i8 
LAND cS: WA T E R 
April ij, lyiO 
Germans on the Stock Exchange 
Till- (icrnKuis have invaded almost every branch of 
British finance, industry, and commerce. Their head- 
ijuartcrs over here ivas naturally the City of London. In 
this article, written by a gentleman familiar with the City 
for over five and twenty years, how Germans gained their 
present strong position is explained, and the difficulties 
that will occur in disentangling their influence pointed out. 
WHEN the Germans first invaded the City they 
were either welcomed or ignored — chiefly per- 
haps the Jattcr. But those who can take back 
their minds, say, twenty years, and think of 
what has happened since have plenty of food for rellection. 
Wc have seen London branches of German banks 
established, which offered greater financial facilities for 
trading— be the traders stockbrokers or merchants — 
than our own banks did. We have seen bill-brokers and 
discount houses not only springing up but increasing. 
We have seen the London Stock Exchange overrun by 
(Germans who became members and were surrounded and 
supported by a staff of clerks, half-commission men and 
" runners," all eager to seize any business going and all 
after it at the same time. English lirms of stockbrokers 
soon found that their German competitors made consider- 
able headway and they did not like it. So many firms took 
Germans into partnership in order to secure their con- 
nections and to minimise competition. 
How these many Anglo-German combinations worked 
together is only known to those directly interested. In 
some cases dissolutions of partnership took place, whilst 
in others the German partner became senior partner in an 
old English lirm and paid out his British partners. 
The Kaffir Boom 
The Kaffir " boom " of twenty years ago was respon- 
sible for introducing to the City a host of German un- 
desirables. During this period of exceptional activity 
the Stock Exchange was subjected to a veritable German 
raid. Most of the Kaffir magnates of those days are now 
dead. Many of them were German and they naturally 
bestowed their favours in the way of orders to German 
firms and German " runners." It was during this boom 
that most of the German firms of stockbrokers established 
and developed themselves. They worked on the " large 
turnover and small profit " system — for in those days 
there was no regulation scale of brokerage — and by the 
" cutting " process they managed to estabhsh a large 
clientele amongst British investors and speculators who 
Mere seduced by a smaller commission than they were 
accustomed to pay to their usual broker. But thougli 
the commission was less it did not follow that the goods 
were bought in the cheapest market, and many true tales 
could be told in this connection. 
To give an illustration : When a market m any par- 
ticular share is active, the price of such share usually 
\aries considerably during Stock Exchange hours, i.e., 
the opening price might be 4i and the closing price 5] — 
a rise of 13s. on the day. The chent on scanning the 
prices in his evening paper would congratulate himself 
on the fact that as his order was sent by post over night 
he would obtain his shares at the opening price. But 
when he received the contract from his German brokers 
hi-i hopes were seldom realised, and he found that although 
he did not pay the top price of the day, he nevertheless 
l)aid much more than the opening quotation. If he 
complained there was always a plausible reply that the 
broker had every reason to believe that the early rise 
would not be sustained, therefore lie thoughtfully waited 
for the shares to re-act — which they did not do. The 
client could, of course, challenge the price if he so wished, 
but how o ten has this been done, and what percentage 
of disappointed speculators would take the trouble ? 
It is no stretch of imagination to say that there was a 
great deal of dishonesty in this direction during the 
Kaffir " boom," and the so-called clever people who per- 
petrated this fraud were in some instances so elated with 
their success that they were foolish enough to talk about 
it. Whether the custom continued after the Kaffir 
" boom " is not known, but to the credit of the British 
members of the London Stock Exchange be it said, 
the many tricks indulged in by their foreign rivals never 
appealed to them. Tiie writer well remembers dis- 
cussing this ipiestion with a somewhat cynical critic 
who knew he had been victimised ; but he merely smiled, 
shrugged his shoulders and remarked : " The Germ ins 
are so clever — we cannot beat them." 
How German Banks Help 
With the assistance of German banks in the City, the 
German broker could always offer better " carrying 
over " facilities than the ordinary British broker who 
had not unlimited capital at his back, and whose own 
bank would only lend on " approved " securities. Such 
special facilities not unnaturally attracted business to 
the German broker from various quarters. Knowing 
this, he was shrewd enough to encourage his assistants to 
secure business. They were supplied with an enter- 
taining allowance, and those with pleasant manners 
worked their way into all sections of society, keeping 
their eye on business all the time. 
At one time it looked as though Germany would 
rule the City of London, which was doubtless i)art of the 
German programme, and progress was only stopped when 
hostilities broke out. For some reason or other we 
never seemed able or inclined to put a brake on the 
German wheel. On the contrary we have encouraged 
German enterprise and loudly proclaimed the marvellous 
ability, industry, patience and perseverance of the 
(iermans amongst us, both privately and in public, 
little thinking what a rod we were making for our own 
beuks. Now we see the folly of our ways. The time 
has surely come to devise a plan of campaign for the 
future, but there will be much work to be done in the 
City before we can expect to succeed. Although the 
Germans may leave many businesses behind them, these 
cannot be taken up just where they are left. Much as we 
despise, and have every reason to despise, our foes for 
their methods of warfare, in fairness we must admit 
that they have taught us much in finance, commerce, 
engineering, chemistry, etc. The secret of the whole 
position is that they have developed their resources to 
the full whilst we, with the same resources, energy and 
brain power, have taken things far too easily. From 
Kaiser to hawker the German is a born " pusher " — 
not a " pusher " such as the familiar American "hustler," 
but a slow, calculating, methodical deep-thinking 
individual who has a goal in view and whose ambition 
is to reach that goal, no matter by what means. 
To be Rid of the Hun 
So far as the Stock Exchange is concerned it would seem 
that the best way to be rid of the German influence would 
be, not by attacking individual members of German 
origin, but by going further and attacking with every 
possible weapon at our command the German issuing 
houses who use the London Stock Exchange as a dump- 
ing ground for their wares. If this could be done, and 
there seems no reason why it should not, the result would 
be not only a gradual weeding out of the objectionable 
element on the Stock Exchange, but it might save British 
investors millions of pounds. The German financial 
houses in the city are mostly off-shoots or subsidiaries of 
leading financial institutions in the United State;, Berlin, 
Frankfort, Vienna, etc., and the bonds sold to the British 
jjublic are created abroad by alien financiers. We 
should boycott every security, no matter liowever tempt- 
ing it might look, that emanates from a German financial 
house, whether its headquarters are in New York or 
on the Continent. The process should not be difficult. 
It is only a question of making up our minds. The 
placing power of such houses is at the present time 
happily crippled, and if British investors determined 
not to touch anything of these issues in the future, it is 
safe I0 say that France, Russia and Italy would follow 
their example and Canada and Australia would certainly 
do the same. Therefore, the only markets left would be 
the United States, Austria, Germany and Turkey. This 
boycott would automatically weed out those members 
of the London Stock Exchange, Germans almost to a 
man, who speciahse in such securities. 
