the bowels of mountains; they undertake to drain lakes; they bridge valleys with viaducts; their steepest gradients are gentle undulations; their curves are lines of beauty; they interrupt no traffic; they touch no prejudice.’

“Labour of all kinds increased in demand. The price of iron rose from sixty-eight shillings to one hundred and twenty per ton. Money remained abundant. Promoters received their tens and twenties of thousands. Rumours of sudden fortunes were very plentiful. Estates were purchased by those who were content with their gains; and, to crown the whole, a grave report was circulated, that Northumberland House, with its princely remembrances, and palatial grandeur, was to be bought by the South Western. Many of the railways attained prices which staggered reasonable men. The more worthless the article, the greater seemed the struggle to obtain it. Premiums of £5 and £6 were matters of course, even where there were four or five competitors for the road. One Company, which contained a clause to lease it at three and a half per cent., for 999 years, rose to twenty premium, so mad were the many to speculate.

“Every branch of commerce participated in the advantages of an increased circulation. The chief articles of trade met with large returns; profits were regular; and all luxuries which suited an affluent community, procured an augmented sale. Banking credit remained facile; interest still kept low; money, speaking as they of the City speak, could be had for next to nothing. It was advanced on everything which bore a value, whether readily convertible, or not. Bill brokers would only allow one and a half per cent. for cash; and what is one and a half per cent. to men who revelled in the thought of two hundred? The exchanges remained remarkably steady. The employment of the labourer on the new lines, of the operative in the factory, of the skilled artisan in the workshop, of the clerk at the desk, tended to add to the delusive feeling, and was one of the forms in which, for a time, the population was benefited. But, when the strength of the kingdom is wasted in gambling, temporary, indeed, is the good compared with the cost. Many, whose money was safely invested, sold at any price, to enter the share market. Servants withdrew their hoards from the savings banks. The tradesman crippled his business. The legitimate love of money became a fierce lust. The peer came from his club to his brokers; the clergyman came from his pulpit to the mart; the country gentleman forsook the calmness of his rural domain for the feverish excitement of Threadneedle Street. Voluptuous tastes were indulged in by those who were previously starving. The new men vied with the old, in the luxurious adornments of their houses. Everyone smiled with contentment; every face wore a pleased expression. Some, who, by virtue of their unabashed impudence, became provisional committee men, supported the dignity of their position, in a style which raised the mirth of many, and moved the envy of more. Trustees, who had no money of their own, or, who had lost it, used that which was confided to them; brothers speculated with the money of sisters; sons gambled with the money of their widowed mothers; children risked their patrimony; and, it is no exaggeration to say, that the funds of hundreds were surreptitiously endangered by those in whose control they were placed.”

The Marquis of Clanricarde, in a speech, spoke very boldly as to the status, social and financial, of some of the subscribers to Railway Companies. Said he: “One of the names to the deed to which he was anxious to direct their attention, was that of a gentleman, said to reside in Finsbury Square, who had subscribed to the amount of £25,000: he was informed no such person was known at that address. There was, also, in the Contract deed, the name of an individual who had figured in the Dublin and Galway Railway case, who was down for £5000, and who was understood to be a half-pay officer, in the receipt of £54 a-year, but, who appeared as a subscriber in different railway schemes, to the amount of £41,500. The address of another, whose name was down for £12,200, was stated to be in Watling Street, but it appeared he did not reside there. In the case of another individual down for £12,500 a false address was found to have been given. Another individual, whom he would not name, was a curate in a parish in Kent; he might be worth all the money for which he appeared responsible in various railway schemes, but his name appeared for £25,000 in different projects, and stood for £10,000 in this line. Another individual, who was down for £25,000, was represented to be in poor circumstances. A clerk in a public company was down for upwards of £50,000. There were several more cases of the same kind, but he trusted that he had stated enough to establish the necessity of referring the matter to a committee. There were, also, two brothers, sons of a charwoman, living in a garret, one of whom had signed for £12,500, and the other for £25,000; these two brothers, excellent persons, no doubt, but who were receiving about a guinea and a half between them, were down for £37,000.”