How a Stock Exchange Scare Dislocated the Life of the Empire for Two Days.

The era of peace which seemed to be well begun in 1906 was naturally marked by an extraordinary commercial and financial activity; an amount of world-wide speculations never equalled in intensity, even in the mad times of the South Sea Bubble, or when Hudson, the Railway King, flourished. The countless millions piled up in English banks earning a 2? per cent. interest were lavishly withdrawn, new mines had been started, everybody was going to be rich. On the face of it people had good ground for their sanguine expectations. The Rand with its forty square miles of rich gold-bearing reefs containing an untold number of immense fortunes—the richest region on earth—was properly administered for the first time. From the highest to the lowest everybody was investing their savings in South Africa.

In other words, there was a tremendous "boom." Nothing like it had ever been seen in the history of commerce. It was the golden hour of the promoter. Yet, for the most part, the schemes promised well. There was, however, an enormous amount of rubbish in the market. Some of the more thoughtful financiers scented danger ahead, but they were not listened to. The roar of the Kaffir circus resounded in men\'s ears and made them mad. Park Lane would never be able to hold the new millionaires.

All England was in the grip of the mania. Bona fide speculation and business had become gambling pure and simple. London thought of nothing else. The City was crammed with excited buyers and operators, the little outside broker of yesterday came down to his offices behind a pair of blood horses, and his diamonds were a solid sign of his new prosperity.

A busy day was drawing to a close. Carl Ericsson sat in his office smoking a cigarette. Ericsson yesterday had been waiter in an unimportant restaurant. To-day he had a fine set of offices and a small mansion at Hampstead. He had "arrived" on the crest of the wave as many far less astute adventurers had done. There was a peculiarly uneasy grin on his dark features, a curious twitching of the lips, and he had the tired eyes of the sleepless.

His partner sat opposite him behind a big cigar. He was a fat man with a big jaw and a merciless mouth. Six months before Eli Smith had been a fairly well-to-do suburban butcher. Now he was E. Asherton-Smith, the big financial agent. He boasted, with truth, that he could sign a cheque for ￡40,000 and be none the worse for it. In the area of the City it would have been difficult to find two choicer specimens of rascality than the partners in Ericsson & Co.

"Got a big card to play, eh?" Asherton-Smith asked.

Ericsson grinned nervously. His lithe little body was quivering with excitement. There was a furtive look in his drooping eyes.

"The ace of trumps," he gurgled; "the coup of the century. Eli, my boy, how much money could we make if we could scare South Africans down five or six points for a week?"

Mr. Asherton-Smith\'s diamonds heaved with emotion.

"Millions," he said. "Just as many millions as we could stagger under. Makes my mouth like sawdust to think of it. But pass out a bottle of champagne."

Ericsson did so, rose from his seat and peeped into the outer office; the clerks had all gone for the day. He closed the door gently.

"I\'m going to tell you," he said. "If I don\'t tell somebody I shall go mad. I can\'t sleep at nights for thinking of it. When I do doze off I\'m swimming in a river of sovereigns. With a bit of luck, it\'s a certainty."

"Get on, Carlo. You\'re just playing with my feelings."

"Well, it\'s just this way"—Ericsson\'s voice dropped to a whisper. "There are two lines of cable by which South Africa can communicate with the outside world—the East and West Africa cables. The West Coast line isn\'t to be relied upon; it breaks down at least once a week. At a time like this a breakdown is a serious matter. The directors have taken the bull by the horns, so at the present moment the West Coast line is out of our calculations. It\'s under repair, and it\'s likely to remain so for some time to come. I\'ve ascertained that communication with South Africa by the Western line is impossible. For the next fortnight no message can come or go by that route. This leaves us only the Eastern line to grapple with. If that kindly breaks down for four-and-twenty hours, our fortunes are safe."

"Is it likely?" Asherton-Smith asked.

"Why, yes. It has happened three times during this year. I tell you I have followed this thing pretty keenly. It\'s more than on the cards. Suppose the breakdown did come, Eli, and we had the last message through? Look at this."

Ericsson took from a safe a sheet of paper—a cablegram message, in fact, sent cut from the office of the East Africa company. It was a genuine document enough, with the date and the hour showing that it had been dispatched from Cape Town on the afternoon of the same day. There were words upon it to the effect that "Bertha has lost her aunt, and the water has been packed in the matchbox."
"That isn\'t our cypher," Asherton-Smith said.

"That isn\'t our cypher," Asherton-Smith said.

"Quite right; it\'s the cypher used by The Messenger. The Messenger, my boy, enjoys as high a reputation as The Times. If a cablegram appeared in The Messenger to-morrow saying that there had been an earthquake on the Rand, and that the Johannesburg water-works had overflowed into the deep levels everybody could take it for gospel. That\'s why I managed to get hold of and learn The Messenger cypher.

