THE JOBBING SYSTEM OF THE LONDON STOCK EXCHANGE: AN ORAL HISTORY

Interview No. 8: Michael Sargent

Interviewer: Bernard Attard

Warburg Securities, 1 Finsbury Avenue, London EC3: 18 January 1990

Tape 1, side 1

BA: Mr Michael Sargent, could you first tell me where and when you were born?

MS: I was born in the UK, in Fulmer in Bucks, in 1942.

BA: What was the date?

MS: 30th August.

BA: And who were your parents?

MS: My parents were Graham Sargent and my mother was Peggy Sargent.  My father was a stockjobber, as his father was before him.  

BA: Which firm was he with?

MS: He was with a firm called George D Atkin, which had been started I think in the 1890s by two Atkin brothers - George D Atkin and his brother Sanyer.  And the other two partners in the firm were Stanley Sargent who was my grandfather, and John Herbert Sargent, who was his brother.  So that was the start of the firm.

BA: Which markets did they deal in?

MS: They dealt mainly, in those days, in the electric light companies.  And also the bus companies and as well as those, overseas transport companies like Anglo-Argentine Trams, Maneos Trams, Port of Para - those sort of funny things, all of which of course disappeared.  And after the war the electric light companies were nationalised and actually so were a lot of the bus companies but that didn't happen until fairly long after the war, and because of that they obviously had to look around for something else to deal in and they took up dealing in the brewery market in 1948, or 1947 I think probably, which really became their major market as a firm. And by that stage they had got I suppose about eight or nine partners - one of which was my father who joined the firm I think in the middle thirties - 1933, 4 something like that.  And obviously then the War caused a lot of them to have a gap for five years or whatever it was.  But anyway, in 1948 their main market was the brewery market and also the sort of companies that were associated with electric light like GEC, AEI, English Electric - those sort of companies - and the remnants of Anglo-Argentine Trams and whatever.

BA: Did you ever know your Sargent grandfather?

MS: Yes, I did.  Oh, yes, very much so.  He lived to a fairly ripe old age and into his eighties.

BA: Did he continue jobbing for a long time?

MS: No, he'd stopped.  He'd retired before the War as had John Herbert Sargent, the brother.  

BA: Had he ever told you anything about stock jobbing or the Stock Exchange when you were young?

MS: No, he hadn't and actually he didn't talk about it much, I seem to remember, after I'd come into the firm.  I used to talk a lot about it to my father, who by the time I'd joined the firm, which was in 1961, he'd retired - he retired in 1955 I think, at a nice early age, but I think he decided he suffered from what in those days was a nasty duodenal ulcer - there wasn't much cure in those days apart from surgery and it wasn't very conducive when you've had that sort of thing done to stand all day on the Stock Exchange floor or something.

BA: So did you learn much from your father about the firm before your time, what I mean is before the time you became involved?

MS: Yes, a little bit.  We used to, in those days with partners, especially in small firms, I think know pretty well everything about everything, so they became sort of pretty household names really.  Not so today, I don't think, quite so much; well we haven't got partnerships, but now your colleagues in business don't frequently mix I find with your sort of social activities, they keep them fairly separate.  But yes, we used talk about the business as very much part of one's sort of up-bringing as to what was going on.  As a small boy I never really understood what it was actually about.  I knew that the penny ha'pennies were very important because that was the turn that was made between the buying and the selling price, and sometimes it was more than a penny ha'penny.  But you were very happy with a three farthings even in those days.  And I used to expect him to come back with his pockets full of pennies and ha'pennies.

BA: Did he intend that you would go into the family firm?

MS: No, I don't think he did.  And my mother certainly wasn't frightfully keen to have another stock jobber in the family because you know it was a fairly well-rewarded profession even in those days but it had its risks as well.  I think she'd [seen] the ups and downs - which is true today of course - but in partnership days obviously the partners were liable for the firm's losses, and you know, they'd had their ups and downs and so had had good years and bad years and I think she rather hoped that I would go into a more stable environment.  But my father did nothing to either persuade me or dissuade me from joining the firm or going into the Stock Exchange and indeed I had no intention, or no active intention anyway, of joining the Stock Exchange, even after I'd left school, because I left at the age of 18 and had no desire to go up to University. And my father said in that case... you know he was very much against one going straight into doing something because he was keen that one should travel and see a bit of the world, because he used to say to me that once you start a job it's very difficult ever to do that and particularly if you get married and have a family; I mean your window of opportunity then becomes very far out and by that stage you are probably too old and exhausted to bother to do it.  So he was very instrumental in seeing that I had a sort of couple of years off, so to speak if I wasn't going up to University.

BA: Where had he sent you to school?

MS: I went to Marlborough.  And so I did a stint around the world and by the time I came back, one had got the wander lust out of your system and I was quite happy to settle down and it just sort of seemed natural somehow just to join what was his former firm.  But the senior partner then was a man called Ronald Quirk.  He became deputy chairman of the Stock Exchange later on, and incidently was instrumental in joining the firm, in 1970, with Akroyd and Smithers but he was the senior partner and he also happened to be my father's cousin so it was all a bit incestuous if you like.  It was a sort of family firm.  But he made it very clear both to me and my father that whilst he was happy to have me in, I would only stay in if I made the grade, so to speak.

