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NATIONAL LIFE STORIES CITY LIVES John Barkshire Interviewed by Kathleen Burke C409/057

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BRITISH LIBRARY NATIONAL LIFE STORIES INTERVIEW SUMMARY SHEET ____________________________________________________________________ Ref. No.: C409/054 Playback Nos: F2290-F2295 incl. _____________________________________________________________________ Collection Title: City Lives _____________________________________________________________________ Interviewee's surname: Barkshire Title: Interviewee's forenames: John Date of Birth: 31st August 1935 Sex: M _____________________________________________________________________ Date(s) of recording: 29.11.1990; 17.12.1990; 08.01.1991; 09.01.1991; 28.02.1991

Location of interview: UCL & Imperial College

Name of interviewer: Kathleen Burk Type of recorder: Marantz Total no. of tapes: 6 x C60 Speed: - Type of tape: Cassette Noise Reduction: DBX Mono or stereo: Stereo Original or copy: Original _____________________________________________________________________ Additional material: None _____________________________________________________________________ Copyright/clearance: _____________________________________________________________________

John Barkshire Page 1

C409/057 Tape 1 Side A (part 1)

Tape 1 [F2290] Side A (part 1)

This is an interview with Mr. John Barkshire on the 29th of November 1990. Tape 1 side A.

[CHECKING SOUND LEVEL]

OK. First of all your family background Mr. Barkshire. Your grandparents, where they

came from, occupations, what it was like, any influences. Just what you'd like to tell me

about your grandfather and grandmother.

Well my maternal grandparents I really hardly knew. I mean they were certainly alive until I

suppose I was about 20, but I never really came into contact with them very much.

Their name?

Blunt. And they came from Bluntisham in Huntingdonshire. And so they came from that

sort of region. But my mother wasn't very close to her parents as a child, and nor was I. My

father's parents certainly had some influence on me. My grandfather was in the Army; he

was in the Royal Engineers and had been a career soldier. And they then retired to Sussex,

and there was really a link there in that my family have lived in Sussex I think without break

for 500 years, and have been living in roughly the same part of Sussex for most of that length

of time. So my grandfather effectively went home when he retired from the Army, and

settled near Horsham. And so I used to go and spend quite a lot of my holidays with him, as

my parents lived in London, and so I got to know them quite well. And I think...I don't know

what influence he had on me, but certainly he is a figure I remember clearly and got to know

quite well, and I think probably under everything he did have some influence. Not least in

the fact that I spent quite a lot of my life in the Army.

Yes, that was going to be a future question once you've said that. And your paternal

grandfather?



That was my paternal grandfather.

I thought you said it was your maternal.

No.

Oh, maternal you didn't know...

Maternal I didn't really know at all.

Fine, all right. Why did your father, you think, then not go into the Army and go into

banking instead?

I suppose it was because...he was born in 1909, so I suppose when he was 18 therefore it was

1927.

And nothing happening.

And there was nothing happening; the Army was shrinking. And he was a military sort of

person, but in fact not only did he not go in the Army but he didn't serve in the last war,

because he was in the Bank of England at the time and therefore was in a protected

occupation, and he was one of the young people whom they didn't let go to the war, which I

think probably he found rather frustrating.

Yes. Why do you think he went into the Bank? Someone he knew, or...?

No, when he left school, he was educated at King's School Bruton in Somerset, he...I don't

think that he would think I was being unfair if I was to describe him as a quite charming

person who is not academically highly qualifiedd, and therefore he wasn't a high-flyer, and



therefore he looked at the banking industry. And I think his first choice would probably have

been to have joined one of the overseas banks, the Hongkong & Shanghai Bank, the

Chartered Bank of India Australia & China as it then was. But in the end I think he went for

interviews with all of them and the Bank of England sounded the most attractive when he'd

been round to them. And so he stayed with the Bank of England for a good part of his career.

Yes. I would have thought that being private secretary to the Governor was a reasonable

position.

Yes, it was. That of course is a job for a diplomat, somebody who is well-organised and a

good administrator, and somebody who is extraordinarily good and thorough at details, and

that my father was in abundance, all of those things. And I would think he was an absolutely

ideal private secretary to the Governor. But he was always on the administrative side of the

Bank of England, and although he was an Assistant Chief Cashier after he'd been the

Governor's secretary he was dealing with the administration of the Chief Cashier's

department, so he was always dealing with people, which he was absolutely superb at.

And he went to what, the Clearing Bankers' Association?

He then went to the Committee of London Clearing Bankers as their secretary, and at that

time the Bank of England generally supplied the secretary to the CLCB, and it was the norm

for the person to come from the bank rather than one of the other commercial banks. I think

they wanted an independent person to be their secretary. And again, there couldn't have been

a rounder peg in a rounder hole; he fitted well, and from all that I've heard he was as good a

secretary as they could possibly have had. And he did that from 1952 I would guess until he

retired, which must have been in about 1969.

Ah. Did he not go on to something else then?



He then worked for Stirling & Co. for a very short space of time, the stockbrokers, as their

banking advisor. And my guess is that he did that for about another three years.

What is being General Commissioner of the Income Tax for the City of London? I notice

both he and you...?

It's really like being a tax justice of the peace, in that you are the first court in people dealing

with their income tax. So that if you or I had a dispute on our income tax return we would go

in the first instance to the General Commissioners, and you would come in as the taxpayer

and present your case to the Commissioners, and then the tax inspector would come in and

present his, and then the General Commissioners decide.

Is this open to people who work in the City or live in the City, or what?

To become a General Commissioner?

For the City of London, yes.

Yes, I think all the General Commissioners do work or have worked in the City, or are very

closely associated with it. You're generally a Commissioner for your area, and so I suppose I

could have been a General Commissioner in Sussex just as easily. But I happened to be

asked to be one by the City.

So it's not an honorary position, it is an actual working...

It's not a paid position, so it is an honorary position in that definition of the term. But it is...I

mean I suppose I sit four times a year, that's all. We have three sessions, like the law

sessions, and we sit at the same time, and we sit once a week and I suppose there are 30 or 40

of us, and so by rotation one sits about three or four times a year. And you will probably sit



all day and hear, oh, a hundred cases, of which 95 there is no representation one way or the

other because they've been settled between the tax inspector and the taxpayer, and five which

are then contended, and they may only take five minutes, or you may get one which takes an

hour or two, with witnesses. But I mean you've probably found that, I certainly have, that

when one's filling in one's tax...one is a bit lazy about filling in one's tax form, and it's when

you get the red letter that comes from the tax inspector which says that, 'We're hearing in

front of the General Commissioners' you hastily fill it in and send it back off. Well that's

what we're there for and that's why 95 per cent of our cases have in fact been settled before

they come to us.

And it's mostly companies or individuals?

It's a mixture. It's...in fact it's fascinating because of the number of people that you know that

you're dealing with, which in itself creates a problem because of course you can't deal with

anybody you know, or at any rate you have to declare your interest and say look, I was at

school with this person, or I'm in the same firm as this person, or this company is a client of

mine, and provided both parties are happy then you can hear it. But yes, being in the City, it's

banks and individuals, and it's a client base that you know rather too well.

How much influence do you think your father had on your end result of going into the City?

No direct influence at all, in that he never tried to persuade me to go into the City, and my

original intention was to be a lawyer. Well no, that's not quite true, my original intention was

to be a sailor, and I was intending to go to Dartmouth but I was careless enough to put a bit of

barbed wire through my eye which means that I can only really see out of one eye, and

therefore I couldn't go to Dartmouth. And so then I wanted to be a lawyer, and when it came

to the point, in those days you had to have Latin, and I hadn't taken Latin at school, and so I

couldn't be a lawyer without going back to school. And at that stage I said help, and went for

half a dozen interviews in the City. And one of them was kind enough to offer me a job.



Yes, we'll come back to why the discount houses. You didn't think of going into the Bank of

England then?

No, not really, and I suppose that's where my father did have an influence on me, in that I

never really thought of going into one of the major banks, including the Bank of England. I

always thought more of going into one of the market-places, and it may well be - and I don't

remember him doing so, but he may well have influenced me in that direction, saying there's

a more interesting career in the markets rather than just being in a bank, which may be right

or may be wrong.

So, you got the impression from his work presumably that it was rather a stodgy sort of

outfit?

I may have done, but if I did, again it was subliminal; I didn't...it never really came...I wasn't

conscious of thinking that.

And what about your mother. Her maiden name and...?

Was Blunt.

Yes. And her first name?

It was Sally, or is Sally.

What sort of background did she come from? I know that you didn't know her parents very

well but...



I suppose you would describe them as upper middle-class Midlands professional would be

the sort of bracket. That's the bracket I think they would like to be put in, so it's probably

reasonably fair. Mummy was very clever, and went to Birmingham University and read

science, which in those days for a woman was fairly unusual. And she is bright; she doesn't

now, but she has done 'The Times' crossword for years and got into the final of the Cutty

Sark Times crossword competition for year after year. She never won it. But she'll do 'The

Times' crossword in 10 minutes every day while she has a cup of coffee. She had an

influence on me. I think her biggest influence probably was, perhaps not surprisingly an

academic one, in that she always encouraged me to read as a young person. She read a lot,

and she read almost obsessionally, which is probably why she's good at the crossword puzzle.

But she always encouraged me to read, and at home in the holidays both she and I would

spend day after day reading. And again, not as a conscious thing, and not as a task, but

simply because she read I read, and so we would sit perfectly peacefully together and read.

What sort of things?

Absolutely everything. She is...no, she isn't catholic in her taste I suppose, because she

wouldn't read a thriller or a light novel; she would be much more inclined to read Trollope

and that type of book. But she has read very widely, and so she would encourage me to do

the same, and I suppose that all of my early reading was of that sort. Since then I've lapsed

into Wilbur Smith and other such rubbish that one might read! (laughs) But that was the type

of book which I read as a small boy. I mean along with all the other books that small boys

read like 'Swallows and Amazons' and all of those types.

Did you have a family library, or did you and she go and buy books, or...?

No, we used Boots in the King's Road, and she...she would go and change a book virtually

every day, at Boots. It seemed like that, but it probably wasn't quite true, but she read both

quickly and avidly.



Did she encourage you to go to go to university?

No. Neither she nor my father did, and I'm sad about that because as I understood it from my

teachers at school I could have gone. And it never really was presented to me as an

opportunity by my parents at all. Having said that, they didn't tell me not to, and I wasn't

saying could I. And so it wasn't a question of being in any way put off, and it's really only

been with hindsight that I wished I had done so, but I think that Mummy certainly could have

pushed me into university, and I was perfectly malleable at that age, and therefore would

have gone. And I think they probably took the view that having done two years national

service it was time that I went and did a job rather than spending another three years, which

takes you up to the age of 23 or 24, before starting to work. And I don't necessarily disagree,

but with hindsight I'm sad.

Well shall we go back and get you born now. You were born when and where?

I was born in 1935, August the 31st, and I was born in Lavender Hill in Battersea. And if the

wind's in the right direction I'm a cockney.

And you have no brothers and sisters?

No brothers and sisters, no.

Do you regret?

I honestly don't know, because not having had them I don't know what I'm missing. But

having said that, I was quite determined to have more than one child myself, and so I

suppose, again in a way I regret it. But no, I was totally happy as a child, and totally happy

being an only child. I've no idea whether I was spoilt or not; I didn't think I was. And I



was...I think what it did for me, which is good and bad, is it made me very self-contained. I

was perfectly happy on my own, happy on my own reading, happy on my own walking,

happy on my own doing almost anything, and therefore certainly in the early days, and

perhaps still, I was a very bad communicator, and didn't mix awfully easily with other

children of my own age, and didn't make friendships easily. And so I think probably there

was that disadvantage, but there is the advantage of being self-contained; one is self-

sufficient as well as being self-contained.

And when you were a child did you have a nanny?

Yes and no. I mean no not a full-time nanny, but yes...I mean our friends had nannies, we

had a nanny for a short space of time, and so nannies were around. But no, only when I was

tiny.

So basically your mother brought you up?

Yes.

And would you say...I mean to what extent would you think you had been influenced in your

later life or your development by your mother then?

Consciously I don't think a great deal. As I say, I mean we talked about reading and I

suppose that gives one something of an inquiring mind, but I don't think that I could directly

say that it was Mummy's influence that made me do anything in particular. There are other

people who have had much more influence on my life I think than my parents, and people I

came across when I was working.

Perhaps you can give me a hint?



Yes. I mean...my first boss in the City, who was somebody called Arnold Brown who was

deputy chairman of Ryders Discount Company, I think had more influence on me than

anybody else in my life.

So that when we come to that part, if I forget you will...?

I will indeed, yes.

Where did you grow up? What sort of house was it, and where was it, how large?

Well the first six years of my life, five years of my life I suppose, we lived in London, 1935

until 1940. We then left London at the beginning of the war and went to live in Bedford

where we lived for the next five years, or lived for the whole duration of the war. And there

there's a slightly curious fact I suppose in that that's where my mother's parents lived. But I

should think I saw them half a dozen times in five years, and they were all of 300 yards away.

And so when I say that my mother and her parents were not close it was perhaps an

understatement.

There was an estrangement was there?

Certainly between my mother and her mother, yes. She was fond of her father, but she had

escaped from home and left home, and I think was...yes, very much at odds with her mother.

Do you think it was perhaps because of university?

I think that Mummy would say that her mother was a very difficult person. I suspect Mummy

has inherited a bit of it and I suspect I have too! (laughs)

So when you were in Bedford it was in a rented house then?



Yes, yes it was. Throughout the war it was in a rented house, and then we came back in 1945

or '46, and my parents had always lived in a flat in London and continued to do so after the

war. And so they lived in...and until they retired down to Cornwall they had always lived in

rented accommodation.

So during the war then, you were basically what, four to eleven I guess.

Yes, yes that's right, yes.

What was it like? I mean were you conscious of the war, of things being different, or...?

I don't know that things being different, because at the age of five you don't know quite

what's normal, but very much aware of the war going on, even though Bedford wasn't

particularly badly hit by it. But memories of...I think it was called an Anderson shelter

inside, which they built; the house being reinforced; air-raid warnings and going into the

shelter, or under the stairs. There were only I suppose half a dozen bomb attacks on Bedford,

but somebody I was at school with was killed in one of them, and I can remember going and

looking at the house, or the hole where the house had been, and seeing it. And so...and the

gas masks which we carried around, and had gas mask practices. So yes, very much aware of

the war. My father in our sitting-room kept a map of Europe, or a map of the world really,

and plotted the war progress every day on it. And it was an amazing map, it was like a war

map, because he had all the generals marked with their names and the different divisions on

it. So as a small boy it was fascinating.

Was this just the British, or did he do all the allies?



Oh it was all the allies. So he had the whole lot there, Patton and everybody. So totally

aware of the war. Certainly not aware of the issues, or what it was all about, but very

conscious of the fact that we were fighting a war and people were being killed.

Were you in Bedford town or were you in a village?

No we were in Bedford town.

Ah, so you didn't have a farm attached and supplies of food?

No.

Do you remember what your diet was like at that time?

Yes, quite delicious. All the things which we now don't get. Lovely things like scrambled

egg made out of egg powder. Have you ever had that?

No, you're the first person I've heard to say how delicious.

It is lovely! Because it goes all brown and crispy on the outside, and yet it's soft and fluffy in

the middle. So...things like that. Corned beef, quite delicious. Corned beef cooked in six

different ways, and I could eat corned beef every day. So it was full of things that small boys

like by way of diet, and not full of all the things that are good for you which one now has to

eat. (laughs) So, those sorts of things I remember well. Ration books. I suppose ration

books really came home because you had a sweet ration, and you knew that Es were worth a

bar of chocolate and Ds were worth half a bar of chocolate, or a small tube of whatever the

pastels were in those days. And the planning that used to go in to one's Ds and Es for the

month and deciding which you would have. It was a terribly good exercise, because it was

like only having a limited amount of money. You had to make a decision; it was that or that.



It wasn't a question of saying, well I'd rather like all of it, because you couldn't have it. And

so rationing was terribly good for one's soul, I think.

So you didn't set up a trading market in...?

No, I didn't. But at school, again with very limited pocket money, I mean we used to get I

think threepence a week, three old pence a week to begin with, and then it went up to the

lordly sum of sixpence a week, and one used to go to the tuck shop on a Saturday afternoon

and you had either ice-cream or crisps: not both because you couldn't afford it. But, as a

junior boy at school if you were prepared to cycle into the town, to the middle of the town

and do the shopping for the senior boys you got a tip out of it, and that was a source of

income.

Jobbers' turns!

Yes. (laughs)

And did you have any...oh dear, what do they call the children who were sent from the East

End out to the...?

Refugees?

Yes, but English children from the inner cities sent out to the villages. I can't think of the

term but you know what I mean.

I know exactly what you mean. I suppose they were around. They must have been, although

I wasn't really aware of them. I was certainly aware of the prisoners of war working on the

farms round Bedford, and seeing them about.



You remember what nationality they were?

No, I don't. I assume they were German but I don't know.

Might have been Italian.

They might have been. But other things like Home Guard exercises at the weekend, the

Home Guard used to exercise every weekend, and seeing my father and his friends lying on

street corners with a Bren gun firing blank ammunition. It seemed to me to be about the best

way of spending a Sunday that any small boy could think of. So that was another memory of

war. But I suppose my memories of war are totally isolated and insulated from the real war.

It was very much second-hand. The only real contact I had with the war was right at the start

of the war, in 1940, my mother and I went down to Cornwall on holiday, and we went out in

a sailing dingy with a friend of hers. And as we were out in the middle of the harbour a plane

came over, and I can remember, or at any rate I'm told I can remember, Mummy looking up

and saying, "That's strange, I wonder what it's dropping". And a string of bombs dropped

right across the harbour, two of which straddled us, one on either side, neither of which went

off. And I suppose had they gone off I wouldn't be sitting here today. So that's probably the

closest to real war that I came.

Were there any Americans around, before D-Day? Were you conscious of that in your part

of the...?

Yes very much so, because East Anglia was the home of most of the American air bases, and

therefore Americans were very much a part of the way of life, and were there the whole time.

I suppose my main memories of them were seeing their convoys going past, seeing GIs in the

town. My father was a very keen sportsman, and he captained Bedfordshire at squash, and

the main match that they used to have each year was against the American Air Force, and so I

always remember the Americans coming to the Bedford squash club for that match, and they



were always very good. I was nearly killed by an American convoy when, and again

curiously it's one of those things that I just remember. My parents and I were out cycling on

a Sunday, and we'd pulled off the side of the road to let the convoy go past, and Mummy said,

"Stay on this side of the road and don't move", and I said to her, "Oh, I think I'll cross over",

and walked across with my bike. And Mummy says if the driver coming hadn't had the

quickest foot and the best brakes around, again I wouldn't be here today. So yes, I remember

the Americans being around...well, apart from that without any particularly personal...

Did your mother become involved in war work as such?

No. No, not at all. I suppose in the...I mean in the interests of history and truth, Mummy is

academic and not a worker as such. And I'm not trying to suggest that academics are not

workers, but she is a reader and a thinker and a writer, rather than somebody who goes out

and does things. Physically she's not all that strong, although she's 80 now and has survived

perfectly well, but she had various operations during the war, and I think that she is a

professional hypochondriac, and therefore she has had an hour's rest in the afternoon when

she goes to sleep ever since I can remember. There aren't many of us in a working life who

can do that.

So she didn't feel she had to roll bandages? There wasn't peer pressure from her neighbours

to...?

No, curiously there wasn't. I mean again I wasn't aware that she was different, it's only

looking back that I realize that she in fact did absolutely nothing at all.

So, when you first went to school was this to a prep school?

This was to a private school in Bedford, a kindergarten I suppose it would now be called,

which was called Miss Beales' School. And there I won, the only time in my life, a school



prize, I think only because she thought I was quite nice because I never said anything and was

very quiet; I don't think it was for any form of academic ability. But I won a school prize

which I've still got, which is a book on dogs. And there, my memories of that school, and I

suppose I went there when I was about five and stayed there till I was about seven or eight, so

I suppose I was there for two or three years, my memories of that school are mainly of

Christmas, and of making...I don't know whether children make them nowadays, but whereby

you have a bit of round cardboard and you wrap wool all the way round it in a particular way,

and at the end of it you cut all the way round, take the cardboard out and you've got a woolly

ball. It was a marvellous bit of science. But anyway we all made those at Christmas.

Christmas cards all made out of black paper with white snow falling. And we used to play a

game there called...well it ended up in some form of tug-of-war, and it went, 'Here we go

gathering nuts and may', but it ended up with individual children pulling each other across the

room. And being a rather miserable and frail little child I was always pulled across the room

not only by all the boys but all the girls as well! So one of my sources of misery was when

we came to play this particular game. Having said that I thoroughly enjoyed Miss Beales’.

And you then went to where?

I then went to Bedford public school, and went to the prep school first at the age of about

eight, and I was there...well I was there for the whole of my education. So I went to the prep

school part first, and then went on to the public school part.

And what were your good subjects? Science presumably?

No, science I took for a little while and took up to what was then O-level, and really found

rather too difficult and so I gave that up, and therefore opted for the much easier subjects of

English, geography and history!

And not maths?



Not maths, no. Again it's something which I look back in some wonderment, because the

whole of my life has been spent in things mathematical, and in a lot of ways there is nothing I

enjoy more than a mathematical problem of some sort, and I enjoy obtuse mathematical

problems, and at school I gave up maths as soon as I could.

Where did you get your skill then do you think?

I haven't any idea. I avoided maths for a very long time. Maths at school was just too

difficult. Whether it was a bad teacher, whether it was just that I thought the other subjects

were easier, I don't know, but I gave up everything that appeared difficult as quickly as

possible, Latin included.

Did you have a particular master who was a great influence on you, or do you remember any

of them at all?

Not really, no, and there were some... I mean I think one's got to start from the fact that I was

bone idle, pretty stupid, came bottom of the class for virtually the whole of my school career,

was a thorough nuisance in class, and as far as the masters were concerned contributed

absolutely nothing whatsoever to either the academic or other life of the school for the vast

majority of my time there. And so I can't say that they would necessarily have been bending

over backwards to see what they could do to instil knowledge into this very unwilling child. I

mean if you read my school reports there they are...consistently was I at the bottom of the

class, consistently the words, 'he does not try', 'he made no effort', 'this term was even worse

than last' appeared. And in the end I was relegated a year I was so bad; having finally ended

up at the bottom of the bottom form in one year, they dropped me down to the year below,

which was the height of indignity for any school boy, to suddenly be mixing in with those

whom you had regarded as infinitely inferior, they being all of a year younger than you. I

suspect that it was that, much as I resented it at the time, which started to bring me to my



senses. I didn't feel so at the time. But I dropped from...we had five classes in each year, and

so I was in the fifth class and at the bottom of it, and I dropped down to the second class of

the year below. And I didn't quite get to the bottom of that, although nearly, but I think from

then on for some reason that I don't really know, but it may just have been the dropping

down, I began to do a little bit of work - not a lot, but a little.

You were obviously very energetic. I mean was your energy going in other things, such as

sports or hobbies?

Yes, most of my energy went into sport, and I wasn't an outstanding sportsman but most of

my energy went into sport and I spent...

Cricket, or rugby or...?

Yes, and we were a rugby school, and so therefore it was that that was my.....

End of Tape 1 Side A


C409/057 Tape 1 Side B (part 2)

Tape 1 [F2290] Side B (part 2)

Any sport that was going. I ran a little bit and played a little bit of cricket, and played fives

and squash. Yes, at any sport.

At what age were you relegated do you remember?

I suppose I was 16. I was born in August and so it was probably...I was relegated when I

was...when I was just 16.

Well do you remember what you were doing with your time when you should have been

doing your prep?

[BREAK IN RECORDING - KNOCK ON DOOR]

So what were you doing when you should have been doing your homework?

Oh absolutely nothing; I was just bone idle. I was quite good at noughts and crosses with

whoever was sitting next to me at prep if I could distract him, reading a book instead of doing

prep. I was just absolutely bone idle, and had no desire to learn at all. As far as I was

concerned I learnt what I needed to learn to get away with the next lesson, and then forgot it

as soon as the lesson was over. So I had absolutely no retention or interest in retention at all.

And your parents didn't put pressure on you to...?

Yes, in that the interview each holidays when my report came in was not something to be

looked forward to. But I think that my parents in the end ran out of words, and just didn't

know what to do with me. I wouldn't want to give the impression that I was an awkward

child; I think actually probably I was a perfectly nice, very quiet, rather introverted, idle

child, and so I wasn't actually going round causing anybody any trouble or kicking doors in, I

was just idle and perfectly happy in my own little world, and playing rugby.



And you had changed a bit you think by the time 18, when you left school?

Yes, I can in no way put my finger on what happened when. I did in my last year at school,

my last two years at school I suppose, have masters that I felt some sort of sympathy with,

and in the last year I certainly did, and in the last...really the whole of my last year at school

and certainly in the last two terms leading up to A-levels I gave up all sport, all recreation of

any sort, and worked from dawn till dusk.

And the end result was?

The end result was that I got three A's at scholarship level, and so hence I could have gone to

university, or probably.

What was your school's reaction to this?

I think with the exception of my form master and house master, my house master because he

knew I'd worked because I borrowed his study to do the work, and my form master because I

think he probably knew too, total and utter astonishment and bewilderment! (laughs).

Yes, they must have been a bit frustrated. And no one wanted to know why you hadn't done

this before?

No, they didn't. I mean nobody...I mean everybody was surprised; I certainly was, my parents

certainly were. And I think yes, it came as a shock and a surprise all round. And I don't

know what caused it at all.

Growing up I expect.



Possibly, but I mean, I suppose a psychiatrist would probe and find a point at which

something had happened, and I certainly don't know what it was, or care. But at any rate, at

some stage I started to work.

Did you have close friends who were keen?

No. I didn't really have close friends, and such close friends as I did have would generally

have been among the idle sports-playing people at school, because those were the people that

I'd associated with for nine-and-a-half years out of the ten.

And did any girls wander into your life at this time, before you were 18?

No, girls were infinitely frightening beings with whom any attempt I ever made of chatting

one up would have met with total failure, and so therefore they were to be avoided. Girls on

the other hand were very useful for playing tennis with, and so I had a lot of tennis-playing

girlfriends as such, or a lot of girls with whom I played tennis. And so if they were sporting

then that was fine, but any contact was limited to the sporting bit.

And did you have tennis courts at home, or did you belong to a club?

No, we belonged to a club, belonged to the Hurlingham Club. And that was my garden

really, and I used to go to Hurlingham every day I suppose during the holidays.

Golf or anything...?

No I never played golf, but playing tennis and swimming there, and the occasional game of

croquet.

And did your family have a car? Did you learn to drive?



Yes, I learnt to drive when I was 18. And again rather to everybody's surprise and certainly

to mine I passed the test immediately, and everybody had assumed that like everything else

I'd tried it would be a failure.

And you were 18. This was before or after your A-level successes?

It was before I knew I had passed A-level. I think I passed my driving test the day after my

18th birthday, which was the first day you could take it.

Well, so you're 18 and all of a sudden you've made your mark. Had you already decided to

go into the Army...to do national service?

Yes.

You had to do national service then didn't you?

You had to do national service.

Did you have a choice? I mean the Duke of Wellington's, was this...?

That was a deliberate choice, because they were a rugby-playing regiment.

And how do you get into a regiment like that?

[BREAK IN RECORDING - PHONE RINGING]

How do you get into that sort of regiment?



Well in looking at what regiment I might join, my eyes alighted on the Duke of Wellington's

because they played rugby, and a cousin of my father's was a very great friend of somebody

who had recently commanded the regiment, and he got me in.

When you say got you in, what does that mean?

It means each regiment in the Army can only take a certain number of officers, and therefore

if their quota is full there is no point in you joining the regiment because you won't be able to

get a commission in it. So when you were doing national service there was no certainty you

were going to get commissioned; in fact the odds are that one might not. But if you wanted

to get commissioned in a particular regiment you had to go and see them beforehand and say,

"If I'm lucky enough to get commissioned, would you have a vacancy for me, and if you have

a vacancy would you take me?" And they take a look at you, and in the case of the Duke of

Wellington's Regiment, and they say, "Do you play rugby?" and that was their main question!

But no, more seriously, I mean they will interview you and decide whether they like you,

whether they're prepared to take you. And if they say yes, then if you get your commission

you've got a place in that regiment. If they say no then you have to go somewhere else. Now

you don't have to bother; you could just go to the officer training school, and when you're

getting close to passing out you could try then, but the odds are that your regiment of first

choice and maybe even second third or fourth choice might be full, because they've only got a

quota of a certain number of officers and once they've got them they've got them.

So you were very lucky?

And so I was very lucky, yes.

And so what did you do for these two years?



I went first of all in mid-September, it must be late September, of 1953, I went up to Halifax,

which is where the regimental depot was, it's a Yorkshire regiment. I arrived in Halifax

which I had never been to before, and Halifax in itself was quite an interesting experience in

those days, at the height of the post-war depression, the cotton mills gradually stopping work,

but everywhere blackened, and it was still very much a northern town. So I arrived in

Halifax, went up to the barracks, which were all that you could imagine of a bleak, northern

barracks, with not a shred of grass or a tree or anything like that about it. So in I went, and

the first thing that happened to you when you went in was that you I think were signed in, and

the paperwork was done, and you were given a number which you had to remember, and you

then went to the quartermaster stores to be issued with clothing. And he would look at you

and then give you clothes; they sort of fitted, and they were what his estimate was roughly of

your size. So you got your clothes and you were then given a brown sheet of paper and some

string, and so you said, "What's that for?" And the answer was, "You dress in those clothes,

you put your old clothes in that, and that goes home". And so your link with the human race

outside disappeared in a brown paper parcel. The next stop was the barber's where they cut

your hair off and left you with a little tuft on top. The stop after that was the medical centre

where they gave you a medical inspection and then injected you for every known form of

disease, and so you came out with two arms swelling like that. And very sensibly the next

thing was PT. Well by the time you finished that your arms were right out like pumpkins.

What's PT?

Physical training.

That's what I thought. Well...just you mean that they built up your body so much, or...?

No. What they did obviously was an exercise in reducing everybody's morale to the lowest

common denominator. So remove your clothing, give you clothing that doesn't fit, cut your

hair off, inject you, and then make you do PT until you feel so ill you don't know what you're



doing. At that stage you're totally malleable, and they can do anything they like to you. And

I can remember, I mean I was all right because I'd been away to school, but I can remember

those boys whose first night it was away from home. They'd never undressed in front of

anybody before, except Mummy, and I mean we got undressed and walked in the nude to go

and have a shower without worrying, and they were wrapping their blankets round

themselves. And for them it must have been the most terrible shock, and I can remember

crying coming from all the way round the dormitory from those who as I say had never

experienced boarding school, and hadn't been through it. So anyway, we spent two weeks

there I suppose, two-and-a-half weeks, and during that two-and-a-half weeks you were

assessed, and if you had potential to become a non-commissioned officer or an officer you

were then singled out, and those of us who were then went to York. York was the centre for

the whole of Yorkshire, and so every regimental depot, Halifax being the Duke of

Wellington's regimental depot, all the other regiments, and there were six Yorkshire

regiments, then sent their potential officers and non-commissioned officers to York to a

squad there. The training was almost identical, but it included an element of leadership

training, and so you were beginning...you had jumped the first hurdle and you were beginning

to be trained for some form of responsibility; it might be to become a lance-corporal or it

might be to become an officer. And then towards the end of one's time there, and we were

there for three months until mid-December, I suppose by the end of November they'd sorted

people out into those who were not potential officers and those who were. Those who were

potential officers then had to go to a thing called WASB, which is War Office Selection

Board, and that was down in Hampshire. And we went there, and you're there for two days

and put through a series of tests. You have to do the ordinary sort of intelligence tests, you

have to give a five-minute lecture, you're interviewed, you have to do physical tests, not to

see that you're a he-man but simply to see that you're physically fit, and you had to do

initiative tests where five of you would be given a short piece of rope, a barrel and a short

log, and told to cross a stream which was twice as long as the log. And they wanted to see

who emerged as the leader out of the group of five. Not necessarily who solved the problem

but who was naturally somebody who was prepared to take charge. And at the end of those



two days you were called in one by one and told you had passed or failed. I was lucky

enough to have passed, and therefore in January I went to officer cadet school, and that was

at a place called Eton Hall, which had been one of the homes of the Duke of Westminster up

near Chester, and he'd disposed of it at some stage and they turned it into an officer training

camp. And those were all the national service officers of all the officer cadets; potential

national service officers from all over the United Kingdom went there. And so there, I think

two of us went from our regiment who had gone through WASBY, and went up there, and

there we were joined by others. And I suppose that we were in a group there of about 60, and

60 came in once a month, and we were then divided into three lots of 20, and our 60, and

there between January and May, for four months we were trained to be officers. And that

was fascinating. Again, it's a bit like a replay of school life, because the first half of my time

there I did as little as possible, and the last half of my time there I reckoned that I supposed I

was there in order to try and get commissioned at the far end, and worked like a black.

