State of Emergency: the Way We Were

by Dominic Sandbrook

  At the centre of the play is the confrontation between Curly and his father Patrick, an old-fashioned gentlemanly capitalist who works in the City, reads Henry James and relaxes by playing the cello. It quickly becomes clear, though, that Patrick is even more crooked than his arms-dealer son; indeed, his corruption is all the more shocking because it is so understated, being hidden beneath the veneer of gentility that his money has bought him. Caught up in the property scam through a web of connections, he makes no apology for leaving his own daughter to kill herself on Eastbourne beach. In classic early 1970s agitprop style, Patrick is the incarnation of sexual and financial depravity, sleeping with his housekeeper and metaphorically raping the public. ‘In the City,’ he says complacently, ‘the saying is, “The exploitation of the masses should be conducted as quietly as possible.” ’ And although we never see the City, it is always there, looming in the background, the supreme embodiment of the abuses of capitalism. ‘I told her some stories of life in the City,’ muses Patrick, remembering his daughter’s final moments, ‘the casual cruelty of each day; take-over bids, redundancies, men ruined overnight, jobs lost, trusts betrayed, reputations smashed, life in that great trough called the City of London, sploshing about in the cash.’ He justifies himself with one cliché after another: ‘Somebody’s bound to get hurt … The pursuit of money is a force for progress … If I didn’t do it’ – and on cue, his son completes the sentence: ‘Somebody else would.’ At the end, far from punishing his father, Curly just walks away. ‘Money can be harvested like rotten fruit,’ he says dismissively. ‘People are just aching to be fleeced. But those of us who do it must learn the quality of self-control.’17

  In the left-wing demonology of the early 1970s, no institution loomed larger than the City, that great financial fastness at the centre of the British establishment. To walk east from the West End, wrote Anthony Sampson in his New Anatomy of Britain in 1971, was to enter a different world, for ‘as you pass St Paul’s you can sense in the air a certain narrowing and intensifying of ambitions, like the narrowing of the street-corners themselves’. The crowds thinned, leaving only scurrying pale-faced men in dark grey suits; the colourful shop fronts gave way to ‘bleak grey office blocks, frosted windows and ponderous bankers’ façades’. The City of London: the last bastion of an institutional conservatism that was otherwise dying out; the last bastion of a stiff-upper-lip Englishness that was on the wane everywhere else; the last bastion, indeed, of the bowler hat. The City: ‘overgrown village, rumour mill, with an atmosphere of a regimental mess and the sense of humour of an Edwardian boys’ paper, full of private language, secret rituals and enough games to last a working lifetime,’ as the narrator puts it in David Jordan’s financial thriller Nile Green (1973). Nowhere better captured its values than Sweetings, the famous restaurant where ‘the City man goes for lunch when he’s nostalgic for his schooldays … Bread and butter, brown and thin and damp, a memory of cricket on the lawn before Evensong. Ginger beer and lemonade. Sherbert. Rice pudding, apple pudding, jam roly-poly and treacle tart.’ The tastes and values of the English public school, preserved into the age of the IBM punch card.18

  And yet despite the sartorial conservatism and the spotted dick, the City of London was on the brink of some of the most tumultuous changes in its history. During the 1960s, an unprecedented number of international banks had opened offices in the Square Mile: whereas there had been just 14 American banks in 1960, there were 37 ten years later, just a fraction of the 159 foreign banks that now had London branches. Thanks to low American interest rates, vast numbers of dollars were now being invested in London to take advantage of the better rate of return, and these so-called ‘Eurodollars’, the basic currency for international trade and multinational companies, helped the City to maintain its reputation as one of the world’s greatest financial centres, even though Britain’s economy had long since tumbled off the podium. But it was not only American money that made the difference. As the oil-exporting Arab members of OPEC raised their prices and began to recoup enormous rewards, so they too turned to the City of London to invest their ‘petrodollar’ winnings. Beneath the veneer of institutional conservatism, the City was becoming the crucible of financial globalization.

