Till Time's Last Sand

by David Kynaston

  Films, table tennis and dances were arranged for our entertainment. Airmen and soldiers from local camps came over for dances (and we went over to the camps by courtesy of the CO’s). The girls would line the walls waiting to be asked to dance. The men stood in huddles eyeing us and plucking up courage to approach us. For some reason, many of us thought men wearing brown shoes were a superior type …

  It doubtless also helped female morale that strict sartorial rules were relaxed – ‘Women staff in Hampshire,’ noted an order in September 1942, ‘may now wear slacks during office hours.’ Yet locally these women may not always have been flavour of the month. ‘Hundreds of girl clerks are being supplied with four meals a day at the canteen – and also drawing their rations,’ reported the Daily Mail in August 1942, by when women formed the majority of the 2,000 Bank employees based in Hampshire. ‘Housewives in neighbouring villages who see “the young ladies of Threadneedle-Street” queuing up at the weekend for sugar, tea and butter to take home on leave are complaining bitterly about their privileged position.’ And indeed, added the Mail’s man from ‘“Bank of England Camp,” Southern England’: ‘Sometimes the girls have had taunts and sarcastic remarks flung at them as they have waited at the grocers’ counters for their rations.’20

  Meanwhile, the financial core of the Bank’s activities stayed firmly put; and when during the early months of the war the Stock Exchange authorities sought to move their trading floor to Buckinghamshire, the gilt-edged jobbers successfully resisted that plan, such was the gilt market’s umbilical cord to the Bank and its transfer facilities. It was not, of course, an easy time in Threadneedle Street for anyone, but the underlying mood was neatly summed up by George Bolton. ‘We will get through,’ he assured the Fed’s man during a transatlantic phone conversation in July 1940. Two months later saw the start of the Blitz:

  All clocks & nearly all windows facing on Bank crossing blown right out. Threadneedle Street and Cornhill barricaded off – I had to show my Bank Pass and put out my cigarette before I was allowed through. Then I saw the cause of the damage: a vast crater in Threadneedle Street between NW corner of Exchange & the Bank walls, extending the full width of the roadway, & perhaps 20ˊ deep, rimmed with huge blocks of concrete, chips of Bank walls and pillars, & some yards of balustrading blown away. The shops opposite quite wiped out.

  Inside the Bank a terrible mess. Every one of the great windows round the central well blown in, curtains in ribbons, massive bronze window frames twisted & bent like so much soft lead. Only one lift working. On every floor the same ruin of windows. Arrived on the 6th I was confronted with the big surprise – a direct hit on the Bank phone exchange. It had penetrated the roof & burst on the 7th floor, blowing out a large hole. I went & stood in the Directors’ Kitchen on the 6th floor amid lumps of concrete and pools and leaking water, immediately under the hole in the ceiling above & the roof above that. So one can say that the Bank is bomb-proof from the 6th Floor downwards. The bomb exploded only some 30 yards from my desk on the 6th Floor & glass splinters were lying in my basket. The wooden & glass partitions in our office were blown down; and with all windows out it was necessary to move us all down to the sub-vault Lecture Hall, for the day at any rate. Even down there, 10 floors below, glass & frames were smashed. All clocks in the Bank stopped at 16 mins. to 4 this morning.

  Only cold lunch available … (9 September 1940)

  The writer was John Mulvany, who to his relief had been transferred back to Head Office in the spring; and over the next year or so, before he was called up, his diary provides a unique contemporary record of life at the Bank during the Blitz:

  Detailed to spend night at Bank, took up attaché case and staked claim in sub-vault during day. Signed-on in Establishments at 4. Shopping in Holborn & cinema at Dominion …

  Arrived Bank 8.30. Drew 3 blankets. Groped up to 3rd in inky blackness for towel (none provided – nor sheets – nor pillows). Washed & shaved and in bed by 10.30. Dozed fitfully. Narrow camp bed & noise of 40 other sleepers & of air-conditioning plant made good sleep impossible. (23 September 1940)

  Endured the tedious ordeal of 3 days and 2 nights at the Bank, 50ˊ below ground level. Worked 9–9; no Overtime to be paid! … Carried my bed & blanket down to sub-vault, and slept in the same spot as I worked at by day. Was ages getting to sleep on Wed., thanks to girls in gay gowns tripping past the open door of the vault. My first taste of roof-spotting 4–5: at dusk in a chill N. wind, with only my raincoat & steel helmet as protection and no scope for exercise. I have never passed a longer or more painful hour. Was frozen stiff by 4.30 and lasted-out till 5 only by fierce endurance & power of will. Could barely stagger down from the Crow’s nest – only to find it was too late to get tea anywhere, in the Bank or outside! (27–29 November 1940)

