Wall Street History

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Wall Street History

11/14/2003

Daniel Defoe...1719

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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