BA: So when was it that you joined them?

MS: I joined in November 1961 and at the vast salary of œ5 a week I think.  In those days, well in Atkin, it didn't matter who you were, you started at the bottom and you worked your way through the messenger department and up through the general office, through what we called in those days a statistical department which was nothing more than sort of collating statistics about the companies the firm dealt in, etc, etc.  So, you know, for a months I was literally just running around the City delivering stock to all the various brokers and then as I say going through the general office and I didn't set foot on the Stock Exchange floor until 1963, I think, when one became what we call a blue button, which I'm sure you've come across.  But, for whatever reasons, they were short of dealers or whatever, I missed out the stage of being what we call an authorised clerk and I became a member of the Stock Exchange in 1964.  

BA: How would you describe the firm when you first joined, say around 1960?  Was it a typical jobbing firm or was it a big jobbing firm?

MS: It was fairly typical in as much that most [firms had eight or nine partners]. In 1960 there were probably, I suspect, about a hundred jobbing firms; quite a lot of them probably only had two partners, and quite a lot of them were what was called 'book and pencil firms', I'm sure everybody else has talked about that; but really they were firms that would just act as a filter for business from side of the House or one side of the floor to the other and they really didn't put up much capital or take much risk - they were almost akin to two dollar brokers in New York.  But it was fairly typical in as much that most of the firms had, I can look it up for you, but I suppose they had about eight or nine partners in those days.  And they dealt in a particular sector of the market - they didn't have a very big coverage, as I say, they actually did breweries and they had a certain fixed interest actually - they did some prefs and debs in the companies that they dealt into.  We hadn't yet embarked... I think it's fair to say that it was the Durlacher firm that first saw the advantage of getting bigger and getting a broader spread across markets and therefore getting more capital.  So they, I suspect by then, had begun to merge with other jobbing firms but they were rather unique then, I think; although with other people it fairly quickly caught on.  So I think they were a pretty typical medium-sized partnership, which specialised in certain sectors of the market.

BA: What kind of premises did you occupy?

MS: Well, I only ever saw one office.  When I joined, they had just moved from Drapers' Gardens which was being knocked down to make way for the NatWest - or National Provincial I suppose it was then - Tower which is still there, which was probably one of the first skyscrapers in the City, I suspect.  So they'd just moved to Bishopsgate. All that's gone now and made way for whatever's there now.  And jobbers, traditionally, had no need of smart premises at all.  It was a purely functional [office].  You tried to find an office that was near to the Stock Exchange, because obviously people went to the office first and then down to the Floor and back again, so you didn't want it too far, but also as cheaply as possible.  So it was a purely functional office of I think three floors; in the first floor was the settlement side - the basement you had what laughingly went for IT in those days, which was just beginning to get, very, very slightly computerised with all the cards and whatever.  And then upstairs you had two or three rooms where the partners would sit with the telephones, where they dealt after hours, depending on whether it was breweries, electric light, or prefs and debs.  And then in another room they would have the blue button clerks who would run around sorting things out.  

BA: What was the atmosphere like in that room, when you started?  Were you all quite young?

MS: What in the blue button?

BA: Yes.

MS: Yes, oh, yes.  We were all sort of either late teenagers or early twenties, and all literally lowest of the low at the beck and call of everybody, hoping that we would get our yellow badge and progress thereon to becoming a partner, but some people made it, some people didn't.

BA: And when you left that stage and in '64 became a member, what did that entail for you in terms of your own work and involvement in the firm?

MS: Well, it meant that I could deal on behalf of the firm, which I think was what they wanted.  And actually, you know, take risk positions and make markets and I went straight onto what was the main book in those days - had then become the main book - [which] was the brewery book.  And it's a book I stayed on through the various mergers that we went through, forever.  I mean I have never... I suspect there aren't many people who have stayed on the same book for all their jobbing life - but I've never jobbed in anything else, apart from breweries.

BA: Can you remember what it was first like when you went onto the floor of the House as a dealer - I mean not necessarily the first day but the first part of that time.

MS: Totally. It was the old floor in those days, and much more like the old part of the New York Stock Exchange.  They're very similar still really; totally confusing as to which door you would ever find your way in or out of.  And of course in those days, one had waiters. The most modern, then, form of communication, if you wanted to find somebody on the floor, was to go to a particular stand.  All the firms had a stand number, various stand numbers, where if you wanted to deliver any messages or any letters or anything you went up and left it with the waiter at that stand.  But if you actually wanted to find somebody, you'd tell the waiter who you wanted and he'd yell out the name and light up a number so that if the guy hadn't heard he might look up and see that his number was alight, then he knew that there was either a message for him at the stand, or somebody wanted to see him or whatever.  I'm sure you've been told that around the floor were broker's boxes and telephone exchanges where you had the Extel..  That was about the extent of the hi-tec that one had.

