THE JOBBING SYSTEM OF THE STOCK EXCHANGE : AN ORAL HISTORY

Interview No. 29 : John  Woolfenden

Interviewer: Bernard Attard

USB Phillips & Drew :  14th June 1990

Tape 1 side 1

BA:  Could you first tell me, Mr. John Woolfenden, where and when you were born?

JW:  I was born in Southport on 7th December 1940.

BA:  What were the names of your parents?

JW:  George Bentley Woolfenden and Amy Woolfenden.

BA:  And what did your father do for a living?

JW:  My father was a director originally of Fitch Lovell, an old firm called Lovell & Christmas, and then left there and bought his own wholesale provision merchant which he ran in Liverpool.

BA:  What had your grandparents done?

JW:  I don't know because my grandfather, my father's father, died when he was very young - about two I think.  And my mother's father, to be honest, I forget.

BA:  What exactly did Fitch Lovell do?

JW:  It was originally a firm called Lovell & Christmas who were wholesale provision merchants and they were taken over by a small firm called Fitch and became Fitch Lovell.

BA:  So in that sense the family didn't have any Stock Exchange connections, did they?

JW:  Absolutely correct.

BA:  Did you have any brothers, or sisters?

JW:  I have a brother who is two years younger than me.

BA:  And what did he do with his life?

JW:  He went to work for a firm called Simpson Roberts, which became Princes Foods and became part of the Bibby empire.  He then left and he now runs a holding company,  which I have a small interest in, and it controls two laundries, a printing works, a signwriting business and things like that.

BA:  Where did your parents send you to school?

JW:  I went to Uppingham in Rutland. I think it's now called Leicestershire.

BA:  Did you have any idea what kind of career you'd like to pursue when you were at school?

JW:  Yes, I wanted to become a lawyer.

BA:  And what actually happened when you did leave school?

JW:  I got fed up with exams and therefore didn't take up the place I had at University and was offered two or three jobs but in fact ended up by going to work for a stockbroking firm which my father knew through dealing in the Stock Exchange in Liverpool.

BA:  What was the name of that firm?

JW:  A S Milnes & Co. 

BA:  Did you have much idea about what stockbrokers did, or what Stock Exchanges did, at that age?

JW:  A little bit, because obviously my father had spoken to me a bit about it and what he was doing.  But also my last term at school, the first lesson of the term was to pick a company from the back page of the FT, and the last lesson of the term was to then discuss what had happened to that company during the course of the term, and we had to draw a chart as to what had happened.  Coming from the north of England, I chose a share called the Cunard Steamship Company and it went from A to A. I say A to A because it didn't move and I thought, 'there's got to be more to the Stock Exchange than this'.  The share price just didn't move, virtually, all term.  And others had their prices going up and down like yo-yos.  I then started to make a few more enquiries and within a month joined the firm, as the office boy so I could learn my way around Liverpool, because I'd got no idea.

BA:  Did you have any particular long-term ambitions for yourself at that stage?

JW:  No, I don't think so.

BA:  What would you have said the attitude to money had been at home, or would you say there was no particular attitude?

JW:  Money wasn't discussed an awful lot.  Father would always say, this is how to run a bank account and so on.  Of course he got a nasty shock one day when he said, 'you're going to need some money today' because I was becoming a member of the Stock Exchange in 1964 and you had to write out a few hefty cheques at that stage, comparatively speaking anyhow, and on the way down to the bank to meet the bank manager I had to disclose to my father that I already had an overdraft, which was a bit of a shock.

BA:  You mentioned that your first job was office boy with A S Milnes.  Can you remember roughly when it was that you joined them?

JW:  It was the 2nd or 3rd of January 1960.

BA: How would you describe the firm at that time?

JW:  Oh it was a small two-partner private client firm, dealing purely with private individuals, some of whom came through banks, solicitors and accountants.  Basically therefore it was contacts built up by the partners, the ex-partner and the current partners that were there, and members of the staff.

BA:  Do you have any recollection of what the offices were actually like?

JW:  Yes, quite vividly.  It was in an old building called State House in Dale Street in Liverpool, 14 Dale Street.  You went in up a rickety old lift.  There was the forerunner to an atrium, I suppose.  The offices were off.  There were all sorts of offices in there: solicitors and accountants and ourselves and all sorts of things.  The offices were very small and were off this sort of galleried atrium.  No money had been spent on them for years.  In fact I don't think we ... We did, we painted it two or three years later.

BA:  Now what did one do as an office boy in a firm like A S Milnes?

JW:  The main thing was to try and learn my way around Liverpool.  You would take hand deliveries, go down to the bank, run across to the Stock Exchange, which was just over the road.  And when I say office boy, it was really a junior clerk, and you'd do what was called then the 'clearing'. We still had the fortnightly settlement for equities and it was all done manually in what was called a clearing house.  It was a big room in the Stock Exchange, and the majority of people gained a lot of experience.

BA:  How would the Liverpool Exchange at that time compared with the London Exchange, say in terms of size.

JW:  Oh very small.  I  can't remember how many firms there were.  They'd begun to shrink in number.  When I say in number, it might have been 52, but over years the Liverpool Stock Exchange firms shrank from 50 to single figures and I think currently there are about 6 or 7.  It's not called the Liverpool Stock Exchange now, but when it finally became the northern unit and then part of the International Stock Exchange, although the firms had shrunk dramatically, the actual number of members was still almost the same as it had been when there were a large number of firms.  So the people employed were probably still about the same.  Firms had got together to save costs and just to grow bigger.

BA:  Do you have any recollection of whether the firm did business with other exchanges, or did it do all of it on the Liverpool Exchange?

