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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 posing as Colonel du Bourg, 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 the Bourbons were victorious. Requesting this information to be relayed on to the Admiralty in London via semaphore telegraph, "Colonel du Bourg" proceeded on toward London, stopping at each inn on the way to spread the good news. [1] Three "French officers" dressed in Bourbon uniforms were also seen celebrating in London, and proclaiming the restoration of the Bourbon monarchy.
Rumours of Napoleon's defeat had been circulating throughout the month, and the combined events had a significant impact on the London Stock Exchange. The value of government securities soared in the morning, after the news from Dover began to circulate among traders at the Exchange. Lacking official confirmation of the news, prices began to slide after the initial rush, only to be further propped up at noon by the French officers and their handbills.[ clarification needed ]
However, the entire affair was a deliberate hoax. In the afternoon, the government confirmed that the news of peace was a fabrication. The affected stocks' prices immediately sank to their previous levels.
The Committee of the Stock Exchange, suspecting deliberate stock manipulation, launched an investigation into the hoax. 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 of prison time, 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 of the trial. [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]
Thomas Cochrane, 10th Earl of DundonaldGCB, styled Lord Cochrane between 1778 and 1831, was a Scottish 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, formerly used for punishment by public humiliation and often further physical abuse. The pillory is related to the stocks.
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.
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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.
The bank stock crisis was a financial crisis that occurred in Israel in 1983, during which the stocks of the four largest banks in Israel collapsed. In previous episodes of share price weakness, the banks bought back their own stocks, creating the appearance of constant demand for the stock, and artificially supporting their values. By October 1983, the banks no longer had the capital to buy back shares and to support the prices causing share prices to collapse. The Tel Aviv Stock Exchange closed for eighteen days beginning October 6, 1983, whilst a recovery plan was implemented and the banks were nationalized.
James Hope-Johnstone, 3rd Earl of Hopetoun FRSE was a Scottish peer, politician and military officer.
Clarence Charles Hatry was an English company promoter, financier, bankrupt, bookseller and publisher. The fall of the Hatry group in September 1929, which had been worth about £24 million, is cited as a contributing factor to the Wall Street Crash of 1929.
Australian securities law relates to securities issued by corporations as well as other securities, including debentures, stocks and bonds issued by governments, and interests in managed investment schemes.
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.
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.
Basil Cochrane was a Scottish civil servant, businessman, inventor, and wealthy nabob of early-19th-century England.
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.
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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.
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