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

Interview No. 19: Richard Durlacher, Robert Wilson-Stephens, Don Bailey

Interviewer: Bernard Attard

Institute of Historical Research: 23 April 1990

Tape 1, side 1

BA: Mr Richard Durlacher, Mr Robert Wilson-Stephens, could you first tell how it was that you met?

RD: We met because the two firms of Bone Oldham Mordaunt  & Seal, which Robert started with and the firm that I was with, which was F. and N. Durlacher, we used to run a joint book in brewery shares.  The division was north and south of the country.  If I remember rightly we had most of the southern brewers and you had the northern ones.

RWS: That's right there was purely a line down the middle and we shared the profits.  Hopefully there were some.

RD: We dealt in Distillers and I don't think you dealt in Distillers in those days?

RWS: That's correct.

BA: At about when did this occur?

RD: Well, this must have happened immediately after the War.

RWS: Well, with respect, I think actually it happened during the War, Dick, didn't it? Because a lot of people were away in the War and I don't think the old Bone side had the people really to run the business, and therefore I have a feeling that I think you effectively ran quite a few of the books and we shared the profits.  I think it happened actually then, [that] is my understanding - I may be wrong.

RD: It surprises me that the actual merger between the two firms then didn't take place until... 1960.

RWS: 1960, yes.

RD: You would have thought it would have been logical if we'd got together sooner.

RWS: Well, I think what actually happened also was that you had a ten-year gap really: first there was five years' War, then you had a Labour government and they were bent on nationalising, whether it was the mines or the railways and...

RD: Steel.

RWS: ...and all sorts of other things were threatened. And therefore business on the Stock Exchange was at a pretty low ebb right through the 'forties.  And it was only when you had the return of a Conservative government - I think it was in '51 or... yes '51 - that things started to pick up and then business picked up. And then one suddenly realised the logic of having been joint book that really we would be far better if we were one firm. I suspect that was the way your father and Nigel Mordaunt saw it.

RD:  Yes, and I think also, thinking back, that it was the fact that you were well ensconced in your offices and we were well ensconced in our offices, we had to look for a very much bigger building.  And ours was the first of the large open-plan dealing floors that were put into any stock jobber's office. We managed to do that because we bought part of the bomb site [which] was just the south side of the vast great Barbican area which was desolate and bombed until the mid '60s, I think.  And they put up a house on the continuation of London Wall where it crosses Moorgate, called Austral House.  And we moved in there and we managed to take two floors, one above the other, so it was all open plan.  So we had our kirum lamp units which were very modern - we thought it was quite convenient.  It was about ten minutes away from the Bank of England, ten minutes away from the Stock Exchange, obviously.  People tell us we were mad because nobody thought that anybody could operate that vast distance.  Because they were thinking about CADs - that's Cash Against Delivery - all the gilts had to go back to the bank.  They thought none of our customers would come and see us.  And now, of course, when you look at the diversified - well there is no market left - all the securities houses spread from Victoria through around the EC2 area - the Stock Exchange area - all the way to Finsbury.  

RWS: The extraordinary thing about that, Dick, is that it was the vision of your father. Of course the dealing room - people came to see it from far and wide because it was something very new.  But in fact, you see, it was really only used for a quarter of the day because we went there first thing in the morning, then we went to the floor of the Stock Exchange - 9.15 or thereabouts - and we were there until half past three. So it was really only used as the extension of the Floor of the Stock Exchange for about two hours a day.  But even so it proved absolutely invaluable, didn't it?

RD: Yes.

RWS: And of course, having set it up, other firms came in. Initially, it was diamond-shaped, if I remember rightly - or sort of a flat-sided diamond - initially, and then rapidly because of the advent of other firms we had to put in desks at the sides, certainly at the sides, didn't we, for additional dealing desks.

BA: Let's go back a bit in time, more or less to the beginning.  When did you join the Stock Exchange, Dick?

RD: '51.  

BA: Had you done that after finishing school?

RD: I had a year's farming.  I was going into the army, but I wasn't accepted because I had asthma.  And I went straight into the office at £2 a week, probably overpaid. 

BA: That was in the family firm?

RD: That was when we were F. & N. Durlacher and we were under a dozen people in toto in the firm.  We dealt solely in brewery shares, as I said, and Distillers, in those days.  Before that, before the War, we dealt in role market and of course that was out of the window by then.  And I worked my way through the blue button clerk, having been through the office - I went through the office for two years.  Then went as a blue button onto the floor of the Stock Exchange, for about three or four years, I think, and then became a partner, I think the year after you did.  

RWS: No, before.

RD: 1958, I think it was.

RWS: No, you were before.  You're that much older than I am!  You were a partner before I am.  Were you with Messel for a short time?

RD: Yes, I spent a year with Messel.

RWS: Seeing the other side of it.

BA: Messel being...?

RD: Messel & Co were stockbrokers who got taken over by Shearsons and now of course the name's gone completely.  Anyway, we won't be too critical about the opposition.  They still don't shine with glory, as it were.  Anyway it was most interesting.  My career with Messel was not only interesting but it was most useful to see the stock brokers worries when dealing with stock jobbers because obviously it wasn't all harmony and peace and goodwill - we had our rows. It really wasn't until bargains became recorded that it was 'dictum meum pactam'. And usually first of all the broker tried to make jobber take the losses, if there were losses, and if that couldn't be resolved usually we'd settle 50/50.

BA: Robert, when did you enter the Stock Exchange?

RWS: I did two years' National Service, then I tried to become an accountant and decided that certainly wasn't for me - that took a year roughly to work that one out.  My father was a broker, and I was interested in the Stock Exchange. And I would have been interested to become a broker but he said, 'Well why not see the other side of it - the jobbing side - first?'  So I went to the old Bone Oldham firm and Sir Nigel Mordaunt and I thoroughly enjoyed it.  And I couldn't see any point [in going broking] They were short of staff in any case and really to go broking there was no point when I was enjoying what I was doing.  And so that was 1955.  

BA: How would you describe the firm at that time?   Was it a very similar firm to F. & N. Durlacher?  

RWS: I think it was - I think we were fifty in all, including the office staff. We dealt in the breweries, a certain number of industrials, mainly in the sort of paint, food, those markets, but it was an absolute tiny bite of the whole market compared with what we ended up dealing in. 

BA: And I understand that both of your firms were already running some joint books with each other?

RWS: I think the idea of a joint book needs to be clarified really, doesn't it, Dick?  I mean there were two aspects of a joint book.  I mean a joint book can either be where you are both actually dealing in the same shares - which is rather complicated - but there were a few of those around and they were supposed to be published.  We did not duplicate any of the shares in which the two firms dealt in...

RD: Companies.

RWS: ... exactly.  What we did was we shared the profits on a varying basis.  For instance, I think the breweries were strictly 50/50, but as far as the equities were concerned I think it was 70/30 - it might have even been 75/25, it varied.  That was the Stock Exchange rule, actually, that you could only be joint with one firm.  Now we had a most extraordinary unofficial relationship with a firm called Pinchin, because they dealt and the Bone side of things actually dealt in Cable shares - I mean BIC cables and Telephone Rentals and things like that.  We had an unofficial joint book with them and it was, everybody knew about it, but strictly speaking, because you could only have one joint book, it was against the rules. But it wasn't...

RD: It was because we didn't deal in that market that made it alright in the eyes of the Council of the Stock Exchange, they knew there was nothing too underhand.

BA: How would you describe the jobbers generally at this time in the 1950s?  There were a lot more jobbing firms about?

RD: There were hundreds of jobbing firms. I think when I first joined there must have been about 300 or so.  But there again they weren't real jobbing firms - there were a lot of one and just two members who were acting like a 2 dollar broker in the states - people went out to lunch they used to out of charity say, 'Execute this oil for me, old chum,' and they used to take a penny a share on it or whatever.

RWS: They really were the sort of fore-runners I think of the professional dealer.  They largely carried out the professional broker's dealer's function because, take my own father for instance, he used to talk to his clients in the telephone room, then he'd come into the market and execute the orders and actually buy or sell what he was asked to do.  Well, they used to have - supposing they had a lot of orders and they just couldn't actually do it. So some firms used to go to these little sort of tuppeny ha'penny so-called jobbers, hand him a list and one used to stand next door to me - it always used to amaze me and I would know that I was say, I was calling Wires 21s and 3 9 and this chap would say, 'Sell you 500' and I would buy 500 at 21s and 3d and then I would see that he'd put down 500 at 21s and a penny ha'penny.  I mean, this seemed crooked to me to be honest, because it wasn't the price that he'd dealt at. And I knew that was his penny ha'penny and that was his commission, if you like, for carrying out that order.  And that's how they functioned and very rarely did they perform the function which we ultimately knew as jobbing.  They negotiated effectively, and then of course that came to be seen as wrong and so then, again back to my father if you like and many other firms, they then hired themselves professional dealers who carried out their orders. And they only dealt, I mean they spent most of their time, in fact of them then left the floor of the Stock Exchange and sort of senior partners they all operated up in their offices and sent down their orders to the box or to the floor and they were carried out like that.  And I think that had a lot to do with the demise of those sort of firms.

RD:  The broker never gave a part of his commission to these [jobbers]?

RWS: To the other guy? Well I suppose effectively he was.

RD: So rather than knocking a penny ha'penny off the price that they had received from the jobber which should have gone to the client - the customer...  

RWS: Indeed.

RD: Did the client sometimes get 21s and 3d say in this particular instance which you mentioned, and then have a penny happenny out of the broker's commission.

RWS: I don't know what went on, Dick.  I mean you could share commission, couldn't you, I believe?

RD: Oh, yes, absolutely.  Of course, we never saw this side - Messel was a very large firm in those days.  And they had all their own dealers in place.

RWS: I think people sometimes get the wrong impression about the demise of the jobbing system.  They say there were two, three hundred jobbers and then we eventually came down to five worthwhile ones, I think it's fair to say, and then a few other sort of fringe ones.  But they, like Tony Jenkins if you like, because he was specialising, and very successfully, in a particular market.  But of the five that remained and the 200 odd that we mentioned, you're not really discussing like with like to my way of thinking.  They were a very different animal.  

BA: Well, Dick, how would you contrast those smaller firms with your own firm and with firms like Bone Oldham?

RD: When I first joined?

BA: Yes.

RD: Well we were just part of the market, and we were a smallish firm in those days.  But my father was senior partner and he saw the way of things and decided to expand and that was the beginning. From 1951 to when we joined up with Bone Oldham. And then from there on, between us, as I say, we ended up with a firm called Wedd Durlacher Mordaunt...

RWS: WDM indeed.

RD: Which incorporated 32 other firms.  I think we were 34 in total weren't we?

RWS: Something like that, yes, yes.