BA: You say that you were put onto the main book - the brewery book - what did that actually mean?  Presumably you weren't running the book yourself.

MS: No, no, no, I was very much the boy and we had three, no, we had four other partners on the book at the time; But we used to split it into three I seem to remember, so although everyone would know what was going on across all the brewery stocks, your prime interest was in either the A-F, or the G-P, or the R-Z.  I think I was on the A-F as it happens, but you know, then as you got a bit more experience or became more proficient so you would be given a longer lead, so to speak, and allowed to have your view put forward and occasionally when you were left on your own even take some quite big dealing decisions - big in those days, they wouldn't be considered very big now.

BA: Well could you tell me what each of you were doing who were running the book, presumably there was a partner who kept an overall eye on what was going on, and made the basic decisions about taking on positions and so on?

MS: Yes, I mean as I say I think there was myself and another dealer who weren't partners, and then there were three people who were sort of full-time on the book, who were partners, and actually Ronnie Quirk, who was on the book but by this time was on the Stock Exchange Council and so wasn't there all the time, so he stood back from it a bit, but always used to come in and look and see what we were doing.  And so obviously it was down to the partners in the end - it was their money we were playing with so if they disagreed with any of the positions or what we were doing, what they said went.  

BA: If a broker came up to deal, who did he actually go to?

MS: They would 99 times out of 100 would go to a partner, because in those days, although when I joined the firm there were a lot of dealing clerks - i.e. dealing for the firm, broker's dealing clerks - it was still very much the custom that the partners of the brokers would come down onto the floor and do the business themselves, although that was beginning to wane because I suppose of the increase in business and everything the way life went.  And they used to, as I said, employ authorised clerks to deal for them. But in the early sixties still the broking partners would come down to do the business and they'd like to talk to jobbing partners.  You know, they were on the same level and they were probably old friends as well.  By the time we got to 1970, that gradually died and I suppose one was anyway a bit more senior in the firm and had been around a bit so broking partners if they did come down might talk to the boys on the book who weren't partners and be happy to deal with them.  I do remember my first deal with one of the characters of the floor, who is probably considered to be one of the most important people down there at the time, who was the dealing partner with Cazenove who was called Charles Purnell, who dealt with me in 25,000 Distillers, which was for those days a reasonable size bargain; but he felt that [he wanted it confirmed], even though I was authorised to deal for the firm and a member of the Exchange, [so] that he called across, I think it was [to] Ronnie Quirk, and got him to confirm the bargain because he wasn't talking to a partner and probably somebody he didn't know very well.  That was not uncommon, I suspect.

BA: In the normal course of events, did you refer back to the partner?

MS: Yes, but only really if... I mean there wasn't much point in putting you there to deal if you weren't allowed to do some of the smaller business.  I think one used to always refer and consult and so did they amongst themselves.  If a broker wanted to come and deal in a bigger size, then one would consult amongst oneselves as to what you'd make the broker.  And certainly, if you were just a boy on the book and not a partner in the firm, you wouldn't dream of doing that without consulting. So yes, you had a bit of a lead but as I said earlier, you were risking their money so you were consulting with them.  But they would, anyway, amongst themselves; I mean it's part of how you run the book.  I mean you need to have someone to have the final say, but you want to build in everybody's opinion.

BA: Did the firm have a particular approach to jobbing?

MS: I don't think so, not in a way that say someone like Blackwell had an approach, where they, as you know, they were chartists.  They dealt very much on charts as to whether their stocks were going up or down, what the charts said, so they took their positions.  We were a much more usual sort of jobbing firm, we just tried to make money out of the order flow and trying to read which way markets were going to be.  We were neither very cautious or otherwise.  I think we weren't risk-averse but at the same time we didn't take abnormally large risk positions either. I think we were pretty middle of the road and therefore one hoped that you didn't make huge amounts of money or you didn't run the risk of losing a lot of money either.

BA: Were there many other jobbers in the brewery market?

MS: By the time I started dealing I think there were only two, but when Atkin took the brewery market up there were more, there were certainly four. But when I started dealing our competition was Durlacher and on their brewery pitch they had some pretty formidable people in terms of Sir Nigel Mordaunt, Jack Durlacher... Jack Giddens, who was there. They considered it to be one of their premier pitches and I think did very well out of it.  We were much smaller, we had much less capital than they did and I would say that in those days, in the early sixties, the market share between the two of us was probably - it would be interesting to hear what they would say - but I would say it was 75-25, very much in their favour.

BA: Was it a good market to be jobbing in?

MS: It was a very good market, particularly as it was a two-jobber market, because it's a much easier market to control providing that the two jobbers in it have sufficient capital and are going to provide sufficient liquidity for the business to run, and I think we did.  And we had a very happy relationship with Wedd.  They were very competitive but one got on with one's competition and got to know them very well.

BA: Did you ever find yourselves challenging directly?

