The yuppies, he said, ‘haven’t got the breeding for the City, to put it quite bluntly. “My word is my bond” has been replaced by “Dog eats dog.” With the stakes getting bigger, they forget the ground rules and get carried away by greed. There are not many people who are capable of being moral when they start talking in millions. Big Bang has changed the profile of the City.’ He mourned the passing of the ‘straightforward, old-fashioned, doddering public schoolboy. He may have had a lot of drawbacks, but he had an honest simplicity. He might not make you a fortune, but he wouldn’t lose you one either.’ There would, however, soon be a shake-out of the young tyros, he forecast with satisfaction, bringing with it ‘a weak market in second-hand Porsches.’
Six months after Big Bang, most people in and around the City agreed that the boom would be followed by at least a mini-bust. Anyone can make money during a Bull market, several people said, but when it turns to a Bear there’ll be blood on the pavement. ‘The yuppies are starting at the top,’ said the international funds manager of the subsidiary of a smallish American bank, ‘and there’s only one way for them to go.’ And he drew a large downwards arrow on the pad in front of him. He, unlike some, was not rejoicing in the fall that might lie ahead for the unlucky. He regretted that there was no longer time or inclination for paternalism, and that dealers joined banks to make a killing rather than a career. Exceptionally, he took young dealers in his own firm to lunch to advise them to be prudent with their money while the good times lasted. Highly salaried young people in most firms had no such avuncular counselling. ‘It is inevitable there will be some pretty disgraceful conduct. The most incredible salaries are paid to the young and inexperienced. The yuppies are immature, and many come from backgrounds which lack a gentlemanly tradition. They were brought up in a void, live in a void and work in a void,’ he said, blaming the poor parenting of the sixties for the lack of moral standards. His young dealers came from a wide range of backgrounds – the father of one was on the Ford production line; one was black; one was a graduate, who had started his career as a journalist and seen the error of his ways; a fourth had the classic ‘barrow boy’ background. He disliked, he said, the barrow boy cliché, but he had to recognize its validity. ‘Yeah, I’m a posh barrow boy, in’t I?’ he said mockingly. Men of his generation had evolved as the City money markets had evolved. When he started, a foreign exchange dealer earned only a few pounds a week more than a bank clerk. Then, far from there being ‘golden handshakes’, which these days lure dealers from firm to firm, this man had had to resign one job before seeking another, such was the etiquette against ‘poaching’.
He was sympathetic to people who were poorly paid in other parts of the economy, having himself three members of his immediate family who did responsible but under-rewarded jobs – a hospital radiographer, an engineer and a police constable. His 31-year-old daughter, the radiographer, was in charge of a body-scan machine, and was paid £12,000 a year. When she had recently wanted to improve her skills in order to cope with a new scanner, she had had to take time off without pay to visit another hospital where one was in use. However, he argued that there were two justifications for the present inflated City rewards. One was simple economics. Good people had been in short supply at a time of high demand. The other was that they lived a crazily hyperactive life, yelling down phones all day. If you put the average doctor in a dealing room, he said, he would not understand how the dealers survived one day. In his own bank four dealers with three assistants settled two hundred transactions a day, worth five hundred million dollars. ‘You get paid for living the life that has that sort of pressure on you. Information technology increases the volatility of the markets. You live with continuous nervous pressure. We are throwing young kids into battle each day,’ he said. However, six months after Big Bang I found fewer people prepared to defend telephone number salaries than I had six months earlier. Then the only senior note of caution had been struck by Sir Timothy Bevan, chairman of Barclays, who warned that the City ‘was subject to a lot of political and social opprobrium for paying what is perceived generally as too much.’
The argument for the new freebooters, put forcibly by a leading head-hunter, is that Britain’s economic activity had been in the hands of unadventurous and easy-going gentlemen for too long. ‘It is extremely desirable that business is controlled by people who are restless and greedy. Since business in international terms is somewhat akin to war, it is best to have people who imitate the action of the tiger controlling companies, rather than the lamblike people who have been at the helm for many years past.’ He pointed to Britain’s 1987 growth rate, and argued that it was propelled by ‘the optimism, the aggression, the competitiveness’ of the new tycoons. ‘All of these are functions of a new cultural mood, and they go hand in hand with the success we are starting to see.’