JW:  Well I ended up, after the compulsory year of working in the office - because you couldn't go onto the floor until you'd had a year's experience - I ended up very shortly after that doing the majority of the deals for the firm on the floor.  So I didn't actually go out and get a lot of business. I was the dealer, and the majority of deals were done on the floor with people that we called 'shunters', although there were certain stocks which you knew you'd get a better market in elsewhere. For example, there was an insurance jobber up in Glasgow - sorry, shunter again - and so, yes we'd deal there.  And of course the other thing is you'd deal in London, through an agent.  And we used to have a fixed time call, well actually three or four during the day, fixed time calls when we would speak to him on the telephone and give orders.  But you could always ring him anyhow.

BA:  So, just to be a bit more specific, a fixed time call was a call that would take place every day at the appointed hour.

JW:  Every day at about five past ten.  There'd be another one at eleven, one at twelve and two in the afternoon.  The times escape my memory now.

BA:  Were you restricted in the number of agents you could have?

JW:  No we actually used one because he had been known to the partners of the firm, because he'd originally been on the Exchange in Liverpool, a fellow called Roy Marshall.  And he  came to London and started up his own firm, Roy Marshall & Co, and we used them most of the time.  There was another firm but we didn't give them an awful lot of business.

BA:  And did you have to pay these firms the full commission that one would normally pay to any broker on the London Exchange who was doing a transaction for you?

JW:  No, not quite. There was a reduced commission to pay.  And you could come to certain arrangements.  I can remember once dealing for myself and I happened to say, that was for me, and he said, forget it, no charge.  But basically as there were fixed commissions for your clients, there was indeed, something almost like half commission but not quite.  It was a sliding scale between the agent and yourself.

BA: Can you elaborate a bit more on what the shunters did?

JW:  Yes, because I ultimately joined a firm which was a shunter.  Let's talk about the firm that I joined. It was called Henry E. Rensburg.  There would be a London end to the telephone line.  The Birmingham end had closed down when I joined them, but there was London, Manchester and Liverpool. Ultimately Manchester closed down as well, so there was just ourselves and London.  And this was an open telephone line.  It was a private line and you'd start off in the morning.  You know the old-type thing where you had to turn a handle and the bell rang at the far end.  They had a list.  It was a big pad of all the stocks which we were shunting in.  And they would give us the prices which they found in the London market.  Now, if for example, Akroyd & Smithers were making a share 3-6 and Wedds were making it 4 1/2 - 7 1/2, I'm talking in old pennies at this stage, then the price that would be put up to us would be 4 1/2 -6 because that was the touch.  They might in fact just put on the one price 5¬d because we used to go up in 3/4d in those days.  And we would then make a price on this spread, making a turn either side.  And again there was an agreed figure.  Again I can't remember the scales.  But let's say on a share of say, 50/- that the turn was say 1 1/2d.  We would split that, so if the share was offered at 50/3d we'd try and sell it on, or somebody would come and ask us what the price was, we'd hopefully say 50/4 1/2d.  And that 1 1/2d - or, if the dealer was very good in London and he got the stock cheaper than 3d, i.e. 2 1/4d - we would then split it, normally 50-50, and that was our, in quotes, commission.

BA:  And did the shunters actually stand on the floor of the various provincial Exchanges?

JW:  Yes.  You had one fellow sitting down with his ear to the phone, or more likely one of these old headsets on, jotting down the prices, because the prices keep on changing.  You don't just take a list every hour.  The prices keep on changing, so he's making a note of these, and he's got a couple of dealers standing by him and you used to know that if somebody called out Westland Aircraft it was at the bottom right of the list.  How the hell that comes back to me after all this time, I don't know, but that's where it was.  The gilts were in the top left and so on.

BA:  How did it work, say, for example, at the London end?  Was it simply a case of a member broker on the London Stock Exchange acting as the London end of the shunting operation?

JW:  Yes, they had some little boxes in Shorter's Court. The box wasn't the size of this office.  It was about, at one stage, about the size of this desk, with a little window out onto Shorter's Court.  And there were railings there.  And they built up a step on the railings so when a dealer came out of the market he could stand on that and pass bits of paper in through the little hatch.  And there was a girl called Minnie, that was it, sitting down there, and she would give the prices up and down, receive our orders and then report back to us.  Occasionally the dealer would want to  argue with you about the price or try and tell you a story about how clever he'd been at getting, squeezing an extra 1 1/2d or something, and so he'd come on and take the phone.  This was a firm called Moy Vandervell, or Moy Davis Smith Vandervell.  When I first met them they were still using the candlestick telephone.  In fact there was one in Liverpool as well on the floor, where they used to call us to the phone.  We had two telephonists.  I don't mean the female variety. They were two fellows, and they used to call us and all the phone calls that they got in would come through their candlestick telephone.  They'd put them through to one of these slightly more modern jobs in the boxes.  But that was basically how it worked.

BA:  Can we go through the steps by which you came to join Rensburg?  You said at one point after about a year you became a dealer for Milnes.  Did one have to go through the equivalent of what would have been a blue button on the London exchange?

