Saturday, December 22, 2018

Hallelujah: How Handel played the markets

Professor Ellen Harris wrote the definitive paper on Handel's finances, Handel the Investor, definitive that is until a BBC reporter made a startling find:

A chance discovery in a ledger at the Bank of England suggests the composer Handel may have been a smart financial operator.

Professor Harris came back with the new definitive paper:

From MIT Open Access:

Courting Gentility: Handel at the Bank of England 

Author: Harris, Ellen T.
Department: Massachusetts Institute of Technology. Department of Humanities. Music and Theater Arts Section
Publisher: Oxford University Press
Date Issued: 2010-08
Perhaps one of the most surprising events of the 250th anniversary year of Handel’s death, in both its content and method of delivery, occurred on a BBC Radio 3 program devoted to the composer’s investments: John Keyworth, Curator of the Museum of the Bank of England, revealed that Handel had opened his first South Sea Annuities account in 1723, five years earlier than previously known.1 The discovery of this early investment activity offers important new information about Handel’s investment practices and their financial outcomes. Further, renewed examination of the records at the Bank of England has permitted a better understanding of the importance of signed transfer forms as biographical documents. In publishing this material, I follow the plan of my earlier article, “Handel the Investor” (Music & Letters 83 [2004], 521-575) in providing a full diplomatic transcription of the account in Appendix I and a list of the people with whom Handel had transactions in Appendix II.
It had been assumed previously that Handel opened his first account in South Sea Annuities in 1728, immediately after the Royal Academy of Music permanently shut its doors. The new information reveals that Handel opened this account following the season of 1723, and it documents just how early he developed a sense of financial security. Having composed only two complete operas in the first years of the Royal Academy (Radamisto and Floridante, which opened respectively in April 1720 and December 1721), Handel saw the premieres of two further works in the first half of 1723—Ottone in January and Flavio in May. Further, in February, 1723, Handel was given the formal title of “Composer of Musick for His Majesty’s Chappel Royal,” which entailed no regular duties but provided him with an additional £200 per annum, doubling to £400 the pension (or allowance) he had been given by Queen Anne in 1713 and was still receiving.2 And some time before 9 June 1723 (perhaps a year earlier) he had also been appointed “Master of Music” to the royal princesses, at a salary of yet another £200.3 With an annual income of £600 from the royal treasury, which Handel received for life, in addition to whatever he earned at the Royal Academy for his operas and his position as“Master of the Orchester [sic] with a Sallary,” one can see how he may have had income to spare. In fact, this surplus may have prompted his decision to move into the house in Brook Street that was to be his home for the rest of his life.

Handel first appears at 25 Brook Street in the ratebooks for St. George Hanover Square in August 1723.4 In preparation for this move, he would probably have needed to hire servants (he had four live-in servants at the time of his death in 1759) and seen to the acquisition of furnishings.5 He also would have had ongoing professional expenses. His work demanded extensive stationery supplies--consisting of a large amounts of paper, ink, quills and the like, and, as discussed below, he may have been paying (and/or advancing payments due from the Royal Academy) to John Christopher Smith, whom Handel had persuaded a few years earlier to move from Ansbach to London to provide managerial assistance and oversee the copying of his music.6 In addition, he may have needed to purchase new, or perhaps better, musical instruments: when he wrote his will in 1750, he bequeathed both a large harpsichord and a small organ to Smith.7

From a financial standpoint, it is surprising that Handel began investing at the same time he was planning the move into his own house. Further, spring 1723 might not have seemed the most auspicious time to invest in South Sea Annuities. Wild speculation at the end of the 1710s had driven South Sea stock to ten times (or 1000% of) its par value before it collapsed in 1720. Many investors lost everything. Handel himself had owned South Sea stock in 1716, but as his name appears in none of the subscription lists of 1720, he must have sold out sometime between 1717 and 1719.8 After the crash, the South Sea Company and the Bank of England, under intense pressure from the government, worked together to try to recompense stockholders for some of their losses.

As a “last step” in its reconstruction, the South Sea Company “at midsummer 1723” (which was traditionally kept on 24 June) had its capital divided in half, one part transformed into “South Sea Annuities,” the other remaining as “trading capital.”9

The so-called “annuities” were issues of government debt (bonds in U.S. parlance, but referred to in England as “fixed interest stock”) offered at 5% interest until 1727, and thereafter at 4%.10 To previous stockholders these annuities represented a significant loss of income, but to new investors they were a secure financial instrument free from speculative risk. Handel appears to have bought in as soon as possible. His capital purchase of £150 of annuities on 25 June 1723 not only followed immediately on the division of the South Sea capital but occurred a full week before the price of South Sea Annuities was listed in The Course of the Exchange and other papers of the time.

As I described in my previous article, the Bank’s stock ledgers show only the par (or nominal) value of the stock, not its market value (Harris 2004: 529-530). Thus, to determine the amount Handel paid or received for his stock transactions, it is necessary to turn to the daily stock listings. In the transcription of Handel’s account given in Appendix I, the price of the stock on the day of each transaction, taken from The Course of the Exchange, is given in the far right-hand column.11 This provides the opening and closing stock prices for the day; for example, on 17 March 1724, the cost of £100 of South Sea Annuities fluctuated (very slightly) between £103 3/8 and £103 1/2.12 I have also given the day of the week in the second column from the left, which illustrates the policy of allowing transfers in South Sea Annuities only on Tuesdays, Thursdays and Saturdays before one o’clock.13

The newly-discovered account activity from 1723 to 1727 completes the picture of Handel’s continual investment activity from the time he arrived in England (see Figure 1).  After an early (and apparently successful) venture with South Sea stock between 1715 and 1717/19, he invested in South Sea Annuities as soon as they were publicly available, in 1723.  Financial difficulties kept him out of the market between 1732 and 1742 (although he kept a drawing account at the Bank from 1732 to 1739).  But from 1743 to his death in 1759, his portfolio only increases in size.14  It seems that Handel rarely, if ever, used his stock accounts to make or receive payments for a specific service or commodity.  Rather, throughout his life, transfers of stock in and out of his accounts typically were cash transactions, a practice that, as with his later accounts, can be illustrated by the identification of most persons named in the accounts as brokers or professional dealers rather than merchants or colleagues (see Appendix II).15

 Of the fifteen names that appear in Handel’s account from 1723 to 1727, three (Carington, Hollingworth, and Whitmore) appear in his later accounts and have already been identified as dealers (Harris 2004).  Three others (Crull, Nodes, and Westley) are named as brokers in the list compiled by the Committee of Secrecy (established following the bursting of the South Sea Bubble) and published in the Journal of the House of Commons in 1721.16  Four others can be assumed to be brokers from the nature and volume of their account activity in the Bank ledgers: Daubuz, who did not himself formally register as a broker, but a likely descendent with the same surname working from the same address did register in 178817; Hayne, about whom I have discovered little; Holloway, whose profession as a “Notary Publick” might have led to brokering as a sideline; and Tysoe, a goldsmith, whose profession was closely tied to both banking and brokering.18 ... 
...MUCH MORE (24page PDF) MIT DSpace Download page

All of which led to Do-it-yourself 'Messiah's' being performed around the world. 
Which can often result in some horrible sounds.

Not always though.
Here's a do-it-yourself version of the big Chorus done at a small college in Japan.
Sensei Jiro Tomonaga, music director, conducting first the choir and then the audience: