Baltic Exchange Communications: Colm Nolan

February 6th, 2016 by JCB
Posted in Articles, History | No Comments »

2014 saw the 25^th anniversary of the birth of the Internet. It is also the 138^th anniversary of Alexander Graham Bell’s first telephone call in 1876. Such an event made me think it would be interesting to write about the history of communication within the Baltic exchange.

London in the fourteenth and fifteenth centuries was very much the centre of trading competition with Antwerp and various Mediterranean ports. Trading in London in those days was based on integrity and trust. It attracted traders from overseas to come here to compete with locals.  Antwerp conducted trade under one roof, the Antwerp Bourse, whereas London clung to its open street trading. In 1571 Elizabeth I opened the first Royal exchange, but this was destroyed by fire, as was its replacement before the present Royal exchange was built.

In the plans submitted for the first Royal exchange in 1567 is the first recorded mention of shipbrokers. In those days many wine houses and taverns clustered round the exchange from Threadneedle Street down to Tower Street. Brokers and traders ran from one tavern to the other, gathering information or purchasing cargoes. Each tavern attracted trade related to a specific cargo occupation. In 1652 London’s first coffee house opened, attracting more traders  who carried out their business in these premises. Brokers continued  to go from one coffee house to another, picking up orders and information on prices. The 1666  Great Fire of London destroyed the Royal Exchange, resulting in even greater numbers of people working from coffee houses. Although a second exchange was commissioned in 1669 to be built of stone, the coffee habit had taken hold and coffee houses gained further prominence.

The Jamaica coffee house in Saint Michael’s Alley attracted shipbrokers and ships captains to transact shipping business. Edward Lloyd’s coffee house in Tower Street, however, was something special. For a ‘consideration’ the proprietor would arrange protection of merchant seamen from impressment into the Navy. He had a special arrangement with the Post Office for the supply of ships news, which also attracted the business of indemnity and insurance. The Virginia Wine House, the Antwerp Tavern and the Sun Tavern  are close and they continued to attract merchants for Baltic trades. In the early 1700s the Virginia was renamed the Virginia and Baltic coffee house, and became the centre for all trades to the Baltic, receiving letters and parcels for and from those engaged in this trade. During the second half of the eighteenth century the corn exchange opened. Trade was increasing, but traders were unhappy with the government taxes on cargoes because foreign competitors did not have to pay tax on their transactions. Commercial, private and official communications were all in written form and were delivered overseas by sea.

The members’ bar as it is today

Around 1800 the Virginia and Baltic coffee house dropped the name Virginia and became the Baltic Coffee house. It still concentrated on Baltic trades and cooperated closely with the East India trade. In 1813 Russian merchants chartered a British vessel, the Janes of 213 tons deadweight, to carry tallow from Archangel to London. The paper deed on which was written the conditions of hire terms of carriage and date of delivery was divided into two parts, and it is for this reason that they were known in medieval Latin as a charta patita  or in French charte partie. There were two copies, one for the merchant and one of the shipowner. The English version, a corruption of the French, entered the language as charter party. This particular charter party is claimed to be the oldest one in existence, the brokers being Harris and Dixon.

The Baltic coffeehouse held a general meeting In April 1823, when the establishment was placed on a more formal footing. A committee was elected and rules were agreed. Those who were to use the Baltic were subscribers, not members, and their numbers were restricted to 300. Other houses followed a similar route, including Lloyds, which also excluded the general public.1845 saw the formation of the electric telegraph company. Using the railways, lengths of wire were laid to increase in the flow of information. This helped stabilise commodity prices. By 1848 2000 miles of cable had been laid. One person who saw the benefit of the amount of information now available was a 35-year-old German Jew by the name of Isreal Beer Josaphat, who converted to Christianity in 1844, changing his name to Paul Julius Reuter.By 1858 Reuters was supplying the Baltic with daily cotton information from Liverpool, as well as twice-weekly information on the core markets from around the UK, as well as from Paris, Amsterdam, Frankfurt, Madrid, Hamburg, Berlin and Vienna, together with stock prices from all exchanges around Europe. By this time the Baltic had become a recognised institution. It moved into bigger premises and had its own telegraph office within its own communications centre.

The Baltic continued to flourish, even after that first phone call by Alexander Graham Bell in 1876. Modern communications caught on quickly, especially telegraph systems. However, postal communications remained the most popular system. By 1870 Reuters had considerable competition. Mr Dornbush, who had an office at the Baltic, offered a special service to its members, that of a private New York telegram. Other telegram companies, including the Press Association, also offered their services. However, the day of private telegram companies was ending, especially after the formation of the General Post Office, which initially wanted to close numerous private offices. A petition to Parliament kept the Baltic Telegraph open.

Historical models on display

In the late 1800s for various reasons a competitor to the Baltic was established. This was the London shipping exchange. Just before the turn of the century, St Jefferies Square, running from St Mary’s Axe through to Bury Street, was acquired and it was agreed to build a new exchange on it. The Baltic company was wound up, and on 14 January 1900 the new exchange company was called the Baltic mercantile and shipping exchange. The new building was opened on 21 April 1903. This new building had up-to-date communications, using the post office telephone system. Some one-and-a-half thousand calls were made daily. Communications with overseas offices and contacts including communications to ships was made by telegraph/telegram, in those days a very expensive way of communication. Each word with a maximum of six letters was charged individually, therefore communications for firm offers had to be kept to a minimum. In 1925 Norwegian Conrad Boe devised a system whereby a message could be sent in code. Each party had full details of the Boe Code from which a telegram or telegraph could be decoded. The Boe Code led the way for other codes to be used in modern communications, but the need for definitions to be clear that would be used in agreements, such as SHEX (Sundays & holidays excluded), WIBON (whether in berth or not), etc., became all-important. These shortcuts caused confusion and disagreements, hence the need for definitions or rules on laytime.

This system was in place worldwide until the mid-1960s, when telephones were more widely used. By then the code contained some 370,000 words and allowed for 18,000 ships’ names. Then the early 1970s saw great changes to communications.  Though phone calls within the UK posed no problem, there was a great delay in obtaining a new telephone line, and calls to many countries overseas had to be pre-booked. The use of telex was commonplace, albeit a bit slow.

The greatest change of all came with the fax machine, the first one being used by a broking house in 1974. This heralded a change to the direction of broking. To some extent it was the start of social media. Mobile phones followed in the 1980s, followed by the Internet at the beginning of the 1990s. It took a while for the Internet to catch on, telex remaining the main source of communicating. The week before Easter on 10 April 1992 at 21.20 the IRA placed a bomb outside the Baltic and another bomb soon after at Bishopsgate destroyed further offices. The world had changed for the broking community. Members were relocated far afield, but with mobile phones and email this was no problem. Tanker brokers used Reuters to communicate with each other, whereas dry brokers relied on MSN. From about 2003 onwards communication saw changes each year. Blackberries were commonplace until the advent of iPhone and smart phones.

In the last twelve months email has been reduced to third place behind texting or twitter and the use of MSN, or Skype as it is now. What the future holds should prove interesting.

Colm Nolan was elected in 2010 as the Baltic Exchange Main Board Director and has held appointments as Managing Director of various shipping companies.