JW:  Yes, indeed.  I wasn't a blue button for long.  I've forgotten what happened.  I think the other fellow who was our dealer at this stage was ill.  And yes, we did.  You took a thing called the Clearing House exam and then you - most people had to take that in any case - became a dealer.  I actually became a member of the Stock Exchange in 1964, and became a partner in the firm within a week or two of becoming a member.  I lasted as a partner for about six months, because in the meantime a fellow came to me and said, 'listen, we're going to start jobbing and would you like to come along and have a go'.   That interested me because I was more interested in dealing than in going out and speaking to clients. I always found it embarrassing going to the bar at the golf club and meeting somebody at the bar who you put into Rolls Razor; it had gone bust, or things like that.  And I decided that wasn't the life for me, not being a salesman.  So I rather jumped at the idea of being able to just deal.  So that's the reason I left.  I didn't fall out with them.  In fact we remained friendly until both my old partners in fact died.  But in fact that old firm A S Milnes is still in existence in Liverpool, with mergers and the name Milnes is still used in the title of the current firm.  That's how I came to change firms, and that was - I can tell you exactly - it was 25 years ago last week.

BA:  This was a new jobbing firm that was being set up?

JW: Well  it was a shunting firm originally.  In those days the country were, dare I say it, ahead of London.  We had a thing called, would you believe, dual capacity.  And Henry E. Rensburg & Co, to give it its full title, of that day was not only a broker, dealing for clients, but it had this shunting side.  It also ran a book and really was a jobber in Government securities as well, which it had done for years.  Because the firm started about 125 or more, 130, 140 years ago now, dealing in Home Rails, which is how the Liverpool and Manchester Stock Exchanges sprang up in the Railway shares, and when they got nationalised and government stock was issued, that's how the firm got into dealing in gilts, and that's where it stayed - and indeed, with amalgamations, it's now part of this firm.

So we had these three businesses going.  And they decided to stop the shunting.  Instead of shunting, which was undoing the position immediately - if we sold 3,000 ICI shares, we'd go into the market to buy them back immediately, trying to get this 1«d or whatever; if you could get threepence it was even better; get the turn - instead of doing the shunting, we were going to try running a book, in fact, therefore, jobbing; and that's what I joined the firm to set up. The senior partner and a couple of others had started in a minor way.  I joined them, was sent to London to Durlacher Oldham Mordaunt Godson, for two or three months training, and then returned to Liverpool and ran part of the equity book for a few years.

BA:  Why was it that Henry Rensburg had decided to try and do a bit of pure jobbing?

JW:  Because we'd had the experience of doing it in gilts for some time, and we'd had the experience of shunting which was sort of trading in a way, the idea being that if you are jobbing - and we'd still use the same agent in London, because we didn't actually deal direct at that stage - the idea was that we might be able to increase the profitability of the firm.

BA:  Is there any particular reason why you went to Durlacher?  Did the firm have some association with Durlacher?

JW:  No I think the senior partner of the day  was a member of the Liverpool committee, and he'd obviously met other people, and at some stage had met somebody from Durlachers when he was in London, and struck up a little bit of a friendship, and this was how it was arranged.

BA:   What form did your training take?  Were you standing on a pitch?

JW:  Yes, I was a member of the Stock Exchange in Liverpool, but that wasn't really acknowledged on the floor of the London market and I had to go before a small interview, I suppose it would be of the membership committee - I don't know - in the old Council room in London, to apply for a blue button.  So here was I, a member of the Liverpool Stock Exchange, standing on the floor in London with a blue button on, and technically not allowed to deal.  But yes, I stood on Durlacher's leader pitch, for some weeks.  I had an idea how the system worked obviously, after a few years in the business.  And you pick it up remarkably quickly.

BA: Who was running the leader book at that time?

JW: A fellow called David Johnson.  

BA:  How did you find actually going into the London House?  Was it very different to the Liverpool house?

JW:  Oh yes, it was much bigger.  The Liverpool floor would have fitted into a tiny corner of the old London floor.

BA: What was the attitude to provincial members among the members of the London Stock Exchange?

JW:  They were very friendly.  There was no animosity.  And you might think, well here are you setting up as a jobber in the country and yet there are jobbers in London, why should they help you, why should they deal with you?  They did.  We used to deal, again, through our agent, and then occasionally we'd deal direct.  But they were quite happy because they realised that if you were dealing it was fresh business as it were.  A position that you wanted to undo - it would be particularly in gilts - you'd have done a lot of small deals to get a decent order.  So in a way you're acting as a clearing house.  And if you'd sold or bought stock, if you bought, they would deliver one deed to you; and if I sold to them, they bought, the chances were that I'd deliver one deed to them, although my œ100,000 of stock might be made up of 50 or more deals.  So they were quite happy for that.  It's a bit of give and take.  Of course there's always a bit of animosity, but it wasn't too much, and it was normally only just a few firms, or more likely individuals in the firm who didn't see why the firm was helping or supporting you.  So it depended.  And you knew who they were so you just didn't go to them.

BA:  Were there other Liverpool firms setting up as jobbers at the time?

JW:  Yes.  Originally there were seven firms in Liverpool that shunted, or made a very small book in local breweries, or something like that.  But of those firms there were four large ones who were big shunters.  So we were all competing against each other to get our prices and to do the deals and to undo the shunting deal in London, because we all had different agents.  So you can imagine, sometimes you could see an order going round the market floor.  It just suddenly landed and there were three or four different firms in London, running round trying to undo a bit of country business.  It must have been a fine sight.  There was a lot of leg pulling going on when that sort of thing happened.

BA: When you went back up to  Liverpool, how did you go about setting up the pitch?  Did you simply replicate what you saw in London?

JW: Certainly on the actual book, the physical book we entered the bargains in.  That was pretty well a direct copy. But the rest of it: we used the same back office system - in those days it was manual;  so everybody ran the business the same way. The individuals ran a book in a different way.  You had different ideas on what should move a market.  That's one of the things that makes up a market, I suppose.

BA:  And the actual technicalities of jobbing, of quoting a price, and running your bull or bear positions, was that more or less the same as what a jobber would have been doing in London?

