Perhaps there are few institutions possessing attributes more
diametrically opposed to one another than the Stock Exchange.
Undoubtedly useful in its way, it nevertheless abounds in gross abuse.
It is a necessity to the _bonâ fide_ investor, as indicating the
locality where he can on the instant purchase or find a market for
almost any stock in the world; yet it becomes a very hotbed of vice
in the hands of the professional speculator. We apply this term to
the man who fraudulently buys without the intention of paying, and
worse still, sells what he does not possess. The method of so doing
was fully explained in an article on ‘Corners’ in No. 19 of this
_Journal_. Take a quite recent illustration of the two evils. Only a
short time ago, a letter purporting to come from Mr Gladstone’s private
secretary, addressed to the Secretary of the Exchange, was received
by him, and posted up in the House. It stated that certain unexpected
interests would be paid to the Peruvian bondholders. The price went
up over thirty per cent. in a few moments, so that any one having
bought ten thousand pounds-worth the day before, could have then sold
them for nearly fourteen thousand pounds. It is more than probable
that the writer of the forged letter had previously purchased without
any intention of paying or ‘taking them off,’ and on the imposition
taking effect, at once sold out not only those he possessed, but also
more that he did not possess. Within half an hour, the forgery was
discovered, when the price immediately fell the thirty per cent. it
had just risen. Thus this impudent adventurer would not only secure an
enormous profit by the rise, but by buying back on the fall the extra
quantity he had sold on the rise, reap an additional profit.
Now, it is this class of gambling, particularly the selling of what
one does not possess, for the purpose of depressing the value of a
certain stock to the prejudice of real holders, that constitutes the
most unwholesome element of our Stock Exchange. Every conceivable
artifice, the most consummate cunning, the most unblushing lies, are
employed to depreciate a security which has either risen to a high
figure on its merits, or else been puffed up artificially beforehand.
Syndicates, as they are called—combinations of unprincipled men
usually—are formed for the purpose, and there are indeed very few
stocks existing at the present day that are not honoured by their
especial syndicate. On any unfavourable rumour, more often concocted
than otherwise, these eagle-eyed monsters swoop down upon their
unsuspecting and inoffensive prey, attacking with the ferociousness of
a bear, until, in sheer desperation, one victim after another succumbs,
and sells out to the ‘bear’ at an enormous sacrifice, in order to save
the remnant of his dwindled inheritance. If, as they were uttered in
it, the falsehoods of a single day could but glue themselves to and
stick on the walls of that building, it would be a feat impossible of
achievement for a fly to crawl unscathed between them! Monte Carlo is
bad; but an institution where more fortunes are dishonestly lost and
won in a day than at that notorious gambling-place in a week, must be
at least no better, if not infinitely worse.
That there are men of integrity on ’Change, men of known principle,
gentlemen in every sense of the word, admits of no doubt; and it is
they who would first appreciate any effort, legislative or otherwise,
for the suppression of the practices alluded to here. An act called
‘Leeman’s Act’ was passed some years ago for the special protection
of shareholders in banking establishments, which made it illegal to
sell shares of any bank without first proving yourself to be a _bonâ
fide_ holder of its shares, giving their respective numbers, &c. The
same protection should be afforded to every shareholder, no matter of
what stock; and the time has now arrived for the legislature to take
the matter seriously in hand. The blessings conferred thereby would be
inestimable.