Till Time's Last Sand

by David Kynaston

  By this time the Labour government, whose fortunes had picked up post-1976 amid economic recovery and generally greater stability, was approaching its endgame. That endgame featured of course the 1978–9 ‘winter of discontent’, with the mood in Threadneedle Street little better than anywhere else. ‘I recall the Governor being tired and ratty at the beginning of February,’ wrote Dow some months later:

  He had been giving too many speeches, a great drain on his energy the way he does them. There was also considerable disagreeableness among us about the state of the economy, which we discussed one afternoon in the Governor’s room. I, of course, deplored having to depress the economy further when it was already depressed, merely to keep public borrowing to last year’s figure. The Governor said aggressively that he did not care about the state of the economy. The Chief Cashier said he didn’t either. David Walker [recruited from the Treasury in 1977 and now running the Economic Intelligence Department] was also there. I learned afterwards that this line of stupidity by John Page had roused him to silent fury. John Fforde was tense and apocalyptic on the other side and talked of the Governor wanting a return to the recession of the 1930s, something with which he, John Fforde, would want to have nothing to do. I certainly felt out of favour …

  The election was eventually set for Thursday, 3 May 1979, one of the turning-point dates in modern British history. Two days before polling, Richardson characteristically took the trouble to note down what someone had told him about the previous weekend’s ‘Sunningdale meeting between the Civil Service and Industry’:

  Douglas Wass had made a remark which had caught wide attention, to the effect that there had been a great political change over the last years, in which the focus of attention had become inflation while the level of unemployment had diminished in importance, so that its rise from its present level still further was not a central preoccupation. Douglas Wass had then said that some of them in the Treasury were now wondering whether this was the right balance or whether the level of unemployment ought not to swing back into greater prominence.33

  It is impossible to be certain, but the chances are that the governor – despite his ‘ratty’ remark a few months earlier – would not have disagreed.

  16

  Sunny Offs

  It begins with the usual touch of drama, a ship unloading, a BR van speeding through London until it is ushered through Grandma’s back door by the majestic porter in top hat and long fawn coat who usually deals with Rolls-Royces; then we have little wooden cases slipping down rollers, a hatchet lifted – crack, and in each case there glints a couple of gold ingots. We admire the gold, we admire the basement stacked high with stuff, we even swallow the narrator’s saliva; but then the film begins. It shows us the Bank glinting in the sunlight, dedicated crowds pouring over London Bridge, Mr Cobbold smiling at Mr Jacobsson, committees meeting, directors in session, Mr Cobbold communing silently with Mr Mynors, hordes of perky girls managing the national debt, hordes of knobbly boys playing hockey, pink-coated waiters, the nightly guard, and a world thrilling to the news of an unchanged Bank rate. But 35 minutes is much too long.

  ‘Each time one thinks that the film is at last dropping off,’ added in July 1960 the New Statesman’s weary but observant critic of the new colour film about itself that the Bank had commissioned as part of its deliberate opening up following the Bank Rate Tribunal and all that, ‘it jerks up again, remembering the weather-vane, or the bust of Governor Norman, or the George Washington share-certificate which we haven’t seen yet, eager to show us one more picture of a Comet or a supermarket and hint once again that all the affluence is Grandma’s own work.’

  A documentary film-maker had plenty of activities to choose from. On any fairly typical working day during the quarter-century or so after the war, these might have involved (in no particular order): monitoring sterling’s performance on the foreign exchange market and dealing as required; examining the macro-economic problems of one of the larger Latin American countries; resolving knotty problems to do with contravention of the exchange control regulations; managing the national debt; ‘passing transfers’, that is, updating the ledgers kept as registrar of government stocks; calculating dividends for holders of government stocks; storing and moving around the gold held in the vaults on behalf of government and other central banks; examining, destroying and issuing banknotes; ‘posting’ and ‘pricking’ (in other words, stamping and checking) the Bank Note Registers; training central bankers from overseas; producing balance of payments estimates; borrowing in the money market to meet the government’s need for short-term funds; acting as banker not only to the government, but also to commercial banks, discount houses, accepting houses, other central banks and some private customers; implementing the government’s monetary policy through operating in the money and gilt-edged markets; executing customers’ orders for the purchase and sale of foreign currency and gold; providing special certification facilities for jobbers in the gilt-edged market; enabling discount houses to discount bills or borrow; operating in gold, foreign exchange and foreign securities on behalf of the Treasury’s Exchange Equalisation Account; and, often on a deceptively informal basis, attempting to keep an eye on the rest of the City. Each day – as no film-maker could ignore – ended with the Bank Picquet, mounting guard through the night over the Bank, the officer in charge favoured with a suite of rooms, where he was served dinner with claret and port.