JW:  On a much smaller scale, yes. Because we wouldn't do the very big bargains, because that sort of business wasn't often in the country.  And I can remember that there were firms, if they got a big order they would do it in London automatically - they were entitled to - and they wouldn't give us a look at it, because it was rather nice to say to their clients 'Oh, well we dealt with Akroyd, Wedd or Durlacher'.  They were household names - well, almost. Whereas to have dealt with us, there was no, I suppose the word is 'kudos'.  But we fought it and sometimes they did give us some decent orders.  Quite amazing really, the size of some of the business in the country.

BA:  When you say 'you fought it', what do you mean?

JW:  When I say 'fought it', we just kept on going out and selling ourselves to these various firms and persuading them that we weren't fly-by-nights and we were a reasonable firm and we were there to stay at it.  And then of course we packed up.  Because we had three businesses going. As I said earlier on, we had the broking side, we had the gilt-edged jobbing side and then we had the equity jobbing side.  And at one stage there were more jobbers in certain stocks, for example, ICI and Courtaulds, in the country than there were in London.  And we came to the conclusion that this was stupid.  It was rather like today's over-capacity in the market. And we thought how can we alter this and rationalise things.  So we approached a number of the other country jobbers and said, 'listen, we will give up jobbing in store shares if you're prepared to give up jobbing in brewery shares, say', or 'pick your own sector. We don't mind'. We were fairly big, and we just suggested that this was the sensible way to approach the market, and cut back all this - not cut back the competition - but make it hopefully a better market by actually just rationalising a bit.  Because it was stupid having more jobbers out there than in London.  Anyhow, we got nowhere with that.  And as it was approaching the late sixties - it might have been the early, very early seventies - we knew that we were going into a federation with the Stock Exchanges and we knew that dual capacity was going to have to come to an end, and we'd have to split the firm into brokers and jobbers.   All the rules were changing and we decided we needed to take more people on to stand still, with these three sides of the business. And we decided that rather than do that, and we couldn't actually see that there was a tremendous future in the equity jobbing business at that stage, we decided to drop out of equities and use all our staff by concentrating them then into gilts and the broking side. And we didn't take anybody else on.  We had a staff that knew what they were doing.  So that's what we did, we gave up equity jobbing and split the staff between the broking side and the gilt-edged jobbing side.

Tape 1 side 2

BA:  [You said that you were] giving up the equities, which sectors had you been covering?

JW:  We covered breweries, stores, aircraft, motors, engineering, a sort of general leader book like ICI and Courtaulds and Unilever, a few shipping companies and then when the local man closed down in insurance shares, we took those on.  And of course we had the big gilt-edged side.  I know that I've missed out a couple of sectors. I can't remember what they were.

BA:  Were there stocks for which there was purely a local market in which you jobbed?

JW:  Oh, there was a smattering of local stocks, Threlfall's Brewery, Higsons Brewery, Greenalls.  But it also included the national names as well. I mean in the stores line, we'd do Owen Owen, which is a local store, but we also did Marks & Spencers, and Tesco, Woolworths.  So it was basically the well-known national companies and a smattering of local stocks.

BA:  Did you then move on to the gilt book?

JW:  I did, yes.  They wanted me to go onto the broking side, but I said no.  And at that stage when you've been jobbing in equities, and you answered the phone.  These were the days when it was just a phone, there was no key and lamp, or any of these modern things here.  You'd pick up the phone, and it would be a gilt-edged call, and you'd say 'Oh, God' and you'd almost throw it down to the other fellow, and say,'here, it's yours'.  You didn't want to know about gilts.  As an equity jobber, I always thought that gilts were deadly dull and boring.  Well, cutting a long story short, I soon found there was quite a bit to them, and spent many happy years jobbing in gilts.

BA:  And how long did that continue for?

JW: Gilts?  Well it's still going even where we are now.  Because what happened was that we split the firm in 1974.  Dual capacity officially came to an end in 1972, but the Stock Exchange allowed you to carry on for a period of up to 2 years, if there was hardship.  By hardship I mean, the partnership taxation was a bit complicated and it took a little bit to alter the partnership structure.  And we actually packed up in - split the firm - in 1974.  And then we carried on in Liverpool, and in fact still have an office in Liverpool.  But we joined Phillips & Drew in 1985, I think it was, and then became UBS Phillips and Drew, last year, eighteen months ago.  And a lot of my ex-partners - there were only seven of us - until a couple of weeks ago, we were all still employed, we all still worked in UBS Phillips & Drew.  Why I say until a couple of weeks ago, one had to retire through ill health and one retired at the statutory retirement age of 60.  So the firm, underneath, is still there.

BA:  Had the creation of the Stock Exchange in the mid-seventies made any difference to the actual structure of the regional business? Did you still in effect operate as the northern Stock Exchange?

JW:  Yes, still, but it was much easier to deal with any jobber at all, then, because you could just ring up and deal wherever it was.  So that added to the competition, which was no bad thing. That was the main difference that we noticed, the ease of dealing anywhere at all in the country, in its wide sense i.e. including London.

BA:  Prior to the seventies, for example when you did start a separate jobbing part of the firm, did you as partners try to steer the firm in any particular direction?  Did you want to expand the business, did you want to try and increase your market share or were you quite happy with the living that you as partners were making from it, and were quite happy to exist as you had?

