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

Interview No. 34: Norman Whetnall

Interviewer: Bernard Attard

Institute of Historical Research: 27 June 1990

Tape 1, side 1

BA: Where and when you were born?

NW: I was born in South London on 5th July 1928, in Lee Green, South London.

BA: What were the names of your parents?  

NW: My mother is still alive and kicking. She's 87 this year. But my father died. His name was Thomas. He died 14 years ago now.  My mother's name is Amy and she remains very fit, with the exception of her eyes that are a bit dodgy at the moment.

BA: Where did they send you to school?

NW: I started off in an Infant's School just across the road from where I lived in South London. Subsequently we moved from time to time, as people do, and I went to Rathbone Road School in Catford.  I was there when the War broke out in 1939, and I was evacuated with the school down to Ewhurst in Surrey, and then subsequently came back to Catford Central School in London at the height of the Blitz.  So in my entry in 'Journalist's Who's Who' it says, 'Educated in Catford Central School, mainly in the bomb shelters.' Basically it's true.  And from then on, I imagine you want to know how the career started?  An uncle of mine worked at St Clement's Press which was a subsidiary of the Financial Times and he got me a job on the Financial Times as a clerk in the Accounts Department.

BA: About when was that?

NW: 1943.  We used to travel up to work on the trains then from South London along Doodlebug Alley, as it was called.  The Doodlebugs or the Flying Bombs used to follow the trains up and fall either side of the train.  But since we were in a situation where there were young lads and girls together, we didn't seem to mind too much at the time.  Looking back, it's quite ironic, actually. But anyway, I started at the Financial Times' rather Dickensian Office, sitting on a high chair and stamping invoices.  I progressed a little up the ladder on the accounts side. And then I went into the RAF in 1946.  I was supposed to do two years in the RAF as a National Service man, but the day I was due to be demobilised, which was in July '48, all demobilisation was stopped because of the onset of the Berlin airlift, and the problem at the time, where you know, they thought we might be at War with Russia.  Anyway, to cut a long story short, I did another six months as a result of that and came out of the airforce, went back to the Financial Times, told them I didn't want to go into the Accounts Department, and I went into the investment inquiry bureau, where in those day, the Financial Times ran this very good bureau, which used to advise small investors particularly on buying and selling stocks and shares.  We had a couple of experts there, and my job at the time was merely, I was quite a good typist, and the idea was to write letters to all the small investors who wrote in, giving them advice on stocks and shares.  In those days we used to tip rubber plantation shares at a penny.  This was just after the War when the plantations had been ravaged by the Japanese and the war out there and of course the shares were virtually worthless, but subsequently became worth a lot of money.  I did this stint in the investment inquiry bureau of the Financial Times, and then asked to be changed over.  I wanted to become a journalist.  So I saw the Editor, Sir Gordon Newton, and he put me into the prices room, which is the basic department of all Stock Exchange affairs, learning about Stock Exchange prices, movements and... In those days we used to prepare the prices for the back page of the Financial Times, together with yields and things. From there I progressed into the market room and became the junior market reporter, where we used to take various sectors of the market - say Engineers or Stores - concentrate on those two or three particular departments of the market, and write little pieces in the Financial Times Market Report, which at the time and still is to some extent the Bible.  And I progressed up the ladder there until I became second in command, and then in 1959 I was offered the job as Stock Market's correspondent of the Daily Telegraph by the then doyen of the City - Francis Whitmore.  And I took it and the rest is history - I've been there ever since - 31 years this December.

BA: Who were the people who you worked for in the investment inquiry department of the FT?  Who were the experts at the time?

NW: Don Ryder. Don Ryder went on to become Chairman of British Leyland and Reed International.  And Robert Smythe who went on to become a top stock broker, and the last I heard of him he was retired on Gozo.  But those were fun days, and one used to get a real kick out of getting letters back from the small investors who'd made money from these recommendations and used to write in to say 'Thank you'.  It doesn't always happen, of course.  

BA: Where would you be getting your information to recommend stocks; because you mention tips, but I'm sure you don't quite mean the same thing as Sunday tipsters who occasionally were a bit notorious?

NW: The Stock Market is all about having information, hopefully knowing something that the other guy doesn't know. But it all comes down to real study of individual companies, looking at the background and saying to yourself, 'They're in the right sort of industry to progress and grow', looking at that particular sector, then studying individual companies and looking at their recent record, perhaps what the Chairman's saying about the current year's trading and so on, and then taking a view and saying on that basis, all things being equal, the shares are reasonably priced or even cheap.   Now nothing has changed; that was in those early days and it remains the same today.  So basically you've got to do your homework when you're looking at stocks and shares. It's not easy to make money in the market; some people thought it was, and is.  But it isn't anymore, and it really wasn't at any time.  But of course now we've got the insider trading laws and things, it makes it much more difficult for the spivy punters, as some people refer to them.  But you've got to remember that those spivy punters, so called - what I would call the professional investor who used to deal perhaps five or six times a day in things which he fancied to move up - the fact that the market has changed so much, means that that man has largely disappeared, and in my view that means the market has largely disappeared.

BA: Did you regard what you were doing as quite different to, say, the tipping in a Sunday paper or was that more or less the same thing? Because it wasn't unheard of for someone to know about what was being printed in the Sunday press a few days before.

NW: It was notorious for that and there were certain brokers in the market at the time, it's no secret, that had contacts there and they would deal on the basis, but would also let the jobbers know at the time. They wouldn't tell them directly, but people got know these things.  And the regulars would come round so the jobbers would be prepared, if you like, and they weren't too upset as a result.  

BA: Did the standards change after a while, or did that kind of flow of information continue right up to Big Bang?

NW: Well, things obviously had to tighten up.  Talking purely for my own job at the Daily Telegraph, we've always had a tight security system.  The problem was really with weekly newspapers where copy was going down to the printer two or three days before it actually came out on the streets. Then you'd get a situation where perhaps somebody in the printing department would tell a friend and he would tell another friend and they're the leaks. It was very difficult to stop it, but certainly there's been a tremendous tightening up of that situation and you rarely get a Stock Exchange inquiry now based on a newspaper article, or what is said to be a leak in a newspaper article, because the security is now very good.

BA: Could you describe in a bit more detail what the prices room did and how you actually went about getting the closing prices to print in the paper the following day?

NW: There again, things have changed dramatically. But in the old days we used to get the prices over the little ticker-tapes and those would be processed.  We used to take the ticker-tapes and literally write them out in long hand.  And obviously, in the early years on the Financial Times, particularly, although it printed the biggest number of prices of any paper, it was still small relative to what it is today.  Now there's bigger staffs, there are computers, and so on, and we get information direct from the Stock Exchange fed into our computers on the share prices.  So it's automatic these days.  Until Big Bang and until the onset of the screen trading, I as a Stock Market correspondent had tremendous difficulty getting late information and up-to-date information, the same as every other Stock Market correspondent at the time, because things used to change quite dramatically sometimes at 5.30 in the evening, and many papers would have the wrong prices in as the result.  It was my job to check around and get the late features and get the right prices in the paper.  Some you'd win, some you lose in a situation like that.  The position was never perfect for anybody.  But nowadays with the computer screens and the Stock Market closing at 4.30 we've got a much better chance of getting everything accurate and the Stock Exchange itself sends out the prices to our computers and they're printed up.  So more or less, the prices are the same in all the papers now, because we all take the service. 

BA: How did you go about getting the late stories?

NW: Personal contacts.  I've been around a long time in the City.  I know a lot of people in the City dealing rooms, head of market making and so on, and also many, many so-called captains of industry, chairman of public companies, who I got to know over the years and who build up a position of trust with some people in the press, and you work it from there.  You'd get sometimes just a gut feeling about a certain share which you see moving, and something clicks in the back of your mind and you say, 'Now, I remember something happened there two years ago that could be relevant to what's happening today.'  So you'd get the file out and cards and so on and look it up.  And that brings back your memory.  And sometimes history repeats itself like that.  

BA: Did the jobbers figure in this information network for you?

NW: Yes, under the old jobbing system when we were all on the floor of the Stock Exchange - and I actually had the privilege of being on the floor of the Stock Exchange for 26 years; that was a special privilege accorded to me by the Council of the Stock Exchange. And it arose from my predecessor, a chap named Turner, who during the War was standing outside the Stock Exchange interviewing the jobbers as they came out saying, 'What's been going on today?  Can you give me a line for the paper? Blah, blah, blah.'  And one day there was a tremendous air raid on and there was shrapnel falling and they said, 'Turner, for God's sake, come inside.'  And it established a precedent for the Telegraph.  And when Turner retired and I took over, the Stock Exchange Council interviewed me and said, 'Now you've got to abide by our rules, naturally, and you mustn't deal, and you mustn't look at the private members' board - at least not communicate it to people outside.'  And I agreed to abide by the rules and for that reason they allowed me to continue for 26 years. I built up a certain reputation of being trustworthy and so on as a result.  But looking at the jobbing system as it was then, for a broker particularly, and for me as an outsider really, just as a market reporter, I could talk to the jobbers on the floor of the House and see things happening as they happened.  And you had a certain feeling of knowledge about people who were wandering around trading.  I personally feel that the onset of Big Bang, while it's been tremendously useful in building up the Stock Exchange reputation as an international trading centre, has been a disappointment, especially for the smaller investor because he cannot now trade in the way he used to.  Where previously he would instruct his broker to buy or sell a certain share, his broker would go onto the market floor and find a jobber in that particular stock and he had the choice of several - and he would ask that jobber what the price was.  And he would say, 'Thank you very much,' remembering that jobber didn't know whether the broker was a buyer or a seller.  And that broker would go round to the other jobbers and check the market, because it was his job to get the best price possible for his client, whether he was buying or selling; he would go round and he'd go back to what he considered was the best price, and he would deal on that basis.  It was all friendly and it was marked down in the book, and if there were any queries it was sorted out and it was strictly 'My word is my bond'.  And there was the cameraderie of the market floor and the situation where when you knew a jobber very well, you could chivy him into giving you a bit more for your stock, or charging you a little less for it.  And there was this friendly atmosphere.  I'm afraid most of that has gone these days because you can't be friendly with a computer screen.  But that is the main difference.  And I think the small investor has lost out and this has been reflected in the dropping away of the small investment business.  I get lots and lots of letters from small investors who are still very interested in the market, but they've been completely disillusioned by especially the fate of the smaller companies, where share prices have crashed because there is no market in them and nobody knows quite what to do.  A lot of people are locked in.  The market makers in the smaller companies can't find enough business to maintain a reasonable price level and so on.

BA: Were there any other journalists who were allowed to go onto the floor of the Stock Exchange?

NW: A lot of people say I was the only journalist on the floor of the Stock Exchange, but that's not quite true because the Financial Times had several chaps on the floor who used to collect prices - this is before the onset of Big Bang.  And they were also market reporters in their own right.  But it's probably fair to say that I was the most recognized one on the floor because I had a blue button with a firm of brokers for many years.  But everybody knew that I didn't do any work for the brokers; they knew that I was the Daily Telegraph man and treated me accordingly, sometimes ignored me, but that was par for the course.

BA: How would you contrast the Stock Exchange as a market place, as a physical place, in... Was it the early sixties when you went in?

NW: Yes.

BA:... with, say, immediately before Big Bang?

NW: Well we had three changes, of course.  We had the old Stock Market floor where we were all allowed to light up cigarettes at 3.15 in the afternoon when the waiter did his rattle to tell us that we could smoke (and of course many people used to smoke in those days, not so these days).  But that was the old Stock Market floor; very old building of course, lovely traditions in there and, I'm just trying to think of the actual physical background of it.  It was crowded; it was dirty, by and large, although they made every effort to keep it clean; it was that sort of place that would get dirty.  And then, of course, preparatory to moving into the new building we went onto a temporary market floor; and then into the Stock Exchange floor as it existed up until Big Bang, which was superb because it was air-conditioned, it was clean, no smoking allowed.  Everywhere you looked there was excellent information, what the time was in New York and so on all around the world, and things that could be viewed from the Public Gallery.  The Public Gallery of course was a very extreme success and people are still going there, I understand, although there's not much to see these days.  We transformed from a dirty but very pleasant working environment into a very clean and still very pleasant but more clinical environment. 

BA: Did you find the way people behaved had changed?

NW: No, people did not change until the onset of Big Bang, where we had a new breed of entrepreneurial men coming into the market who  were paid a great deal of money, as you know, when the things were set in the first instance and when everybody thought there was a lot of money to be made in the new International Stock Exchange in dealing terms.  Of course history has told us that too many cooks spoil the broth. But until the market floor closed, you still had that wonderful atmosphere where you had a laugh and a joke; a situation where they played the fool when there wasn't much business; the old idea of buying a box of chocolates outside, eating the chocolates then placing the box of chocolates on the market floor with water in it, until some idiot came along and kicked it, which always happened.  And the idiot would of course get a soaked foot and silly things like that.  But it was all part of the make up and the friendliness of the Stock Market floor, which unfortunately has now disappeared.

BA: What was your daily routine like pre-Big Bang?

NW: My daily routine was I would go into the market floor soon after the opening, which at that time was 9.30, and have a good look round, talk to a few people, say 'What's going on, what sort of things should I keep an eye on today?'  Then I'd report back to my office, the office conference at noon, and then having had a snippet of lunch, I'd go back onto the market floor until 3.30.  You'd walk round, and remember that there were obvious things going on on price boards, because in those days they marked the price boards up in blue and red.  And if you saw a big string of blue or a big string of red, walking round the floor you immediately wanted to know why, so you'd ask the jobber.  Sometimes he'd be friendly and tell you and other times he'd say, 'I don't want to say too much at this time,' or whatever.  But generally speaking they were extremely helpful and you usually found a reason for it which you could communicate to your readers on the following day.

BA: How reliable were these price boards?

NW: Generally speaking quite reliable but you've got to remember if those jobbers who were changing the prices all the time, particularly if the market was busy - and in those days it used to be very busy at times; you'd have to queue up to talk to the particular guy you wanted to deal with - he wouldn't always have time to write their prices up right up to date.  He would always make sure at the end of the day it was right so that it could be transferred by his blue button in the morning to show you the starting price.  But in the days, for instance, of the Australian boom - the Poseidon Affair it was known as - it was absolutely incredible.  They were so busy and the market was so wild, prices were jumping sometimes by a pound a minute and nobody really knew why except that people were speculating and buying them.  And of course we all know what happened to the Australian boom.  But it was fascinating and it was tremendous fun because it was action and it certainly kept the brain cells from dying everyday because you were so mentally stimulated.

BA: Were they particular firms or particular jobbers who you had a good relationship with and generally could rely on?

NW: Well there were. Obviously you'd make particular friends over the years and there were certain jobbing firms where I would always go because I would know that I'd get a friendly reception.  More often than not they would answer my question sensibly and we got on like that.  Sometimes, of course, the jobber would say to me, 'Have you had a look at such and such a share recently?'  And I would say, 'No.'  'It might make an idea for your tail-piece', which was a little tipster column I'd do every day.  I'd go back to the office and I'd get the file out on the company, and I'd have a look at it and if I agreed with his views I might well write a little tail-piece on that.

BA: By the early '60s the mergers among jobbing firms had already started but there were still a far greater number of jobbing firms in the Stock Exchange than there were subsequently.  How would you contrast the jobbing system when you first went into the market with the early 1980s?  Did you still have small one man or two man firms?