And did you?

And got through, yes.

So then why did you decide not to stay in the Army, or was that never on the cards?

I don't know. I then from there, from Eton Hall went out to Gibraltar, where...I went out in

late May, was there for about 15 months till the following August, and had 15 months of the

happiest time I've had in my life. Absolutely enjoyed every minute of it; it was the most

tremendous fun. I enjoyed soldiering, I enjoyed the actual soldiering-type soldiering, I

enjoyed the ceremonial side, I enjoyed the life, I enjoyed the sport, and everything about it I

enjoyed. And it never crossed my mind to stay in. And again I don't know why. I think I

was a very un-inquiring still, boy, you know, and I was doing my national service and that

was two years and at the end of two years I would come out and do the next thing, and

therefore it never occurred to me to question the process, in the same way it has never



occurred to me to question not going to university. The thing is mapped out, and so I went

along the tramlines that had been set.

What did you end up as?

And I'm very sorry, and again I mean I have regrets at not staying in the Army, because I have

thoroughly enjoyed all my association with the Army since.

Yes, what...I noticed you have all sorts of positions, and you've obviously joined up with the

Territorials.

Yes.

When did that come about?

Well in those days you had to join the Territorials as soon as you finished your national

service. You were committed to do so. And so you did two years' national service and you

then I think had to do three years in the Territorials. But the three years you did you need

only do two weeks camp a year. I joined up to be a full-time Territorial so to speak, largely

because the regiment I was thinking of joining played rugby, and so I thought I could

combine the two, doing my Territorial service with playing rugby, and that's exactly what I

did.

What's a full-time Territorial?

Well, as opposed to just doing the two weeks a year minimum, it meant that I signed on and

committed myself to do an evening a week, six weekends a year, and a fortnight's camp. And

so you become part of the Territorial Army instead of just doing your two weeks when you're

just attached to somebody.



And what did that involve? Much the same as the previous?

In a way it was a total contrast, because the regiment I joined, the HAC, the Honourable

Artillery Company in London, made everybody who joined them resign their commission.

And so having sweated for some time to get a commission and thoroughly enjoyed 15 months

as an officer in the Duke of Wellington's, I promptly came out and resigned my commission

and re-joined as a private soldier. And again it didn't seem particularly curious at the time;

everybody did it. The sergeant of the platoon I was in the HAC had been a brigadier in the

war, every other person in the regiment - almost but not every other person; there may have

been a handful who hadn't been commissioned, but just about 99 out of 100 had been

commissioned so we were all in the same boat - and so it was just if you wanted to join the

HAC you resigned your commission so I resigned my commission.

What do you think was the point?

The point...I mean I don't think I felt it at the time, but it is the senior regiment in the British

Army, and the senior Territorial regiment, and so there is an element of prestige to it, but that

was in no way why I joined it. I simply joined it because I had friends in it, and wanted to

play rugger.

But why do you think they made people resign their commissions?

They always had, and they had never accepted people coming in with outside commissions.

That meant that they recruited a very high quality person, and certainly at the beginning of

the last war, the 1939-45 war, the HAC was then turned into an officer training unit, and so it

immediately recommissioned all its soldiers, and then went and spent the whole of the war

supplying officers to the whole of the British Army. And so it had a very worthwhile role.



It's just one of those very curious British things, that there is a regiment that in order to join

you have to resign your commission.

What commission did you resign?

At the end of my national service I was a second lieutenant.

And what is a Territorial Efficiency decoration?

That's something you get for hanging around for quite a long time, and turning up. In fact

you have to do 12 years commissioned service in order to get it.

So it's sort of a seniority...?

Yes, it's just long service and good conduct, and that's all, and provided you do the requisite

training during your 12 years commissioned service then you'll get it, provided you're

recommended by the CO, but everybody is. But I actually spent...I resigned my commission

in 1955 and I then spent eight years as a private soldier until 1963, and refused any form of

promotion. I refused to be a lance-corporal and refused to be an officer again, and

thoroughly enjoyed myself as a private soldier. I suppose in a way it was fun mixing with

people who had also all been officers and therefore we all had done the same sort of thing.

Most of them worked in the City and so they were people that I knew and was coming across;

there was great comradeship, and there was a happy lack of responsibility, which perhaps

again goes back to one of the flaws in my character.

Or perhaps relaxing in comparison to your weekly dealing or your day-time duties.

Well one of the chaps we had in was a brain surgeon, and he was a little bit older than the

rest of us, and he refused any form of promotion, and he said for two weeks a year I can get



drunk, I can do anything I like; nobody knows that I'm a brain surgeon; and for the whole of

the rest of the year I have to keep myself so that my hands are utterly steady at all hours of

the day and night, and can never let myself go. And I totally understand that, and I

understand it rather more for him than for me.

The tape's almost at a close, and we'll both have to go. Should we jump chronology and just

look at the rest of your relationships with the Army. What's the Reserve Forces Association

then, of which you have been chairman since 1983?

That is an organisation which represents all three services, that's the reserve Army, Navy, Air

Force and Marines, all four really. And it is our representation on the Reserve Forces NATO

Committee, and there is a thing called the CIOR, which is the Confederation of International

Officers of Reserve, but in French. And they meet twice a year, and each country has a

delegation which consists of four people, and the chairman of the RFA and the equivalent in

each of the NATO countries is chairman of your delegation. So we represented the reserve

forces at NATO, and went as I say once a year to Brussels for four days and then once to

each NATO country in turn for a week to debate matters that were of concern to NATO

insofar as they affected reserves. Things like, what is a reasonable call-up time, that if war is

developing say in the Middle East, how long do you need to call up your reserves, get them

into a state where they can fight, and get them there. And the answer in one country would

be a week, in another would be six months. Now, we're all in NATO, so how do we get

round that? Because it means that reserves from one country could be called up and would

be fighting very quickly and not of another. And so we would address that sort of problem,

and then go back to our governments and say, "Here's a problem. We need greater

uniformity". So those that take six months, what can we do about it? Simple things on

medical matters, we found that the French, if they get a casualty, if they tie a red tape to the

person it means that they have got a severely damaged leg which may need amputation. If we

tie a red tape to somebody it means they've got a damaged head. Now the complications of

that could be quite enormous! And so simple things like that we co-ordinate. And so it



is...it's low-key, but it does achieve a great deal in the co-ordination of the reserve forces,

getting signals on the same nets, weapons the same, ammunition the same, all of that type of

thing. And that was fascinating.

And you have your opposite numbers the same on all the...?

We sit round a table with each nation with its flag in front of it and the delegation sits there

with the chairman of each delegation in front of them and the rest behind, and we

debate...well the topics just evolve as to what we debate. But we then have a series, other

commissions they're called, of which there are six, which are specifically looking at topics.

There's a medical commission, there's a training commission, there's a public relations

commission. All of these things we've got other people working on and they then report back

to the main committee. And so it is really co-ordinating all the reserve forces of the whole of

the NATO alliance.

Gosh. I shouldn't think I realized it existed.

Most people don't.

Yes, I'm sure. And then, Officers' Pension Society investments, you help run that

presumably?

Yes. That, if I can sort of go sideways is really...that comes into another category really. I

mean my Army service, if we're going to wrap that bit up, I mean really was the HAC, and I

was then commissioned in 1963 and then commanded in 1970 and then became regimental

colonel. So that was my full-time Territorial service. I then became chairman of the Reserve

Forces Association, and chairman of the South-East TA Association and chairman...

Does that [INAUDIBLE] from Sussex?



I was chairman of Sussex initially, and then chairman of the whole of the South-East, which

is Sussex Kent and Surrey, which I still am.

That's since 1983?

I was chairman of Sussex from '83 to '85, and I've been chairman of the South-East from '85

until next year, when I will have done six years.

And what do you do as that?

The TA Associations, well I need really to give a little bit further explanation. The TA is

organised in a way that for operational responsibilities it is part of the regular Army and

comes down through the chain of command. So if somebody is going to say to a regiment

based in Sussex, go and fight over there, I shan't tell them that, the general in Germany or the

general in South-East district will tell them that. And so operationally he is their commander.

For administrative matters, for recruiting matters, for welfare matters, for housing matters,

barracks and equipment matters, I'm responsible for them. And so we divide everything

effectively which is home-based, which the TA Associations look after, and there are 14 in

the country each looking after an area, with operational, where the regular Army is

responsible, and the regular Army commander may be in Germany. So that is really the

division of responsibilities between the two, and I liaise with my opposite number, the

general in South-East district, and he's their boss for one set of matters and I'm their boss for

the other, so he and I have regular meetings. In fact as it happens topically, until a month ago

my opposite number was Peter de la Billiere, who has gone out to Saudi to command the

British forces there. And he was a fascinating chap. So effectively I'm in command of the

South-East TA for all matters except for their actual operational role.



And what would you say has been the role of influence of all your Army duties and

relationships? I mean a substantial part of your life, or an interesting sidelight, or...?

No, it's much more than an interesting sidelight. I think that it's taken up a lot of time, and a

lot of energy, and in some ways has given me the greatest pleasure of anything. I enjoy

soldiering, thoroughly enjoy it. I enjoyed it much more when I was commanding troops,

individual chaps, than when I became a commanding officer; it's a tremendous thrill being a

commanding officer, but I actually wanted to command individual people. And so the

interest was in commanding smaller groups of people. And I think that it was when I was

given my first group of Territorials to command...

Which was when?

Which was in 1963, that I first had to learn what leadership was about. And we talked earlier

about Arnold Brown having an influence on my business life, I think the other biggest single

influence in the whole of my life has been given command of a collection of chaps, and

actually having to command them, having to get their respect, being in charge, having to take

responsibility, having to plan ahead, things which in my butterfly-brained way I'd never really

done before, and suddenly to realize that there was a two-weeks camp coming up, and we

were going to have an operational role, in which albeit only in a peacetime role, but

nonetheless we were going to be fighting an opposition. You had to plan. And so from not

thinking much about the TA I then went and spent three weekends running down in the area

where we were going pre-planning. Learnt every bit of woodland and every hedgerow

backwards, so that I knew exactly where we were going to be exercising, exactly if we were

there where the enemy were likely to be. And so when we got there I knew absolutely

everything about the area that we were going into. Cheating you might say, going down

and...because we knew where we were going to be. That's if you were being unkind, forward

planning if you were being kind. But nonetheless it made me realize that that was what you

had to do. As a result my collection of chaps came top, we won everything, and they were on



my side thereafter. And they realized that I'd put in a great deal of work beforehand, in order

to make them win, and they knew that when next it happened, next time I would do the same.

And so I suppose I gained an element of respect from them. And I then made absolutely

certain that in my particular group of chaps, when we were off parade they called me John

and not Sir, and we would all go to the pub and thoroughly enjoy ourselves, and I would

behave just as badly as they did, and we were absolutely as one. And I'm not saying this for

any other reason than it taught me a great deal, and it taught me what you had to do to win

people's respect, and that was 99 per cent hard work and only one per cent inspiration. That

your human relationships can be built; even if you're in charge of somebody it doesn't mean

to say that they have to be frightened of you, that they have to dislike you, that you can get

them absolutely totally on your side. And I think that has had more influence on committees

and companies and businesses I've chaired than any business training I had. Because I think I

really got an insight into human beings and what makes them tick, and how to get under their

skins. So I think that that bit of military training and military experience did a tremendous

amount for me, and I was very lucky to have that chance and to learn that particular lesson.

End of Tape 1 Side B




This is an interview with Mr. John Barkshire on the 17th of December 1990.

.....profound effect on me. And the more I have thought about it afterwards the more I think

I'd just like to revisit that, because I think in some ways it was one of the most important

times of my life, and had one of the most profound effects on me. In that we were discussing

the time when I was in the Territorial Army at about 1963, '64, and I'd just been

recommissioned after seven or eight years as a private soldier in the TA, and I was then asked

to take command of a new unit that was being formed. Now, up until that particular minute

and including that particular minute, as far as I was concerned people were generally things

to be afraid of. Decisions and responsibility was to be avoided at all cost; and the thing that

you must never do is to be put in charge of people. And the area was a complete one of, not

so much fear but I mean, that I didn't want to face. I'd been put in charge twice before in my

life, once was when I suppose I was about 12 when I was made head of a house at my prep

school. And I got back to school at the beginning of term not knowing this was going to

happen. My parents hadn't told me, and I hadn't been warned, and walked in and found I was

head of house. It was about the last thing in this world I wanted to happen, and that meant

that you were just in charge of everybody and in charge of your dormitory and that sort of

thing, and I solved it perfectly easily by, as soon as I got into bed every evening, covering my

head up with the bedclothes to ensure that if there was any trouble anywhere I didn't hear it.

And I adopted an ostrich-like approach for a complete term, and the house was a complete

shambles, and I was utterly miserable, and I used to go to bed and cry every night, because I

just couldn't cope with responsibility, I'd never had it, didn't know what to do. Didn't know

how to deal with other people. It then happened again at school, I suppose about four years

later when I was about 15 or 16, and again I was put in charge of a dormitory, in the senior

house, and my reaction that time was to become a Hitler, and if anybody did anything I

marched them straight down to the housemaster and had them caned. And that didn't work

either. And I lived in fear during the term that I was head of a dormitory then, because on the



last day of term we always used to have a rag, the last morning of term we always used to

have a rag, and it was the time when unpopular people got beaten up. And I dreaded the

whole term, that I should be beaten up for the last day of term, being a rather frail little boy.

And I wasn't, but... That, I feared authority from that day onwards. And about '63, '64 I was

marched in front of the commanding officer, having just been commissioned, and told I was

going to form the new reconnaissance platoon, and I tried every form of excuse as to why I

wasn't the right person, it wasn't the right moment and I had other things that were essential.

And he wouldn't have it and he made me do it. And I thought about it, and I don't know why,

but I decided I'd go back to my old regiment and see the commanding officer there, and the

reconnaissance platoon commander, and learn what it was all about. So I did that, spent a

week with them and learnt what it was all about, and I then came back and I wrote all the

exercises and I wrote everything to do with reconnaissance for the chaps who then became

part of my new platoon. And as a result of that I found that actually commanding people was

rather easy. It was also rather satisfying, and responsibility was something that you could

accept, provided you worked very hard beforehand, had thought about the problem, had done

your homework, done all your preparation, and then, presenting it to your platoon as it then

was, and saying, 'This is what we're going to do...', they follow you. And in the end I found

that I could say to them, 'Drive that vehicle off the end of the cliff' and they'd do it. And

somehow, in those two years of commanding that particular platoon, I went from somebody

who was utterly afraid of any form of authority, and utterly afraid of being in charge of

people, to somebody who in a way welcomed it and enjoyed it, and enjoyed the challenge.

And that had repercussions right through business life. It wasn't just that it made me enjoy

the TA and made me stay in the TA, and therefore it became a second career. It meant that in

the office I wasn't afraid, or I was less afraid, to take decisions and to take responsibility.

And that I think in some ways was a turning point for me as a human being, and in

somebody...I suppose for the first time in my life I had some faith in myself, and actually

believed that if I was given a job to do that there was perhaps a 51 per cent chance of being

able to do it. And so I just wanted to go back to that, because as I say I think it was for me a

very important happening.



So are you one of those who think that the loss of national service is a tragedy?

No, I'm not. I think national service on the whole did a great deal of good, in that most

people not wanting to do it enjoyed it. The taxi driver who drove me here today had done

national service and he said just that, he said, "I didn't want to do national service, and I

enjoyed most of it, and looking back on it I enjoyed almost all of it and it did me good". And

so I think as a social element it was good. It made people mix, it made people get outside

their own backyard, meet all sorts of different people, and most people benefited from it. As

a political act, and to reintroduce national service, or even to have kept it was impossible, and

for the regular forces it was a disaster, because the whole of one's regular Army, Air Force

and Navy became trainers, and they did nothing but train a constant flow of people coming

through. And it made for a very inefficient Army. So no, I wouldn't have it.

No matter how good it was at social engineering!

Yes.

All right.

I'm sorry for that little interlude, but...

No no, that's part of the point, that's most interesting. It eliminates one of my later questions!

Oh dear, I'm sorry!

Not at all. All right, I suggest we move to the world of work as it were. Now, before...well

you started with Cater Ryder in 1955 at the age of 20, but what influences led you to it? I



mean how did you decide what sort of work to go into and so forth before...why did you

actually apply to that position?

I suppose that the initial decision was to go into the City. My original intention, or original

hope had been to go into the Navy, and then because I found I was blind in one eye, or nearly

blind in one eye, or put a bit of barbed wire into my eye which made me nearly blind I

couldn't. And so I then wanted to be a lawyer, and when I came out of national service I

hadn't got Latin so I couldn't be a lawyer. And I suppose that it was just a question of looking

for a job. And because my father was in the City I went for, oh, I suppose six odd interviews

round the City without having the remotest idea about the jobs that I was applying for; no

idea what the firms did, and certainly no idea as to what I wanted to do.

So you didn't actually ever plan a career, if one accepts the general hope of being in the

Navy; it was all rather fortuitous?

Never. Entirely fortuitous.

But if your father had been in steel you might have gone into steel?

I might well have done, yes. I was entirely malleable and if somebody had said go and do

that, I went and did it.

Did your father have contacts that you followed up, or did you just decide where to go on

your own?

No, it was all arranged for me, either through my father or through friends of his. My father

when he joined the Bank of England joined with somebody called Hilton Clarke who became

head of the discount office, Leslie O'Brien who became Governor, and my father who were

all roughly of an age. And Leslie O'Brien then I think was probably Chief Cashier and



signing the pound notes. And so my father had contacts, not at a high level but at a medium

level in the City, and those people were kind enough to at any rate get me interviews, most of

which resulted in rejections!

And why Cater Ryder then?

Because they were the first ones who offered me a job, and it was no more scientific than

that. And I didn't know what they did.

All right. Well tell me at some length then what you found, and what you did, and what a

discount house actually is.

A discount house then, in fact the company that I joined in 1955 was Ryders Discount

Company, and it became Cater Ryder in 1960, when Ryders Discount merged with Cater

Brightburn. In those days the discount market acted as the lubrication in the financial system,

in that the banks had to keep a certain percentage of their assets in liquid assets; they had to

keep eight per cent in cash, and a varied amount then in near cash. And at that stage it was

about another 12 per cent, making 20 per cent in all. That 12 per cent could be in Treasury

bills, it could be lent to the discount houses, or it could be in one or two other short-term

assets. And the Bank of England, by manipulating...not manipulating, by moving the

liquidity ratios could affect the liquidity in the system, and thus affect credit control. And it

was one of the ways then that they orchestrated our monetary affairs.

Precisely what do you mean by liquidity ratios?

Liquidity ratio was this percentage that had to be either in cash or in short-term assets.

Of the banks?



Of the banks. So we take Barclays Bank for example. If they had to have 12 per cent in

short-term assets, short-term liquid assets, and 8 per cent in cash, that's 20 per cent in total; it

means they can only lend 80 per cent of their total assets. If the Bank of England then put

that liquidity ratio up to say 25 per cent, they had to recall 5 per cent of their loans. If they

put it down to 15 per cent they could lend an extra 5 per cent. So that the bank could directly

affect the amount of money there was able to be lent by moving the liquidity ratios up and

down. In those days the banks' sole source of money was from their deposits. There was no

inter-bank market, they didn't borrow from other banks; they had nowhere to go to get money

except by bidding for people's and companies' deposits.

What's 'in those days'? When are you talking about?

1955. So that meant whereas now, in 1990, if a bank wants more money to lend it simply

goes out and borrows it from another bank in the inter-bank market and can lend it. Then it

couldn't. And because deposit rates were fixed and agreed between the banks it couldn't even

put up the rate it paid depositors in order to attract more money. All it could do was to hope

to have customers who would deposit money with it.

Can you say just as a short diversion in fact when the inter-bank market began, when the

banks actually could borrow from other banks? It obviously changes the nature of the City.

About 1967. It was shortly after...the Eurodollar market really had reached some form of

maturity in 1967/68, and the inter-bank market followed it I would guess in 1968/69. So

there was an inter-bank market in Eurodollars first and then in sterling. So at that point, in

the late Fifties, there was no other way that the banks could increase their deposits, therefore

by moving this liquidity ratio the Bank of England and the Government had total control over

the credit in this country; it was a totally...it was a hundred per cent safe way of regulating

credit. Now the discount houses were one of the depositories for this 12 per cent, when it

was 12 per cent, and that meant the banks could lend to the discount houses money, and it



was all at call. So if Barclays Bank needed more money because its deposits had dropped

say, and therefore it needed to recall some of its liquidity in order to keep the liquidity ratio

constant, it would recall money from the discount market. And that meant that the money

that the discount market had by way of deposits had gone down, and money rates, short-term

money rates went up, because there was an increased demand for money. Ultimately the

discount houses had the Bank of England as the lender of last resort, and they could go to the

Bank of England and borrow money at Bank Rate, a penal rate, or sell securities to the Bank

of England. So the Bank of England then had control over short-term rates through the

discount houses, and it also had control over the short-term supply of money through the

discount houses. Because every single day the Bank of England then, and indeed now,

knows what inflows and outflows there are in the banking system; it knows what money is

coming through the foreign exchanges, it knows what taxes it has collected, it knows what

disbursements it has made to the National Health Service, Social Security, and so therefore it

knows what the national cashflow is on a particular day. And it means that in the early part

of the year, January to April, there is a cash inflow into the Bank of England every day

because it's the tax collection season, and therefore the system is short of money, because

money is going into the banking system. In the second half of the year there is a surplus of

money, because taxes are not being paid in the autumn, and the Government is disbursing

money, to pay teachers' salaries, and all the other day-to-day things, so there is a surplus. So

there is a seasonal pattern that you can look and say money is short in the early part of the

year, it is in surplus in the later part of the year. But there are then daily fluctuations. Now

the Bank of England operates through the discount houses to iron out those short-term

fluctuations. It either lends money when there's a shortage in the system, or forces them to

sell securities, either of those pushing short-term interest rates up; or if there's a surplus in the

system it will absorb it by selling more short-term securities. So the discount houses are the

liquidity of the banking system. In those days they were much more the liquidity of the

banking system, because there was no inter-bank borrowing and lending market and therefore

they were the only place banks could get money from, and because in London then there

were only 64 banks, most of which were British, and all of which were much more tightly



controlled by the Bank of England than the 400 assorted nationalities that there are

nowadays. So the world of the discount market was the world of the short-term money and

short-term money rates. A discount house's balance sheet, on one side its liabilities were

entirely money at call borrowed from the banks, and Ryders Discount in those days would

have had about £30-million I think of borrowings from the banks, and that money would then

be invested in short-term securities, Treasury bills being the shortest and most liquid,

commercial bills, bills of exchange, trade bills being the next most liquid, and short

Government bonds being the least liquid, but still pretty liquid. And every day you would

start the day looking at your book, and that means to say you would have your 30 million of

assets and liabilities, and the banks would then start off the day by recalling money. And

during the morning banks generally recalled money from the discount houses. They thought

they were likely to be short, they knew they had liabilities, they were more certain of what

their outflows were than their inflows, and therefore they played safe and recalled money. So

by midday, or 1 o'clock Ryders might be £5-million short: they'd paid away £5-million more

than they'd received. Between lunchtime and 3 o'clock when the banks shut they then had to

get that £5-million in. Either because banks came into funds, and Barclays Bank might have

paid the money to the Midland Bank and therefore Barclays Bank recalled it in the morning;

when Midland Bank finally got it in the afternoon they'd lend it back into the system, or the

Bank of England would step in and smooth out any overall shortage that there was. And so

the job of the discount house was entirely looking after this short-term money. We employed

I suppose about 16 people, who were three or four directors, three or four messengers, and

the rest of us were clerks. We acted in three ways. You were either employed in the

Securities Department or the Cash Department. The Cash Department looked after the daily

balance; it kept the cash book, the daily diary, and wrote down, whoever was on the diary, the

diary clerk, wrote down all the transactions both in and out during the day and kept a tally as

to what the position was, the shortage at any particular minute, and kept a pencil total on the

diary. And the Cash Department was then responsible for drawing the cheques in the

morning to pay money back to the banks, receiving cheques in the afternoon and paying them

into your bank at the end of the day. So it looked after the actual cash of the business. The



Securities Department looked after the assets of the business which were those securities in

which we were invested. Now all of those assets were pledged to the banks by way of

security, so all of the loans were secured loans, and the Securities Department would be

buying securities in the morning, or receiving securities which we'd bought, making them up

into parcels, that's wrapping them up with a funny...with a bit of sticky paper round the

outside, and writing on the outside that this was £100,000-worth of Treasury bill, or £¼-

million worth of Government bond, so that you knew what you'd got in the parcel. And so by

midday when we were £5-million short, there would then be £5-million worth of securities in

the Securities Department, because as we'd paid out the money in the morning, so we would

receive the security back from the banks by way of collateral repaid. So, short of money, but

had the securities back. But in the afternoon the reverse happened. The money came into the

Cash Department and the securities went out to the banks that had lent the money in the

afternoon by way of collateral. So by the end of the day you had no security, and your book

was balanced. And you worked in one of those two departments. I started off in the

Securities Department, and your job was simply to count security when it came in, and then

make it up into one of these parcels and write on the outside of the parcel what the amount

was, and that was the lowest job. And you then progressed up, to adding up the number of

parcels there were, and then further up the ladder you would be allowed to write in the books

as to which bank had which parcels by way of collateral. And then the final senior person,

the manager of the Securities Department would decide which parcels of security went to

which bank. Some banks would only take some types of security, and so it was a juggling act

to make sure that the banks that would take anything got all the rubbish to begin with, so that

the banks that were tough got the good stuff later in the day. The Cash Department, you

started off by writing cheques, and ended up as the senior person by writing and keeping the

daily diary, and then...apart from the Chief Cashier, who was in charge of all of that. So

really just two sides. The third aspect of the business that I mentioned was that you were also

a messenger, in that you acted as a messenger during the day, because there were just four

messengers, and at the height of the day there was too much activity for four messengers to

cope with, so all the clerks, starting with the most junior going to join the messengers first,



but all the clerks every day would do some messengering as well. And that meant that in the

morning you were taking cheques out and collecting collateral from the banks, in the

afternoon you were taking collateral out and collecting cheques from the banks. So you acted

as messenger really throughout the day, but at intervals. And I had one of my early heart

attacks as a result of being a messenger, when I was standing on Mansion House station,

Underground station, ready to go home in the evening, and put my hand in my pocket and

pulled out £5-million, which I'd forgotten that I'd collected during the afternoon and I'd put in

the wrong pocket. And there I was, with £5-million, which was a great deal of money in

1956, and plainly our books hadn't balanced. And I was presented with the choice of tearing

it up into small pieces and dropping it into the Mansion House Underground station

wastepaper basket and pretending it wasn't me, or creeping back to the office and saying look

what I've found. Luckily I did the latter and took it back, but it was a very nasty moment, and

I assumed that I would be sacked the next morning, but in fact I wasn't.

What had in fact been the outcome at the discount house with this missing 5 million? What

would they have done?

Well they didn't know of course until I found it, because it wouldn't have been until they got

their bank statement the next day that they would have realized they were £5-million short.

What they did was ask for a special collection, which you could do, and one of the directors

went down and saw one of the directors of the bank and said look, we've got this problem,

we've just found these securities, can you arrange for a special collection, and so it was

hurried through the clearing house, even though it was after hours. And in fact all was all

right, but it was a very nasty moment. So that was what the discount house did, and I just

started off as the most junior person in the Securities Department which was the lowest of the

low, and as all the junior clerks did, spent a bit of time in the Securities Department, a bit of

time in the Cash Department, a bit of time being a messenger. And did that for the next three

or four years.



And then, you became a manager?

No, in 1960, Ryders Discount merged with Cater Brightburn to form Cater Ryder, and at that

moment.. I don’t know that I ever really thought whether I was happy or unhappy in the

discount house, because in those days you took a job and you took it and you stayed at that

job until you retired at the age of 60, and there wasn't mobility in the way there is now.

Is there a challenge to it? What was the challenge in the discount house? The assessing of

risk, or...?

As a clerk in a discount house, absolutely no challenge at all. It was a way of passing the

week. And so...as I said, I didn't know what the job was when I went to it. It was perfectly

acceptable, it was no worse than any of the jobs that any of my friends were doing, and

certainly no worse than working in a bank where you would be an under cashier by the time

you were 26. And nobody changed their jobs in those days, so you didn't ever look over the

garden wall to see if the grass was greener; you accepted your lot and generally stayed in a

job. But, the merger in 1960, when I was still one of the junior clerks (I suppose not the

junior by then as others had come in) certainly made me think very hard, and I did decide to

emigrate and to change my job. And I went and saw Hilton Clarke, who was principal of the

discount office, and who was my godfather, and told him what I wanted to do, and he

arranged for me to have some interviews. And I had the thought, not really of knowing

where I wanted to go but I was offered a job in Canada. And at about the time that I was just

poised and wondering whether to take it or not I was in the Cash Department of Cater Ryder,

and I was by then in the accounts part of the Cash Department, and to say that I was assistant

accountant would be true, but as there were only two people in the department, which was the

accountant and me, it wasn't difficult to be the assistant accountant, and I certainly wasn't

called assistant accountant because nobody had any job titles at all. At any rate, I was the

person who added up the books at the month end, and then used to photocopy them, which

was a marvellous process of putting the original through an acid bath and rolling it round.



You took the original and put it on to what looked like a modern photocopier between two

sheets of photographic paper. It was exposed to the light for about five minutes, you then

took it out, put it through an acid bath, and as you rolled it out of the other end of the acid

bath, just like a photograph, it came out the far end as a photocopy. And it was really a

photocopy. And if you wanted two copies you did that again. And so photographing the

accounts for the directors, of whom there were four, took about an hour in the evening, as

you rolled these things through. And that was the sort of job that I was doing as the assistant

to the Accountant, adding up the books, posting the books, and at the month end helping him

with the dogsbody work. He then got pneumonia three weeks before the end of our

accounting year, and the directors looked at me and said, "Well there's nobody else, you do

it". And so I did. And from knowing absolutely nothing whatsoever about book-keeping or

accounting, except what I'd learnt in the Banks and exams in three weeks I had to become an

accountant. And so I took books home and learnt how to do it, and I produced the accounts.

The final night of the year, you had to be balanced by the following morning, I left the office

I think at about half past five, the next morning, having finally balanced and got the accounts

ready for the directors. And they didn't say thank you, and they didn't think there was

anything particularly odd about it, but nonetheless I had done it. The Chief Accountant was

then away for some time, and so I just did his job. I suppose in a way it was just lethargy that

I didn't go to Canada. I had something which was interesting to do, and I was busy, and I

couldn't...if I'd left there wasn't anybody to do the books, and so therefore the thought of

going to Canada was just shelved rather than forgotten. And that I suppose was about '61 or

'62, and six months later I was put into the directors' room, which came as a total bombshell

to me; I hadn't got the remotest idea that anything like that was going to happen. But the

directors had a way of having one or two non-directors in the directors' room, and it was

generally reckoned to be a stepping stone to becoming a director. And out of the blue they

said, "As from tomorrow you will move your desk in there", which I did, in a state of total

panic. And I went on acting as accountant for some couple of years after that, and then in

1963 I was made a director.



Your 'Who's Who' entry I notice says managing director. Oh, it's in the merchant banking,

where everyone is...they call them managing directors.