JW:  I think that one always wants to try and expand the firm a little bit, if not a lot, and certainly we were trying to expand to get ready for the split, which we knew was coming. You see Henry E. Rensburg was originally a shunting firm, and it was only after the War, when - of course I wasn't taking any interest in it at that stage - but when the then senior partner got some other people he'd met on the market; just before the War, he'd started to get a few people in, and then more, and they built up after the War the broking business.  Because there wasn't any broking business in that firm before the War, or very little.  It was primarily a shunter.  So they had a big expansion in the broking business and that was continuing throughout the time I was there and until we split. We split because of the rules of the Stock Exchange. We didn't split because the partnership fell out.  A lot of people think it was that, but it wasn't.  People who weren't in the business thought, 'Oh, they must have had a bust-up'.  It wasn't that at all.  It was purely that the rules of the market changed.  So yes, the partners were trying to expand the business, a) in the broking side, that had been going on for a number of years, and of course, when we did go into jobbing in equities. We tried to expand that.  And in doing so, of course, it helped with the gilts side.  We were without doubt one of the biggest jobbers at that stage in the country.  And certainly when we packed up and just kept on in gilts, we were by far the largest gilt-edged firm.  In fact there were only three, latterly only two in the country.  Compared to London firms we were the minnow in the size of the bargains going through, but we were pretty high up the list on the number of deals.  In other words, we did a lot of small deals with low value, whereas the Wedds and Akroyds in London were doing not so many deals but with a very large value.

BA:  Did you have the same kind of merger activity taking place among local stock exchange firms that had been taking place in London, particularly during the 1970s?

JW:  Yes, because the number of firms dwindled quite a bit, and it was not uncommon for three firms to get together into one.  Normally you'd just get two getting together, but it happened quite a bit.  And then the bigger ones would then join up again.  So yes, you ended up with some very large partnerships in the provincial centres, or the country centres, which were an amalgamation of, over ten years, six, eight firms.   Certainly that has happened a lot.

BA:  One of the arguments for single capacity was that in dual capacity one potentially had a conflict of interest.  What were your feelings about that, having been in a dual capacity firm?

JW:  My feelings were completely different to some of my more elderly partners at that stage.  They didn't like the idea of splitting the firm because they'd been partners together for a long time, which I understood.  But I wasn't so much worried about that, because I was definitely of the view that you had to be very careful if you were dealing with one of your own clients in the firm, and off your own book, you could easily get into trouble, I felt.  And we adopted a policy of trying, well we certainly adopted a policy, of not giving the broking side any favoured nations terms.  And they actually did, in the end, a lot of deals with other people rather than with us, and we were quite happy in a way, because it showed that we were being..., well nowadays, you've got 'Chinese walls'; it was the forerunner of that I suppose.  We really only dealt with the broking side if we were convinced that the price was the same around the country.  We didn't like to put anything in cheaper because you could be accused - and equally there's always the risk, too - of trying to rip the other side off as well.  And the easiest thing was not to do it.  That made life much easier.

In gilts we did a completely different thing, though.  In gilts if we dealt, because there was really only one other fellow, what we did - in fact the rules changed, and this is why we did it.  They did bring in a rule about dealing off your own book.  And what we used to do was, in a gilt-edged stock, because we had the volume of business going through, which he probably didn't want to deal with our client side like that, we would actually sell the stock to him, and he'd then sell it back to our client side, and give him a turn in the middle, to get the business done, but again at the right price in the market.  But it was very complicated, and the sooner we split off the better!

BA:  I wonder if I could ask you to go through what a typical day may have been for you, just arbitrarily pick a date, some time in the early seventies.

JW:  This is going to be testing, isn't it?  Well we started later.  The gilt market, I can't remember, started about 10 o'clock, and then it came to quarter to ten or half past nine, I forget.  So you'd get in roughly 9, 9.15. half hour's train journey. And we'd have a chat and see what we'd read in the papers. And we'd have a chat in the dealing room or sometimes in the partners' private office, and then we'd get our prices. We always had an idea what they were in London.  The gilt market's quite easy, because basically they all went up or they all went down, pro rata it moved, all the stocks moved together.  It's a very simplistic way of explaining it, but still.  And the phones would start ringing, and you were off.  Sometimes they didn't ring, that was always terrible.  Years before we used to go out for coffee at 11 o'clock or whatever it was, to the local coffee shops.  We'd take it in turns to go out.  But at this juncture, when we'd split the firm in 1974, we actually stayed at our desks and had coffee there, and then we'd stagger our lunch hour.  We'd normally eat lunch in the office.  Once or twice a week we might go out.  When I say, eat lunch in the office, not at our dealing desks.  There was an unwritten rule in the firm that you were not allowed to eat at the desk at which you worked.  You had to move to another desk, just to give you a different change of scenery, just to relieve the boredom.  And we stuck rigidly to that.  So you might go through to the partners' ... We always had a partner's office.  Three or four of us would share one big office.  In fact sometimes it was a waste of time, because if you're a jobbing firm your partners are active dealers, so you're either on the pitch or in your dealing room, and you're not sitting behind a partner's desk.  So it was the most under-used area in the office.

And then you'd go through.  The market would close 3, 3.30 I think it was; a bit of admin work; and those were the days, 5 o'clock, train home.  Easy wasn't it?

BA:  So you weren't actually physically going onto a floor?  You were dealing over the phones more or less as a dealer would deal today over a phone?

JW:  Yes, we were one of the first to pull off the floor in Liverpool and then we went back, because they said, would you like to go back?  They didn't actually put pressure on us to go back, so we went back, and in fact got a little room off the floor so that we were still very much in touch with our men on the floor.  But then the floor started to die as other brokers started moving, and in fact in Liverpool, the floor became my office, became our dealing room and office.  So in the end we stayed there to the very end.

BA:  Was that characteristic of most firms that were doing country jobbing in the sense that they were primarily dealing on the floor?

