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Stock Exchange panic three years after the Peace of Amiens

Posted in Historical articles, History, Institutions, London, War on Monday, 3 June 2013

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This edited article about the Stock Exchange originally appeared in Look and Learn issue number 276 published on 29 April 1967.

Mansion House letter, picture, image, illustration

A messenger demands to be taken to the Lord Mayor as part of a hoax that panicked the Stock Exchange in 1803

There are two kinds of hoaxers: the practical jokers who perpetrate their hoaxes just for the fun of making people look silly; and those whose hoaxes are nothing but deliberate frauds to swindle people of money.

One of the most famous of these latter hoaxes happened during the Napoleonic Wars, with the City of London as the intended victim.

At half-past-eight on the morning of 5th May, 1803, a travel-stained horseman leaped from his sweating mount outside the Mansion House and, running up the steps, banged on the door. When the door was opened by a footman, the traveller demanded to be taken to the Lord Mayor without delay.

On being told that the Lord Mayor was out of town and not expected back for a couple of hours, the caller said that he was a messenger from the Foreign Office. He then handed the footman a large, official-looking envelope bearing several seals. He said it contained important news and must be given to the Lord Mayor the moment he returned to the Mansion House.

About two hours later, the Lord Mayor returned and was given the envelope. When he opened it, he found the following letter, apparently signed and sealed by Lord Hawkesbury, who was then the British Foreign Secretary:

Downing Street, 8 a.m.

To the Right Hon. the Lord Mayor of London.

Lord Hawkesbury presents his compliments to the Lord Mayor and is happy to inform him that negotiations to continue the peace treaty between Great Britain and France have been successful. There will be no war with France.

At that time the uneasy Peace of Amiens, which had been signed between Britain and France on 25th March, 1802, was in danger of ending, and the country was expecting to be at war again in a few days.

In spite of this, the Lord Mayor did not question the letter. Instead, he had two copies made. One he had posted outside the Mansion House, and the other he sent to Lloyd’s. The original he took in person to the Stock Exchange.

During the previous couple of weeks, the daily expectation of war had led to much panic selling of shares and Government bonds, which were being sold at prices as much as 20 per cent below their normal value.

When the contents of the letter received by the Lord Mayor was made public at the Stock Exchange, there was a rush to buy back the shares, but the sellers demanded their normal market value. In this way, those who had bought the shares cheaply stood to make large profits.

In the meantime, news of the sudden boom on the Stock Exchange reached the Government. Lord Hawkesbury heard about the letter to the Lord Mayor and announced that it was a forgery.

By that time, however, thousands of stocks and shares had been bought at high prices. Then came the Foreign Office denial of the letter, and the Stock Exchange was thrown into complete panic, with brokers trying to get rid of shares worth pounds for a few shillings.

The committee of the Stock Exchange held a hurried meeting and, with Government approval, issued a notice that all dealings in stocks and shares would cease for the day, and that any business already conducted must be cancelled. As a result, the hoaxers gained no benefit from their trick, and an enormous swindle on the stock market was avoided.

The Government then issued a statement that, so far from peace between England and France being likely to continue, negotiations between the two countries were on the point of being broken off. And in fact, less than a week after the hoax on the Stock Exchange, Britain and France were at war again.

A reward of £5,000 was offered for information which would lead to the arrest of the tricksters, but they were never found.

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