Until I met ‘Geoffrey Jones’, I had taken the claim that people burned themselves out in the City with a small pinch of salt. There were other stressful lives that were not eased by BMWs and 1980 Henri Boillet Volnay that would seem more likely to drive a person into an early grave. But, at forty-six, Mr Jones, a foreign-currency banker, had just had a heart attack, and was a deeply worried man facing a heart bypass operation and expecting he would never work again. ‘If it’s a choice between extending life expectancy or showing the world in the City what hot stuff I am for another two years, I know which I’ll choose,’ he said. I later met a banker who had known six people younger than Mr Jones who had died of heart attacks.
Geoffrey Jones’s father had been a working man, and he had gone into the City from school. He had loved the life. ‘You joined the club by wearing the uniform; charcoal grey suit, gleaming shoes polished top and bottom, white shirt, sober tie, white handkerchief in your pocket and bowler hat. I was part of a disciplined and ordered life, where respect prevailed for wisdom and knowledge. The big decisions were made by elderly people living in Surrey – “Charles and Herbert” – hand on shoulder, whispering in each other’s ears, doing their business in the City chop houses. It was all very much an old pals’ situation, and I never questioned the ethics or morality of that style.’ He learned the terminology: speculating became ‘taking a view on the market – “speculate” did not smack well of responsible monetary activity,’ he said. In those days foreign currency was actually traded to facilitate international trade: today, 99 per cent of currency movements are speculative.
Mr Jones rose rapidly and travelled, selling what the City had to offer. ‘It was a wonderful opportunity to see the world, even though the days were long and the living hard, with lots of entertainment. I didn’t suffer any discomfort. I was not conscious of the mental pain, which was probably a pity because I didn’t realize what damage I was laying in store for myself,’ he said. He considered himself very fortunate to be in the small minority of people he knew who had clung on to their marriages. ‘There are very few of the people in the City who started with me to whom I can say, “How’s the wife and family?” and be confident that it’s the same wife and family I first knew. Divorce is very much related to one’s degree of success,’ he said, adding that ‘money causes them to lose perspective.’
The next banker I met hadn’t, I judged, lost perspective, but he had lost a wife, causing a drain on his finances, which meant he lived in Chiswick rather than Belgravia. He also talked convincingly of the strains of a business deluged daily with new information and money-making instruments. High salaries and intense competition made for a highly pressurized life. A bright, original idea lasted no more than one phone call. A deal might be re-priced five times in one morning, during which the variables – such as exchange rates – on which it was based were constantly moving. He knew dealers who would walk all over you if you got in the way of a profit, even if you were marrying their sister. I said I had once been in a life-assurance sales office where photographs were put on the walls of everyone who had sold a million pounds’ worth of business – a kind of capitalist league tabl
e. ‘We do not have time,’ said the banker, ‘to put pictures on the wall.’ He slept only five hours a night, and even trips to Paris were really ‘pure hell’. By contrast, when he started in the early seventies, the only people in before 9.00 a.m. had caught an early train by mistake. He was in charge of a dealing room, and much of his job was to keep his young dealers’ feet on the ground – they oscillated between peaks of elation and troughs of despair. ‘My family thinks I am completely bonkers,’ he said. ‘Eventually the City will disappear up its own rear end. It takes itself far too seriously.’