JW:  They were primarily dealing on the floors, most of the others, yes, indeed.  But Liverpool had its contraction in the number of firms very early, and therefore the floor packed up earlier than the others did.  This was just one of those quirks of fate.

The other thing about the day though was that by the time I went home at night, or late afternoon probably, we knew our profit and loss for the day.  And we always prided ourselves in that. So we always knew, even when dealing in equities.  We always knew the P & L before we went home.  We put a computer in and we hadn't got a cat in hell's chance [of knowing the P & L].  We then only knew it the next morning. Then we put another one in.  That gave it to us - back to normal then.  But it was very important, at least we always used to think it was, to know that.  You then felt you were in command of the business.

BA:  During the course of the day were you able to have some idea of what your opposition was quoting in the same stocks?  Or did you feel that you were quite cut off?.

JW:  You wouldn't know exactly what they were quoting, but you got a fair ... You knew what the middle price was, roughly.  Yes.

BA:  And did you actually each as individual partners, have a separate book of stocks, that you alone - or would you have an understudy?

JW:  No, we had separate books.  In equities, I might have been running the brewery book.  I used to run brewery and stores.  In gilts, yes, we split that up. You'd either run the shorts, the mediums, the longs.  So it was easy to do, because of the way the gilt market has grown.  It was very easy to split it up at that stage into shorts,  which were up to five years, mediums, five to fifteen, and longs.  Irredeemables, there weren't enough, so you normally lumped them in with the longs.  There weren't enough of them to make it a separate book, and we lumped them in with the longs.  So yes, we did have a separate book.  And we'd occasionally change over. When I say occasionally, you would be stuck on a book for a year or two.  And of course if your colleague went away you'd try and look after his book.

BA:  Let me ask you some more general questions.  You've already touched on the links that the firm would have in London and as I understand it you essentially had an agent, who would before the creation of a single stock exchange...

JW:  Basically yes.

BA:  Did you have links with the other provincial exchanges?

JW:  No, no, we didn't, not in that way.  Brokers in the other exchanges would ring us up and deal with us because we were a jobber.  They rang up and asked a quote, and if you gave them the right quote, they'd deal with you.  They'd go round and try the market.  They'd try London, they'd try Glasgow, they'd try Liverpool - certainly. But we didn't have any links like an agent.  At one stage we considered putting a dealer on the floor in Birmingham, and in the end we actually put a direct telephone line there, so there were no agents.  In fact we still used an agent in London to deal for us in gilts and keep us in touch with what was going on, and be our link with the Government broker, up to I would guess the early eighties, about '80, '81, [ie. end of '81] when in fact this firm Moy Vandervell, who were our agents, packed up. I was actually on my way to London when that news broke, and I stayed here the week and went to see all the jobbers down here and arranged for the fellow who'd been looking after us with Moy Vandervell to join my firm the next week, and then he became a partner with me.  So in fact I had a partner and a dealer based in London. But we guaranteed that we would not make prices on the London floor.  These two would not make prices to any London broker.  If London brokers wanted a price they had to ring us in Liverpool.  And that system worked very well for a number of years.

BA: But they were members who were permitted to go onto the floor of the House and then go to the various jobbers?

JW:  Oh yes, one was a member and one was an authorised dealer.

BA:  You mentioned the Government broker.  What form did your relations with the Government broker take? 

JW:  Well if he was changing a tap price, or making a new issue, he would go onto the floor and walk round the jobbers.  And that news gets out pretty quickly as you can imagine.  And the jobbers were entitled to deal with him, when he was changing his price.  Now we were 200-odd miles away and by the time he'd walked round the floor and he rang us, it could be half an hour, or more.  And my partner there or dealer there - he'd just go to them and say will you tell them in the north that the tap price has changed.  In a way, it was just as if we were standing on the floor. So that was our contact, and if ever we wanted to do anything with the Government broker, we could ring him up, but more often than not he'd be on the floor, so Barry who was my partner, could go up to him and say, 'what are so-and-so? I'd like to put this proposition to you'.  So that was the relationship we had.  We would talk to him at various times of the day on the phone, but the main contact with him, and at his request, was in fact with our partner and dealer on the floor in London.

BA:  In more general terms did you feel that you were as adequately informed about a stock as the London jobbers were, or did you ever feel that you were at a slight disadvantage being away from the main central market?

JW:  No, I don't think we were at a disadvantage.  I think that it worked very well.  It's a question of getting used to the system.  We just grew into it.  There was no difficulty.  In the gilt market there was no trouble whatsoever.

BA:  What was the advantage to a broker or a client to do business with you in Liverpool rather than go down to a more liquid market in London?

JW:  Well it was still liquid, the prices were hopefully the same, and if the price was the same or better, nowadays it would be called 'best execution', I suppose - they would deal where the price is best.  And it was competition.  And of course we built up a reputation, and we used to go round and visit all the brokers in the various country centres.  I think we used to try to get round to see them all every two years, we saw every body every couple of years.  And quite a rapport grew up, quite a friendship developed, and this was how you got the business.  And also when you're dealing in small amounts of stock, you didn't want to send someone into London to do it.  We were specialists in dealing with the small client - sorry, the small client through his broker.  We did a tremendous number of deals a day.  The average size would be, I forget; I used to have the figures - certainly at one stage it would be œ1,500 of stock nominal.  It grew.  It did grow, quite dramatically in fact.  But we still do a lot of the small bargains, here in this firm now.  Although we have a very large gilt business - hopefully we're dealing with major institutions, we're doing large size - there's still the members of the public that have got small holdings in gilt-edged.  And we still provide a service for that in that we have a small desk on the dealing floor downstairs which is manned by three or four people and they concentrate on dealing with the brokers either in London or in the country who ring up, and we still have a staff up in Liverpool where the country brokers can ring as well.  And that is, again, dealing with the brokers, the small brokers - well some of them aren't so small, and indeed some of the orders they now get are larger than they used to be - but we still support the small market.

