300 years of Being Screwed by Stock Jobbers: Daniel Defoe on the Evils of Stock and Speculation

Portrait of Daniel Defoe, National Maritime Museum, London
Portrait of Daniel Defoe, National Maritime Museum, London

Daniel Defoe is more than a bit curmudgeonly in this tract, but not curmudgeonly enough given I agree with all of it where I understand what the hell he’s talking about — and it’s almost three hundred years since he first wrote this scree. I am sad to find so much that resonates with his opinion of the stock market and those making a living by speculating on its ups and downs, along with the suckers they take in:

’tis a Trade founded 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… Are you sure of it, says the Fish, who jumps eagerly into the Net?

I’ve been reading so much, but still can’t be bothered to find out the identities of Mr. T—s chief Agent or Lord M—r‘s Broker, but ‘that Original of Stock-Jobbing, Sir J— C—-‘ is of course, Sir Josiah Child of the East India Company, in connection with tales of how he and the Company passed along false notices of news and manipulated the price of stock to their profit.

I quite enjoyed this summary of the differences between thievery through the stock market and armed robbery:

their Employment was a Branch of Highway Robbing, and only differ’d in two things, First in Degree, (viz.) that it was ten Thousand times worse, more remorseless, more void of Humanity, done without Necessity, and committed upon Fathers, Brothers, Widows, Orphans, and intimate Friends; in all which Cases, Highwaymen, generally touch’d with Remorse, and affected with Principles of Humanity and Generosity, stopt short and choose to prey upon Strangers only. Secondly in Danger, (viz.) that these rob securely ; the other, with the utmost Risque that the Highwaymen run, at the Hazard of their Lives, being sure to be hang’d first or last, whereas these rob only at the Hazard of their Reputation which is generally lost before they begin, and of their Souls, which Trifle is not worth the mentioning.

I think also his warning about what happens when men trusted with public moneys are also involved in stock speculation is as valid today as it has ever been, and truly ‘more fatal to the Publick than an Invasion of Spaniards’ (a phrase that is funnier today than it was at the time I am sure):

But when we find this Trade become a Political Vice, a publick Crime, and that as it is now carried on, it appears dangerous to the Publick, that whenever any Wickedness is it Hand, any Mischief by the worst of the Nations Enemies upon the Wheel, the Stock Jobbers are naturally made assistant to it, that they become Abettors of Treason, assistant to Rebellion and Invasion, then it is certainly time to speak, for the very Employment be∣comes a Crime, and we are oblig’d to expose a Sort of Men, who are more dangerous than a whole Nation of Enemies Abroad, an Evil more formidable then the Pestilence, and in their Practise more fatal to the Publick than an Invasion of Spaniards.

And then there are those who simply put the public at risk through their own selfishness:

yet if it appear they are hearty Knaves too, will do any thing for Money, and are, by the Necessity of their Business oblig’d, or by the vehement Pursuit of their Interest, that is to say, of their Profits, push’d upon Things as effectually ruinous and destructive to the Government , as the very buying Arms and Amunition by a profest Jacobite, in order to Rebellion could be, are they not Traytors even in spite of Principle, in spite of the Name of Whig; nay, in spite of a thousand meritorious things that might otherwise be said of them, or done by them?

This means to say that they act upon their own financial interests, bet against the state, make runs upon the national bank rather than shoring it up…it all sounds so familiar. As does the government bailing them all out. That’s at best. At worst?

But to see Statesmen turn Dealers, and Men of Honour stoop to the Chicanry of Jobbing; to see Men at the Orfices in the Morning, at the P— House about Noon, at the Cabinet at Night, and at Exchange-Alley in the proper Intervals, What new Phoenomina are these? What fatal Things may these shining Planets (like the late Great Light) fore-tell to the State, and to the Publick; for when Statesmen turn Jobbers, the State may be Jobb’d.

The State may be Jobb’d. Maybe a phrase we should bring back into general use.