NW: You certainly did.  I recall particularly in the Kaffir market as it was called, the gold share market, there were quite a number of one or two men firms who would have a tiny little pitch against a wall tucked away somewhere where you could always go and say, 'Good morning, how are you today?  What are so and so shares?'  He being a small man, he might be well prepared to give you a slightly different price as somebody else, if you were a small dealer.  Those people used to live on small investment business and the brokers knew them for what they were and dealt accordingly.  And also there was the friendliness of the situation and people used to say, 'We'll give so and so a turn this morning because he was very good last time and he hasn't had much business.  He'll be standing there all day doing nothing, let's help him out.'  This was the cameraderie that I was talking about before and things have changed so much; it's all about big business and big money nowadays.  And the big firms are certainly going to come out on top in international trading terms in the forth coming battles with the Americans and the Japanese, because I think London will remain the capital of the world in terms of trading, but there are still too many cooks in the market.  Most people recognise the number of market makers at the moment cannot exist.  There isn't enough business to go round.  And looking ahead, it's hard to see there will be enough business because we have problems coming up like General Election uncertainties and Wall Street at the moment looks pretty toppy and people are worried about a possible crack there.  So one cannot see that business is going to improve [and] the volume is going to improve sufficiently to justify the current number of market makers.  Anybody in the Stock Exchange will tell you that; they all agree but they are all reluctant to be the first to go, as it were, which is understandable.

BA: You mentioned earlier Kaffirs.  Did the different markets in the Stock Exchange then have a different character?

NW: Yes.  They were identified by the pitches.  And after you had been on the market floor for some time you could immediately identify in your mind, if somebody asked you for a particular share, if it was an engineering share you knew which section in the market - the geographical section of the market - to go to.  So that stopped you, if you were experienced, from wandering from one side of the big room to the other, because you knew immediately where those certain jobbers in those certain shares were.  And that came with experience.  The character of the markets we usually identify with the nature of the particular business in which companies were involved.  Gold mining shares by their very nature, and oil shares, are speculative investments in the sense that companies invest lots of money digging holes in the ground without any real knowledge that the money they're spending will be returned.  Obviously an oil company who is drilling a well is hopeful of getting a gusher, in which case it's investment will be repaid many times over.  The same applies to a gold mining company or any company like that, whereas at the other end of the scale you know that an industrial company trading say in the engineering sector or the motor industry - you can see what the general economic situation is at the moment and therefore you can get a very good idea in your mind how things are going to go in that particular industry and you invest accordingly.  If you think that things are going to go over the top and the economy is going to turn down to the disadvantage of say the motor industry, you used to sell your motor shares and switch to something else which looked more promising at the time.  

BA: Did jobbing firms each have a distinctive character, a distinctive identity?  For example, some firms were known to be traders and to turn over stock very rapidly, other firms were known to be - well, equity jobbers were sometimes seen to be a bit different from the gilt jobbers, who were a bit more slower moving, a bit more staid, does that ring any bells?

NW: Gilt jobbers, 'staid' perhaps is the wrong expression, because although they were often described as such, the gilt market is a huge market and is always rapidly moving and the jobbers in gilts certainly didn't have to be staid, they had to remain on their toes all the time.  But the big firms who dominated the gilt market were certainly in that character in the sense that they weren't regarded as speculative, you didn't have a broker....

Tape 1, side 2

BA: We were talking about the character of the firms.  I suppose what I was getting at was, was there anything distinctive say, was Wedd a very different firm from Pinchin or a very different firm from Bisgood, or did they more or less project themselves as similar?

NW: The three you mentioned, in actual fact were three of the biggest firms in the market, and therefore they had their aura about them.  But in terms of character it was the individuals themselves that gave the character.  I remember when I first went into the market, Mr Percy Duke. You may have heard of him already, and as a blue button if you asked him a question you were expected to stand to attention.  And if you needed a hair cut he would certainly tell you.  But he was one of the characters and much loved although much feared by some of the younger men.  But there were characters on every pitch and there were guys you knew that you could get a friendly reception from and there were others where you thought you might get a frosty reception, depending on their mood at the time; because they're only human - jobbers and brokers - and they had their ups and downs.  And if they'd had a bad day they were likely to be a bit off hand with you.  By and large it was a great place for character building and for characters themselves.  And we had many of those on the market floor and we used to expect at certain times of the year happenings related to just having a bit of fun.  But certain people you always knew would be behind that sort of activity on the market floor.  

BA: The '60s was a period when a lot of jobbing firms were either liquidating, ceasing trading or merging.  Was that something that you were conscious of as a Stock Market reporter?

NW: No, it wasn't because to be honest, I don't think that's absolutely true.  I don't remember many occasions in those days.  I mean we had I remember the horrible sound of the hammer in the old market floor.  But to my knowledge, in my experience, I only heard that twice.  When the waiter stood up and made this hammering noise, the whole market which was alive with noise at all times, there would be a deathly hush and he would announce that such and such a firm cannot meet its commitments and therefore was being suspended.  That was a dreadful sound and much feared, and it still is today.  But of course we don't get the physical aspects of the hammering these days.  It was a very rare occurrence and one that made everybody very unhappy for a while, but you just got on with the job at the end of the day.