  Dull & cold. Had to make a long detour to approach the Bank. After viewing the scenes of destruction from the Oak Room spent the whole of my Roof Spotting Hour gazing in harrowing fascination into the world’s largest artificial crater, some 50 yards across and 15ˊ–20ˊ deep, created in an instant of time at 8.30 p.m. on Saturday [two days before this Monday diary entry] by 1 of Hitler’s Angels of Destruction – a truly appalling sight. The bomb fell plum in the centre of the Bank Crossing, penetrated the roadway & exploded in the Bank Station Booking Hall, blowing out the entire subway Roundabout, shops & all. The effect of the blast in that confined space was terrific, but above ground, apart from damage at exits, man-holes etc., there was no damage to buildings, Statue, or even windows …

  Hayes told me how on Sunday, Norman was with him & others on the Balcony of the Oak Room, watching the scene. His comment was: ‘There’s no telling what That Man won’t do!’ When presently a body was brought out of the debris – it was enough for Norman – he retired from the balcony. (13 January 1941)

  Fire-watching … Caught 4.14. Arrived Victoria 5.15 & Bank 5.45. Supper at 7. Practice at 8.15 … Bed 11. At 12.45 roused by sudden ‘Stand To!’ followed at once by ‘Take up positions!’ Never dressed so quickly in my life: in 5 minutes from sound sleep all 24 of us, including Deputy Governor Catterns, were at the assembly point, only to be told it was merely a ‘test’! The rottenest practical joke I have ever been victim of. It gave me a shock & I was ages getting to sleep again. (2 June 1941)

  For most of the war, the majority of staff worked below ground during the day; while on any one night up to some 500 slept in the Bank, either in camp beds by their desks or in the now relatively empty vaults or in the nearby vault corridors. Fun or amusement was on the whole in short supply, and some thirty years later an Old Lady contributor would recall without any misplaced nostalgia ‘those airless vaults it was part of our fate to endure, on one of those nights which were a mixture of extended hours of work, interrupted by meals, with an occasional spice of danger but mostly made up of hours and hours of empty boredom’.21

  A crucial new reality – and almost from the start a major source of employment – was exchange control. ‘Suddenly,’ remembered Leslie O’Brien, ‘everyone was on our doorstep with questions of bewildering complexity’:

  We made up rules as we went along and we made them fast under the pressure of insistent enquiry and the threat of unjustified loss for the enquirer. To those in the Bank who liked the challenge, and that was most of us, the exchange control was highly stimulating. Many of us excelled ourselves, even over-reached ourselves, as never before. Long hours meant nothing in such a vibrant community which for some years worked and slept in Threadneedle Street. As the machine necessarily expanded with new offices being created, promotions and appointments came thick and fast and they caused some uneasiness, if not jealousy.

  The contrast was stark – for elsewhere in the Bank, added O’Brien, ‘there was little of our excitement to be found’, with ‘numerous women’ having ‘taken over jobs formerly the male preserve as men were released for war service’. Inevitably, exchange control in its strict wartime form was incompatible with the continued operation of Lond
on’s foreign exchange market, and the Bank softened the blow by recruiting some seventy-five foreign exchange brokers to come and help on the exchange control side, as well as selecting four firms to be retained as sub-offices of the Bank in case its telephones were put out of action. The guiding spirit was one of flexibility, epitomised by the fact that the man in day-to-day charge of exchange control, Harry Siepmann, had on his wall what would become a celebrated notice: ‘Freedom is in danger, Defend it with all your might.’ Even so, building on Bolton’s important preparatory work before the war, there was a determination not to allow any loopholes. An impressed outsider was Keynes. In May 1940, having submitted a lengthy memorandum on the whole subject of exchange control, he visited the Bank to meet Clay, Siepmann and Bolton. The ensuing dialogue, he informed Clay next day, ‘was one of the most heartening I have enjoyed for a long time’, for ‘it was extraordinarily agreeable to discover for once people in executive positions who were in a drastic state of mind, seemed completely competent and equal to their job and were not enjoying living in a perpetual twilight, dim and incomplete’. A copy of Keynes’s letter went to Norman, who scribbled on it some words that for most of the previous twenty years would have been unimaginable: ‘He must come again: his support of Exch policy will be most important under new Cabinet [Churchill had just succeeded Chamberlain]. Treasy have neither time nor knowledge to help – but feel bound to interfere!’22