BA: What inspired your father to think ahead in that way, whereas a lot of other older senior partners in jobbing firms were quite happy to retire and take their money out - others were quite happy to be merged in other bigger firms?

RD: He was very forward looking. He didn't just cast his eyes around the floor of the Stock Exchange, he spent a lot of his time going round talking round to the boards, the Chairman of companies, in which we dealt, finding out what their requirements were.  This led to us speaking and having to lunch the finance directors and the managing directors, the chairmen of those companies in which we dealt. And because of those meetings they used to say, 'Well I wish that you wouldn't deal in Hawker Sidley on the motor book.  That should be dealt in on the engineering book.'  And then if we found that the shares were very unmarketable, very high-priced - and a high price share in those days was £5, it's nothing today but it was then - we'd say, 'Right if you give us a share split we'll move the stock over.'  Because they didn't mind it being dealt in on the motor book per se physically on the floor of the Stock Exchange, but if it was dealt on the motor book it appeared in the Stock Exchange daily Official List as being a motor share rather than an engineering share.  So I think that father was responsible for a very good rapport growing up between the market makers and not having to rely on the brokers, entirely on the brokers.  The brokers didn't like it very much, they thought that we were trying to tread on their patch. It was quite harmless because we weren't allowed to deal. As you know, no jobber is allowed to deal directly with any customer, they have to deal through a broker.

RWS: One of the other marked things, I think, he did...  He had amazing foresight.  One of the most obvious things he did - it's a matter of detail - but for instance, when I mentioned BI Cables, Wires, if you dealt in the ordinary, you also dealt in the 7% preference, the 3 1/2% convertible loan and any other bit of rubbish there was - all on the same book.  And of course Fixed Charges, as we called them, were a totally different animal, mainly related to sort of interest rates and he put an end to that and set up a complete section of the firm which dealt in all, originally as I say the Fixed Charges and indeed the convertibles, although we took that one stage eventually and had a separate convertible book when more came along.  In those days there were a lot of stocks which fell into that category and they were quite profitable.  

RD:  Sorry, just whilst I remember it, likewise, we used to deal in the options when options came in on the same book - this is much later - and we used to get into the most frightful pickle until we realised, of course, that the options had to be separated out and run by a professional dealer on their own.  So that was rather an appropriate parallel.

RWS:  We used to play around and thought we were quite clever and made a complete hash of it half the time.

RD: We always used to forget to exercise the option!

RWS: That was traditional options, obviously. There weren't any traded options in those days.  

BA: How would you describe the senior partners in your firm before you merged with Durlacher?  For example, Sir Nigel Mordaunt.

RWS: Well, they were all working on a book for a start, and indeed so was your father in those days.  But they all stood on the Floor of the market.  I think the office manager had quite a lot of influence in those days: he sort of ran the office side of things; he produced, if they wanted some blue buttons or whatever, he looked around or he led them down to the market.  And, as I say, certainly Nigel Mordaunt, he adored dealing. And really if you had some sort of problem, to get him away from the book took a lot of doing because he was a good dealer.  In those days he was an enormous sort of bull dealer and I think that was part of the success of our merger, wasn't it because I think the Durlacher firm, certainly your dear cousin Jack in particular, was a very great bear and we were always bullish.  I remember when Jack accused me of being a bull for twenty years, eventually he agreed that I could be bear, but it wasn't strictly true. But that was one of the successes of the merger, I think.

BA: What were the  main attractions of a merger from the point of view of your firm?

RWS: Well, I think one saw the way things were going, that if we were going to be able to compete I think you needed the size and the increase in capital behind you. And of course, I suppose when other firms came in eventually, as we both mentioned, the number of stocks that we dealt in, or markets we dealt in was comparatively limited and sometimes there was very little interest -  there was always a fair amount of interest actually in the breweries - but some markets would go out of fashion, there wouldn't be a great deal of interest in them. And therefore if one spread one's interest, one could foresee that there would always be some sort of turnover in one or two of those markets, and it was no use... you couldn't just sort of take up a stock tomorrow because you saw there was some activity in that particular market.  You needed to be basically there.  I know it was rather a convention, you could, but you didn't.

RD: Another big attraction, of course, was the cost savings in the back office.  We were the first ones to go onto a computerised back office systems - we took in Hollowith for all the sorting and we took in ICL.  We did a job deal with Joe Lance....

RWS: I was going to say we had a thing called 'Leo' didn't we?

RD: We had Leo which...

RWS: Bloody great thing.

RD: It was about three times the size of this room, standing about this size. And you could put it fairly comfortably on one segment of this desk today.  And it was for years and years and years a show piece in Whiteleys.  People used to go and look at it and wonder what it was.  

BA: You were also one of the first firms to have a stats department?

RD: Ah, no - we weren't.  Bone Oldham had a stats department and we used to share it.

BA: Oh I see.

RWS: The idea there was ... put it this way, the needs or requirements for a jobber as to research into a stock were somewhat different from those of a broker.  In those days, actually, we used to produce various pamphlets.  They were purely factual - they were a bit like an exchange telegraph card - we used to produce the thing called 'Tea Sugar and Milk', if I remember rightly. And all it had was Tate & Lyle and United Dairies and Cow & Gate and it just said there was a capital of 25 million or whatever it was, they paid so much dividend and that was it.  There was a sort of fairly non committal foreword to it.

RD: Capitalization and Dividends.

RWS: That's right.

RD: Yield and gross yields.

RWS: I suppose it changed really because when one first went there I remember - and it was a question I absolutely loathed - a broker would walk up to you and he would say, 'What is the price of Cow & Gate?' And you'd say, '2 bob pro quo' and 'What do you think of them?' to me the jobber.  And I loathed that question because the odds were that I had a book in them of some sort - I was either a bull or a bear - they were very difficult.  I mean supposing one was a bull of 100,000 at 2 shillings a share wasn't too much, but you're hardly likely to say well you think they're very expensive and they're going down to 1s 6d and vice versa if you were short.  You wouldn't sort of say, 'Well that's the cheapest share in the market.'  And I always felt it was an unfair question. But anyhow we used to have a little fly-leaf there which gave the fact and figures and we used to call it an Oscar I think.  It had roughly what I mentioned was in the book, and so you used to say, 'Oh, well they yield 5% and this and that,' and you tried to give a non-committal answer.  But that was before brokers had their research departments.  Because they would be saying quite definitely that Cow & Gate were cheap and telling their clients to buy them and it was always a great relief to me when people rarely asked that question.

RD: I think the most important part of the information that you could glean from an Oscar, was the running yield against the price. And then you just compared the brewery market  across that sector right across these geographical spread here and why does this one yield 7 1/2% and that one yield 3%.  And if there was ever a takeover that was all we had to go on.  You didn't look at the dividend cover, you didn't look at the asset backing or anything like that.  But it was very primitive research.

BA: What was your role as a jobber during a takeover in the 1950s or '60s?

RD: Well and '70s and '80s, we had to make up our minds within 30 seconds, 1 minute, as to what we were going to call the shares, and also we then had to adjust our prices in all the other companies who were competitors because it might have put them on a different gill basis.  So it was pretty hectic stuff.

BA: Did you, as a big firm of jobbers, ever exercise much of an influence over the way in which a takeover bid went?

RD: Oh, yes very much so, until rules came in to stop us.

RWS: Yes.

RD: If I can start backwards, the last one where we could have influence a bid and enabled it to go through quicker than it did, but it actually went through afterwards, was when Ernie Harrison & Racal took over Decca.  And I remember a meeting with Sebags - the brokers - in our boardroom and they said that, 'this only means a matter of 25, 30,000 shares, surely you can sell them to us.'  We said, 'We haven't got them.'  And no company was allowed to declare a short position from a market maker as stock as sent to the bid.  I remember being under tremendous pressure.  But in point of fact if it had done that, not only would we have been at fault and been heavily censured so would have Sebags and then if the company themselves knew that they were declaring non-existent stock, they would have been censured too.  So we were protecting really the brokers and the company.  Going back to before then, well you can talk about that bloody gentleman Marguiles.

RWS: Yes, that wasn't a controlling interest, but you certainly could.  You could sell a bear, you didn't have to declare anything in those days, because every deal now has to be declared - a director, if he deals if he sells one share we've got to publish it.

RD:  But you sold an enormous bear to Marguiles through his brokers and after that he launched a....

RWS: He started, didn't he?

RD: He used that as the springboard to launch his bid, before we got our bear back.

RWS: Yes, he did the dirt on us too, one way and another.  Very much so.  I suppose one of the first ones I remember was when Charlie Clore bid for Watneys. Do you remember that?

RD: I do.

RWS: Of course it created enormous interest.  We welcomed them. Quite often you would find yourself, initially you'd be short of the stock in the company receiving the bid, and it might cost you quite a few thousand pounds.  But it created the position - or rather the turnover - so you were able to turn your book, turn it round and get straight and just turnover you jobbed out as we said, that loss.  So it was fun really, it created interest, there was a market there and it was fun. You just sort of took it on the jaw, took it on the chin and got on with the job.  And if there was a lot of turnover, you could hopefully make that loss back pretty quickly. 

BA: Did you have cases of jobbers becoming too close to brokers or too close to outside companies?

RWS:  I don't know, jobbing was a very personal thing, wasn't it really.  Some people I mean, Basil Sharp, if you like, he was an amazing man, but he knew, I should think better, he dealt in an enormous number of shares and he did know quite a lot of them. But my own theory or the way I worked it out was that I preferred, in latter days, to know what the brokers wanted to do.  Okay, if you knew why as well, but don't forget if one broker thought the shares were cheap and was recommending a purchase, there might be another one who equally was saying, well they were expensive. And if I could stand in between those two and buy from one and sell to the other that was me.  I wasn't going to say, 'Well he's right and he's wrong.'  

RD: Friendship can be very expensive.  It didn't matter in a share which was marketable, but we had a few friends and they always used to want to deal with our firm and they used to arrive on your pitch and they used to say, 'Robert I want to buy 25,000 this, that and the other, and they knew very well, it was only a market in 1,000 shares.  It was almost blackmail through the friendship so you felt obliged to sell him half the stock to start with and then you probably hadn't got a chance of getting it back at anything like that level.  Another situation we had, for which we were very severely criticised by many brokers, was the friendship which grew up between ourselves and the fund manager of the BP pension fund, a man called Jack Butterworth.  He used to call round to our offices with a list of buyers and sellers - ran to millions, vast great orders in those days. And we used to go round and ask each pitch without disclosing which way whether we were buyers or sellers, and where possible execute those orders.  And where we weren't commercial then we used to hand those orders back or we used to give it to another broker; or if he thought that we had a better chance of executing that order because we were bigger than other jobbers, he might leave it with us for a time.  And then we used to tell the brokers that, 'This stock that had been allocated to you, you have bought 100,000 Distillers.' And then we used to go to Cazenoves and say that, 'You have sold 50,000 Borax.'  And they didn't like that at all.  