BA:  Did you begin to see some of the larger institutional business?

JW:  In Liverpool?  Yes, I suppose we did, because the brokers, as they were breaking into that business, would give us sight of it, certainly.  Our main expansion came one day, it was very quiet - I've forgotten the year - and a broker in London range up, and said, 'we've just been flicking through our STX book' (which is the internal telephone exchange in the Stock Exchange) 'and we see that you deal in gilts.'

Well, we knew the firm, and they were indeed quite a big player in the gilt market.  So we said, 'yes', and they said, 'what's the price of so-and-so, and so-and-so?'  It was the first million pound order that we did. In fact, it was a million both ways.  And from that day on until they merged (I think ultimately a lot of their fellows left the conglomerate they joined), but from that day on, for years and years, we spoke to them every day.  And the main benefit we got was not so much - yes, when they came on with that first quote, there was no way I wasn't going to do the deal.  But the main benefit was that we were talking to somebody who knew about the gilt-edged market.  And we could talk to them  every day. We didn't necessarily deal with them every day, far from it, but we were suddenly speaking to someone who knew a lot about the gilt market.  Whereas the majority of brokers [in the country], I think it's fair to say, and they wouldn't argue with me, didn't at that stage know an awful lot about the gilt market.  That helped us a lot.  And from that, we started to deal with other London firms.  And the business grew and grew.

BA:  Did you feel you were competing directly with the London jobbers, Akroyds, or the Wedds or the smaller firms?

JW: We weren't competing with the Wedds and Akroyds, no.  Now, yes; at that stage, no.

BA:  Did you feel you were able to be competitive, though,  to some of the London gilt-edged jobbing firms?

JW:  Oh, yes, certainly.  Of course we had the disadvantage that we had to settle overnight, in other words we had to send stock out 200 miles away.  You can't deliver during the day, or you can't deliver the next day, so we had to have a very efficient and snappy back office, because a night's interest [cost] a lot. So it had to be pretty efficient organisation, because we had to lose that [ie. the interest charge].  There was no way of doing anything else.

BA:  Now one of the things that the London jobbers were criticised for, coming up towards the end of single capacity, was spread agreements both in gilts and equities.  Was this something that Rensburg was involved in the sense that ..

JW:  Well at this stage we'd changed the name to Moulesdale.  

BA:  When did that actually happen?

JW:  Well when we split from Rensburg in 1974, we called ourselves Moulsdale Rensburg.  We realised that was a mistake fairly quickly because it was confusing with Rensburg still going.  So we dropped the Rensburg in a couple of years and just called ourselves Moulsdale.  But that name came because when we split, he was the senior partner of the firm.  And we were Moulsdale until we joined - in fact when we joined Phillips & Drew, we were Phillips & Drew Moulsdale, and it's only in the last eighteen months that the name has disappeared.

BA: Yes, so were price agreements things that one participated in?

JW:  We didn't.  We were never asked to and we never did.  There were certain stocks which you didn't make a normal price in, because they were bloody difficult to deal in, and so you might just be bid or offered, certain stocks like Victory 4s, and odd stocks that were difficult.  If you were making a two way price, it would be a point or two points.  But that was market conditions more than a price agreement.  I'm not conscious of ever having agreed any price spreads.  Our basic idea was to try and make a price of a certain width and then you could always close it.  But we hadn't agreed to make it that width with other jobbers.  No, but we tried to keep uniformity within our own firm.

BA:  One thing I believe the London jobbers occasionally criticised the provincial jobbers for, was basically taking London's price and then seeking to undercut it.  Was that something you were aware of?

JW:  Yes, I suppose a fair amount of that did go on,  particularly just after the shunting - when it started up - to  try and get the business.  I think that did go on.  In gilts no, it didn't really pay to try and do that.  I mean you're in a cash business, we had to worry about ....

Tape 2 side 1

JW:  We had to worry about being out of the cash or money overnight or over the weekend.  So no, we weren't too keen to try and undercut them at that stage.

BA:  How often did you find you were dealing with London to close a position or to cut a position?  Was that an important part of one's jobbing?

JW:  It wasn't so much cutting a position.  If you wanted to cut, quite often you'd try and do a deal with the Government broker.  But it was more a question of adjusting the book.  You could suddenly find that the way the business was that you'd suddenly got very bull or very bear, which wasn't the true way - it wasn't actually showing what the business was in the market.  The country brokers as a whole could suddenly all be buyers or all be sellers, whereas in London you were getting a two way business.  They could indeed be the opposite way.  And it was a question of just looking at the total book, seeing what our total capital was, weighing up, saying we've got far too much here, we must adjust it, what are we going to do?  Then you'd look for a stock.  You'd think, well what do we try and do it with?  And it would pay to try and deal in a stock which the Government was active in, because then you'd just deal with the Government broker.  And if not, then we would go to the market and say 'listen'.  They were quite happy to take the stock, or sell us stock.  But, as I say, sometimes the country could be sellers to a man, and yet in London the jobbers were finding buyers all over the place; so it was an odd phenomenon, really.

BA:  Did you have situations where there was wide variation between the prices up in Liverpool and those being quoted down in London.

JW:  No, not really, because we knew what the prices were.  We had a rough idea of what they were.  We didn't actually know the touch, but we had an idea what the market was like.  Don't forget we had our partner down here.  And he would say, 'oh add an eighth on the mediums and a quarter on the longs'. So you'd then adjust your prices. That's a very rough and ready way of doing it. And then he'd come down and say, 'well one or two of them aren't quite that good, so they should only have gone up three sixteenths or something'. 