"On the off-chance of the Eastern cable breaking down, I\'ve had a cable sent to me every day from a friend in South Africa saying that there has been an earthquake in Johannesburg, and that the mines are flooded out. The cable comes to me in the cypher used by The Messenger people. That\'s what all that gibberish about Bertha and the water and the matchbox means.

"Suppose you were to walk into the office and say the Eastern line of cable had broken down. As the Western line is under repair that tells me that communication with South Africa is impossible for a day or more. Probably the lines would be unavailable for nearly a week. I\'ve got a spare envelope or two used by the Eastern Company for their messages; I put this flimsy inside and alter my own address \'Bonan\' to \'Bonanza\'—which is the registered cable address of The Messenger—by the addition of two letters, and there you are. That\'s why I thought of \'Bonan\' and that little office of mine in Long Lane, where I am known as James Jones.

"I\'ve had this scheme in my mind for years. A boy drops into The Messenger office and hands over the cablegram, and there you are. The thing looks perfectly in order; it is the private cypher of the big newspaper, and, moreover, it is quite up-to-date. If the cable breaks down no questions can be asked, and the thing goes into the paper. We\'ve only got to get the same message sent to me every day, and sooner or later our chance comes."

Asherton-Smith was breathing heavily. The prospect was dazzling. Somebody was tapping at the outer door. A large man in a big fur coat entered.

"What are you beggars conspiring about?" he asked. "Got something extra special from down below? Egad, I\'d give something for a private wire of my own! We\'ll get a rest for a day or two. The East Africa cable is bust up south of Mauritius."

The intruder helped himself to a glass of champagne that he obviously didn\'t want, and drifted out again. The partners glanced at one another without speaking. Perhaps they were just a little frightened.

The thing appeared to be absolutely certain. So far as they could see, the story would be believed implicitly, for The Messenger was absolutely reliable.

The great beauty of the whole scheme was its conclusiveness. There never had been an earthquake on the Rand, but there was no reason why there shouldn\'t be. And an earthquake would assuredly destroy the Johannesburg water-works, which would mean the washing away of half the place and the flooding of some of the richest mines below the town.

The West Coast cable was under repair and incapable of use. But that frequently happened, as most people interested in South Africa know. There was no chance of the truth trickling back to London via Australia or New York. And now the Eastern line had broken down also, as all deep sea cables do on occasion.

"Upon my word, I can\'t see a flaw anywhere," Ericsson remarked, in a voice that trembled. "If the Eastern line is repaired by morning we shall be none the worse off. Our coup will have miscarried, a few inquiries will be made, and James Jones will never be seen in Long Lane Office again."

Asherton-Smith went home and dined and drank; but sleep was not for his pillow that night. The papers were late in the morning, and that did not lessen his irritability. The breakfast stood untouched, beyond a little dry toast, and some brandy and soda water. Just for the moment the prosperous Asherton-Smith regretted the day when he had been the oily and irresponsible Eli Smith, butcher.

The papers came at last—a whole pile of them: but Asherton-Smith only desired to see The Messenger. He fluttered it open with fingers that trembled. There it was—the news that he sought. He drew a deep breath.

Usually The Messenger avoided sensation; but here was a "scoop" that no human editor could possibly resist. The headlines danced before the reader\'s eyes.

"Earthquake at Johannesburg! Destruction of the Water Works and the Flooding of the Mines. Great loss of life and property." The Messenger, alone of all the papers, contained this news.
The Messenger, alone of all the papers, contained this news.

A map of Johannesburg, right away from the water-works to the five-mile belt, where the world-renowned mines lay, only served to make the story more convincing. The water would have swept over the city, from the aristocratic suburb of Dornfontein to the auriferous belt that held the wealthy mines.

There were hundreds of millions of money invested here. The news of the disaster would have a depressing effect upon the Stock Exchange. Weak holders would be pretty certain to lose their heads, and the markets would be flooded with shares. Asherton-Smith trembled as he thought of his forthcoming fortune.

A little after ten o\'clock he was in the City. In the train and in the streets people were talking about nothing but the great disaster in South Africa. Nobody doubted the story, though only The Messenger contained it. Unfortunately the Eastern line had broken down at a critical moment, and no details were forthcoming for the time being. The Messenger\'s cable had been the last to come through.

"Going all right, eh?" Asherton-Smith asked. His teeth were chattering, but not with cold. "Pretty satisfied, eh?"

Ericsson nodded and grinned. He looked white and uneasy.

"I\'ve started the machinery," he said. "When prices have dropped five or six points we are going to buy quietly. Mind you, I\'m going to make no secret of it. I\'m going to pose as the saviour of the market, the one man who refuses to bow to the panic—shall swagger about the stuff being there in spite of a dozen earthquakes. I shall boast that at bed rock prices we can afford to buy to hold. That line will avert suspicion from us when the cat is out of the bag and our fortunes made. And you\'ll have to back me up in this. What a row there will be when the truth comes to be told!"