RWS:  Strictly speaking, we were breaking the rules.  But he was a unique old chap, Butterworth, and it suited us because we had the business and therefore we treated it with a certain amount of discretion.  And of course the brokers couldn't say too much - he only dealt through four or five brokers in any case, like this, and it was big commission to them. And I suppose very occasionally we might have booked Distillers at 21s 3d and the broker he might have got them at 1 1/2d but...

RD: Even before then we had an account with Harley Drayton, which I don't think anybody whose still in the market would know about today.  They'd decided that they wished to build up a substantial holding in brewery shares and there was nobody else they could go to.  So we had this Harley Drayton account that we used to just deal through one broker.  When we used to get the stock in we used to say, 'Right ring him up,' or go round to see him and say, 'Right, we've managed to buy an extra...,' at the end of each day's dealing you brought an extra 5,000 here or 50,000 or, 'Sorry we haven't dealt for you.'  

BA: Did you as jobbers, have much contact with shops - that is to say brokers who acted on behalf of directors in companies - and who, I believe, in the early days of the Stock Exchange effectively could run a market...

Tape 1, side 2

RD: If I understand your question correctly, by a shop you mean the brokers of a company.

BA: Yes.

RD: The answer is yes, very definitely.  If ever we were long of stock or short of stock, the first person that you went to - unless you had a limit order on your book, I’ll explain the limit order later - they were the first people that we would go to, because they knew exactly who held the stock, they were in constant touch with the registers. The limit orders that I was referring to, has that been explained in other interviews?

BA: Yes, it has, but you might briefly...

RD: Well on the left hand side of your page opposite your dealing page, you had a list of all the buyers who wanted to buy stock and on the right hand side of the page you had the list of sellers who wanted to sell stock. And that in the '50s certainly, and in the '60s as well, I'd say until about '67/8 that was very much a main part of the so-called 'jobbers turn'.  The only misuse of the jobbers turn, the expression 'the jobbers' turn' has taken place 99 times to a 100 because only one in a hundred times did you buy stock and have a buyer and you could pass that stock on.  And as time developed to use that expression, 'jobbers' turn', was anathema to us because it was absolute crap because there wasn't any such thing as a jobbers turn.  But in the days when we had full limit pages it was very useful to help us determine a price.

RWS: And a firm limit of course was absolutely invaluable because actually if you had a firm limit - in other words the chap said, 'I will leave you 100,000 shares to buy at a pound - you could then call them 19s 10 1/2d to 20s 1 1/2d and if you bought at 19s 10 1/2d you then passed them on and you knew you were going to pass them.  Whereas if you didn't have a firm limit like that well you mightn't call them easier and buy them at 19s 9d and might sell them at a pound. And then if you went on buying them and didn't sell a share you would lower the price so a firm limit was something to be very much valued. And I suppose if you analysed the thing, when you had a firm limit you were actually at that particular time you were acting not only as a principal you were almost an agent.  You were the agent of the broker who had left you that minute and there were very strict conventions as to how much you took out of a firm limit. And it was normally, if I remember rightly, a normal 1 1/2d in the pound was sort of deemed appropriate, which is roughly what his commission was in any case.

RD:  And a firm limit, of course, gave the broker who had left that order with the jobber at a distinct advantage because he knew that  all the stock that was bought round the market was going to come back to him because, for instance, say a smaller jobber found that his book was too large and he wanted to call them 19s 7 1/2d to 10 1/2d we used to hear about it and go and take his stock at 19s 10 1/2d because we had the ready-made buyer, he didn't. So that the reasons why brokers left the stock with jobbers was because they knew that they were going to execute that order rather quicker than if they had just been buying the stock by walking round the market and dealing in a haphazard fashion.  It centralised things.

RWS: And then very likely putting the price up against themselves, if they dealt all the way round the market.  If they just left it with one then they were happy to bide their time and weren't in a mad rush.  I suppose in latter days what tended to happen with those limits was that they would leave them with you for a shorter period of time and then they would tend to play the market.  In other words, if Wall Street came in and had been 25 points down the previous night, then they would lower their price and therefore it was worth dealing with them.  Firm limits were always: the tradition was, the convention was, that they closed at the end of the day and then they renewed them again in the morning. But it was a very useful thing to have - from both points of view.

BA: Just going back to the shopbrokers, very briefly. Certainly until the 1980s what we now call insider trading was not illegal.  If a broker did have too close a relationship with a company could that be taken advantage of by a jobber who might have been very close to the shop?

RD: No, because he would never act as a principal and try and deal directly with the company.  He was always, as Robert said, he would just be handing over his stock, it might put him in a privileged position because he's making more penny ha'pennies than anybody else within the market, but there was no way that he could have taken advantage of well, I don't know, to my knowledge nobody in my company bought shares PA if that's what you are referring to, making themselves rich men out of it.  Our senior partners were not rich.

RWS: As the jobber, one wouldn't have been human if at times, if you had a firm order from a broker, if it didn't cross your mind. If it was say a company that possibly might be taken over and if you had a firm order, a broker buying you would think, well I wonder who he's dealing for. And of course one didn't do anything about it but in your mind you would think, 'Well I wonder if it was so and so, I wonder if it's so and so.'  There's a case in point I remember, for instance I sold a large number - I think it was 2 million shares, which was far too many and it cost the firm a lot of money - in British Sugar and I had expected that I was going to be able to get these back over a period of time, and then of course Beresford - S and W Beresford - made an outright bid before we'd had the time to get the shares back and it was obvious that the 2 million had been bought by Beresfords to give them a base from which to launch that bid.  But there were times when companies or one dealt in stock and it would be perfectly innocent, funds were getting ever bigger in those days and they needed a reasonable proportion and of course there were no disclosure - you could own 10% or whatever.  But then as of now, 5%, if you're over 5% you've got to declare that. So, I suppose that was one of the advantages from client's point of view of the jobbing system that it was a secret system if you like, and things could go on which now would have to be published.  This is where we were slightly apprehensive when the new market-maker system came in because everything in the Alpha stocks has to be published virtually within seconds. And you would not run the positions or big bear positions that one would have run in the old days because they would be immediately exposed, unless you covered them, and so I suppose that has all gone.  I doubt that the bears that were sold in those days would ever be sold again, because you are immediately exposed.  And let's face it a bear couldn't go to the moon, I mean a bull, if you're a bull at a pound it can only fall to nothing, whereas a bear at a pound can go to twenty pounds and you're out of the stock.

BA: To go back a little bit in time, Bone Oldham and Durlacher merger was just the first of several further mergers, or takeovers, one of the next big ones being with a firm called Kitchen Baker Shaw.

RWS: Yes, Kitchen Baker Mason and they had merged with Shaw - P E Shaw - before, that's right.

BA: Yes, but in fact half of the firm went to Durlacher and half of the firm went to Wedd. 

RWS: Yes.

BA: Why did that actually happen?

RWS: Well K B M had virtually to do something because they had the death of one partner in any case, and Wedd Jefferson, as it then was, dealt only in gilts. And Dick Wilkins, who was the senior partner and ultimately our Chairman, I think he foresaw that although they had marvellous business in the gilts that an interest in the industrial equity market would be of some advantage and so half of them went to Wedd initially and half came to us.

BA: And yet, within a few years, you yourselves had joined with Wedd.

RWS: Well, put it like this, I think that was a question of personalities.  Dick Wilkins of Wedd was the King of the gilt market.  And Esmond Durlacher, Dick's father, his nickname was the Emperor.  And he was the Emperor, if you like, of the industrial market and there was not room for a King and an Emperor under the same roof. And when Esmond retired Nigel Mordaunt, who was the deputy senior partner with the Durlacher firm, was a very great personal friend of Dick Wilkins - they lived close together, they used to travel on the train together, and I think then the two of them saw the logic of having a conglomerate as it was, including the gilt market and the industrial market. And of course they were proved very right, because I think the gilts felt that we were the poor relations because there wasn't that amount of business at the end of the '60s and actually it was slightly ironic because the very first year that we did merge, the gilts had a tough time and the industrial market actually made more money than the gilts did.  But it was a very good thing because I think the gilt people thought, 'Whose this riff-raff we've taken on?'  And it cemented the relationship very well.  And it was part of what I was saying originally.  You were very fortunate if you were firing on all cylinders at the same time because business wasn't like that.

BA: How did the people in Wedd feel about joining this firm of industrial equity jobbers?

RWS: Well, I was one of the industrial equity jobbers!  But I think they felt the gilt market had a certain sense or feeling of superiority and they used to march around in rather more top hats than they did in the industrial market but I think we soon became pretty good friends.  

BA: Did personalities play an important part in the Stock Exchange or in firms at this time?  

RWS: Yes, undoubtedly.  I remember the old Pat Durlacher, who was a cousin of Dick's, and one of the things that one needed to know, you needed to know your stock and a bit about it but you also needed to know the broker, the individual brokers who were handling the business in that stock.  It was very important because, as I say, they were all individuals and they all act and react differently and some were always easy to get on with, charming friendly, some were absolutely four-letter men.  And you avoided dealing with them if you possibly could because you knew either they were unpleasant or b) the business they had tended to be on the warm side - in other words they certainly knew what they were doing, and you only wanted to deal with them if you knew what you were doing yourself.  So personalities played a big part in it and we used to arrange our jobbing teams so that the... supposing it was the food market, you had dealers, we had dealers who got on well, as individuals, with the brokers who were the lead sort of brokers in those stocks. And you always arranged your teams so that you had a partner, possibly quite a senior partner, then you had a number two who was slightly down the scale, possibly a potential partner, and then you had very much a junior and one would allow if you were the partner, the partner, the brokers partner would most likely want to speak to him and if it was a big deal he certainly would and he would consult with his own team, 'What do you think about that?'  But if it was a junior dealer and he had 500 shares to buy or sell, well you would stand back and let the boys get on with that because they were learning to deal and they wanted to make a relationship so that they were going to be senior partners hopefully one day, so you let them get on with it and become friends and get on with their equivalents - their same age group.  So personalities were very important. And the other aspect I suppose from the brokers point of view with the jobber, was knowing who you felt was the market in a particular stock, or who was discreet.  I mean some people had the reputation, as I think I mentioned before, Jack Durlacher was a great bear, certainly when one first knew him.  And therefore if you wanted to buy some stock, he'd be a good chap to go to, whereas Nigel Mordaunt, if you like, was always a great bull and you might pick him if you had stock to sell because he loved putting stock on the book. So knowing the individual was an important part both from a broker's point of view and a jobber's.

