Stock Exchange Forgery 1872-73
Encyclopedia
The Stock Exchange Forgery was a fraud
perpetrated at the London Stock Exchange
during the years 1872 to 1873.
systems of the United Kingdom
were nationalised and run by the Post Office
. The development of the telegraph systems had been of great benefit to the Stock Exchange as stock prices could be quickly communicated. If those working at the Stock Exchange wanted to send a telegram they would write their message on a telegram form and take it with payment of one shilling
or more to a clerk who would then give them a 1 shilling green postage stamp
to apply to it, if necessary with other stamps to make up the correct fee which depended on the number of words. The clerk then cancelled the stamp with a dated postmark
to indicate that the appropriate payment had been made.
A fraudulent clerk supplied forged
stamps for the forms in order to steal the expensive one shilling fees without depleting the stock of genuine stamps which were subject to audit. The fraud was successful because the forged stamps were only used on certain days and the stamps were convincing forgeries that were not retained by the customers who only handled them briefly. After the telegrams had been sent the forms were filed before later being put in a bag for disposal.
noticed the following differences from the genuine stamps:
The dates when the fraud was operating are apparent from the dates on the Stock Exchange postmarks applied to the stamps. As a large number of forged stamps were found and 1 shilling was a significant sum at the time it is likely that the fraud was highly profitable for the culprit(s) who were never identified. Paradoxically the forged stamps are now worth more than the originals to collectors.
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...
perpetrated at 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...
during the years 1872 to 1873.
Description of the fraud
In 1870 the telegraphElectrical telegraph
An electrical telegraph is a telegraph that uses electrical signals, usually conveyed via telecommunication lines or radio. The electromagnetic telegraph is a device for human-to-human transmission of coded text messages....
systems of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
were nationalised and run by the Post Office
Royal Mail
Royal Mail is the government-owned postal service in the United Kingdom. Royal Mail Holdings plc owns Royal Mail Group Limited, which in turn operates the brands Royal Mail and Parcelforce Worldwide...
. The development of the telegraph systems had been of great benefit to the Stock Exchange as stock prices could be quickly communicated. If those working at the Stock Exchange wanted to send a telegram they would write their message on a telegram form and take it with payment of one shilling
Shilling
The shilling is a unit of currency used in some current and former British Commonwealth countries. The word shilling comes from scilling, an accounting term that dates back to Anglo-Saxon times where it was deemed to be the value of a cow in Kent or a sheep elsewhere. The word is thought to derive...
or more to a clerk who would then give them a 1 shilling green postage stamp
Postage stamp
A postage stamp is a small piece of paper that is purchased and displayed on an item of mail as evidence of payment of postage. Typically, stamps are made from special paper, with a national designation and denomination on the face, and a gum adhesive on the reverse side...
to apply to it, if necessary with other stamps to make up the correct fee which depended on the number of words. The clerk then cancelled the stamp with a dated postmark
Postmark
thumb|USS TexasA postmark is a postal marking made on a letter, package, postcard or the like indicating the date and time that the item was delivered into the care of the postal service...
to indicate that the appropriate payment had been made.
A fraudulent clerk supplied forged
Forgery
Forgery is the process of making, adapting, or imitating objects, statistics, or documents with the intent to deceive. Copies, studio replicas, and reproductions are not considered forgeries, though they may later become forgeries through knowing and willful misrepresentations. Forging money or...
stamps for the forms in order to steal the expensive one shilling fees without depleting the stock of genuine stamps which were subject to audit. The fraud was successful because the forged stamps were only used on certain days and the stamps were convincing forgeries that were not retained by the customers who only handled them briefly. After the telegrams had been sent the forms were filed before later being put in a bag for disposal.
Discovery of the fraud
The fraud was not detected at the time and could have remained undetected had all the stamps been destroyed as originally intended; however they were retained by the Stock Exchange for a period, after which they were disposed of as waste paper. Some of the forms eventually came into the hands of stamp dealers, and the fraud finally came to light over 25 years later in 1898 when the young philatelist Charles NissenCharles Nissen
Charles Nissen was a philatelist, and stamp dealer who discovered the famous stock exchange forgery and wrote, with Bertram McGowan, the definitive book on the plating of the Penny Black.-The Royal Philatelic Collection:...
noticed the following differences from the genuine stamps:
- Postage stamps at the time included letters in the corners which indicated their positions on the sheet. Some of the forgeries used ‘impossible’ lettering that did not correspond with the possible sheet positions. The letters were also slightly larger than on the genuine stamps and the corners were blunter.
- The genuine stamps were on watermarkedWatermarkA watermark is a recognizable image or pattern in paper that appears as various shades of lightness/darkness when viewed by transmitted light , caused by thickness or density variations in the paper...
paper showing a rose spray whilst the forgeries were not watermarked.
- The forgeries were printed by typographyTypographyTypography is the art and technique of arranging type in order to make language visible. The arrangement of type involves the selection of typefaces, point size, line length, leading , adjusting the spaces between groups of letters and adjusting the space between pairs of letters...
whilst the originals were lithographedLithographyLithography is a method for printing using a stone or a metal plate with a completely smooth surface...
and had a slightly crisper appearance. There were forged versions of printing plates 5 and 6 of the stamp, with fewer examples of plate 6 which were better quality forgeries.
The dates when the fraud was operating are apparent from the dates on the Stock Exchange postmarks applied to the stamps. As a large number of forged stamps were found and 1 shilling was a significant sum at the time it is likely that the fraud was highly profitable for the culprit(s) who were never identified. Paradoxically the forged stamps are now worth more than the originals to collectors.