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

Interview No. 23:  David Parry

Interviewer: Bernard Attard

Institute of Historical Research: 15th May 1990.

Tape 1, side 1

BA:  Could you tell me Mr. Parry, where and when you were born.

DP:  I was born in Shepperton, Middlesex, 7th February, 1932.

BA:  And who were your parents?

DP:  William Parry and Hannah Parry, both of whom, as indeed I am, are of Welsh extraction.  My father worked in the Stock Exchange.  I'm not sure exactly his starting date, but I would guess it to have been before the First World War anyway, somewhere about 1910.

BA: What did he do?

DP:  He was a broker.  And he worked initially for a firm called Fielding, Son & McLeod. He left them to work for Kitcat & Aitken, the name of which is still just about alive in, I think, 1921, and he worked there for the rest of his working life.

BA:  Did your family have any other connections in the City?

DP:  No, none.

BA:  What had your grandparents done?

DP:  My father's father did various jobs about the place in and around London. He had moved - I'm not certain at what stage in his life he moved from Wales to London, I think not necessarily very successfully.  My mother's father was a musician and lived in Wales, apart from a brief spell in America, all his working life.

BA:  Do you have any brothers or sisters?

DP:  No.

BA:  And did you form much impression of what your father did when you were a boy?   Did his work ever impinge much on the family life?

DP:  No, I wouldn't say that it did.  He very much enjoyed his work, and was very keen on the Stock Exchange and so he always expressed enthusiasm for the place and was very keen that I went to do it, which I didn't necessarily want to do in the latter part of my school career.  But anyway, in the end I did.

BA:  What was the attitude to money in the family?  Was it fairly relaxed or were you fairly careful with money? Or were you aware of an attitude to money at all?

DP:  It was fairly relaxed, but not so relaxed that there was an awful lot of it about all the time. I think that by and large the family was pretty careful with it, but it wasn't on the breadline or anything like that. One has to remember that in my earlier years was the tail end of the Depression and anybody who had a job and had some kind of reasonable income rated themselves pretty well off; and then, of course, it was the run up to the Second World War, so that there were, if you like, distortions to what one might like to think of as a normal way of life.

BA:  Would you say your parents had an influence on you in any particular way?

DP:  No more than one would expect one's parents to have an influence on me.

BA:  Where did they send you to school?

DP:  I went to a couple of local schools at the preparatory stage, and then after a certain amount of agonising over the War situation and whether I should have been dispatched to America, where there were some cousins, Parry cousins, one of whom was in stockbroking, very successfully, in New York.  But this didn't materialise.  The other thought, because living in the London area was fairly unpleasant at times, in the early forties, the other thought was to go and live in Wales with relatives there and be educated there.  But I finished up in Kings College School, Wimbledon, which was about the worst place you could possible go from the War point of view because it was bombed and generally interfered with right through.  My first term there was delayed a week because of bomb damage.  But once we got going it was alright.

BA:  As you came towards the end of your school education, did you have any plans of what you'd like to do as a career?

DP:  I was quite keen on forestry, and I think I would have pursued that, given the choice.  But there were various problems at that time.  Perhaps the greatest of which, as far as doing anything that involved University was concerned, was that people coming out of the services - and we're now talking about 1947, 1948 - had priority, not unreasonably, on University places, and it meant that it was really quite difficult to find your way to University. You had to work for it.  But I was sixteen, therefore that would be the O-Level stage in current educational parlance (even if that's not already out of date) my father and I between us had a difference of opinion with the headmaster, so I departed rather earlier than I might have done.  And that was what directed me away from University and forestry and into the Stock Exchange.  I obviously had some sort of entree there, and that was how I went into the Stock Exchange, and I've been there ever since, more or less.

BA:  Were you able to form much impression at the time about how your father's stockbroking was going in the conditions immediately after the War.  What I'm getting at is, was it a difficult time for the Stock Exchange or was business picking up...?

DP:  It was a difficult time for the Stock Exchange.  Business was starting to pick up. I think the only indication I ever got on that was that he used to grumble bitterly about the amount of income tax that he was paying, so I can only assume things weren't too bad.  There never seemed to be any serious money problems at all, so I think it was all going quite well.  And he had carved for himself quite a good business.  He was never a partner in Kitcat & Aitken.  He had a lot of clients of his own, particularly amongst the country brokers.  I don't know if you know the set up, the way the country brokers operated at that time?

BA:  Could you explain?

DP:  There were other exchanges than the London one; Liverpool, Manchester, Birmingham, Edinburgh, I think, had a stock exchange, and there would be markets in those exchanges, and there were jobbers and brokers just as there were in London.  But the main market was in London, and these people who were members of the provincial exchanges were not members of London and therefore had to deal into it through brokers.  There was a special relationship with them, obviously.  They were regarded as being fellow stockbrokers, but not fellow members of the London Stock Exchange.  And he did quite a lot of business.  He had a number of these people, and used to take a trip round once a year and go and see them all and so on.  So that that was perhaps rather better than simply having a few private clients of your own, who might not deal for months.   These people were doing some sort of business through him into the London market all the time.  So I think that probably was his strength.

BA:  What was the nature of his relationship with the firm?  Was he a half-commission man?

DP:  He was a half-commission man, yes.  But I think he was more than a half-commission man.  He was paid by the firm.  He used to do a great deal of the firm's dealing as well as dealing for his own people.  So that he was not just the half-commission man.  He was that plus being employed by the firm.

BA:  So you left school now in about 1948, aged sixteen, and you decided that you couldn't pursue your interest in forestry, so you were going to the Stock Exchange?

DP:  Well, there was another hurdle to be crossed at that time, which was National Service.  I knew that I had to go and do that, which at that time was eighteen months, and the trip to the Stock Exchange in 1948 was therefore only a fairly short one.  And I regarded it (a) as a way of earning money and (b) as finding out what the Stock Exchange was all about and whether I liked it or not.  And I worked for a jobber then, a firm called Wedd & Owen.  My father was friendly with the partners of that firm, particularly the senior partner with whom he had worked at some stage, if I remember correctly.  So I went and did all sorts of office jobs, running over to the Bank of England and that kind of thing.  They were jobbers in the Gilt-edged market.   I found out roughly how it all worked and it was very enjoyable.  They were a very good crowd of people and it was great fun working there.  But I still felt that I was going to go off and do this National Service bit, and then see what I thought about it all, which I did.  I went into the Army and was commissioned, and went off, quite unexpectedly, due to a change in the posting arrangements, to the West Indies, where there was a British battalion based in Jamaica.  It had various bits and pieces, companies on detachment in islands and other places.  And as part of one of those, I went to Belize in Central America.  I enjoyed it there. I don't know if you've been there or know anything about it, but it is the original one-horse town.  But I quite fancied the idea of being a colonial developer at that stage.  I got my timing rather wrong, because while I was there they were shutting down the Colonial Development Corporation's activities there.  But there was great scope there, at least, I thought there was.  I don't know that I was right.  If there was, I don't think it's ever been developed to this day.  It's still a very backward sort of place.

However, I came back from there in 1952 and I really did then have to make up my mind what I was going to do.  The people I'd been working for, Wedd & Owen, were obliged to offer me a job, because that was part of the deal with the National Service.  If you went from a job to do it, they were obliged to offer you something.  Not that that obligation was necessary exactly.  They wanted some younger people to come into the firm, and so they offered me, I can't remember exactly what the terms of it were, but a pretty attractive job, such that it made the uncertainties of colonial development or - and I don't think I ever really considered this seriously, because I had, by this time, become pretty idle - the idea of getting back to studying, going to University at this stage, which I might have done, [was unattractive] so in I went to the Stock Exchange.

BA:  Were you conscious of making a deliberate decision between broking and jobbing?

DP:  Well, in a way, yes.  At this point there was some thought that perhaps I might go into Kitcat &  Aitken with my father, but I think we both came to the conclusion that there wasn't room for both of us inside a single firm.  I had enjoyed myself in this other place and the idea of jobbing quite appealed to me. So I went off there.

BA:  Did your father have any thoughts on whether one ought to be a jobber or a broker, or the difference between jobbers and brokers?

DP:  No it was all part of the Stock Exchange, of which he was particularly fond.  At that time, and for some time afterwards, it appeared necessary that you had to have both, and so I would have thought that in his eyes it didn't matter which you were as long as you were one.

BA:  Some people have said that there was a social distinction between jobbers and brokers and that brokers were regarded as being a bit more top drawer than jobbers.

DP:  You've obviously been talking to brokers!  Yes, there's a bit of that perhaps - certainly going back some time, I think if we go back, to the previous century to the early days of the Stock Exchange, the jobbers were regarded as pretty tough characters, and the smarter people, or people who thought of themselves as being the smarter people, were the brokers.  They were the people who had the smart clients. Jobbing perhaps was regarded slightly as the dirty work.  But I think that became less so as time went by.

BA:  Well, how would you describe Wedd & Owen at the time that you first joined? You might have some early memories when you were there for a short time before National Service.  Was it a fairly typical firm in the Gilt Market?  Was it a large firm?

DP:  No, it was a small firm, and we're talking now about 1948, 1950.  There were two or three large firms.  I'm just trying to think.  Yes, not more than two or three.  But at that time, and I forget the exact figure - I've got an old members' book in there, but I don't think it's old enough, really, to tell us - but I think there was something of the order of over 30 gilt jobbers, and it follows that most of them were small.  Wedd & Owen was not amongst the smallest, but it certainly was a small firm.  It existed largely to do the private client business, of which there was quite a lot, and you'd keep doing orders in a few thousand pounds, a lot of the time.  It wasn't until after I'd come back from the Army bit that it started to get more professional and you started to get institutional switch business and so on, and that a firm like Wedd & Owen did participate in it.  I think  there was also the beginnings of the bond washing business then, which at that stage was regarded as being perfectly respectable and it was my impression that it was condoned by the authorities because they needed to have a gilt-edged market and if that was the price they had to pay for a market that worked, then okay let it go on.  It then, latterly, got out of hand and there was massive manufacturing of dividends and that kind of thing which obviously they couldn't live with, and by that time didn't need to, because they'd got a fairly good market going anyway.  I think that was the scenario. So that they were probably into the bond washing scene at a time that it was regarded as respectable in a small way.  The unit size then - I suppose you'd be doing switches in hundred thousand pounds, that sort of size - would be regarded as quite reasonable.  I'm sure that amongst the bigger operators there was bigger business.  But I would have thought that 100,000 to 250,000 was really quite big then, and still a lot of the bread and butter business was in twos and threes and fives and was private clients.

BA:  Could you explain for the benefit of whoever might be listening to the tape what was involved in a switch?  What precisely was a switch?

DP:  Well you were selling one stock to buy another.  You either had anomoly switches which was where for one reason or another, due to market forces, one stock looked cheap and another looked dear, so you'd sell the dear and buy the cheap; or you might be making a policy switch, if you thought the market was going to go up you'd be going longer, if it was going to go down, you'd be going shorter.  Those are the basic thoughts about switches.

BA:  What were the first things that you were doing when you rejoined the firm in 1952?

DP:  The first thing I really did was to go and spend 6 months with a broking firm to find out what broking firms did.

BA:  Was that a decision of your employer?

DP:  Yes, it was.  It wasn't particularly successful in the sense that I went to a firm that was basically private client orientated and I didn't learn the sort of things that I might have learned if I'd gone to an institutional broker, a bigger broker, in the Gilt market.  However, it was an interesting insight into how brokers worked and how they got orders and what they did; and of course I was ranging all over the Stock Exchange for them, not just in the Gilt Market; so it provided a look at the other side.

BA:  So at that early stage you were going on to the floor of the House, you had been given a blue button..

DP:  Yes, I had a blue button and I ran around the place.

BA:  That happened day one when you rejoined the firm?

DP:  Not quite day one but pretty soon.  It was felt sensible and I'm sure it was, to not bother to get involved with anything else, go and do that and then come back and get on with the work, as it were.

BA:  So you did that for about six months.

DP:  Yes, I think it was six months.  I can't remember exactly when I started working.  I came out of the Army in June 1952, but I didn't start working until August or September or something like that.  So six months on from there.

BA:  So when you rejoined Wedd & Owen, you were still working as a blue button.

DP:  Yes, I don't think it would have been possible for me to have done otherwise, because one couldn't just become a member.  That's a sweeping statement.  I think in certain circumstances you could, but it was more expensive, and anyway it was obviously much better to allow somebody to serve their apprenticeship and that meant being a blue-button for a period of time and then you became an authorised clerk, which enabled you to deal but without the privileges of a member.

BA:  What were the kind of things one did as a blue button for a Gilt firm?  Were you standing with the same partner?

DP:  Not with the same, but with the partners.  There were only four partners in Wedd & Owen.  It was really quite a small operation, so you stood with them and were general dogsbody, really.  One of the quite amusing things that you were given to do from time to time because it was before the time when you had name badges, somebody would come up and it would be, usually a face familiar to the partners of the firm, but they wouldn't be able to remember his firm, and it was definitely regarded as out of the question to ask somebody who he was.  So you'd be sent off to follow this guy and find out who he was, which was quite humorous at times, and it led you into bars and all over the place.  And you'd hopefully find a friend, and say 'Who's he?'  But the other sort of tasks were booking bargains and keeping price lists up to date and Wedd & Owen - they might have been unique initially but they provided an up to date list of prices to people, which meant writing these things out endlessly, so one spent a lot of time doing that, and by brokers not professional in the Gilt market, and that meant most at that time.  I think it was very helpful to them to be able to come up, they were in a hurry, and you just thrust this thing into the chap's hand, and he would know that that price list was up to date, pretty well all the time.  He would know pretty well exactly what he could do, just from that piece of paper.  So, one was kept fairly busy with these dogsbody jobs. And of course one was expected to be picking up tips and learning how it all worked.  Which I suppose we did.

BA:  What was the gilt market like at this time, was it a busy market?

DP:  It was fairly busy.  Difficult to qualify that word.  There was still, though it was declining, quite a lot of private client business.  The institutional bit was starting to come along by this time.  By this time also the number of jobbers in the Gilt-edged market must have declined, I wouldn't have said dramatically, because nobody seemed to think of it as being dramatic, but certainly quite a lot of the smaller players had dropped out by then. And of course that was a trend that went on, and is still going on apart from a brief explosion about 1986!  So that it was getting to be rather smaller and rather more professional.  But it wasn't harming the business of Wedd & Owen, particularly at that time.  Nor, did it for a very long time.  I left Wedd & Owen in '57 I think.  When was the Bank Rate Tribunal?

BA: '57.

DP:  '57, yes.  We had a row and went our separate ways, or some of us did.  But it had been a profitable business and continued to be for some time after that.  As you probably know the profitability of jobbers tended to go in cycles, and you reckoned to make a loss one year, break even one year and do rather well in the third year, and it all sorted itself out fairly satisfactorily, something of that order with the swings in the economy and interest rates and all the rest, which of course were much less dramatic than they are now.  Bank Rate change was pretty unusual then.

BA:  How did your career with Wedd & Owen unfold to the point at which you left them?  Were you authorised at some stage?

DP:  Yes, I became a member of the Stock Exchange and I was a partner of Wedd & Owen, which I think I became in '56 or thereabouts. And while it all sounded very grand it had much to do with the taxation arrangements and cessations and so on.  I don't understand the full technicalities of it.  It's essentially an accountant's problem.  But you ceased one partnership and created another by bringing somebody else in, and that gave you certain tax advantages; so that partnerships generally were on the look out for somebody suitable to make a partner, not necessarily every year, but there needed to be people coming along all the time.  I was, for a time, the only young person with these four partners, and then the nephew of one of them came and joined me.  I think he must have come along just after I returned from the Army, I can't remember exactly when;  a chap of the same sort of age as myself, maybe a little bit younger.

BA:  Was that fairly young to be taken into a partnership?

DP:  Yes, it was.  Generally speaking people would expect to have to wait rather longer, but I happened to be standing in the right place at the right time, really.

BA::  Had you already been authorised?

DP:  Yes, yes there was a progression from blue button to authorised to member, which I had gone through.  As I mentioned before, there was a cheaper route. I think you had to be authorised for two years before you became eligible for it.  You were referred to as either double decker or triple decker, which meant the number of sureties you had.  I can't remember exactly how it worked, but if you served your time, as it were, you got in on easier terms than if you didn't serve your time.  And of course at that time there were no exams.  I can't even remember whether I had to do that, but there was a test of competence by interview for authorised clerks.  I don't think that was in place when I was authorised.  It's a long time ago and I don't remember.

BA:  Was there anyone particular who influenced you when you were learning your jobbing skills, as it were.  Did any of the partners in Wedd & Owen have much influence on you?

DP:  Well the senior partner there was a man called Percy Spooner who was quite a strong character.  He made a point of - I don't say lecturing, I don't mean that, to me, and then latterly to us; not in a formal sense - but he would take the trouble to either check us off if he thought we were doing something wrong, and explain things to us.  But I think in a way more than him, another partner in the firm, who was the second partner, whose name was Redfern, Kenneth Redfern.  He was an older man I think. He had a brilliant mathematical brain, which is something which is totally lacking as far as I'm concerned.  But I found his explanations of what was going on and the numbers part of it absolutely fascinating.  He was a very clever chap.  

BA:  Did you feel quite confident about becoming a dealer?

DP:  Yes, I certainly didn't have any doubts about it.  It seemed a fairly simple thing to do.  At that time it was a relatively simple thing to do.  It became very much more difficult in the latter stages of my jobbing career and indeed throughout the time I was broking.  Things became more and more complicated and difficult to understand.

BA:  Did you have any early triumphs or early disasters as a young dealer?

DP:  Not that I remember particularly, no.  I ran a small book in - can't remember what the things were called now -  some bonds which were traded in a particular way.

Tape 1 side 2

BA:  Did Wedd & Owen have just the one pitch?

DP:  Yes they had the one quite small pitch.  There were the four partners plus myself at one stage.  The partners at that time had a unique arrangement which I'm bound to say was one of the attractions of working for them and hoping to become a partner.  They rotated one week's holiday in four, between the four of them.  Obviously that was distorted by summer holidays or that sort of thing, but they did that, and it was a delightful arrangement.  I'm afraid I never quite got in on the cycle as I would have wished to have done, but nevertheless they were very generous holidays, so it wasn't a problem.  They, alone amongst their rivals, had this practice of having one week off in four.  So, as one or two more people were employed, so that little group got rather larger and indeed it started to become something of a problem at its peak, because it was only quite a small piece of floor, and rival jobbers got pretty touchy if you started invading their little patch of floor.  I can't remember how many there would have been of us, maximum about seven I think.

BA:  And how was the division of responsibility organised?

DP:  Things were not divided up.  We all dealt in everything.  Apart from this little [book]. I can't remember what sort of bonds they were that I was dealing in, but if I wasn't there somebody else would cope with that. We were not divided up into short market and long market as became the custom later.  Wedd & Owen were never - no, that's not true; in their latter stages, long after I left they were - but while I was there, never regarded themselves as players in the short market, which was a very much more, even then, a much more technical and professional market, dominated by the discount houses.  But they simply did the private client business, dealt in fives and tens, or twos and fives or whatever it was that people wanted to do.  I don't remember ever doing - even when the switching and the bond washing and this kind of stuff came along - I don't think we ever did anything in the short market, because they didn't know their way around it.

BA:  Did that mean that you were always dealing with the same particular group of brokers who had that kind of private client business or were you seeing a whole lot of different brokers?

DP:  I think it would be right to say that all brokers full stop did private client business at that time.  Some of the bigger ones who were dealing for banks, the people who were in the short market dealing with the discount houses and so on, they would have that sort of business to do as well.  But I think everybody had some private client business.  And brokers would have their favourite jobbers, and a lot of business, I think was done on trust. That is to say they wouldn't go all the way round checking the prices.  They'd simply come along and deal with you at the price you were making.  You'd get people, say, now and again - and you also have to remember we were making quite close prices then, by the standard of later years - 'I think they're so much better bid or cheaper offered somewhere else', in which case if it was one of your regular customers you'd probably say 'ok, put it down'.  We were dealing most of the time on 1/8th prices in the long based stocks.

BA:  Did you have many of what other people have referred to as the 'spoon-fed jobbers' still around, people who were basically doing the brokers' business for them.  They'd be left with the orders in the morning, and ...

DP:  Yes, there were still some of those around.  But I think, I'm not sure that 'spoon-fed' is strictly the right description of that.  It sounds easy, but that's simply an extension of what I was saying, that people had their favourite jobbers.  They might handle it in that way or in the way that I've just mentioned.  But 'spoon-feeding' is not exactly ... I suppose you got one or two who perhaps were getting the business in the way that you mentioned from some of the bigger people, but even that I would have thought was relatively unusual... Because some of the bigger people would have dealers spending all their time in the Gilt market perhaps, as it started to become more professional and they would know damn well what the prices were and where to find them.  So they, unless they were very busy with other things, wouldn't play it in that way.  But there certainly was a certain amount of that around.  Either in the way you have described, or in the way that I have described.  Somebody would simply come up and say 'This is what I want to do', but it wasn't - and this is why I'm objecting slightly to the term 'spoon-fed' - there's no way you ripped those people off and therefore made an improper profit out of it.  Because if you did, eventually they were bound to find out, and they'd either give you a roasting or simply stopped coming.  Plenty of other places to go.

BA:  Did you, as Wedd & Owen, have much contact with the other jobbers on the floor of the House?

DP:  Yes, a fair amount.  At that time the smaller jobbers would deal amongst themselves and particularly with the bigger jobbers.  They tended to lean on the bigger jobbers, who - I used to be quite rude about it - were basically helpful, and I think this is something that, as the market got more professional, the bigger jobbers felt they needed it more.  They did not want their books cluttered up with a lot of small bargains and they didn't want to have to keep somebody important waiting while they were going through a great list of 2,000 of this and 4,000 of that. So they were happy for smaller jobbers to exist and to look after that business;  and if they, the bigger jobbers, had to undo some of it every now and again, well that was fine, and they'd drive a pretty hard bargain when they undid it anyway, and so they would make money out of that.  But that was how they were quite prepared to see it work.  And so, yes, one did talk to them, and we all knew one another pretty well.  And not on a help you out basis, but simply on a book straightening business, small jobber to small jobber, would deal;, if you'd got a cross book, you'd go and sort it out.  Indeed later on when I moved to another jobbing firm, after the 1957 thing, I had a very humorous relationship with somebody in Angus Ashton's firm at that time, which was Francis & Praed, where we would have a weekly 'book straighten'. And it was really quite funny, because invariably you'd have two or three real stinkers on your book, but one or two good ones as well; and sometimes they'd be the same, but sometimes they'd be different; and you'd go down with your respective 'Bull and Bears' and say 'I'll sell you 25 of those and I'll buy 30 of these or 50 or 100' or whatever it might happen to be, and you'd then get down to bargaining, one of your winners against one of his.  It could be really very amusing. And sometimes refusing to sell what he really wanted - 'I didn't really want to do that anyway'.  It was quite fun.

BA:  Could you explain what a cross book was?

DP:  Well long of one and short of the other.  And unless that was the position you particularly wanted to have, then it would suit you to unscramble it so that you went level in both things.  And they would often be in relatively small amounts.  I think by the time I'm talking about, it had got above fives and tens; actually, you'd probably be straightening things out in between fifty or a hundred thousand or something like that - fives and tens you wouldn't have bothered about, unless it was something that was particularly difficult.

BA:  What was the attitude to carrying positions from one account to another?  Was that something you tried - well, no, we're talking about Gilt, aren't we?

DP:  No, accounts didn't enter into it, it was cash settlement.  If you're asking, 'Did you worry about the book?' only very latterly did I do so when I'd perhaps become rather more senior in the second firm I was with.  The market had become much more professional and more difficult.  It was the reason that we finally packed up.  Our capital had not grown with the market.  We just hadn't got the fire power to deal in the size of unit that people wanted to deal in, and not find all our cash used up by the end of the day.  Obviously one ran on borrowed money, but only on a certain ratio and once you'd used up all the cash ...: before you could buy something, you had to sell something; and on the jobbing system the obligation to make a price, if times were a little bit difficult or something had gone wrong, you couldn't simply say, 'well I don't want to buy anything', you had to carry on making prices; and if you bought something when you'd used up your fire power, you simply had to sell something.