BA: What was your approach to jobbing, did you prefer to be a bull or a bear?

RWS: Initially, I think youth, you're optimistic, you're bullish and it's only... Being a bull is a positive thing - you can't actually be registered as a bear.  You're on the share register as a bull.  A bear is a more sophisticated animal and I think on the whole it really only comes more easily with experience, because inflation... on the whole stock prices have gone up.  I mean, if you look at the index - I mean it's whatever it is now - something over 2,000 and in those days 400 was the top wack.  So I think until you have actually seen a bear market and, of course initially there wasn't a proper bear market until 1974 in our lifespan, I mean pre-War there had been but not in our experience.  Shares on the whole had been on a sort of gentle up trend.  And then when you suddenly see what can happen, the prices just fall away and experience tends to make you feel more bearish, if you like.  And as I say Nigel Mordaunt became one of the biggest bears I've ever seen in his latter days, having been an earlier bull.  So saying I mean we always tried to balance our books to a certain extent, either on the bull tack or on the bear tack - in other words, we wouldn't be a bull in every stock we dealt in. And we had the figures at our fingertips the whole time and that you would be a bull of say, I don't know, half a million pounds worth of stock on a particular book and a bear of say a quarter of a million, and obviously that was a bull point of view.  If you had no particular point of view you might be 300,000 either way or whatever, but you would never be, or very rarely would you be just a bull or just a bear, because life didn't work out like that.  

BA: You mentioned the bear market in '74 which was quite a crash.  How did you as a firm cope with that or do you have any personal recollects of what it was like being in the Stock Exchange when things did look very black, and when, for example, a firm like Feranti announced it was in trouble or a firm like Burmah Oil?  

RWS: Burmah was the one wasn't it who was reputed to be and some of the banks - there were rumours about the NatWest - I can't remember whether it was Nat West or just the Westminster Bank in those days, I think it was even NatWest - and I think they had to make an announcement that actually they were still solvent.  Well, it's quite a harrowing experience.  I think there was a gentleman - his name was John James of Bristol - and he had been predicting the market going down very accurately.  And it had fallen from 200 to 154 or thereabouts, I think, and when it got to 154 the next stop is 112 and that was around Christmas time if I remember rightly.  And then, fortunately, I think a group of institutions got together and said, 'Well look this is ridiculous, I mean we are all going to go under.  Let's see if we can buy some stock at this level.'  And they very rapidly, I think within about a fortnight, they pushed the index back up to 200 and that established a certain level of confidence, but it's very unnerving.  And indeed it was, as far as we were concerned, it was the only year when I remember actually that when I was a partner there that we actually lost money.  But it was so easy, if you are dealing in marketable shares, you've got a chance to remain a bear.  I mean, say you buy stock at a pound, and normally you would hope to sell that at 20s 3d, or 101 now.  But if you then buy it, in todays' terms, 98, 95, 94 and you haven't sold any, obviously you are looking at a loss situation, assuming you're a bull.  But in a marketable stock, what you can do is to buy it at a pound and immediately sell it at say, well you'd look to see where you can establish a buy, it might be at 95 it might be at 90.  Well then you could cut that stock if you are a bull or you can open a bear position at say 90 and then call them 85 90.  Well that's comparatively easy to do if there is a market in the stock.  But if the stocks are unmarketable, and most of the stocks numerically in any case were unmarketable in which we dealt - you only had to have a few thousand and if you bought them at a pound and then you'd buy them at 90 and 80 and you haven't sold a share, well that's where you pile up stock - you try not to but we always tried to make a price and I think we were recognised for that that, there was always a price.  I mean in the old days, so-called jobbers used to say, 'Well, they're 95 100 nominal', which meant there wasn't a price, or 'sellers only'.  Occasionally we would say buyers only because we wouldn't sell a non-existent bear if you had to take over a situation on a very unmarketable stock.  Take, I don't know, Savoy B if you like, where say Forte was trying to buy them, we wouldn't sell a bear in that company.  We might have a few on the book and try and make a price, which is what I used to try and do but make a price in 50 shares.  But throughout that period we tried always to make a price, even if it was only in a few thousand shares or a few hundred shares, and I think that was one of the strengths of the thing.  But there was a price to pay for that but we felt it was correct because otherwise we used to say if there wasn't a price in the London market, well where's the London market?

BA: At about this time a number of other jobbing firms, old well-known firms, like Frances & Praed, Blackwell, which finally got taken into Wedd.  What was the feeling in the Stock Exchange about these kinds of...?

RWS: Well, obviously it was a sign of the times and I think people, I mean David Blackwell, actually, had a very good business - he was the King of the oil market, quite definitely.  We didn't deal in oil shares in those days.  And there was a lot of business in them and he was undoubtedly the lead in that market. And I suppose there were certain regrets but on the other hand I think that people felt that maybe if he was on his own and in fact was happened there was that they tried to diversify and they took over a firm called Da Costa and that was a big mistake and so when they came to us they were in a vulnerable position - and indeed Da Costa and his stocks came to us. But he built up a position of too many of the stocks I've described he was a bull of them, and he couldn't sell them when he had a nasty loss situation and that brought Blackwell fairly close.  As far as Frances & Praed was concerned they were the gilt market and I think they were sailing fairly close to the gun in that particular situation.

BA: Yes.  Well, I've already spoken to one of their former partners - a gentleman called Angus Ashton.

RWS: Oh, yes I know him.  

BA: He explained the circumstances, and the firm didn't quite recover it's reputation afterwards.

RWS: I think that's correct.

BA: How did you feel now as one of the big jobbing firms? I mean did you begin to feel that you had greater responsibility than simply making a profit for your own firm but then somehow the Stock Exchange depended a bit more on Wedd Durlacher than on some of the smaller firms, or did you still think of yourself primarily as traders and there to make .....?

RWS: No, I think again this was something that Esmond and indeed Pat Durlacher.  I think one felt a very great responsibility to the market.  In fact there were times when I thought we were perhaps too commercial. But on the other hand, there's no doubt about it by doing that, I think we prolonged the existence of the jobbing system, because brokers actually, they weren't envious of us.  They used to think, 'Christ I wouldn't want positions like that' and to make the size which we did make.  And at times we had the most appalling losses, I mean we really did.  To lose half a million on one book in those days was quite a lot of money, and it didn't happen too often and it couldn't have happened too often, but we did stick our necks out enormously.  Obviously, when you made a price you were hoping you were going to make money out of it.  But on the other hand we did feel that we owed a responsibility to the system and I think all the jobbers, to be fair, who survived that period, and as I say there were basically 5 of them, I think we all felt that we were contributing to the system and you can't win them all, you've got to win 7 out of 10.  And we felt a responsibility to that market place.  But obviously we were quite keen to see the bottom line.  

BA: What was your relationship with the other jobbers like?  Was it a very competitive relationship?  For example you can contrast the other four major firms with some of the smaller ones like Charlesworth and Co and so on.  

RWS: I think, as the years went by and it became a question of the survival of the fittest, I think the relationship improved, on the whole, enormously. The markets I was connected I never believed in having a war with the opposition, it was totally counter-productive. And if brokers knew you never spoke to opposition they would play on that and they would get up to all sorts of tricks like saying, 'I'm only dealing with you' and they were dealing with the other one as well, because they knew you would never find out because you never spoke to him.   But I always went out of my way to talk to my opposition and get on with them and have a healthy market. No one jobber would have been healthy if he did all the business.  You don't want to do all the business.  As Dick said earlier, you could be embarrassed if a chap who knew always dealt with you at times because there were times when you didn't want to deal with him, however great a friend he was. But in the latter days, I would say that the relationships, on the whole, were first class with one's opposition.  They were professional relationships.  One saw oneselves rather in the like as members of a sort of trade association, if you like, and there weren't many jobbers left and there was no point in us all fighting each other.  We reckon there were sufficient of the cake to be split up and obviously we wanted the largest portion, but we didn't always get it.  

BA:  Did you feel that the outside world understood and valued the jobbers, or did you feel that within the four walls of the Stock Exchange, well outside the four walls no-one really knew what was going on?

RWS: Initially I think the understanding of what a jobber did amongst the sort of financial press was pretty vague.  I suppose one of the consolations was if you ever found your name in the papers - whether it was a I don't know, with your girlfriend or somebody else's girlfriend - you were always referred to as 'stockbroker' because they really didn't know what a jobber was.  But in latter days, I think the press became more aware of the function and the difference between the two.  So I think the relationship and the understanding did actually improve when there weren't many of us left.  But initially I don't think they had a clue what we did.

BA: Can I ask you a little bit about your own career with Wedd?  Is there a progression with a jobber in the firm? Do you get moved around from market to market?

RWS: Yes, I think it's very important that one does because all markets are different.  I mean I actually - it's a long time ago - but I started as a blue button on this joint book with Pinchin - in the Cable market - and you met several brokers dealing in that market.  And then I think I became authorised and a member in the food market and we dealt food shares and indeed paint shares - there were a lot of paint companies in those days, some sort of horrible mix.  And I dealt in them for quite a bit.  I then went onto the leader book, which it was called in those days, dealing in shares like Unilever, ICI, Courtaulds, British Oxygen - they were the big market shares.  Then I think I went in for a spell for textiles, I certainly had a spell on the breweries, this was all dealing, and then ultimately, I'm a gutsy so and so in any case, I like my food, and drink maybe, and so I went back to the food book and that's where I spent most of my dealing days. And ultimately it built up quite an experience then, as I say, because of all those different markets.  And then one got to a more sort of supervisory role - one was still dealing but one had an overseeing function for various other books, but you had actually jobbed on them so you knew a bit about them.  It's quite difficult, although you pick it up, but some shares are very different from others, and some markets are, so it's all part of one stock-in-trade and one's experience, which helps as one progressed up the firm.  This was policy.  We used to move all our dealers around up until eventually they would sort of find their niche by the time they were 30 maybe.  But even then, if we were opening a new market, if ever we acquired a new firm we always had to send one of your own people into that firm - it was no use leaving them just as they are because they'd carry on their own ways and we had to integrate them.  So we tended to move people around but you don't want to do it too often.  But a junior, you would move more than a more senior person. It was all part of their training.

BA: Did you have perhaps in your younger days, have any outstanding failures or successes...?

RWS: Oh, God, plenty of failures.

BA: Could you perhaps recall one or two?