BA: What I meant was simply senior partners deciding that it was time for them to retire and closing the firm down and maybe some of their dealers going to a firm like Akroyd or Wedd, or firms simply merging like the big one, Wedd and Durlacher.  Do you think that made a difference to the Stock Exchange?

NW: I suppose it made a difference but not a very obvious one.  Things went on as usual day to day and it's not like today - the huge operations, sometimes governed by outside sources where you have leading market makers who were very good jobbers prior to Big Bang who frankly are very frustrated since they are not allowed to conduct the business as they think it should be conducted because of outside interference; and when I say 'outside interference', if the outside interferer is a company, say, an American company which has put a lot of money into a market making operation and it is very conscious of the fact that it doesn't want to lose money on it, it will be in a situation where it will say to its leading market makers at four o'clock in the afternoon, 'You've got too many so and so shares on the book, cut them.'  In other words it's knocked out a bit of the entrepreneurial spirit of the old jobbing system where a leading jobber might have three million shares of GEC on the book over night.  And he'd keep those thinking to himself, 'Well, all things being equal, the market will be a bit better tomorrow, I might make a couple of coppers on those. And that's how he operated.  But nowadays, having a large position overnight is not welcomed or encouraged especially by the overseas bosses, if you like, because the markets worldwide now are so volatile that you could have a nasty loss on that particular share.  So they don't encourage that sort of thing.  And in that sense you dampen the entrepreneurial spirit of those jobbing - the real jobbers in the old days who used to make good money.

BA: Did the style of jobbing actually change?  For example, one of the things that occasionally has been said is that whereas in the early days turning over your book was the basic aim of a jobber, latterly position taking and carrying stock for a much longer period, simply, I suppose, because of the size of bargains that they were being asked to deal in, became much more important and became a fact of life?

NW: Yes, at the end of the day it's all about money.  Running a bear position in the old jobbing days was very useful because it meant you didn't have to fund the position overnight.  Running bear positions recently have seen tremendous losses for the major market makers, because the problem with running a bear position is that of course you never know the extent of your loss.  And the way that works is that very few people want to sell on a rising market.  And if as a market maker you've for some reason or another got a short book in a certain stock, and the whole market is rising and you bid up for that stock to get it back on your book, the potential seller will say to himself, 'Well the market's rising, no, I won't sell them yet.'  He's out on a limb, so if he wants to close that bear position, he's got to keep bidding higher to persuade somebody to sell them to him.  Because human nature being what it is - the greed syndrome - when the market's rising as I say, nobody wants to sell.  So you can get in an awfully expensive position running a bear.  Prior to Big Bang you could still lose money being a bear, of course, but at least you seemed to have more opportunity, you saw more people, and you put bids out to all and sundry on the market floor; you had a greater spread of potential dealers, I think anyway.  A lot of this is personal opinion.  You get people all round the market; my view is that if you conducted an anonymous poll of all the leading market makers they would almost certainly say they would prefer a return to the market floor than to carry on with the current system.  But bearing in mind that so much money has been invested in the current system - and eventually it will pay off, albeit with a smaller number of market makers - nobody wants to say that publicly and you can understand that.  But you talk to many of the old stagers who are still around in the broking houses, who are just agency brokers, they will all say to you, 'Give us that chance we would be back on the floor tomorrow.'

BA: Did you ever feel before '86 that some of the jobbing firms, or perhaps even the broking firms were too big or too powerful for their own good, in the sense that, because often they were the market in a particular stock,  a lot of people didn't have much choice about who they went to deal with.

NW: Well, they've got even less choice today in that sense.  Certainly if you were a broker on the market floor you had your knowledge of the biggest jobbers in particular stocks, so you knew if you had a large order, you would really have to go to one of those of the top three or four in that particular stock.  If you had a small order, you could job it around with the smaller people in the market and, on a friendly basis, possibly get a better price.  At the end of the day, it was a matter of individual choice for the broker concerned.  But he would know what he was doing and he would know where he could serve his client's best interests in that dealing form.

BA: I've mentioned some of the firms that were successful right through to Big Bang, but of course there were a lot of firms that didn't quite make it and disappeared over time, like a firm called Kitchin Baker Shaw, which disappeared in the mid-sixties, or Francis & Praed which was a big gilt jobber went out in the early '70s, Blackwell & Co. which were oil jobbers, Stocken & Lazarus which were in international mining.  Did any of the disappearance of some of these firms seem to make much of an impression at the time, or are all those names now more or less forgotten?  

NW: Well, nowadays, yes, they're more or less forgotten.  But of course, anybody over 50 around the City would remember those names and look back and say, 'Why did they go?' for one reason or another.  It might just have been that the senior partners decided that it was time to retire and they wanted to get some money out to live on and so they sold the business or whatever.  I don't think it made a particular impression - not like it does today where there's so much more money involved that a decision by a market maker to retire from the scene obviously creates speculation that that particular market maker has lost a lot of money.  And, as I say, it's all about money, and big loses and big gains always attract publicity.