MS: Oh, yes, I mean it was in those days, or right up until Big Bang, the convention that if you heard that there was what we would call a choice price or a backwardation, one would go onto the pitch and open one's business to them and they could either deal with you or not, as they felt fit.  There was no obligation - and sometimes we did and sometimes we didn't.  Yes, one used to do quite good business.

BA: Did you ever get bargains that were too big for you to handle and you passed them on to Wedd?

MS: Personally?

BA: As a firm.

Tape 1, side 2

MS: You were asking if we ever got bargains that were too big for the firm to handle.  In a funny way that wasn't our judgement - that was for the broker to decide, and he would decide that by checking his price amongst the jobbers and seeing who made the closest price and the larger size; and clearly the person who was not prepared to, was feeling that the broker was asking too big a size, would duck out by virtue of the fact of the price and size he was making.  So the broker would make that judgement.  Occasionally though, the broker would come in and call both, in the case of the brewery market where there were only two, would call in both jobbers, because it was a very big order for some reason. The brewery market was going through an intense period in the sixties of rationalisation.  When I started there was a lot of brewery companies and brewery stocks which are only names today and probably mean nothing to anybody.  I mean there were so many mergers and bids going on in those days and gradually, the big four or five emerged.  So while all that was going on there was some pretty big business which the brokers would occasionally call both jobbers in because of the size of the order and we'd do it together.

BA: Were any other jobbers tempted to come into the brewery market?

MS: I think they would have liked to have done but they didn't and I don't know why they didn't.  Whether it was because the market worked so well that the brokers didn't encourage them to come in, or whether it was for other reasons, I don't know.  But having said that, eventually they did, we did get a third jobber in, but not until much, much later. 

BA: Who was that?

MS: That was Bisgood who came in.  And even then, I think I'm right, for a long time they only did the majors, they didn't do what we call the second liners, but my memory may be at fault on that. But compared to other markets where there were a lot more jobbers, it certainly could have sustained more jobbers, unlike other markets. But as I say, I personally believe, still to this day, that really no market should have more than three jobbers in them to really work well, providing they were all putting enough capital and liquidity into it, and two was perfectly adequate, more than adequate, and could do a very good job.

BA: What were your impressions of the Stock Exchange as an institution during this period, the early sixties?  Did you feel it was a place that was moving with the times?

MS: In those days, one was new and green and one wouldn't have presumed to know better than the Stock Exchange, at least I didn't.  One did what one was told.  My impression now, looking back, was that they were very much more in control of events than they are today, or even were leading up to Big Bang before we really knew about Big Bang.  There was a very, very tight circle drawn round the Stock Exchange; and continental markets really didn't exist very much, I suppose because of communications and so on.  And even New York seemed pretty far away and whatever.  But one's impression was that by the middle seventies they were beginning, not to flounder, that's being a bit unkind, but they were beginning to be caught up in world events and weren't so dominant as they were in sixties.  

BA: What about in terms of the actual conventions on the floor of the House - I'm thinking of dress and the way people behaved?  You think of society generally moving during the sixties and changing, was that something that was reflected in the Stock Exchange by its members?

MS: When I came down from the office to the floor as a blue button, the senior partner expected you to turn up in the office wearing a bowler hat.  I bought one. I never wore it. I used to carry it to work, put it on to walk through the door and take it off again; I've still got it to this day.  We would never dream of turning up to work in anything but a white shirt and a stiff collar and that went across the board.  A lot of brokers in those days used to wear top hats, of course, and that tradition lasted, among some firms right up until Big Bang.  The government broker always used to wear top hats.  

BA: He'd come onto the floor of the house in a top hat?

MS: Oh yes, very much so.  And if you look at old pictures of the Floor in the sort of thirties and pre-War probably, I mean, most people wore top hats.  But by the sixties that was bowler hats, and people used to walk onto the floor in their bowler hats, but as I say it was very much white shirt and stiff collar.  And the convention on the floor was that you weren't allowed to run, and the other convention was that, it wasn't until the middle sixties certainly that it became compulsory for members to wear badges with their names of firms on, and it was quite difficult for a new dealer to know who everybody was but you were never allowed to ask; if a broker came up and dealt with you and you didn't know who he was, you were not allowed to ask who his firm was.  So that caused a problem because there you had a bargain, you'd dealt with a firm but you didn't know who to book it to, so you were used to detail your blue button to run off and follow him to see where he ended up, which box he went into or whether he got to a stand and you could ask a waiter.  But this, of course, caused problems if the chap then immediately walked out of the Stock Exchange and went up to the West End for lunch or something.   But then the authorities had pity on us I think, and then it was an obligation to wear a badge, although quite a lot of people didn't, but that solved that one.  And then of course, as the sixties gave way to the seventies, dress became more informal, the white collar went out; somebody actually wore a coloured shirt!  

BA: Did the older members have feelings about these things, which they occasionally expressed?

MS: I think the older members would express their feelings quite volubly occasionally, yes.  Particularly if they found blue buttons running into them and treading on their toes or whatever, they would be quite sharp disciplinarians, yes.  