Though many City types claimed that dealers had to be at their screens twelve hours a day, leaving them no time or energy for the high life, my own experience and observation suggest something different. A Bank of England official once told me that an essential attribute for City success was ‘the ability to operate when tanked up,’ and for many that hasn’t changed. In bars like Coates’s in London Wall, decked out in neon, and the Altruist Champagne Bar in Bow Lane, the young dealers in their pin-striped suits, their white or striped shirts, and with their expensively coiffed hair, down Vollereaux pink champagne at £16.50 a bottle before heading off for a night’s gaming. The notion that many of these yuppies – although most of them dislike the term, it now has its own self-fulfilling accuracy – earn over £100,000 a year must disturb anyone who believes rewards ought to be in proportion to effort and contribution to society. Liberated from that essential connection between what they do and its value, it is little wonder that some of them welch on their bookies and throw plates at Roy Hattersley. If you can make six hundred pounds a day when you’re still in your early twenties, it is easy to consider yourself above tedious and petty rules by which others must live. Once the boorishness of the rich yob was a private phenomenon: now all the world is their stage. (Nothing could have been more revealing of the prevailing class attitude than the comments of the manager of the hotel in Birmingham at which yuppies threw a plate like a Frisbee at Mr Hattersley’s table, cutting deeply the face of a senior Labour Party man who was with him. He said: ‘These people were nothing like your conventional football thug. Otherwise they would never have got into here in the first place. They were respectably spoken – more like City gents – the kind of customers we expect to see on a Saturday lunchtime. There was nothing to suggest they were going to behave in this dreadful way.’) What price morality anyway, when yuppies see their elders at Guinness – and certain MPs, who bought into privatized industries with the zeal of a junkie after a fix – carving the rules up like so many pork bellies? Insider dealing was acknowledged to be rampant, after all, the City’s stock- in-trade is ‘information’. A word had even been coined for its practitioners – ‘corrupies’.
A close observer of the City said: ‘In any other walk of life, you get rich, if at all, through sustained hard work. The amorality of the quick killing soon leads to amorality in the wider world. City conduct is a kind of promiscuity. If you can’t immediately get what you want, you have the perfect right to go somewhere else to get it.’ He argued that the pressures on ‘good’ men were intolerable; with their huge salaries and the money invested in their golden handshakes and golden handcuffs and in the new City technology, they had to ‘perform’. He said: ‘Good people in the middle don’t know which way to turn, and are being carried along on the tide. They dare not stop and look at the whole situation, the consequences are too damn frightening. They daren’t face the crucial question: “Is what we are doing any longer serving a purpose except self-enrichment?” If you are making a profit, no more needs to be asked. That is the justification. The tendency has been a downward ratchet, with people sinking their standards to survive. There is no countervailing force, no moral breakwater – only bamboos in the sand which the sea runs through at will.’
City solicitor Andrew Phillips, a member of the Institute of Business Ethics, campaigns in the Observer and on radio against ‘untrammelled capitalism’. He said: ‘We have made greed, envy and avarice respectable; they are almost glorified by some people. It is about the biggest self-inflicted injury that this society could suffer. There are two hundred people in the City earning a million pounds a year and five hundred earning half a million pounds. That sort of money by any traditional standards is quite astonishing. It is a mark of just how far down the road of materialism we have gone that there are people in London who not merely justify what’s happening, but say, “Let’s have more.” They want their heads examining. Economic activity must be within a moral framework or it will ultimately destroy you.’
What was going wrong, so I gathered, was not the lack of rules – the Securities and Investment Board, which has the ultimate responsibility for licensing and regulating fifteen thousand investment businesses, has, a Bank of England official told me, a rule book thick and heavy enough to serve as the foundation stone for a substantial building. ‘Big Bang’ derestricted rather than deregulated the City. But the rules are now approached in the American manner. In the words of one senior banker, ‘you obey the rules, but try to find a loophole. In the past the rules represented an intention. You stood by the intention, and didn’t need the rules.’ The Bank’s official said: ‘The American financial giants that now dominate the City are used to being told in great detail what they can’t do. If it is not forbidden, you can do it.’ That was certainly the case in my limited experience with American financial regulations. Income tax was a game played entirely to the letter of the rules, without any consideration of the intention. The rich bought yachts as tax write-offs and, when that was disallowed, they redesignated their boats as ‘second homes’, which was allowed.