  In fact, in the dominant context of war, the two men had already started to become reconciled. Keynes in February 1940 published his pamphlet How to Pay for the War, advocating a policy of compulsory savings (in the form of deferred pay) and explicitly seeking ‘an advance towards economic equality greater than any which we have made in recent times’. Such an approach was anathema to the City at large, but Norman invited his old antagonist to the Bank in early March. The conversation went well, and soon afterwards Keynes noted with pleasure that their ‘long estrangement’ was over. The economist (based in the Treasury for the duration of the war) and the central banker were also singing from the same hymn sheet over the related question of war loans. There, for all his qualms about the high-tax implications, Norman accepted that it needed to be a cheap-money war in which, unlike before, there were no politically unpopular high returns for bondholders; and accordingly the principle was established by March 1940 of a ‘3 per cent war’, with the governor doing much to persuade a doubtful City that there was no realistic alternative. All of this made possible the election in autumn 1941 of Keynes to the Court. It was a richly symbolic moment. ‘At last,’ he remarked, ‘orthodoxy has caught up with me.’ And: ‘I do not know if it is I or the Old Lady who has been made an honest woman of.’ Keynes also reflected that although ‘the old villain’ (that is, Norman) ‘loves his institution more than any doctrine’, nevertheless in terms of the Bank as a whole ‘the balance of sympathies and policies is widely reoriented’. Soon he was a regular attender at Court on Thursdays, usually staying on for lunch afterwards. ‘I do enjoy these lunches at the Bank,’ he declared after one visitation, as he slumped back in the car he was sharing with a fellow-director. ‘Montagu Norman, always absolutely charming, always absolutely wrong!’23

  Norman himself reluctantly but more or less uncomplainingly accepted that the war further tipped the scales of power away from the Bank and towards the Treasury. Nor was it only the Treasury to which Norman found himself having to be subservient. In February 1940, shortly before an issue of War Loan, he saw someone from the dreaded Ministry of Information. ‘He is settling details for next week,’ noted Norman, ‘& I promise to obey his orders!’ Yet during that same first winter of the war, he seems to have been reinvigorated by the new situation. Sayers portrays the sixty-eight-year-old governor as ‘tireless in his calls upon Ministers and the Treasury to get moving with an adequate economic policy’:

  He went far beyond any normal bounds for a central bank. Though sometimes he would confine himself to urging adequate Ministerial guidance in the rationing of exchange resources, at others he would launch out into advice on labour supplies, unemployment benefit, control of commodity prices, and a great deal else. In the first months of war, the Governor and Cobbold were wanting a drive for more exports, though there was little satisfaction to be had from the President of the Board of Trade. Norman was impatient, too, at the laggardness of the development of the new Ministry of Supply, and poured into Ministerial ears suggested names for important posts in it. Above all, he chafed at the weakness of the Chancellor …

  In the event, Simon stayed on at No 11 until the change of government in May 1940 – a change in the political landscape that could not but be a serious blow for Norman. ‘Now I know that I shall never cross the threshold of No 10 again,’ he accurately predicted on hearing the news, well aware that Churchill would never forgive him for his part in the ill-fated return to gold in 1925. That did not, however, dilute one jot his commitment to doing all he could in the wider war effort. ‘Ruin?’ he expostulated in early 1941 to Wendell Willkie, when that visiting American politician mentioned the economic cost to Britain of resisting Hitler. ‘Go to hell,’ went on Norman. ‘We must win.’ And in the Bank itself he remained an alert and vital – if sometimes irascible – presence, often sleeping there two or three times a week and readily distinguished by a dressing-gown emblazoned with a dragon.24