BA: How did your career with Atkin develop?  You started as a member-dealer in 1964, but you weren't a partner then?

MS: I wasn't a partner, I became a partner about a year before they merged with Akroyd and Smithers, so I was the junior partner. That was wonderful because that was the year, the first year as a partner, and I remember we had to dip into our pockets at the end of the year because we made a loss, so I thought I didn't think much of this.  Then we merged with Akroyd and Smithers, who you've been talking to Brian Peppiatt about, and they had already merged with lots of other firms.  

BA: Could you describe the background to that from the Atkin side?  Why was it you went into a merger?

MS: Well, just before that we had a brief flirtation and indeed a sort of engagement with a firm called Blackwell and that didn't work and I wasn't a partner then, and I don't know quite the ins and outs but obviously they didn't get on, the Blackwell partners and the Atkin partners. And I think Ronnie Quirk and Francis Peck who was the next partner - second senior partner - I think could see that the strategy that someone like the Durlachers were following in getting bigger and more market coverage was necessary by the seventies, and looked around to find a suitable partner.  Akroyd by that stage was a biggish firm. They had gone through several mergers themselves during the sixties. Having been a gilt-edged firm, they had decided that they needed a spread of equity, so they had merged with several firms and we were one of those and we weren't the last.  So that took place in 1970.

BA: How did you actually make the decision?  Did you all sit around with arms crossed and talk about it or did someone make the decision and it was communicated to the more junior people?

MS: I'm sure I didn't have much say in those days, where I did what I was told.  I'm sure the senior partner took the decision along with some of the more senior partners in the firm; they had the equity, they had the percentage of the equity and they would have the votes.

BA: How was it received?  You said that in those days you did what you were told.

MS: Oh, I remember it was received very positively because it was pretty clear to everybody that in order to survive in the jobbing world you had to get bigger and you had to have a bigger spread of stocks you dealt in because you ran the risk if you were only in one or two markets and those markets would be very dead for some reason and all the activity might be the gold mines or the oils or whatever.  And I think we also liked the spread of having the gilt-edged side of the firm.  So I think it was received well.  

BA: Had Atkin had difficulty with markets going dead during the sixties?

MS: No.  I mentioned that particular year was a poor year, 1969 it must have been, but only marginally so.  Up until then they'd had some moderate years but really done quite well.  And they'd been lucky, as I say, the decade of the sixties was a very active one for the brewery sector with all these bids and deals going on, so they hadn't suffered a dead sector; and the electrical market was also going through a bit of a rationalisation because AEI and English Electric no longer exist, they both went into GEC - at different times - but that stimulated that market.  So we were lucky in that respect.

BA: Had you been involved in any takeovers?

MS: On the brewery side?  Dealing while they were happening?

BA: Yes.

MS: Oh, certainly, I mean too many to mention actually.  

BA: Did you ever have any contact with the brokers who were amassing the shares?

MS: Yes, both Durlacher and ourselves would be left orders by the brokers and it was quite clear that they left us firm orders to buy certain brewery stocks and its quite clear they were buying for a predator at some stage. It didn't mean to say that it was necessarily going to happen there and then, but somebody was amassing a stake and the way to do it was to leave a firm order in the market.  With the two jobbers they, more often than not, used to leave it with both of us.

BA: Did that put you in a difficult position in terms of people outside of the Stock Exchange wanting to find out whether anything was going on and coming up to you as jobbers in that market?

MS: The segregation between jobbers and others was pretty acute, I mean you really didn't talk and people didn't expect you to or ask you actually.  You didn't talk to anybody apart from other brokers on the floor.  Obviously they would want to come and ask you what was going on but, if you were sensible, you had an order and it was confidential and you were discrete and they can ask but you probably didn't tell them - shouldn't have told them.

BA: Speaking in more general terms, outside of the House, did journalists for example use you as jobbers as a source of information, generally on how the various markets in which you were involved were doing?

MS: The Stock Exchange allowed some newspapers, I think it was certainly the Financial Times, and maybe even I think the Telegraph, used to allow those certain newspapers to have a blue button attached to a broking firm who was really working for the paper - not so much to get the sort of inside story and the gossip, more to collect the prices - we hadn't got any screens or anything like that, I mean it was all done manually.  But nevertheless they obviously picked up the gossip on the floor, but they always behaved absolutely extremely properly and I think then the other way of newspapers in those days would have gleaned their market information would be over the road in the various bars that were around in those days, many of which sadly have disappeared.

BA: Did anyone ever come into the office?

MS: I don't remember, I mean jobbers... well certainly in our firm, and still probably to this day, were very careful what we say and if the press found that they weren't getting anywhere they tried other sources.

BA: Well thinking now of the period after the merger with Akroyd's, what in practise did it mean for you?  You weren't moved to another book?