BA: I'd like to ask you a few questions about relations between jobbers and brokers because, as we know, the whole idea underpinning single capacity was that there would be no conflict of interest and it made for an efficient market.  Did you ever think there were situations where brokers did get too close to jobbers and would tend to do most of their dealing with particular jobbers, or even in a takeover situation where the jobbers were in effect, well, the broker was in effect working in tandem with the particular jobber?

NW: You're talking about pre-Big Bang now?

BA: Yes, certainly.

NW: Pre-Big Bang, of course, all brokers had their particular friends in the market in the jobbing world. Quite often this went on a social basis outside the market which is natural enough when you are working with people.  And you had a situation where if you were a broker and you wanted to deal in a certain stock where one of your particular friends was on the jobbing book, naturally you'd give him a chance.  That was all part of it, and there was nothing wrong in that; it was just natural and a friendly atmosphere developed as a result.  So there could be a time when a broker was limited on a price by his client and the jobber say wasn't bidding as much as the client wanted, if it was only a small amount there could be times when the jobber would say, 'Well, alright, I'll put it down if your client insists that that's what he wants.'  It would just be outside the market price, but it was done as a favour because 'you scratch my back, I'll scratch yours'.  It happened and this was the friendly and nice environment there was in the Stock Exchange before Big Bang.  It still goes on now to a certain extent because a lot of brokers still know the market makers very well and although it has to be done mainly on the telephone, you've got a situation where a broker will ring up and say, 'Hi, Fred, what are so and so today?'  And he'll quote a price and the broker would say, 'That's a high and a low, that's not a price.'  And so they'll have a laugh and a joke, and sometimes deal slightly different to the market screen.  But the problem is, these days, for brokers is that they're so exposed through the screen system.  Because if you're a broker and you want to deal in a sizeable amount of a certain stock, an alpha stock, and you punch it up on the screen, you'll see seven or eight market makers all making a price in that same stock and one of the market makers is slightly different, perhaps a penny cheaper on the sell side, and you as a broker want to buy some for a client.  You'll pick up the telephone and ring the cheapest offer guy; he immediately knows you're a buyer, you're so exposed.  That doesn't mean to say he won't deal with you, because he might well be prepared to offer the stock at slightly cheaper than the other market makers. But this is the disadvantage. Because prior to Big Bang, of course on the market floor, you as a broker would go along to the jobber and you'd ask a price and he had no idea whether you were a buyer or a seller.  And to that extent things are much more difficult these days, especially for the brokers who's trying to deal for small clients.

BA: How often pre Big Bang would you get a situation where virtually all the jobbers in a particularly stock were quoting the same price?  Because this is something that's occasionally been said to me by brokers.

NW: Yes, well it happened, of course, but it was just a question of whipping round the market and trying to do the best you could.  And if they were all quoting the same price and nobody would come in, even on a friendly basis, you either had to accept the price or you didn't deal.  But in most cases, you could usually get a bit inside with somebody, if it was a marketable stock.  When I say a marketable stock, one that was freely traded, not some ....  There was a wonderful pitch on the old market floor run by Durlacher which was called Treasure Island, I don't know whether you've been told about this before.  Well this was run by several senior dealers and other people used to describe it as the rubbish stock book.  It wasn't the rubbish stock book but it was a lot of odds and ends that couldn't be classified directly under, say, engineering or electricals, but smaller companies usually which had bits and pieces of this, like small ... Oh, dear, I'm trying to think of the name. Just the smaller companies which had a big spread on interests which you couldn't classify under one heading; and that pitch was called Treasure Island.  And it dealt in I should think 500 stocks and you would always find people clustered around that trying to deal inside and usually getting some sort of service and satisfaction because it was a fun place - that's why it was called Treasure Island.  At the same time it was quite serious dealing.

BA: Were shop brokers very important elements in the market, in the sense the broker to the company, in providing liquidity in a stock?

NW: In those days you had a situation where a jobber, if he was short of stock, would say to the company broker, 'Any chance of you letting me have a bit old boy?'  And things used to happen like that and I suspect it still goes on today, to a certain extent.  But you see prior to Big Bang, dealings by and large were smaller in size than they are these days.  We're talking big numbers these days. When you see the active stocks list on any particular day, you get a printout on the computer and you'll see there's 15 million or 25 million traded in a certain share.  That sort of activity used to go on occasionally, but of course it wasn't recorded, nobody really knew, prior to Big Bang.  And I suspect that in general terms it was much smaller than what happens today because we've got this international market and we have American, Japanese, European investors who are prepared to put big money in.  This is why Big Bang was set up, of course, to make London - it was already probably the best recognized international centre but it wasn't the biggest in terms of volume and now it's getting to that stage.

BA: Did you ever think much trading went on on personal account?  I mean this was something of a grey area, that...?

NW: Prior to Big Bang everybody on the Stock Market floor used to deal PA.  They'd buy a few shares in this.  When I first went in in 1959 the popular turn was £3 2s 6d; you'd buy a certain share and you'd sell it ten minutes later and take £3 2s 6d - 3 2 6 was the turn.  Then of course, as inflation increased, that got to be a bigger sum.  But no, everybody, in those days, it was pretty open house in terms of dealers dealing on their own account.  That was not to say they were encouraged to do insider trading.  But when you're working in an environment like that you can see what's happening, you can feel what's happening, and you could say, 'I just fancy the market will go better this afternoon; perhaps Wall Street might come in a bit better.  Let's buy a couple of thousand ICI,' or whatever, and hoped in an hour's time to sell them and take £15, £20 profit or whatever it was at the time.  And everybody used to deal PA on the market floor.  I say everybody, but I mean nearly everybody.  It was certainly not discouraged.  Nowadays it's very much discouraged and people, especially in the market making firms, have to get permission from their clearance people to deal on personal account.  

