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• Preface
• A Memoir of Ricardo With Addenda
• Note On the Authorship of the Memoir
• Addenda to the Memoir of Ricardo
• I.: Introductory
• II.: The Family of Abraham Ricardo
• III.: The Delvalle Family
• IV.: Ricardo’s Childhood and Education
• V.: Independence and Marriage
• VI.: The Wilkinsons
• A Family Who’s Who
• I.: David Ricardo’s Brothers and Sisters
• II.: Ricardo’s Children
• Ricardo In Business
• Ricardo In Business
• I.: As a Jobber On the Stock Exchange
• II.: As Loan Contractor
• III.: A Canard
• IV.: Investments and Estates
• V.: Ricardo’s Will
• A Selection of Family and Private Letters
• I: Early Letters to J. H. Wilkinson
• 1.: Ricardo to Wilkinson1
• 2.: Ricardo to Wilkinson1
• 3: Ricardo to Wilkinson1
• 4: Ricardo to Wilkinson2
• 5: Ricardo to Wilkinson1
• 6: Ricardo to Wilkinson1
• Other Correspondence With J.h. Wilkinson
• II: ‘ricardo’s Letter to the Old Doctor’
• III: The Fraud of 5 May 1803
• IV: The Loan of 1807
• V: Jacob Ricardo
• VI: Two Sisters Decline a Present
• VII: A Visit to Cambridge
• VIII: A Letter to a Wine Merchant
• IX: The Cumberland Affair
• 1.: Sydney Cumberland to Ricardo3
• 2.: Sydney Cumberland to Ricardo1
• 3.: George Cumberland to Ricardo1
• 4.: Ricardo to George Cumberland 1
• 5.: George Cumberland to Ricardo1
• 6.: Ricardo to George Cumberland
• X: A Servant and Two Masters
• XI: Fanny’s Marriage
• Edward Austin Sen. to Ricardo 3
• Ricardo to Edward Austin Sen. 1
• XII: Ricardo to Miss Mary Ann
• From Maria Edgeworth’s Letters to Her Family
• 1.: To Her Stepmother Mrs Edgeworth From Gatcomb Park 9 Nov. 1821
• 2.: To the Same From Gatcomb Park 10 Nov. 1821
• 3.: To Her Sister Lucy Edgeworth From Gatcomb Park 12 Nov. 1821
• 4.: To Her Aunt Mrs Ruxton From London 9 March 1822
• Journal of a Tour On the Continent 1822
• Introductory Note to the Journal of a Tour On the Continent
• Appendices
• (a.) Bibliography of Ricardo’s Works
• (b.) a Survey of Ricardo Manuscripts
• (c.) Commonplace Books
• (d) Ricardo’s Library
• Supplement to Volume I New Evidence On the Subdivision of Chapter Viii of the ‘principles’ 1817
• Supplement to Volume Iv Notes On ‘a Reply to Mr. Say’s Letters to Mr. Malthus’
• Corrections to the First Printing of the Previous Volumes*

I.

As a Jobber on the Stock Exchange

Of the beginnings of Ricardo’s life in business we know only what the Memoir tells us, namely that ‘at the age of fourteen his father began to employ him in the Stock Exchange, where he placed great confidence in him, and gave him such power as is rarely granted to persons considerably older than himself.’1 It would seem that by the beginning of 1793 (being just under twenty-one) he was doing some Stock Exchange business of his own, since his name appears at this time in the Stock Ledgers2 as a holder of government Funds. The earliest of the accounts opened in his name is that of the Three per cent Consols, where he is entered on 29 January 1793 as purchasing £1150 of stock in two lots, and selling on the same day £1056 to A. Ricardo, his father.3

When he married in December 1793 against the will of his parents, we know that he was thrown ‘upon his own resources, as he quitted his father at the same time.’4 He was not, however, left entirely without support. All the biographers agree in saying that influential friends in the City came to his assistance. Thus Mallet in his Diary writes: ‘His friends who felt warmly for him then, as they have ever done since, gave him their countenance and support, and set him up as a stock-broker, the usual resource of people who have no capital. Mr. Ricardo’s whole property when he married did not exceed £800’.5 But neither Mallet nor any of the later biographers has revealed the identity of these friends. Fortunately, however, the obituary of Ricardo in the Sunday Times,1 which has so curiously been overlooked, makes it possible to identify them: ‘Renounced and disinherited, Ricardo was not without friends. An eminent banking-house in the city (Lubbocks and Forster, we believe) knowing his character, and hearing how he had been used, sent for him, told him that as they had every confidence in him, he need be at no loss for money; for if he continued prudent, “they would honour any check which he pleased to draw upon them”. This support and his own talents were quite enough for Ricardo, he immediately began business and in the course of a very few years was a richer man than his father.’ Some confirmation of this is found in the fact that Lubbock and Forster were Ricardo’s bankers throughout his life.2

When Ricardo started in business with his father, the stock-brokers and stock-jobbers met in the Stock Exchange Coffee House at the corner of Threadneedle Street and Sweeting’s Alley, having moved there from ’Change Alley in 1773. This was a loose kind of organization, anyone being admitted on payment of 6d. per day.

In 1801 it was decided to reorganize the Stock Exchange and to convert it into a ‘subscription room’; admission to be by ballot and the subscription for membership 10 guineas per year.1 There were some five hundred members and, unlike the old Stock Exchange Coffee House, the general public were not admitted. The new building in Capel Court was opened in the following year, and Ricardo, who had been a member of the Committee for General Purposes in 1801, was elected to the new committee at a general meeting held on 8 February 1802; but he resigned shortly after2 and was not a member of the Committee in any subsequent year. He took however an active part in the clearing up of two spectacular frauds on the Stock Exchange, both of them based on the dissemination of false news about the war, that of 5 May 1803 and the Cochrane hoax of 1814; Ricardo being on the latter occasion a member of the Committee for the Protection of Property against Fraud.3

Already at the time when the Stock Exchange was in Sweeting’s Alley stockbrokers were divided into two distinct groups, although the distinction was not nearly as sharp as it has become since: the brokers who acted on behalf of clients, and jobbers who dealt on their own account with brokers or between themselves, and who made a market by being always willing to quote prices at which they would deal. Bargains were made both for cash and for time, the latter being for the settling days, of which there were about eight in the year.4 Transactions for time were by far the most important; one writer says that they were ten times as large in volume as those for cash.5 At the time, business was almost exclusively in government Funds, apart from the stock of the great chartered companies such as the Bank of England and the East India Company.

Ricardo was himself a jobber; and as one would expect there is not much documentary material available bearing on his business. All that is preserved among his papers is a few files of correspondence, referring to the distribution of bankrupts’ assets among the creditors. Some picture of Ricardo’s business turnover, however, may be obtained from the Stock Ledgers which, for several of the government Funds, were kept by the Bank of England and are preserved at the Bank’s Record Office. Among these, separate volumes were kept for the jobbers, whose accounts were much more active than those of members of the public. This arrangement of the ledgers has made it possible to abstract Ricardo’s transactions without excessive labour. The stock that has been selected is the Three per cent Consols, which was by far the most important of the Funds (representing more than half the National Debt in the year 1800).1 It was in this stock that Ricardo’s earliest transaction was recorded on 29 January 1793 (as we have seen above, p. 67). From that date until 21 January 1794 his purchases totalled £16,068 and his sales £15,543, leaving him with a balance of stock of £525. Unfortunately there is a gap in our information, since the volume containing the transactions from 1794 to the middle of 1798 is missing at the Bank of England Record Office.2

Ricardo’s transactions from 5 July 1798 up to the closing of his account in the Jobbers’ Stock Ledgers in 1818 are set out on an annual basis in the Table on p. 72 below. His total purchases for each year are given, and also the balance of stock held by him at the end of the year (a date to which no particular significance attaches) to show the difference between purchases and sales.1

The stock acquired by Ricardo has been distinguished according as it was obtained by transfer or by subscription. The former represents purchase of stock from an existing holder; the latter new stock obtained through the process of paying up in full the scrip of the latest Loan, thus transforming it into registered stock.2 During the period of several months while the instalments on the Loan were being paid, the scrip (or, more usually, the ‘Omnium’ as described below, p. 77) circulated virtually as a bearer security until, when fully paid, new stock was issued and inscribed. The stocks issued for the Loan were normally of types already in circulation, and whenever the price of the partly paid scrip fell below the corresponding level of the fully-paid stock, it was profitable for the jobber to buy up the former, pay up the outstanding instalments (for which appropriate discount was allowed) and sell the fully-paid stock. This operation was often possible since, while stock was held by permanent investors, scrip was largely in the hands of speculators and subject to greater fluctuations.

These figures would not include all Ricardo’s dealings in the Consols, for many speculative transactions would be closed before the end of the account thus giving rise to no transfer of stock.3 In any case throughout the period of

Ricardo’s activity the security most widely dealt in and the usual counter for speculation was the Omnium of the latest government Loan, which circulated from hand to hand without the necessity of any entry in the Stock Ledgers. Accordingly no record of such dealings has remained.

Of Ricardo’s day-to-day activity on the Stock Exchange, Mallet notes in his Diary: ‘He is said to have possessed an extraordinary quickness in perceiving in the turns of the market any accidental difference which might arise between the relative price of different stocks, and to have availed himself of this advantage, so as to realise as much as £200 or £300 in one day, by selling out of one, and buying into another stock, or vice versa. He is also said never to have carried his stock transactions to any speculative extent; but to have always, or generally, sold out on the turn of the market, so as to realise a small percentage upon a large sum.’1 There is a tradition that Ricardo’s successful dealings rested upon a scrupulous attention to what he called his own ‘golden rules’, namely: ‘Cut short your losses’ and ‘Let your profits run on’.2 In this connection Bowring quotes Ricardo as saying that ‘he had made his money by observing that people in general exaggerated the importance of events. If, therefore, dealing as he dealt in the stocks, there was reason for a small advance, he bought, because he was certain the unreasonable advance would enable him to realise; so when stocks were falling, he sold in the conviction that alarm and panic would produce a decline not warranted by circumstances.’1