  Some things remained the same: a survey of City directors in 1971 found that Eton, Oxbridge and the clubs of St James’s still held sway. But even the geography of the Square Mile told a story of change that belied the City’s stuffy reputation. On Old Broad Street, for example, work on Richard Seifert’s NatWest Tower began in the first year of the decade: even though its fifty-two floors of steel and glass were later seen as an emblem of Thatcherism (since it opened in 1981), in commission and design it was a product of the Heath years. Further along Old Broad Street, nothing symbolized the new City better than the Stock Exchange Tower, which was formally opened by the Queen in the autumn of 1972, although trading did not start until six months later. With its Brutalist concrete façade, electronic currency displays and clocks showing the time in nine different financial centres, the new trading floor seemed light years away from the days when a waiter’s rattle at a quarter past three had announced the last part of the trading day, when smoking was allowed. Even the floor itself, which was lined with rubber tiles instead of the familiar wood, represented radical change: for since cigarette butts would damage the tiles, smoking was now banned outright.19

  The man who, more than anybody else, came to embody the new City was the son of a west London building contractor, a former grammar school boy who, like Edward Heath, became a symbol of modernization, mobility and ruthless efficiency. Jim Slater was a trained accountant who had worked for Leyland’s sales division, rose to become their financial director, and wrote an acclaimed share-tipping column for Nigel Lawson’s Sunday Telegraph City pages in the mid-1960s. In the winter of 1963, he met Peter Walker, the insurance whizz-kid turned ambitious Tory MP, and persuaded him to join forces. Slater Walker, as their new enterprise was known, became easily the most glamorous and controversial City firm of the late 1960s and early 1970s. To their admirers, Slater Walker represented a breath of fresh air and a dose of much-needed modernization; to their critics, they were nothing more than ruthless asset-strippers, buying companies of all shapes and sizes, ripping out the loss-making elements and selling them off to make a quick profit. ‘While the directors were out on the grouse moors or golf courses, the gimlet eye of Slater cased the company records,’ one observer wrote. ‘Then the predators moved in.’ The paradigmatic example was his first major takeover victim, Crittall-Hope, a family-run window-frame manufacturer. Slater told the directors that he was ‘not there to make windows, but to make money’, immediately sacked numerous workers, and soon sold off the profitable parts of the company. Yet as the firm’s previous chairman pointed out, its performance after the takeover was not much better than it had been beforehand, while ‘any activity with a speculative or long-range future was ruthlessly pruned’. Indeed, when Slater Walker finally collapsed in the mid-1970s, it became clear that Slater’s castle had been built on sand. As the City’s historian David Kynaston writes, he never managed to dispel the sense that he had been running ‘a systematic, quite shameless insider-dealing operation’. Either way, given the endless pages of press enthusiasm, ‘it was amazing how little of substance’ he really achieved.20

  In the early 1970s, however, Slater’s reputation was at its peak. He was a radical hero, ‘the most brilliantly successful’ of ‘the City’s self-made men’, wrote the admiring journalist Jonathan Aitken. Slater seemed to have ‘found, untapped, a whole new vein of talent, particularly from the post-war grammar schools’, observed the Sunday Telegraph in 1971, while another profile claimed that he brought ‘a sense of tension, of high voltage, into the room’. Not unpredictably, one of Slater’s biggest fans was another self-made grammar school boy, himself seen as the incarnation of social mobility, naked ambition and the victory of style over substance. In February 1972, Slater announced that he had bough
t a company called Equity Enterprises as ‘a sort of investment piggy-bank’ for his new best friend, David Frost. At about this point, the Sunday Times began running a series of articles hostile to Slater, so when Frost spotted one of the paper’s executives at a garden party a few weeks later, he pounced. The newspaper should invite Slater to lunch, he gushed: ‘You would be absolutely fascinated by his mind.’ For dramatic effect, Frost pointed to a rosebush that stood nearby in the gathering twilight. ‘I mean,’ he said, ‘Jim is as interested in why that rose should wither and die as he is in a balance sheet.’21

  Even the generally sceptical journalist Anthony Sampson fell for the Slater myth. ‘Still only forty-two, Jim Slater has a sense of command which quickly gives confidence to others,’ he wrote in a gushing paean of praise:

  He contemplates his own motivation as if he were talking about someone else; he sees himself as a chess-player (at which he excels), extending his skills to the great game of the City, and urged on by a driving desire to prove himself right. Politically, like most self-made men, he supports Heath’s views on the need for self-reliance and the dangers of cosseting; he has dined at Downing Street, and he is (like Walker) the very paragon of the new Heath-type Tory – self-made, hard-working, unsentimental, competitive. Certainly in the financial world he has stimulated a new aggressiveness, unleashing energies and money-mindedness: he loves to watch his young protégés discover their money-making potential, as he discovered his ten years before.

