Gullibility of the Investor and Pastimes of Marketmen D N Ghosh "A SOLICITOR or two, a civil engineer, a parliamentary agent, possibly a contractor, a map of England, a pair of compasses, a pencil and a ruler were all that were requisite to commence the formation of a railway company in those halcyon days at any rate so tar as the drawing of the prospectus was concerned. Then that document had to be embellished with the names of a few noble and gentle country landowners and well-to- do manufacturers as provisional directors. These were all the ingredients for forming a railway company." These are reminiscences of Edward Callow, a member of the stock exchange as quoted by Charles Duguid in his book, The Story of the Stock Exchange. Duguid was commissioned to write this book to mark the centenary of the laying of the foundation of the new stock exchange building at Capel House, London, in May 1801. The book which covers the important events at the London Stock Exchange during the 19th century keeps the reader engrossed with the recurrent incidents of fraud, deceit and the credulousness of the investor. This is virtually a repetition of what Daniel Defoe wrote ''proving that the scandalous trade, as it is now carried on, to be knavish in its private practice and treason in its public" in the subtitle of his tract The Anatomy of the Stock Exchange Alley. Duguid relates many telling instances of investor credulity. It is difficult to pick and choose, but even 200 years later, the incidents are alarmingly similar to what happens in today's market, Edward Callow in his book City Press, talking about the year 1845, described the beginning of the Railway Mania in the London Stock Exchange. Sixteen new companies were floated in January and by September the number had gone up to 1,036; in October 363 more were added. The schemes would require hundreds of millions of pounds to bring them to fruition. It was not the railways that the promoters were interested in, but the deposits and premium on the shares. The venerable Times of London warned "We cannot add 50 millions of money to rail way enterprises without the most ruinous, universal and desperate confusion." But George Hudson, the uncrowned Railway King, was the revealed God to the investing community.
