Andrew Cochrane was born in Edinburgh in 1767. After a spell serving in the British Army, he became the MP for Stirling Boroughs in 1791, marrying the heiress Georgina Hope-Johnstone in 1793 (he added Johnstone to his name at that time). By 1797 he was promoted to colonel and was then made governor of Dominica, quickly acquiring a reputation for corruption and mismanagement. Although a mutiny prompted him to be recalled to face a court martial, he was acquitted and made his way into Parliament for a “rotten borough”. Although subsequently disqualified, he returned to Parliament for a third time in 1812.
What was the scam?
What happened next?
The fraud was quickly discovered and the subsequent stock exchange investigation uncovered Cochrane-Johnstone’s transactions. De Berenger was arrested after trying to flee the country. After a trial, Cochrane-Johnstone, Butt and Cochrane-Jonhstone’s nephew Thomas Cochrane (who is now believed to have been unaware of the scheme) were convicted, and given short prison sentences. Both Cochrane-Johnstone and Cochrane were stripped of their titles and expelled from Parliament, though the latter decision caused public outrage as Cochrane was a naval hero.
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Lessons for investors
The scandal, which is now known as the Great Stock Exchange Fraud of 1814, is another illustration of why you should be very sceptical when you hear rumours. The fate of those involved also demonstrates why it is a bad idea to get involved in speculation, especially using borrowed money, without understanding exactly what you’re doing. After all, had Cochrane-Johnstone and his associates avoided the temptation to trade bonds on credit, they would never have fallen into a position where such a desperate (and illegal) scheme looked like the only plausible solution to their financial problems.
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