  The link with Heath was more than merely metaphorical. Slater donated thousands of pounds to the Conservative Party, praised Heath as the ‘personification of meritocracy in politics’ and urged him to ‘generate an atmosphere in which success and profit in business are regarded as important and in the interest of the country’, while Walker became one of Heath’s more effective ministers. And Slater Walker was good to Heath, who bought shares in the firm, as well as its satellite companies Ralli and Tokengate, in 1965, and sold them five years later for £21,500 – worth more than ten times that in today’s money.22

  What contemporaries often called the ‘new capitalism’ left a deep imprint on popular culture, manifested not just in the fawning profiles of entrepreneurs like Jim Slater, but in television series like ATV’s The Power Game and the BBC’s The Trouble Shooters, with their endless boardroom battles, hostile takeovers and merciless power struggles. Barely two months after the FT30 share index had reached 500 points for the first time in its history, the BBC launched perhaps the most successful series of this kind, The Brothers (1972–6), which chronicled the boardroom (and bedroom) intrigues behind a family haulage firm, and was mercifully a lot more glamorous than the premise sounded. If nothing else, shows like this gave the lie to the notion that the BBC merely pumped out left-wing propaganda and working-class agitprop; the critic Kenneth Tynan complained that The Trouble Shooters was ‘naked propaganda for capitalism’. The Brothers even had a good claim to have produced television’s first Thatcherite villain in the character of the City whizz-kid Paul Merroney (played with relish by Colin Baker, never knowingly understated). A ruthless proto-yuppie with an ‘ambitious, cold personal manner and willingness to discard traditional practices’, as an appalled cultural studies textbook of the day put it, Merroney would have fitted in very nicely at Slater Walker. Baker did his best to stand up for the character, insisting that he ‘never told outright lies [and] never broke the law’, and was merely ‘ruthless in his ambition for the company’. Evidently viewers did not agree: at one point, Sun readers even voted him ‘the ‘most hated man in Britain’.23

  As the Sun’s poll might suggest, the buccaneer capitalism of the 1970s was not to everybody’s taste. Even during Slater’s heyday, there were plenty of doubters, particularly among the City old guard who resented the meteoric rise of a self-made upstart. And with the stock and property markets booming at a time of industrial strife and mass unemployment, it was no wonder that many people saw a disturbing link between the two. When the FT30 index hit 500, many City insiders were deeply embarrassed, for on the very same day, 30 January 1972, unemployment reached the dreaded figure of one million. Even the Financial Times admitted that the coincidence made ‘an easy anti-capitalist debating point’. And to find another uncomfortable debating point, the City’s champions had only to walk half an hour west. During the previous ten years, a handful of ambitious speculators had borrowed enormous sums of money to develop space in the centres of London, Birmingham and Manchester, throwing up high-rise glass and concrete office blocks that were loved by few and hated by many. By far the most notorious was the secretive Harry Hyams, who had bought a small space beside Tottenham Court Road tube station and commissioned a thirty-two-storey skyscraper to fill it. Since the proposed building would totally dominate the area, permission would not usually have been given. But in classic David Hare-villain-style, Hyams managed to persuade the council by promising to build a transport interchange – which never quite materialized.24

  What turned Centre Point into a national scandal, though, was the fact that when it was finished, Hyams refused to let it out. With property prices rising so quickly, he preferred to wait for a single tenant who would take the building for £1.25 million, rather than let it floor by floor, as the council repeatedly requested. London was therefore left with the embarrassing spectacle of a 385-foot concrete tower at the end of its most famous thoroughfare, finished but completely vacant, at a time of mass unemployment and rising public concern about homelessness. By June 1972, it had been empty for almost eight years, yet still Hyams showed no signs of finding a tenant; indeed, because of the tax laws on capital gains, he was probably making more money by keeping it empty than if he had rented it out. At one stage, the borough of Camden threatened to apply for a compulsory purchase order, while Peter Walker even threatened to use public money to nationalize it. A year later, a group of Labour MPs organized a public protest on the steps outside the unoccupied building, and in January 1974 more than a hundred demonstrators managed to get into it. Still Hyams refused to budge. Indeed, by the time Heath faced the voters, Centre Point had become a nationwide symbol of the excesses of property speculation and the apparent callousness of the new capitalism.25