Correct. Yes, all the directors...there wasn't anything other than managing directors.

Yes, it would have been partner in the old days.

Yes, yes. And being the way they were they still referred to themselves as partners.

Indeed. So, at the age of 28, was this considered to be remarkably young, or did Cater Ryder

actually promote people at a reasonably early age?

No.

It seems phenomenally young to me.

They didn't, and I suppose I was the only non-family director. No, that's not true, there was

one other non-family director, somebody called Hugh Colville, who had been manager of

Cater Brightburn, and had run Cater Brightburn and had finally been made a director of

Caters before the amalgamation. They, if I may digress, used to work on the most remarkable

system at Cater Brightburn[ph] in that they had I suppose six or seven directors, called

partners, and they had a rota during the week, and one director worked Mondays and

Tuesdays, one Tuesdays and Wednesdays, one Wednesdays and Thursdays, and one

Thursdays and Fridays. So they all did two days a week, except for the chairman who shot

on Mondays, who was Johnny Musker, and he came in on Tuesdays and stayed till Friday

lunchtime when he went home. So he worked the longest week. Hugh Colville, having been

the manager and been made a director, worked Monday to Saturday inclusive, always, and he

was the person who made it tick. And to the end of the time when he retired he was called

Colville, and they were all on Christian name terms but he was Colville. And that was the



way it was. And he was absolutely superb; he knew everything about the market. He refused

to wear a top hat; in those days we all wore top hats, but he refused to and he wore a battered

old black Homburg. And he was a real source of knowledge, and was very kind to me.

When I became a director, the other non-family director, he to an extent took me under his

wing and taught me a great deal of what I knew.

And were you called Barkshire or John?

A bit of each. I suppose...I mean certainly when I'd been in the office I was called Barkshire.

End of Tape 2 Side A



Tape 2 Side B (part 4)

.....called me Barkshire for virtually the whole of my career, but the other younger directors

who I suppose were 10 or 15 years older than me called me John, so I was sort of in the

middle ground.

Was your social background the same as the other directors?

Yes.

And presumably Mr. Colville's wasn't?

That's right, yes.

What was his background?

He had come into the business...I mean I wouldn't want to overstate my social background,

but he came into the business as the junior clerk, as I did, but I suppose he'd been to the local

school, whatever it was, and I'd been to public school, and therefore I'd been to school with

the directors or with their sons and relations, and I met them socially, whereas he probably

didn't. And so it was more difficult for them to go on calling me Barkshire.

Was it obvious in the office if you were called John and he was called Colville? It seems...

It wasn't odd in those days. This was...you know, even as short a time ago as 20 years ago

those distinctions were still very much there, and I think if you had gone into any merchant

bank, as you must have done for your research, they were all the same, and those who were

regarded as being below the salt remained called by their surnames for the whole of their



lives, and they worked their way up, and they were the quartermaster commissions of the

business world, as opposed to the officer-cadet commissions.

Do you suppose his hat was his mark of defiance?

Probably, yes. But I mean Hugh Colville had no chip on his shoulder at all, and I think he

would regard himself as having been very fortunate to have had the way of life that he did.

So there was no resentment, because he'd grown up in the system.

Yes. All right, so you're a director at the age of 28. So now, what was your day like now that

you weren't wrapping up packets of securities and...?

The directors and some of the more senior staff would spend their morning visiting the banks.

And you remember I said the banks during the morning called their money out of the system,

out of the discount houses. You would go round and see perhaps 10 or 12 banks each, and

you would have a list of what money the banks had got deposited with you, and you would go

say to Barclays Bank who might have three or four million on deposit, and the director at

Barclays Bank would say 'I need to have a million back from you today, and will you sell me

some Treasury bills or will you do some other business with me?' So the business was all

done face-to-face in the mornings, not over the telephone, and the telephone would hardly

ring during the morning, and it was very much a personal market, and you made your

contacts in the market through your own personality or lack of personality.

Would Barclays have dealt with all the discount houses or did they have favourites?

They would have dealt with all the discount houses, but all of the banks would have had

favourites. And that was either historical or because the chairman of the bank said that you

will regard a certain discount house as a favourite, or because the sons of one of the directors

of the bank worked there, or because the two people doing the money got on well with each



other. And I had a particular friend in Lloyds Bank whom I played rugger with. Well I

hadn't in fact, he'd been refereeing a rugger match in which I was playing, a fellow called Bill

Brownsey. And he had thought I was getting fairly close to the rules, and he kept on blowing

his whistle on me. Nothing very serious, but just thought I was getting away with things.

And I was mildly irritated by this, as one does get, and he dropped his whistle, and entirely

by chance I trod on it - only it wasn't by chance at all - and it went deeply into the mud. And

we became firm friends from then on, and he then became the Assistant Treasurer at Lloyds

Bank, and he was the person we saw when we did the money. And we got more money out

of Lloyds Bank than any of the other discount houses, including those who were much

bigger, because I'd got a personal friendship with him. Now I'm not saying he gave us money

because we were friends; we paid the right rate for the money. But it meant that I could go to

him with propositions and say 'Look, we need money for a certain period, we'll pay you

slightly over the odds, will you lend it to us?' And he would generally do it. You can strike

up that sort of relationship, and you got proportionately more than you should have done, but

it was marginal.

You said your discount house was one of the smaller ones?

Yes.

How did they rank, in size and in perhaps status?

The biggest one was the Union Discount, followed by the National Discount; those were the

two big ones, and they with Alexanders were called 'the companies', because they had been

public companies, oh I suppose since the turn of the century. Whereas none of the other

discount houses had become public companies I think until after the war, and so they were all

fairly recently quoted companies. And they were the big three. We as Cater Ryder I suppose

ranked about fifth out of 12, so we were in the middle. As Ryders we'd been about ninth or

tenth, and as Cater Brightburn they'd been about ninth or tenth, so together we had moved up



the league. In asset terms I suppose our total assets then were, in the mid-Sixties were about

60 or 70 million, the biggest being the Union Discount I would guess at being about 200

million at that time, so they were considerably bigger than us.

And did status in the market follow size?

[PAUSE FOR THOUGHT] Yes. I hesitate, because it did, because the big houses had more

clout and the big three would have been quite a lot more than half the market in total. If you

then said which are the most prestigious houses, I think that you would probably have looked

at Smith St. Aubyn and houses of that sort, which were much smaller but were prestigious

because of their directors, their connections, and the quality of business that they did, in that

Smith St. Aubyn were very close to the merchant banks, and all of their directors were

brothers of, sons of, fathers of people in the merchant banks, and they were very much a

school of the old house. They had the best lunch room in the City; Duncan McKinnon, who

was chairman, was a keen race-goer; the Smith family were the Smith family of the City bank

of Smiths, which became the National Provincial when it was taken over, and Smiths Bank

remained until ten years ago as one of the branches of the National Westminster, and so the

Smiths were a great banking dynasty in the City. And so Smith St. Aubyn had I would say

more prestige than any of the other houses because of that, but in the crude nasty world of

money it was the big three which had the most power.

So you lunched better if you were linked with the merchant banks, but you got more money if

you linked with the clearers?

Yes. Yes.

And you linked with the clearers?



We again were in the middle. We had our links with the merchant banks, but we were...the

Ryders of Cater Ryder were part of Coutts, and so they had their links there. But otherwise

generally the directors of Cater Ryder didn't have connections of the sort that the Smith St.

Aubyn’s of this world would have, and therefore we were about in the middle ground, and so

we had to work hard to get a higher proportion of the money than was our share in order to

move up into the league occupied...or up into the ground occupied by the big three. We in

some ways had the toughest ground, because we had neither the very good connections nor

the size. On the other hand that gave us the opportunity of improving our lot, and moving up

the league, which we did.

How?

By getting more than our fair share of the money that was available. We forged quite

aggressive links with some of the American banks, and some of the young bankers in the

American banks I think took to a rather more earthy approach. And again perhaps it comes

back to surnames. There was somebody called Keith Woodbridge in the First National City

Bank as it then was, and somebody called Ken Roberts who worked there, and the two of

them had come into the City and had worked their way to their positions of running the

money, and they were about my sort of age. Now, if somebody from say Smith St. Aubyn,

and I'm only picking them as an example, I don't know that this actually true, but if somebody

from Smith St. Aubyn came in to see them they would say, 'Good morning Woodbridge' or

'Good morning Roberts', because as far as they were concerned that's what you called a

person like that. I would come in and say, 'Good morning Ken, good morning Keith'.

How had you picked up the Americans who worked...you worked with, with first names

rather than surnames?

They were the same age as me, and we went and had a drink together, and just got to know

each other. And we were just...when we sat across the table talking we had more empathy



between us I suppose. And that meant that we got a quite disproportionate share of their

money. And I think I'm right in saying that Citibank had to go to New York to get

authorization for the amount of money that they were lending us, because it was over the

limits that the local management had authority to lend. And we worked several interesting

schemes with them and with one or two other banks, whereby we used the exchanges to

create sterling, which was unheard of in those days. I mean everybody does it now. But we

perfectly simply used the swaps of selling dollars and buying sterling in order to create

sterling, and there was a rate at which you could do it, and that was simply a play on the

interest rates of the United States and here. And so you could produce money in this country

always at a rate. Now if we were very short of money we had the option of going to the Bank

of England who would charge us Bank Rate for a week, or going to one of our friends who

would charge us over Bank Rate for one night. And you could perfectly simply work out that

if you thought money was going to be relatively easy for the other six days it was worthwhile

paying a very penal rate for one night in order not to borrow from the Bank of England for

seven days, and that's what we used to do.

When are we talking about now, mid-1960s?

'63, 4, 5, 6, yes. And we were just about the only people who did that.

Who thought it up? Why were you the only one to do it?

I suppose it was a combination of the chaps at the Citibank and me, and we sat down and we

thought about the way the exchanges operated, and came up with the idea that we could

create money any day of the week if we wished to, so we did.

And what did your fellow directors at Cater Ryder think about this wheeze at the beginning?



They realized that it was making money for us, and so they went along with it. I think to

begin with they were very suspicious.

Could you do it on your own authority? Did you have to convince them first?

Oh I had to convince them first. Yes, as the junior director one had no authority at all, and so

the chaps at Citibank had to convince their management and I had to convince my directors,

and I have no doubt that the two senior people talked and authorised it between themselves,

and we then got on with it. But it was that sort of thing that the personal contact could

produce, and it was through that sort of activity that we were able to increase the size of our

money book in the Sixties. And by about 1965 I suppose I was running the money book and

was a director in charge of the money book and really had, I wouldn't say complete authority,

but fairly complete authority to run the money book in any way that I chose.

How did you learn about the market? I mean did you read newspapers, did you talk to

people, did you just sit and think about it?

I think a mixture of all those things. I went to banking school and took the banking exams,

and that gave one a reasonable start because it brought you up...I think it brought you up to

about stage one of accountancy, stage one of law, stage one of economics, and stage one of

monetary theory, if you'd been going on to qualify in any of those areas, or take a degree in

any of those areas. So it gave you a good grounding without getting into the higher more

esoteric levels. And so I had an understanding of the basic way the system operated. I read

quite a lot, I talked to people.

What did you read?



I read all the economic theory books that there were on the City; I read the newspapers from

cover to cover, and publications like 'The Economist'. So yes, I mean I educated myself as

far as I could. And then I suppose by talking to people learnt the practicalities.

What sorts of people, who might you have talked to?

People like Hugh Colville taught me an enormous amount. Other people in the market,

talking to the people, at Citibank for example. Again I only use them as an example. We

would sit down after work in the evening and they would say, 'I don't understand this about

the way a discount house works' and I'd explain it, and then I'd say, 'And I don't understand

how that bit of the foreign exchange market works' and they'd explain it. And we'd both think

about it and go back the next day and say, 'I still don't understand what you said yesterday,

explain it more simply'. And so, it wasn't formalized and it wasn't trying to educate each

other, but we learnt off each other, and with each other, and learnt the practicalities of the

way the market operates. And in the end it was just then a question of somebody having a

wheeze, and saying, surely if we did this or that, we could do something else, create money.

What did the Bank of England think about this?

It took them some time to find out, and when they did find out they called for the chairman

fairly quickly and said don't do it, because it was wrecking their exchange rate policy, and

they thought they had control of the exchange rates, and of interest rates, and we were driving

a coach and horses through it. I'm glad to say that the chairman said tough to the Bank of

England. We were actually the first discount house, and this was nothing to do with me, to

totally sell all our Government bonds, and that was unheard of. One of the things the

discount houses were supposed to do was to maintain a market, or help to maintain a market

in short-term Government bonds, and always to hold some. And the directors, and

particularly the chairman, Johnny Musker on that side of the business decided that interest

rates were going up and declined to hold any bonds, sold the lot, and we published our



balance sheet with no Government bonds. And so we were rebels from the top downwards,

and I suppose to an extent I happily fitted into that. Only marginally rebellious, I mean

nobody was very rebellious in the City in those days, but into that marginally rebellious

atmosphere, and it suited me very well.

If you told the Bank of England tough, did they ever so nicely threaten not to be a lender of

last resort to you? What sanction do they have?

They couldn't do that, but they could make life pretty tough for you.

How?

By lending for longer than seven days when you came in, and...

So if you want the money, you have it for a fortnight?

Correct. And if you want the money you can have it at half a per cent over Bank Rate. So

they could put squeezes on you in that way.

Did they do this to you?

Yes. And we took the commercial view that we could live with that.

Because the profits you were making through swaps were...?

And we were generally very...the way the Bank of England operated in the market was

through the Government broker, who was Seccombe Marshall & Campion, and they were if

not the smallest house, one of the smallest, and their principal job, apart from running a very

small operation of their own, was to be the Bank of England's eyes and ears and operating



entity in the market. So at about 12 o'clock Seccombe would telephone all the way round the

market and say, 'How short are you?' And if we for example were 20 million short we told

them that, and all the houses would then tell them their figure, and they would add up the

total shortage of the market at 12 o'clock, which might on that day be say 150 million. Now

the Bank of England would know what the shortage or surplus was at the end of the day.

And let us say they knew on that particular day that there was to be a shortage in the market

of 20 million.


So Seccombe would ring round the market, and if they found the market as a whole was 150

million short, and the Bank of England knew at the end of the day there was a 20 million

shortfall in the market for whatever reason, tax collection say, they would know that they had

to put 20 million into the market. The other 130 million was there, somewhere in the system.

It was somewhere between Bank A and Bank B. And they knew that if they made 20 million

of credit available in the market by one means or another, at the end of the day the market's

books would balance. We might not think they were going to, but they would know they

would. So the Bank would then say one of two things. Either they wanted money rates to be

soft, come down a little bit, in which case they would immediately put £20-million into the

market at a quarter past 12, and Seccombe Marshall would come on to each house and buy

our proportion of the total 20 million, our percentage proportion of securities from us. So

that our shortage would go down from the 15 million I talked about to 12 million, because 3

million was our share of the total shortfall of 20 at the end of the day. Interest rates would

immediately start to drop, money would then come out from the rest of the system, and the

market would balance its books at the end of the day. If on the other hand the Bank of

England wanted interest rates to firm up, it would do nothing, and not buy any securities from

the market, which would mean that at half past 2 the houses had to go down to the Bank of

England and borrow at Bank Rate, and so that would have kept rates at Bank Rate or close to

Bak Rate right up till 2.30. So it would have meant all the market rates, all interest rates

would have firmed up during the day, and the Bank of England would have exerted short-

term pressure on rates. So it could by its actions between 12 and 2.30 push rates up or down.



Seccombe Marshall were the people who as I say listened...first of all picked up the shortage

from all the houses, then acted in the market or didn't act, depending on what the Bank of

England wanted to do. We cheated. If we were 20 million short and we thought it was a

pretty rough day we told Seccombe we were 30 million short, so instead of getting 3 million

of securities bought from us we got 8 or 9 million bought from us. And that meant that our

shortage came down to about 10 million very quickly. That meant that we weren't as short as

we should be compared with the rest of the market, so we could then go out and either buy

securities at a profit or lend money to the other houses at a profit, and so we could make

additional profit. Conversely, if money was plainly very easy and there was a surplus on the

day, and we were 5 million short at 12 o'clock we'd say we're not short at all, we're square, at

that stage. And that meant that if the authorities were going to come in and sell securities to

the market to absorb a surplus they'd sell them to us first, and that meant we could either sell

them on to other people at a profit, or build up our book at cheap rates in the afternoon. And

so we'd constantly...cheated was too strong a word, but we constantly manipulated the system

in order to make more profit than we should have been. And although they could never put

their finger on it the authorities knew. And they could never actually, or they would never

actually say you're lying, but nonetheless they knew that we worked the system, and so we

were rebellious right the way through.

Did they ever discount your discounting I wonder?

Probably. I should think they knew which houses cheated and which didn't, and knocked a

bit off, or added a bit on, depending on which way round it was. And so I should think that

they aimed off a bit for it, which meant that we had to alter our figures even more!

It's amazing the system worked. And so they presumably thought you were very socially

irresponsible.



Yes. Yes. And some of the other houses thought so too. Because the big houses would

never do anything other than tell the exact truth all the time.

Who else was in your category do you think?

Oh I would think that there were probably two or three other houses who were regarded as a

bit sharp. And I should think that if you had asked people at the time, that they would in a

disparaging way have said, 'Barkshire's a bit sharp'. If I'd done the same and had been in

Smith St. Aubyn they wouldn't have thought it was a bit sharp, they may even have thought it

was quite smart, but because I was only half in the Establishment, and was sort of in the mid

ground I think that it was reckoned to be a bit sharp, and I know perfectly well that some of

the directors in the other houses certainly didn't like me.

And did this harm your business at all?

No. I mean yes it might have done, very occasionally at the fringes. If somebody had the

choice of dealing with us or somebody else they might have dealt with somebody else, but

no, no.

So the other discount houses presumably didn't really affect your business?

No, not at all. And so they could bad-mouth you to a marginal extent, but it would have had

an infinitesimal effect on your business.

Indeed presumably in some sectors of the business, such as the American banks they would

have appreciated it.

Yes. Yes, they would indeed, and it would have been a plus.



Yes. What other banks beside Citibank did you work up, and Lloyds, did you have?

I suppose...oh quite a number. There would have been... I mean it's difficult, and I really use

those two as examples, to say it was a particular bank or not a particular bank, because

people moved round, and there was some mobility then, and so if somebody moved from one

bank to another you might find that your relationship with the first bank deteriorated and

your relationship with the next bank improved. And so it was a slightly moving feast, and it

was more a relationship with people rather than banks. But we at that time, one of the

functions of the discount houses was to underwrite the Treasury bill tender, and we were

required to do so by agreement with the Bank of England.

Can you explain what that means?

It meant that every 31st of December all the discount houses had to in confidence disclose

their net assets to the Bank of England. The Bank of England would then add up the total

assets and would then go back to each house and say you are X per cent of the total assets.

And we might, say, have been 10 per cent of the total assets. Every Friday there was a

Treasury bill tender, and the Bank of England would offer a certain number of bills to the

public to buy. The discount houses were obliged to underwrite and to subscribe for the

whole of the number of bills on offer. So if we were 200 million bills on offer, we had to

subscribe for 10 per cent, because we knew we were 10 per cent so we had to subscribe for

20 million bills. Come what may, whether we liked it or not, we had to. And if the number

on offer was 500 million we had to subscribe for 50.

And you would have been perfectly straight in giving your net asset had the Bank...?

Had to, yes, yes, there was no...

That was a legal requirement?



That was a legal requirement and there was no way round that. So every single week the

discount houses underwrote the tender. Then in the mid-Sixties the discount houses agreed

between them at what rate they would underwrite the tender, so the chairman of each of the

houses would meet on Friday morning and decide what the market rate was to be. And so the

Bank of England sold all of its bills at that rate or better, so the moment that the public or

banks or anybody else came in to buy Treasury bills they had to pay more than the discount

houses' underwriting rate. And so the chairman would come back from the meeting at quarter

past 12 and say the rate is such and such, and the number of bills on offer is such and such,

and we would say 10 per cent of that is this, and we would then apply for that number of bills

at that price and we made out the various forms and sent them into the Bank of England and

they had to be done by 1 o'clock.

And would the Bank of England agree with the rate set? Was there any negotiation?

No, none at all. But, if they felt that the rates might be softening and they didn't want them to

they would tighten money on the Thursday, and on the Friday morning, so that we were faced

with high rates, and therefore we wouldn't lower the Treasury bill rate. If the Bank of

England wanted the rates to come down they would do the reverse, they would make money

easy on Thursday, so that we were in the mood to lower rates and bid aggressively on the

Friday. So they could exert immediate pressure on us in order to push rates one way or the

other.

And you wouldn't place the bills would you? The Mullins presumably, the gilts brokers

would place the bills would they? You would just underwrite?

No. No, we underwrote them and then we got them direct from the Bank of England.

So you placed them then with your clients?



With our clients, yes. We then had got all those... Let's assume that the discount market got

all the bills, and there were 200 million on offer, so we would get 20 million of bills to pay

for the following week. We could buy them on any day we liked, and so you could buy them

all on Mondays, spread evenly over the six days of the week, or on any proportion that you

chose. Now we made a guess as to which days we thought there was going to be a good

supply of money, or a lesser supply of money, and we would weight our bill intake for the

good days against the bad days. But that didn't make any odds, you had still got 20 million

bills. The banking system would then come to us, the discount houses, to buy the Treasury

bills from us, and it was at an agreed turn over a 16th per cent per annum. And so that the

banks...we underwrote them at a certain rate, the banks would buy at a 16th per cent per

annum higher than that. So we had a known turn. And so the Treasury bill issue all came -

didn't all come, it came to the discount houses or to anybody else who chose to buy direct

from the Bank of England. All Mullins

did - not all - what Mullins did was to act as a Government broker in the Government

securities market, as opposed to the Treasury bill market.

Ah, non-dated gilts as opposed to [INAUDIBLE] Treasury bills.

Well any dated gilts, but not Treasury bills. So they were the Government broker.

Which are what, 30 days, 60 days, 90 days, the Treasury bills?

They were typically 91 days, and that was the ordinary Treasury bill. Occasionally they

made shorter or longer issues, but week in week out the vast majority of the bills were 91

days; they were a three-month bill. And that was quite separate from the bank operating

through Mullins[ph] in issuing stock or buying in stock in the Government securities market.

[BREAK IN RECORDING]



One thing perhaps I should just recall is that the cartel was abolished, and I can't remember

when it was but it must have been in the very late Sixties or...yes, it must have been

somewhere in the '67, 8 9, 1970 range of years. The cartel was abolished, whereby the

discount houses were stopped agreeing the rate at which they would underwrite the Treasury

bill tender. They still had to underwrite it in amount, but it was at a rate to be decided by

each house, which meant it was a free-for-all. Now that in the world of the discount houses

was, certainly to the traditional directors was a total disaster, because it meant A) you had to

think, and having thought you then had to make a decision, and you then had to do something

which might lose you money. Because the banks said, we will buy Treasury bills from the

market at a 1/16th per cent per annum turn, but from the average rate at which the bills were

issued. So if you had bid more than the average rate you could sell your bills at a loss,

whereas in the good old days it was a 16th per cent per annum turn, regardless. Now it might

be an eighth loss.

What broke up the cartel?

As far as I can remember it was Bank of England pressure; it was the general loosening of all

the cartels in the City, and it was at a time when the liquidity ratios were altered and were

generally freed. And it must have been...it was under a Labour Government, and it must have

been at the time when the whole of the credit control mechanism was being altered, and the

way the money markets operated were altered. And I'd need to go back to my books to recall

precisely what happened when, but the whole system was in a state of change. And we

talked about the Sterling money market emerging, the inter-bank market, that was emerging

at that time, and so you had banks borrowing and lending money to each other, which meant

the old way of operating the discount houses' liquidity no longer worked.

Well has to be between about '67 and 1970 then.

It was in that period, yes. Competition in credit control.



That's '71.

The three Cs followed it. And that was the Conservative Government.....

End of F2291 Side B




This is an interview with Mr. John Barkshire on the 17th of December, 1990, by Kathleen

Burk, tape 3 side A.

And so in the late Sixties all of the ways that the money market had operated really for

centuries was starting to be dismantled, first of all through the Eurodollar market appearing,

and that was really the first chink in the armour, because banks dealt freely with each other

and through brokers, and then the sterling into bank market, and then the desire by the

Government in the late Sixties to control credit through various means, all meant that the

system got changed. And one of the elements that affected us was the abandoning of the

cartel in bidding for Treasury bills. We worked out a way of bidding for Treasury bills that

guaranteed us no loss. And it was perfectly simple, it was merely a mathematical formula.

And we used to bid sometimes for the whole of the Treasury bill tender as Cater Ryder on a

formula that I worked out, which ensured that we sold the whole lot at a profit. It was an un-

loseable formula. It's perfectly simple, it worked on the method of doubling-up, and as long

as you got your bottom price right for which you bid for one Treasury bill, and you doubled

up at every penny upwards, whatever price you got them at, the doubling-up of the next lot up

paid for everything below that, and the rest was profit. And we used to wreck the Treasury

bill tender in the same way as we had wrecked the money market operations a few years

earlier, because we were the maverick. We would buy as many bills as we wanted, knowing

we were going to make a profit. Everybody else in the market was having to guess at where

the price would be, and they were just bidding at that price to try and make a profit. And so

we had an enormous proportion of the Treasury bills coming in to us every week, and again it

didn't necessarily endear us with the rest of the market. The Bank of England probably didn't

care, they got their Treasury bills sold.

I don't quite understand how you decided what price to set that you knew you wouldn't make

a loss.



Well I suppose that there was an element of judgement in that, but if you were bidding for

200 million of bills, and your lowest bid was for one million, if we think of the spread of

prices you can get through going up, through 1, 2, 4, 8, 16, 32, 64, 128, and then...because

you could over-bid 256, you have got ten different prices at which you could bid. And if you

made them tuppenny increments, old pence, then you're covering a two-shilling spread, and

that's about one per cent in interest rates. It was inconceivable that you could have a spread

greater than that in the Treasury bill tender. If there was, and you really were in a week when

rates could have gone anywhere you didn't do it, you simply bid for your minimum amount at

a safe price.

And how do you determine a safe price?

You could...we would bid for our 10 per cent at a price which was 2 per cent over the current

market, and if you got them at that then the end of the world was fairly close to coming, or

rates would have moved an enormous amount. There is no system which is a hundred per

cent safe, and which one could possibly say there is no way that we could not have lost

money on it, but we didn't in the three years of operating it ever lose money on it, and we

never were concerned that this was a day when it might go wrong.

Would the Bank of England indicate a price below which it wouldn't sell?

No.

So that's what's interesting, is how you determined...how you set a price to outbid if you

wished the rest of your...

You knew what three-month money rates were on a particular day, so you went in to writing

your Treasury bill tender knowing that the three-month rate was say 6 per cent, as it perhaps



would have been then. And looking ahead, you could say interest rates are either going to go

up or down over the next week, or not move at all. By how much? If we really thought the

Bank Rate was going to go up 1 per cent next week three-month interest rates wouldn't be 6

per cent, they'd be nearer 7 per cent, because everybody would be thinking interest rates were

going up the following week. So the anticipation of the market would have already moved

three months' rates in the direction in which rates were likely to go. So there you were,

midday on a Friday, looking at the market as it was, anticipating a movement one way or the

other. You then from that got about a 1 per cent further movement in rates away from that

anticipated rate in which you're covered and would make a profit.

Real gambler's instinct.

Perhaps, based...

Based on a system.

Based on a system, yes.

So what happens if there's an attempted assassination of the Pope then, on the Thursday say?

Well that would depend on whether you think that made interest rates go up or down. But if

they went up... I mean if the world did fall out of bed over the weekend and if we had a 1987

over the weekend and rates did move 2 or 3 per cent, we would have lost a great deal of

money.

And would you have been bailed out by the Bank of England?

Not to the extent of not losing money, no; we would have lost money.



But you wouldn't have been allowed to go out of business presumably?

Probably not, although the second biggest house, the National Discount, eventually went out

of business, and there had been plenty of bankruptcies in the discount market over the

century.

Well over in [INAUDIBLE], I thought because of that they didn't actually allow discount

houses to...

They didn't...to actually fail, and the National Discount were taken over by Gerrard and Reid,

and were bailed out in that way.

And you don't think perhaps they might have been just glad to see the end of your house as a

particularly...?

No, I think the knock-on effects would have been too disastrous for them. I wouldn't want to

paint the wrong picture. We weren't that bad bad boys, we were just a bit rebellious. We

were no more than one of the naughtier boys in class, we were never in any danger of being

expelled.

And relations with the Bank of England would have been distant but polite?

No, in fact the relations with the Bank of England were on the whole very good indeed. And

they understood us; they may not have agreed with what we were doing, they may not have

liked what we were doing. Where relationships were bad were with the Government broker,

because he was the jam in the sandwich, and we were the people...he was the person whom

we would make life difficult for by overstating or understating our position, or not co-

operating, or not doing what he wanted in some way. So he was really the one who got the

thin end of the wedge. The Bank of England may from time to time have got a bit cross with



us, but they knew we were utterly professional, and we would never do anything that was in

any way illegal or wrong. And indeed with things like the Treasury bill tender I went down

to the Bank of England and said this is what we're proposing to do, and they may have said

that's a bit anti-social. If they had said, 'Look John, just please don't do that', we wouldn't

have done it. If they'd said to us at the time of doing the swaps, 'Look, just please don't do it',

we wouldn't have done it. What they said was, 'We don't like this, you're wrecking the

system', and we might then have said, 'Are you telling us not to?' And they'd have said,

'S'pose not'. And the Bank of England in those days could influence...and it only required

'please', and you didn't do it. And that's something which I have held to throughout my life in

the City; I've always been very close to the Bank of England and I've always kept very close

to the Bank of England. I've always told them exactly what I was doing, and to this day I still

do. And whenever I was proposing to make any commercial move of any sort at all I would

always go and see them and talk to them and explain what I was doing and why. And indeed

ask their advice. But the great thing I always felt with the Bank of England was, never

surprise them. They don't like being surprised. Tell 'em. And so...and I have always, if the

Bank of England have said to me, 'Please don't', I never have. And they knew that.

Have you found, just to follow this a minute, this relationship with the Bank of England, a

change in either the quality or the powers in the Bank from the Sixties through to the period

now?

Yes. There is plainly a difference in...there is a difference certainly in the way they operate,

because then, in the Sixties, 64 banks in London only, of which 15 were foreign I suppose,

the 12 discount houses, Government broker in the stock market. By calling in a handful of

people, the Governor had influenced the City. A dozen merchant banks. You know, the

numbers were very very small, and he only had to talk to the chairman of the Accepting

Houses Committee and the chairman of the Discount Market Association, the chairman of the

Clearing Banks Committee and the chairman of the Stock Exchange, and the City was

influenced. And the City being the tight-knit club that it then was it would have been very



unlikely not to have heeded what the Bank of England requested. With 400 banks, mostly

foreign, most of the committees having lost some or all of their power, there isn't this easy

way of influencing people, but I don't think that I would say that at the end of the day the

Bank of England's influence is much less. It's more difficult for them now; they have to be

more overt.

Morgan Grenfell for example?

In what way?

Threatening to withdraw their licence, if they didn't do what they wanted.

Yes.

I mean in your Sixties it wouldn't have been necessary?

It wouldn't have been necessary, no, no. I mean they would simply have called Lord Catto in

and said 'Please don't', and he wouldn't. So, I would say that the Bank of England's power,

yes, marginally less now, but not much, and not significantly so. The method of influencing

people considerably changed, and as I say overt rather than covert.

Legislate even inactments rather than inflence.

Yes.

OK. So you were with Cater Ryder until 1972, and then you decide to leave?

Yes, it really goes back a little bit further than that, and it goes back to the mid-Sixties. And

the Eurodollar market I mean I suppose started initially in the late Fifties, had really grown



and had come of age by 1965, '66, '67, and it was in London, and being an off-shore market it

couldn't be in the United States and had to be somewhere, and London then was the

only...only possible place for it to be I suppose. And there wasn't any other financial centre...

Did it not begin in Paris and then move to London?