  Even more than in peacetime, Norman was now acting as ‘the bridge’ – as he called it himself – between Whitehall and the City. A significant constitutional moment occurred as early as the fourth week of the war, when the chancellor wrote to the governor asking him to ensure that the clearing banks confined their advances to such war-oriented purposes as the needs of armaments and the export trade. Norman in turn passed on Simon’s letter to the chairman of the Committee of London Clearing Bankers; and thus was established what would become the firm unwritten rule that all communications between the Treasury and the clearing banks were, in either direction, to be mediated by the Bank. Norman also increased, if anything, his number of fingers in City pies. In March 1940, for instance, he saw the Stock Exchange’s deputy chairman and tersely recorded, ‘No fortnightly settlements’; some three months later, he insisted to the merchant banker Helmut Schroder that for the rest of the war he be ‘neither seen nor heard in any way by anybody anywhere’; and the ailing discount market was the subject of his constant attentions, as was the struggling, often undercapitalised merchant banking sector, where he came tantalisingly close in 1942 to acting as midwife to a grand if improbable union between Rothschilds, Barings and Schroders. Norman that year even tried to stop a Jew becoming lord mayor, with his diary giving his reasons as ‘bait for Hitler’ and ‘black market’; but to no avail. This did not stop him being, at a big Mansion House lunch soon after Sir Samuel Joseph had assumed office, ‘somewhat embarrassingly audible, in view of a very Jewish-looking old boy sitting opposite, in voicing his preference for Christian over Jewish Lord Mayors’, according to the Tory politician Leo Amery sitting next to him.

  Even amid a broadly unifying national struggle for survival, the political climate remained chilly – despite the Bank at last in March 1941 recruiting Bernard Rickatson-Hatt from Reuters to become its first press officer. ‘Yes, whether we like it or not, we’ve got to have Mr Montagu Collet Norman as the man in charge of Britain’s money-bags for another eighteen months,’ declared the Sunday Pictorial in September 1941. ‘For he has just calmly announced that he is going to be re-elected governor of the Bank of England next April. Which means that nobody can get rid of him until April 1943.’ And the Sunday version of the Daily Mirror went on: ‘ALTHOUGH HE IS OVER 70 YEARS OLD AND BY THE RULES OF THE BANK OUGHT TO RETIRE AND ALTHOUGH HIS FINANCIAL DICTATORSHIP FOR THE LAST TWENTY-TWO YEARS HAS BROUGHT NOTHING BUT MISERY TO THE PEOPLE’. Siegmund Warburg would not have been so demotic, but that gifted and driven Jewish merchant banker, who before the war had fled from Nazi Germany, was almost equally critical of the Bank. In October 1942 he sent a candid m
emo to his friend the Labour politician Manny Shinwell:

  The Governor and the directors of the Bank of England … should be appointed by the Treasury and should not be chosen preferably from representatives of the City. The Board of the Bank of England should of course contain a number of experienced bankers, but the majority should consist of industrialists, trade unionists, accountants and economists. The result would be that the Bank of England would be a centre of British economic life which would stimulate commercial and social progress instead of being a bulwark of reaction as it is today to a considerable extent … As to the actual policy of the Bank of England, its chief aim should be to prevent inflation in times of prosperity and deflation in times of depression. Unfortunately during the twenty years before the war the Bank of England did usually just the opposite, mainly in times of prosperity they allowed over-investment, and in times of depression they accentuated the crisis by restricting the flow of credit.

  Robert Boothby, a Tory radical with a flair for publicity, also weighed in, demanding in the New Statesman the following spring that ‘the grip of what is usually called finance capital upon the economic system must be broken’; and that accordingly the Bank ‘will have to be converted into a public corporation, owned by the State’, with ‘representatives of industry, of agriculture, of the trade unions and of the consumers’ to be appointed to its Court.25

  Inevitably, indeed, the great looming question for the Bank was nationalisation. ‘Like many of the institutions that form the mainstay of this country,’ observed a defensive internal memo drawn up not long after Rickatson-Hatt’s appointment, ‘the Bank has reached its position by a process of growth and whilst, in theory, it may seem to be open to criticism on this ground or that, in practice – like the Common Law of England – it works’; in spring 1942 the election to the Court of the leftish pottery manufacturer Josiah Wedgwood V, author of The Economics of Inheritance, was a deliberate attempt to defuse external criticism. What did Norman himself think? About the same time as Wedgwood’s election, he frankly told senior colleagues not only that ‘in his view it had seemed for a long time past increasingly likely that some form of nationalisation would be applied to the Bank, not long after or even during the war, whatever the political party in power’, but also that ‘the interests of the Country and Empire and the maintenance of the credit structure and of a valuable tradition would be best served by the conversion of the Bank into a public utility corporation … perhaps the sooner the better’. Yet a year and a half later, at the Economist’s centenary lunch, he gave a ‘very short’ speech that, noted one of those present, ‘traced the community of interest over the 100 years between the Economist and the Bank of England – both privately owned but both, he thought, rather the better able on that account to serve the public interest’.26 In short, it was a case of head versus heart: not unusual for Norman, and perhaps hardly to his discredit.