History - 1846-1873
The repealing of the Corn Laws in 1846 resulted in the wholesale importation of foreign wheat. The numbers of shipowners and brokers rose to meet this need and the Baltic suddenly required more space.
A company - the Baltic Company Ltd - was formed to purchase a new and larger premises and in 1857 South Sea House on Threadneedle Street was acquired. A full time secretary, William Oxley, was appointed to the company and by 1859 membership of the Baltic grew to 737. 1859 was also the year in which a telegraph office was established at South Sea House enabling faster and more frequent communication around the world. Ten years later the Suez Canal was opened, heralding a new era for commerce and shipping.
However, the increasing size of trade and the required growth in ship tonnage led to a very contemporary problem - the raising of capital to finance new shipbuilding. At that time shipbrokers owned and managed steamers raising the cash for them from friends and clients. However, this meant unlimited liability. The advent of the concept of limited liability meant that large numbers of people began to invest in shipping on speculative basis.
The first Baltic posting
It was during this period that the first incident of blackballing was recorded, a process which still exists today under the Baltic's "postings" service which ensures that the high ethics encapsulated in the Baltic motto "Our Word Our Bond" are maintained.
WR Arbuthnot & Co complained that Baltic member William Kern had left a parcel of linseed oil in their hands for acceptance by 11.20 am at the commercial sales room. The clerk was there on time, waited for 5 minutes, and then went over to Kern's office to see if he could locate him before returning to the Baltic. He met Kern coming in by the back entrance, but Kern informed him that he could no longer have the linseed oil as he was too late. Arbuthnot argued that as the fault was not theirs, they should not be penalised and suggested arbitration as a means of settling the dispute.
Kern at first refused, but relented after Arbuthnot threatened to refer the case to the Baltic. After the arbitration went against him he refused to abide by it. Arbuthnot complained by highlighting a fundamental aspect of business:
"It is important that a broker's word should be considered binding and trustworthy….he should not be allowed to escape with impunity for such gross breach of faith."
And he was not. Kern accepted the judgement. An important article of faith had been established.