In any case, once having started in business on his own, he was to prosper with remarkable quickness. Two years after his marriage, in the summer of 1795, we find him staying at Brighton with his family in an expensive style.2 In a letter of 1798 he speaks of how ‘bountiful’ Fortune has been to him;3 and in letters of 1802 he refers to ‘the ample means’ he possesses,4 and describes himself as ‘one of Fortune’s chief favorites’.5

The earliest mention of Ricardo’s business address as a stockbroker is in the directory for 1798,6 when it is given as 3 Capel-court, Bartholomew-lane. He appears next in the directory for 18087 as being at 16 Throgmorton-street. It is here that for a number of years he had his counting-house which is mentioned from time to time in letters to his friends, and where he went every morning after breakfast, and which he would leave at half-past-three to return home for dinner.8 In 1815, when he was preparing to retire from business, the directory9 shows him as having moved to 1 New-court, Throgmorton-street, and from 1817 to 1819 he is entered as of 4 Shorter’s court, Throgmorton-street: this last can have been little more than an address, since in those years he had ceased to be active on the Stock Exchange.

In 1802 (when, with the foundation of the new Stock Exchange, the records begin) Ricardo employed, as his authorized clerks, his brother Francis Ricardo and also G. Field; from 1803 to 1806 his brother Francis alone, from 1807 to 1810 another of his brothers, Ralph, and from 1811 to 1815 his own nephew William Arthur Wilkinson.10

[1 ]Above, p. 4.

[2 ]See below, p. 70.

[3 ]Altogether £11,493 of stock passed through his account from 29 Jan. to 15 Oct. 1793, his total sales balancing the purchases. No further transactions were recorded during the remainder of the year.

[4 ]Above, p. 5.

[5 ]Diary entry on Ricardo’s death in Political Economy Club, Centenary Volume, 1921, p. 205.

[1 ]14 September 1823.

[2 ]See, for the year 1798, above, p. 55, n. i. See also Ricardo’s annual applications for membership of the Stock Exchange, which from 1811 give the bankers’ name; in that year he states, ‘I keep cash at Messrs Forster Lubbock & Co.’. This is repeated in subsequent years, the banking house from 1813 being described as ‘Sir John Lubbock & Co.’ (The MS applications are in the possession of the Stock Exchange.) The bank was in 1860 amalgamated with Robarts, Curtis and Co., to become Robarts, Lubbock & Co., and this in turn was absorbed by Coutts & Co. in 1914. In 1931 enquiries were made by the editor at the ‘Robarts, Lubbock & Co. Office’ of Messrs Coutts & Co. at 15 Lombard Street; but no records of the original Lubbock’s bank had been preserved.

[1 ]‘Minutes of the Committee of the Old Stock Exchange’. MS in the possession of the Stock Exchange.

[2 ]‘Minutes’, entries of 4 March 1801, 8 Feb. and 3 March 1802. Cp. below, p. 123, n. 2.

[3 ]See below, p. 123–4 and above, VI, 106.

[4 ]R. Hamilton, An Inquiry concerning...the National Debt, Edinburgh, 3rd ed., 1818, p. 316.

[5 ]The Art of Stock Jobbing Explained, by A Practical Jobber, 7th ed., London, Clarke, n.d. [1819], p. 88.

[1 ]See J. J. Grellier, History of the National Debt, 1810, p. 420.

[2 ]To fill this gap similar information for that period has been collected for another Stock and is given in a footnote to the Table.

[1 ]The totals have been obtained by roughly adding up, in round figures, his purchases of each year. The Stock Ledgers do not state these annual totals; nor do they give the balance as it stands after each transaction. They only show the total at the end of the page, when the balance is struck and carried over to another page.

[2 ]No Three per cent Consols were issued with the Loans of 1808 and 1809, and only small amounts with those of 1810 and 1811, which accounts for the falling off in the ‘Subscription’ column in those years. There were no Loans from 1816 to 1818.

[3 ]Not all unnecessary transfers could be avoided, however, since at that time there was no Stock Exchange Clearing. This was not instituted until the 1870’s. (See London Stock Exchange Commission, Minutes of Evidence, 1878, Q. 7591.)

[1 ]Diary entry of 1823, in Political Economy Club, Centenary Volume, 1921, p. 205–6.

[2 ]The wording above is quoted from J. Grant’s The Great Metropolis, London, 1837, Second Series, vol. ii, p. 81. Later writers have often repeated them in varying forms, e.g. C. Duguid, The Story of the Stock Exchange, London, 1901, p. 118. Grant also mentions a third rule, ‘Never refuse an option when you can get it’. This has not been taken up by later writers; it is obviously incomplete, and indeed does not make sense in the absence of any reference to the price of the option.

[1 ]Autobiographical Recollections of Sir John Bowring, London, 1877, p. 58.

[2 ]See below, p. 110.

[3 ]ib. p. 113.

[4 ]ib. p. 114.

[5 ]ib. p. 113.

[6 ]Kent’s Directory.

[7 ]Post Office Directory.

[8 ]See above, VI, 19 and 21.

[9 ]Post Office Directory.

[10 ]From the annual applications for membership in the possession of the Stock Exchange.