Paris did a bit of it, yes, but it was a very small bit of it, and there wasn't the international

banking community in Paris at that time. And there was only just beginning to be the

international banking community in London, because the American banks were only just

beginning to come in their hoards. And so it would be easy to say that London was very

clever to get the Eurodollar market to come to London; in a way it was a choice of London or

nowhere else, and I think it almost had to be London. Having said that London was I think

very smart in the way it exploited that, and the way it created the environment and the

mechanism which allowed the Eurodollar market to thrive here. And in particular the foreign

exchange brokers moved in to broking Eurodollars, and the broking system for some years

became the heart of the Eurodollar market. The foreign exchange market had reopened I

think I'm right in saying in 1953, and the foreign exchange brokers who were authorised, or

re-authorised by the Bank of England were effectively the same foreign exchange brokers

who had been shut by the Bank of England in 1939, and with one or two exceptions, one or

two amalgamations, as you probably know, they'd taken on the staff from the foreign

exchange brokers into the Bank of England during the war, those of them who didn't actually

go to war, and they then released them in 1953 to go back to their own firms and start them

again.

Which firms are you referring to here for example?

Harlow Meyer, Marshalls, Godsells. There must have been nine firms of foreign exchange

brokers, broking purely in foreign exchange, broking purely between banks and purely

between banks in London; not just British banks but any banks in London. So the foreign



exchange market was a very restricted affair, and plainly with exchange control and all the

other regulations that there were on then, the market was well controlled by the Bank of

England, fixed exchange rates or exchange rates only moving within narrow bands. We're

almost back to that again. So the foreign exchange brokers had re-formed. They saw the

Eurodollar market when it started to appear, and very smartly said, surely this is next to

foreign exchange, why don't we broke in Eurodollars as well as in foreign exchange. And I

imagine they talked to the Bank of England, and the Bank of England I imagine said yes, or

they wouldn't have done it, and all the brokers, or virtually all the foreign exchange brokers

set up small Eurodollar broking departments. And generally if one looks like a typical

company like Marshall, M W Marshall & Co., they employed 12 people, they'd have

employed three in the Eurodollar broking area and nine in the foreign exchange broking area.

But a very high proportion of the business that was done, almost all the business that was

done in both those markets was done through the brokers. So, London was changing by the

mid-Sixties. At about the same time the brokers who were called bankers' agents, who

operated between the banks and the local authorities, purely in sterling, and that would be

generally a new range of brokers like Guy Butler, Murray Jones, and one or two others of that

sort, Short Loan & Mortgage, who was Mr. Woolly's company which had been going for

some time, all of those were typically, or traditionally bankers' agents, and they only operated

between banks and the local authorities; that was banks lending some of their money to the

local authorities, either short-term but mainly long-term.

Just to clarify my own mind here. Are we leading to the establishment of what are called

money brokers?

Yes.

OK, go ahead.



That's exactly what we're leading to, because all of this was tied up together. We then saw in

the mid-Sixties an inter-bank market just begin to start, and it was started by one or two

banks lending direct to each other. And the Bank of England didn't seem to mind, and so a

little bit more began to happen, a little bit more business began to happen. And then brokers

started to emerge to broke in the inter-bank sterling market. And at that particular minute

therefore you had three sets of brokers operating, all of whom were tiny. You had the foreign

exchange brokers who were operating mainly in the foreign exchange market, but also in the

Eurodollar, entirely between banks in London; you had bankers' agents operating between

banks and the local authorities in sterling, and they were as is implied on the side of the

banks, and they were always perceived to be on the side of the banks; and you then had the

inter-bank brokers acting purely in sterling between banks in London.

Basically buying money and selling money?

Borrowing and lending money. The local authority business and the inter-bank sterling

business and the Eurodollar business was all borrowing and lending money, whereas the

foreign exchange business was the buying and selling of money. But you had this emerging

broking fraternity. In the TA, one of the people whom I got to know quite well was

somebody called David Spillman, who was in the same regiment as me, and we used to pass

the nights when we were out on patrol or should have been watching out for the enemy or

doing some other soldier-like things, we used to pass the nights talking about the City. And

he worked for one of the foreign exchange brokers, M W Marshall & Co. And we theorized

about the way the markets were going, and the conclusion that we both came to was that

there was going to be a convergence of the money markets, or a convergence of the firms

making up the money markets in the years ahead, and that we would begin to see money

market houses emerging which would be likely to encompass the activities of the discount

market, the foreign exchange market, the Eurodollar market, and the various sterling inter-

bank markets. Surely they were one market; surely there was only one thing, which was

money. We were all dealing or broking in it. Therefore was it not logical that a single house



could deal in all aspects of those markets. In about 1964 I was sent to work in New York for

a short space of time, and was attached to Salomons, simply to broaden my education and to

see how another market centre...another money market operated. It was quite fascinating. I

was attached to Sidney Homer, whom no doubt you will know as among other things the

author of the book on the history of interest rates. And at that stage he bestrode the money

market economists in New York, and was second to none. He was the great guru then. A

young lad came and joined about the same time as I did called Henry Kaufman,to be taught

by Sidney.

A new guru was he?

A new guru. And Henry and I used to sit figuratively at Sidney's feet, while he lectured to us

on the money markets. And I spent I suppose three or four months in Salomons, and came

back to London in '64 saying, that is the way we've got to be. We've got to have dealing

rooms which spread the markets in the way that Salomons and the others do in New York.

They are years ahead of us in the way they operate. Why should we be so restricted in

London? And if one looks back, Salomons themselves were pretty restricted in those days,

and only covered a tiny percentage of the areas that they cover now, and were only in New

York and very much just the New York money market. But to somebody from London it was

a new world, and it was a highly attractive one. And so I came back filled with New York,

and then seeing these developments taking place in London.

How long were you in New York?

Oh only three or four months, a very short space of time. And said to myself, and David

Spillman[ph] said to me and I said to him, surely we are going to develop like New York, and

if we look at what's happening in London, if we put it all together, we would be some way

towards creating a City Salomons. Isn't that the way we ought to go? So I went back and

talked to who were then my fellow directors at Cater Ryder, and they said nonsense boy, go



back to writing the money book, and David Spillman went back to Veonas[ph] and

Marshalls, and they said nonsense boy, go back to doing your broking. But as the climate

changed between '64 and '65 '66 '67 the markets then developed and we dripped away in both

of our organisations at this, and by '66 we'd won over both of our two sets of principals. And

the result of it was that we agreed to buy Marshalls, and it was just about the first move of

that sort in the City. Some of the discount houses had taken stakes in money brokers before,

in the previous year. Gerrard & Read had taken a stake in Murray Jones; somebody had

taken a stake in Guy Butler, Clive Discounts had taken a stake in Guy Butler, but that was a

sort of 10 per cent stake. And we agreed to buy a hundred per cent of M W Marshall. And

we agreed it with the partners who owned it, and the agreement was that they would retire,

and a new generation, including David Spillman,of the senior dealers would become the

directors of Marshalls. And so it was highly attractive to the owners selling out for £385,000,

which was a lot of money in 1966. So there was a new generation of managers in Marshalls

being given their heads to an extent of running their element of a new thing, and to us at

Cater Ryder leading the way into a new field of acquiring a foreign exchange programme.

That we agreed in late '66. At the same time we said to ourselves, why only foreign exchange

broking, and why only foreign exchange and British Eurodollar broking; what's wrong with

the sterling money markets? And so we formed a company called Cater Brokers as a wholly-

owned subsidiary of Cater Ryder, to be brokers in both the inter-bank market and in the local

authority market.

Presumably by this time you were a bit more senior a director?

Yes. I'd been a director for three years by then, so yes.

So you had more clout inside [INAUDIBLE].

More clout. I was running the money side of the business, in fact I was running all of the

business except for the investment side. And I was and remain a lousy investor, and they



quite rightly recognised that, so the other directors ran the investments and I ran the money

side.

And yours presumably was the more profitable side.

Well no, it was their side which really decided whether we made an enormous amount of

money or went bust, because by getting your investments right or wrong, you will make or

lose the big money. But my objective of my side of the business was to make a constant

profit. So regardless of what they did we were turning in profits. If they could make a

bonanza, terrific, if they lost money we probably wouldn't make an overall loss. And so I

was for turnover and creating daily profits.

You were the bread and butter man.

The bread and butter, yup. And that I was relatively competent at, and as I say I'd have been

quite hopeless at running the investment side. And running the money side of it was largely

mathematical; provided you were reasonably brave, reasonably difficult, and mathematically

literate, it wasn't difficult. And so yes, when I proposed that we buy Marshalls, dripping

away for two or three years in the end they agreed, and it was to be part of my part of the

organisation, and in forming Cater Brokers, that was also to be my part of the organisation.

So I would run Marshalls, Cater Brokers, and our money book. And we were saying, it's all

money, we've started to create the London Salomons in the money world. In forming Cater

Brokers we formed not only an inter-bank broker but also a bankers' agents, a local authority

broker, and that was the first time that the two had been put together. In theory up till that

moment in the two or three years of their development, the inter-bank broker dealt only

between banks, and the bankers' agent dealt only between banks and local authorities. It was

thought to be a conflict of interest to have the two together, to which we said rubbish, put the

two together. A foreign exchange broker had never been put together with a sterling broker

before. And so what ground did we break? We broke the ground of putting the two types of



selling money broker together; by putting a foreign exchange broker together with a sterling

broker and creating a total broking entity, and for the whole lot to be owned by a discount

house. So quite a lot of new ground, and the papers of the time were not all complimentary

in the way we were going, and nor were the commentators. And so...

Why not? What did they object to?

Surely there's a conflict of interest; surely this is breaking up the City club; surely this will be

bad for the future of the City; surely the Eurodollar market will be over in two years; surely

all of this is just a passing whim of a few people, and there can't be any long-term future in

foreign exchange broking, Eurodollar broking, or in the sterling money markets developing

outside the discount market, which traditionally has been the home of the money markets.

You're brash and new, and you don't really know what you're talking about.

That's fairly comprehensive!

Yes! (laughs) So there was quite a lot of criticism round the place. But Johnny Musker,who

was chairman of Cater Ryder, revelled in it. I said earlier that he had had his knuckles

wrapped by the Bank of England for being the first discount house not to hold any

Government securities. He absolutely adored having his photograph in the newspaper. He

adored being written about, whether it was complimentary or critical. All of this brought

quite properly praise or criticism of the chairman. The criticism or praise rubbed off on me

was minimal, because most people had never heard of me, and I didn't matter anyway, it's the

chairman's decision in the end. And so he quite rightly got a great deal of publicity out of it,

which he was delighted about. And to give him his due, he was...the majority of them didn't

like him, but he was a very good chairman to work for, because you could go to him and you

could say, 'This is what I want to do, these are the reasons for it', and if he felt you were right,

regardless of outside opposition, he'd say yes, do it, and would then back you. Having said



that he never backed us in anything that went wrong, and I don't know what he would have

done if it had gone wrong, but he was somebody who was prepared to trust.

When you say outside opposition, is that other directors or [INAUDIBLE]?

No, outside the organisation, criticism from the City.

And if the other directors had objected but he liked it, what would happen then?

He probably wouldn't have won. It would depend which of the other directors had objected.

If Arnold Brown, who was the deputy chairman had objected he would have lost. Arnold

Brown was actually the power within the organisation, and he was the person who had more

influence over me than anybody else. But perhaps we can come back to him at another time.

The fact was that Johnny Musker adored all this, and was very very supportive of it, and so

within the organisation there was an umbrella of support. But nonetheless he was pretty

controversial. If you add that to the fact that we had been the first discount house two years

before to computerize, which again was an interesting exercise. The directors decided - I

suppose it was just about the time I was becoming a director - to computerize, and nobody

actually knew what a computer was, but it sounded a good idea and other people in other

businesses were doing it. So they sent me off on a systems analyst's and computer

programmer's course, which I went on, which I found fascinating. And I came back, and then

we decided what computer we were going to buy and I programmed it and analysed it and

installed it. And so we were the first people to have computers. That again brought quite a

lot of criticism around the place.

The first discount house to have computers?

Yes. But again, it had been a fascinating experience. So there we were, we'd got this

money...we had started to create this money market operation, and we moved offices from the



Lombard Street where we'd always been. And in those days the discount market was known

as Lombard Street, and Lombard Street did something or other it meant the discount house

did something. And so to move from Lombard Street with the most prestigious address in the

world, as it was regarded then, was quite something, quite a brave move. When I first went

to work at Ryders, Lombard Street was paved in rubber still, and that was so that the metal-

clad carriage wheels didn't make a noise and disturb the bankers of Lombard Street when

they drove up and down, and it wasn't till the late Fifties that the rubber was dug up and

replaced with tarmac. And as a boy, or young man first working in the City, on a wet day one

of one's infinite pleasures was to see unsuspecting drivers drive into Lombard Street and put

on their brakes which of course had no effect at all, and they would end up skidding firmly

into the next car. And you knew that on a wet day there would be two or three crashes in

Lombard Street. But it had little rubber tiles all over it. But I digress. We moved from

Lombard Street to 1, King William Street, where we built, which was quite unashamedly

modelled on Salomon's dealing room, an enormous, I think it was the first single-floor

dealing room in the City, with every aspect of the money market represented in it. So at one

end we had Cater Ryder's dealing room, we then had the sterling money markets, the inter-

bank market first because that related to our operation, then the local authority market

because that related to the inter-bank operation, then the Euro.....

End of F2292 Side A




So we had created a contiguous dealing room of all aspects of the sterling money markets.

And in that room you could deal in anything, in both the sterling and the Eurodollar and

foreign exchange markets. And although, I mean we say it ourselves, it was a showpiece, and

people who came to London used to come and see our dealing room, because it was the only

dealing room like it in London. I mean now it would be tiny compared with what's being

created and old hat, but then it was novel and new, and you had to go to New York to see

anything like it. And we were very proud of it. And it was...it was exciting; we'd created an

atmosphere. And it was all glass and you could look through from one dealing room to the

other and you could see right the way round from one end to the other. Again, old hat

nowadays, in those days utterly unheard of. And so that was what we had created, and that

was my part of Cater Ryder; I was reponsible for all of that area. Now we then started to

expand from that, and we opened a...Marshalls opened an office in Toronto, because the

banks in North America, as you recall North America didn't become a fully international

financial centre until the late Seventies, when American banks were allowed to deal outside

New York from within New York; they could only deal within New York until about '76, '77.

But they could deal in Canada, and a lot of them had subsidiaries or operations in Canada.

And so a fledgling Eurodollar market began to start in Toronto, and so we opened an office in

Toronto, and we were the first broker to open an office in Toronto. I remember going there,

it was when the first Toronto Dominion Tower, one of the three black towers, was the only

one standing at that moment, it was the Royal Trust Tower. It was totally unoccupied, and

we were to be just about the first tenants of it. And the chap who was doing the letting was

somebody whom I'd known slightly in England and was the Duchess of Kent's brother, and he

was working for Royal Trust at that time, and so he set about letting us one floor of this, or

one bit of one floor of this enormous building. So we set up a Eurodollar broker in Toronto

with three people. And it had a remarkable effect on the business that was done in Toronto,

because they started off by coming in normal working hours from say half-past 8, and

because London was five hours ahead they got in at 8 o'clock in order to pick up the London



prices before Toronto opened at 8.30. Toronto banks heard that they were open, or they were

in by 8 o'clock, so they decided to come in at 8. We ended up by them coming in at 5,

because the thing just rolled backwards and the Toronto bankers used to deal from their

homes with us at 5 o'clock in the morning to get ahead of the market, because London plainly

at 10 o'clock was open. And so we wrecked the whole of the Toronto working practices in

the Eurodollar market. But it was a very profitable little operation, and because we were the

only broker for some time it did us jolly well. At the same time - that was Marshalls - at the

same time Cater Brokers opened an office in Dublin, which again was wanting to encourage

the development of some form of sterling money market in Dublin, and of course the pound

was the same, being in those days, there was but a single market. And so we opened two

overseas offices.From that, other international operations began to spread. We bought a

foreign exchange broker in New York called Peterson Bailey,a huge firm that consisted of

one man and an assistant. And he literally couldn't go to the lavatory all day if his assistant

was on holiday, because otherwise his telephones wouldn't be being manned. And in New

York there were, I can't remember exactly, but say half a dozen foreign exchange brokers,

and there was immense opposition to a foreigner buying one of the American brokers, and

there was a general assumption that all the American banks would stop doing business with

him.

When was this again?

'68. We'd bought Marshalls and started Cater Brokers in '67, and a year later opened in

Toronto, opened in Dublin, and bought Peterson Bailey in New York. And we paid $25,000

dollars for it, which seemed an absolute fortune, and again it was the first time I'd done any

negotiating of that sort, and was despatched on my own to New York, and spent three days

with American lawyers in an atmosphere which I'd never come across before, and was an

education in itself. And it ended up, I was offered a job by one of the American lawyers at

the end of it, which...



You weren't tempted?

No, because it was becoming exciting in London then. But anyway, we negotiated the

purchase of Peterson Bailey[ph] and the American banks didn't take all their business away

from them. Some did, some refused to deal with them. America then, New York was very

protectionist and isolationist, and anti foreigners, and particularly anti British. Not anti

British-British, but anti a British presence coming into their tight-knit little financial

community, and buying one of their middle men.

Anti British; would they have been anti German and anti French in the same [INAUDIBLE]?

I would suspect they would have been, but it wasn't happening. But I suspect also there was a

slight...if you'd lined up a Frenchman a German and an Englishman there would have been

marginally more prejudice against the Englishman.

Why do you suppose?

Still...no, it would be unfair to say any form of inferiority complex, but nonetheless a feeling

that the British...were toffee-nosed? Looked down on them? Regarded themselves as

superior? And the Americans wouldn't have had an inferiority complex but they would have

felt that the British thought they were inferior, and they knew damned well they weren't. And

therefore, why are they dressed in those funny clothes and bowler hats looking down their

noses at us. So...

[BREAK IN RECORDING- PHONE RINGING]

So, much more of a backlash in New York from us buying a one-man firm, and entering their

field, than there had been in London from us buying a money broker. Anti feeling in London,

but much stronger, because it was a nationalistic feeling in New York added to that. But

nonetheless we did it, and we gradually built Peterson Bailey up as an entity, and sent one or

two people over; made him move to new premises and gradually developed that. So by about



1970 this area of the Cater Ryder group was beginning to develop quite strongly. The

Eurodollar market was developing very strongly by then; it had become a very powerful

market in its own right, and in some ways was dominating London in that it had been the

attraction that had brought in most of the foreign, particularly American banks. They hadn't

come for the joy of London, they had come for the Eurodollar market. And therefore it had

become extremely important. The banks in London were still however only allowed to deal

in Eurodollars in London, they weren't allowed to deal overseas through a British broker. So

we formed an alliance with Pierre Dagbier[ph] in Paris, and formed...and Dagbier[ph], it was

his company, and he was a foreign exchange broker in Paris, and we formed Marshall

Dagbier,which was our international Eurodollar broking business. So in fact the Toronto

office opened as Marshall Dagbier,and as we started to contemplate other developments, we

opened next in Geneva, that was as Marshall Dagbier, again as a Eurodollar operation. And

so we had got a continental link through Pierre Dagbier and he owned 30 per cent and we

owned 70 per cent of Marshall Dagbier.So we'd got the Eurodollar market developing in

London enormously, in the continent quite a bit; internationally it was beginning, Singapore

was thinking about it, Hong Kong was thinking about it, and one had the seize of the

Eurodollar market becoming an international market, or the international market in dollars, or

in dollar loans. One had the sterling inter-bank market developing very rapidly indeed, and

the role of the discount houses diminishing as banks more and more dealt with each other,

and more and more dealt through brokers rather than through the old intermediary, being the

discount houses. And the result was that by 1970 the discount house was probably declining

in importance, and certainly declining in profitability, whereas its subsidiaries were growing

both in importance and profitability, and in their international presence. In 1970 Johnny

Musker retired from chairman of Cater Ryder, and there was a succession battle as to who

should take over from him. It had been assumed for some time that Robert Pace would take

over. Ryders Discount Company had been formed by an amalgamation I think just after the

war between Jones & Brown, and Ryder & Co, Ryder & Co being the Ryder family discount

house. Jones & Brown had been formed in the early 1920s by Arnold Brown's father, and

somebody called Charles Pace,both of whom were in the Bank of England and left the Bank



of England to form Jones & Brown, and Jones came in, I think Jones had the money, who

was Bertram Jones. And they formed Jones & Brown. And so they were the new boys of the

discount market. Amalgamated with Ryders after the war to form Ryders Discount

Company. And Arnold Brown had then retired in 1965. Robert Pace was Charles Pace'son

and was older than Edward Ryder, and they were both in their 40s, and it had been assumed

that Robert Pace would succeed Johnny Musker and Edward Ryder had other plans for that,

and in a perfectly gentlemanly way put in a bid for the chairmanship. It wasn't quite put like

that in those days but it was quite plain that he wanted to be chairman. In the end they came

up with a compromise candidate, Francis Hoare, of the Hoares banking family, who had

joined at the same time as I had, and being of the family had become a director in a year,

which was perfectly fair, it was the way it had happened and that's why he had joined. And

he therefore became the compromise chairman. Francis will be the first person to admit that

he A) didn't want to become chairman, and B) wasn't cut out to be chairman. He was

probably one of the best bond dealers in the discount market, and he ran the investment side,

and was very very good at it. He was not a chairman, and the pressure got to him pretty

quickly and he ended up having a nervous breakdown and later retiring at a pretty young age.

But he was the compromise; he wasn't strong enough, and he had the factions to deal with of,

not Robert Pace, who took it perfectly quietly, but Edward Ryder who was a thorn the whole

time and wanted to be chairman; although he had agreed to Francis becoming chairman, was

nonetheless a thorn. And this growing money side, which was rapidly overtaking the

discount house in importance. The result was a battle between 1970 and 1972, although I

suppose again we didn't think of it in these terms, but it was a power battle between my side

of the house, the money side, and the more traditional side. And in the end the differences

became incapable of being reconciled, and we had to decide what we were going to do about

it. We had the most profitable part, being the money broking side and the money side saying

we want to become a Salomons, we want to become international, we want to grow, the

discount house side saying this is all just a passing phase; those other critics outside were

right, and it's going to disappear, let's get rid of it or shut it. And in contemplating what to do

the directors of the money broking side suggested that they bought the whole of their part



from Ryders. And that seemed to be a perfectly sensible solution. Plainly if they didn't

succeed in buying it they'd leave, and what there would be left was next to nothing, there

would at any rate be some value in them actually buying it. And so a price was negotiated

and agreed at £600,000 down - no, £600,000 part of which was lent to them by Cater Ryder

to be paid back over the next three years, and then an additional bit of the purchase price

which was to be a percentage of the profit - no a percentage of the turnover, of the broking

side over the next three years, or during the time until the loan was repaid, which seemed

perfectly fair on all sides. And so that was agreed. At that point the money brokers came to

me and said will you join us, and will you become our chairman. You've been running us

now for five years, albeit as a subsidiary of Cater Ryder, you've been the person we've been

answerable to over that time, we would like it if you would come with us. And I thought

about it long and hard, for about ten minutes, and said yes. And went and saw my fellow

directors and said look, I can't be involved in the negotiations any more because they want

me to go with them and I'm inclined to do so. I think they were probably quite glad I was

going, because I think that if I'd stayed I'd have been a nuisance to them, going back into their

shells as a discount house, and so I think that they reckoned it was the best solution, and I

think probably we all did. And so, in June of 1972 we bought all the broking side and all the

international side from Cater Ryder. And it wasn't called a management buy-out in those

days, because the word hadn't been invented but nowadays that is exactly what it was.

Why did your fellow directors...it's not entirely clear, unless it's wanting a comfortable life, or

a quiet life, why they wanted to, or were happy to get rid of the most profitable part of the

business.

[INAUDIBLE] answer that question but say that 'The Economist' the week after the deal was

announced said, 'This is quite extraordinary, here is the most successful discount house, with

the most successful money broking enterprise, and it has developed over the past few years,

for some extraordinary reason standing on its head and selling the most profitable bit. Why?

Is there a soft dollar somewhere for someone?' As a result of that, we had to have again what



was I suppose unprecedented in those days, we had an enquiry, and Morgan Grenfell were

appointed to come in and investigate what had happened on behalf of our shareholders, and

state whether or not they thought it was right for the company to be bought out, and whether

the price was fair. You may or may not be surprised to know that that is exactly what they

said, that it was fair for the company to be bought, the shareholders should be pleased with

the price that they had got, which in the circumstances was eminently fair. I don't think I'd

want to be on record as saying what one might read into the City system.

Even as late as 1972?

Even as late as 1972. It was whitewashed, and so it went ahead. Now, you can perfectly well

argue, and I would be happy to do so, that had the sale not gone through, the directors and

then all the principal people in the broking side would have left. Was it not better to take

600,000 and a share of the profits over the next few years than nothing? And so I think that it

is perfectly...that argument is perfectly sustainable. You could equally argue those people

were all replaceable, and if you really believed in the concept why not let them go and

replace them? So there's a debate that could be had there, but the question was asked

publicly by 'The Economist' and had to be answered.

You don't remember, just out of curiosity, who the Morgan Grenfell investigators were?

Charles Rawlinson was the director.

Yes. OK, so 1972 then presumably Mercantile House was founded.

Indeed, it was. And founded in 1972, with none of us with a penny to our name and owing

£600,000 back.

So what did you do then?



We...I mean I am amazed by...now, looking back, by our bravery, brashness, temerity,

stupidity, call it what you will.

And how old were you? 37?

1972, 37, yes. How we could have contemplated doing that in the first place I don't know.

How we would have contemplated doing what we then did, which was to move to brand new

premises with not inconsiderable expense, and we did open an office in Singapore, started to

look at new offices all over the world.

Who backed you? Who were your line of credit coming from?

We did it almost entirely out of cash that we were generating, and although we had lines of

credit we, as far as I can remember were virtually never...we were never in serious overdraft

other than our debt to Cater Ryder, and we were hardly in overdraft at all. But there were

one or two bankers who supported us if necessary, but we had a positive cash flow from day

one. And we ran ourselves we would like to think very prudently in that way. We were very

lucky; the business we bought immediately expanded. We decided that although there were

six of us who were the principal directors, and three others who were the next layer of

directors, we as principals all owned, the six of us, 7 and a half per cent of the firm each,

which was 45 per cent, and the others owned 5 per cent each, the other three, which meant

that we owned 60 per cent between us. The other 40 per cent we spread among every single

person in the firm, so that every single person in the firm had a stake of some sort.

So the John Lewis approach.

Absolutely. And until 1975 when the Government, goodness knows why, forbade the giving

of shares to employees, every single new employee once he'd served his probation got shares.



1975 the Harold Wilson Government brought in legislation which meant that the giving of

shares to employees was counted as a distribution by the people who had been diluted, even

if it was not their shares, diluted, and they were charged Capital Gains Tax on what was

effectively a disposal, and those that received the shares were taxed at the top rate of 75 per

cent, as part of remuneration. And so it was not illegal but it was...it would have cost

something like 105 per cent of the theoretical value of shares, and therefore was utterly

impractical. But [INAUDIBLE] understood, and I mean I am utterly unpolitical and I have

voted Labour as often as I have voted Conservative in my life, but I cannot understand how a

socialist government, believing in democracy of ownership of the workplace, could actually

bring in legislation which stopped the ordinary workers in a business, the lowest workers, the

messengers as well as everybody else, owning shares in their business. It has always struck

me as quite extraordinary, as against all socialist principles.

Did they have you in mind? Did they know about you?

No.

Well then they just thought it was other directors.

And we protested and talked to them about it, and got nowhere. I mean they probably

couldn't jeopardise the principle for a very small fish. But it did always strike me as a very

odd bit of legislation that our type of operation, which was utterly socialist in its outlook, and

we...our shareholding went down from seven-and-a-half per cent over the years as we gave

shares to our employees, and so we just were diluted fairly rapidly over the years. And it

didn't matter whether they were Chinese working in Hong Kong, messengers working in

London, they all got shares, every single person.

Was there a market in them, or were these...



No.

These were dead shares, and they could only be sold back to members.

Yup. So, anyway, that's the way we set ourselves up, and we decided that we would be self-

owned. In '73 came the property crash, followed by the secondary banking crisis. And there

we were, still owing money, with a business that was starting to expand, commitments all

over the world to open new offices, leases being signed, with a business which was about to

collapse. So, what was the prudent thing to do? Just pull in our horns and lay off people, and

generally wait and see what happened. All of our competitors in London were laying off 20,

25 per cent of their staff and it was plain that all those people who had foreseen the end of

these markets were right. So we increased our staff by 30 per cent! Again, absolutely mad,

looking back on it. But I called a meeting of all the staff in London, and they all knew

exactly what I was going to say to them, which is one in ten is going to be laid off, and I said

to them, "What I want you to do is to go out and find your friends in other broking firms, the

best, and we'll take them on, and we want to increase our staff worldwide by up to 25 per

cent, and we're going to open new offices". And morale went sky-high, and as a result, by

sheer good luck the business grew; we were never affected by the banking crisis; the staff

that we took on were fully employed from the day they arrived. And we really grew from

that moment onwards.

Why? Was it good judgement? Just the fact that there was no one else in the business then,

because they were all too scared?

I think it was the other brokers were scared and weren't taking people on; we increased our

staff in London, we increased our coverage of the market, we went into new areas, we opened

new offices overseas, particularly in Singapore which was then starting to emerge as a

Eurodollar centre, and then in Hong Kong. We were seen to be the leading broker.



Are you saying you created the markets in some of these places?

Undoubtedly, yes. Alan Moore[ph] in Bahrain, which admittedly wasn't till '77/'78, said the

Bahrain money market started on the day Marshalls opened, and he indeed said it was the

opening of Marshalls which created the market here. Exactly the same in Singapore. We

went to Singapore when there was no money market there at all, and saw Michael Wong

Pacshong[ph], who was then the managing director of the monetary authority and his

assistant, one Elizabeth Sam[ph], and they were about the only people in the monetary

authority then in the old town hall type building, the government building facing the Ricket

Square there. And we went in and said we want to...we think there should be a Eurodollar

market here, and they said so do we, what will you do about it? We said we'll do the

following. And they said right, we'll give you every support. And so we were the first broker

to open...we'd been the first broker to open in Toronto, the first one in Dublin, the first one in

Geneva; we were the first in Singapore, the first in Bahrain. We weren't the first in Hong

Kong, we were behind in Hong Kong. But generally, in most places we were the first broker

to open throughout the world. And that gives one a perceived lead. Now whether we were

ever actually the best broker, or whether we were ever actually the biggest broker I don't

know; I think we probably were the biggest broker for some time. But in people's perception

the leading broker was Marshalls. Independent, not owned by anybody else as most of the of

the brokers were by then, as other people had followed us in buying Marshalls in the late

Seventies, and most of the brokers were owned by somebody at that time, and here we were,

a share-owning democracy.

Cabinet or prime ministerial government?

I suppose at times close to dictatorship! (laughs) But it worked, and we all knew what our

job was. And the people that had...when we all left Cater Ryder, it was quite clear that they

wanted me to run the business, to run the finances, and to keep my nose out of the broking.



And you were the dictator in other words?

And they would run the broking. And they were very very good indeed at it. And all the

directors we had then I would put among the leaders in the broking fraternity. But it needed a

businessman, and where most of the other money brokers went wrong was that they had a

money broker running them. Like the stockbrokers going wrong because if they have a

stockbroker running them. There are good business getters and good brokers, and very often

good dealers are poor managers. And we were a good combination. They were a thousand

times better than I was at doing what they did, and I was better than them at doing what I did.

