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The Great Stock Exchange Fraud of 1814 was a hoax or fraud centered on false information about the Napoleonic Wars, affecting the London Stock Exchange in 1814.
On the morning of Monday, 21 February 1814, a uniformed man calling himself Colonel du Bourg and claiming to be aide-de-camp to Lord Cathcart, arrived at the Ship Inn at Dover, England, bearing news that Napoleon I of France had been killed and Bourbon rule restored. Requesting this information to be relayed to the Admiralty in London via semaphore telegraph, "Colonel du Bourg" then travelled to London, stopping at inns on the way to spread the news. [1] Three men posing as French officers dressed in Bourbon uniforms were also seen celebrating in London, proclaiming the restoration of the Bourbon monarchy.
Rumours of Napoleon's defeat had been circulating throughout the month. When the news from Dover began to circulate among traders at the London Stock Exchange, the value of government securities increased rapidly. However, with no official confirmation of the news, prices began to drop back, only to increase again on reports of the supposed celebrations of the French officers.
However, the entire affair proved to be a hoax. In the afternoon, the government confirmed that reports of Napoleon's death and the Bourbon restoration were false. The relevant stocks' prices immediately fell back to their previous levels.
The Committee of the Stock Exchange, suspecting stock manipulation, launched an investigation. It was soon discovered that there had been a sale that Monday of more than £1.1 million of two government-based stocks, most of it purchased the previous week. Eight people were eventually convicted of conspiracy to defraud, including Lord Cochrane, a Radical member of Parliament and well-known naval hero, his uncle the Hon. Andrew Cochrane-Johnstone, Richard Butt, Lord Cochrane's financial advisor, and Captain Random de Berenger, who had posed both as du Bourg and as one of the French officers. Six, including those involved in the purchases, were tried, and sentenced to twelve months in prison, with the most prominent also sentenced to the public pillory; fines were also imposed. [2] Lord Cochrane was stripped of his naval rank and expelled from the Order of the Bath and from the House of Commons.
Andrew Cochrane-Johnstone fled the country after hearing the verdict. [3]
Though convicted of the fraud, Lord Cochrane continued to assert his innocence. In 1816, he brought an (unsuccessful) charge of "partiality, misrepresentation, injustice and oppression" against Lord Ellenborough, the presiding judge in his case. Popular opinion certainly backed Cochrane; his sentencing was followed by his re-election unopposed to the House of Commons for Westminster. The pillory portion of his sentence was dropped, for fear of public reaction. Due to public outcry over his treatment, the punishment of the pillory was limited to those found guilty of perjury in England and Wales in 1816. Its use was completely discontinued in 1837 in England and Wales (though the stocks, a similar device, were used over the rest of the nineteenth century).
Lord Cochrane continued to petition the government for redress; in 1832, he was granted a free pardon, including reinstatement to his rank of Rear Admiral. Restoration of the Order of the Bath and other honours followed in the subsequent decades, and, in 1877, a Select committee found that his treatment since 1832 constituted "nothing less than a public recognition by those Governments of his innocence."
Lord Cochrane's culpability has been a subject of continued debate. In 1965, the judge Henry Cecil set out an argument that supported Lord Cochrane's guilt in A Matter of Speculation: The Case of Lord Cochrane; Brian Vale's 2004 book The Audacious Admiral Cochrane also argues for his guilt. [4] In his 1981 PhD thesis, John Sugden argued that "the question of his guilt cannot satisfactorily be resolved." [5] Two other historians, Christopher Lloyd in 1947, [6] and David Cordingly in 2007, [4] concluded that Lord Cochrane was innocent.
Security speculation based on allegedly accurate news delivered by semaphore telegraph forms a plot event in the novel The Count of Monte Cristo (published 1844).
The Great Stock Exchange Fraud forms the basis for the 11th novel in Patrick O'Brian's Aubrey–Maturin series, The Reverse of the Medal (published 1986).