BA:  Were these problems as far as Wedd & Owen were concerned, were they problems in the fifties as well as one advanced  into the sixties?  Were you conscious of these difficulties?

DP:  Well, not particularly at the Wedd & Owen stage,  I think every now and again somebody would set off round the market because we'd got too much stock, and say, 'Oh, we've got a bit too much, we'd better go and sell something', and would endeavour to sell it to another jobber;  or you might, knowing a broker's or some brokers' business, knowing that he was a buyer of whatever stock, go and find him and say 'Look, I'll offer these a bit cheaper, I want to get rid of them,' and possibly solve the problem that way.  But the row that took place in Wedd & Owen which resulted in the bust-up in 1957, was really very much more because the then senior partner, Percy Spooner, felt that he wasn't getting the support of his other partners, of which I was one, in saving money and putting it in as part of one's capital in the firm, and building that up.  And one has to say that he was absolutely right about that, and it was the problem in the second firm we went to, which was why we packed up, we hadn't got the fire power.  Whether one could ever have been successful enough to have simply put a bit away each year and had the capital grow in that way, I doubt one could. It was a nice idea.

BA: I was going to ask you about the attitudes of the partners in Wedd & Owen to the firm and to the future.  Were they quite happy to keep things as they were or were they thinking in terms of trying to expand either in terms of the size of bargains, the type of business you took on, or in terms of combining with a few other jobbers to expand the firm in that way?

DP:  I don't think they ever thought of that, certainly not while I was there.  No, I don't think that there was much in the way of long-term planning going on, except that the senior partner at the time had this feeling that people ought to be, of their own volition really, putting a bit in.  Though he was no puritan, I think he just felt that we were taking it all out and putting it in our pocket and going off and spending it.  He was probably absolutely right, but I don't think that there was the sort of forward planning that there probably should have been, i.e. what's the market going to be like in ten years' time? Will there be sufficient private client business? and so on.  I think they probably just saw it as bumbling along roughly as it had done.  Obviously they were aware of the increase in professional business and we were started to get into that.  We were doing switch business, this sort of thing, with the brokers who were professional in the market - there had been some throughout - people like Pember & Boyle whose name was associated very much with the gilt-edged market and did a lot of business for the clearing banks, and Nivison, the same; and both were also issuers of corporation and county stocks, colonial stocks as there were at that time as well.  So there were professional operators in the market, but other brokers were coming in around about this time and doing switch business for institutions who would be insurance companies, pension funds and that sort of thing.  Pension funds weren't really the big factor that they have since become.  They were obviously there, but then as jobbers we were not aware of who business was being done for, anyway, though we could be by going and looking at the transfers coming into the office.  The information was available to us if we wanted it, unless they were nominee names or anything like this, but I don't suppose they would have been.

BA:  Were you with Wedd and Owen when there was the Bank Rate rise from 5 to 7% in '57 and then the controversy which eventually led to the Tribunal?

DP:  Yes, I was.  I was on holiday at the time that it actually happened.  As you may be aware, Wedd & Owen were central figures in that, in that it was Wedd & Owen who wrote the letter saying that they'd been let down and that there'd been a leak and all this kind of thing, which, because it had been put into writing, it was suggested, actually prompted the Bank Rate Tribunal.  It would have been swept under the carpet if it could have been; but where somebody had actually made an accusation, it was felt something had to be done about it.  But I was on holiday for all that, including the letter going out and all the rest of it, so that it went out with my name on it as a partner, but I was unaware of all that.  That I feel is something that wouldn't happen now in that I was in this country, I could have been contacted, but we tended to take an old-fashioned view about holidays, and as I've explained to you (this one week in four thing), they took holidays seriously.  And the general idea was that you went on holiday and that was that - you weren't disturbed.  It wasn't the normal thing to leave phone numbers and that kind of thing, so I was blissfully unaware of it all.  The balloon went up within a week or two of my return from holiday, the row that bust the thing, which, as I explained earlier, wasn't actually to do with the Bank Rate Tribunal; so that was general dissatisfaction with the way that we were all behaving and working together.  So that was the scenario there and that left me looking for something else to do and through my father, who was my job broker again, I moved to a firm called Bruce & Hinton, and I was with them until I stopped jobbing in 1968.

BA:  Was it fairly unusual for a jobber with one gilt firm to move to another gilt jobber?

DP:  Yes, I think it would be fair to say at that time it was.  It was unusual for people to move at that time.  A lot of people went into firms either as employees or as partners, as a job for life, and people being sacked was pretty unusual and people moving about was unusual.  The same faces stayed in the same places by and large.

BA:  Let me revert a little bit to the Bank Rate Tribunal.  What was the feeling of jobbers towards this series of events in the sense that a few firms - the names had got into the press and they were associated with this controversy.  Was this regarded as all being slightly unusual and untoward, or were jobbers very much concerned that there had been a leak and that they really had been the losers.

DP:  Well I would have thought that it was large versus small.  The large and more professional, particularly those dealing in shorts (I'm not suggesting for a moment that they knew because it took everyone by surprise), but if there were any warning signs, they would have come through the short end of the market and through the discount houses from the Bank of England, a tightening of money.  As I say, I wasn't there at the time, so I don't know.  I would have thought that the smaller jobbers probably would have rallied round Wedd & Owen to some extent, because they must have had the same sort of experience.  And the larger ones probably would have preferred to have seen it swept under the carpet, and perhaps somebody given a quiet talking to by the Bank of England - the old boy network doing its bit.

BA:  Were there any comparable incidents where it was handled differently?

DP:  The Bank Rate?

BA:  Yes, or people feeling that there'd been a leak of sensitive information, and perhaps I'm not asking about whether there were specific occasions but ...

DP:  I don't think so as far as the Gilt market was concerned.  I think that was what made that such a special event.  But of course there have always been suggestions of leaks.  Whether there have been leaks or not one doesn't know, but one certainly is inclined to be suspicious in the equity market, because it's much easier for that to happen there.  And to this day there are enquiries going on all the time into that sort of thing, and occasionally people get disciplined.  Well, as we know, now one is breaking the law by doing it and there have been prosecutions - not perhaps as much as and as many as some people would wish to see, but some action's been taken.

BA:  Were most people satisfied with the results of the Bank Rate Tribunal?  Did you have any particular feelings on the matter, or was it simply one episode which came and went, and you got on with the business in hand?

DP:  I think that probably just about covers it.  I don't know what we expected.  Kindersley was regarded as being,  - I hesitate to call him nigger in the woodpile because I don't think anything was ever proved against him, but he, if you remember, was on the Court at the Bank of England and there was this question of an order in War Loan from Hong Kong. So he was wearing two hats, and that obviously put him in a very difficult position.  I mean, what if you're consulted, at that critical time on that Wednesday evening, what do you say?  'Should I sell War Loan or not?'  I don't know whether history and the Bank Rate Tribunal ever did discover exactly what he did say.  Though it probably did, because I think it would have been a matter of telexes, so it was probably in writing.  But one has some sympathy with the person who finds himself in that position, very difficult.

BA:  How would you contrast now Bruce & Hinton with Wedd & Owen, were they very similar firms?

DP:  No, Bruce & Hinton was much more into the professional institutional market which was growing all the time.  It also conducted its business by specialisation in either the short end of the market or the long end, and it did a lot of business in the short market, which I wasn't involved with basically.  I always remained concentrating on the long end of the market rather than the short.  But it was a different sort of business.  Where Wedd & Owen stuck religiously to its board list of prices as I described, one had much more latitude in Bruce & Hinton to make whatever price you thought was appropriate at the time.  We had a board of prices, but it was not gospel in the same way that the Wedd & Owen one had been.   And I suppose one was dealing with some different people.  Of course, your friends tended to follow you wherever you went.  We were quite prepared to do small business at Bruce & Hinton. We'd do anything for anyone, but basically we were looking to dealing in larger amounts than Wedd & Owen.

BA:  Was it also a larger partnership than Wedd & Owen?

DP:  No, it was quite a small partnership.  It was four partners at that time, so it was the same size in terms of partners, but it probably had a bit more cash, because the nature of its business dictated that it had to.

BA:  Did the partners have a different approach to jobbing and to the running of the firm?   For example, did you have the similar rotation of weeks for holidays?

