The Sun.
London, England, 1866-12-19 00:00:00

TISIES.—At the end of last week the stock of the
South-Eastern Railway experienced a rapid fall of
about two per cent., followed at the beginning of
this week by an almost equally rapid recovery. So
great are the fluctuations to which railway shares
are liable at a time like the present that such a cir-
cumstance would attract but little attention, espe-
cially as some other Companies participated in the
depression and reaction. We have now reason to
know, however, that it was not wholly due to legiti-
mate causes, but that a mice .ssful attempt had been
made to depreciate the value of South-Eastern stock
in the market by an act of deliberate fraud. The
correspondence which appeared yesterday in our
City Article places this in a very clear light. On
Friday afternoon Mr. Watkin, M.P., Chairman of
the South-Eastern Railway, being then in Manches-
ter, learnt to his dismay that a report of his own
failure was being circulated on the Stock-Exchange
is that city. He immediately wrote to Mr. Raw-
son, Chairman of the Manchester Stock Exchange,
emphatically denying the truth of the rumour, and
requesting that steps might be taken to discover its
author. The result was that a telegraphic message
was found to have been received by Messrs. Field-
ing and Hayes, of Manchester, from a Mr. Grise-
wood, in London, of which the following is a
copy :—" Grisewood to Fielding,—l hear the B
Chairman has failed •, please say if true or no." The
reply was to the effect that no such event had
been " named" in Manchester. But the story
thus suggested was not allowed to drop. On
the contrary, it was spread busily and widely
enough to ,be " thoroughly discredited," as Mr.
Rawson says, on the Manchester Exchange, and to
reach the ears of Mr. Watkiu himself. That gen-
tleman, having succeeded in tracing its origin so
far, very properly applied to the Chairman of the
London Stock Exchange, of which Mr. Grisewood
appears to be a member, calling upon him to insti-
tute a further inquiry, with a view of identifying the
" real author." A searching investigation was at
once promised, and we can only hope that it will
lead to the detection and punishment of all parties
implicated in so infamous a transaction. We infer,
however, from the circular addressed to the share-
holders of the South Eastern Railway, as well from
Mr. IVatkin's letter to the chairman of the London
Stock Exchange, that the canard produced the de-
sired effe.:t before it exploded, "enabling a number
of unprincipled persons to realise large dishonest
profits." A panic was actually created for the time,
and the first consequence of a panic is that deben-
tures falling due must be renewed on unfavourable
terms. Unhappily, it is much easier to excite dis-
trust than to remove it, and long after falsehoods of
this class have been exposed, the impression left by
them continues to operate injuriously. It may be
said that, at all events, this is quite an exceptional
case, and that such conduct, once brought to light,
will be effectually put down on the Stock Exchange.
We cannot for one moment assent to either of these
opinions. We do not believe that a wilful falsifica-
tion of facts, with the fraudulent intention of low-
ering the price of shares, is an exceptional, or even
a rare, piece of sharp practice ; nor can we affect to
have much confidence in the disposition of the Stock
Exchange Committee to adopt stringent measures
against it. The peculiarity of the calumny in this
instance is, not that it was morewicked or unfounded
than usual, but that it took somewhat too definite a
shape, and was embodied incautiously in a telegraphic
message. The system of "bearing" the share mar-
ket, which inevitably arises out of time bargains, in-
evitably leads to the fabrication of statements equally
malicious and equally criminal, but it is generally
conducted with greater skill. A stockjobber sells a
number of shares which he does not possess in a per-
fectly sound undertaking for delivery on a future
day. Thenceforward it becomes his direct interest
to damage the credit of the concern by every means
in his power • and unless his conscience be more
scrupulous than that of his neighbours, he will not
stick at trifles. It is not as if categorical assertions,
capable of prompt refutation, were at all necessary.
A question or innuendo will serve the purpose just
as well, and a great deal may be done by a tacit
shrug of the shoulders or shake of the head, judi-
ciously timed, and set off by an air of sincere regret.
Even here the interrogative form of insinuation was
employed, but it was preceded by a distinct intima-
tion that Mr. Grisewood, the sender of the telegram,
had received certain information about a certain
gentleman. He will, of course, be expected to name
his informant, and as positive " failure," such as
was alleged to have befallen Mr. Watkin, is not so
vague a thing as mere embarrassment, it is not im-
possible that the invention may be at last brought
home to some individual. At the same time we
cannot forget that on a recent occasion the com-
mittee of the Stock Exchange expressly declined to
co-operate with the public in checking the abuses
of time bargains. It is contended, on behalf of the
" bears," that, after all, thersonly act in self-de-
fence, and do but neutralise the shameless efforts of
others to raise the value of shares by rigging the
market. There is just enough truth in this plea to
deceive those for whom it is intended. It is true
that new enterprises are often got afloat by shame-
less and wholesale puffing, sometimes aided by ficti-
tious purchases of the shares by the promoters. We
have not a word in excuse of these persons, but,
after all, the maxim " caveat eniptor" applies to
their machinations, and their victims must take the
consequences of fancying that exorbitant interest
can be realised on good securities. To compass the
ruin of an innocent and solvent company or firm by
persistent attacks on its credit, and to do this for the
sake of getting a higher profit on a speculative sale,
is a very different thing, and those who live by such
a trade are public enemies. It is absurd to pretend
that well established concerns are proof against
assaults, however ingenious, and that only those
already destined to fall can be thus undermined. A
business which depends but little on short credits,
and from which money cannot be suddenly with-
drawn, may, indeed, defy the arts of the " bears,"
while hardly any bank, however stable, could sustain a,
general and simultaneous run on its deitosits. Rail-
ways are less at the mercy of the Stock Exchange,
but railways may find it impossible to borrow money
at a reasonable rate if their stock is unfairly depre-
ciated, and this may easily be effected by an orga-
nised conspiracy of sharejobbers. In short, the
power of an exclusive body, like the members of
the Stock Exchange, to injure the rest of the com-
munity is almost unlimited, and it is high time to
consider what restrictions can be placed upon the
exercise of it. Nothing short of a resort to the cri-
minal law, and, if necessary, the enactment of new
provisions against new kinds of knavery, will put a
stop to an evil so highly organise,l, and supported
by interests so powerful. This is not a question for
select circles in the City; it is a question for the
country and the Legislature. Our complaint is
that commercial morality, so far as it tolerates such
proceedings as we have described, is several degrees
behind the standard of national morality, and even
behind that recognised in our penal code. Men who
deserve to stand in the dock of the Central Criminal
Court, and whose offences are notorious, do not
always forfeit their position in the mercantile world,
but often contrive to keep up appearances until the
ugly tales about them have blown over. The reason
is, that many others are inwardly conscious of hav-
ing been privy to acts but a shade less dishonest.