The Great Stock Exchange Fraud is a key plot element in Katherine Cowley's The True Confessions of a London Spy (published 2022). [7]
In the terminology of 1814, stocks refer to interest-bearing securities of the type that are today called bonds. The fraud particularly involved government bearer bond instruments called 'Omniums', which were partly-paid government bonds, where the purchaser initially only had to pay 10% or 15% of the face value and later made further installment payments. This feature gave the securities a great deal of price volatility, as a small change in the value of the fully-paid bonds would represent a much greater change in the value of the partly-paid Omniums. [10]
The Treaty of Paris of 1815, also known as the Second Treaty of Paris, was signed on 20 November 1815, after the defeat and the second abdication of Napoleon Bonaparte. In February, Napoleon had escaped from his exile on Elba, entered Paris on 20 March and began the Hundred Days of his restored rule. After France's defeat at the hands of the Seventh Coalition at the Battle of Waterloo, Napoleon was persuaded to abdicate again, on 22 June. King Louis XVIII, who had fled the country when Napoleon arrived in Paris, took the throne for a second time on 8 July.
The Hundred Days, also known as the War of the Seventh Coalition, marked the period between Napoleon's return from eleven months of exile on the island of Elba to Paris on 20 March 1815 and the second restoration of King Louis XVIII on 8 July 1815. This period saw the War of the Seventh Coalition, and includes the Waterloo Campaign and the Neapolitan War as well as several other minor campaigns. The phrase les Cent Jours was first used by the prefect of Paris, Gaspard, comte de Chabrol, in his speech welcoming the king back to Paris on 8 July.
Admiral Thomas Cochrane, 10th Earl of Dundonald, styled Lord Cochrane between 1778 and 1831, was a British naval officer, peer, mercenary and politician. Serving during the French Revolutionary and Napoleonic Wars in the Royal Navy, his naval successes led Napoleon to nickname him le Loup des Mers. He was successful in virtually all of his naval actions.
The pillory is a device made of a wooden or metal framework erected on a post, with holes for securing the head and hands, used during the medieval and renaissance periods for punishment by public humiliation and often further physical abuse. The pillory is related to the stocks.
HMS Bellerophon, known to sailors as the "Billy Ruffian", was a ship of the line of the Royal Navy. A third-rate of 74 guns, she was launched in 1786. Bellerophon served during the French Revolutionary and Napoleonic Wars, mostly on blockades or convoy escort duties. She fought in three fleet actions: the Glorious First of June (1794), the Battle of the Nile (1798) and the Battle of Trafalgar (1805). While the ship was on blockade duty in 1815, Napoleon boarded Bellerophon so he could surrender to the ship's captain, ending 22 years of almost continuous war between Britain and France.
The Reverse of the Medal is the eleventh historical novel in the Aubrey-Maturin series by Patrick O'Brian, first published in 1986. The story is set during the Napoleonic Wars and the War of 1812.
Penny stocks are common shares of small public companies that trade for less than one dollar per share. The U.S. Securities and Exchange Commission (SEC) uses the term "Penny stock" to refer to a security, a financial instrument which represents a given financial value, issued by small public companies that trade at less than $5 per share. Penny stocks are priced over-the-counter, rather than on the trading floor. The term "penny stock" refers to shares that, prior to the SEC's classification, traded for "pennies on the dollar". In 1934, when the United States government passed the Securities Exchange Act to regulate any and all transactions of securities between parties which are "not the original issuer", the SEC at the time disclosed that equity securities which trade for less than $5 per share could not be listed on any national stock exchange or index.
The Battle of the Basque Roads, also known as the Battle of Aix Roads, was a major naval battle of the Napoleonic Wars, fought in the narrow Basque Roads at the mouth of the Charente River on the Biscay coast of France. The battle, which lasted from 11–24 April 1809, was unusual in that it pitted a hastily-assembled squadron of small and unorthodox British Royal Navy warships against the main strength of the French Atlantic Fleet. The circumstances were dictated by the cramped, shallow coastal waters in which the battle was fought. The battle is also notorious for its controversial political aftermath in both Britain and France.
HMS Speedy was a 14-gun Speedy-class brig of the British Royal Navy. Built during the last years of the American War of Independence, she served with distinction during the French Revolutionary Wars.
Robert Emmet Brennan is an American businessman and former accountant who built the infamous penny stock brokerage firm, First Jersey Securities. The firm specialized in promoting penny stocks to unsuspecting investors, many of them elderly, who lost their entire investments when the stocks inevitably crashed.
David Cordingly is an English naval historian with a special interest in pirates. He held the position of Keeper of Pictures and Head of Exhibitions at the National Maritime Museum in Greenwich, England for twelve years.
Sir George Eyre was an officer of the Royal Navy who saw service during the American War of Independence and the French Revolutionary and Napoleonic Wars, eventually rising to the rank of Vice-Admiral of the Red.
HMS Beagle was an 18-gun Cruizer-class brig-sloop of the Royal Navy. She was launched in 1804, during the Napoleonic Wars. She played a major role in the Battle of the Basque Roads. Beagle was laid up in ordinary in 1813 and sold in 1814.
The action of 6 May 1801 was a minor naval engagement between the 32-gun xebec-frigate El Gamo of the Spanish Navy under the command of Don Francisco de Torres and the much smaller 14-gun brig HMS Speedy under the command of Thomas, Lord Cochrane. El Gamo was captured despite being four times as large, with much greater firepower and a crew six times the size of Speedy, which had a reduced crew of 54 at the time of the engagement.
Andrew James Cochrane-Johnstone was a Scottish soldier, politician, swindler and adventurer who was found guilty of participation in the Great Stock Exchange Fraud of 1814. He was born in Edinburgh, Scotland.
The Battle of the Basque Roads was a major naval battle of the Napoleonic Wars, fought in the narrow Basque Roads at the mouth of the Charente River on the Biscay coast of France. The battle, which lasted from 11 to 25 April 1809, was unusual in that it pitted a hastily assembled squadron of small and unorthodox British Royal Navy warships, distantly supported by a larger fleet, against the main strength of the French Atlantic Fleet, the circumstances dictated by the cramped, shallow coastal waters in which the battle was fought. The battle is also notorious for its political aftermath in both Britain and France.
The Court-martial of James, Lord Gambier, was a notorious British naval legal case during the summer of 1809, in which Admiral Lord Gambier requested a court-martial to examine his behaviour during the Battle of Basque Roads in April of the same year. Noted for the acrimony and corruption of proceedings, it has been described as "one of the ugliest episodes in the internal history of the Royal Navy".
The Kingdom of Naples was a French client state in southern Italy created in 1806 when the Bourbon Ferdinand IV & III of Naples and Sicily sided with the Third Coalition against Napoleon and was in return ousted from his kingdom by a French invasion. Joseph Bonaparte, elder brother of Napoleon I, was installed in his stead: Joseph conferred the title "Prince of Naples" to be hereditary on his children and grandchildren. When Joseph became King of Spain in 1808, Napoleon appointed his brother-in-law Joachim Murat to take his place. Murat was later deposed by the Congress of Vienna in 1815 after striking at Austria in the Neapolitan War, in which he was decisively defeated at the Battle of Tolentino.
HMS Imperieuse was a 38-gun fifth-rate frigate of the Royal Navy. Built in Ferrol, Spain, for the Spanish Navy she was launched as Medea in 1797. In 1804 she was part of a squadron carrying gold from South America to Spain that was seized by the British while Spain and Britain were at peace. Medea was subsequently taken into service with the Royal Navy and was briefly named HMS Iphigenia before being renamed Imperieuse in 1805.
The 1st Regiment of the Line (King's Own) or (Italian: 1° Reggimento della Linea 'del Re') was a line infantry regiment of the Royal Army of Naples. The regiment was the first infantry regiment formed by the small kingdom, but by 1811 gained a reputation as an exemplary infantry regiment, and was reformed with the honorary title of "King's Own, or del Re". After the disastrous Neapolitan War, the regiment was disbanded, having never seen action outside of the Napoleonic Wars.