DP:  No, no.  The senior partner - no he wasn't senior partner at the time - the number two partner, who became senior partner, had quite expensive tastes and had a pretty good idea how to go about taking holidays.  There was a certain amount of giggling and tittering about whether he worked more days than he had holiday, or holidayed more days than he worked.  However, he was very very switched on and that was a fundamental difference in the way Bruce & Hinton worked to the way Wedd & Owen worked.  Where I think Wedd & Owen were much more inclined to rely on turnover, just to keep jobbing away, and possibly aimed not to have much of a book, Bruce & Hinton were more inclined to take positions.  And we used to run quite big books in tapstocks while I was there.  The whole method of operating in tapstocks was rather different, at that time, to what it later became.  So that was also a difference.

BA:  Could you describe that method a little bit?

DP:  Well what happened a lot of the time, particularly when the market was rising in a good period, I'm thinking about now particularly, a stock would be issued by the Government and it would be pitched at such a level that not very much of it actually went at the time that it was issued, and it sat there waiting for buyers.  As the market rose, the Government would sell a bit of it and raise its price usually by about an eighth.  This might go on for several weeks, until the thing finally ran out and in those sort of times one could build up a Bull book in that tapstock and, assuming there were no serious upsets to the market - and bearing in mind that interest rates were pretty low, so the cost of carrying it wasn't very great - it was possible to job very profitably, against that book of stock.  Possibly you would still have stock on your book a point lower down than the level at which he finally ran out of that stock.  It was very easy jobbing, really.  Latterly of course it's become quite different to that in the few years up to Big Bang, where huge wadges of stock were taken and the institutions were much much bigger, much more aggressive, so whole tapstocks would run out at a stroke. The whole thing became much more professional and much more punchy than it was and therefore more difficult.

BA:  Did you ever get caught out with large positions in a particular stock and there might have been an interest change, or political crisis and market sentiment turned?

DP:  Oh yes, the sort of thing that you would do usually then would be to go to the Government broker and say 'I have a little problem here, I wonder if you can help me?'  And sometimes he would bail you out, or sometimes, indeed as often as not, he would take out the bigger jobbers in perhaps really quite large amounts and would rely on them to take out the smaller ones.  If you were a smaller one that wasn't necessarily a good idea, because it generally meant that the larger jobbers were taking a profit between you and him, but it was better to get out that way than not at all.

BA:  And where did Bruce & Hinton fit in that chain?

DP:  They were medium-sized.

Tape 2 side 1

BA: Are there any particular episodes that you remember when you were caught out and needed help from the Government broker?  For example Suez or the devaluation in 1967?

DP:  No, I don't; nothing that particularly sticks in the mind.  One tended to regard it as all being the cut and thrust of business and therefore obviously we were getting help from one source or another reasonably satisfactorily.  It wasn't too much of a worry.  I found as one built up one's relationships with brokers generally and got to know their business, it was quite likely you'd find somebody to do what you wanted to do, without having to go to the Government broker or the other jobbers.  Because the number of brokers who were professional in the market was growing and there was a lot more business, so that it did give you scope even when something had gone wrong, to find somebody who'd sort you out.

BA:  Once again, did Bruce & Hinton have a particular group of brokers that generally came to them - I'm not necessarily asking you to name firms and so on.  But it's just interesting to know how the market worked.

DP:  Yes, every jobber would have had that.  Your friends came and talked to you first, or not necessarily first, because they might have checked some prices somewhere else.  But you would always have friends who would deal with you if you were making the price that suited them, rather than someone else.  But with this professionalism in the market, people had to check round, and certainly the idea of just going up to someone and saying this is what I want to do, or here's a list of things - that in the professional market just couldn't happen.  But you still had your regulars but only at the market price and they knew what that was.

BA:  Did you see much of the Government broker during the course of trading during the day?

DP:  It varied really.  In the latter stages of Bruce & Hinton, yes, we used to see more of him than I had done previously, and he was basically helpful, although earlier that had been less so.  As the number of jobbers started to decline, the Authorities in the shape of the Government broker and the Bank of England probably became rather concerned that they had already got a market that was by this time dominated by two people, but there needed to be a reasonable number of others for it to at least appear to be competitive.  And it was competitive.  The competition between both brokers and jobbers was intense and now and again jobbers got their heads together as they had to do, particularly the dominant ones. But it didn't mean that they didn't compete with one another - they most certainly did.

BA:  Reverting slightly to this issue of brokers, did you ever feel that because there might have been a friendship between firms that sometimes there was a pressure coming from the brokers on the jobbers, on the basis of their existing friendship, either to make a size that perhaps the jobber wouldn't normally have felt comfortable with ...?

DP:  I think that quite often happened.  There was pressure to deal in larger sizes than perhaps you wanted to, and also on your price spread, and sometimes it was lighthearted and sometimes it wasn't.  But, that's exactly what you'd expect in any market, really.  A lot of lighthearted banter about the high and the low for the year, now watch the price, and this sort of stuff.  But I regard that as absolutely natural, whether you are buying cabbages, buckets or second-hand motor cars.  I am sure the same sort of thing goes on amongst professionals.  'What a ridiculous price, what do you mean by it?'  And so, yes, you'd finish up being squeezed sometimes on price and at other times doing a bigger bargain than you really wanted to do.  And you'd then scratch your head and think of ways undoing it.

BA:  Perhaps as we draw through the sixties, could I ask you describe what a typical day would have been for you.  For example, where were you living at this time?

DP:  More or less in the same place - by the late sixties; I was living in the same house I'm living in now, but I've always lived in the same area.

BA:  So you'd be commuting into work?

DP:  Yes.  One feature of the whole thing, and I can't remember when it really seriously started, but I would say early sixties, was that the day started to get longer.  People wanted to deal earlier in the morning. Throughout the fifties the market simply did not open until 10 o'clock.  You didn't make prices and you didn't have to do anything; you didn't have to appear until 10 o'clock. And gradually people started coming on the phone to you, wanting an indication of prices.  And as you probably know, that's gone on and on and I'm not certain what time the Government broker is on stream now, but it's certainly earlier than it used to be.  So it meant one got up rather earlier.  But it was still a fairly dignified existence.  In the early sixties - I'm trying to remember what time - we usually used to meet for a number of years in a Club to which we all belonged, just across the road from the Stock Exchange, have a cup of coffee there about 9.30 and just talk about what might be in the papers or what we thought about things, and go over to the Stock Exchange about a quarter to ten and start at 10 o'clock. And then it gradually got so that we had to be in the Stock Exchange by 9.30.  We would - this would have been when there were telephones actually inside on the Stock Exchange floor, which there had not been previously; if you wanted to make a phone call you had to go out, and we'd be answering questions or indicating prices or possibly making prices on the phone.  And that practice went on. It grew and went on until the market was finally forced to open at 9.30.  I can't remember when that was - but about '83, '4 something like that.  It became, at that stage, I was a broker by this time, a thoroughly unsatisfactory arrangement in many ways because for brokers and jobbers alike, we'd be on the phone trying to get an indication of what the market was going to be and give that to clients, get orders maybe from them.  And also this ghastly business of when a tapstock was available from the Government broker, the jobbers would prepare lists of orders and they would then apply to the Government broker for however much they thought they wanted, which might be nothing, because they might choose to sell a damn great Bear, but that's something else.  All this would be done on the phone, and then you'd have to go rushing down from the office to the market and then hang around waiting until the jobbers knew what they'd got from the Government broker and then they would let you know whether you'd got what you wanted in full. Oh, absolutely ghastly business.  The fact that there isn't now a marketplace must make all that rather better in a way, in that you don't have to hang around waiting or rush from one place to another. But going back to the sixties, that kind of thing simply didn't happen, and you started making prices in real earnest at 10 o'clock on the floor, not on the phone.

BA:  What kind of factors would a gilt jobber take into account in making a price, standing there on the floor of the House. What would you be conscious of and what would influence you in changing the price?