And if I said we were going to do something business-wise they didn't argue with me, and if

they said they wanted to do something broker-wise I didn't argue with them. We debated a

bit, but in the end we would both go the way of the person who was expert...whose field it

was in which they were an expert. And it worked very well. So, an element of dictatorship,

because there was only one boss, and actually I believe they are the only organisations which

really work in the end. Somebody's got to say yes and no in the end, having listened to

everything. But everybody had their sphere of influence, and everybody had pretty good

autonomy to run their particular area. And so there was a lot of responsibility given to

people, and they weren't interfered with. And I think it's terribly important that in motivating

people in business that you tell them what their responsibility is, make it absolutely clear

what their responsibility is, so that they don't know...so they have no grey areas and not

understanding whether they can do something or not. They know what they can do and what

they can't. Give them that responsibilty, make it theirs and then reward them on the results of

that, and they stand or fall by it. And I'm a firm believer in that, and that's why we gave

people bonuses related to the success of their business and shareholdings as well. So that in

theory they stood the chance of making money if it went well. But we had...in the whole

organisation we had a spirit, and we had...we were all a little bit mad perhaps, and we were

prepared to take risks. We quantified them, thought about them, and said that is a hell of a

risk, shall we take it, yes or no, and if we took it we took it. And we weren't afraid to take big

risks, but we knew when we were taking them, and we'd thought about them and said if it all



goes wrong, what will be the effect. And we would never take a risk which would bring us

down. We were prepared to take a risk which would hurt us. And we were lucky in that

most of our risk-taking paid off. Not all, we had to shut some offices, they didn't all work.

Most of the ones that didn't work were because we got it wrong. We opened in Luxembourg,

other people made money in Luxembourg, we never did. We just got it wrong. Maybe we

put the wrong people there, we made wrong decisions of some sort. So we made our share of

mistakes, and quite a lot of them, but luckily when we made mistakes we were able to contain

them, and we weren't afraid of saying that was wrong, we made a mistake, let's stop it. And

the things that went right on the whole went very right.

Where do you think your big source of money was? Did you trade Eurodollar bonds, or...?

No, we were only a broker.

Only a broker.

Yup. And never traded and never took a principal position. I don't think there was any

particular area which was our particular source of money. At any one time you could point

your finger in one direction and say that is where currently the impetus of the firm, financial

impetus of the firm is coming from, and that area which was super a couple of years ago is

not as productive as it was. That one could always say, but looking at it overall you couldn't

say it was Singapore, or Bahrain, or Eurodollars, or foreign exchange, or Deutschmarks, or

yen; all of them had their day. But it was the fact that we had gone back...if one goes back to

our philosophy of 1967 when we said let's create an enterprise which covers all the money

markets, we then added as the years went by in every financial centre in the world. So we

had an element of protection, and by spreading ourselves in that way, and.....

End of F2292 Side B




This is an interview with Mr. John Barkshire on the 8th of January 1991. This is Kathleen

Burk. Tape 4 side A.

I suggest we start then with the establishment of Mercantile House, and you take it from

there.

Mercantile House was really established in 1972, when we did our management buy-out from

Cater Ryder. And although we called ourselves Marshalls Investments for a few years before

we changed our name to Mercantile House, that was really the start of it. And I suppose we

spent the first five years from 1972 till 1976/7 establishing ourselves, paying off our debts,

establishing our credibility as much anything else as an independent organisation, and

establishing our financial worth. And it was towards the end of that period that we opened a

banking account with the Bank of England, which in those days was fairly rare and we were

the only organisation of that type to have an account with the Bank of England, and it was

also, if not a stamp of approval it was in a negative not a stamp of disapproval, because they

wouldn't have let you have an account and use their cheque-book unless they approved of

you. And in a small way that marked the end of our rehabilitation period, and I have always

felt that at about that time we had proved that we were reasonably a part of the

Establishment, and were there to survive and had arrived.

What do you mean by rehabilitation?

At the time that we bought ourselves out from Cater Ryder there was a certain amount of

opposition, both among Cater Ryder shareholders, and the City I think looked askance at us

at that stage, because management buy-outs hadn't been thought of then, and they weren't

particularly respectable, and it was really called rebellion rather than management buy-out.

And if you rebel against an Establishment house there are people - and some forever will



look down their noses at you - but some will wait to see if you fall flat on your face, and if

you don't, and I think at the end of those five years we'd proved that we weren't going to.

And so it was to that extent it was rehabilitation.

So it was...or establishing a new concept I suppose.

It was...we were the only large independent house owning a money broker, we were the only

independent financial services organisation not owned by a larger parent, and we had set

ourselves up as our own management structure.

OK. And so how did things develop then? It grew larger presumably.

Yes. And we'd been opening offices over those five years, not in a hurry but perhaps at the

rate of one a year or one every 18 months, as opportunities presented themselves. So we had

opened in the Far East, in Hong Kong and Singapore; we had opened in Sydney, we then

opened in Kuwait and Bahrain as they developed into large Eurodollar markets. And I think

that it was Alan Moore who was the head of the Bahrain monetary agency, said that Bahrain

as a financial centre came of age the day that Marshalls opened. And so I think we were

regarded as a reasonably important part of the international financial community, and by then

we'd become the biggest money broker in the world. And so over those five years we had

achieved that at any rate. So, we were developing largely money broking; we did start

another subsidiary called Satin[ph] Management, and that was a fund management subsidiary

and a leasing subsidiary, and we started a fund called the Simco Money Fund, which was a

Satin invesment management company, making Simco Money Fund. And it was the first

time that a money fund had been launched on the concept of pooling lots of individuals' small

amounts of money, or relatively small amounts of money, and placing them as a single block,

thus getting money market rates of interest. And so I think the minimum deposit we would

take was perhaps £5,000, and we were placing money in blocks of a million, two million and

five million. So plainly we were getting a very advantageous rate, and I think we charged a



management charge of say an eighth, and so the individual with a small amount of money

also got a very good rate. And I think that was the first time that that had been done, and the

Simco Money Fund as a concept caught on and built up very quickly indeed, and that was our

first adventure into fund management, albeit at the money market end. In a way that was

important, because we were in the market, we understood the money markets, and here were

we displaying that we had expertise in managing other people's money in the area that we

understood.

How mass market was it?

We advertised it very widely. I just can't remember how many depositors we had, but it

would be some thousands of depositors, and the funds were in tens and eventually hundreds

of millions.

And what would £5,000 then as an initial investment compare with today do you think?

10, 15.

Oh, so it's not really very high up in the hierarchy of wealth as it were.

It's not, no, no. And in the end we took the individual deposit down to £1,000 as we got the

advantages of size, and we could reduce the unit cost.

And the administrative cost didn't outweigh the benefits?

No, not really, because by the time the whole thing was on computers it was administratively

efficient, and therefore it presented no problem. We also went in for lease broking through

Satin[ph] Management, and again this was about the first time that an independent lease

broker had been set up. And again it was perfectly simple, and in those days there was tax



efficiency, or greater tax efficiency than now in leasing, and we were able to put together

those who had money, typically the banks and financial institutions, and had tax to pay, and

those who didn't have money and wished to lease equipment and probably didn't have tax to

pay. And we acted as lease broker between the two types of individuals, or two types of

institutions. And again it built slowly, but it meant we were developing and diversifying

beyond our pure money broking business. We also took an investment in a merchant bank in

Australia called Spedley,and that was formed by somebody called Brian Ewell and his

partner Ken Hawkins, who had originally worked for Martin Corporation in which Cater

Ryder had had an investment. They left Martin Corporation to set up on their own, and they

wanted an outside shareholder and ideally an international shareholder, and so we bought I

think 10 per cent intially which was all we were allowed to buy of Spedley Securities. And

so in those ways we were diversifying away from money broking, and that was always our

intention. In about 1977 we took in our first institutional shareholders, and we went at that

stage to our friends at Cazenove, who arranged a placing among about ten institutions, and

that brought in a little bit of capital which enabled us to develop, and also was the next step

towards getting a public quotation, which had always been our ultimate intention.

What side of shareholders? Insurance companies or banks, or active or passive shareholders?

They were generally passive, although one of them, Electro Investment Trust put a nominee

on the board, a splendid Scottish accountant called George Fyffe, who was as Scottish and

Scots could be, and was as much of an account as an accountant could be. And it was always

said then that every firm should have a Scottish accountant on their board, because the first

thing a Scottish accountant says when you put any proposition to him is, 'Ah, well no', and

then he will consider it. And George was very good, and he was extremely helpful to us, as

well as being a watchdog for the shareholders. So I suppose we placed about 15 per cent of

our shares among about ten institutions, so the stake was fairly small but nonetheless it was

the first step, and an important first step in putting in place the financial disciplines that were

necessary in moving towards becoming a public company.



In what sense for example?

Producing proper annual reports, producing our accounts in a way that the public would

accept; not diversifying into things which appeared attractive but were irrelevant, as we had

done in the past. We had invested in a film called 'The Water Babies', which was a lovely

idea and it was a beautiful film, and I spent a happy two days in Yorkshire watching it being

filmed up there. But when we came to write our prospectus for these shareholders, Cazenove

quite rightly said, "Why did you invest in 'The Water Babies'?" To which we said, it seemed

a terrific idea, it's a lovely film, to which they said, "The question that's going to be asked of

you by every institutional shareholder is, what are you going to invest in next?" And if you

invest in something that is as irrelevant as a film, and you are in business, will you invest in

tomato plants next, or any other wild-cat scheme. And we'd never thought of it like that. But

it was that type of discipline, in ensuring that everything that you did was logical, was

explainable, and was a perceived part of the development of a financial services group. It

was also very good for many of my colleagues, and that I had been lucky enough to be a

director of a public company in Cater Ryder. None of them had, and so it was very good for

them to be the directors of a public company, and realizing that their salaries were published,

and they were brought in accounts. Fringe benefits were published; they couldn't sell shares

whenever they felt like it. All things like that led us, both internally and personally to adopt

these disciplines which were increasingly important.

Did you lose any directors thereby who regretted the loss of informality, or...?

Yes. I don't know that I could put the loss of the directors down specifically to that, but

certainly the move from being effectively a partnership and a fairly...a partnership run on a

fairly loose rein, as we'd been when we first started out of Cater Ryder towards becoming a

public company, made some of them feel that this was not the organisation for them. Nobody



left to join anybody else, but several left and retired and felt that the City in this guise was

not what they had joined for. And so we did begin to lose people.

Would they have left and remained silent partners, or would they have taken money out,

capital out of the firm, or how did this work?

No, they all left and remained silent partners, largely because we didn't let them take their

money out of the firm. But...I don't think they wanted to, and in the end they made a great

deal of money out of our flotation and the subsequent climb in the share price. So although

some of them may have felt a little bit miffed at the time, if they had school fees to pay,

ultimately they did very well out of it. But we wouldn't let people...we had a rule,

particularly among the senior people, that anybody who sold their shares had to sell them for

a penny, and as the value was probably even then somewhere in the region of £20 it wasn't a

particularly attractive deal, but it was a way of discouraging anybody from cashing in by

leaving, rather than cashing in when those who stayed and were actually making the firm

make the money were able to do so. So, 1977 we took in our first outside shareholders and

we then moved towards getting a quotation and becoming a fully-fledged public company in

1979. And our flotation was late July, by July 27th 1979. And obviously the last 12 months

leading up to that we were even more disciplining ourselves. We had to be careful not to

open too many new offices, not to make too many acquisitions during that period, and to

ensure that the financial profile of the company would be attractive to investors. And so we

floated the company, and as far as I can remember the market capitalization on floatation was

somewhere in the region of £7- or £8-million, and that was in July. By the time Christmas

came it had shrunk to about £5-million, because the shares went steadily downwards. It was

difficult to know exactly why. I think that we were the only quoted firm of our sort, and

there was therefore no yardstick against which to measure us. Because we were very small

we were not an attractive investment to most financial institutions, to most investment trusts

and investment companies, and pension funds. Because unless they bought 100 per cent of

the firm it was a meaningless stake, and to buy say 5 per cent for 300,000 got them nowhere,



because their minimum investments might be half a million pounds or a million pounds. And

so we were in the not very interesting category, and it wasn't until an article was written in

'The Daily Telegraph' by David Broughton, who was then one of the financial editors, and he

just wrote a little piece saying Mercantile House must be grossly under-valued, if you look at

the way the markets in which they are operating are developing and growing. And our shares

never looked back from that day, and grew almost steadily from then until we were ultimately

taken over in 1987. So it was a much more significant little article that David wrote than

either he or we realized at that time.

When did you become Mercantile House from Marshalls?

Somewhere in about 1977 I would think. It was just about the time we took in our first

outside shareholders.

Why did you change the name?

Because as we were developing we didn't want the holding company's name to be the same

name as one of the operating subsidiaries, for two reasons. One, that as we developed into

other areas it would become increasingly misleading, and secondly it caused confusion as to

which was a quoted company and which wasn't. Which was curiously the reason why Siggy

Warburg called Warburgs Mercury, and which they were were until last year I think when

they changed their name to Warburgs for the public quoted company, and he always kept that

name separate from what was his main operating company. And I think that that was right.

And as it happened we took on Warburgs as our merchant bank in about 1977, and so we

came to the market with what we thought were two of the best names that one could have.

And Cazenove and Warburgs being our sponsors, and with our bankers being the Bank of

England, we felt we'd done everything that we could do to make ourselves look respectable as

well as being financially attractive.



So you came straight into [INAUDIBLE], and then the lifting of the exchange controls, and

then the subsequent recession. What happened to Mercantile House and the sort of

international buffetings?

We were just extremely lucky in that the markets in which we were involved generally didn't

suffer, or didn't all suffer from the buffetings that took place, and the development of new

markets like Bahrain and Kuwait, like Hong Kong and Singapore, like Sydney, the

internationalization of New York in 1978, all meant that although the U.K. market, and

indeed the European foreign exchange and Eurodollar markets went into a period of

stagnation, the developing markets more than compensated for that. And so because we were

constantly developing we were able to keep the momentum going, and we never...I think in

10 years, from 1972 to 19...12 years, till 1984, we only had one year when profits went back,

and that was about two years before our floatation in fact, but otherwise we managed to keep

the profits progressing throughout that period.

What do you mean by the internationalization of New York, and did it affect Mercantile

House?

It affected us enormously. New York most curiously until 1977/8 was a domestic and not

international foreign exchange market, and I never understood how it took the greatest market

in the world so long to become international. But it was internal pressure groups who

reckoned that their profitablity was going to be adversely affected by becoming an

international financial centre. And the American banks were able to...the big American

banks were able to operate perfectly happily through their offshoots in London, and then in

Bahrain and then in Singapore, and elsewhere in the world, and they could do all that they

wanted in the foreign exhange and Eurodollar markets, but kept the market to themselves. As

soon as New York became a place from which one could deal internationally every Tom Dick

and Harry bank in New York was able to deal, and therefore they didn't have to go through

the major banks. And so I have no doubt that there was an element of protectionism among



the major players in the market in keeping it domestic and not international. And that move

was certainly led, or it was supported by the American foreign exchange brokers, and they

were adamant in keeping it domestic, because it meant that the Marshalls of this world

couldn't go into New York. If they did, could only compete domestically with established

domestic American foreign exchange brokers.

Did they have to go through an American company?

And so they would have had to have gone through an American company. And then in

19...and I'm not quite sure how linked these events were, but in 1977 we started negotiating

with Lasser Bros, who were probably the biggest American foreign exchange broker.

Lasser Bros?

Lasser Bros. LASSER Bros. We started negotiating to acquire them, and they were the

leaders in the opposition to internationalization. At the moment that it looked as though we

might buy them and offer them a price which they found attractive, quite miraculously they

changed their stance and became one of the leaders of the free New York movement. And

we did buy them, and within three months New York had become an international market.

And we bought them for about a million and a quarter dollars, which seemed a lot of money,

and it was. It was very soon...no, it was just when we...we bought them in 1977/8, and it was

the last deal that we did before our floatation. And we agonized over it, because we knew we

were aiming for 1979, as to whether we dared do as big a deal as that, representing probably

a quarter of our total worth at that time, in the lead-up to a floatation. And we decided that

we had to, even if it meant putting the floatation off, because to acquire the biggest American

foreign exchange broker was such a big step as to override everything else.

What was your turnover with the £4-million capitalization, or $4-million capitalization?



I don't know, I can't remember. My guess is that it would have been in the region of £20- to

£30-million. That seemed to be about right, but I can't remember precisely. I think that

would be about the right level of profitability. We were sort of 15 to 20 per cent of

profitability ultimately, but we were probably higher... No, that would be about right, we'd

be at about that level at that stage.

And that was an acceptable return on capital? That's less than banks get nowadays isn't it?

No, that was profit to turnover.

Ah!

And you were talking about capitalization. Our actual capital was a great deal smaller. Our

actual capital was probably only in the region of a million pounds, and so we were making

something in the region of...oh, about a 200 per cent return on capital.

Yes, of course if you're a broker you don't have [INAUDIBLE].

You don't need capital, no, and in those days the regulators didn't require us to have capital.

And would they now?

They would now, yes. And I mean the equivalent would be that I would think we'd have to

have 10 or 15 million pounds of capital to support the operation now, but then there was no

requirement.

So how difficult was it to integrate a foreign culture, a foreign company into your

organisation?



I would like to say that we were wise enough not to try. I think that it was...I think that that

would not be quite fair. I think the personalities of the people we bought were so strong that

we failed. And we would have liked to have integrated them but they insisted, perfectly

fairly, before we bought them, so we didn't go into it with anything other than our eyes open

and their eyes open. They said the only way of making this successful is for us to remain a

discrete entity and to play it the American way, which meant that they had their own bonus

pool and they paid people in an American way.

A great deal higher than in England.

A great deal higher than in England, but without some of the perks that our people would

have regarded as mandatory, like cars, which none of them had. But small salaries and very

high bonuses they had. I mean in those days I suppose that as chairman I was probably

earning in the region, in 1977, of about £25,000 a year. I would think that Tony Aloi who ran

Lassers was earning in the region of a quarter of a million dollars a year, so £125,000. So he

was earning five times what I was.

And your reaction to this was?

Fine. Because his salary would probably have been less than mine, and the rest was bonus

based on profit. And that goes right back to the whole of our concept of saying individuals

working for the company should be shareholders, and they should also be rewarded on the

profitability of the company. And so we never worried how much people were paid, and at

one stage our highest-paid employee was getting in the region of $4-million a year. And at

that stage I was getting in the region of £75,000 a year, and so he was getting 10, 15 times

more than I was. But that was totally acceptable.

And none of your English employees thought it might be nice to work in New York for a

while?



Yes, and any that did we said off you go, go and work in New York, and they were totally

free to go there if that's what they wished to do. Most of them shut up and got on with

working here, one or two of them went over to New York. One or two of them succeeded

very well, and the majority couldn't adopt...adapt themselves to the American culture, and

therefore it didn't work.

What did they find that was different?

Just about everything I think. It's difficult to put one's finger on any individual thing, but the

whole of the way that the New York market operated. I suppose the Mafia element, the

ethnic element, the junk food, the no lunches, the no alcohol, all of those sorts of things were

operating in a totally different way. It was a much rougher market.

Longer hours?

Much longer hours. I think they work much harder, and it was a more bruising market in

New York, and the people were very very tough indeed. And the majority of people in

England didn't realize how protected they were until they went and tried to work in New

York, and very few of them survived. Some did, and did very well.

Did any of the New Yorkers come to England?

No, because they would have had to have taken a pay cut, like taking a nought off the end,

and so no, nobody did at all. But it did raise some interesting questions when we came to

publish our report and accounts as a public company, and you had to put in your highest-paid

employee. And it meant that it jumped from being £40,000 a year...it meant that our highest-

paid employee jumped from perhaps 40,000 a year to several hundred thousand pounds a



year. And one had to explain to shareholders why, and there were quite a number of

shareholders who didn't like it.

And what could they do about it?

Well they had I mean two options, they could either sell their shares...

Indeed. And did they?

No, I don't think so. I think in the end they recognized the logic of what we were saying,

which was that the profits were going up, the people were only paid on a profit share, and

why should their shareholders grumble if somebody was paid a great deal when they the

shareholders were getting increased dividends as a result? And the vast majority accepted.

Some didn't, and there were some of the nationalized industry pension funds who could never

come to terms with it. I don't think they actually sold their shares, but they still couldn't come

to terms with the ethic of paying people the market rate for the job, which could mean they

earned a great deal of money. But the acquisition of Lassers was relatively smooth, but it

was...again it took us into a different culture, and it was a curiously different one. Tony Aloi,

who ran Lassers, ALOI, was very Italian, and I mean he would tell us about his childhood,

and he was brought up in the Bronx, and he would without any shame say that he became

leader of the childhood gang by taking the previous leader out, putting his hand in a car door

and shutting it. And that he regarded as a big plus as a way...because it made him leader and

respected. And Tony died just after about 18 months of us owning the company, which is

hardly surprising because he weighed about 23 stone, and his idea of a diet was to cut down

from eight hamburgers a day to seven. And I mean he was always going to have a heart

attack at some stage and he did. And I went and flew across to his funeral, and I suppose

there were a dozen limos with black windows, and I mean quite extraordinarily, chaps with

black shirts and white ties and dark glasses and black hats stepped out. And it was...it was

again a great culture shock. I mean I'd been to Catholic funerals before, I'd never been to an



American Italian Mafia Catholic funeral. And it started off by going and having to visit the

body lying in the funeral parlour, and we as...well as chairman of the company I sort of had a

private audition with his wife and the body, and one had to go up and kiss this dead body,

which was different, and I can't say that I had done it before. But there he was, dressed in his

blue suit lying in an open coffin with his face made up, and it was again something of a

shock, with half a dozen female relatives pouring their hearts out beside you. And it required

a stiff drink back at the hotel afterwards to recover from that. And then the funeral the next

day, again with people chucking themselves on the grave, and these chaps with dark glasses

standing all round, and their retainers standing there with their hands inside their shirt,

looking as though they were about to pull a gun at any minute. It was a very interesting 48

hours.

It didn't make you worry about any Mafia involvement in your firm?

It certainly...yes. I mean again Tony never hid...he never said that he was connected with the

Mafia but he never hid his connections with the Italian community, both before we bought

the company and afterwards. And so we were always aware of that, and we went through the

company very very carefully indeed, and we were as convinced as anybody can be that there

was no Mafia money involved in the company, going through the company or being washed

by the company. And I can never be a hundred per cent sure of that, but we and Price

Waterhouse crawled over it, and we were satisfied that it was clean. And so his connections

were personal and not business. And looking through the company there was quite a strong

Italian element in it, but there was also quite a strong non-Italian element in it, and in senior

management, and I don't believe that they would have agreed to anything of that sort

happening. So we were satisfied as I say, it was personal rather than in the business domain.

And once he had died, was his successor Italian?



His successor wasn't Italian, he was an ex Swede called Eddie Balters, who again ate

hamburgers at the same rate as Tony Aloi, and coming over on Concorde always had to have

two seats, because he couldn't fit into one. But he was out of the same mould and ran the

company with the same sort of iron fist that Tony had done. But it was incredibly successful,

and the combination of our culture in London and theirs in New York worked extremely

well, and did up to the day that Mercantile House was sold. Eddie Balters was still running

the American operation up to that date, and really running it very well indeed.

So tell me about the demise of Mercantile House then. I mean was it sold over your dead

body, or was this a...?

No, it wasn't. And we'd seen some fascinating developments over the years, and the

company... Perhaps before coming to that I think it might be clearer if we just traced a little

bit more of the company's history as one goes through, because it was the component parts

that we'd bought and then some of which we then disposed of, which perhaps ultimately led

to the demise of Mercantile House. In 1979 we decided to look at the futures.....

End of F2293 Side A



Tape 4 [ Side B] (part 8)

.....in Chicago, because as financial futures developed, and they'd started in 1975, they were

beginning to have a marginal impact on our foreign exhange markets, or the foreign exchange

markets in which we were a broker, both from the currency futures and from the fixed

interest futures. It was all just beginning to have an effect, and you would hear dealers in the

market saying that the futures have opened at something or other, and so we decided that we

should find out what a future was. So I went over in late '78 to have a look at Chicago and

find out where that was, and then to have a look at the markets. And the conclusion I came to

(I suppose I only spent about a week there) was that we at Mercantile House should have a

look at the futures market in some depth, because in my view it looked as though it was a

market in which we should be involved. And so we agreed fairly early in 1979 that I should

go to Chicago and spend what amounted in the end to five months looking at the futures

markets in both Chicago and New York. And I literally started with a blank sheet of paper

not knowing one end of a future from another. And all the markets were extremely kind, and

extremely helpful, and I spent weeks and in the end months going round the markets talking

to the regulators, talking to the market authorities, talking to the traders in the market, talking

to the clearing houses, talking to customers. And I wrote a dossier on futures, which was

meant to be a layman's guide to the futures markets as they were developing. And it was one

of the most interesting years of my life, 1979, doing that. It was also made interesting by the

fact that woven into all of this Mercantile House was going public, and so I was having to be

half in Chicago and half in London. But at the end when I came back in September finally I

wrote the recommendation that Mercantile House should become involved in the futures

markets, and that we should start off by acquiring an American-based futures company. And

so we got A G Bekker, who were Warburg's counterpart in the United States, to commence a

search for us. And we did...we I suppose did a profile on about 25 different futures

companies in late '79 and early 1980. I negotiated with about 15 or 16, we produced a short-

list of six, and eventually negotiated with one called Woodstock, whom we bought. Perhaps

just as a side issue, the second recommendation that I made when I came back in autumn of



'79 was that there should be a financial futures market in London, and it was that which led to

our involvement in the development of LIFFE. But we acquired Woodstock, and that in itself

had some interesting little aspects to it. We bought the company from two brothers who

owned it, and we became aware as the negotiations developed that their bankers were pretty

interested in the outcome of the negotiations, and indeed were even more interested in what

happened to the cheque if and when we passed it over. And perhaps the highlight of the

negotiations was when my lawyer and I were getting down to the fine details of the price that

we would pay. We were in a restaurant in Chicago and the brothers with whom we were

negotiating, one of them lost his temper and picked up his drink and just threw it at my

lawyer. Martini dripped down his face. And the other one just reached under his coat,

produced a gun and said, "If we're going to negotiate, I suggest we do it over this". And he

said, "And by the way, I'm a sherriff, and here's my badge and I can shoot". We did actually

buy the company at our price. But it was an interesting moment, and the restaurant cleared

completely, we were the only four people left in it. Though we didn't get any food for a little

while, as the gun was dangling across the table. I very much doubt if he would have shot us,

but nonetheless it was an interesting negotiating tactic.

Yes, how do you feel about American negotiating methods?

Oh I suppose I felt rather at home with them! (laughs) It seemed at any rate to clarify the

issues. And so that was one interesting little aspect of that, and we acquired them at...I think

we paid three-and-a-half million dollars for them, which was a perfectly reasonable price on

the face of it. One of the odd things of this development was that we bought them, and we

then bought a company called R J Rowse, who were futures brokers in London, and

amalgamated the two to become Rowse Woodstock. I think the most significant failure of

the whole of the development of Mercantile House was in the futures markets, and we just

failed to find our niche, and we failed to develop it profitably. And it was extraordinary

really, when we were involved and in some ways in the forefront of international futures

development that our own futures company was really among the least successful. And I



don't think we ever really...we made two mistakes. One was we never really made up our

mind what our role in the futures market was, and the second mistake was we never got the

right person to run it. I got my lawyer in Chicago, a very good chap called Arthur Harn to

come and run it, which meant we had a clean ship and a very clean one, and he cleared up

any of the difficulties that there might be in the operation. But he wasn't commercial enough,

and we should have had the courage, as we had with the money broking, to have gone out and

bought a very expensive, very good person and paid them the right price. But we never did,

and it was one of our continuing problems and failures. It never really lost us a great deal of

money, but it didn't make us the money that it ought to have done. And I always felt

personally slightly peeved that I couldn't get right our own operation in the futures market

when we were waving the banner in the international futures development. But I went round

all the offices in the United States of Woodstock, and they had about seven or eight offices,

and those produced some fascinating little incidences. And funnily every place we went to

was true to its local style. The office in Dallas was exactly what you would expect an office

in Dallas to look like. There was an office in Colorado, where they had one room which was

padded because they had one customer who was they said a semi-lunatic, and he used

to...when he lost money he used to like to throw things around, so they gave him his own

room and it was padded and he could throw anything he liked around. I had one of the most

amusingly embarrassing incidents that has ever happened to me when I went and visited their

office in San Francisco, which was run by two women. And I went in as the British chairman

and was taken in by Arthur Harn who was then running it, and he knew what was going to

happen. And I went in and was all-British and friendly to these two girls, who were all-

American and friendly back. And on one of their desks was a green woolly toad sitting on

top of the desk. It was about three inches long and a sort of...toad-size in proportion. And I,

like any foolish person wanting to make myself appear friendly and at home and on good

terms with the natives, picked it up, whereupon the two girls fell about with laughter because

out from underneath this green toad came a foot-and-a-half of red penis, in wool, on a spring!

And there I was, clutching a green toad in one hand whilst with my other hand trying to put

this thing away, and putting it back on their desk! And they'd obviously caught every man



who went in there, and it was their game to play, and a great British chairman was there

blushing furiously and not knowing what to do! (laughing) After that we never looked back,

and the ice was completely broken. But it was the sort of...the sort of game that one had

played on one as one went round. Anyway, we acquired Woodstock. We then at about the

same time, in fact in the end at exactly the same time, acquired a company called

Fundamental Brokers, and they were owned by the same people who had owned Lasser Bros.

And once we'd integrated Lassers they said why don't you talk to Fundamental Brokers

because I think they would fit into your operation pretty well. And Fundamental Brokers

were brokers in the American fixed interest securities markets, and therefore they broked in

everything from long bonds through short bonds, Treasury bills, municipals, and commercial

paper in a small way. So they covered the fixed interest or quasi fixed interest markets. And

I went to visit them after this introduction, and walked in through the office which was in

total darkness. And they operated in a funny little office off Wall Street, and it was totally

dark, and they had all the curtains drawn, and they had screens with the prices projected on

the walls, which was the reason for the darkness. And they operated from opening in the

morning till the evening in the pitch dark. And it was the most terrible office, and I don't

exaggerate when I say as I stood there mice ran across the floor, and were eating the half-

eaten hamburgers which had been left from the day before. It was an absolute pigsty. But, in

talking to them it seemed a thoroughly good operation; the American debt was just beginning

to grow significantly at that time, and it just seemed a sort of operation that we would be in,

and just the sort of diversification that we wanted. And so we bought them, and bought them

for eight-and-three-quarter milllion dollars, and the first year after we bought... And I then

got some of my colleagues to go and have a look at them, and they couldn't believe that I had

been so out of my mind as to buy this scruffy, dirty, mice-infested office for eight-and-three-

quarter million dollars. In the first year they made $10-million, in the year after they made

15, and so it went on.

Which year did you buy them?



We bought them in 1980, at the same time as we bought Woodstock, and we bought the two

together. Well we got the purchases to coincide so that we could send out one circular to our

shareholders explaining the diversification which we were doing, which was the first

diversification after our float, and so it was important that we got it right. And it was an

absolute gold mine, and it was quite the best acquisition that we ever made. It too was

heavily Italian, run by somebody calld Vinny Griffer, who was a very colourful Italian New

Yorker, and he ran it in his own sweet way, and it was he who was our top earner at $4-

million a year. And I have to say that he was worth every penny of it, and so were all his

very highly-paid people. They made a great deal of money for Mercantile House and its

shareholders. So we made those two acquistions in 1980; we made a whole series of small

acquisitions as the years went on. In money broking we bought a Swiss company; we bought

a Panamanian company, we bought a money broking company in Tokyo; we expanded

Fundamental Brokers round the world. And so we were expanding by then, by 1980/81, in

virtually every area. We had a quotation, we could go back to our shareholders for more

money if we needed it, we could issue publicly-quoted shares if that's what the vendors

wanted. Our profits luckily were rising every year, the markets we were involved in were

expanding, and really things were looking quite good. But again we came up against all sorts

of different cultures. When we bought the company in Tokyo we went to see the Ministry of

Finance and the Bank of Japan and explained what we wanted to do, which was to open a

money broking office in Tokyo and then to open a United States government securities

broking office in Tokyo for Fundamental Brokers. And they said they thought that was a

very good idea, and they had heard all about Marshalls and Fundamental Brokers and they

knew they were the best brokers in the world outside Tokyo, and they would very much like

us to open an office there. So we said splendid, and we said how do we do it? And they said

oh it's perfectly simple. Here's the form, you've just got to fill it in and you can open. And so

we shook our heads slightly and said terrific, just fill in the forms? And they said yes, when

you fill it in, on the back you will see that there are some spaces and you just have to get the

sponsorship of 38 Japanese banks. And so we did a quick tot up and got to 20, and then we

said "Could you give us a list of the Japanese banks?" He said, "Ah, there's no list!" And we



said, "Could you tell us where we could find out the names of 38 Japanese banks?" They

said, "Oh, there's no list". They had been totally Japanese. They had given us permission to

open, there was no problem, famous firm, like to have you here, but no list. And so we

couldn't open. And there was an absolutely...it was totally Japanese. We then went through

the second totally Japanese episode, when after...we opened a rep office which they said that

we should do, and after two years they said...they'd said to us, after about two years we will

then review your application again, and so after two years we got a telephone call from the

Ministry of Finance, "ome and see us". And they said, "We hear that Mr. so-and-so would

like to sell his broking company to you". And so we went and saw Mr. so-and-so, and yes, he

had heard from the Ministry of Finance and he would like to sell his broking company to us.