RWS: Well the worst one I've already told you it was in my younger days, was that bargain, that was the worst one I ever did, was to sell too many in British Sugar - that cost half a million quid.  I suppose I was very fortunate because I arrived at a time when there were so few people had joined the Stock Exchange and therefore one had a great opportunity. For instance, I remember I was working on one occasion, we were newly authorised and both the partners - we were two adjacent books - were away. One was on holiday and the other one was ill so you were left to get on with it and there was nothing like just getting on with it to learn the job so to speak.  I suppose one of the greatest successes if you like was after Allied - was it Allied Breweries, yes - they tried to buy out Trusthouses. I don't know when this was, early '70s I suppose, and we sold an enormous bear.  The bid was off, they retained their stock, but they wanted to buy more after the bid was officially off, and we sold them a bear, I've forgotten what it was....

Tape 2, side 1

RWS: Well, one sold this bear.  I had actually half a million on the book when we did it and so one was selling them - they were 185, something like that - and we were selling them at 225 I think it was, and so one had put roughly £200,000 profit in one's pocket to start with so that underwrote it.  And we kept the price down and we didn't call them up and it took us about 4, 5 months to get the stock back.  I don't know how much we got out of it ultimately but as I say, you couldn't do that these days because that would have to be published straightaway so nobody would do it.  

BA: You described yourself earlier, probably unkindly, as a failed accountant. Did you feel that you had made the right decision about going into the Stock Exchange and becoming a jobber rather than a broker?

RWS: Good God, yes.  I don't think I'd even wanted to be a broker.  I think I said that I hated being asked what I thought of a share and I didn't like telling people to buy or sell shares, and I still don't.  And when one used to meet people outside the Stock Exchange and they were your chums and they all automatically thought that one bought a share today at £1 and was selling it at £2, so they said, 'What do I buy, what do I buy?'  If it was somebody who didn't know much about the Stock Exchange, you had to come up with some sort of idea, otherwise they thought you were a complete idiot.  But I loathed being asked that question, and I always felt a tremendous responsibility if I did sort of say anything, and of course if it went wrong, that used to worry me and I avoided the question like the plague.  But on the other hand I thoroughly enjoyed being a jobber.  You were effectively your own master.  Okay, you had a boss there who told you were a bloody idiot if you were one, and that was quite often, but on the whole you knew if you were doing the thing reasonably correctly getting on with it there was job satisfaction there and I loved it.

BA: Let me ask you a few more specific questions about aspects of the jobbing system, particularly as they came more into prominence in the 1970s, for example I believe put-throughs became a source of dispute often between jobbers and brokers.  Now you smile when I said that, could you first explain what a put-through was, and then perhaps describe the kind of problems that would come up and again if you could recall one or two occasions?

RWS:  A put-through, if I were to go back to the example of British Sugar and Beresford, if you like, the broker if I remember rightly was Greenwell.  And he had bought stock, I didn't know, but he knew, that he had bought stock on behalf of Beresford and he wanted to buy more.  And supposing he had an institutional seller who came along - or just a body if you like, a corps, and he knew there was a buyer, well he would come to us - the jobbers - he'd already got both a seller and a buyer and he would want to put the stock through the market.  The advantage of that was that it was then known to be the correct price because the jobber could say 'no it's not the correct price', but what used to happen was the only rule the jobber knew to my way of thinking, was rule 90.  A jobber knew what was right and wrong and he knew rule 90 because rule 90 said that before putting stock through the market or before, if you have a seller, finding the buyer you must go to one jobber and say, 'I've got a seller and I think I can make a buyer, what is the correct level to do it?'  He would actually ask what the price was in say, 100,000.  And you'd make him 19 and 9 to 20 and 3 or 99 to 101 and he would think he would have buyer at a £1 or he could make a buyer at a £1 and depending on the size and you would agree it with him and he would then go away and then he would come back and do that deal.  What used to happen was that supposing he knocked that particular broker, supposing he had a nice line of British Sugar to sell and he didn't know there was a buyer at a £1 he would come along and say I've got quarter of a million of these to sell, he'd think the jobber got half his commission basically on the turn, on the deal and he'd say, 'I want to put them through at 95 to 95 1/2 and you say, 'Oh, no you don't, I will give you 99 for that stock.'  And that used to cause a certain amount of anguish because the broker thought you were doing him out of two commissions, which effectively you were, but then his function was to do the best he could for his initiating client which was the seller, and if he's putting it through at 95 he's not getting the best when he can get 99 in the market.  Eventually the brokers realised this that they were breaking this rule.  But for an awful long time the rule that existed there and brokers tended to ignore it and that did cause problems. And I suppose when they became more sophisticated they didn't originally worry, they sold it into the market and got on with the next job and then they suddenly realised well if they found the buyer that's another commission.  So they were stupid if they didn't do it but they had to do it correctly.

BA: Well, we've been joined by Mr Don Bailey, who was also with Wedd Durlacher. Could you first tell me Mr Bailey how it was that you became involved in the Stock Exchange?

DB: Well I joined the firm of stockbrokers called Kemp Gee in 1959, having come out of industry at that time.  My reasons in the way I joined Kemp Gee are quite bizarre.  In fact I went for an interview when I wasn't supposed to have done, but made a suitable impression and got into Kemp Gee that way.  I was there for two years and I was thinking of packing in the Stock Exchange as a career because I was quite disillusioned with working at the time in the City for the broker.  And believe it or not, in those days, and Robert will tell you, going back there was something in the firm of Durlacher Oldham Mordaunt Godson as it was then, and I'd made up my mind that I would only continue in the Stock Exchange if I got a job at Durlacher Oldham Mordaunt Godson.  When you think what happens today.  

RWS: They were in the same the building as you, weren't they?

DB: That's right.  They were in Copthall Avenue.  And I went to Tom Shervill the head man then and said, 'I'd like to come and work for Durlacher.'  And I had an interview and that is how I got there - pure cheek really.  And that was in 1961. And I spent a lot of time in the early days of Durlacher going round the office learning the office routine, and then spent most of my life in what we call the bull and bear department, which was the back office - back up between the systems in the office and the actual trading on the Floor. And I had a wry smile when Robert was mentioning some things because we used to produce the profit and loss for the market makers every day, and the same in Robert's case.  It was never right, we never gave him enough money, we always filtered it away into a back book or something.

RWS: Quite right.

DB:  And of course in that way I came to know both the back office and the trading side, spent time on the trading floor, not as a trader but as a blue button, in the original old Stock Exchange. But then as I say I went back into the office and spent most of my life in the bull and bear department or setting aside, up until being taken over virtually. At the time of being taken over I was in the training department, personnel department, and I'm now in BZW in the marketing department.  I'm director in the marketing department, that's how I came to be taken over, and I'm responsible for talking to people about BZW now and certainly the situation in the City prior to Big Bang.

BA: What was your attitude, as a person who was based in the back office to the dealing staff?

DB: Well my relationship with the dealing staff was very good, but I must say when they chose me, you were chosen to do the job that I did together with other people - Alan Kemp and people like that - because you were a certain type of person.  In the firm, prior to Big Bang of course, the side of the business that was important was then perceived to be the side of the business that actually made the money, and if you worked in the back office I think it was true to say there was a certain degree of thought within the organisation that you were just an expense, and an unnecessary expense in a lot of the cases.  But towards the end of the time, coming up to Big Bang, that had changed quite considerably where people suddenly started to realise there was a value in what was done in the back office.  A lot of people in the back office were quite unhappy with the fact they were never given the chance to trade on the floor, which was the glamour side of the business - the side that made the money - and by and large they received their due in consideration of the fact that they were taking the risks.  I mean it's not a job, they talked about it being the glamour side - it wasn't the job that would have suited everybody by any means. It was a long day even before Big Bang where we start trading now at BZW at half past six, well I'm not suggesting we got in at that time at Wedd but there were certainly people were there at half past seven in the morning.  People think that the Stock Exchange opened at half past nine and closed at half past three and that was your day, I suppose, you're on the quarter to four train home on the golf course.  But of course in truth it wasn't like that at all.

RWS:  It's a very fair question that, isn't it, because there was no doubt about it there was a certain amount of feeling between the office and the glamorous side of it, if you like, being on the floor because that's what you read about in the papers if there's a takeover or there's heavy turnover.  But it was absolutely essential to have a good back office which was well run, because I mean for instance, I can remember an occasion when Nigel Mordaunt went round to the senior partner of Schweder and said, 'Look, we're not going to deal with you any more because you are not settling your accounts with us.'  It was a threat and he meant it.  They wrung their hands and we actually sent a couple of people round to try and sort out the account. But some firms did get themselves into an absolute muddle in the back office and as far as I can remember I don't think there was ever a question of that.  I mean at times they were very busy.  I mean if we were doing enormous, I don't 1950....

DB: Going back to those days we were doing something like 15,000 bargains a day.

RWS:  Exactly, it's a lot of bargains to be processed.

DB: We were working Saturdays and Sundays and Esmond Durlacher was very concerned and so was Sir Nigel Mordaunt were very concerned about the effect that it was having on the back office.  But certainly your question was, yes, there was a certain amount of glamour attached to the trading side and there wasn't bad feeling but we always used to feel that we didn't get the rewards until the very end when things changed considerably I have to say about the back office and got the rewards towards it. But you needed to be... you see the problem with it was, you're talking about an organization that was privately owned, with very, very forceful people.  Now you had to have certainly in my case and we'll go on to talk about Vic Monday and people like that.  You had to have people who were quite capable when they selected people for these certain areas you had to have somebody who could say, 'Please go away, you're talking rubbish,' and be able to talk to people, if I can say, 'Sorry he's right' because quite easily you could be overpowered by the personalities of these people and if you were at all, what shall I say, sensitive, let's put it that way, then you simply would not make it.  It was not the place for people of a sensitive nature.  I think that's true to say.

RWS: Absolutely.

DB:  And that was towards the end that was happily recognised and accepted by the fact that you had to be expert.  But I can talk perhaps of an horrendous character there who would try and literally use their power or their position to persuade you to do things that you really shouldn't have been doing.

BA: Could you give us a few examples?  You don't necessarily have to go into....

DB: Well certainly, it's not any secret; but I mean the fact was that the senior partners of the organisation at that time were very very conscious about the positions that we ran - in other words we were either a bull or a bear - we actually buy shares and hold onto them or we can sell shares that we haven't got.  Now each of the partners in charge of a particular pitch was given a position over which he could go a bull, and it maybe say #7540,000 worth of stock you could hold on your book over which you mustn't go over that limit.  And of course every morning my particular job was to go into the senior partner and say, 'Look, we a bull of so much stock on the food pitch, the bull of so much on...' And of course, if that particular partner in charge of the pitch has a reason to go a bigger bull than he should have done, because he thought perhaps they were going to go better, but he wasn't allowed to. It was not inconceivable that the partner would come over to the chap on the bull and bear and say, 'Look take a hundred thousand off of my book, and put it on the back book.'  In other words what you were doing was that you were taking off the book and hiding it.  And you had to turn round and be very forceful and say, 'I cannot do that.' And of course he would sometimes say, 'You can do it, because I'm telling you to do it.'  'I'm very sorry, I cannot do that.'  And after a while, of course, you get the respect of people for doing that. But at times if you were new to it, that could be, it wasn't unheard of, Robert was it?