DP:  Well, all kinds of things.  I always used to laugh about this kind of thing where you perhaps had some - it wouldn't usually be a new recruit - but somebody with you on the pitch. We would sometimes at Bruce & Hinton, and other firms did it as well, have someone perhaps from a Discount House, who would spend a little time with us and have a blue button and so on, just finding out how the market worked.  You'd just get a feeling that you wanted to lower a price, perhaps, and he'd say 'You've made a different price then?   Why did you do that?'  And you can do it for almost no reason at all.  Two of the stock answers were 'I didn't like the colour of the chap's tie' or 'Well it started raining, so I thought I'd put the market down'.  I'm being slightly facetious here, but if you're standing there making prices all day, there doesn't have to be a particular signal that causes you to want to change them.  It may be that you keep making prices to people and not dealing and nobody's telling you why, and you change things to find out what will happen.  But obviously there are other indicators.  If you make a price and buy a load of stock you didn't particularly want, the chances are you'll put the whole lot down in the hope that you don't buy any more - or not the whole lot, but most.  And there are the obvious indicators like something happening with interest rates or international news or whatever.  You just have to be as alert to everything as you possibly can be.

BA:  What kind of information could you rely upon from a broker coming up to deal?  Would they occasionally mention to you what another jobber was making.

DP:  Yes, they might do.  If you'd made a wrong price that gave a choice price or a backwardation, a broker was obliged to tell you if it was a backwardation.  It was a crime to deal on a backwardation.  Then he would say that, and you would then be more or less obliged to deal with him on pretty good terms.  And the other, choice price, which meant that you made a price that enabled him to buy or sell at the same price.  I don't think there was an obligation, that wasn't a crime, to deal on one of those, but nevertheless it was polite to say that you found that that was a choice price and was that alright.  And generally speaking, if he was a regular customer, you'd say, 'yes of course it is' and do it, whether it was or not.  But yes, now and again you'd get somebody say, 'that's a bit high.  It's not choice or a backwardation, but you're a bit high.  They're only so much bid somewhere else.'  And you'd say 'thanks for telling me', and again if he wanted to deal on your price, you would probably, if he was one of your chums, say OK.  Or possibly it's what you wanted anyway.  Just because you're making a different price it doesn't mean it's the wrong price and perhaps the other chap's wrong.  So yes, you got help from people now and again.  But there were other people of course who didn't help, who were completely poker-faced and just got on with it.

BA:  Would you find yourself preferring to be a Bear of stock or a Bull, or did it really not matter to you terribly much.

DP:  It didn't matter, really, I don't think.  The more experienced one got, perhaps the more inclined one was to be Bearish.  I don't know whether that's simply a fact of life and old age and all that.  Being a Bear is an unnatural position, if you see what I mean.  One perhaps rather naively initially felt that you wanted to have a few good things on the book, and that would do nicely, and it was only as you became more experienced that you realised the value of being a Bear, and indeed the necessity for it at times.  I talked about cross-books earlier on.  There were often times, it would almost always be the case, when certain cross positions you wanted to have.  You wanted to be a Bull of what was going up and a Bear of what was going down, obviously, and that was what you were trying to achieve.  But it didn't trouble me particularly which.  I think on balance because it was easier, one preferred jobbing in a bull market and therefore perhaps you have to say that you prefered being a bull.  Perhaps that's over-simplifying it a bit.

BA:  Would you be taking a break for lunch at some stage during the day?

DP:  Yes, you'd have staggered lunch arrangements so that the place was always manned, as it obviously had to be. Things were pretty free and easy about lunch.  You'd quite often have quite long lunches if we were entertaining a broker or if you were being entertained.

BA:  Did you do much of that?  Did Bruce & Hinton entertain much or were you entertained?

DP:  Yes, both things happened.  We used to entertain a fair amount.  We did not have our own luncheon room.  I think the arrival on the scene of smart luncheon rooms came later.  People had them, brokers particular at the time I'm talking about, but not as much as they did later on.  But yes, we'd go out.  I'd simply go out for a beer and a sandwich with a friend or go to a restaurant or whatever, either you taking somebody or somebody taking you.  We used to have during the course of a year two or three or perhaps more quite big lunches where we'd invite a whole lot of people and go to a restaurant.  That would be not exactly a formal affair, but a bit of a trip out, and would probably turn out to be quite a long lunch.  The long long lunches tended to tail off rather latterly when people were, I think it's wrong to say were taking it more seriously; but when the market became much more active and so on, you simply couldn't have people away from the market for all that long.  And if you tried to they'd be for ever phoning up to find out what was going on, or being called to the phone.

BA:  And what would you do?  Presumably then you'd return after lunch and things would more or less resume as they had in the morning.

DP:  Yes, roughly speaking.  You'd have a run down of what business had been done from whoever had been looking after it.  If you'd been out, particularly if you'd been out for a longish time, the chances are that he would then go out for a drink or coffee or tea or whatever and leave you to get on with it a bit.  It was always quite a difficult thing to do - the handover, takeover - and also it was often the time for jokes about things.  You'd come back and look at what he'd done.  Seldom would you approve.  'Oh, I wouldn't have done that if I were you.'  You used to get battles between people now and again where you'd come in and find the other guy had done exactly the opposite to what you'd have done.  He'd bought something, so the first chance you got when he'd gone out you sold it, and you had a row afterwards.  I'm perhaps exaggerating slightly here, but by and large you were agreed about roughly what you wanted to do and left one another to get on with it.

BA:  What would happen at the end of the day when the House closed?  You'd go back to the office?  What would happen then?

DP:  Yes, you'd sort out your Bull and Bear positions and you'd sometimes do some business on the telephone but usually through the early sixties anyway we would go down to having perhaps one guy on the long book and one guy on the short book from about four until five and the rest would leave quite early, which was a very agreeable practice and one got home at quite a reasonable time.  And as time went by that tended to happen less and less and trading did tend to go on rather later; not every night, but there was always quite a chance that somebody would want to do something or that something would happen somewhere that would prompt you to want to be around, and maybe want to make certain moves that you didn't want to make before; so that was a part of what I spoke of earlier, the day tended to get progressively longer as time went by.

BA:  What kind of back office did Bruce & Hinton have, was it a largish staff?

DP:  No, quite a small staff.  If you'd got people who knew the job, you'd get one guy covering more than one task.  You didn't need very many people to run a gilt jobber's office.

BA:  How big were the offices?

DP:  Pretty small.  I couldn't tell you in square feet, but the last offices that we had were in Cornhill and they were two rooms in one of which all of us, the partners and dealers sat, and another room of similar size or maybe a bit smaller which was the general office in which the settlement staff sat.  It was pretty compact.

BA:  Did you feel quite distant from back office staff or was there a warm relationship.

DP:  There was a very good relationship.  We walked through the back office to get to our inner sanctum in the latter days and one would invariably stop and talk to people on the way through and find out what had happened; whether somebody had delivered - you sometimes got stocks that didn't come in very quickly, and you'd be pressed for delivery by other people - so you'd keep in touch with that kind of thing.   There was a very good relationship.

BA:  Now you've already mentioned that one of the difficulties that the firm experienced was the one of capital.   Could you explain that in a bit more detail?  Was this always a difficulty that Bruce & Hinton had?

DP:  No, I think with the departure of the senior partner a fair slice of the capital went too.  The individual in question was adept at making the maximum use of the capital he did have, and also making certain that we were making the maximum use of our capital which perhaps, latterly, we were not as good at.  But a fair slice of capital went with him, which was going in exactly the opposite direct to what was required. We were needing more capital and we in fact had less, and to remedy that, we looked at the idea of possible mergers.  This was at a time when the most we could have had would have been 10 per cent shareholders in us, and limited partners putting in outside capital.  I think we might have found some of those, but there wasn't much of that around at that time.  Obviously it became a big thing - a huge thing - following Big Bang.  But at that time it was something one really didn't think very much about.  And getting a 10 per cent - or suppose you got two 10 per cent - injections, it still didn't add up to very much.  Only if you went out and got ten, and doubled your capital, would it start to have much in the way of impact.  And that was just extremely unlikely to happen.

BA:  So, how did you approach the problem?

DP:  We soldiered on with such capital as we'd got for two years, I suppose.  We had quite a good run the first year and were quite profitable.  If I remember correctly the market pretty much went to sleep for a period of time, and that was the kiss of death really; rather like now.  There wasn't much turnover and the market would be 'raided' every now and again.  Somebody would come up with a bright idea - I forget exactly [whether] we were into neutral zone stocks - but that was one thing that caused all kinds of headaches.