  For a government keen to encourage enterprise and entrepreneurship, Centre Point was a painful embarrassment. Heath’s administration, said a stern leader in The Times, had been ‘too soft in its attitude towards property development’, encouraging the widespread feeling that ‘the Conservatives are to a considerable extent to blame for it’. Writing in May 1972, as the railwaymen prepared to join the dockers on strike for a better wage, the paper’s star columnist Bernard Levin wondered if Heath realized the resentment that was building among the low-paid. ‘Has he any idea what a man earning £20 a week feels when he sees speculators about to make untold millions by befouling Piccadilly Circus and Covent Garden and indeed any other bits of any other city that they can get their hands on?’ Levin wrote. ‘What sort of a society is it that says dockers are holding the country to ransom by striking but does not say that developers are doing so by keeping office blocks empty until the rent has risen high enough to satisfy their greed?’ And it was a sign of the times that the piece next to Levin’s column took a similar line. Written as an open letter from a company director who had lost his job, his Jaguar and his £5,000 annual salary, it warned the Prime Minister that working-class people had lost all faith in his sense of fairness. ‘You may sincerely believe it when you talk about “one nation” and conquering inflation for the common good but they frankly don’t believe it,’ the former director wrote. ‘To them you are a plummy-voiced, granite-hearted lot of bastards who are out to kill the unions and grind them down. And everything you say about inflated wage demands confirms it.’26

  Given that Heath’s ministers spent more money on social services than any of their predecessors, planned to expand the NHS and state education, pumped millions into Upper Clyde Shipbuilders and Rolls-Royce, and rapidly abandoned their ea
rly economic rigour in an attempt to get people back to work, it is ironic that they were perceived as granite-hearted bastards. The problem for Heath, though, was that he could never shake off the albatross of Selsdon Man. By talking so much about competition, enterprise and meritocracy, he had earned the reputation of a ruthless modernizer, the political equivalent of Jim Slater, slashing through the red tape of the welfare state. Even though the union leaders knew that this image was a myth, their members were convinced it was true. On top of that, Heath had become the symbol of a deeper change sweeping through British society: the rise of the ‘self-made men’, ambitious and assertive grammar school boys like Slater and Merroney, impatient with tradition, determined to wring every possible penny from a society ripe for development. Ten years later they would be called Thatcherites; now they were the ‘new capitalists’, the young meteors of a society in which, as the researcher Mark Abrams wrote in October 1974, ‘more money has become almost a terminal value’. And it was not only left-wing idealists who found them deeply unsettling. Plenty of Tory voters shared the sentiments of the ex-serviceman Turner in David Edgar’s play Destiny (1976), who is dumbfounded when his beloved antique shop is ripped down by developers. ‘You bastard,’ he tells the long-haired, denim-jacketed Monty, the incarnation of the new capitalism. ‘No, not bastard,’ Monty says. ‘Selsdon Man … We make money out of money. We covet on a global scale. We got cupidity beyond your wildest dreams of avarice.’ Despite his years of service, his love of country, Turner is out of date; it is Monty who represents the future. ‘Once we stood for patriotism, Empire,’ laments an old-fashioned middle-class Conservative lady in the same play. ‘Now it’s all sharp young men with coloured shirts and Cockney accents, reading the Economist.’27

  But it was Heath himself who coined the phrase that defined the excesses of the era. Amid all the rumours and revelations of financial corruption that dominated headlines in the early 1970s, one name cropped up again and again: Lonrho. Founded at the start of the century as the London and Rhodesian Mining Company, it had fallen in the early 1960s into the hands of an Anglo-German financial adventurer, ‘Tiny’ Rowland, who drank and gambled with, among others, Jim Slater and James Goldsmith at the Clermont Club in Mayfair. Like his gambling partners, Rowland called himself a ‘revolutionary capitalist’. A tall, charismatic man, he cultivated the image of an imperial adventurer, jetting ceaselessly around Africa, charming the black leaders of the newly independent states, and gradually acquiring a vast portfolio of concessions, mining and trading rights, newspapers and even a Malawian railway. ‘He was brought up against a background of restless danger,’ an aide reverentially explained, ‘so his mind never worked in conventional ways.’ By the early 1970s, Rowland had become one of Britain’s best-known and most flamboyant entrepreneurs, having bought the Hadfields steelworks, the distillers Whyte and Mackay, the Volkswagen agency and a string of casinos. He also seemed determined to buy his way into the British establishment, having recruited the former Conservative Defence Secretary Duncan Sandys, the former Labour Attorney General Lord Shawcross, and the chairman of the backbench 1922 Committee Edward du Cann to act as his advisers.28