RWS: Absolutely, no, no, no, no.

DB: It wasn't illegal in any sense....

RWS: Oh no, no, no.  You weren't breaking any rules, it was only a firm's rule.

DB: It was the firm's rule.  In fact the senior partner, God bless him, probably didn't know what the position of the firm was at any one time because it was, I wouldn't say they were maverick in the way they did it but it was the entrepreneurial approach which you hear was absolutely vital. And if you tried to take that entrepreneurial approach away from people then you simply destroyed them and one of the things that's happening in the City now is where that has gone to a large extent.  

RWS: It's what I was saying to you earlier about individuals being some bullish, some bearish, and the personality of it, as you say, you can't express a personality over a television screen.  

DB: We had Basil Sharp who was a bear tack dealer - he was always a bear, never would go a bull, because obviously if you're a bull you've got to finance that.  But being, of course, a bear is an unlimited liability, so with him we had other problems.  Let's say not problems but you know, interesting.  If I can come back, can I make a remark on what Robert was saying when he was talking about put-throughs.  I think it's important to realise that if you now, as an individual want to buy or sell shares you don't have to go through the Stock Exchange, you know that you can get yourself a transfer form and do it.  And what happened was at the time of put-through business, if you were the senior partner - a director or the Finance Director of a big institution - a big pension fund or a big insurance company - and you had a line of shares to sell maybe, a huge amount of shares let's say 2 or 3 million and you knew somebody the other way that wanted to buy them, there was absolutely no reason why you should go through the Stock Exchange and give a commission.  And in fact there was a thing set up, Robert if you remember, at the time called Ariel.  We perceived that as being a great threat to the Stock Exchange because they said, 'Why on earth should we go through the Stock Exchange and give them a turn, put-through the business, no risk to the market makers or the broker and give them his commission, why should we do that?'  But of course as Robert was saying the thing broke down right at the very beginning was because they could never ever agree on a price.  And they had to come into the market to get the price they could deal.  But then of course it broke down again because you'd got 3 million or 50 million or whatever to sell, the person the other way, only had 40 million. And I can remember now Robert was saying, we didn't see the business and what they do they come into the Stock Exchange to do the residue of the business.  And they had a fresh injection of capital very quickly and it just couldn't work.

RWS: Fortunately, it didn't get off the ground.  The other thing I suppose as well, was that as far as the Inland Revenue were concerned and if it was capital gains, if you had a contract note from the Stock Exchange from a member firm, the Revenue wouldn't argue with that because they knew that it had been exposed to that jobber by way of the put-through.  So that was one of the reasons we were entitled to our half of their one commission on it.  So that gave it an air of respectability.  But unfortunately, I suppose what one of the contributory factors of the ultimate demise of the system was the fixed commission, because as inflation took the prices of shares higher, the brokers didn't.  They stuck by fixed commissions and particularly in the gilt market they had the opportunity to reduce them and they didn't and I think that caused a certain amount of unhappiness, because for doing very little when they knew perfectly well who the buyer was, what didn't take much research or anything like that they picked up very substantial sums of commission, and I think that was destructive, unfortunately.   

BA: Besides put-throughs, minimum spreads is another thing that has been referred to when people talk about the Stock Exchange during the 1970s.  And in fact your last senior partner told me that you'd rather go off and be a pig farmer if you weren't allowed to have a minimum spread agreement with other jobbers.  

RWS: Well, I was very much involved in that and we certainly had them in the food market where I was because we felt that as long as they were a responsible spread - in other words - it depended upon the marketability of stock for a start.  In, I think it was about 1977, we set up an inquiry [by] Deloittes. The various half dozen firms sent off figures of leading stocks such as, I remember,  Fison, ICI, Metal Box independently, because we reckoned we were losing money in these stocks, and we discovered yes, that quite a few of us were all losing money.  Now if you are losing money in a stock there were mostly likely two or three reasons.  One of them is there were possibly too many jobbers - there just wasn't room, there wasn't enough turnover to round.  Another possibility was that you were making too close a price - in other words you weren't making enough out of it for a stock when it moved.  It's easy if you make your penny ha'penny in the pound, but you don't always do that and if your loss making continued, what's the point in it?  You're better off not being here.  And one of the ways you could counter this was by having a slightly wider price, and particularly, we would do this without an agreement.  Initially if after say results and at times you hadn't a clue what to make it was a complete guess.  So supposing a share had been 99 to 101 prior to the results and the results are far worse than anybody was expecting, well you wouldn't automatically make 90 to 3 you might make 85 90 - a wider price - and then you would buy them at 85 and you'd make 80 to 5, you were guessing, you're shooting in the dark. So that was one of the mechanisms of self-defence was the width of your spread.  Well, we felt that particularly in that food market where they certainly did exist that it wasn't the width of price that mattered to the broker, he wanted to be able to deal and so did his client.  And if you made a very close price, again part of our mechanism was, I mean you would make a close or a comparatively close price, in say 100,000 shares and then he wanted a price in a quarter of a million or half a million and then you'd say, 'Right, they're 99 to 101 in 100,000 and then 98 to 102 in quarter of a million', if not half a million or maybe even 97 to 103 in half a million.  And we felt that what they wanted was that - 100,000 was quite a reasonable number of shares in any case, rather than say they're 99 1/2 to 100 1/2 in 20,000 or 25,000 or 10 - he would rather know that he can deal, alright without even referring he knows he can deal in 100,000.  So we felt that there was an advantage to the client - and indeed the broker, and of course there was to us because otherwise we wouldn't have done it but that was what lay behind it and we had very few complaints about it.  Occasionally somebody would say, 'Oh well,' they would challenge us..., we'd say, 'No, I'm terribly sorry, I'm not going to.  I've got a living to make and that's it.'  And if it was a question of a put through well then they would do it inside in any case.  But that was the justification and I would defend that to my dying day.

DB: I think, who was the senior partner that you used?

RWS: Was it John Robertson?

DB: Well, I mean it's quite a fact that we had a survey done by McLintocks, business consultants, and I think Dick Wilkins was actually senior partners, certainly it was Dick Wilkins. And at the end of the survey that McLintocks did on Wedd Durlacher Mordaunt the results of the survey said that what we should have done as a firm was to stop trading and use the capital - just put the capital on deposit at a bank and we would make more money without any risk.  And I think Dick Wilkins at the time stood up at the firm's Annual Dinner and said, it was something like .0001 of 1 per cent return on the capital invested.  Any other business would not have taken the risk to the investment because it was so risky and we would do better to take our money out and just put it on deposit and all sit back and have no worry about it, and that was the findings of Thomas McLintock.  

RWS: It was McKinsey wasn't it?

DB: McKinsey, yes, business consultants.

RWS: McLintocks are the lawyers or accountants.

DB: That was what they came down and said, 'You are absolutely mad to do what you do.  The risk is far too great for the return you can expect.'  

RWS: I mean at that stage, I think we were in the Guinness Book of Records. Mind you it was the gilt turn to be honest.  

DB: One and half billion pounds in one day, the turnover.

RWS: But that was gilt which is not really comparable with the equities, is it?

BA: Now at the time of Big Bang or certainly at the time when you sold the firm out to Barclays, you were still a private partnership.

RWS:  We were a partnership or a company, we used to change every other week but we were a partnership....

DB: I think it was a partnership at that time...

RWS: But we used to change a lot.

BA: I suppose the distinction I was trying to draw was that a firm like Smiths or Akroyds had become listed.

DB: They were quoted.

BA: And this was a route that Wedd hadn't chosen.  Was it something that had ever been contemplated?

RWS: You mean going public?

BA: Going public.

RWS: Yes, it had.  But one felt, I mean I think Akroyd went public in about 1972, if I remember rightly, and I think Smiths was most likely a bit later.  Yes, of course we contemplated it, but I think taking every aspect of it we felt that it was better to remain with control ourselves.  Yes, that was the reason.  And I would also add that at the time when it was becoming possible that the jobbing system was coming to an end - in other words we were talking about dual capacity, which is what you now have - we were one of the last firms, Akroyd I remember said, 'Well look this is inevitable.'  And they had lined up their future partners long before we.  We tried to hold out to try and preserve the system as it was, as we felt there was merit in it and we didn't particularly want dual capacity. But once they had gone that way and Smiths was saying the same thing, well there was no point in our burying our heads in the sand so we had to get on and do something about it.  But our initial reaction was to try and preserve the status quo.  Now the pressure came because the brokers felt with negotiated commissions their income was going to be severely at risk and therefore they wanted part of our so-called turn.  And therefore they wanted to merge with us - that was their I think it was called the link argument wasn't it or something.  And then they had their way.  And I suppose on balance, if you think that supposing you wanted to transfer some stock to Don, what actually happened was - you knew he was the buyer, as I mentioned.  Well there was three bites taken out of that, or three charges, if you like, made for taking that piece of stock.  You would instruct your broker, he would charge a commission, he would come to me, I would hopefully take something out of it.  I would pass the stock onto his broker, who would also charge a commission.  And of course I suppose there were four because the government was going to take a stamp.  But anyhow, you could say that it was an expensive way of doing it because now, let's face it, I mean there's only going to be one turn, effectively, taken out of it.  And I suppose that was the reason.  But if the brokers hadn't have been so greedy in the old days and had reduced their commissions earlier, maybe the pressure wouldn't have been there.  But anyhow that's water under the bridge.

BA: What was the feeling, in Wedd Durlacher, when the Office of Fair Trading took up the Stock Exchange rule book?  Did you regard that as an alarming development, did you fear that it would lead to big changes?

RWS: Yes, very much so.  I mean we resented it.  And I actually was supposed to be one of the witnesses involved in it and I had a ghost writer, fortunately, because jobbers, I mean I could hardly put two words together on paper and as I say I would have been a broker if I enjoyed doing that in any case.  And it was John Aarons, you know in the Ivory Tower, and he was my ghost writer and I got to know him quite well and we would write sort of ten pages at a time of what I was supposed to sort of say in defence of the system.  And then I would go along and say, 'Yes, well that's alright John, but that's absolute balls,' and I'd rewrite it for him.  No, one thought, 'Hell, they're supposed to be a Conservative government, they're supposed to be on our side, they're not supposed to be tearing us apart.' So one did resent it - there's no doubt about it.

DB: It was originated by the Wilsonian government which shows you how...

RWS: Yes, I suppose it was, but we thought they would rescind the thing but they didn't.