MS: No, absolutely not.  I stayed on the brewery book.  It meant that pretty soon after the merger, I think I was actually in charge of it.  Ronnie Quirk became, as I say the senior partner and he was then deputy chairman of the Exchange; he was in charge of all the firm's equities, still obviously through that kept an eye on it, but I think I was in charge of the brewery book, which was very exciting.  It also meant a change in structure in terms that we were - almost simultaneous to the merger I think we became a limited company.  Brian probably can remember that better than I can.  So we had an effective board of directors almost.  The old partners, we all became employees.  I went on the pension scheme, for example.  The senior partner of Akroyd was somebody called Hugh Merriman, much loved and respected senior partner, and ran the firm very much as a senior partner.  

BA: Was his approach to jobbing any different to that you had known in the Atkin days?

MS: He had come into Akroyd from a small equity jobbing firm, called R.M. Long, but then became involved on the gilt-edged pitch, and his attitude I think was very much leave it to the equity boys to get on with the equity business as they always have done, so that's what we did.

BA: Did jobbing, itself, change during the seventies?  The actual business of jobbing on the floor, dealing, making bargains?

MS: By then it was becoming... the number of individual jobbing firms had dropped dramatically from the sixties - the hundred I mentioned down to probably about twenty.  The number of people employed in the jobbing firms hadn't changed much, because by then it was beginning to polarise - you could see where the five or six or seven or eight big firms were.  The capital base of these firms had obviously grown and the size of bargains one was doing was getting bigger and consequently, I suppose, the risk was getting bigger, and the Ps and Ls got bigger.  

BA: Were your prices getting closer?

MS: I don't recall that, I don't think so!  But competition was more intense, and more and more in the equity market the firms wanted to cover the board in the equity stocks - wanted to do all the major markets.  We had a lot of discussions between ourselves as jobbers as to the way of regulating that because clearly we all saw that to have seven jobbers dealing in all the stocks would be counter-productive as far as our own margins were concerned and probably, or we all felt - and as I said earlier, I still feel strongly - it wouldn't have done the investor any service because the thing would have got so competitive that liquidity would have suffered, and the orderly markets that we liked to keep would have been more difficult to keep. But nevertheless there was always pressure for firms to take up more stocks and deal in more markets.

BA: Who did the pressure come from?

MS: Well, from the jobbers themselves, from the guys in the firm.  You know, they saw that there was huge business going on in the brewery market, 'Why aren't we in there doing a bit of it, we're sitting here and finding it a bit tricky in oil stocks, why aren't we dealing in the brewery market?', and we would say 'Well see the oil market over there, they have good times, why can't we deal, there's big pressure from everybody'. And we formed a body which had no recognition by the Council really, called the Jobbers' Committee.

BA: Roughly when was that?  Early seventies, mid seventies?

MS: I would say early seventies, '73-4, something like that, to try and stop everybody being so competitive or the jobbers being so competitive that they really ruined their own markets.  It was a forum to discuss things.  We couldn't stop anyone doing anything they liked obviously but it was a forum to discuss things, to make other firms aware that if they did something what the consequences could be and it worked jolly well actually.  And it lasted really right up till Big Bang.

BA: Would you aim to meet on a regular basis? 

MS: We met whenever there was a problem, whenever anybody wanted to do something out of the ordinary that they thought would would cause a problem and then after a bit we began to have a lunch once a month or something, it became rather a nice little  club in a funny sort of way.

BA: Could you describe some of the kinds of problems that would come up in general terms, not necessarily mentioning specific incidents or specific firms?

MS: Well, it was pretty mundane things really but they were pretty key to what we were doing all day.  It may be that somebody, as I say wanted to take up a specific stock that those that were dealing in it felt that there was enough jobbers in; it might extend to markets, take up a whole market which we all felt was adequately covered; they might want to start, for some reason, being super-competitive and that really wasn't much of an issue - people could make the sort of size that they wanted to make - more importantly I think was the width of prices that were made on the Floor.  There was always a sort of supposed cartel on the price widths and if traditionally the convention was that there was a sixpenny price in GEC and somebody wanted to make a fivepenny price, or a fourpenny ha'penny price before decimalisation, that squeezed the margins and that was a change in conventions and by tacit agreement we usually discussed it at the Jobbers' Committee before it was done.  Now if someone wanted to do it and they were hell bent on doing it there was nothing to stop them, but it was a way of regulating the market behaviour and in a sort of orderly fashion - we hoped.

BA: How did people from the outside looking at this feel, did they somehow feel that you were all conspiring together to control things?

MS: I'm sure they did, I'm sure they did, but I think at the same time they recognised that actually in the end it was for the benefit and for the good of the community as a whole.  Naturally brokers and clients would like to have the closest price in the biggest size that they could possibly get, but there's a balance between something that is clearly so aggressive and so competitive, and we all wanted to be in business next year and it was in the interest of the brokers and indeed the clients that the jobbers were in business to execute the business next year.  So there was a balance to keep and I think - there were grumbles, of course there were but in general I think the clients and brokers you know accepted it for what it was.

BA: Did you actually have much personal contact with brokers either on the floor of the House or outside?

