View source for Great Stock Exchange Fraud of 1814

{{more footnotes|date=August 2009}}
{{Use dmy dates|date=August 2024}}
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.
==The du Bourg hoax==
On the morning of Monday, 21 February 1814, a uniformed man calling himself Colonel du Bourg and claiming to be aide-de-camp to [[William Cathcart, 1st Earl Cathcart|Lord Cathcart]], arrived at the Ship Inn at [[Dover]], [[England]], bearing news that [[Napoleon I of France]] had been killed and [[House of Bourbon|Bourbon]] rule restored. Requesting this information to be relayed to [[the Admiralty]] in London via [[semaphore line|semaphore telegraph]], "Colonel du Bourg" then travelled to London, stopping at inns on the way to spread the  news.<ref>{{cite book |url=https://books.google.com/books?id=fB968wRi1VoC&q=colonel+du+bourg+stock+exchange&pg=PT18 |title=Secret Britain: The Hidden Bits of Our History |author=Justin Pollard |year=2011 |publisher=Hodder & Stoughton |isbn=978-1848541986}}</ref>  Three men posing as French officers dressed in Bourbon uniforms were also seen celebrating in London, proclaiming the restoration of the Bourbon monarchy.
===Effects on the stock market===
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 [[security (finance)|securities]] increased rapidly.  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.
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 stock prices immediately fell back to their previous levels.
===Investigation===
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 [[Thomas Cochrane, 10th Earl of Dundonald|Lord Cochrane]], a [[Radicals (UK)|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.<ref>{{cite book |url=https://www.gutenberg.org/ebooks/21027 |title=The Trial of Charles Random de Berenger, Sir Thomas Cochrane et al. |page=600 |accessdate=2 November 2014 |author=William Brodie Gurney |author-link=William Brodie Gurney |edition=2007 |date=June 1814 |publisher=Project Gutenberg}}</ref>    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.<ref>{{Cite book |last=Cordingly |first=David |title=Cochrane The Dauntless: The Life and Adventures of Thomas Cochrane. |publisher=Bloomsbury |year=2007 |isbn=978-0-7475-8545-9 |location=Great Britain |pages=246 |language=English}}</ref>
===Culpability of Lord Cochrane===
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 [[Edward Law, 1st Baron Ellenborough|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 (UK Parliament constituency)|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#Uses|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, lasted 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 (United Kingdom)|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.<ref name=":0">{{Cite book |last=Cordingly |first=David |title=Cochrane The Dauntless: The Life and Adventures of Thomas Cochrane |publisher=Bloomsbury |year=2007 |isbn=978-0-7475-8545-9 |location=Great Britain |pages=359 |language=English}}</ref>  In his 1981 PhD thesis, John Sugden argued that "the question of his guilt cannot satisfactorily be resolved."<ref>{{Cite thesis |title=Lord Cochrane, naval commander, radical inventor (1775-1860) : a study of his earlier career, 1775-1818. |url=https://etheses.whiterose.ac.uk/3466/ |publisher=University of Sheffield |date=1981 |degree=phd |language=en |first=John |last=Sugden}}</ref>  Two other historians, Christopher Lloyd in 1947,<ref>{{Cite book |last=Lloyd |first=Christopher |title=Lord Cochrane, Seaman, Radical, Liberator: A Life of Thomas, Lord Cochrane, 10th Earl of Dundonald |publisher=Holt |year=1947 |isbn=978-0805055696 |location=New York |pages=190 |language=English}}</ref> and David Cordingly in 2007,<ref name=":0" /> concluded that Cochrane was innocent.
==Literary references==
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 | Katherine Cowley's]] ''The True Confessions of a London Spy'' (published 2022).<ref>{{Cite web |date=2022-03-03 |title=The Big Idea: Katherine Cowley |url=https://whatever.scalzi.com/2022/03/03/the-big-idea-katherine-cowley-2/ |access-date=2022-03-05 |website=Whatever |language=en-US}}</ref>
==Note==
In the terminology of 1814, ''stocks'' refer to interest-bearing securities of the type that are today called [[bond (finance)|bond]]s. 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.{{#tag:ref|These are described in <ref>{{Cite book
|last=Piero Sraffa
|first=Piero
|author-link=Piero Sraffa
|url=http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Fperson=107
|title=Ricardo in Business - David Ricardo, The Works and Correspondence of David Ricardo
|volume=10 Biographical Miscellany [1795]
|page=77
|access-date=19 September 2013
|archive-date=21 September 2013
|archive-url=https://web.archive.org/web/20130921213828/http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Fperson=107
|url-status=dead
}}</ref> also discussed in <ref>{{Cite web
|title=How The Richest Economist In History Got That Way
|author=Climateer Investing
|date=16 January 2011
|url=http://climateerinvest.blogspot.co.uk/2011/01/how-richest-economist-in-history-got.html
|accessdate=19 September 2013}}</ref>}}
==References==
{{Reflist}}
* Yapp, Nick. ''Great Hoaxes of the World (and the hoaxers behind them)''. Robson Books. 1995.
* [https://web.archive.org/web/20110223134926/http://www.fathom.com/feature/121984/ Civilising Mammon: Fraud and Profit in Nineteenth-Century London]
==External links==
* [https://www.gutenberg.org/ebooks/21027 The Trial of Charles Random de Berenger, Sir Thomas Cochrane et al.] taken in shorthand by [[William Brodie Gurney]], from [[Project Gutenberg]]
[[Category:1814 in the United Kingdom]]
[[Category:19th-century hoaxes]]
[[Category:Hoaxes in the United Kingdom]]
[[Category:1814 in economic history]]
[[Category:London Stock Exchange]]
[[Category:February 1814]]
[[Category:1814 in London]]
[[Category:1810s crimes in London]]
[[Category:1814 crimes in the United Kingdom]]