So we negotiated and we couldn't agree a price, and we went back to the Ministry of Finance

and said yes, we would like to buy it but his price is too high. They said, "We understand.

Go back and see him". We went back and saw him, he agreed our price. And he'd been told

by the Ministry of Finance plainly to get on with it. Totally fixed. Having bought him, we

saw the Ministry of Finance again and they said, "What are your expenses, what are your

costs?" So we told them what our costs were. In the first year our income covered our costs

to the penny, and we made I can't remember, £500 profit. And we had an exact percentage of

the market which enabled us to cover our costs. And each month, if we'd got enough income

by say the 20th of the month to cover our costs, nobody would deal with us for the rest of the

month. Japanese way, you're allowed to break even. After two years our market share just

went straight up and made a profit. We had another incident where one of our people, the

person who ran the Tokyo office, was asked by one of the Japanese banks about his chief

dealer, and the president of the bank said to our chap, "Now" he said, "I want you to be

totally honest", he said, "we just want to know whether our chief dealer is any good". And he

said, "Don't worry about telling us, we want to know". And so our chap thought a bit and he

said, "Well" he said, "as you've asked me, no, he isn't". We didn't deal with that bank for two

years. And the right answer would have been, yes, he is an extremely good dealer, but

perhaps you could employ somebody slightly better if you went outside the bank. But we

said he was bad, so they didn't deal with us. Even though they had asked the question.



Why did they ask the question do you suppose?

Oh they wanted the answer, but they wanted the answer in a Japanese way. They wanted the

Japanese answer not the English answer. The English answer was he's a bad dealer, the

Japanese answer is he's a very good dealer but you could perhaps do better.

Did he stay in place in the bank?

No. So they took our advice, and didn't deal with us. So we had a learning curve, and I mean

those just happened to be three incidents in Japan, but it was the same almost everywhere in

the world. The terribly important thing was to get under the local skin and culture and

understand it, and roughly as we had done in the United States, don't anglicize a very good

American operation; don't anglicize a good Tokyo operation. Let it be Japanese, let it be

American. But ensure that the standards that they they employ in the way they do their

business are acceptable to you, to our standards in the U.K., and also ensure when they deal

internationally that they deal in our way in the international markets.

What about the ones where you established offices ab initio, without buying?

Then generally we would...although we might... We almost everywhere, except for New

York, had a Brit in charge. But almost everywhere we would have had a Chinese or an

Australian number two, and so he would have been the person who would have talked

Australian or Hokkaian to the appropriate people.

And did you emphasize bringing on local staff?

Yes, everywhere. And we had very few, we had the minimum ex patriots in every place. I

mean partly it was financial, because ex patriots are very expensive. Wherever you send



them you're housing them and educating their children and feeding them, whereas locals

everywhere are inclined to be cheaper, except New York perhaps. So no, we had a definite

policy of bringing on the locals, and making them the boss wherever we could. And so that

was always our stance.

And could you keep standards that way?

If we didn't feel we could keep standards we wouldn't have promoted the local person to be

the boss.

And you never had any difficulties?

Oh I think it would be wrong to say we never had any difficulties, but we never had any

difficulties which we didn't quickly overcome and put right. Yes of course we had people

who played it the local way or bent the rules, or were unethical, or just straight dishonest. I

mean you will always in these markets get people on both sides of the fence, whether they be

dealers or brokers, who will take bribes one way or another, whether the bribe is a soft bribe

or a hard bribe. And so that inevitably happened. But we did insist on our standards. And I

got deported once for insisting on our standards in Kuala Lumpur, where we went there to

open an office. It was a money broking office, and we were allowed I think it was 39 per

cent, and therefore we had to have 61 per cent local participation. And the local bumiputras

were wheeled out for us, and we had the armed forces pension fund and the post office

pension fund and one or two others, and so they were highly respectable. And they were

represented, to be represented on the company, by the deputy governor of the central bank.

And so I went to conclude the negotiations with him, and it was all perfectly sensible and

straightforward, and he then said, "Can just you and I have lunch together?" So I said yes, of

course. And we went and had lunch together and he said, "Now" he said, "I think we want to

get things straight between ourselves" he said. "If you could write down on a bit of paper the

number of your Swiss bank account" he said, "I'll then arrange for your percentage of the



shareholding to be put in that name, your personal shareholding". And he said, "You'll

countersign my personal shareholding as well I know". I said, "What do you mean?" being

naive. And he said, well, of course, he said, we're men of the world he said; we both want to

have...we both know what the rules are, and therefore we can't have a personal share of

things, but he said I'm sure we both would like to have a shareholding in this operation, and

he said I suggest that about 15 per cent would be appropriate for me and 5 per cent for you.

And he said provided we both sign each other's papers, he said, I can fix it at this end and

nobody will know. To which I said that that wasn't on. And he gave me two hours to get out

of the country, because I had refused a bribe and I knew that he had offered one. And I didn't

go back for 15 years, and it was suggested that I didn't, because I knew that an important

person was offering bribes. And we didn't open an office. It was the end of that. And we

found it difficult to do business in Malaysia under that particular regime. That's all changed

now, and we do, or Mercantile House does business in Malaysia now. But it was that sort of

thing which came up from time to time, and you had to be very careful. I mean it was easy

for me, but you had to be very careful that everybody in the organisation understood that

there were no side deals as far as we were concerned. And when it came to the Middle East,

where we had to have local partners, and they had to be paid, and they had to be paid in cash,

we adopted a perfectly simple rule, that provided Price Waterhouse would sign it we'd pay it.

And as long as it went through our books as an advisory fee, and as long as it went through

our books, and was audited, we would pay them a fee. But we would never have paid them

anything that didn't go through the books and came out of a slush fund. And we said it's

exactly the same as paying Morgan Grenfell in London: you pay the local people a fee to

organise your company for you; that is what we're doing here. But it must be audited and it

must be above board. And we wouldn't go in for brown envelopes.

And was this causing difficulties?

Yes, as a result...I mean some shareholders in the Middle East wouldn't come on board our

company, and some declined to help us. But there were always some who recognised that



that was the more proper way of doing business, and were happy to be associated with a

company which wanted to do things that way rather than the brown envelope route.

So, are you saying that the usual course in these countries is the brown envelope route?

I'm saying that a lot of people went down that particular road, and I'm sure that we can both

remember British public companies which have been publicly hauled over the coals, and big

public companies, for the way they operated in Africa. And sometimes central management

didn't know and sometimes central management did know. And I'd bought the argument that

that was the way of doing business locally, and therefore you did it through brown envelopes.

I would buy the argument - and you may say that I was bending the ethics too - but I would

buy the argument that if it goes through the books and it's properly audited, and it's classified

as a fee and is paid in the proper way, I regarded that as acceptable, and that was the level at

which we set our standards. You may say it was too low.

I mean what's interesting is, did you develop this strategy after your Malaysian experience?

I think that I got everybody together and said this has happened to me, at that time, and let's

just be quite clear as to what the rules are. But no, we had always instinctively felt the same,

and instinctively operated in the same way. And so...I don't know of any occasion when

anybody seriously wavered. I mean they may have privately done so, but it certainly never

came through. If they had doubts whether they wanted to take a bribe they kept it to

themselves in their hotel bedroom. So we got into the early Eighties, developing by then

Marshalls' money broking developing, Fundamental Brokers developing, Satin developing

into fund management and leasing, and our futures operation, the newly-merged Rowse

Woodstock also developing, but as I said earlier never developing satisfactorily, although at

that stage we were still optimistic about it. We decided we wished to move into two areas

then, one was into fund management in a bigger way, and the second was into the American

securities market. And we were only exploring very gently as to how we might achieve



either of these aims, and they were separate, when I chanced to have dinner with Michael

Stoddard who was chairman of Electra, who had been one of our original shareholders in

1977, and still were one of our larger shareholders. And so I kept in touch with him over the

months and years and generally kept him informed as to what was happening. And he said

by chance he knew of an American company that was for sale, which was Oppenheimer, in

which Electra had taken a stake some years before, and they, Electra, were happy to sell out,

and he knew that the earning partners wanted to sell out. But he knew that the next layer of

management were keen that they didn't sell out to an American - I suppose an American

insurance company would have been the most likely at that stage - but did sell out to

somebody who could bring an international perspective to their very American business.

And so at first glance it seemed to be something which was worth pursuing, and we did

pursue it, and ultimately we acquired them. And at that stage, at the time that we acquired

them it looked very much as though our philosophies were running along parallel lines.

When was this?

We acquired them in 1982, and we acquired them finally in August 1982, and the bull market

in New York started on the 1st of September, which was one of our luckier bits of timing.

We were terribly lucky right the way through the development of Mercantile House. We

arrived in places when money markets were just starting and we bought into America

when...into Fundamental Brokers when it looked as though the U.S. bond market was about

to expand, and the American economy looked as though it was going to produce larger

deficits and therefore it looked logical. Wall Street looked as though it was in the doldrums,

it looked as though it would come out of the doldrums at some stage. In fact it came out a

fortnight after we closed, and it was terribly lucky. And we acquired them, and we did bring

the international perspective that they wanted, and they developed their office in London,

they opened an office in Tokyo. And generally they were able to produce a more

international flavour to their business, and it enabled them to expand a lot, and they were

immensely successful and profitable. We separated the fund management bit for several



reasons. Firstly that we wanted to make it quite clear that the old Oppenheimer was not a

single entity, because it was half Mercantile House; we were capitalized at £90-million by

then and we bought them for £90 million. So we were doubling their size, and they were too

big a cuckoo in the nest if we had kept them as one. So we quite deliberately separated them

for that reason, and also because we wished to develop the fund management side

internationally as well as the securities side. And we did both of those things, and the fund

management side took over our Simco funds and our relatively specialized fund management

in the U.K., and they became Oppenheimer Simco. And they then started to develop their

international range of funds, and the London operation really grew very well indeed. And so

if we go through 1983 and 1984 we were by then I think firing on all cylinders, and we

rationalized the business so that we had on the one hand money and securities broking, which

was Marshalls and Fundamental Brokers, at the other end of the scale we had Fund

Management which was Oppenheimer Fund Management, and in the middle we had the

securities operation which was Oppenheimer & Co. 1984 was the time when the Stock

Exchange decided to change the rules, allow outside capital in, allow a hundred per cent

ownership ultimately, and big bang was a real possibility. And so we set about making

acquisitions in London, and again I think I talked to 20 different firms of stockbrokers, all of

them major 20 firms I talked to, and in the end we felt that Laing & Cruickshank suited us

best in outlook, temperament and the type of business that they had, and the fact they fitted

well with Oppenheimer and knew them. And at the same time we acquired two discount

houses, having had negotiations, or preliminary negotiations with all the jobbing firms in

London. The rationale behind that was that dual capacity was coming, and therefore you

needed a dealing side, and you had to buy either a jobber or a discount house; you needed a

broking so you had to buy a stockbroker. And so we bought one stockbroker, two discount

houses, and merged them altogether into Alexanders Laing & Cruickshank, and started to

move towards merging them with Oppenheimer & Co. We didn't actually obviously make

the final acquisitions of Laing & Cruickshank till just before big bang, and we weren't able to

acquire a hundred per cent until I think 1985. But at that time, as we moved towards

amalgamating them, we had...I think our harshest critics would call it rebellion in Opco; our



kindest critics would say a realization that the direction in which Opco wanted to go was

different from ours, and it was probably somewhere in between the two.

Opco is Oppenheimer & Co?

Oppenheimer & Co. Not the Fund Management.

The securities?

The securities side. And the chaps running it, having developed it successfully under us - and

they would be the first to say that we had been very helpful to them in enabling them to

develop it and in teaching them something about management too - felt that they really

wanted to run their own shop and to own their own shop. And they wanted to pay people in a

way that we would find unacceptable; they wanted to own part of the equity, they wanted to

give away part of the equity to their people. And this rumbled for about six months, and one

wet Saturday in New York the two principal people, Steve Robert and Nate Gancho came to

see me and said look, they were serious, and they really did want to buy it. And rather to

their surprise I said OK, done, at the right price you can have it. And I'd come to the

conclusion that we were either going to tough it out with them, in which case they would

have left and we would have brought in new management, and I had my doubts.....

End of F2293 Side B




John Barkshire, 9th of January 1991. Tape five side A.

So Nate Gancho and Steve Robert came to me and said they wanted to acquire the company,

and the reason for that was that they wanted a direct shareholding, and they wanted to own

their own company; although they had shares in Mercantile House that was too indirect for

them, they wanted to have shares in the bit of the organisation that they were running. And I

think it would have been acceptable if we had sold them part of the company, but it was not

our philosophy to have partly-owned subsidiaries, and I still believe that you get immense

conflicts of interest in all sorts of ways. When you make acquisitions, when the payment of

dividends, use of capital, all of these things I think do make for complications if you have...if

you don't own the whole of your subsidiaries. And so it was certainly my philosophy that we

owned a hundred per cent. And so we agreed to sell it to them, and I took the view that it

was better to get a good or even a reasonable price for that company, rather than have a

running sore which would be to the detriment of both the company and Mercantile House.

And we eventually, after some pretty tough negotiating, sold it to them for the same price that

we had paid for the whole of Oppenheimer. So we had the Fund Management Company for

free, and that in itself was then valued at probably $90-million, and so we had had...in our

defence we would have said that we had had very good returns over the three years, four

years that we had owned them; we had had good dividends, and we'd doubled our money.

And I don't believe that that's all bad. What our critics then said was, what of this much-

flaunted Mercantile House strategy? Oppenheimer were making enormous sums of money

for you; they seem to be a central part of your strategy, we don't believe you any more. We

think you are opportunistic. And I don't think we had really shaken that off, even by the time

that we were taken over. I think that looking back in retrospect it did do our shares harm, it

did our rating harm, in that people were unsure as to what we might sell next. And the

answer was nothing, and we never did sell anything else again, but the fact that we had sold a

major part of Mercantile House for the first time ever made them at any rate wonder what our



future strategy was. So, that was financially extremely satisfactory; it was unsatisfactory in a

more philosophical way. We then came to the conclusion that we needed more capital in the

company. Despite the fact that we had sold Oppenheimer, the development of the securities

business in London and then ultimately the development of a new operation in New York,

was undoubtedly going to take capital. And so we had a series of discussions with potential

shareholders, and we didn't want somebody to come and acquire a bit of one of our

subsidiaries, we wanted somebody to acquire a bit of Mercantile House, say 10 per cent or 15

per cent. And so we needed somebody who was attracted by the concept of financial

services, and we had discussions with both...well with possible such investors in North

America and in this country, and in Japan. At the same time Globe, who along with Electra

House who had originally been in the stable, wished to sell their shareholding. And they

would have sold their shareholding I think to almost anybody who would have at that stage

shown them a turn on the market. the reason for that was a change of management at Globe,

in that Edward Davis[ph], who had run it for some years and had been chairman at the time

that they acquired their stake in us, had retired and had been replaced by David Hardy. And I

think it's fair to say that David Hardy and I...I was going to say didn't see eye to eye to each

other; he's 6 foot 6, and so nobody could see eye to eye to him. But we were...different

people, and we didn't...we were not comfortable together, and that I think reflected through in

to them not being comfortable with their shareholding in Mercantile House, which was one

of their biggest investments. We had, and I have said earlier, that our profits rose steadily in

every year but one, from 1972 to about 1983. We then had in 1984/5 another year when our

profits turned down, and with investment trusts becoming very short-term minded, not

through any fault of their own but because their shareholders were looking to short-term

performance, had turned down their second biggest investment, had a disproportionate affect

on Globe's profits. And so personal...an element of personal antagonism between David

Hardy and me, and a lack of performance by Mercantile House, meant that in crude terms

Globe's shareholding in Mercantile House was on the street. And if somebody had made

them a bid, and if that meant a bid from Mercantile House they would have gone along with

it. So we had almost an unfriendly shareholder in Globe, as opposed to a very friendly



shareholder from the old Globe. And at the same time we were looking for this injection of

capital. That meant that it was relatively common knowledge that...not that Mercantile

House was for sale but that it would not be too difficult to acquire us, because anybody

buying Globe shareholding would have a 12-and-a-half per cent start; we were looking for

more capital, and therefore ipso facto we were under-capitalized. And therefore we were

approached by a number of potential suitors from about 1985/6 onwards, and it did become

increasingly common knowledge that we were likely to be bought by somebody. Now, our

view of that, I don't think that if you look through the organisation you could say that there

was a single view, in that from the operating companies they were very concerned as to who

might acquire us, because that would have a direct effect on their operations, and an

undesirable owner could do harm to their businesses and could cause their people to leave.

As far as those of us in the centre were concerned, if we were to be acquired our duty to the

shareholders was what mattered most, and really we had to put our personal feelings on one

side in that, and look after the shareholders and the employees. And we did rightly or

wrongly take the view that our order of priority was shareholders, employees, and the

management coming a fairly poor third. To say that that caused a rift within the Mercantile

House board would be setting it too strongly, but it certainly meant that we had different

views as to what should be the future. And the money broking side, Marshalls, certainly felt

that their best interests might be served by them being sold (and they immediately said you

sold Oppenheimer so why not us) to somebody else, and there was a possible buyer in

Crownex,

who owned Crown Life in Canada and were one of the major life companies. And so there

was an element of disarray within Mercantile House. I don't think it was...it wasn't serious,

either internally or externally, but we were not as one as we'd been for 15 years, or 14 years,

from 1972 to 1986. Therefore when the British & Commonwealth bid came along, certainly

my view and those of both Cazenoves and Warburgs, and of my colleagues in the middle

was, this was a crazy bid, and we were never likely to see, or not likely to see a bid at the

same sort of level for a long time in the future. And whether we liked it or not it had to be

recommended to our shareholders. And that was what we did. And I think that if you trace it



back, we bought the company in 1972 for £600,000, we went public for £6-million in 1979,

600 million in 1987 wasn't a bad price. And therefore I don't think we can be said to have

done our shareholders down. But there was disagreement within the board at that time, and

there were certainly some of the constituent parts of the group who didn't wish to be owned

by British & Commonwealth. The problem that meant was that they sought other purchasers

for their bit, and we then did have a conflict of interest within the organisation, and we had to

be fairly tough and say that it might be in their interest to be acquired by somebody else, but

if that meant that the British & Commonwealth bid for the whole fell through, it was not in

the interest of our shareholders and we were not therefore prepared to accept another bid for

a part. Anybody who wanted to buy had to buy the lot. And we were very tough about it,

and some of my colleagues felt pretty put out that they were not able to go their own way.

But I make no apology for it; it was...morally we had to go down the direction that we went.

But it was sad in that having had happy and successful times, and the final sale you could

argue in financial terms being very successful, it was sad that there was not unanimity and

not personal unanimity among the board and senior management at that time. The reasons

for them not wanting to be sold to Mercantile House, and this really in particular came to

Marshalls...

To B & C.

I'm sorry, to B & C, and this really particularly came to Marshalls and to Fundamental

Brokers, was that British & Commonwealth already owned a money broker, and already

owned an American securities broker, and therefore they were required by the authorities

both in London and in New York to divest themselves of one or the other. And it became

quite plain they were going to divest themselves of Marshalls and FBI and they were going to

divest them both to Quadrex, who were owned or largely owned by Gary Klesh, whom

everybody involved found totally unacceptable as an individual, and their view was, we are

not prepared to be owned by him. I have to say that I didn't...I mean he was I think probably

the instantly most dislikeable person I have ever come across in my life, in that he came...and



he was one of the people who wanted to acquire Mercantile House at one stage. And he

came to my office wearing large boots, sat back in my chair, put his boots on my desk, puffed

a large cigar smoke. And I said, "Now Mr. Klesh, what can I do for you?" And he said,

"John" he said, "what would be best I think would be if I acquired you". And he said, "I'd

value you and I'd make you my deputy chairman". Well it isn't actually the way to win

companies and influence people, certainly not in London, and so...I mean the answer was no.

I mean there was nobody in our organisation who could have countenanced working with, for

or anywhere near him. So the thought of Marshalls and FBI, that British & Commonwealth

were going to sell them on to him, very understandably as far as I was concerned meant that

they were anxious about the future, and would have wished to make other arrangements.

And I don't blame them at all, but it did introduce this element of antagonism. As far as the

securities side went, Alexanders Laing & Cruickshank, British & Commonwealth didn't want

that side, and therefore they agreed to sell them to Credit Lyonnais, and that was perfectly

acceptable to the people involved. I think it's fair to say that everybody would rather have

gone on being owned by Mercantile House, and we would have liked British &

Commonwealth, Gary Klesh and anybody else to go away, and for us to continue to develop

the organisation, but given all the factors that I outlined, of requiring more capital, an element

of concern both outside and inside, Globe shares being on the street, it was unrealistic to

assume that we could remain independent. And I would not agree with the suggestion that

therefore we were up for sale, but there was no doubt in my mind and our advisors' mind that

if a really good bid came along, that that was in the interests of our shareholders, and

probably ultimately in the interests of the people who worked in the organisation.

So what did B & C in the end end up owning of Mercantile House?

Only...well they ended up owning both Marshalls and Fundamental Brokers, because the

October crash came and Klesh was unable to complete his side of the bargain. And so he

was left with those two, and the Bank of England and the Fed gave him, very properly, an

extension of time in which to divest himself of them. But all he wanted was to own



Oppenheimer Fund Management, and merge that with Gartmore, so that he became a major

fund manager throughout the world. I think in looking at the acquisition, I think there were a

variety of elements to it. I think that John Gunn was always probably personally slightly

envious of the way Mercantile House had developed, in that we had eschewed financial

dealing, apart from the sale of Oppenheimer which to an extent was [INAUDIBLE] forced on

us. We had always said, this is our strategy and we're going to stick to it, and we're not a

buyer and seller of companies, and had developed in that sort of way. We were probably

rather more part of the Establishment than he was and his team. We'd had quite a successful

run. And I think that there was an element of...I don't think personal antagonism to me, but at

any rate a feeling that the company he would like to acquire is Mercantile House, as well as

the commercial rationale for acquiring the Oppenheimer Fund Management. So I don't think

it was purely, 'I want Oppenheimer Fund Management and therefore I'll buy the whole thing';

I think there was a slightly...another element to it. What I found fascinating though since that

time is that of course the acquisition of 600 million in August/September was followed by the

October crash, and we didn't foresee it, and nobody...we would never pretend that we did,

and therefore we didn't sell prior to the October crash anticipating it, any more than John

Gunn realized what was going to happen when he bought the companies. But, if anybody

had tried to buy the companies in November the price would have been nearer 300 than 600

million, because the markets in which we operated were that much less attractive. The fund

management had shrunk, the securities side had shrunk, even the money broking was hit by

the October crash. And so he probably paid double the price that fortuitously he might have

paid two months later. I think that our assessment was that, as I say, we would never pretend

we foresaw the October crash; what we did say was, the stock market is too high, prices are

too high, and 600 million is too much money. And so we were not clever enough to foresee

what was going to happen; I think we were sensible enough to know that that was a crazy

price, and that we had to sell at that price. But it did mean that he had bought the companies

much too expensively. And not one commentator in the two years since has ever gone back

and said that that was one of the reasons why British & Commonwealth started on the

slippery slope downwards, and in my view it was. They were left with two companies they



couldn't sell in Marshalls and Fundamental Brokers, because Klesh had effectively gone out

of business, and when they did sell them they had to sell them for a lot less than they had

paid for them; they had Fund Management which was worth less than they'd paid for it, and

the securities operation they probably washed their face on. But they just lost money on the

Mercantile House deal within two months of it being done. And I believe that it was, prior to

Atlantic Computers, one of the things that started British & Commonwealth at any rate on the

beginning of the slippery slope, which in the end brought their downfall.

What did you do then, just...I mean if you no longer had Mercantile House?

Well, the agreement that I had with John Gunn was that I would stay until the end of that

year, 1987, to help him put the various bits to bed, and I agreed that that seemed a sensible

length of time. So in fact I stayed till the 18th of December. And we just did, the central

management team, all we could to integrate the Mercantile House group into British &

Commonwealth, and I would like to feel that we were as co-operative with an acquirer as any

management team had ever been. We did everything we could, both prior to the crash and

post the crash, to make life as easy for B & C as we could. I then agreed with Credit

Lyonnais, who had acquired Alexanders Laing & Cruickshank that I would become a

temporary chairman of that, and again until they had integrated it into their operation, and

said I'd stay for a year or two years, and in the event I stayed for about 18 months there I

suppose, by which time they were beginning to put French people in and absorb it. But

again, it was...I was perfectly happy personally to be involved in the bits which I had initially

been involved in developing and acquiring, in getting them put as comfortably to rest as one

possibly could. So it had its sad moments, on the other hand it was satisfactory to be asked to

be involved in their continued development, and as I say, the putting of them to bed.

OK. Well shall we then turn to LIFFE. Basically it looks as though you were chairman of

the financial futures working party in 1980, and the steering committee '81-2, and a director



from '82 and chairman from '82 to '85. So you were obviously involved from the beginning

till just...you know, shortly, a few years ago. So how did it start and so forth?

Well it really started with the five months that I spent in New York and Chicago on

Mercantile House's behalf, looking at the futures markets to see what was in it for us. And

that led me to come back in September of 1979 with two recommendations, one was that

Mercantile House should be involved in the futures market which led us to the acquisition of

Woodstock and Rowse, and secondly a view that the futures markets were going to spread

outside Chicago, and they were already beginning to spread into New York, and that if they

did spread outside Chicago they were likely to become international, as international players

were starting to become members of the Chicago markets, and if they became international

there ought to be a market in Europe, and if there was going to be a market in Europe it jolly

well ought to be in London. And so...I mean they weren't very clever thoughts, they were just

logically looking at the way futures had developed since they'd been invented in 1975, till

that period in 1979. In 1975 they were, like all of the futures markets in Chicago, dominated

by the locals, individual traders, who made up all the trading. By 1979 the major Wall Street

houses were becoming involved in the markets; one or two were beginning to become

members, or just starting to buy seats on the markets, and it was quite plain that the markets

were going to become institutionalized rather than dominated by locals. And it was not as

plain but fairly plain that they were going to become international. So I came back to

London, and apart from setting Mercantile House on the road to entering those markets,

talked to the Bank of England about it and said what did they think about a financial futures

in London, to which they said a financial what in London, and so...(laughs)...I put them

through a little bit of the education process that I'd just been through myself, remembering

that 12 months ago I hadn't known what a financial future was. And we agreed that it would

be proper to set up a working party to investigate the feasibility of setting up a market in

London. And so...I really just rang up some friends, and I thought that we ought to have

representation from the different elements who might make up the market. And so I felt we

needed Stock Exchange representation, and in those days with single capacity we therefore



needed a broker and a jobber, and so I rang up Pip Greenwell of Greenwells, and David Roy

Lewis at Akroyd & Smithers, as being the two broadest-minded brokers and jobbers that I

reckoned I knew, and said how about it, and went round and saw them and talked to them

about it. I then thought a merchant bank, and so I rang David Scholey, of Warburgs; I

thought a discount house so I rang Roger Gibbs at Gerrard & National; it seemed sensible to

have a clearing house involved so ICCH, who coincidentally had also been to Chicago and

were contemplating...their minds were going along similar lines of developing a market in

London. I asked them to get somebody from the commodity markets, as plainly we needed

somebody with expertise in commodities, and so they came up with Woodhouse, Drake &

Carey. And that was the little team that we set up. And so it had Stephen Raven from

Akroyds, Jack Wigglesworth from Greenwells, David Burton from Warburgs, Brian

Williamson from Gerrard & National, John Morris from Woodhouse, Drake & Carey, myself,

and Neil Matheson from the International Commodities Clearing House. The first thing that

happened was that the clearing banks, scratching their heads and wondering what this strange

thing was, asked me to go and talk to their chairmen, so I went to one of their chairmen's

meetings, and explained it to the chairmen, who were Robin Leigh-Pemberton then of

NatWest, and Jeremy Morse of Lloyds and their colleagues. And the result of that meeting

was that they asked if they could have somebody on the working party, so Michael Mayer of

Barclays, who was Treasurer of Barclays joined us. So that was our working party, and we

had our first meeting in January 1980, and we set ourselves three months to do a feasibility

study, at which we would address the problems of, were financial futures going to come out

of the United States, if so would there be a European market, if so was it feasible for there to

be a market in London, and if so what contracts would we suggest were traded. And this was

to be a feasibility study for the Bank of England only. And we produced it, and I suppose the

most controversial recommendations that we produced were...I mean I suppose it was

controversial to come to the conclusion that we should have a market in London and that we

should trade a variety of different contracts, but in a way the most controversial decision we

came to was that the market should represent all parts of the City, or be open to all parts of

the City, and that it should not be part of the Stock Exchange or part of the commodities



markets, or part of any other market, but should represent everybody. And that at that stage

in 1980 was absolutely unheard of. It produced a howl of protest from every quarter when

they heard about it, because the commodity market said this is absolute nonsense, futures are

ours, it should be our members who develop it, and it should only be our members who are

members of the market; anybody else who wants to trade should come through us. The Stock

Exchange said of course it should be part of the Stock Exchange, it's entirely logical. To

which we said, well you two haven't done anything about it, we have, and we don't agree and

we think it should be a broadly-based market. We put the feasibility study to the Bank of

England who accepted it, in principle. And what they said was that they would accept the

principle that a financial futures market could be formed in London, if it was shown that

there was broad-based public support among the City community for such a market. So we

produced a discussion document in August which set out our proposals, and we then held a

series of seminars during the autumn, with the intention that by December we would have

come to the conclusion that our proposals were either acceptable and had that broadly-based

support, or did not, and depending on that the thing would die or go ahead. We aimed to

have four seminars, and hoped that we would get something in the region of about 500 people

in total to them. We ended up by having six seminars, and between us we had seen 5,000

different people. I mean individual interviews, we went all round the City and all round the

country. It was quite fascinating. Nobody had the slightest idea what we were talking about,

and we produced a slide show on...in those days videos weren't thought of, we produced a

slide show which explained how a financial futures market worked. Chicago were helpful,

they lent us slides, which we had developed, and we went to meetings of the clearing banks,

meetings at the British Bankers Association, meetings with the Association of Corporate

Treasurers, meetings with the Scottish bankers, meetings in the Stock Exchange, meetings

from all sorts of individual organisations, and people just wanted to hear what we were

talking about. I should think that by the end of that process, to say out of the 5,000 that more

than 500 really understood what we were talking about would be probably an exaggeration,

and to say that we had a majority in favour of what we were proposing would be an

exaggeration. But there were very very few who were against it, very few. There were a



minority who were utterly opposed to it. It was new, it came from America, it knocked down

the City barriers, it potentially threatened their closed shop, were generally the reasons that

they were against it, which they would have put together under the heading of saying that this

wasn't good for the City of London and anyway it wouldn't last. So, there was some very

strong opposition, but it was very much in the minority. And the Bank of England and the

Government accepted our recommendations that we should form a steering group with the

intention of forming a market. And perhaps the most significant part of that was that the

Bank of England joined the steering group, admittedly only as an observer but agreed to be

part of the process. And I can't have enough praise for the way the Bank of England, from

being...not understanding what a financial future was to being our most helpful supporters in

every possible way. I mean they were absolutely marvellous and gave us, to begin with

covert and ultimately overt support, without ever overdoing it; they played it absolutely dead

right all the way along. They helped us with legislation, and they were very very good to us

indeed. I mean right from Gordon Richardson, whom I went to see to talk to about it

downwards, they were in support. So we set up the steering group in the early part of 1981

with the intention of forming the market, and that steering group had about 20 people on it

representing every single part of the City whether they liked it or not, and we wound that up

in the spring of 1982 when we formed LIFFE Limited, and sold our first selection of seats at

that time, and then had the first election for a board. And the board then ran the shop for the

last six months before we opened in September, September 29th 1982.