  The total size of the concern remained broadly constant over the quarter of a century. In 1949 there were 8,263 staff, of whom just over 7,000 were in the offices and the rest were at the Printing Works; by the end of the 1960s, after a decade or so of significant mechanisation in the offices, the aggregate figure was around 7,400, of whom almost 2,000 were at the Printing Works.1 They were all part of the living but sometimes slumbering organism that was the Bank – and that was still, in many ways, a world of its own.

  During these years the most customer-facing part of the Bank’s work was through acting as the government’s agent in administering exchange control – or, in Stephen Fay’s apt words once exchange control was a memory, ‘monitoring the export of money from Britain’. By 1950 as many as 1,600 staff were involved in the work, and two years later one of the Bank’s non-executive directors, Hugh Kindersley of Lazards, wrote a lengthy letter to an executive director, Harry Siepmann, expressing concern about the way in which ‘City houses and their industrial clients’ found themselves ‘frustrated by the eternal delays which they meet once they have crossed the threshold of the Bank’. The implications, he believed, were serious:

  The technicalities and difficulties faced by the Bank are not appreciated nor understood so that inevitably faith in the Bank as the leader and parent of the City becomes progressively shaken. In other words I believe the reputation of the Bank is at stake and unless something can be done to improve matters and to put things on to a more businesslike footing, also to guide the City as to what is or is not wanted of it, the great regard in which the Bank has been held will gradually diminish and it will come to be looked on as just another Government Department with wheels that turn just as slowly as any other Department. In other words the result of nationalisation as foretold by many in the early days …

  Siepmann countered with a robust set-piece defence. After noting that 80 per cent of all letters were answered within eight days of receipt, and 50 per cent of forms dealt with within twenty-four hours, as well as observing that the Bank was left with ‘all the difficult cases’ after the routine ones had been delegated to authorised dealers, he went on:

  When one considers how arbitrary and tyrannous, how intrusive and impertinent, the foreign exchange control is bound to seem to those who suffer from it, the surprising thing, to my mind, is that we are not more hated and execrated. Partly this may be due to the fact that in some domains we are financially ineffective, i.e. that personal suffering can often be prevented by evasive action. But I believe it is also due to our having realised at the
Bank from the very start, that what you do matters, very often, less than how you do it. Dilatory we may be, where we have not the authority to be prompt and decisive; but if you were to tell me that we are inconsiderate, tactless, rude, or even pert, and that we take sides with the Sheriff of Nottingham rather than with Robin Hood, I should feel deeply hurt …

  Through the rest of the decade the work declined somewhat, and staff numbers with it, so that exchange control even became known as ‘the Bank’s withered arm’; but the sterling crisis of 1961 then gave renewed importance to exchange control, and by 1969 (when almost 500 staff worked there) governor O’Brien was describing it to the Select Committee on Nationalised Industries (SCNI) as ‘a regrettable necessity’: ‘We have it still because we have to have it. If we were to achieve such a change in our affairs that we achieved the strength which some countries not very far away have achieved since the war, we, like them, no doubt, would no longer have exchange control.’

