Stock Exchange forgery 1872–73

A forged 1 shilling stamp on part of a telegraph form.

The Stock Exchange forgery was a fraud perpetrated at the London Stock Exchange during the years 1872 to 1873. It involved forged postage stamps that were applied to telegraph forms and it was only detected over 25 years later.

Description of the fraud

In 1870 the telegraph 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, if they followed usual procedure, 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, with other stamps if needed to make up the correct fee, which depended on the number of words. The clerk then would cancel the stamp with a dated postmark, often heavily inked, to indicate that the appropriate payment had been made. However, cozy arrangements between companies that used large quantities of the one shilling stamps meant that the telegraph forms would be stamped and canceled the following day in quantity so that the purchasers never saw them; the companies involved would pay an accumulated sum.

A clerk or clerks supplied forged stamps for the forms in order to steal the one shilling fees without depleting the stock of genuine stamps, which were subject to audit. The fraud was successful because the forged stamps, though not precise in every detail, were yet convincing enough; they were not retained by the customers, who handled them only briefly or perhaps not at all, the clerk sometimes obligingly pasting the stamp later on the telegraph form. After the telegrams had been sent the forms were filed before later being put in a bag for disposal.

Details of the fraud are impossible to determine with certainty. From investigations carried out by Dr. Ian Ray, it seems likely that a head clerk named George E. Smith colluded with his subordinates T. H. Wright and Benjamin Hind to affix the bogus adhesives to forms. Almost four decades after the known dates when most of stamps were thus sold, Wright and Hind had died, but Smith was still alive, having retired from the post office in 1870's on the grounds of ill health. In 1910, A. J. Waldegrave, formerly Deputy Comptroller and Accountant General to the Post Office, interviewed Smith. Details of that interview have never been made public.

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 Nissen noticed the following differences from the genuine stamps:^[1][2]

• 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. A second batch of forgeries, for plate 6, improved the sharpness of the corners and other details, but whoever was behind the fraud either failed to work out the combinations for the corner letters or did not think it necessary to do so.
• The genuine stamps were on watermarked paper showing a rose spray whilst the forgeries were not watermarked.
• The forgeries were printed by lithography whilst the originals were typographed 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.^[3]

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 in their lifetimes. The forged stamps, especially those from plate 6, are now worth more than the originals to collectors.

See also

• Philatelic fakes and forgeries

References

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