BA:  What was a neutral zone stock?

DP:  It was free of capital gains tax.  It was all to do with the price at which it had been issued and what the prospectus had said.  And I think the neutral zone idea was forced upon the Government for this rather technical reason, that the prospectus had suggested that if a stock was issued, for instance some of the nationalisation stocks were at a very deep discount, say at 80, it was suggested that the prospectus had said that that difference between redemption and par was yours.  And to suggest that it wasn't was to invalidate the prospectus, and that was not on.  So you got different tax treatment of different stocks, and this was a nightmare, really, it was a ghastly idea.  There were two stocks, Electric, '68 and '73 and Transport '68 and '73, and they were differently treated, because they'd been issued at different prices.  And there was arbitrage between the two, and it was really a very unsatisfactory state of affairs, but you could get - I remember it happening, I can't remember which stock it was - but as a stock - the market had risen - got close to its neutral zone, somebody had the bright idea that because it was so close, they ought to be rushing in and buying it so that it actually reached its neutral zone. Well of course that sort of thing was something against [which], unless the Government broker was a seller of it, we didn't have very much protection.  Between that kind of thing and general lack of turnover, it made jobbing quite difficult and not at all profitable.  Where one was already short of capital -  and this is why we decided to pack up finally - we could see ourselves maybe having a year or two of loss making,  which would mean we'd got even less capital and there didn't seem to be really very much point in carrying on.  And the merger situations we'd looked at for one reason or another, usually due to potential personality conflicts, didn't look like working, so we just bailed out.

BA:  Was that a difficult decision to make, did you spend a lot of time thinking about it and discussing it?

DP:  No, I think this decision was finally taken in a nightclub or bar when a number of people - it's sounding  rather lighthearted but it wasn't;  I wasn't actually there while that was going on.  But this discussion having taken place, one of the partners phoned me up and said 'we've had this discussion and this is what sitting around here we all thought,' and I wasn't prepared to argue with it. There wasn't much I could have done anyway about it.  The only thing one might have done with hindsight is to say, if two or three of us wanted to carry on the business and then merge it, how about that, but I think that would have been pretty complicated.

BA;  What had happened to the gilt jobbers generally?  Were a number of other smaller gilt firms experiencing the same pressures and deciding to stop trading also?

DP:  I don't think that they were at that point, though of course a wave of it happened later.  Angus Ashton's firm was one that went out in that wave, and a firm called Pike & Bryant went out at almost the same time. Smith Brothers had their unfortunate foray into the gilt market and they'd gone out.  I think it was at that point the Government was really very concerned, when I say the Government I mean the Government broker and the Bank of England, about the decline in the number of jobbers.  Though the big business was all getting done, they were worried that it would appear that it was a cartel and that it would be unacceptable.

BA:  One of the things I was trying to get at at that point was by the stage that you'd decided to withdraw from the gilt market, had there developed a sort of irreversible divide between the very big gilt jobbers and the smaller ones, and it would be impossible ever to bridge that?

DP:  No, I don't think that that was the case.  It was very difficult to bridge it, but some time after that, for instance Pinchin came into the Gilt market, now they set up....

Tape 2 side 2

BA:  You were saying that Pinchin had entered the gilt market.

DP:  Yes, they came into the gilt market and set up an operation that was 'the right size of medium sized', I think was the phrase I used.  They were taking on some quite big business and they started it up from scratch, not by buying somebody else, they bought in expertise, but they didn't buy a firm; and so the answer to your question, 'was it possible to bridge the gap?', I think has to be, yes, though they didn't bridge it by buying a small firm and make it larger, they did it off their own bat.  Some of the smaller firms did do some quite decent sized business at times, particularly on these tapstocks and so on; and they would have a sizeable allocation of stock from the Government broker, and that would put them in the way of, not only simply selling that straight, but doing switch business and so on.

BA:  In retrospect, how did you feel about the decision to stop jobbing, particularly as the 1970s unfolded and the gilt market became a very lucrative one for the jobbers who had managed to stay in it.

DP:  Well, I didn't find any opportunities to carry on jobbing in the gilt market, but I was offered the opportunity to job in the fixed interest market.   I thought quite hard about that because it was quite a decent proposition that was made.  But I just felt that my experience had been in the gilt market.  I knew all the people, and I therefore felt I would rather stay in that, even though it was on the other side of the fence, rather than go and job elsewhere where I would have to make new contacts and so on, so that was what I did.  Initially I didn't enjoy it, particularly because there's a great freedom in being a jobber.  It's your own money, you can say what you like by way of price and so on, and in various other ways, too, if you feel inclined; whereas as a broker you're somebody else's servant and you're a go-between between the client and the jobber and that took a little bit of getting used to.

BA:  Which firm did you go to?

DP:  I went to Laurie Milbank initially and I was there for a couple of years.  Possibly in no small part because it was the transition period, I didn't particularly enjoy it, though I made some good friends there.  So after two years I moved to Panmure and stayed there till a couple of years ago when I packed up altogether.

BA:  How did these changes happen?  Did you have friends in the firms and...

DP:  You mean the recruitment changes?  I honestly forget now, but what generally tends to happen, and I think it must have done with the Laurie Milbank one, is that you find that one of the jobbers is in fact acting as a job broker and he would be aware of a broker wanting to take on somebody.  You have to remember that everybody knows everybody anyway, but unless you're actually unemployed, you're not likely to get a direct approach.  Where it was obviously known that I was looking for a job after the Bruce & Hinton thing, it may very well be that a number of the approaches were in fact direct.  I would guess that there were some of both sorts, some direct and somebody acting as a go-between.  And when I left Laurie Milbank to go to Panmure I in fact answered an advertisement.  It was one of these rather anonymous affairs in the Financial Times which I followed up.  I did not know that it was them when I replied to it.  But latterly, once I was at Panmure Gordon, any recruiting we did, we did by the other method that I mentioned.  I would be talking to a friend in the market: 'we're looking for somebody who might do this or that' and generally, particularly if it was somebody one knew really well, he could stand there and run through all the people who were looking around.  And I would know and would be in a position to say, 'I don't like him and don't like him, but perhaps we ought to talk to him' and then something would be set up.

BA:  Can you describe what you did now, when you joined these broking firms?  You became a broker/dealer?

DP:  Yes.  Mostly it involved being in the market all the time and trying as best one could to know what all the prices were all the time and talking back to the office by phone and latterly by radio, and generally keeping in touch and obviously doing all the business that came along, actually dealing with the jobbers.  And a certain amount of contact with clients, but more the market and dealing angle than the contact with clients part.

BA:  What was the reaction to you?  How did you find the reaction perhaps from former friends who were still jobbers to you becoming a broker?  Was there a certain amount of leg pulling, or....

DP:  There was a certain amount of leg pulling, yes.  There was a great deal of leg pulling in the Stock Exchange because, except on relatively rare occasions, one did spent a fair amount of time hanging around waiting for something to happen, as one does in all markets, and so there was a lot of joking and leg-pulling going on; so yes, when you change, a fair amount of joking and fooling around.  But people were very helpful basically and there was certainly no antagonism or anything like this.

BA:  Did you feel your experience as a jobber gave you a particular advantage when you were going up to deal with them?

DP:  Yes, I think it did.  And every now and again, again in perhaps to some extent a leg-pulling spirit, you'd get people saying, 'now come on, you've done this job perfectly well - I'm not going to want to do that, why are you even suggesting it?'  But by and large I felt that it was very helpful to me to have been a jobber before being a broker, and people were inclined to be helpful.

BA:  Presumably now you had a greater deal of contact with the investors, either the institutions or the private clients - what I'm getting at there is, did you feel that having moved over to the broking side of the Stock Exchange that there was much understanding of what jobbers did, the kind of problems that they faced and where they fitted into the market.

DP:  What, my understanding or the client's understanding?

BA:  The client's understanding.

DP: Yes, it helped.  You see I didn't speak to clients an awful lot and those that I did ... I didn't speak to any private clients. That's a slight exaggeration, but I wouldn't speak to them during the normal cut and thrust of business.  For instance, if one had a client, it might be your solicitor or family clients or something like that, by and large that would be fairly pedestrian sort of business and nothing to do with what I'd been hired to do, which was the professional gilt-edged business.  So that didn't really apply, and talking to the professional clients that I talked to, they were indeed professional clients so they knew what went on and didn't really need to be told.  They would have a sufficient understanding of the jobbing system not to need much help from me.

