Top of my Christmas reading pile is Saving the City by Richard Roberts, a new account of the largely forgotten crisis which afflicted global markets at the outbreak of the first world war, forcing the London Stock Exchange to close on Friday 31 July 1914 and stay dark for six months. It’s a reminder of how often in modern times the City has had to be ‘saved’ — including May 1866 when Overend & Gurney collapsed, November 1890 when ‘Nemesis overtook Croesus’ in the first Baring crisis, and of course the bailouts of October 2008. It’s also a reminder of another book on my shelf, subtitled The Night the City Was Saved. That one, The Cedar Story by Charles Gordon, is an account of the dramas of 19 December 1973 — 40 years ago this week — when a Who’s Who of the City was summoned to the Bank of England to prevent a crippled ‘fringe bank’ called Cedar Holdings from provoking a domino collapse across the financial sector.
Presided over by Governor Gordon Richardson and his deputy Jasper Hollom (still with us at 96), the 17-hour conclave involved the directors of Cedar, representatives of its major shareholders, and a team from Barclays, the bank most exposed to Cedar. No one leaves until a rescue is sealed, commanded the governor, and tempers soon began to fray. Cob Stenham, representing Unilever’s pension fund, barked at -Hollom not to treat him like a clerk when Hollom threatened to go over his head for a decision. One of the Barclays men was my father, who was afterwards secretly proud of having picked a fight with the chairman of Phoenix Assurance, Viscount de l’Isle VC.
The investors and bankers at last agreed terms through gritted teeth, but the Cedar directors refused to sign — until the alternative was presented to them in the person of Sir Kenneth Cork, the City’s most feared and famous liquidator. ‘The parlour steward opened the door and a man entered whom none of the directors had seen before,’ wrote Charles Gordon. ‘Who are you?’ snapped Cedar’s managing director. ‘I am Kenneth Cork of Cork Gully.’ ‘Oh no!’
And so they signed and the City was saved, at least until the next time. I once took tea at the Bank with Paul Tucker, -Hollom’s recent successor as deputy governor. By way of small talk I mentioned my father’s role in the Cedar cliffhanger: it was, I said, ‘the most exciting night of his career’. ‘In this very room,’ Tucker replied, and suddenly we were surrounded by ghosts.
Threshold of happiness
In this season of rampant consumerism, with its inevitable hangover of money -worries, I’m intrigued by research from the universities of Warwick and Minnesota that says optimum ‘life satisfaction’ is achieved when average annual income hits £22,000; beyond that, our collective sense of well-being declines as we get richer. I’m reminded of an embarrassment of long ago when the Mail on Sunday asked me to write ‘I used to be a fat-cat banker but now I’m happier on £20,000 a year’ as a spoiler for that weekend’s Sunday Times Rich List. Being a truthful person, I hesitated.
‘Couldn’t we pick a bigger number?’ ‘No,’ growled the voice on the phone. ‘It’s what the editor wants. D’you want to write it or not?’
So I tied my conscience in a knot, made as much as I could of the fact that in the months after I left the City I earned next to nothing but woke every day full of joy — and felt lucky not to find myself pilloried in the next issue of Private Eye. Years later, a man approached me in the pub and pulled a faded cutting from his wallet. It was my Mail on Sunday essay. ‘I’ve always wanted to meet you,’ he said. ‘I was out of a job, on my own, at the end of my tether; then I read this and I knew I could be happy again. You changed my life.’ As far as I know, it’s the only thing I’ve ever written that did that for anyone.
Gamble to win
My best Christmas present so far is Market Meltdown, a board game that seeks to replicate the frisson of financial crisis by combining roulette, elements of Monopoly and the possibility of massive borrowing with luck factors such as euro chaos, US default and ‘protesters outside your office’, though not ‘Paul Flowers is your chairman’.
To test the game’s authenticity from a high-rolling financier’s point of view, I called in the market veteran who sometimes appears in this column as ‘my man with big binoculars in the mining sector’. We set to it at the kitchen table, and pretty soon both found ourselves a billion in hock to the bank. Being naturally risk-averse, I kept careful count while betting modestly on stock market roulette and trying to accumulate ‘data’ which (by blocking off segments of the wheel) would supposedly improve the odds in my favour. Meanwhile my opponent — displaying the trance-like glint more usually provoked by Kazakh gold and home counties shale — repeatedly piled chips on the table, struck lucky and paid down his debt.
But when a roll of the dice caused my little plastic ‘private jet’ to land on a square that ordered me to make immediate repayment in full, I went broke and lost the game. How realistic is that? There isn’t even a ‘quantitative easing’ card to flood the market with cheap money and artificially boost asset prices when you need it. On the other hand, the sense of losing control as conditions deteriorate, and of expectations based on past patterns suddenly becoming void, is very much like the mood of late 2008.
I emailed the game’s inventor, Will Sorrell, to ask whether my first experience was unusual. No, he replied, ‘I’ve also found that gambling boldly can make you survive longer’ — a lesson for us all in what I hope will be an opportunity-rich 2014. Market Meltdown is available online and in good toy shops.
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