Great Stock Exchange Fraud of 1814

Great Stock Exchange Fraud of 1814

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The Great Stock Exchange Fraud of 1814 was a hoax
A hoax is a deliberately fabricated falsehood made to masquerade as truth. It is distinguishable from errors in observation or judgment, or rumors, urban legends, pseudosciences or April Fools' Day events that are passed along in good faith by believers or as jokes.-Definition:The British...

 or fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

 centered on false information about the then-ongoing Napoleonic Wars
Napoleonic Wars
The Napoleonic Wars were a series of wars declared against Napoleon's French Empire by opposing coalitions that ran from 1803 to 1815. As a continuation of the wars sparked by the French Revolution of 1789, they revolutionised European armies and played out on an unprecedented scale, mainly due to...

, affecting the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...

 in 1814.

The du Bourg hoax

On the morning of Monday, February 21, 1814, a uniformed man posing as Colonel du Bourg, aide-du-camp to Lord Cathcart
Charles Cathcart, 9th Lord Cathcart
General Charles Schaw Cathcart, 9th Lord Cathcart was a British soldier and diplomat. He was also chief of the Clan Cathcart.The son of Charles Cathcart, 8th Lord Cathcart and Marion Shaw, he was born on 21 March 1721...

, arrived at the Ship Inn at Dover
Dover is a town and major ferry port in the home county of Kent, in South East England. It faces France across the narrowest part of the English Channel, and lies south-east of Canterbury; east of Kent's administrative capital Maidstone; and north-east along the coastline from Dungeness and Hastings...

, England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

, bearing news that Napoleon I of France
Napoleon I of France
Napoleon Bonaparte was a French military and political leader during the latter stages of the French Revolution.As Napoleon I, he was Emperor of the French from 1804 to 1815...

 had been killed and the Bourbons
House of Bourbon
The House of Bourbon is a European royal house, a branch of the Capetian dynasty . Bourbon kings first ruled Navarre and France in the 16th century. By the 18th century, members of the Bourbon dynasty also held thrones in Spain, Naples, Sicily, and Parma...

 were victorious. Requesting that this information be relayed on to the Admiralty in London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...

 via semaphore telegraph, "Colonel du Bourg" proceeded on toward London, stopping at each inn on the way to spread the good news. At about noon, confirmation for the news of peace arrived in the form of another coach which circulated throughout London, bearing three French officers who distributed leaflets celebrating the Bourbon victory.

Effects on the stock market

Rumors of Napoleon's defeat had been circulating throughout the month, and the combined events had a significant impact on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...

. The value of government securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...

 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.

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. Three people connected with that purchase were charged with the fraud: Lord Cochrane
Thomas Cochrane, 10th Earl of Dundonald
Admiral Thomas Cochrane, 10th Earl of Dundonald, 1st Marquess of Maranhão, GCB, ODM , styled Lord Cochrane between 1778 and 1831, was a senior British naval flag officer and radical politician....

, a Radical
Radicals (UK)
The Radicals were a parliamentary political grouping in the United Kingdom in the early to mid 19th century, who drew on earlier ideas of radicalism and helped to transform the Whigs into the Liberal Party.-Background:...

 member of Parliament and well-known naval hero, his uncle the Hon. Andrew Cochrane-Johnstone, and Richard Butt, Lord Cochrane's financial advisor. Captain Random de Berenger, who had posed both as du Bourg and as one of the French officers, was soon arrested, and a guilty verdict was returned against all three charged in the case. The chief conspirators were sentenced to twelve months of prison time, a fine of £1,000 each, and an hour in the public pillory
The pillory was 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, sometimes lethal...

. Lord Cochrane was also stripped of his naval rank and expelled from the Order of the Bath
Order of the Bath
The Most Honourable Order of the Bath is a British order of chivalry founded by George I on 18 May 1725. The name derives from the elaborate mediæval ceremony for creating a knight, which involved bathing as one of its elements. The knights so created were known as Knights of the Bath...


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 Lord Ellenborough
Edward Law, 1st Baron Ellenborough
Edward Law, 1st Baron Ellenborough PC KC was an English judge. After serving as a Member of Parliament and Attorney General, he became Lord Chief Justice.-Early life:...

, the presiding judge in his case. Popular opinion certainly backed Cochrane; his sentencing was followed by his re-election to the House of Commons for Westminster, and, due to public outcry over his treatment, the punishment of the pillory was officially discontinued in Britain.

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 honors 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."

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
The Count of Monte Cristo
The Count of Monte Cristo is an adventure novel by Alexandre Dumas. It is often considered to be, along with The Three Musketeers, Dumas's most popular work. He completed the work in 1844...

 (published 1844).

The Great Stock Exchange Fraud forms the basis for the 11th novel in Patrick O'Brian
Patrick O'Brian
Patrick O'Brian, CBE , born Richard Patrick Russ, was an English novelist and translator, best known for his Aubrey–Maturin series of novels set in the Royal Navy during the Napoleonic Wars and centred on the friendship of English Naval Captain Jack Aubrey and the Irish–Catalan physician Stephen...

's Aubrey–Maturin series
Aubrey–Maturin series
The Aubrey–Maturin series is a sequence of nautical historical novels—20 completed and one unfinished—by Patrick O'Brian, set during the Napoleonic Wars and centering on the friendship between Captain Jack Aubrey of the Royal Navy and his ship's surgeon Stephen Maturin, who is also a physician,...

, The Reverse of the Medal
The Reverse of the Medal
The Reverse of the Medal is a historical novel by Patrick O'Brian set during the Napoleonic Wars. It was first published by HarperCollins in 1986 and is the eleventh book in the Aubrey-Maturin series, concerning the adventures of naval commander Jack Aubrey, and his friend, ship's surgeon,...

(published 1986).


In the terminology of 1814, stocks refer to interest-bearing securities of the type that are today called bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...


External links

  • The Trial of Charles Random de Berenger, Sir Thomas Cochrane et al. taken in shorthand by William Brodie Gurney
    William Brodie Gurney
    William Brodie Gurney was a famed English shorthand writer and philanthropist of the 19th century.-Biography:Gurney was the younger son of Joseph Gurney , shorthand writer, who died at Walworth, Surrey, in 1815, by a daughter of William Brodie of Mansfield.He was the grandson of Thomas Gurney ,...

    , from Project Gutenberg
    Project Gutenberg
    Project Gutenberg is a volunteer effort to digitize and archive cultural works, to "encourage the creation and distribution of eBooks". Founded in 1971 by Michael S. Hart, it is the oldest digital library. Most of the items in its collection are the full texts of public domain books...