Like A Journal of the Plague Year, Defoe is most precise in his geographies of London — so an aside into what is of a happier interest:

The Center of the Jobbing is in the Kingdom of Exchange-Alley, and its Adjacencies; the Limits , are easily surrounded in about a Minute and a half (viz.) stepping out of Jonathan‘s into the Alley, you turn your Face full South, moving on a few Paces, and then turning Due East, you advance to Garraway‘s; from thence going out at the other Door, you go on still East into Birchin-Lane, and then halting a little at the Sword-Blade Bank to do much Mischief in fewest Words, you immediately face to the North, enter Cornhill, visit two or three petty Provinces there in your way West: And thus having Box’d your Compass, and sail’d round the whole Stock-jobbing Globe, you turn into Jonathan‘s again; and so, as most of the great Follies of Life oblige as to do, you end just where you began.

The map of ‘the whole Stock-jobbing Globe’ is below, showing where the coffee houses stood before destroyed by fire in 1748:

A map of Exchange Alley after it was razed to the ground in 1748, showing the sites of some of London’s most famous coffeehouses including Garraway’s and Jonathan’s
A map of Exchange Alley after it was razed to the ground in 1748, showing the sites of some of London’s most famous coffeehouses including Garraway’s and Jonathan’s

Here is a print showing the interior of Jonathan’s:

Jonathans_Coffee_House_w_Border

And another showing the second reincarnation of Garraway’s rebuilt after the fire, but this also demolished:

91M+60pOaiL._SL1500_

(There is an immense and wonderful history of coffee houses explored by many authors — a good summary and collection of every resource available to you online and off can be found at one of my favourite blogs – The Public Domain Review)

Now Exchange Alley is simply Change Alley, and you can follow Defoe’s instructions, but it looks very different — cold and fairly empty and immensely uninviting. Public space that no longer feels very public. There are no longer any shops at all, selling coffee or otherwise. Entering it from Lombard St:

Change Alley

From Jonathan’s:

Change Alley - Jonathan's Coffee House

South a few paces and then East to Garraway’s:

Change Alley - Garroway's Coffee House

Further East, to emerge into Birchin’s Lane:

Change Alley

But first we pass other memorialisations of food, warmth and hospitality that make you positively nostalgic for the banking and stock-jobbing that was:

Change Alley - Bakers' Chop House

Change Alley - King's Head Tavern

Birchin’s lane is still a pleasant enough place however, if it weren’t for the bankers:

Birchin Lane

The Sword-Blade Bank does not have a plaque. To Cornhill:

IMG_1860

More pictures of what was from a wider view, standing on Aldgate Street and looking to where Leadenhall and Fenchurch Streets split. Exchange Alley runs between them, though further down (as they become Cornhill and Lombard Street):

10337

And the towering structures that now represent banking might:

View down Aldgate

But to return to the scenes of non-scenic corruption — the East India Company members buying up seats in Parliament to ensure its support of their profits:

It may easily be remember’d, that the first Occasion of the Exchange-Alley Men engaging in the Case of Elections of Members, was in King William‘s Time, on the famous Disputes which happen’d between the Old East-India Company and the New; which having held a great while, and having embarrass’d not the City only, but the whole Nation, and even made it self dangerous to the Publick Business, it was expected it should be fully decided by the House of Commons: To this End the Members of both Companies, with all the Trick, Artifice, Cunning and Corruption, that Money and Interest could arm them with, bestirred themselves to be chosen Members.

Brokers rid Night and Day from one End of the Kingdom to the other, to engage Gentle∣men 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…

Sadly, bankers and stock market speculators continue to expose the public to such dangers, and we have not yet found a way to control the ups and downs of crisis, the state bailouts, or rampant greed setting policy and calling the shots for politicians. It seems to me it’s time to do so, it’s only been 294 years since Defoe first identified the problem though somehow it’s Robinson Crusoe that has become the more popular of his writings.

The anatomy of Exchange-Alley: or, a system of stock-jobbing. Proving that scandalous trade, as it is now carry’d on, to be knavish in its private practice, and treason in its publick: … By a jobber. (1719)

Defoe, Daniel, 1661?-1731.

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