  The work itself could undeniably be difficult, requiring a mixture of experience, knowledge and judgement. Around the time O’Brien gave evidence, the chief of Establishments, Ken Andrews, recorded that in October 1968 the superintendents ‘working as signatories in the Exchange Control’ had requested extra payment (discontinued in 1964) on the grounds of their ‘special position’; and that the governors had consented, on the basis of ‘the creation of goodwill towards the Bank in a field which is potentially a source of conflict and dissatisfaction and the small proportion of decisions on Exchange Control questions which, in practice, have to be submitted to administrative staff for decision’. Exchange control itself was abolished in 1979, and many years later an old Bank hand, Eddie George, would recall that it had been administered ‘in a flexible, sensible way’, with ‘on the whole remarkably little challenge as to why we are not being allowed to do this and he’s being allowed to do that’. The last man in charge – at which point there were more than 200,000 live case files in London alone, quite apart from those being dealt with by the Bank’s agents – was the eminently pragmatic Douglas Dawkins. ‘If the control was to be acceptable, those who administered the rules also had themselves to be accessible,’ he wrote shortly after abolition. ‘Over the years, controllers at all levels gave countless interviews and answered countless telephone enquiries. For a controller, face to face contact with an applicant was a salutary experience. Nothing concentrated the mind on the shortcomings of a rule quite like a well-aimed attack on it from an irate applicant across the table. Nothing, on the other hand, boosted confidence quite like a successful defence of the rule and the collapse of the irate party (not that it always happened that way). Most interviews in fact proceeded in a relaxed and friendly fashion …’

  From across a huge range of possible areas (‘foreign trade, greenfield investment, take-overs, investment in securities, oil, insurance, shipping, diamonds, films, bloodstock, commodity trading, merchanting, documentary credits, factoring, Euro-bond issues, roll-over credits, cheque cards, bureaux de change, trust law’, as listed by Dawkins), a specific if minor example is illuminating and perhaps representative. At some point after leaving the Bank in 1962 and returning to academia, Roger Alford was approached by a postgraduate student, ‘very worried and carrying a letter he had just received from the Bank threatening him with dire penalties for breaking the Exchange Control Regulations’:

  He was Swiss, and he had noticed that in London large, crown-sized, continental silver coins of the eighteenth and early nineteenth century were not popular with British collectors and were considerably cheaper here than they were on the continent. To help pay for his stay at the LSE he began a small arbitrage business, buying such coins, taking them back with him to Switzerland and selling them at a profit. He then remitted these funds to his account in the UK and I think that it must have been at this point that he broke the Exchange Control Regulations by not declaring his foreign currency earnings. I suggested to him the commonsense solution: that he should write a contrite, even grovelling, letter to the Bank explaining that he was only a Swiss student who knew nothing of these regulations, and was deeply sorry for breaking them inadvertently. He should go on to ask if the Bank would be kind enough to tell him exactly what he should do to rectify his position because he was anxious to be on the right side of the law. I explained that the Exchange Control experts in the Bank would enjoy exercising their deep understanding of their own intricate regulations in telling him what he should do. In due course he received a letter back which in a kindly way told him how to put everything right.

  The crux was a necessary degree of flexibility. ‘Real life stubbornly refused to limit its variety to that provided for in the body of rules as it existed at any one time,’ reflected Dawkins. ‘As a result, there was a constant need for review and adjustment which was often a ticklish matter since exchange control in its maturity was represented by an intricate network of rules, each supporting, dependent on or derived by analogy from one or more other rules. The art in devising a new rule, or in introducing a relaxation for that matter, was to ensure that the whole corpus remained more or less in equilibrium and that one did not create intolerable anomalies or internal contradictions.’ ‘Devotees of the old game of spillikins,’ he added, ‘will recognise the problem.’2