That's when the Exchange opened to the public?

That's when the Exchange actually opened to the public. And so yes, I mean I was lucky

enough... They always say that the way to be elected...the only way to be elected to become

chairman of any organisation is to go to the loo at the moment the election's about to take

place, which is what I must have done originally with the working party, and found myself

elected chairman of that, and then they were kind enough to elect me chairman of the steering

committee, and then of LIFFE itself. And it was very exciting, and when Gordon Richardson



came and rang the bell on September 29th 1982 it was a big moment for all of us. And after

the first day, which you can never tell what's going to happen, I should think at the end of the

first week looking at it we were two-thirds convinced that we had made the most awful

mistake of our lives and it was never going to happen. It was a new concept; there were very

very few people using the market. We'd convinced an awful lot of people that financial

futures ought to open in London and London ought to be the financial futures market of

Europe. It's a very different thing to convince them of that, and for them to say yes, that's a

good idea, and to get 200 odd of them to fork out the money and buy seats, which at £20,000

wasn't a great deal of money. It't quite a different thing for a treasurer of.....

End of F2294 Side A




.....treasurer, to go back to his board and say, 'You've heard of financial futures?' To which

they'd say ‘No’ or 'Yes, we've read about them in the paper and they're things traded by

cowboys in Chicago aren't they?' And for him to say, I believe that our organisation, ICI,

Unilever Pension Fund or anybody of that sort, should use these things. To which they

would say, 'You're joking, but put up a paper, and we'll consider it'. And so, he'd come and

talk to us, and we'd help him write his paper and he'd put it up to his board, and his board

would say, 'Very interesting indeed. What sort of turnover in this market you're talking

about?' And he would say, 'Well, at the moment they turn over somewhere between 1,000

and 5,000 lots a day'. 'What sort of liquidity is there in the market?' And he'd say, 'Well,

some days there's liquidity, and some days there isn't a great deal'. And they'd say, 'Well if

we were to buy some [INAUDIBLE] could we sell them?' And he'd say, 'Well, might be able

to', to which they'd say, 'Well, bring it up in a year's time'. And that was the almost universal

reaction, and a perfectly fair one. Why should these commercial people, who were good at

making soap powders or ball-bearings, or whatever it may be, why should they take a risk of

moving into what they perceived as a risky market? And their treasurer might well stand

there and say, it's the avoidance of risk. And they'd say, well we did read something about it,

and it's locals taking risks, whatever locals might be. We've read words like 'speculators';

we've read things like 'gambling' and all those sorts of things. Doesn't this happen in the

market? To which he would say, 'Oh yes, speculation is very important, because it's the

speculators who take the opposite side of your trade'. 'We're going to deal with speculators?'

And one can see the conversations, and indeed I went to quite a number of board meetings of

different companies to help treasurers with their presentations, and the reaction was not

unfair. In their shoes I suspect I might have reacted in the same way to a totally new, as yet

untried concept in London.

And what was this concept?



The concept was saying that you can buy and sell money in the future, and you can buy and

sell an interest rate in the future. And the treasurer would say, 'But you've been buying and

selling foreign exchange forward for years'. 'Ah, we do that with our bankers, and that we

know is all right. We know that we're going to want to have dollars in six months' time, so

it's perfectly reasonable to buy them forward'. 'But' your treasurer would say, 'you know

you're going to want to borrow in six months' time, and therefore surely it's reasonable to lock

in today's interest rates now, six months forward'. 'That's different' they would say. It wasn't

different, but it was an enormous mental jump, from somebody who could understand just the

buying and selling of foreign exchange to buying and selling interest rates. It's ephemeral, it

doesn't exist an interest rate. A dollar that you're going to need in six months' time you can

almost talk to it and dust it and see it and take it off the shelf, and know it's there. It's money

that's going to be there. An interest rate isn't money.

So what your treasurer would be doing would be to buy a piece of paper that said if you want

to borrow a hundred million in six months' time you can borrow it at 7 per cent, today's rate,

even if the rate is 9 per cent then.

Great.

Or 5 per cent.

Or 5 per cent. And so there is...what you were doing is losing the opportunity to make either

a profit or a loss. But if you reckoned, as a lot of manufacturers now do, that they can make a

profit - well not at today's interest rates, but in normal circumstances - will look at the

development of a product and say, if we can borrow money to finance this at 10 per cent, and

the margins on our sales are as follows, and we believe that they are sustainable, we will

make a profit on it. The unknown factor is the rate at which they can borrow. So if they can

lock in 10 per cent and know it's going to cost them 10 per cent they shouldn't grumble if the

rates go to 8 per cent, because they've still got the profit that they wanted when they were



debating whether or not to go ahead with the project. And they have the knowledge that if

rates have gone to 12 per cent that they're still making the profit margin that they wanted.

And so it's that type of certainty that one can buy. If rates start to go down you can always

take your hedge off, and you can always undo the position that you have put on. It's not there

until the day it happens. And it's important that you manage your risk.

You can sell your option then?

You can see your future at any time. So whatever stake a company which today has a

borrowing requirement in 12 months' time, in sterling, and they believe that today's...and they

know that when they borrow that money they're going to want it to build a new factory, and

the pay-back period for that is three years, and so they want to borrow three-year money in

one year's time. They look at that and they say, at today's interest rates we could borrow that

money at 10 per cent for three years, and that is an attractive proposition. Therefore they say

yes, we will buy the future which enables us to do that. And they instruct the treasurer to go

out and borrow the £100-million at 10 per cent, deliverable in 12 months' time, but for three

years at that time. As the year progresses they find that there's an election, a new government

comes in, and it's quite plain that interest rates are going to fall. A new government wishes to

spark economic activity and generally to get industry going again. Interest rates are likely to

fall, and 10 per cent, even though it looked attractive, and the rates may have gone up to 11

per cent during the election, now the rates have dropped back to round about 10 per cent

again and it looks as though they're going to fall. So at that stage the company can say, we

believe we can borrow more cheaply in three months' time, which is nine months having past,

so therefore we're going to sell our future now, and get rid of it; we will have no position and

we will take the risk for the next three months of interest rates falling and thus being able to

borrow cheaper. So at that stage they sell the future, they have no position at all, either

buying or selling; the position has died, and they are able to be back in the market again

borrowing at market rates.



And who has bought this future from them?

Oh somebody else who is...I mean looking at who is on the opposite side of a future, if you

had somebody who knew that they had money to lend in 12 months' time, and regarded

today's interest rates as attractive, three year money, they would in the original scene that we

painted have been the seller of the future, because they had an equal, an opposite requirement

to the borrower of the money. And so who would be buying the future back now, with it

having three months to go, would be somebody who in three months' time is looking ahead,

has money to lend at that time. He says, 'Interest rates are dropping. I agree with this other

chap, interest rates are dropping, so I'm going to take that future off him, and that will enable

me, at that time, to lend the money in three months' time'. And so there's always somebody

on the opposite side.

How long did it take for this liquidity to grow, so that your ICI treasurer could get

[INAUDIBLE]

Well it's still growing, and one company that I'm a director of is just now in the process of

putting through a board resolution to enable them to use the futures markets, and that's nine

years after the market opened. And so there is still...and the Government only altered the

legislation to allow certain types of pension funds and investment trusts to use the market

without tax consequences in the last Budget, in 1990, and so that's brought in a new raft of

people able to use the markets. So, people are still coming in and will continue to come in

and use the markets. But the real liquidity I suppose took between three and five years to

have come, in most of the contracts.

What was the first big break? What was the first big industrial company that took a chance?

Oh I suppose there were quite a number in the early days who'd been involved. The

Association of Corporate Treasurers were very good, and they believed in the concept, and



they invited us to talk at quite a number of their meetings. And I suppose there were a

handful of companies who very early on reckoned that this was a useful additional tool. And

that's the important thing to remember with futures. It is not something which you should do

every day of the year; you should not always have a futures position. It is an additional tool

in the management of your cash position, and that's all. And there should be a time when you

should have no futures position, there is a time when you should have a large futures position

or option position.

So pure speculation in the Chicago exchange model hasn't really developed in London then?

People actually making money, not...you know, purely from their speculative activity.

I think what has happened is that the Chicago market has become more institutional and the

London market has become more speculative, and so we've converged over the years. And

whereas in London when we opened there were no locals, no individual speculators on the

floor of the Exchange, and Chicago said you'll fail because you don't have them, to which we

said we may fail, but they don't exist in England, and so there's no point in...you can't create

them, there aren't individual dealers in England at all. And there weren't. But now there are

quite a number on LIFFE, and I don't know how many but 10, 20, 30 down there every day.

So we've developed our British breed of locals who do provide the speculative liquidity in the

market. And I'm quite certain that there are institutions who speculate in the market. Would

a big bank honestly be able to put his hand on his heart and say it never speculates in foreign

exchange? It would say it doesn't speculate: 'We intelligently anticipate movements in the

market'. It's what some other people would describe as straight gambling. And the same is

true in the futures and options markets. I'm quite certain that large financial institutions do

take a view and a position in the markets, and that all is liquidity. But the vast majority of the

turnover in London is people genuinely taking out futures positions, or closing futures

positions, to protect their interest rate or currency exposure.



And did your work with LIFFE differ from your work with Mercantile House in the day-to-

day activities, or was it all LIFFE meetings? Not really in that I was...we took a different

view on LIFFE from all of the other London exchanges, in that we appointed a chief

executive, and all of the other London markets at that time were run by members' committees,

who again, the Stock Exchange said you're out of your mind. It's a members' market,

members have got to run it, and you've got to have at least 10 committees, none of which

should have less than 10 people on them and they should meet not less than once a day, and

that's the only way of running a market. Well we did suggest to them that their 48-number

council hadn't achieved a great deal over the past 25 years, but they wouldn't have it, and they

said that's the way to run it. To which we said well, that's your view, we're appointing a chief

executive and he's going to run it. And we've always had the minimum of committees on

LIFFE, and Michael Jenkins, who you may be interested to see got an OBE in the New Year's

Honours List the other day, we appointed Michael Jenkins. And again he was an interesting

choice. We had a short list of people, all of whom understood the futures markets except for

Michael, and he said, "You don't want somebody who understands the futures markets, you

want somebody who is an organiser, a manager, and who will run the project for you". And

we scratched our heads and thought about that, and said, "Well we thought we wanted

somebody who knew about futures, but actually we think you're right", and hired him. And

he was quite different from all the other candidates. He had run the European Options

Exchange, so he did understand markets, but he was a manager and a project manager, and an

organiser, and not a futures expert. And he was right, and we with hindsight were also dead

right in appointing him. And that was the way we've always been. So the chairman has

always been non-executive, the board has always been non-executive. In my day the board,

towards the end, only met once every two months; it now meets monthly which is probably

right. But we quite deliberately passed all the day-to-day running of the organisation down to

the chief executive and his staff, and we appointed strong people to support him. So LIFFE

didn't...I suppose to say it didn't take up a great deal of time, it took up quite a lot of time, but

it didn't take up as much time as being Chairman of the Stock Exchange, because we had a

strong chief executive. But the two did run together, and when...I suppose for Mercantile



House I was travelling about four months of the year, was out of the country for about four

months of the year in total most years, and I suppose for 15 years I was abroad for three or

four months most years. The work for LIFFE fitted in precisely with that, because when I

was in the United States I would go to Chicago and see the people in the markets there and

keep in touch with them, keep them in touch with what we were doing; while I was in Tokyo

I would talk to the Tokyo stock exchange about futures, and the same elsewhere. So every

trip had an element of LIFFE and Mercantile House about it. And in London the

development of LIFFE into these different markets...sorry, the development of Mercantile

House into the different markets in which we were trying to break down the barriers between

the different markets and create an integrated money market house, was pretty much the same

as LIFFE saying we will allow any financial organisation to become a member, and we don't

believe in the artificial barriers that exist in the Stock Exchange and the commodity markets

and the banks and the discount houses. So the philosophy and the thought process was one.

And the development of LIFFE was good for the development of Mercantile House, because

it was good for the development of London. And had we got our presence in the futures

markets more right in Mercantile House it would have made us more money than it actually

did. And as I said earlier it was one of the oddities I found of my involvement in the markets

over the past few years, is that LIFFE has proved reasonably successful and Mercantile

House's operations in the futures markets prove reasonably unsuccessful. And that ought not

to have happened.

So why did you leave LIFFE then in '85?

I decided that the right term for a chairman was three years, and I'd done three years, and in

fact if you add the working party and the steering group I had in fact done a total of five as

chairman of one bit of LIFFE or another, or pre-LIFFE and LIFFE. And I think that...I was

adamantly opposed to the way the Stock Exchange, and indeed the other markets allowed

their chairman apparently to go on forever if he so chose. I believe there's always somebody

else who will probably do the job slightly better, who will do it differently which is



important, and bring a different perspective to the market. And I think it's terribly

important...I thought it was terribly important to set a standard time, which Brian Williamson

who followed me, also did three years, and I hope David Burton who completes his third year

in May this year will do the same. And so I hope we've set a pattern of three years. I

wouldn't argue against four particularly, but I think that three is probably about right. And if

you're to get somebody who's any good to do it, there are very few firms who can spare

somebody who is good for longer than three years. And again it used to be...apocryphal

maybe, but it was always said that the Stock Exchange Council consisted of the partners who

could be most spared by member firms. There was an element of truth in it, if one looked

round the old Stock Exchange Council; it did contain people who were no longer of much use

to their firms. The great danger is, if you allow people to serve for a long time, that those are

the people you get. Particularly being chairman. I mean Brian Williamson who became

chairman of Gerrard & National towards the end of his term as chairman of LIFFE, could

never have done both jobs for long. And again, David Burton and his successor, whoever he

may be, have got to get the right person, and the firms to release him. And we've got to be

able to go to the chairman and say it's for three years, if you'll please let him go for those

three years, in which he will spent about a third of his time doing LIFFE business and only

two-thirds your business, and he won't get paid for it, but it's good for your firm because it's

good for London. Most chairmen of organisations will be sufficiently far-seeing to let even

their best person go for that length of time. For an indefinite period they won't. And so you

get a less high-quality person. So, rightly or wrongly both Brian and I agreed that three years

was the appropriate length of time, and that is why we both stopped doing it at the end of that

time. We're both still on the board of LIFFE, and I certainly intend not to be re-elected in

May this year, 1991, and I think Brian Williamson is taking the same view. Again, I think it's

important for a chairman to stay on for a limited length of time after he's given up. You

sometimes see things a little bit more clearly, you're sometimes able to say steady when

things are happening, but I think if you stay on for too long you just become a boring old fool

who thinks it was better in his day. And so I think it's important to do a spell past the chair

and then to retire.



So what...I mean you're obviously still in the prime of your working life. What are your main

occupations now then in terms of...I mean various directorships, or do you have a focus on

any one or two things?

When Mercantile House was taken over one or two people were kind enough to offer me jobs

as chairman and chief executive of other organisations, mainly in the financial field some not.

And I thought hard about it, and decided that I just didn't want...two things. I didn't want

firstly to go on working seven days a week, which I suppose I'd done for 20 years in the

development of Mercantile House, and it really was seven days a week, 365 days a year. I

don't regret a second of it, but it was a commitment. And secondly, I didn't want to do the

same sort of thing again; I didn't want to be a re-tread, trying to create another empire. I

think there's a danger that you will look back and say, I think Mercantile House was pretty

good apart from this, so I'll try and create something else like it. And I think that's a mistake.

So rightly or wrongly I decided that I would not do anything full-time, and that I would only

do or accept non-executive directorships. And that is what I have done. I became chairman

of the International Commodities Clearing House which I agreed to do for about three years

and did for I think three-and-a-half in total. And I am a director of a variety of other public

and non-public companies now, and non-executive with all of them. I can't see any job of

any sort that anybody could offer me which would make me reverse that decision, either

financially or a challenge. And there are plenty that I would think about over the weekend,

and there have been one or two that I have thought about over the weekend, but in the end I

don't think...as I say I can't perceive anything that would make me want to become a full-time

executive again. Because I do believe that if you are chairman of a company it's seven days a

week, it has to be. Even if you're a non-executive chairman I think it's seven days a week.

You've got to worry about that company the whole time; you've got to be prepared to be on

the end of a telephone the whole time. And mentally you're committed in that sort of way.

And I wouldn't take anything on without feeling that I was prepared to give that type of

mental commitment, and I'm not.



This must do astonishing things to family life.

Oh it does, and it would be unfair and wrong to say that my divorce was a result of being

away, it wasn't, it was the result of an incompatibility, but there are plenty of... But, being

away undoubtedly contributed towards it, and there are plenty of people who have been away

as much as I have whose family life has broken up directly as a result, and only as a result of

their absence from wife and family. But no, I mean I occasionally get withdrawal symptoms,

and occasionally I think the only decision I've made for a month is what tie I'll put on in the

morning, and nothing more important than that. I occasionally miss the adrenaline that one

gets from making a difficult decision and then sticking by it, and explaining it to staff, board

members, shareholders, press, and I occasionally miss appearing on television and having to

defend what I've done. All of those things I miss from time to time, because they do get your

adrenaline going. And to make decisions and have to live with them and stand by them, or

admit you're wrong, or fine-tune them, is tremendous fun, and as I say I don't regret a second

of the years in which I was doing it. And therefore from time to time I don't think one would

be human if one didn't get the occasional withdrawal symptoms from that, but it is only an

occasional withdrawal symptom.

You're never tempted by something...doing something rather like Derek Roberts, who left his

position in GEC to become Provost of University College? I mean, taking one's talent into an

entirely different field?

I think curiously that that is perhaps the one sort of thing...if it was a seven-day-a-weeker the

answer is no, but if there was something that was quite different in that field, of that sort, that

is just the sort of intellectual challenge that I would find interesting, because it wouldn't be

running a business as such, and provided there was a clearly-defined role which was limited,

and one was there not as an expert in the field but for whatever other reason, that that I would

do. And at that stage I would probably say right, I will give up all or virtually all of my non-



executive directorships and substitute this for it, which gives roughly the same sort of time

commitment, but concentrates it all in one.

How much do all your Army activities and your various good works to do with that take up?

They have taken up quite a lot, and certainly...I mean over the years, I mean at once stage

they were taking up...the Army activities were taking up a great deal of time. But this year,

during 1991 I will give up my three principal Army activities, which is being chairman of the

TA in the south-east, chairman of the TA in the City of London, an honorary colonel of 67th

Queen's Regiment, and those are the three which take up most of my time and I'm quite

deliberately giving up all three at the same time, or within a month or two of each other. So

that that particular bit of my life shuts neatly together. I've still got a number of other Army

involvement’s but the principal ones will shut down together. And all the other Army

involvement’s I've got are with Army charities, Army funds. I'm a sort of honorary financial

advisor to a number of regiments and corps and that sort of thing, and Army clubs. All of

that is to do more with investment and welfare rather than with the fighting soldier, and so

that chapter will stop as from now.

You do a lot of parish work, or did you do before you moved?

I did. I did before I moved.

I suppose it was Chiddingly rather than Three Leg Cross or whatever it is.

Yes. Yes, no I was treasurer of the parochial church council for ten years I suppose, and

looked after the finances of the church, and I was on the civil parish council for I suppose six

or seven years. But those I gave up when I moved.

And you haven't cultivated...?



No, I don't think...I don't think again it's something which I would want to do again even if

somebody wanted me to. I think that having done it... Again it's quite a commitment to do

that, and I don't think it's something which I would want to get involved in again. I also feel

with quite a lot of these things, that there's a great danger of people, when they retire or semi

retire, taking on all these things, and the result is that they're all run by retired or semi-retired

people. I think I was much more value in being the local church treasurer when I was 40 to

50 than I would be 55 to 65, because I was involved more in financial life, I was involved

more in business, inevitably more switched on, and I think I was able to bring a more acute

view to it, which was not necessarily welcomed by the church authorities, but it was good for

them. I mean for example when we ran an appeal for the church I thought that it would be

good to raise money outside the parish, and so I got one of the parishioners to go and run in

the New York Marathon, and I got all of our New York companies, as individuals, not as

companies, the individuals there, to sponsor him. We raised £15,000 in New York. It's that

sort of aspect you can bring to it if you're working, and I think that it's better for active

working people to be involved, not retired old buffers like me.

We should all be so bufferish! I see you're a JP.

I am, yes.

You are still?

Yes.

So you don't mind local political or judicial work, it's just the church stuff.

Not political.



No, I know these aren't, but I mean that's often something that one does as well.

Yes, I mean I am utterly unpolitical, and I'm totally disinterested in politics, and upset every

local Conservative party wherever I go, when as soon as you arrive there they come round

and see you and say, 'We're quite sure you will want to contribute to the local Conservative

party', to which I say I'm not a member of the Conservative Party, to which they say, 'You

must be! Everybody is!' I don't know quite what that means, but I think I do know what they

mean!

In with us.

But...the answer is no, I won't, and never have. Mercantile House didn't contribute to any

party, and nor do I. And so... I don't say I'm disinterested in things political but I am utterly

unpolitical and wouldn't want to support a political party, and rather to some people's surprise

I have voted Labour and I have voted Liberal and I have voted Conservative in my life, and I

will vote for the party at a particular moment which I believe is the right party to govern the

country, and I have swung between all the parties over the past 15 years.

A very American idea.

And there are those who would say that's quite wrong, you should always vote Conservative.

But, in answer to your question, to go back, sorry, it was a digression, but to go back to being

a JP, yes, that is fascinating. Anybody who says they enjoy being a JP is probably a very bad

JP. Nobody can enjoy - well I suppose some judges do, but no layman I think can enjoy

sitting in judgement on your fellow human beings, and very often having to do things to them

which are unpleasant, and very often having to do things to them not being certain whether

you're right or not, and very often having to do things to them which you know is wrong but

it's the only thing that you can do, because that's what the law says. And so you come home

sometimes...not upset, but disturbed, and I...I mean I don't worry and never have worried



about anything, so I can't pretend I go home and worry, but in the car driving home from the

court I will sometimes mull cases over and say, I wish I hadn't had to sit on that case, because

I don't know whether we got it right or wrong, and I'm pretty certain the punishment we gave

was not suitable, but it was the only punishment available to us and we had to do it, and I

wish I could have done something else. But it is quite fascinating, and I think terribly good

for people who are involved in commercial life, particularly senior people who have become

isolated from the day-to-day happenings and the day-to-day populace. They don't know what

it's like to be unemployed. I don't, but I have people in front of me every day who are

unemployed and I know more about it therefore than some directors of some companies,

people who... I think it brings you back to reality, and particularly if you work in the City,

which is a total ivory tower, having to go out and see real people with real problems is

extremely good for you. And I think probably it leads you to a more balanced judgement,

even in matters connected with the City markets, and so I think it makes you a bit more

human. So, I do find it...I find it something which I'm very glad to do, even though I don't

always enjoy it.

How did you get involved? I mean how does one become a JP in your part of...?

I was simply asked one day if I would be prepared to have my name put forward, to which I

thought about it and said yes I would, and then it's... I don't agree with the system of JPs.

Somebody will say to you, do you want to become a JP, and you fill in a form saying all the

things...you know, a sort of CV, and that goes off, and you may never ever hear anything

about it again in your life, because it goes to a thing called the Local Advisory Committee,

who are un-named people who are supposed to represent all sectors of the local population.

They go through the lists of people who have been recommended, and decide yes or no, and

they don't have to give reasons for it at all. Now to my mind it's something like a secret

society and as I say I don't agree with it, but that is the system, and if they say yes your name

then goes to the Lord Chancellor and the Lord Chancellor then writes to you, and you have to

fill in a fairly voluminous form declaring all the things that you've done. And again you may



hear nothing about it, because he may on reading it say no. But if he says yes, at some stage

you will get a letter saying it is proposed that you are to be appointed a Justice of the Peace.

On my form I had to fill in the fact that I'd been to jail, which...did we go into that at all?

I don't think so, no.

No. Well I did. I went to jail, and that is not something which they expect potential JPs to

fill in on their forms. It went back a long time, and it was in the late 1950s when I was living

at home with my parents in Chelsea. And the story went that after rugger the week before,

we'd been to a pub.....

End of F2294 Side B




This is an interview with Mr. John Barkshire on the 28th of February, 1991. Tape 5 [it is

tape 6] side 1.

OK, this is the hour in which we talk more about your personal ideas and relationships in life

and leisure and that sort of thing. And can we start out by talking about your marriages.

Yes.

You were first...I know absolutely nothing so why don't you just tell me the name of

your...you've had two wives is that...?

That's right, yes.

OK, start with your first wife and...

Yes. I was married to my first wife in 1960, and she was the...her name was Margaret and

she was the daughter of Dorothy and Leslie Robinson. He was an architect; they originally

came from the north of England and they lived in Essex. We had three children, Charles born

in 1963, William born in 1965, and Sarah born in 1969. We separated in 1987, and we were

finally divorced in 1990, and I then married for the second time in April 1990, to Audrey

Whittam, who had been divorced for some years, and whom I had met and known for quite a

long time. And that's where we are now.

Where did you meet your first wife? Was it at school, or...?

No, we met at a New Year's Eve party in Kensington.



And was she from the same social group as your parents, or were they family friends, or...?

No, she...no, it wasn't family friends. But yes, I mean broadly from the same social group,

and she had been at school with the sister of a chap whom I'd been at school with.

Classic.

Yes.

And you knew each other for a long time before marriage?

No, we met one New Year's Eve and we were married 16 months later on the 30th of April.

Not a whirlwind courtship.

I don't know. In those days...no, I mean we were engaged after knowing each other about

nine or ten months, and then married six months later.

Was there any sort of decision on marriage taken as...with any reference to you being able to

support a family or support a marriage? I mean nowadays one tends to just marry without

worrying about being able to set up household or anything.

In those days I suppose it was probably reasonably normal for the wife to stop working on

marriage, which is what Margaret did. She had taught cooking at the Cordon Bleu before we

were married, and she gave up work as was relatively normal. I mean I suppose now, our

oldest son's just got married, and it is accepted as the norm that...


Whereas our oldest Charles has just got married at Christmas time last year, and it is now the

norm for wives to go on working.



And do you think she minded giving up, or was quite keen?

I think it was just in those days, I mean you're talking back to 1960, it was so normal for

wives not to go on working, for the thought process not really...it was not really to have

discussed it much.

And was she then not working outside the house the whole time you were married then?

She did one or two part-time jobs, but she was basically not working at all outside the house.

And when you had your children did you have help in the house?

Yes. Yes, we did, and we had help in the house throughout our marriage.

This is nannies or housekeepers, or...?

Housekeepers, daily help, gardeners. (laughs) The complete variety.

Heavens, you are clearly a man truly a man in affluent circumstances. Was this natural? I

mean was this something that you assumed would happen, or was this...did your wife come

from a family situation that took this sort of thing for granted? A nanny one can...of course is

fairly common.

I suppose that both her parents and mine had daily help throughout their lives, and certainly

my mother's parents, my grandparents, would have had two or three resident staff, and my

father's parents had a resident butler and other staff, and so although everybody's personal

staff had run down over the years, and quite rightly so too, nonetheless there was still an

assumption that one would have some help.



How did you find it? It's very difficult nowadays, how did you find it then? Agencies, word

of mouth?

No, simply that there were people around who enjoyed being a domestic help, enjoyed that

sort of work, it being a very personal sort of work. And therefore in every village and I

imagine every town, and certainly in London, there were people looking for that sort of work.

Remind me where you lived with your first wife.

At that stage we lived in Sevenoaks in Kent, a commuting town.

But village atmosphere?

We lived just outside Sevenoaks and so it was a villagey atmosphere, yes, and the people

who came and worked for us, the wife came and worked in the house and the husband came

and worked in the garden.

And who would have hired them? Who would have interviewed them, you or your wife?

Whose responsibility?

I suppose my wife interviewed the wife and I interviewed the husband, for the two different

jobs.

What would have happened if you hadn't agreed?

I don't know. I suppose that we might have taken on one and not the other. I mean they

didn't come as a pair as such; they weren't living in, they were living in the village, and so if



we hadn't taken on one of them I suppose they would have gone and worked for somebody

else.

Was any of your help live-in help then?

No, no.

Was this how it was, or your decision?

It was our decision, and the house we had wasn't big enough to have accommodated them

anyway. But I think one's got to...I mean there was a changing social evolvement from

Victorian times when a lot of people had living-in help, and most Victorian houses had a

complete floor where the living-in help lived. As one moved down over the years to smaller

houses so the number of people living in reduced, until in the end I suppose nowadays

virtually nobody has living-in help; if they have any help at all it is somebody who comes in

on a casual...not a casual labour basis, but from their own home.

3 to 5 on Thursdays.

Yes, and I think nowadays if one has help on the whole it's inclined to be young people who

come in who can spare an hour or two during the week, want the extra pocket money, and

therefore can park their children or their young children are at school, and a job which is two

hours every morning and one hour during holiday time, it suits them very well.

And your help with the children. You've had nannies?

I had nannies when they were very young, that's when they were first born, and particularly

when my wife had the second and third one we had nannies in to look after the older ones.



But then after they reached a certain age you dispensed?

Yes, we only had nannies really for a very brief period on the birth of each child.

And was this usual amongst your contemporaries?

Yes, I think the days of nannies had by then largely gone. I think the number of people who

had nannies were very few.

And do you think your wife enjoyed...

Whereas it's come back, if I may interrupt, now, and I think that people...far more people

have nannies now. Because far more wives are working they have got to have nannies to

look after their children while they're working, and so I think the trend has reversed back.

That's interesting. I mean, so...would you think your wife might have liked to have had a

nanny, or did she like the idea of full responsibility for the children as soon as possible

herself?

I think that...I don't...we just didn't ever discuss it, and so it's quite a difficult question to

answer. I suppose that obviously if she had gone out to work then we would have had to

have had a nanny to look after the children, as people do now. If she didn't go out for work...

the question really didn't arise. Apart from the fact that we couldn't have afforded it. And

one's got to remember that people now who have nannies can afford it because they’re both

working.

Well that gives a slightly different cast on your full home help then, of housekeepers and so

forth. What would have been the rates of pay then? If you have gardener and housekeeper

and so forth.



I just can't remember, but I mean compared with nowadays they were a pittance.

So, when do you think...just...this is an interesting train of thought. When do you think the

idea of women working and having nannies changed in your own sort of social City-related

milieu, Sevenoaks or whatever?

I think that, going back a bit, I think that probably the point of change was the war, and that I

think that up to the war quite a lot of people in the professional classes had nannies and more

help in the home, whereas after the war almost nobody did. I mean I think that was probably

the point of change, and so those of us who married in the years after the war didn't expect it

because it wasn't happening any more. And then I think as one went through the Sixties and

Seventies, and it was probably the Seventies, as more and more young wives kept on working

and kept on working in order to pay for the mortgage and in order to pay for holidays, then as

they had children they had to have nannies. And if one looks at it crudely as a profit and loss

account they were making more money outside than they were paying the nanny, and

therefore, apart from the interest they got from their work, and in fact they wanted to work, it

was a profitable equation.

So your three children, Charles you said was your oldest?

Yes.

And was he educated locally or did you send them away?

He went away to school from the age of seven or seven-and-a-half.

What happened between five and seven?



He went to a local school, from the age of three to seven I suppose, or four to seven he went

to a local school.

Prep school or...?

A pre-prep school, yes, and then at the age of seven went away to prep school, and was at

prep school for five years, and then at public school for five years. And the same with

William. Sarah went away to school slightly later; I suppose she was probably nine or ten

before she went away to school, and was then away at boarding school until she left.

