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Daniel
Defoe...1719
Brian
Trumbore
President/Editor, StocksandNews.com
Daniel Defoe (1660-1731), the great
English journalist and novelist responsible for the
likes of "Robinson Crusoe" (1719) and "Moll Flanders"
(1722), is also generally thought to be one of the
most prolific writers in the English language.
Prior
to the South Sea Bubble (1720), which I've previously
written on, Defoe did a number of pamphlets on the
evils of "stock-jobbing," or brokering stocks.
About
a year ago I invested way too much money in a compilation
of old books put out by Pickering & Chatto of London
and edited by Ross B. Emmett. I keep forgetting I
have this unique set, quite frankly, so I thought
I'd share some of Defoe's 1719 pamphlet titled "The
Anatomy of Exchange- Alley," which explains the various
methods employed by stockbrokers and speculators to
manipulate prices. It's just one way of showing that
the more things change, the more they stay the same.
While
I am only including excerpts, you have to understand
that Defoe was writing just as the South Sea Bubble
was taking off. It would come crashing down in September
1720. He was brilliant in forecasting the end.
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[Original
spelling and punctuation?you have to trust me on this!]
The
General Cry against Stock-Jobbing has been such, and
People have been so long, and so justly Complaining
of it as a publick Nusance, and which is still worse,
have complained so long without a Remedy, that the
Jobbers, harden'd in Crime, are at last come to exceed
all bounds, and now if ever, sleeping Justice will
awake, and take some Notice of them, and if it should
not now, yet the diligent Creatures are so steddy
to themselves, that they will some time or other,
make it absolutely necessary to the Government to
demolish them?.
But
before I come to the needful ways for restraining
those People, I think 'twill be of some Service to
expose their Practices to common view, that the People
may see a little what kind of Dealers they are.
And
first, they have this peculiar to them, and in which
they out do all the particular pieces of publick Knavery
that ever I met with in the World, viz. That they
have nothing to say for it themselves; they have,
indeed a particular Stock of hard Ware, as the Braziers
call it, in their Faces, to bear them out in it; but
if you talk to them of their Occupation, there is
not a Man but will own, 'tis a compleat System of
Knavery; that 'tis a Trade found in Fraud, born of
Deceit, and nourished by Trick, Cheat, Wheedle, Forgeries,
Falshoods, and all sorts of Delusions; Coining false
News, this way good, that way bad; whispering imaginary
Terrors, Frights, Hopes, Expectations, and then preying
upon the Weakness of those, whose Imaginations they
have wrought upon, whom they have either elevated
or depress'd. 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 publick, it is worth a Thousand Guineas
but to mention it: I am heartily glad I met you, but
it must 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 10 per Cent. in a
moment, and I warrant you 'South-Sea' will be 130
in a Week's Time, after it is known. Well, says the
weak Creature, prethee dear Tom what is it? Why really
Sir I will 'let you into the Secret,' upon your Honour
to keep it till you hear it from other Hands; why
'tis this, 'The Pretender is certainly taken' and
is carried Prisoner to the Castle of Millan, there
they have him fast; I assure you, the Government had
an Express of it from my Lord St----s with this Hour.
Are you sure of it, says the Fish, who jumps eargely
(sic) into the Net? Sure of it! Why if you will take
your Coach and go up to the Secretaries Office, you
may be satisfied of it your self, and be down again
in Two Hours, and in the mean time I will be doing
something, tho' it is but a little, till you return.
Away
goes the Gudgeon with his Head full of Wildfire, and
a Squib in his Brain, and coming to the Place, meets
a Croney at the Door, who ignorantly confirms the
Report, and so sets fire to the Mine; for indeed the
Cheat came too far to be baulkt at home: So that without
giving himself Time to consider, he hurries back full
of the Delusions, dreaming of nothing but of getting
a Hundred Thousand Pounds, or purchase Two; and even
this Money was to be gotten only upon the Views of
his being before-hand with other People.
In
this Elevation, he meets his Broker, who throws more
Fire- works into the Mine, and blows him up to so
fierce an Inflamation, that he employs him instantly
to take Guineas to accept Stock of any Kind, and almost
at any Price; for the News being now publick, the
Artists made their Price upon him. In a Word, having
accepted them for Fifty Thousand Pounds more than
he is able to pay, the Jobber has got an Estate, the
Broker 2 or 300 Guineas, and the Esquire remains at
Leisure to sell his Coach and Horses, his fine Seat
and rich Furniture, to make good the Deficiency of
his Bear-Skins, and at last, when all will not go
through it, he must give them a Brush for the rest?
But
the East-India Stock was the main Point, every Man's
Eye, when he came to Market, was upon the Brokers,
who acted for Sir Josiah; Does Sir Josiah Sell or
Buy? If Sir Josiah had a Mind to buy, the first thing
he did was to Commission his Brokers to look sower,
shake their Heads, suggest bad News from India; and
at the Bottom it follow'd, I have Commission from
Sir Josiah to sell out whatever I can, and perhaps
they would actually sell Ten, perhaps Twenty Thousand
Pound; immediately the Exchange (for they were not
then come to the Alley) was full of Sellers; no Body
would buy a Shilling, 'till perhaps the Stock would
fall Six, Seven, Eight, Ten per Cent. sometimes more;
then the Cunning Jobber had another Sett of Men employ'd
on purpose to buy, but with Privacy and Caution, all
the Stock they could lay their Hands on, 'till by
selling Ten Thousand Pound, at Four or Five per Cent.
lost, he would buy a Hundred Thousand Pound Stock,
at Ten or Twelve per Cent. under Price; and in a few
Weeks by just the contrary Method, set them all a
buying, and then sell them their own Stock again at
ten or twelve per Cent. Profit?
By
this exactly concerted Intelligence, he then knew
how to turn the Wagers (a sort of Jobbing then in
Mode, and which grew so infamous that they were at
length oblig'd to suppress it by Act of Parliament)
which way he pleased; and by which he got an immense
Sum of Money. How often did the Gentleman run down
true News as if it had been false, and run up false
News as if it had been true, by the Force of his Foreign
Intelligencers, how often coin Reports of great Actions
to serve a Turn; it is too late a Trick to be forgot,
by many that were bit by it to the Bone.
In
a word, the putting false News upon us, is nothing
but an old Trade reviv'd, tho' it must be confess'd,
this of the Pretender has been a MasterPiece, and
the worthy Projector who has the Credit of it, must
pass for a dextrous Manager as any the University
of Exchange-Alley, has bred up for 30 Years past?
Stock-Jobbing
is Play; a Box and Dice may be less dangerous, the
Nature of them are alike, a Hazard; and if they venture
at either what is not their own, the Knavery is the
same. It is not necessary, any more than it is safe,
to mention the Persons I may think of in this Remark;
they who are the Men will easily understand me.
In
a Word, I appeal to all the World, whether any Man
that is intrusted with other Mens Money, (whether
Publick or Private is not the Question) ought to be
seen in Exchange-Alley. Would it not be a sufficient
Objection to any Gentleman or Merchant, not to employ
any Man to keep his Cash, or look after his Estate,
to say of him 'he plays,' he is 'a Gamester,' or he
is 'given to Gaming and Stock-Jobbing,' which is still
worse, gives the same, or a stronger Ground of Objection
in the like Cases?
Brokers
rid Night and Day from one end of the Kingdom to the
other, to engage Gentlemen to bribe Corporations,
to buy off Competitors, and to manage the Elections.
You will see the State of Things at that Time, and
the Danger this Stock-jobbing, Wickedness had brought
the Publick to, if you please to read the following
Exclamation of the honest Freeholders at that Time,
which was presented to the Publick by way of Complaint:
The Thing was laid before the King first, and before
the Parliament afterwards; and it was his Majesty's
Sense of the Consequence that made him resolve to
bring the two East-India Companies to unite their
Stocks; for in a word, the Stock-Jobbers embroil'd
the whole Nation.
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Wall
Street History will return November 21.
Brian
Trumbore
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