BA:  Did you feel now, particularly after the shake-out around the early '70s, when as you mentioned earlier, a couple of firms went out, that there was an adequate number of firms in the gilt market, or did you feel that created difficulties for brokers, in that you really didn't have all that much to choose from?

DP:  All the brokers welcomed the arrival in the market of Pinchin, for instance, because it was going to be another place to go if you'd got a reasonable sized business.  But by and large you got your business done alright.  The other side of the coin, coming more up to date now, I obviously don't have very much experience, but this huge rush into the gilt-edged market on Big Bang - and there were, whatever there were, twenty-eight market makers - if you stop and think about it for a moment, there's no way you can go to all 28 of them to find out what they're making, bearing in mind that if you're doing the job properly you will have a pretty good idea who to go to anyway.  But I think that only extends to perhaps half a dozen, or something like that, places.  You simply can't get round a huge number of different jobbers and/or market makers.  Business got done pretty satisfactorily during the very busy years in the 80s.  There were log jams now and again, particularly on these tapstock mornings, where the jobbers have got a list and all this kind of thing.  That used to cause pretty good chaos, possibly for an hour or so.  Because they were concentrating their attention on what they were actually doing in this stock, you'd find it quite difficult to get prices in other stocks, or to start thinking about what the switch possibilities were, and this kind of thing.  But I don't think that having a greater number of jobbers would have improved that; they'd all have the same problem.  It all worked fairly satisfactorily, and the criticism which it was receiving, criticism that it was not sufficiently competitive, I thought was a load of rubbish; because the competition amongst all the players in it, brokers against brokers and the market makers, the two big ones in particular - they competed pretty hard against one another, and my feeling was the Bank of England thought it all worked fairly well too.

BA:  Did you feel personally, or did Panmure Gordon feel as a firm, that single capacity was harming its business in any way?  Particularly now one reads about the growth of the foreign banks in the City and the development of a market outside of the House.

DP:  I don't think Panmure Gordon can possibly - though I can't speak for them - believe that, because they still operate in single capacity.  They are agency brokers.  While I was still there after Big Bang they, I think, took positions occasionally, but only very occasionally.  They certainly didn't go round making prices, in anything, gilts, equities or anything else.  I think that they've been, through that policy, one of the success stories of Big Bang, and there aren't very many of those.  I would imagine they've remained profitable all the time.  And I think the biggest factor in that was not going into market making.

BA:  Let me revert for a few moments again to the pre-Big Bang period.  You've mentioned Smith Brothers that tried to get into the gilt market and failed.  Is there any particular reason why a firm like Smith Brothers would fail in the gilt market - perhaps from your experience as a jobber during the sixties or again as a broker with a knowledge of the market during the seventies?

DP:  Yes, I think they made two mistakes, I thought.  One was that they bought a small jobber (and they were buying a back office and an account at the Bank of England, that was fine). They also thought they were buying some gilt edged market expertise and I say this with great respect for the people who were partners of that firm, whom I knew very well and liked, but they were small private client sized jobbers, basically, and that wasn't the sort of business that Smith Brothers wanted to do.  So where they might have thought they were, they did not buy expertise in that particular field.  They then put their own people into it and they tried to job the gilt market in the way they jobbed the equity market and that simply didn't work and I think that they tried to job their way out of it and things got bigger and bigger and worse and worse.

BA:  What was the difference between equity jobbing and gilt jobbing?

DP:  Well it may not be that it's the difference between equity jobbing and gilt jobbing, it's a question of the style of Smith Brothers to some extent.  Again, I can't speak from experience, but I think that their method of jobbing in equities was keep turning it over, and not - or try not - to take big positions.  I think they tried to do that in gilts, and it was that that didn't work.  In gilts by that time, you simply had to run big positions, possibly for quite a long time, and wait for the opportunity to sort them out profitably.  They tried to undo them and they drove the market up and down, and needless to say there would be people around to take advantage of a situation like that if it occurred.

BA:  What was the attitude among the gilt jobber, or again among the brokers specialising in gilts to newer types of financial instrument, which began to appear during the '60s. I'm thinking of the Eurobond.   Did they ever consider taking them up and trading them in a big way, or were they regarded as being something quite other and out of the normal range of business?

DP:  I think they were regarded in just that way, and we certainly, while I was jobbing, never contemplated dealing in Eurobonds.  One reason that I mentioned before was capital;  we hadn't got enough capital  We hadn't enought capital to job in gilts, one wouldn't be thinking about jobbing in something else.  So I think it just wasn't really considered.

BA:  Was that the attitude generally among jobbers?

DP:  I think it was, yes.  Because also Eurobonds did not trade in single capacity, did they?  I think the people who got into Eurobonds were brokers who took positions which they were committed to do, and I can't remember now in which way they were committed to do it, but they were.  So whether it was in effect offered to the gilt market if you like, or to the fixed interest market, to look after these things and they turned it down or whether it was never offered or what, I don't remember, but I certainly do not remember ever considering it.

BA:  Well that's probably the answer to the question in the sense it didn't impinge to a great extent.   Let me just ask you a few final questions about jobbing generally to wind things up.  What did you think it took to be a successful jobber?

DP:  You had to be able to make up your mind fairly quickly and be fairly decisive.  You were faced every time somebody came on the pitch with a situation and you had to make a decision on it, and apart from that I think various things that I didn't have would have been helpful, such as perhaps a better understanding of economics, and perhaps also a better mathematical brain.  Though a mathematical brain in a sense wasn't all that necessary.  Quick reaction to events and decisiveness I think were the things that you needed.  One thing people couldn't bear if they came and asked you a price was that you hummed and ah-ed and fiddled about and couldn't make up your mind.   You had to say something, right or wrong.  So I think that that's a fairly key factor.

BA:  What would you describe as the strengths of the jobbing system, if you felt there were any?

DP:  Well there certainly were some because they got huge amounts of business done, fairly satisfactorily, and I think the complaints by the customers, i.e. the clients about the single capacity system was more about fixed commissions, perhaps, than it was about the jobbers.  They objected to the jobbers' profits but  what they were getting for those profits was a market in which they could always trade.  A dedicated market-maker market does have that advantage.  There's always a guy there prepared to make a price.  It might not be the price you want to hear;  it might not be in the size you'd like it to be in, but at least you can do something.  With markets that don't operate in that way, that isn't always the case.  So that I think that a lot of the clients would say that they'd objected to the size of the brokers' commission,  which they most certainly did; they objected to the amount of money that the jobbers were making, but that was a touch of envy; and if they put their respective hands on their hearts they would admit that they were getting a good service from the jobbers, in that there was always a price.

BA:  Would you say the jobbing system had any weaknesses?

DP:  Yes, it was undercapitalised.  Apart from that I don't think it necessarily had any weaknesses.

BA:  Would you say that more having had experience of a smaller firm, rather than a bigger one?

DP:  As a jobber? 

BA:  Yes.  

DP:  Don't know really how to answer that.  Shortage of capital was its weakness as far as I was concerned; that's why I stopped jobbing when I did.  I don't know how the people in the better capitalised bigger firms felt about the jobbing system, presumably they thought it did a reasonably good job, it certainly was a money maker for them.  I wasn't thinking so much of that when I made my remarks as the system.  Did it get done what people wanted it to do?   I thought the answer was that it did, with complaints from the clients that too much money was being 'creamed' for the service that they were getting.  But as I said before, I felt that their criticism was directed more at brokers' commissions than at what was happening in the market itself.  And if they felt that they didn't like the jobbing system because basically it was two big players doing most of the business over a long period of time, but particularly latterly, and if they thought everything was absolutely marvellous after Big Bang, it would appear that it's only going to be a short space of time before we're back to the very small number of big players;  indeed we've possibly even got that now.  I'm not close enough to it to know, but I would think that there are quite a number of people who are gilt-edged market makers to whom many people simply wouldn't bother to go, because they wouldn't hear something which was going to be to their liking.  So I think it's polarised down to a very small number of big players and the two old big players are probably the biggest and best of them right now.

BA:  I think we can end on that note.