BA: Was that a feature of the post Big Bang era, the necessity to get permission and a very careful supervision?

NW: Oh, yes, indeed.  When you're dealing in bigger numbers you've got to take bigger responsibility and you've got to protect that responsibility as much as you can.  Hence the situation where we have recorded phone calls, telephone calls, mainly in case you get a bargain query.  On the market floor prior to Big Bang, if you went up to a certain jobber and say, 'I'll buy x so and so share from you', that would go through the checking department between the two firms and sometimes it happened that the checking man found that the jobber had put he'd bought them when he'd sold them.  And so you used to go back to him with the checking query and you'd get it sorted out somehow or other.  And you'd say, 'Well, I said this.'  And he'd say, 'No you didn't, you said that.'  But they'd sort it out somehow.  Nowadays, with the recorded messages, all you've got to do is press the tape and you can say, 'There you are, I did buy them, I didn't sell them.'  That sort of thing.  And of course also it's part of the surveillance business of keeping an eye on people, it's become more important to keep an eye on things to stop any real trouble going on.

BA: During the late '70s, I believe a certain amount of tension began to develop between the jobbers and the brokers over the greater numbers of put throughs being done and things like price agreements the jobbers would occasionally have in particular stocks.  Does that ring any bells?  Did you ever have, for example, jobbers coming to you complaining about what particular brokers were doing or what brokers were doing generally?

NW: No, by and large, they were little internal rows that took place between the two parties and it would all be forgotten the following day in the cut and thrust of things.  In general terms, the business wasn't really big enough to get too upset about.  But you got the occasional row between a broker and a jobber, but usually it was all smoothed over; in a couple of days it was all forgotten and you're back to square one again.  Pre-Big Bang, I never saw any real evidence of what I would call big upsets.  

BA: Did you ever get the impression that brokers occasionally wanted to cut the jobbers out and job their own stocks, or basically match business?

NW: Well, of course, the facilities really didn't exist for that as they do today.  The situation is that a broker would sometimes get a buy order from one client and a sell order from another one.  But what he would do in that case, prior to Big Bang, he would go into the market to a jobbing friend who dealt in that particular share and he would say, 'I want to buy these at that and I want to sell them at that.'  And the jobber would be happy because he's done a bargain with perhaps a smaller jobber's commission, but at least he's done it without any problems, it's there and done.  And the other side is quite happy because the buyer probably bought a little cheaper and the seller got a shade more because of that deal.  That's the way it was done fairly satisfactorily in the old days.  Not quite so these days; the numbers are that much bigger.  I keep coming back to this but this is what we've got to contend with - the market is a completely different place now to what it was then.

BA: Well, let me ask you a few questions about what you could describe as the wider Stock Market in the sense of bringing the clients and the outside financial institutions, like the merchant banks.  Strictly speaking the jobber was meant to stay in the floor of the Stock Exchange and not have any contact with the people outside.  Did you ever get the impression that jobbers occasionally did have contacts with outside clients in an informal way, fund managers or institutional investors?

NW: I have no evidence of that to be honest, but I can only say that in the normal run of things, in the friendliness of the City as a whole, there must have been examples like that.  And there were also some suspicion of course that some people's cards were marked occasionally, but that's the same the world over.  Nobody deals in anything unless they think they know something that the other guy doesn't know.  A lot of the big speculative operators who've now given up trading say to me that it's just not worth dealing because if you get one right out of ten there's sometimes an inquiry and you might find that the bargain is cancelled because there is a suspicion you're using something inside.  But they would argue they don't take into account the nine I lost money on.  So it's swings and roundabouts a bit, but you will find the big speculative trader who used to operate before the insider trading laws really became tough no longer trades; not because he's got particularly insider information but because, for one thing, the operation of the market isn't conducive to the sort of business that he does, or did.  Because, as I said before, he might deal five or six times a day in five or six different things and he'd take a profit on two or three and perhaps a loss on the other, but that was his form of gambling as opposed to gambling on the horses.  It was a fun thing, and hopefully he'd make money out of it, but at the end of the day it wasn't that serious.

BA: Did you ever get an impression that there was much of a market going on outside of the Stock Exchange in the sense of institutions dealing with merchant banks in American stocks, or gold stocks or whatever; or even institutions dealing between themselves?

NW: I wasn't really in a position to see any of that, so I honestly don't know the answer to that question.  I'm sure it did go on in some form or other, but I suspect that tales were slightly exaggerated.

BA: What was the feeling in the Stock Exchange to things like spread agreements and the informal Jobbers' Committee that the jobbers set up themselves during the later '70s, early '80s?  Do those enter in any way in your experience as a journalist?