MS: Well, yes, a lot of contact with all the brokers on the floor, all day every day. One of the great attractions and the great enjoyments of the job was the Stock Exchange floor and one of the biggest changes in one's life since Big Bang; if you spent twenty-five years standing on the Stock Exchange floor when you could see any amount of people on any day, to come up to an office where you don't see [them] is a huge change, dramatic change really in quality of life and lifestyle.  So you had a terrific contact with the people that came onto the Stock Exchange floor, not so much with the people... I mean there were stockbrokers that I think had never come onto the floor in their lives, possibly, so you didn't know those so well.  Our only contact with clients was through brokers.  Brokers jealously guarded their clients.  They didn't like jobbers talking direct to clients.  We weren't allowed to deal with them direct, but they didn't even like us to talk to some of them.  But occasionally brokers would ask us up to their offices for lunch to meet a director or somebody who's working for the company that you were dealing in, and one would try and reciprocate. As I said earlier jobbers had pretty menial offices really, they didn't have to entertain clients, but we used to entertain brokers and have luncheons eventually.

BA: Did you ever feel that they took a particular line with you as jobbers?  Did they regard you as people with whom you had to have your wits about?

MS: I think they thought we were... Brokers always regarded the jobbers as the enemy, if you like. They had their clients, they had their clients' business to do and it was always blame it on the jobbers if they can't do it and they said 'Jobber's trying to take too big a turn, jobber's being difficult'.  That didn't mean to say that one didn't get on with them, one did.  One had some wonderful friends and relationships around.  But they regarded us, I think really, as pretty sharp people quite honestly.  They didn't quite understand how we worked, how it worked, how the system worked.  Even people who were on the floor really didn't understand how the jobbing system worked.  I don't think very few people to this day, really understood how it worked and what it was all about.  So there was a mystique about it and if it wasn't on the....

Tape 2, side 1

MS: If there was a mystique inside the Stock Exchange, I think the general public were totally mystified by what the system did.  And probably still are to this day.  

BA: Did you ever feel before Big Bang or before the Office of Fair Trading took the rule book up  that the jobbing system was under any kind of pressure?

MS: It was beginning to become apparent that because of progress in technology and life in general that the outside world was beginning to encroach onto the Stock Exchange floor and by that [what] I mean is clients were finding that although the Stock Exchange was meant to be the central market place there were other ways of doing some business.  Indeed one always suspected that there was quite a lot of dealing going on between clients. There was no reason why it shouldn't have done, but that meant that they were dissatisfied with the sort of liquidity they maybe were getting on the floor. And also I think the American firms were beginning, they always had an interest in London, but they were beginning to focus on London a bit and were becoming competition in themselves.  The ADR market was quite an effective way of doing that.

BA: Could you explain what an ADR was?

MS: The ADR was a way in which - it stands for American Depository Receipt - and for various reasons American institutions couldn't or wouldn't buy a London registered stock and so some of the American banks created a depository receipt which meant that they were able to deal in say - if they'd got a quote on the big board in ADR form in America - they could deal in BP happily in ADRs without coming anywhere near the London market.  ADRs don't require registrations with the company - that sometimes caused problems for the Americans who weren't used to our funny settlement system and account day settlement system and didn't like paying stamp duty either.

BA: But this was taking business away from the Stock Exchange?

MS: This would have been effectively taking business away from the London market.  So I think, yes, there were, although I think the single capacity system, if it hadn't been for the DTI etc, etc, would have gone on for a long time if it had been allowed to; there was no great wish to change.  The change, if anything - the wish to change if you like - was coming from the jobbers themselves who were casting eyes at business that was being done away from the London Stock Exchange in foreign securities, and felt that they were very encumbered if you like - were at a disadvantage against foreign brokers, foreign houses - because the foreign houses could make markets and deal direct with clients; we couldn't.  If we wanted to deal in South African gold shares we had to do it through a broker all the time, and then in the late seventies, early eighties, the Stock Exchange did relent and there was a sort of half-way house for firms that could set up something called IDs - which  was International Dealers, I don't know whether you've come across those in your discussions - whereby you set up a separate entity, still within the firm, but a separate entity which enabled you to deal in foreign securities directly with outside houses and not having to go through the broking system member firms.  That was always something that was going really to be a temporary stop-gap affair, so I suppose the pressure from the jobbers all the time was to be able to get to clients outside of the member firms in some way and so I suppose they brought about the change a bit on their own, because jobbers said they couldn't compete fairly and squarely with their American counterparts.

BA: Switching the focus back to you.  Was there any progression in your career with Akroyd's or did your work more or less stay the same? I imagine you became more senior in the firm?

MS: Yes, I can't remember exactly the date but I told you one of the changes in 1970 was that I was asked to be in charge of the brewery book.  About three years later I was asked to join the board of directors and was given the responsibility for looking after all our equity books.  By that I didn't mean I dealt in all the stocks but I had responsibility for looking after all the books themselves, although individually they were run by somebody else.  At the same time I stayed on the brewery book but as time progressed after that, I spent less and less time on it because other things took up one's time.  So one left it to others.  So that situation remained until Big Bang.

BA: Were you still going down to the floor of the Stock Exchange and spending a full day dealing?