  The note issue remained of course the Bank’s most visible responsibility. ‘This new fiver is not a beautiful thing,’ commented Punch in March 1957 about the predominantly bluish £5 note that now replaced the old and larger white fiver. ‘It is rather like a Victorian sampler as seen in a nightmare by the Council of Industrial Design. Amorphous panels sprawl on both sides, vaguely suggesting lacework, commemorative masonry, wallpaper and the covers of old-fashioned exercise books. There is Britannia (decapitated), St George and the Dragon, a loveable old lion mauling a key on a chain, and the magic signature “L. K. O’Brien.”’ Not everyone would agree. One historian of banknote design, John Keyworth, has called Stephen Gooden’s note ‘a powerful, confident design exhibiting extraordinary draughtsmanship’; but such was its curtailed size that, as a letter to the press pointed out in 1959, Lear’s owl and pussycat would have found ‘difficulty in wrapping honey, money or anything else in it’. Either way, its reception was mild compared to that in March 1960 for the new £1 note – the Bank’s first note to bear the likeness of a reigning monarch. Outspoken critics included (in a rare show of unanimity) Harold Wilson and Osbert Lancaster, while according to the Daily Telegraph’s art critic, Terence Mullaly, ‘severe without being stately’ was ‘not the Queen we know’. The unfortunate artist-designer was Robert Austin. ‘He had no previous experience of bank-note design,’ ruefully recorded O’Brien (who as chief cashier was ultimately responsible for the new note), ‘and found himself severely constrained by the experts in the Bank of England printing works intent upon incorporating every anti-forgery feature they could think of. The result was a note of far from distinguished appearance which lived to haunt me for many years.’

  In 1963, on the new blue £5 note designed by Reynolds Stone, a more acceptable likeness of the monarch appeared; but most attention focused on the surprisingly young and even racy Britannia on the back, prompting the Bankers’ Magazine to reflect that ‘we can get used to anything’. A pause ensued, during which the Bank turned to the fine artist Harry Eccleston as its full-time banknote designer. The upshot was the Series D notes: the Bank’s first fully pictorial banknotes, featuring the Queen on one side and notable historical figures on the other – William Shakespeare (£20), the Duke of Wellington (£5), Florence Nightingale (£10), Isaac Newton (£1) and Christopher Wren (£50), issued in that order between 1970 and 1981. Artistically the series was a triumph, but the significantly smaller size of the new £1 note issued in February 1978 prompted the president of the Royal Academy, Sir Hugh Casson, to comment that ‘it looks cheap, feels cheap and is cheap’.3 As for the gender aspect of Series D – four men, one woman – that for the moment was the dog that failed to bark.

  From
1956 the banknotes were produced at the new, purpose-built Printing Works at Debden. The old works at St Luke’s in Old Street had become increasingly beset by capacity and other problems; while the choice of Debden in Essex – a London County Council out-county estate rapidly filling up with young families of Londoners leaving rundown housing in Bethnal Green and elsewhere in the East End – was influenced partly by its greenfield potential, partly by the fact that many of the printers already lived in the north-east London area. ‘Compared to St Luke’s, it seemed a paradise, with the outlook on open country,’ observed a former non-executive director, Arthur Whitworth, following a visit to Debden shortly after the move had been made in June 1956, though graciously adding that ‘the grim and grimy St Luke’s served its purpose’. The huge main production hall, designed by the leading architect Sir Howard Robertson, had no central roof support, enabling uninterrupted use to be made of its whole area. ‘At first sight,’ explained the Old Lady, ‘the interior appears to the spectator to be enormous, which indeed it is, though he may be a little surprised to learn that the areas provided under this roof are not very much greater than the corresponding ones at St Luke’s. The clear space, however, makes it possible to arrange the machines more economically.’

  Around the time of the move from St Luke’s, the decision was taken also to transfer from the Cashier’s Department to Debden the task of inspecting, checking and destroying used notes – deeply repetitive and boring work for which the Bank had found it increasingly difficult to recruit female clerical staff whom it regarded as sufficiently well qualified. The Paid Note Building opened at Debden in 1961, with facilities enabling a reduction in the number of examiners needed. ‘You seem to have a splendid body of women there,’ declared Colonel Lancaster to the governor in July 1969 after he and the rest of the SCNI had visited the Debden complex. ‘A lot of them look to me the epitome of honesty … Your system seems such a perfectly splendid one that it did not look as though there was any chance anyhow of getting away with anything. I tried very hard myself and found I could not.’ Security at the Printing Works was undeniably stringent, but of course it was always, as O’Brien said in reply, ‘a matter of judgement as to what is enough’. Moreover, he went on: ‘The Committee will have noticed from walking round, I expect, that the control corridors which might be manned by hundreds and hundreds of people certainly are not. There is an exercise in psychology there.’4