NW: As a Stock Market reporter I wasn't really privy to many of these insider type things that went on (when I say insider I mean inside the Stock Exchange walls, as it were).  I really saw no real evidence of any problems over price agreements, or whatever.  It just didn't come up in my sphere of operation.  I don't believe there were many problems associated with that because, as I say, in the old days people used to get on well together and they always had a situation where they could sort it out over a cup of coffee or whatever.  I don't think that I can make any real comment on that because I wasn't privy to the information, as I say.

BA: The referral of the Stock Exchange Rule Book to the Restrictive Practices Court put the Stock Exchange under a spotlight and caused the whole way of trading to be examined and eventually led to the demise of single capacity.  As a Stock Market reporter, did you ever feel there were any pressures on the single capacity, simply as a way of trading, before Big Bang, quite apart from the OFT case?  Did it ever seem to be a system under strain, and that the Stock Market as a whole was suffering?

NW: I would say that single capacity prior to Big Bang worked perfectly well.  There were never any real problems with it.  In my humble opinion, the whole idea of dual capacity was based on almost a greed syndrome where people wanted to get bigger and bigger and needed the advantages of both side, broking and jobbing, under the same roof.  But, as I say, I personally think that was a retrograde step.  Some people would agree and some wouldn't, but all I can tell you is that prior to Big Bang, the Stock Exchange dealing system used to work, and work well.  The subsequent complaints, especially from smaller investors about the problems associated post Big Bang might lead you to the view that under some circumstances the old system was better than the new. 

BA: One of things that was said about the jobbers in particular was that they were basically undercapitalised in relation to the size of business that they were being increasingly asked to do; perhaps not so much the Akroyds or the Wedds but firms at second tier level, like the Pinchins or Bisgoods and so on.  Does that strike you as valid criticism?

NW: Well, I suspect that they were under-capitalised in today's terms but under the conditions that they were working at the time, I don't think that they were.  Even the medium or even the smaller sized firms had adequate banking facilities.  Mind you, interest rates weren't always 15 % and in those days, of course, we didn't have a situation where the Stock Exchange watchdogs are keeping a very close watch on the actual liquidity of the Stock Exchange firms themselves and have put down a minimum requirement.  I imagine there were some times prior to Big Bang when several smaller Stock Exchange firms, for instance, were at times out of the money, as it were.  But they weren't hammered and they got it back eventually because they'd got decent banking arrangements and so on.

Tape 2, side 1

BA: I'll just ask you a few questions more generally about jobbers and jobbing.  It was occasionally said that jobbers were a very different type of animal to brokers, a different way of thinking, sometimes very different backgrounds.  How would you react to that comment?

NW: Well, in the sense that they always felt that they were there to be shot at.  They would stand there and they would make a price in a stock and many, many stocks, of course, and there would be times when they felt they were, what they used to describe [as], picked up by the brokers who perhaps knew something that they didn't know. But at the end of the day the system did work.  When you look back at the old Stock Market floor and look at the jobbers as opposed to the brokers, if that's the question you're asking, there really wasn't a great deal of difference between the actual personalities.  There was always obvious differences between education and background of the people concerned, but a difference in education didn't matter on the floor of the House.  If you were a nice enough guy and had some personality, you got on whether you had no education or went to Eton, it didn't matter.  If you got on with the other guy it was okay and you dealt accordingly.  And there was this nice atmosphere in there generally speaking.  I can't say there was any basic difference between the jobbers and brokers as people, because you had your real comedians, almost, who would keep the House roaring at times when there wasn't too much business, with jokes and so on, and playing the fool in various ways.  And you had more staid, upright people who tended to sometimes look down their nose a bit at the tomfoolery but at the same time enjoyed it.

BA: What do you think it took to be a successful jobber?

NW: A lot of nerve, certainly a feel for the business, a feel for the market, not to mention an appreciation of what might happen in overseas markets.  He always had to try and be ahead of the game.  That said, it was quite interesting as a market reporter, I used to go around sometimes and see a certain share would be marked up or down and I'd ask why, and he would say - the jobber would say, 'The results have just come out and the company has cut the dividend', or increased the dividend, and that's the reason for the movement in the shares.  And I'd say, 'Oh, they've put the dividend up, you tell me by x per cent of that', and he'd say, 'Yes'.  And I'd say, 'Well, what's the yield on the stock at the moment?' and he said, 'I haven't got the faintest idea,' he said, 'I just buy and sell shares, I don't have to know what the company's doing.'  And I think that was a good illustration of the jobbing system as it was then.  It's different now because the jobbers have these highly paid analysts who immediately give them information, up to date information, on which they base their books accordingly.  On the old floor they still had analysts who would give them fairly quick information on the background of the company, but the business wasn't that big that they had to know immediately.  Nowadays the business can be so much bigger that you've got to be on your toes more in that sense.

BA: You've already mentioned some of the strengths of the old jobbing system, would you say there were any weaknesses in it?

NW: The weaknesses really were that it couldn't cope with international standards as we know them today.  It wasn't big enough, there wasn't the capital there to back major share dealings.  And I think this is why we have got to recognize that although a lot of us complain about the problems arising from Big Bang, it was a necessary step to maintain the Stock Market position and to build it up as the world's number one.

BA: Good, I think that's an appropriate note we can finish on.  Thank you very much.