Was there any discussion about whether or not to send them away, or was it taken for

granted?

I think it was taken for granted.

Do you or they regret it?

I don't think so, no. I don't...I have never had discussions with them about it, with the

children about it, and I don't think they regretted it. I don't know whether they enjoyed their

school days: I don't know whether any of us enjoy school days, but I don't think that they felt

that they were being sent away, I don't think that there were any hang-ups about it at all.

And what did your wife do once the children were all out of the house, but she didn't go out

to work?

I suppose that in looking...to borrow a phrase, at the anatomy of a marriage, it was perhaps

that she was totally centred on the house, and really had no outside interests which gradually

led to us drifting apart. And I think it was, in retrospect a pity that she didn't do things

outside the house. Not only in retrospect, I said so at the time but she didn't want to.



No interest in sort of local village outlet?

Spasmodic but not much.

Not president of the local WI or...?

No.

Church warden or anything of that sort?

No, I mean she mildly involved herself in local affairs, but never really got deeply involved

in them. It's difficult in an interview like this, I mean one wants to be careful when one

has...having divorced one's wife not to indulge in character assassination, which is not what I

would want to do, and so what I am saying is critical of her, and it was perhaps her

contribution to the break-up of the marriage. My contribution was that I was so busy that I

was away a great deal of the time, and that also contributed to us drifting apart. I think...one

doesn't allocate blame but I suspect it was six of one and half a dozen of the other.

Yes.

On what basis...with your children, on what basis did you choose the schools? Did you have

any sort of educational philosophy, or did they go to schools that your contemporaries sent

theirs to, or...?

The philosophy that we really adopted was that we wanted them to go away to school but not

so far for it to be administratively inconvenient, in that if they were in a school play or

playing in a match, or there was something that we needed to go to the school for we didn't

want to drive half way across England. So we really ruled out any schools north of the



Thames, and so we looked in Kent and Sussex for schools. So that ruled out my old school

in the Midlands.

Bedford School?

Bedford School, yes. And so we just looked around. And the prep school that we sent them

to was one to which we'd been recommended; in fact one of the people with whom I worked

had sent his children there.

Sevenoaks School is one of the best now of course.

No, this was in Seaford.

This is after you'd moved.

No, this was when we were still in Sevenoaks, but we sent them to prep school in Seaford,

which wasn't that far away. I mean it's an hour's drive but a fairly easy hour's drive.

And they were all single-sex schools presumably?

Yes.

And...were you interested in the schools' provision of music or athletics or academic, or just

atmosphere, or...?

I think that looking back at my own school days, the thing that by then I had placed most

value on was the roundness of the education I received. By that I mean I think that Bedford

School turned out boys who were good at going out in the world, and they were ordinary who

were capable of looking after themselves whether they found themselves in the middle of



Africa or in the City of London or in the services. And therefore in looking at schools for the

children, I certainly for the boys was keen to go to a school which didn't give them airs and

graces, but enabled them to go out, capable of mixing with people, and hopefully getting on

with people, and being able to take whatever the world threw at them. And so it was that

really rather than saying, it must be a school which is very strong on Classics, or very strong

on games, or very strong on music.

And which school did you...?

And so we sent them to Eastbourne, which was relatively near us, but was a school...we liked

the headmaster, I knew the headmaster, I'd known him for some time, liked his approach, and

liked the atmosphere at the school and what it provided, whereupon he promptly left and

went to another school!

And were you happy with the outcome?

Yes very, yes. I mean the headmaster who took over from him, again I think he's very good.

I was lucky enough to become a governor of Eastbourne while the boys were still there, and

so I suppose to an extent I was able to interfere with the way the school went. And I think

they found it a satisfactory school, and looking back at it I wouldn't have sent them anywhere

else.

So what is Charles doing now?

He after he left school went to Cirencester Agricultural College. Charles is...Charles is not

clever; he gets on well with people, and is good with people, but he struggled through his

school O-levels and A-levels. The struggle was partly because he's not clever and partly self-

induced because he was always rather doing something else, and that his order of priority at

school was games, girls and work a long way third. So, university wasn't on for him, and



anyway it wouldn't have benefited him I don't think, and so he went to an agricultural college

at Cirencester, and after that went into a firm of chartered surveyors, Savills, where he still

works.

And is happy, successful?

Yes, I think he's a round peg in a round hole. He is good at selling houses, and he now runs

the residential side in Bath, and there could be nowhere lovelier to live than Bath. And I

envy him that, and he lives in a cottage outside Bath. And he is doing something at which I

think he is really quite good..

So he is 30 now?

He is 28.

28. Has he married yet?

And he got married two days after Christmas last year, yes, so just married.

And is his wife working?

His wife intends to work. She was an investment analyst in the City, and it's not easy to get

an investment analyst job in the West Country, but she is looking really for anything at the

moment, but yes, certainly intends to work.

In the City. Does this mean he met her through contacts with you?

No he didn't. He met...I'm not absolutely sure how he met her. I imagine almost inevitably at

a party somewhere.



On a weekend.

Yes.

And he didn't consider going into the City, following you?

No. I didn't encourage him to. I don't think the City would have been the right place for him.

He is much more of an open air person, and I think the confines of an office or the City

would have not suited him.

And what's William doing?

He went to Southampton University, and got a B.Sc. there, and he then went to work in the

City, and I think the City is the right place for him, and went to work for Warburgs. He

then...I suppose he was with them for about a year, and again I think was quite well suited to

it, wanted to go and do something on his own, and so for the last 18 months has been working

on his own, and I think now has learnt quite a lot from doing that but is now I think

convinced that he ought to go back to the City and work in a larger organisation and will

probably go back to Warburgs or a similar company.

What was he, on fund management, or...?

No, he was on the securities side.

What a good time!

Yes.



Well it's a good time possibly to get back into it.

To go back, yes.

And were you instrumental in this? Was he interested in what you had been doing for years?

Yes, and at school he had always taken an interest in the City, and in a very small way had

had an investment portfolio for a long time. And so he had always intended to go in that

direction.

And did you facilitate, or...?

Yes. I mean in both William's case and in Charles' case. And I'm not sure whether either of

them actually know it, I telephoned the chairmen of both the companies, not to ask them to

employ them but simply to tell them that they were coming for an interview, and who they

were. And I knew the chairmen of both the companies, and I mean I wouldn't want to

influence them into getting a job, but when they're interviewing a large number of people it

does at any rate mean that the inteviewer thinks about them, and if they reject them they do

so having thought about it.

Yes. And what about Sarah?

Sarah struggled academically. She was quite good at games, and was school prefect, and is

good with people. When she left school she did a secretarial course, she did a history of art

course in Italy, and she did the Cordon Bleu cookery course, and so we tried to sort of give

her a fairly rounded finishing off of her education which took about the same time as going to

university, and she then took a secretarial job which she left last October in order to go

abroad, and is now back working at another secretarial job.



And did you see these finishing aspects as preparation for marriage or for a career?

Oh for a career.

Like the Cordon Bleu and the history of art.

I mean she didn't really know what she wanted to do. She was interested in art, and I had

hoped, and still hope that she might go into one of the art dealing companies, or into the

media in one form or another. She is, without being a good painter, she's artistic, and I think

could do well in that sort of environment.

She has taste.

Yes. And is interested in it. So I mean I had hoped that by giving all of those things she

could then make a choice as to what she wanted to do, but rather hoped that she might go into

say Sotheby's or Christie's, and maybe start as a secretary and then work her way through.

Does she have languages?

No.

So in Italy...?

Oh I think she learnt a smattering of Italian while she was there, but the course I think was

conducted in English because it was a multi-national course.

And you say she's gone abroad now.



She went abroad and she's now come back. And in fact I sent all of them abroad at some

stage. Charles went to Australia, William went to America and Sarah went to Australia, and

so I've sent each of them abroad for up to a year, to try and broaden their outlook.

It's interesting Australia and America and not to Europe. Was that their choice or yours?

Mine, to send them further away and to send them to places which they would find more

difficult...might find more difficult to visit in the immediate future. Whereas Europe is

relatively easy to visit.

Why Australia?

Because...I suppose pragmatically because I know a lot of people in Australia, and therefore

could find them employment, and in an emergency somewhere to live and stay. And

secondly because, certainly in Charles' case, to go and work on an Australian farm before

going to agricultural college was jolly good training.

And I suppose William went to New York City?

He went to New York City and worked in the investment market.

Wall Street?

Wall Street, yes.

And you facilitated?

Yes.



Whereabouts did you send him?

He worked for a short time for one of my companies, and he then spent a bit of time with

Salomons and a bit of time with one or two others and generally worked his way round.

And did any of them, whilst they were abroad take off and travel by themselves, take care of

themselves for a bit?

Yes they all did, in that the jobs that they got were all for only a part of the period that they

were abroad, and so they had the opportunity to go elsewhere, and they all took advantage of

it, either on the way home, for the two who were in the Far East, or in the United States in

William's case.

Can they take care of themselves?

Yes.

So if Sarah was coming through India...

Yes, she didn't in fact, she went through...I mean she travelled round Australia a bit and then

went to Singapore and to Bangkok. But yes, I mean in all ordinary circumstances perfectly

capable of looking after themselves.

I mean it's interesting. I mean did you ever wonder, or worry when they were growing up,

they've had such obvious advantages in the usual...that they were in fact too pampered, that

somehow they wouldn't be able to make it if they were in crisis on their own?

I think I'd like the answer to be that...yes, they were brought up in a privileged environment,

and one can't escape from that, but that we put the privileges that we had, and I mean the



relative wealth that we had, to advantage in giving them that sort of preparation so that they

could cope. And from early days I always tried to make them stand on their own feet. I mean

for example when they both, all three of them, started to learn to sail, I gave them sailing

lessons for a couple of times, and made them do as much as I could, and then I took both of

them, singly, or each one of them, outside the harbour and capsized the boat, and swam away,

and said get it up and sail home. And after that they were on their own. And so they jolly

well had to learn how to get a boat up the right way after it had capsized. In fact I didn't, I

got back on board again and capsized it again to make quite sure they could do it twice. But

in that sort of way, I mean the whole way through, that was only one example, in the whole

way through their lives I've tried to...to prepare them for life, despite the fact that they had a

pampered or privileged upbringing. And school was important in that too.

How so?

As I said before, not sending them to somewhere which re-emphasises the privilege and the

pamperedness.

You thought Eton was not perhaps the place to send them?

No, no. I mean I think in today's environment the majority of people who have been to Eton,

unless they go into their own family firm, or their own father's firm, would hide the fact

they'd been to Eton, because there is an assumption among employers that they imagine that

they're going to go straight to the top and they're not going to work. And I think that most

people don't say where they've been to school if they've been to Eton. I think it's reached that

sort of pitch. I think it can be a disadvantage.

Even in the City?

Yes.



It's most interesting. Would it be an advantage in the City to have come from a grammar

school?

I think that to have come from a grammar school, and to have been to one of the top half

dozen universities gives you a better start in the City than to have been to Eton, yes.

That's very interesting. So it is rather more meritocratic you would say now than it was even

a generation ago?

Oh much more. I mean I'm leaving aside the handful of firms who are still privately owned,

and...

Warburgs, Kleinworts, [INAUDIBLE]?

Where sons come in automatically. The general run of the City now I think is a meritocracy,

in the way that it wasn't certainly when I came into the City.

What do you suppose was the change? Coming of the American banks?

I think it was partly a failure of the old system, in that the assumption was that sons were

always best, and a lot of sons were howling failures. And as soon as we moved out of the

protected environment of the old City and came into the new competitive City of the Sixties,

firms just couldn't afford to be run by pleasant incompetence. And therefore they had to go

for meritocracy, and once you get some meritocracy in they quickly squeeze out those who

don't have merit. And there are plenty of sons who have merit, but they should be there

because they have merit and not because they're sons.



That's most interesting. And would you say that nowadays there is in fact a correlation

between meritocracy and success in City firms?

Of very much so. Yes. I think that the City firms who have recruited purely on merit are the

ones which have risen to the top.

Also with your children, did you find that you treated your daughter in terms of expectations

or preparations in a distinctively different way? I don't meant Cordon Bleu versus...you

know, but I mean in terms of what you expected her to achieve or how far you thought she

could go?

No, not...in theory not, but in practice of course one treats each of one's children differently.

If Sarah had been...if Sarah had had William's intellect and had done as well at school as he

did, I would have expected her, would have hoped that she would have gone to university,

and gone into the City. In other words if they'd been reversed I don't say William would have

gone to the Cordon.....

End of F2295 Side A




.....was not the deciding factor in the fact that she didn't go on to further education. The fact

was that she couldn't cope with it academically. And had she been able to she would have

gone the way of the boys. In the same way as Charles didn't go to university, he went to

agricultural college, which was his level of capability.

It's interesting though that his level of responsibility in a firm is clearly substantially more

than her responsibility in a firm. Now do you suppose this is their personal characters, or

what is expected of them?

I think that it's...I think Charles has made the most of his capabilities, and has therefore done

better than one might have expected, and has therefore achieved responsibility quite quickly.

I think that...and I think Charles was lucky in that I think he found his niche in going to

Savills and it was the right place for him to go, and therefore he's been able to harness his

ability to the job that he's doing. I think Sarah hasn't found that niche yet, and I think she

doesn't know quite what that niche is, and therefore she is drifting much more. And perhaps

a girl can still drift more easily saying well, I get perfectly well paid as a secretary, I can do

all that I want to do on a secretary's pay, and I expect I'll get married.

You think she's marking time a bit?

And therefore it is not necessary for me to say, blow the pay at that stage, I've got to get my

foot on the ladder. And whether she has said that consciously or unconsciously, I suspect

that that is where she is at the moment.

How old is she?

21.



Plenty of time then.

Yes. But if Charles or William in the equivalent stage of their career had been marking time

in the same way, it is fair to say that I would have been much more concerned and

disappointed than Sarah doing it.

Why do you suppose?

Because I think that I still take the view that Sarah probably will get married, and therefore

the job that she does after marriage, on the assumption that she does a job, will be of a part-

time nature. She hasn't got a mission in life; she hasn't...or she hasn't found it yet, and she

hasn't got something that she really wants to do, and therefore almost inevitably she will drift.

You don't ever fear a failure of previous generation...I mean a repeating of previous...actions?

How do you mean?

Well do you ever worry that she will be the same, or that the same thing will happen to her as

happened to her mother, basically having put all her eggs in the marriage basket?

Yes, I think there must be that worry, and I think that again, being careful in what I say I

think that one of my biggest concerns over Sarah is that she is her mother's daughter, and

therefore is probably being encouraged...no, that's not fair, she is probably not being

encouraged to go out and do something. I don't say she is being positively discouraged.

Whereas if her Mother had had a career she would be saying to her, come on girl, go out and

do something I did.



Do you think that if Sarah had in fact been like William and had gone into the City, how

difficult would she have found it, as a female in the City?

Oh I don't think she would have found it a bit difficult. I think there is equal opportunity in

the City for male or female, up to a certain level, in that Charles' wife was an investment

analyst, was paid exactly the same as her male counterparts, and was doing jolly well.

What's the change...I mean 15 years ago Morgan Grenfell had their first female banker; she

was an American. I mean no native female had ever been to that level. That's quite a change

then in 15 years. What do you think is the...?

I think it's the change throughout society. I think that over the past two decades far more

women have gone to university with the intention of going on and doing something

afterwards. And it's an obvious fact that they're as able as men; of course they are, they're

exactly the same as men intellectually, and therefore must be as capable. And therefore as

soon as women went to university or any other form of further education with the intention of

having a career afterwards, they were bound to be as capable as men, and it would not be

long before employers recognised the fact that women were as capable as men. And as they

were short of good men they quite quickly employed women. I suspect in the male

chauvinist world that we lived in, had they not been short of good men and had there been an

ample supply of good men at that stage, women would have found it much tougher. Thank

goodness that was not the case, and the shortage led to women making inroads, and once that

had started they proved that they were equally as capable as men, and they therefore

progressed up the ladder on an equal basis.

There are still areas, aren't there? I mean for example outcry futures exchanges, or merger

and acquisition, business corporate finance and banks, that probably have many fewer

females than men, that are seen somehow as taking not brutality but requiring a certain thrust

and aggression that females aren't seen to have, or am I wrong?



I think that's probably so. I mean it's always very difficult I think to know whether the

shortage of women in any particular area is because women have looked... Because of some

makeup in the female, the female generally says, that's not an area that I will go into. And for

some curious reason all women look at an area and say, that's not an area I want to go into,

simply because they're women, and not a deficiency in the women, but simply it doesn't

attract females, or whether there is an actual barrier. I suspect it's a mixture of both, because

there are some areas like investment analysis where I would have thought in some firms there

are more women than men. And it could be that the woman's brain is particularly well suited,

and is better than men at that particular aspect. And maybe when it comes to mergers and

acquisitions the woman's brain for some curious reason is not the equal of man's. I mean I'm

only guessing, and I don't know, and I'm trying to rationalise it, and it may be quite wrong.

But I think it is not impossible that that is the case, and that there are in this world places

where women are better than men and there are places where men are better than women.

But having said that, I mean one of Kleinwort's best corporate finance directors is a woman,

and she has looked after several companies where I've been involved, and I've happily

selected her as the person to look after us.

Are there any female traders in LIFFE?

Yes.

Do they wear stripy jackets?

Yes.

How many are there out of how many?

I don't know.



I mean I'm glad to hear...I assumed there wouldn't be you see, so...

I would have said...I mean if you look at the floor of LIFFE, and Michael Jenkins would

know much better than I do, I would have said that there is a very reasonable proportion of

women, and whether it's 50 per cent or not I don't know, but certainly...

It's that substantial?

But I would have expected it to be really...yes, pretty substantial.

In open outcry?

When it actually comes to trading the percentage is smaller. And I don't know why that is; I

mean there are plenty of women in Chicago...

They shriek along with the rest do they?

Yes, they do. It's tough, it's physical. I don't know whether a man lasts the day better or not.

That's interesting.

But I do think if one looks through the legal profession and the accounting profession, and

now look at the partnership lists, a large number of firms have, certainly among the under-

40s, have as many women as men, and I would say that in the vast majority of those firms

there is absolutely no prejudice whatsoever for or against women. So I think that the City is

still a bit chauvinist, but I don't think it's...I don't think that it is very chauvinist, and certainly

is not chauvinist in the way that it was.



And in summation then you don't see that there are areas of the City that are more chauvinist

than others, that it's...?

I would think, and I speak with I mean not a great deal of knowledge, but I would say that

Lloyds probably has a far smaller proportion of women doing responsible jobs and acting as

principals than men, and a far smaller proportion than other parts of the City.

That's rather strange isn't it? You'd think if they can be investment analysts...


But you asked the question, are there some areas which are more chauvinist than others, the

answer is yes I think Lloyds probably is; chauvinist rather than having a real reason for there

being more men than women.

Any ideas why?

No, not really.

Amazing. Is it more of a club atmosphere?

Yes, I think that's probably right.

Last bastion?

Yes, I think it is. Yes.

I must think about that! We're almost coming to an end of the tape, and I have I suppose

taken quite enough of your life, but I would like to know something about...well, general sort

of leisure interests. What do you do when you're not...well I don't want to say not making



money, when you're not sort of gainfully employed, how's that? What do you spend your

time doing?

Well the Territorial Army has taken up a lot of my life and time, and still does, and so that

has been I suppose...I mean it's difficult to describe it as a leisure pursuit because it's anything

but, but that has been the other thing which has taken up a great deal of my time. And being

a magistrate takes up quite a lot of time. Charities, I suppose I'm involved with about a dozen

or so, and perhaps a few more than that, charities...

When you say involved, what does that mean?

It means that I'm either a trustee of them or financial advisor to them. And the roles that I

have on...oh I think just about every charity with which I am involved, is looking after their

finances or advising them on their finances and their investments. And so...

What charities for example, large ones, small local ones?

Absolute mixture, from schools, to a lot of service charities. I am involved I suppose with

about ten service charities of various sorts, and then others which perhaps are slightly

service-orientated like service clubs, boys clubs, the church I looked after at one stage. So a

complete variety of different charities. And I've got a charity of my own which I set up,

which again predictably gives money to the church and to the services and to education, those

three areas. I've been a governor of four different schools, and am still a governor of two,

and so that takes up quite a bit of time. But for pure leisure interests, when I was much

younger I played quite a lot of sport, and I suppose that was my prime interest for five or ten

years. Sailing has always taken up...

Do you own a boat now?



Yes. Has always taken up quite a lot of time. And of course we farm, and so that...

How big a farm do you have?

Oh very small, it's a hundred acres.

What do you raise?

Sheep.

And do you do it yourself?

Yes.

You lamb, you get out there and help them out?

Yes, yes, yes. My wife and I run it between us.

I see. Was this hers before...?

No, we bought it between us.

And which one of you was experienced at lambing?

I've done more than she has.

Where did you learn?



I learnt because when I was married before we had a farm, and so we had sheep and beef and

wheat on that farm. And about 20 years ago...one of my aunts had a farm when I was a boy

and so I used to go and spend my summer holidays there, part of my summer holidays, and I

learnt a little bit. And 20 years ago I suppose, 1972, I went to the Aylesbury College of

Further Education to learn farming, and took time off from work and went and did some

further education. And so I educated myself.

I see. Why did you decide you wanted to become a farmer?

I'd always enjoyed farming and the land, and therefore I wanted to own a farm, and I wasn't

prepared to own a farm unless I could run it.

And do you have a farm manager at all?

No. No, no. I mean...

How large was your farm before?

At one stage we had about 250 acres.

Mixed farming?

Yes.

And you ran it all in addition to the City?

There I had a stockman who looked after, who was full-time, and a part-time worker as well,

because with that acreage you couldn't do it all yourself.



What happened at harvest time?

We got through, occasionally with some contract labour. But again perhaps it's a

commentary generally in that in the farm when I was first married Margaret never did

anything on the farm at all, whereas my second wife farms as actively as I do, and so she's

fully involved and we're involved together.

You both drive the tractor?

We both drive the tractor and we both do all the work equally between us.

And how much do you...?

And that perhaps is the difference between my two marriages.

I wonder between the two decades as well.

Yes, perhaps. I think it's more...

Is your second wife much younger than you?

No, the same age. In fact she's older than my first wife. No, I think it's more of a

commentary on the people involved, and their relationship.

Would you have been surprised if in your first marriage, your wife had assumed she would

either go out to work or help farm? Have your attitudes changed do you think?



Oh I'm sure my attitudes have changed, they must have over the years. But no, I mean I

would always have welcomed, and said so, having other interests and doing something else,

whether that had been being involved with the farm or going out and doing a job.

And who keeps the books for the farm?

Audrey does.

And so she's a trained bookkeeper or...?

Yes. We bought a computer and she learnt how to work it and keeps the books on the

computer.

And do you expect children from the second marriage?

No.

You won't adopt, or anything of that sort?

No. No, no. I mean she's got two children and I've got three, so five between us I think is

enough.

And do the children get along? Do they know each other?

Not really no, because they're all off doing different things. I mean they've met on odd

occasions, but no, I mean on the whole if they come and stay they come and stay separately.

And I don't mean that mine come one time and Audrey's come another time; each one of the

five is inclined to come separately.



You are still a very young and incredibly energetic man, probably 30 years ahead of you.

How do you expect to spend the rest of your life?

I don't know. It's a question which I haven't really decided the answer to yet. When

Mercantile House was taken over in 1987 I took a little while to think about it, and decided

then that I didn't want to work seven days a week again, or to become a chief executive of

something again. Because having been chairman and chief executive for 17 years that was

enough, and I think you just become a retread and probably haven't got many new ideas. And

so I have...one or two people have been kind enough to offer me that sort of job again and

I've said no, so that is not a route that I would go down. And at the moment, with a dozen

charities perhaps, and eight non-executive directorships in total, and the farm, and being a

magistrate, my time is full. If you were to ask me, start with a blank sheet of paper and what

would you actually like to do for the next 15 years, I think the answer is that I would like to

farm, and I would like to be a magistrate, and I would like one other interest which I could

get my teeth into. Not full-time, but something which takes maybe a couple of days a week,

and to become the part-time chairman of something where there is a job to be done. And I

don't mind whether it is charitable or whether it's business or whether it's academic, or

government or anything; I have no views as to what it might be, but I think I would like

something central to be able to exercise whatever brain I've got left on. And just occasionally

I get withdrawal feelings, of not having made a decision except whether to go and look at the

lambs first or do the plumbing first.

Do you still have political contacts of any sort?

Yes, in a non-political way. I mean, as I think we have discussed before, I'm not a political

animal but yes, I mean I do have contacts throughout the City, and in industry, and

politically. But nothing that anybody has come up with so far has really been something

which has attracted me. And I mean let's take the ludicrous extreme, if somebody came to

me, and I can say it because they wouldn't, and said to me, right, Robin Leigh-Pemberton's



retiring next year, would you like to be Governor of the Bank of England, and by the way

we're going to pay you half a million pounds a year, and of course there's a peerage at the end

of it, the answer is no. And I have no difficulty in saying no. And so I mean I'm not after any

of those things, and don't want any of those things. I want something that interests me, and is

part-time, and which I could become involved in. But I would not under, I think I can safely

say any circumstances go back into doing something that I either didn't want to...


I wouldn't want to go back to anything which was full-time or which I didn't enjoy.

Do you suppose this is because you decided you had got bored, or you got tired of the

pressure; saw what it had done to your first marriage, or just decided...there must be

something else to do?

No, I mean I like the pressure and I would be perfectly happy to go back and do something

which put that pressure on, and so that doesn't worry me. But I am sufficiently interested in

certainly being a magistrate, and in some of the other...and in farming, and in some of the

other things I do, not to be prepared to throw it all away in order to do something else. And

so it's my priorities that have changed, and for a long time the principal priority in my life, to

the detriment of everything else, and I say detriment advisedly, was Mercantile House,

financial futures, the City. And whatever engagements there were at home, if somebody

wanted me to go to the United States or Singapore this afternoon I'd go, come what may;

whether it was a child's birthday, a wedding anniversary, or anything, I would go. And that

was my priority. My priority is now...I would not be...I don't think you can get involved in

business unless that is your priority. I think if you're going to be totally involved, everything

else has to be sacrificed and you have to be prepared to sacrifice everything else. I'm not

prepared to do that.

How do marriages survive in the City?



A lot don't. But again I think it comes back to the personalities and the people. I mean sadly,

my first wife and I didn't converse easily, and again I'm not putting her down and saying that

she was not awfully clever and therefore I couldn't discuss the City with her. And so I could

never go back home and explain the problems of what had happened and for her to say, but

why, and how, and surely you should have done that. And so, there was no safety valve at

home. A good marriage, whether it's of somebody in the City or in industry, or in academic

life or anything else, is one where I believe you've got that safety valve at home, and even if

your partner doesn't totally understand everything that you're saying you can go back and talk

about it, and both of you can talk about what you've been doing and get an understanding, not

just sympathy but an understanding, and ideally some sort of comeback. And certainly in my

second marriage that's what I've got.

She could tell you when you're talking rubbish.

Yes, absolutely. And to wake up in the morning and say, 'I've thought about what you said

yesterday evening and actually I think you were wrong. I think you shouldn't have taken that

particular stance that you told me you took, and you were wrong for the following reasons'. I

think that's terribly helpful.

You must have had a real crisis of...not confidence, but...after Mercantile House. I mean did

you find yourself just taking off for a while to decide you were going to change your entire

life, or was it just on impulse?

No, it wasn't. It was...I don't know whether it was coincidental that my marriage ended

precisely at the moment that Mercantile House ended or not. I suppose looking at it entirely

clinically, I had known for some time that my marriage was going to end, and I had hung on

until Sarah left school, and Sarah left school that summer. And so I was going to end the

marriage at some stage after that, and so...exactly when I didn't know. And it wasn't to go

and marry somebody else at that stage, it was just that I had had enough. And so...it was



always going to end, and it was coincidental that Mercantile House happened at that

particular minute as well, but it did mean that I started with a clean sheet, and therefore was

able to step back and say just what do I want to do, personally and business-wise from now

on.

Well, is there anything you think I should know that...I mean frequently you come back and

say there's something I wanted to add.

No, the only other thing which I think we kept on half talking about and never quite came

back to or revisited, and correct me if I am wrong, but I don't know if we ever really talked

about Arnold Brown.

You're quite right, and there's some tape left so...

And his influence.

This is the chap you thought was the most influence on you.

That's right, and he was one of the managing directors of Ryders Discount Company, and

then deputy chairman of the merged Cater Ryder in 1960. And he was the first person in my

life who taught me what real standards are, in that if you produced something for him, and it

didn't matter whether it was the accounts or whether it was written work for him, an analysis

or something, there was only one standard that was acceptable, and that was the perfect. It

had to be one hundred per cent correct, and he would accept no excuse for anything being

anything other than one hundred per cent correct. For the first time in my life somebody said

to me, "That is the only standard that's acceptable, and by the way it's achievable". And

anybody can achieve it provided they just go away, and are diligent enough about it. And

that I think made...it made me feel that only the perfect answer and the perfectly correct

answer was ever acceptable. And therefore before I ever presented anything to him I would



go over it time and time and time and time again, until I was absolutely convinced in my own

mind it was absolutely one hundred per cent correct, and flawless. And I would like to feel

that ever since that day, that is how I have approached anything. And without him I would

never have done so; I would have gone on with my slip-shod happy-go-lucky, I will produce

things to the minimum standard that I think I can get away with, which had always been my

attitude, and with a bit of luck I will get away with it. But he would not accept that. And he I

think...I don't believe that...if I have achieved anything at all, I don't believe that I would

probably have achieved any of it without him, because I don't believe that I would have set

those standards. Throughout everything I've done.

What sort of man was he? What was his background do you remember?

He was...he had come into the firm because it was his father's firm, and so he was a product

of nepotism in that way. But I mean he was in a word a total shit, and disliked I should think

almost universally; certainly feared universally, and I would think there were very very few

people in this world who liked him.

Because of his high standards?

Yes, and because he wouldn't suffer fools at all, and he would accept nothing other than these

very high standards, and the vast majority of people were not prepared to work in order to get

those high standards. Nor was I, except I was so terrified I did. I wouldn't like to pretend

that I achieved those high standards willingly, it was only because I was more frightened of

him than I was idle.

How long did it take you? Did you get a rocket more than once before you realised?

I should think that probably the whole process took five years, until...no, he would send you

away to...send me away to the United States to negotiate a deal, which seemed an enormous



deal, it was buying a company for $25,000, but then it was the biggest sum of money that I

had ever thought about. I knew that unless I came back with the deal absolutely perfect, that

he would probably ring up the other side and say I had exceeded my authority, and would

undo it. And he would have no conscience about shaming you in that way. So I either came

back with the deal that he would accept or it wasn't worth going home. I mean it was that

sort of thing you know, and so... I remember it well. I flew over, as one did then, before the

days of Concorde, on the morning flight, got into New York at...I suppose it was about half-

past three in the afternoon their time, and worked through till 3 o'clock the next morning,

negotiating this deal, by which time it was 8 o'clock in the morning our time here, with a very

tough American lawyer on the other side. And that deal had to be done that night, and it had

to be done on our terms. As I say I wouldn't have dared to go home otherwise. Quite

interesting, the American lawyer offered me a job at the end of it! But it was he who set all

my standards, and turned me from being as I say an idle person who got away with anything

he could, into somebody who recognised what standards were. And it went right the way

through my military career, right the way through my City career, and everything else.

And did you find yourself applying the same standards to your subordinates?

I hope, and would like to think with slightly more compassion than he did. But yes. I mean

he had no compassion, and I would like to feel that I had some, and recognised... He would

not accept human weakness at all, and the fact that somebody was incapable of producing

work of that standard would not spare them. I would like to feel that I can recognise what

somebody is capable of doing, and therefore I will push them to the point of their capability.

But I don't see any point in hitting somebody over the head for something which they can't

do.

Did he find difficulty keeping subordinates?



Yes, and he found difficulty I suppose - perhaps I'm no one to speak, except he had rather

more than I've had - he found it difficult to keep wives, subordinates, or anybody else, and he

went through a large number of all of them. He was a very very difficult man.

End of F2295 Side B

END OF INTERVIEW

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