DB: I mean, you're talking to Graham Ferguson, he will be able to fill in the noughts and crosses more on that, but yes, certainly at the time we felt, but if you look at what's happening now, what happened to us years ago, they're going to have again, they're certainly going to have a go at the estate agents now, they've had a go at the Law Society and they've had a go at the Insurance Companies.  It's one of those things.  It always seems that I always used to think that we were one of the ones that were picked out and now of course every time you read or watch a television programme. I was watching a television programme yesterday I just saw in the evening, I don't know if you saw about the insider trading side where they're bringing it all up again.  But going back to what Robert was saying,  what happened years ago and I think probably Ferguson will tell you, Graham Ferguson will tell you when he comes here  - what we saw and perceived to be a threat to us was the fact that this thing called arbitrage, where I can go back in to the early sixties, where brokers were taking lines of shares on their book to hold until Hiram J. Glockenheimer, who were in New York, could be contacted. And then ‘we've got this line of stock, do you want it or don't you?’  So in fact what we saw as the jobbing system was the fact that they were actually becoming jobbers because they were holding positions.  And of course there was a lot of bad feeling if you remember at the time Robert, ‘well, blow that, if you're going to do that we'll bloody well go and get ourselves clients because we're acting as market makers.’

RWS: That’s totally true.

DB:  I think Ferguson will tell you. Right from the very beginning, he perceived that the reason that the gradual deregulation of the Stock Exchange goes right back to those early days of arbitrage trade, trade which has now taken on a new concept as you know in world-wide terms.  But it was that fact that the brokers were taking positions, holding them...

RWS: Strictly against the rules.

DB: Yes.

RWS:  And of course, to a minor extent there were people who were, we used to call them shunters.  But when you had a Floor in Glasgow, Bristol, Birmingham, these shunters used to... Supposing a stock was in those days 19s 9d to 20s and supposing they were 19s and 4 1/2d 7 1/2d in Birmingham, well the shunter would buy in Birmingham 7 1/2 and sell it on to us at 9d and that was their function.  But of course it was only a reflection of the inefficiency of the markets around, and then of course eventually, once we had telephones in the Stock Exchange, we thought, 'This is absolute rubbish,' so we got onto them direct.

Tape 2, side 2

RWS: The country jobbers, so that was the end of the shunters, effectively.

BA: Was that within the Stock Exchange rules for you to deal outside with the country, with the provincial Stock Exchanges?

RWS: Er, yes.  Yes, they could definitely.  Once we had the telephones, country brokers would come on to us and deal direct, that was allowed.  I always used to have  my suspicions over the shunters - I think they kept two sets of books, although they always used to deny it, because, let's face it supposing that stock was offered in Birmingham at 7 1/2 when we were bidding 9.  Well supposing they'd taken it in Birmingham and by the time they got to our pitch we were only bidding 7 1/2 and they looked as though they were going easier, well the shunter would say, 'Alright I'll sell them to you at 7 1/2,' well he'd bought them at 7 1/2 and he was supposed to be charging a commission, so he was on a loss situation when he wasn't allowed to be.  I mean, he was acting as a principal which he wasn't allowed to do.  So I'm always convinced, although I never saw them, that he had two sets of books: one to show the Stock Exchange and one which was the actual prices at which he dealt, but they always denied it.

BA: Now, about how big, Don, was the back office around the time of Big Bang?

DB: Um, good grief around the time of Big Bang.

BA: Approximately, early '80s I mean.

DB: Early '80s, let me think.  We were about 300 and it was about half and half.  I would think something like 150 people.

RWS: It must have been, yes.

DB: And we had over 300 people in the firm and we used to reckon it was about half and half.

BA: And how would you contrast the back office in the 1980s with the early '60s when you'd joined.  Was it very different, were you using different types of equipment?

DB: Yes.

BA: Was it more sophisticated?

DB: Wedd Durlacher, had started to computerise actually in 1961 when I joined the firm. We'd gone onto computerised systems because we realised that the way the back office was working was grossly, not inefficient, but within the system it was very hard to maintain good delivery.  Let's face it, we're talking about settlement now, as opposed to the side that Robert was concerned with.  Settlement is all important, it's become more and more important now, simply if people didn't get delivery of the Stock then they wouldn't pay for it and your business would go broke very quickly.  And it was certainly a cumbersome situation.  One of the greatest developments was the talisman settlement system within the Stock Exchange, which meant that that was handled by the Stock Exchange itself, and it apportioned the stock out so that people got delivery and they could pay for it quicker.  Of course since then, things have moved on a pace and there's now going to be a central depository where all the share certificates are going to be held, very similar to in New York, which will increase and will make the situation much better.  That is now, as you've heard called 'Taurus'.  They're having problems within the Stock Exchange with Taurus but the thoughts are in the business that we are obviously, in the City of London, now very keen that, come 1992, we are seen as the centre of the business empire, if you like, throughout the world.  Obviously Frankfurt have got different ideas, Paris, and of course Rome have got different ideas about that.  I'm very optimistic about that side, but there's no doubt about it one of the things that will harm us is that fact that we have quite an archaic settlement system at the moment.  We've got to do something about that and that's what their working [on] - they're pulling out all the stops now and if you ever hear anything from the Stock Exchange they are working very hard on the settlement side of the business.  It's no good you selling shares if you don't get payment for them, it's absolutely ridiculous.

BA:  Was there a particular partner in Wedd who was responsible for the oversight of the administration.  

DB: Yes, well there was a chap called Les Turtle who there again was a very forceful personality, a very, very intelligent man, but was blunt to the point of you know, whatever you say.  As I said, it was not a business for anybody who was of a timid nature and you had to be very forceful with a lot of people to get your point made.  Having said that, one of the greatest things I think you can say about the Stock Exchange as it was then, and I always say to when I talk to youngsters coming, if you at the end of your career whatever you're going to do, can say with your hand on your heart, 'I never ever once looked at the clock and thought to myself, "Oh, my goodness, there's another two hours to go before I can go home".'  And the only reason you ever looked the clock was to think to yourself, 'Crying out loud, I've got to get a move on.'  And if you can say that at the end of the day, you've been forceful - that was the way the business was and I can say that with my hand on my heart, I never ever looked at the clock and thought, 'Oh, my goodness, another two hours to go.'  Having said that, the upside was that you had a lot of very, very forthright people.  We had to be forthright, because if you've got 50 million pounds worth of stock to pay in before 3 o'clock then you hadn't got time for niceties, that was the way it was.  

RWS: The market side was very similar actually, I mean you used to look forward to Monday morning, and especially in those days, they used to have a lot of newspaper tips, and if one of the stocks that you dealt in was tipped well you knew you were going to be busy - it was great - and even if you were short of stock and it was tipped you reckoned on the whole well you would get it back because as I explained before. Oh it fun.  And you looked forward to it.  Ok you got tired at the end of the week if you'd been very busy and you undoubtedly were and you'd think, oh, well we can collapse now, have a few beers and go home, no it was fun.  And I think that's rather sad.  I think you've got to have fun in life and I just question whether they have quite as much fun as we used to have.  And people talk about I always used to think the Stock Exchange was a place where grown men used to sort of behave like children, throw paper balls around and this and that, but I always think that that was part of a sort of safety mechanism for people because they could be under very great pressure at times. And if you've got a book which is costing you a lot of money, it gets you in the guts - it can do - and that's why some people there are quite a few people who I can think are broking now, who have been with our firm and they just weren't cut out, it wasn't in their personality to be jobbers.  It takes a, I think you have to have a slightly sort of cavalier attitude to life to do it, but not let it get at you.  You're superhuman if at some stage or other it doesn't get at you and you think, 'Well can I ever do anything right, am I ever going to make a profit again?'  But you've got to ride that and one of the ways you rode it was because most likely your opposition was in a similar state.  It was very unlikely that you would have a different book from him.  If it had really gone badly you would all have been caught, and so you could check it out with him and talk to them and the brokers understood this.  So there was a very great sort of camaraderie if you like and friendship between the dealers, brokers and jobbers, dealers.

BA: What were the other qualities required to be a jobber? To be a successful jobber?

RWS: Good heavens, I don't know.  You'd better answer that Don.

DB: Yes, difficult.  I mean I was actually responsible towards the end of my career in Wedd for the recruiting of market makers.  That's the question I'm always asked, 'How on earth did you ever recruit a market maker?' I have to say I had quite a bit of success at that, and Graham Ferguson also whose coming in will tell you, he was responsible as well.  The simple answer is you could never ever tell whether anybody was going to be good at market making until you actually trained them.  We in Wedd had a two-year training period for these people. Before they were allowed to trade they had to be in the office two years and we ran a system where I used to put them round the back office, because I always felt that it was important, or it was felt that way, let me put it that way, that these people knew how to settle a business, if they knew something had happened that they were going to have to settle that business.  It was impossible for them to know.  But to become a market maker, let me just give you a for instance.  It would probably not be right to say that a graduate would make a good market maker...

RWS: Absolutely.

DB:... because market making is, to put it in vulgar terms, was a gut reaction to a situation.

RWS: Seat of the pants.

DB: Yes, if you were analytical, I mean that's not being derogatory towards market makers and Robert would agree, but if you were at all analytical: ‘What are they now?’ ‘They're 1.50 1.52.’ 'I sell you ten thousand.’  ‘What are they now?’, well if I make, do that then they'll, no....' - you're lost, you've had it.  I mean we had partners who would go round the floor and say, 'What's your position in such and such a thing, cut it, get rid of it.'  And you had to do that because the risk was considered then too great and you had to be... so it's very difficult. Having said that one of our best dealers was a chap, Woods, who came who was brilliant. He was a graduate. He was a brilliant dealer. And [with] some of the people I was constantly proved wrong, where [with] people I would think ‘well...?’ Certainly if I interviewed you in the first instance and you were a bit of a nervous disposition, I always used to say - Robert said certainly you had to be cavalier - but I always used to say to people, not temporary insanity, but ‘does this slight eccentricity run in your family?’  Because I used to think that anybody that chose that as a career had to be slightly eccentric, not in a nasty way, but you had to have an unorthodox view of what life was about.  And I think that is certainly true from the hours and the pressure that you put yourself under.  I mean, why would people put themselves - and queue up - to put themselves under this sort of pressure?

RWS: I think, certainly in the old market there was no doubt about it, you needed to be some sort of personality and you needed to be able to get on with people.  That was most important because otherwise if you were just a shrew or a mouse, they'd either run roughshod over you and it would get to you. You had to be a bit of an extrovert I think to be a jobber, I'm sure you did.  

BA: Did you ever get someone sent onto your pitch as a blue button who you thought was quite a dud and you couldn't actually work out why on earth they had sent you this person?

