High Finance by A. A. Milne

I know very little about the Stock Exchange. I know, of course, that stockbrokers wear very shiny top-hats, which they remove when they sing “God Save the King,” as they invariably do in a crisis. When they go out to lunch, the younger ones leave their top-hats behind them, and take the air with plastered polls; and after lunch is over, young and old alike have a round of dominoes before placing threepence under the coffee-cup and returning to business. If business is slack, they tell each other jokes, which get into the papers with some such introduction as, “A good story going the round of the Stock Exchange.” Probably it was going the round of the nurseries in 72, but the stockbrokers have been so busy making Consols go up and down that they have not been able to listen to it before. Anyway, the careful man always avoids a good story which is going the round of the Stock Exchange.

But apart from these minor activities of the City, the financial world has always been a mystery to me. To this day I do not understand why Consols go up and down. Perhaps they only go down now, but there was a time when they would be 78 1/4 in the morning, 78 1/2 after the Stock Exchange had returned from its coffee, and 78 when it went out to play dominoes again. When they thudded down to 78, this proved that the Government had lost the confidence of the country. But I never heard an explanation of it all which carried any conviction.

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Once I asked a noted financial authority to tell me all about it in words of one syllable. He did his best. He said it was “simply a question of supply and demand.” In that case one would expect umbrellas to go up and down according to the weather–I mean, of course, the price of umbrellas. But apparently umbrellas aren’t so sensitive as stocks, which are the most sensitive things in the world. In the happy days before the war, when the President of Nicaragua sent a stiff note to the President of Uruguay, Consols immediately dropped a quarter of a point. The President of Uruguay answered, “Sorry, my mistake,” and Consols went back again. Evidently, several gentlemen, who would have bought Consols in the ordinary way on that Thursday, decided to buy Haricot Beans instead, as being, I suppose, more useful in the event of a war between Nicaragua and Uruguay. So Consols feeling the neglect, went down. But on the Friday, as soon as Uruguay had apologized, the gentlemen who had just sold the Haricot Beans hurried out to buy Consols, as being quite safe again now that there was no more chance of war. So Consols went cheerfully up again. You see?

But the financial problem is getting very much more difficult than this, The vagaries of Consols, or even of the reputed gold-mine in which I once had shares–(this is a sad story, but, fortunately, when they had dropped to six-and-sixpence, there was a demand for them by a man called Wilkinson, poor fellow, which arrested the fall just long enough for me to get out. They are now three a penny, so I hope Wilkinson found a demand, too)–well, then, even the vagaries of the West African market are a simple matter compared with the vagaries of the Exchange. The mystery of the mark, for instance, is so utterly beyond that, in trying to understand it, I do not even know where to begin. I see no mental foothold anywhere.

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The mark, we are told, is now worth tuppence-ha’penny. Why? I mean, who said so? Who is it who arranges these things? Is it Rockefeller or one of the Geddeses or Samuel Gompers–a superman of some kind? Or is it a Committee of the Stock Exchange and Greenwich Observatory? And how does it decide? Does it put a mark up for auction and see what the demand is like? Or does it decide on moral grounds? Does it say contemptuously, “Oh, I should think about tuppence-ha’penny, and serve ’em dashed well right for losing the war”?

Let us go slowly, and see if we can make any sense of it. Suppose that I produce something worth a shilling, something, that is, which I can sell in this country for a shilling–a blank verse tragedy, say. Let us suppose also that, having received the shilling, I propose to buy a bag of nuts. A German offers me a mark for my tragedy. Now that mark has got to be spent in Germany by somebody; not, of course, necessarily by me. I probably hand it to Thomas Cook or his Son, who gives it to somebody else, who eventually takes it back to Germany again. Obviously, then, what I have to consider, when I am offered a mark instead of the customary shilling for my blank verse, is this: “Can this mark purchase a similar-sized bag of nuts in Germany?” If the answer is “Yes,” then the mark is worth a shilling; if the answer is that it will only buy a bag of about a fifth of the English size, then the mark is worth tuppence-ha’penny.

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Well, is everything in Germany five times as dear as it is in England? No. Not by any means. If a mark is regarded as tuppence-ha’penny, everything is extraordinarily cheap; much cheaper than in England. Also it occurs to me suddenly that if this were the way in which the pundits decided upon the price of the mark and the franc and the peseta and the cowrie-shell, then the price of living in every country would be exactly the same, and we should have nowhere to retire to when the taxes were too high. Which would be absurd. So we must have done the sum wrong. Let us try again.

The price of the mark (this is our new theory) depends on the amount of goods which Germany is exporting. A German offers me a mark for my tragedy, but if no other German has got anything to give me, or Thomas Cook or his Son, in exchange for that mark, then the mark is obviously no good to us. If, then, we say that the mark is worth tuppence- ha’penny, we mean that Germany is importing (or buying) five times as much as she is exporting (or selling). Similarly, when the rouble was about ten a penny, Russia was importing a hundred times as much as she was exporting. But she was not importing anything then because of the blockade. Therefore–no, it’s no good. You see, we can’t do it. We shall have to stand about on the Brighton road until one of those stockbrokers comes by. He will explain it to us.

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But perhaps a better man to consult in these matters of High Finance is the Strong Man whom we see so often upon the stage. Sometimes he builds bridges, and sometimes he makes steel, but the one I like best is the one who controls the markets of the world. He strides to the telephone and says grimly down it: “Sell Chilled Tomatoes…. No…. Yes… Keep on selling,” and in far-away Nan-Kang-Foo a man shoots himself. He had too many Chilled Tomatoes–or too few.

But the Strong Man goes on his way. He is married to a young and beautiful girl, whom he has adored silently for years. He has never told her; partly because he thought it would not be fair to her, partly because he knows it would spoil the play. He is too busy to see much of her, but sometimes they meet at dinner, and then he strokes her head and asks her kindly what she is doing that evening. Probably she is going out with George B. Pusher. What else could you expect? All the time when Staunton is buying Tomatoes and Salmon and Tintacks and Locomotives and Peanuts and lots of things that he doesn’t really want, George B. Pusher is in attendance on the Heroine.

There is a terrible scene when Staunton discovers what is going on. Who is this puppy? George B. Pusher? That settles it. He will ruin Pusher.

He sells Tomatoes. Pusher hasn’t got any. He buys Raspberry Jam. Pusher doesn’t want any. Damn the fellow, he refuses to be ruined. Everybody is shooting himself except Pusher.

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At last. Wire Netting! Why didn’t he think of Wire Netting before? He buys all the Wire Netting that there is. Then he sells it all. George R. Pusher is ruined. He comes round to beg for mercy.

Now, perhaps, if we listen very carefully, we shall understand how it is all done.

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