MS: Oh, gosh yes, oh yes, yes, yes.

BA: Would it be possible to describe a sort of typical day for you in the early eighties from the actual trip into work to the office, to the floor of the House and so on?

MS: You still had a fairly civilised day in the early eighties, it wasn't as civilised as the early sixties but it was still fairly civilised.  I think one used to do one's commute from wherever one commuted from and get into the office about eight.  And my job was then to, having overall control and responsibility for the equity positions for the firm, would be to go through the computer sheets of all the positions and all the bargains that were done the previous day, just to see that everyone was behaving themselves in terms of what positions they were running etc, etc.  And the floor still opened in the early eighties at 9.30, I think it came back to 9.00 very soon after that.  Then, having done all that we'd have our morning meeting with all the jobbers as they were then, all the dealers and we'd look at our money positions and look at any individual positions that were abnormally large or discuss what we think the market was going to do and so on and so forth, and generally have a strategy; you know, this is what we think is going to happen, this is where we want to get to, whatever.  Then we used to drift down to the Stock Exchange ready for the bell and dealings would commence.  And there you stayed until 3.30 - well you didn't quite stay because in those days you had lunch and 11.30 was quite important I seem to remember for quite a lot of people.  Whether it would be over a pint of beer at 11.30 or lunch, that was a way of communication and getting to know people and establishing relationships and whatever, and the floor would shut at 3.30.  And then we would go back to our office and continue dealing on the telephone until about half past five and then toddled off home.  

BA: Was dealing on the telephone very different to dealing on the floor of the House?

MS: Not really, it was probably more difficult for the brokers because instead of coming in onto the floor and walking round, checking the prices, they had to ring up different firms and then not find the phone was answered because they were busy was pretty frustrating for them, so it was more difficult to deal.  Equally, it was a bit more difficult for us I suppose because you couldn't see the guy coming. There's nothing like looking into the white's of someone's eyes when they're trying to deal with you - there's no substitute for it.  That's something that now of course we've lost forever.  There was probably less business once the market floor had shut, unless there was something exceptional going on; there was probably less business really.  But it gave you a chance; we used to sit and rule up our positions and add up exactly how many shares we had bought and sold and then enter the position in the back so we knew exactly how we stood - whether we were a bull or a bear - and we would take out our P and L manually, work out whether we had made a few pennies or lost a fortune. And then unless there was some special meeting or whatever, by five thirty everyone would have been well on their way home.

BA: Well, beginning to review things in general terms now, had the Stock Exchange as an institution changed a lot between when you'd joined, or when you'd first started going to the floor in 1963 to the eve of Big Bang, were there still the personalities, were there still the same kind of goings-on or was it a different institution altogether?

MS: Well, as you grow up you never can quite see the same personalities amongst your own age group as one remembers in one's youth.  But I'm sure there were lots of personalities and there still are.  There has always been a peculiar Stock Exchange sense of humour, that probably prevails to this day, luckily; but it had become a much more informal place than in the '60s and '70s, not only in terms of dress but in manner and approach and partly, I suspect, brought about by the rebuilding, going from the old floor to the modern tower, which was probably much more efficient and whatever, but was also much more antiseptic and didn't have the atmosphere that the old floor had.  They used to come round at 3.15 on the old floor, no, 3.15 the rattle went didn't it and you were allowed to smoke for a quarter of an hour and then they used to come and put the tea leaves down all across the floor and sweep it all up, take care of the mess.  They didn't have to do that in the new floor because you weren't allowed to smoke.

BA: Who were the personalities from the early days?

MS: God, I'm so bad on names, I don't really remember.  One of the most strikingly personalities I remember who sadly has just died two or three years ago, and I mentioned him before, was Jack Durlacher.  Sir Esmond Durlacher, I suppose; Sir Nigel Mordaunt; then there was Charles Purnell.  They were important but there were lots of others, I'm so bad on names and faces I forget, you'll have to get it from other people.

BA: What would you say it took to be a successful jobber?

MS: Well, my father said to me, he said really all you need to be a successful jobber is a pleasing personality and a bit of common sense.  I think he's right actually, but you also have to have a good gut for the market.  I think jobbers are born and not made, actually.  You can tell virtually when a guy starts whether he's going to be any good at jobbing or whether he's not.  I'm not often wrong.  And you have to get on with people and that was always very important.  But one of the great misnomers about it is that you don't have to be a mathematical genius or you didn't as a jobber, you just had to have a good feel for whether the markets were going up or down really.  These days, I think in some of the more complicated areas you probably do have to be a mathematical genius.  I'm certainly not. 

BA: If anyone had asked you at any point before 1986 what you thought about the decision to go into the Stock Exchange and go into a stock jobber, what would you have said?

MS: Before '86?

BA: Yes.

MS: I would have said I'd been extremely lucky and very fortunate to have found a career that - it had its ups and downs naturally - but it was by and large a pleasure to go into the office every day; doesn't mean to say that it isn't now but it's different!

BA: Well, I think we'll finish there, thank you very much.