City salaries do have consequences beyond the dealing rooms and the narrow streets of the Square Mile. An estate agent explained how property prices rose like a wave beneath the NatWest tower in the heart of the City and swept westwards sixty miles through London and the home counties. A choice Knightsbridge flat might have jumped £200,000 in price, releasing its former owner to bid higher for property in Wimbledon, the owner of which then enters the market further out of town flush with funds. The consequences include the £4.6 million an acre price tag in the docklands, the celebrated £36,500 for a ‘broom cupboard’ opposite Harrods and £10,000 for a Kensington car parking space, and – crucially for many people – such inflated prices in the outer suburbs that essential people like teachers and hospital staff can no longer afford to live and work in many parts of London and the south-east. My son returned from school to report that he was about to be taught by a third geography teacher in one year because, so he gathered, her predecessors had been forced out of the area in search of homes. A major local hospital has permanently closed wards because of lack of staff. None of this concerns the ‘Big Bangers’ who live locally, because they educate their children privately and belong to BUPA (the private health insurance scheme).
The madness (and some of the amorality) of ‘Big Bang’ was exuberantly captured in Caryl Churchill’s play Serious Money, presented at London’s Royal Court Theatre in Sloane Square in the spring of 1987. A host of avaricious financiers and dealers on each side of the Atlantic cream what millions they can from predatory takeover bids with no thought for the consequences beyond their own wealth. Productive firms are closed down and their workers made redundant to suit the strategy of the moment. The play was bang up to date, with references to the many current scandals. Zackerman, an American banker, caught the prevailing philosophy:
There is no question there are thin lines
and this is definitely a grey area.
And since Guinness it’s a whole lot scarier.
You can’t play ball if you keep off the grass.
So promise whenever you have to. Peddle your ass.
Let’s give it all we’ve got and worry later.
The action was set after a prophesied future Conservative election victory, and Zackerman commented that the return of the Conservatives had been ‘handy though not essential because it would take far more tha
n Labour to stop us,’ and the whole cast concludes:
Five more glorious years, five more glorious years.
We’re crossing forbidden frontiers
for five more glorious years
pissed and promiscuous, the money’s ridiculous
send her victorious for five fucking morious
five more glorious years.
When it was over, the yuppies in the audience clapped their hands raw and spilled out chortling into the Sloane Square night. ‘Pretty damn accurate,’ they told each other heading off for a glass of ‘poo’. ‘Usually,’ said the Royal Court’s director, ‘it’s bicycles; now it’s Porsches parked in Sloane Square.’
I asked all the bankers, the dealers, the brokers I met what it was that the City did for the rest of us. I had in mind the despair of manufacturers I had met in the provinces (the offstage victims, as it were, of Ms Churchill’s play), who could have revolutionized their businesses – often creating exports and replacing imports – sometimes with as little as four months’ earnings of a successful City yuppie. Mere mention of the City made conservative manufacturers angry and resentful. Its iniquities, as they saw them, were closely allied to the wider issues of class and accent, and even occasionally to the royal family, which, from the manufacturing outback, appeared to be the foundation of a structure that was snobby and ignorant about industry. City men tended to respond to this question with, ‘Ah yes, your average manufacturer of widgets,’ thereby confirming the small industrialists’ perceptions.
The first line of City defence is always that most of the truly unimaginable sums of which we hear have nothing to do with the British economy. By trading in foreign currencies and securities, the City earns six billion pounds a year. ‘It keeps a hell of a lot of people employed,’ said one banker. High street banks, the bêtes noires of most small manufacturers, he argued, were businesses, owned by shareholders who would take them to task if they made rash loans. They could not be doing everything wrong if they made a billion pounds a year, an argument that missed my point. However, the banker had been bruised himself when a bank turned him down for a bridging loan to buy a new house – although he offered them the deeds as security – so he could sympathize with the point of view of my provincial friends.
When the Iron Lady Ruled Britain Page 18