BA:  So was London a kind of benchmark in that sense?

JW:  Yes.  Well, London is the mother market.  We were just providing a service in the country.

BA:  One of the things that is often said about the jobbing firms in London was that capital was one of their main problems in coping with the market environment as it evolved during the late sixties, seventies.  Was that something you were conscious of as partners in Liverpool?

JW: Yes, capital was a bit of a problem.  None of us were wealthy men.  We had capital in the business and as partners went out, either through death or retirement, so did their money.  That had to be replaced.  New partners were coming in, and when I was senior partner, once or twice I didn't let them take out an awful lot of money at the end of the year, thereby forcing them to keep more capital in. In fact, we didn't have enough capital to run the business, basically.  Yes we were liquid.  We weren't breaking the rules - capital adequacy rules - and things like that.  But we had to have a tremendous line of credit at the bank.  And I always kept a little bit in reserve, which the bank agreed, it was a commercial rate of course.  Myself and my finance partner could ring up and on our voice at the end of the phone, have an extra line for the night, if we got into a little bit of trouble.  I only had to do it twice, three times.  But it was useful to have that buffer there.

BA:  Was position-taking something that you found was an increasing thing that was happening?

JW:  We made our money on our positions.  We made very little on actual turnover during the day.  Yes, the taking of positions provided the majority of our income.

BA:  About how long would you be running a position for?

JW:  Sometimes not very long.  But you could buy a stock,  and, if you were damn lucky, you'd sell it and make a turn and that would be super.  It didn't often happen.  Once you've taken a position, one thing we always looked at was when the stock was delivered to us.  If it came in the next day, you were then beginning to pay for it.  You had to take it up and pay for it and so you were out of the money.  So it depended upon what the book was like, how your cash situation was.  But we'd run positions, even in gilts for weeks on end.

BA:  What capital did you feel it was necessary to run a book?  Did it vary from book to book?

JW:  Didn't look at it that way.  We'd looked at it over the whole gilt market. Although we had our own books, we didn't say, well you're limited to X. We just looked at the total.  It wouldn't surprise me if in London it was slightly different, because they were dealing in much larger amounts of money, but we just took the book as a whole.

BA:  And roughly how much do you think it was necessary say at a particular time, to run the firm's books?

JW:  Well it was millions really.  We borrowed it from the bank.  We had capital in the business but our capital wouldn't have provided.  We couldn't have run very large positions.  When I say very large I'm not talking about the large sizes run down here.  A couple of million was a large book position.  In fact I think we rarely had positions over a million.  Latterly, the last six years, yes, but before that we wouldn't often have a position over a million in any one stock.

BA:  Just to switch the focus slightly, what were your feelings when the Stock Exchange did come to a decision with the Government to abolish fixed commissions, and then shortly after the Stock Exchange decided to do away with the single capacity system?

JW:  I was very lucky and fortunate in that I was part of that decision-making body, called the Council of the Stock Exchange.  And so I was involved in the big debate, the two day debate we had in July or August, I've forgotten how many years ago now.  I'd been on the Council since 1981, and I'm still there.  So I was well prepared, as well prepared as anybody was, knowing about it.

BA: And what were your feelings about the decision to end single capacity?

JW: It was a unanimous decision by the Council.  It was the end of an era.  And I think that my personal feelings were definitely, and still are, that it was very sad.  I suppose it's progress.  It had to happen.  But it was quite sad really.  The end of an era.

BA: What would you say had been the strengths of the single capacity system, even within your direct experience as a dealer?

JW:  You had the segregation of the businesses.  There was no doubt about that.  And I believe that jobbers and brokers are two different animals.  You had a completely different outlook on life.  It's as different as chalk from cheese.  I don't think many people make the change from one to the other very easily, although funnily enough a number of jobbers have now become brokers.  Perhaps that's the easy way of doing it.  But no, I think that they were two different animals. As to market-making and broking now, the system is so different, but looking round, you've still got, although I don't suppose it's going to last for much longer, a lot of old traders - that sounds terrible - ex-jobbers working as market makers. When they've gone, I do wonder what will happen to the market-making system.  It'll carry on, but it might lose a little bit. I don't know.

BA:  Well let me ask you one concluding question. What would you say it took to be a jobber? What were the qualities of a successful jobber?

JW:  I read an article once that a jobber was a fellow who went down on to the market with a bit of paper, a sharp pencil and his nose, and lived on his wits.  And there's a lot to that.  I believe one's got to be mentally agile.  And the one thing you really haven't got to do is to worry.  If you worry, you're not going to get to sleep at night.  And then you're going to be no good to anybody.  So you certainly mustn't, in my book, worry.  And I particularly could never work with somebody who hadn't got a sense of humour.  And it was fun.  That era's gone, never to return.

BA:  Would you ever have contemplated taking up a different career at any stage during your jobbing career?

JW:  During the jobbing career, no.  I was forced to give up trading, running a book, when I became senior partner, which is too long ago - I don't like to recall.  Where we were in the country it was very difficult to be senior partner and to be an active jobber.  I've often had a hankering to go back to it.  I could quite easily go downstairs now, pick up the phone and start dealing.  But, I don't.  I have changed my career, because I've given up that.  I'm no longer the senior partner, because we're now in a bigger firm here.  I'm now, a lot of people say, 'poacher turned gamekeeper' in that I'm now the group compliance officer here.   If you asked me which I'd rather do, I'd rather go back a few years and be running a book.

BA:  I think we'll finish on that note.  Thank you very much.