Ericsson and his partner pushed their way past inquisitive spectators who had nothing to lose, and therefore enjoyed the strange scene; they elbowed wealthy-looking men in all the garb of prosperity whose haggard faces gave the lie to their outer air.

Everybody was constrained and alert. The big financiers who usually controlled the markets were getting frightened. They assumed that there must be no panic, they desired that nothing should be done till the full magnitude of the disaster could be verified.

But people believed in the integrity of The Messenger which had never played them false yet. The great men of the exchanges and the marts had forgotten their human nature for the moment. They were asking poor humanity to put aside greed and self interest and love of money, the father to forget his savings, and the widow to ignore her dividends. They might just as well have appealed to the common sense of a flood tide swept by the gale.

Two of the big men were penned on the pavement on Cornhill. Their names were good on "\'Change" for any amount in reason; they reckoned themselves rich and comfortable. But the strain of the situation was getting on their nerves.

"I\'d give ￡50,000 to have my way here for a few hours, Henderson," said one.

"I\'d give twice that to feel that I had what I deemed myself to possess yesterday," said Sir James Henderson. "What would you like to do, Kingsley?"

"Clear the streets," the great bullion broker replied. "Get some troops and Maxims, and declare the City in a state of siege for eight-and-forty hours. Pass a short Act of Parliament prohibiting people from dealing in stocks and shares for a week. By that time the panic would have allayed itself and folks regained their sanity. As it is, thousands are going to be ruined. Every share in the South African market is absurdly inflated, and, even if the disaster is small, prices must keep low. But there is worse coming than that, my friend."

Already rumours were spreading far and wide as to the fall of certain shares. Mines that yesterday stood high in the estimation of the public were publicly offered at a reduction of from eight to ten points; even the gilt-edged securities were suffering.

The feeling grew that nothing was safe. It is the easiest thing in the world to shake public assurance where money is concerned. With one accord the thousands of large and small speculators had set out for the City to get rid of their liability on the earliest possible occasion. They asked for no profits, they demanded no margin—they would have been content to get out at a loss.

It never occurred to the individual that the same brilliant idea might strike a million brains simultaneously. With one accord they rushed to the line of action that might be the ruin of one-third of them. Just for the time purchases by a few bold speculators stopped the rush; but presently they got filled up or frightened, so that by two o\'clock some of the best paper in the market was begging at a few shillings the ￡1 share. When the fact struck New York and reacted on the London market, nobody knew what might happen.

It was fortunate that sellers could not unload at once. Sheaves of telegrams tumbled into brokers\' offices, the floors were littered with orange envelopes, the City was musical with the tinkle of telephones. The heads of firms, half mad with worry and anxiety, were offering the girls in the telephone exchange large sums to connect them with this office and the other. The usually sane City of London was as mad now as it had been in the days of the South Sea Bubble.

By three o\'clock, however, business on the Stock Exchange had practically come to a standstill. It was useless to deal with waste paper. To-morrow the crowd would doubtless be augmented by thousands of provincial speculators. Already the foreign Bourses were suffering under the strain. Early in the afternoon there were rumours and signs of an excited struggle in Lothbury.

What had happened now? People were straining their ears to listen. The news came in presently. There was a run on the South African Industrial Bank!

When the crowd began to clamour at the doors of the South African Industrial, the manager slipped out by a side entrance and made the best pace he could in the direction of the Bank of England. Once there, all his self-possession deserted him. He asked wildly to see the chief cashier, the general manager, the governors, anybody who might help him for the moment.

But the officials had other things to occupy their attention. From all parts of the country intelligence had arrived to the effect that the panic was at its height. It was only now that the big financiers realised what a large amount of fanatical gambling there had been in South Africans. Everybody had been going to make their fortunes, from humble clerks up to the needy aristocrats. Every penny that could be raked together had gone that way.

And now the country had taken it into its head that the Rand was lost. Wild appeals had been made to the Eastern Cable Company to do something, but they could only reply that their line had broken down somewhere beyond Mauritius, and that, until it could be fished up and spliced. South Africa might as well be in the moon. People were acting as if the Rand had been swallowed up altogether.

The Bank of England was full of great financiers at their wits\' ends for some means of allaying the panic and restoring public confidence. The great houses, Rothschild, and Coutts, and the rest, were represented in the governor\'s parlour.

The presiding genius of the South African Industrial found his way into the meeting. He was sorry to trouble them: he would not have come unless he had been absolutely bound to. But there was a run on his bank, and he wanted ￡2,000,000 immediately. As to security——

One of the grave financiers laughed aloud. It seemed an awful thing to do in that solemn and decorous parlour, but nobody seemed to notice. But there was a general consensus of opinion that the money must be forthcoming. If one sound bank was allowed to topple over, goodness only knew where the catastrophe might end.

"You will have to do with ￡500,000 for the present," the chairman said. "There are sure to be applications. You must be diplomatic; festina lente, ............