London - Edward Rutherfurd [496]
The counting-house was a merry environment. The six clerks, all under thirty, went out drinking together most evenings. The City was also a great place for practical jokes. One favourite was to go round to the Royal Exchange and offer obviously bogus stocks. Any unwary taker was then hooted with derision by all the onlookers. One offer – Chinese Turnpikes – was so successful it was tried on newcomers regularly. A more serious case that year had been an enterprising rogue’s offer of bonds in a South American country he had invented, called Proesia. Having taken a considerable amount of money, he then vanished. Two unlucky investors had actually been ruined, but Meredith’s traders were young and brutal: they howled with mirth.
But though he was enjoying himself day to day, Eugene never lost sight of his objective. What was he worth? This was the expression one heard every day in the City. How else, in a financial community, could a man be measured? So far, apart from the modest amount he would one day inherit from his parents, the answer was: not much. True, it was early days yet, but there were plenty of stories of ambitious young men working their way into partnership and riches in less than ten years. “Look sharp about you, Eugene,” the other clerks told him. “That’s the name of the game.”
One way to make a little on the side was to dabble in stocks, but with very limited funds he was not sure how to get started. A young stockbroker friend enlightened him. “Futures, Eugene,” he assured him. “I’ll show you how they work.”
The futures market was a lively business. Instead of buying a stock or bond and holding it, a man could agree to buy it at a future date, in effect taking a bet on what its price would be then. But then, if he could find another buyer, he could sell this option to purchase at a higher price, and pocket any profit having put practically no money down at all. This trading of options, which a later age would call derivatives, had first begun back in 1720 at the time of the South Sea Bubble. Although it had since then been made technically illegal, it was carried on every day.
Eugene soon found it was a good way to train himself in the intricacies of taking risks. He kept a little book detailing all his trades, and after a year he was starting not only to show a modest profit but to develop strategies for offsetting one risk against another. “You’re getting the idea,” his friend told him. “It’s just like hedging your bets at the races!” Yet it was this kind of training that gave rise to Eugene’s first feeling of disquiet.
Without particularly meaning to, Eugene realized that he was forming a picture of the Meredith Bank’s activities, too. He began to make a catalogue of the principal people they dealt with and started to assess their businesses. And slowly he found himself coming to a rather uncomfortable conclusion. “I can’t be sure,” he had told Fleming, “but if some of these firms were to fail, I think Meredith could go under, too.”
“But you must assume,” Fleming comforted him, “that the Earl of St James is behind him.” As everyone at the bank knew, it was Meredith’s grandfather who had brought up the old earl and as a debt of gratitude St James had staked Meredith when he started his bank. The old man still liked to drop by from time to time: the business seemed to amuse him. “So I dare say,” concluded Fleming, “he’ll see you through.”
Besides the Bank and the Royal Exchange, there was one other growing place of business in the City. Housed only recently in premises close by the Bank in a narrow enclave called Capel Court, this extended trading room was known as the Stock Exchange and was mainly used by the men dealing in the innumerable issues of government debt. Its inmates had decided they were going to live like perpetual schoolboys. They even had a big stall that sold them cream buns, doughnuts