RWS: Oh, yes, yes, you did.  And we had quite a heavy turnover and of course, it was in their interest. I was with one yesterday, actually who used to be a blue button with us and he's done very well since - he went broking.  But he just wasn't cut out for it.  And I can think of many partners' sons who were just not cut out for it.  So they came into the firm and it was very difficult and you had to say to the father perhaps, 'Terribly sorry, I just don't think they're going to make it.'  But there's no point in going on and doing something if you're not good at it - you won't enjoy it and what's the point, you're going to be good at something else.  But one had plenty.

BA: Don, when did a firm like Wedd have to start thinking seriously about recruitment?

DB: When did they think seriously about it?

BA: Yes, for example, did they have a recruitment programme when you first joined?

DB: Well, they obviously had a recruitment programme because they employed people, but no, I think it was, actually I don't take credit, you've got some gentlemen coming in and some gentlemen here that probably take credit for this, but we were actually the first organisation in the Stock Exchange, and I was part and parcel of that which I took on from a chap called Paul Daniel, who actually felt it necessary to have a training programme. And we set up a very, very comprehensive training programme which is what I have actually taken into BZW if I can put it that way.  And we thought that that was necessary and we thought, I going ten years before Big Bang, '73, where we thought it was necessary to talk to people from outside whereas a lot of the firms said, 'Why do you want talk, what's in it for us.'  That wasn't the case at Wedd.  Ten years ago I was actually receiving people into Wedd from other businesses and it's funny how it comes back, I see those people again now, and they phone me now in BZW - it's quite extraordinary. Gerald Dennis, will probably tell you when he comes in the effect that this has had, where you take time to talk to the press, and it's a follow-on from what we did at Wedd where we would take time to talk to the press or take time to talk to people from institutions or from universities.  That wasn't something that we suddenly thought we'd better do this, that was done well before there was any thought of deregulation.  A recruiting policy, well we used to at that time, you've got to bear in mind that we were extremely busy and you tended to take people, if you could get them if they had any sort of experience at all and it happened again of course for Big Bang where there was such a shortage of very good staff that you actually took people if they'd got some experience.  But our recruiting programme and the training programme, took effect certainly a good ten years prior to Big Bang, where we thought there was a necessity.  We never knew that things were going to happen the way they did.  We were the only firm in the Stock Exchange... In fact we were responsible for, believe it or not, we used to have a very nice chore which I used to do where we used to have the Stock Exchange gallery guides come round to Wedd for three days and I used to sit and talk to them.

RWS: Yes, that's right yes they did, didn't they.

DB: And so when they were asked the question, 'What is happening on the trading Floor?' We used to get them to go down to Robert and Stanley just to get the feel of it, they just had a special class.  And we used to do that, we were the only firm that ever did.  Most of the gallery guides were trained by Wedd Durlacher, not the Stock Exchange.  It was the foresight there.

BA: Do you think that distinguished Wedd Durlacher from the other jobbing firms on the Stock Exchange? I suppose another way of putting that question is, if someone had asked you in 1980/1 what you thought was distinctive about Wedd Durlacher what would you have said, Robert?

RWS: I think we had a - and this was inculcated, I think right from the start by Esmond Durlacher - I think we had a great sense of responsiblity to the industry, if that's the right word.  I think we felt that we did owe it a duty, that we didn't do badly out of it and therefore it was up to us to try and put something back into it.  I think that would sum it up as far as I'm concerned.  We may not have been - we were pretty commercial - but there were some firms who I mean I have a very healthy regard for Tony Lewis and Smith Brothers as they were then, they were a very healthy competition to us and at times far too healthy.  But I think they did look after themselves quite a lot.  

BA: How would you answer that question, Don?

DB: Well I think that earlier on we talked about, McLintock was it?

RWS: McKinsey.

DB: McKinsey, sorry I keep getting it wrong.  I can answer that question, ‘why didn't we take their advice and pack up trading?’  And I think it goes back much more before that I mean it sounds terrible to say it now and people will say in years to come, when we're perhaps no longer here, somebody, 'I don't believe that, that's impossible.'  But I can remember Sir Nigel Mordaunt, going back to the times before Wedd Durlacher, Sir Nigel Mordaunt, at a meeting saying when we were thinking of doing certain things that are done now off-hand in industry, where great sides of industry are made redundant and laid bare, I can remember Sir Nigel Mordaunt saying, 'We have to remember we've got 300 staff here. That's not 300 people that are responsible to us - that's 1200 or 1500 people, because we're talking about the families.  And when you think of that, and because that will effect them, we're not going to do it.  And we've run situations, loss leavers if you like when they should really, I'm not saying they were bad businessmen, but I think there was definitely from my point of view going back to those days there was a definite feeling of that sort of thing.  Plus the fact that the firm had grown up and it was like a family.  And you didn't do that sort of thing.  Now of course that's changed, quite rightly probably, we've got to be professional to counteract the challenge that we're getting from abroad and that sort of thing, probably nowadays would not be good enough, but certainly I can remember that going back to those days.  There was that feeling that if we had left the Stock Exchange - and I can say that - if we at that day Durlacher and Wedd had pulled out of the Stock Exchange, it would have been disastrous for the Stock Exchange and for the financial insitutions in the City of London.  And I think as Robert said earlier on, when you think of the Conservative government at that time should have been on our side, and I think that really when Parkinson came and he had that fully in mind.

BA: I've been told, rightly or wrongly, that in the immediate last years of single capacity - the last years of the physical market place - a lot of the old standards seemed to go.  And a lot of firms tried to position themselves competitively for the new situation, does that chime with your own experience?

RWS: Yes, I think it did because there were the conventions, you know, that you didn't take up stocks.  It was normally assumed and worked out, part of what I was saying before, that if you had three good jobbers in a market, well that was enough to make an efficient market, but towards the end before Big Bang you had new firms taking up or some of the old firms taking up - for instance French and Smith took up breweries - well they were going to be dual capacity so it was no use them saying they didn't deal in breweries - somebody rang up and said they wanted to deal, I mean they'd got to be dealing in virtually everything, and so all that convention went.  Yes, I think the gloves came off rather before Big Bang and those niceties and they did disappear.

BA: Were you continuing as a jobber on the Floor of the Stock Exchange right up to 1986?

RWS: No, no.  Dick and I came off, I can't remember when it was, '84...

DB: About then.

RWS: We were overseeing in any case,  I suppose in 83/4 something like that, we were oversseing the industrial equity market - we weren't actually running books but we were seeing the figures that Don was producing every morning and watching them very closely. And we weren't actually running a book, unlike the old senior partners were in those days, who, you know actually jobbed from the front so to speak.  

DB: You were responsible for a collection of pitches weren't you.  Not a market official but we had a dealing executive who was responsible then for keeping an eye on what the lads were....

RWS: All the group of partners who were running were in charge of that...

DB: With the power to say, 'I think that bull position is too large, cut it.' And they had to do it there and then and cool the price down until they cut it because the indebtedness was too great.

BA: Would you say the actual art of jobbing - the mechanics of standing on the Floor of the House - in 1984 was different to what it had been in the late 1950s when you had first worked as a dealer?

RWS: Funny enough, no, I don't think it had changed that amount.  I mean you stood, you didn't sit.  I liked to talk eyeball to eyeball to somebody so they were standing up.  You had a seat, but you normally stood up.  And they came to you and they asked the price. And of course one of the advantages of the jobbing system was from our point of view you had a board, rather like a bookies board with all your stocks on it and it didn't have the two-way price, it just had a middle price - £1 Sainsbury whatever they were, 250. And it was an indication but you had the flexibility, supposing you were short of stock and there was a broker and you suddenly saw him coming and you had been calling them 47 52 or 48 52 and you thought, 'Oh no, I'm down a quarter of a million of those, he's always a buyer, this chap. I think we might make him 50 to 4,' and say you could even make 52 6 if you wanted to.  He would know most likely that you were shooting him, which is what it was called and occasionally there was a rather crude expression that said that 'He who shoots gets shat upon.'  But what actually would happen was you would do that and you be ready when he said I'll sell you some.  So you called the price up and .... 

DB: That was the safeguard.

RWS: But that was part of the fun of it.  Now you see, the market maker has to be up there, his price is firm, everybody - his rivals and he can see it. And he's up there at 48 52 but he can't change it - the only way he can change it is if he sees his rivals changing it and he hopes the phone hasn't gone by the time he's changed it.  We could do that just by seeing somebody.  And of course the other pressure which I think it puts on the market makers these days, is that these prices have got to be up there live and they may not of dealt for three or four hours, may a couple of days, but the price is live.  Whereas we used to occasionally, if it was an unmarketable stock, you'd sort of pick up the book and have a look at it and normally you'd make the price straight out but if you hadn't dealt in it and they were very unmarketable they did, they picked up the book and they looked at their limits and then made a price, now they've got to be up there.  If you were dealing in 200 stocks, keeping 200 stocks up there live where you could be hit at any second puts a hell of a strain on people, I think.

BA: Don, from your perspective in the back office over more than twenty years, would you say that jobbing had changed from the point of view of the administration, from the point of stats and so on?

DB: Had it changed?  Well, I suppose at the time of Big Bang things obviously changed.  I'm one of those that I think the old days were the good old days, but I'm not one of those that would knock the system that we have now.  I think the system that we've got now is going to stand us in very good stead for 1992. No, the basic principle, I'm one of those although actually some of the market makers disagree with me, but I think, not just from back office point of view settlement side - we've discussed the changes that have got to come there - but I believe it's absolutely necessary within the organisation now, and I'm open to contradiction here, that people when they put the prices on the CX screen understand how those prices get on there, because we are going to quickly come to a situation where we have market makers now in our organisation that have never stood on the floor of the Stock Exchange.  I think that will be a great loss and one of the things I do and I'm very particular to do if people come in and I talk to people is to explain to them how prices used to be made because I don't think thatyou can show them a CX screen and get them to understand what they're seeing on that screen, unless you realise what goes in to putting those prices on the screen.  Now there are people from Wedd who disagree with me in that, but I believe that's absolutely necessary.  It's not changed all that much, the market making of course you're not doing face to face, whereas as Robert's said you could see somebody coming and now you pick the phone up.  As far as the back office is concerned, well the running of the office in BZW is not so personal as it was....

RWS: But nothing is is it, sadly.  That was the fun of it the market place.  The market creates an atmosphere, it's like going to an auction and people do silly things at auctions, they pay more than they thought they were going to and there's an atmosphere and you could always tell how much business there was by walking in there, by the sound the level of noise, of people talking and dealing.  You could think the place is dead there's nothing going on.  You looked at the boards and they were covered in red or blue or whatever, so you could gauge if there was activity there - people rushing in and out.  But it was fun.

BA: Well, I think we'll finish on that reasonably bright note, thank you very much.