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

Interview No. 4: David LeRoy-Lewis

Interviewer: Bernard Attard

Stoke, Hampshire: 20 December 1989

Tape 1, side 1

BA: Mr David LeRoy-Lewis, could you first tell me where and when you were born?

DLL: I was born in Sussex in a little village called Uckfield on the 14th of June 1918, a very long time ago now.

BA: And who were your parents?

DLL: My parents were - my father was at that time in the army but he came out very shortly afterwards, and my mother was nobody of importance.  

BA: And what did your father do, what was his profession?

DLL: He went into the discount market to start with though I never did discover very much what he did then.  He was invalided out of the army after a period in Egypt in the '19 to '21 period, I think.  No, it must have been after that because my brother was born in 1921. So it must have been '21-'23 sort of period.  He was invalidated out and he then went into the discount market and after that he became Managing Director of the Imperial Continental Gas Association of which my grandfather had been Chairman - was probably Chairman at that time.  

BA: Your family had had a long-standing involvement in the City?

DLL: Yes, my grandfather who was an American - naturalized English - did come into the City after he was educated and we've had a City experience ever since then, although neither of them had anything to do with the Stock Exchange.  

BA: Where did your father send you to school?

DLL: He sent me to school at Eton.

BA: What years?

DLL: From 1931 to 1936.  I didn't go up to University after that.  I was too young to go immediately in 1936 and he sent me round to spend six months in Paris at the Sorbonne and then I went travelling with a school friend through Belgium, Holland, Germany, Czechoslovakia, we got down to Budapest and then came back via Austria.  We did four months like that.  I took the exam again for Oxford, got in but decided that things were too dicey internationally and that I wanted to get my feet on a career ladder as soon as I could.  That was a decision that was really rather like the curate's egg.  It was good in that I got into the City, I took my articles - I was given articles with George A. Touche & Company - the predecessor firm of Touche Ross - and with whom the partners, the Touche family, I was the third generation of my family to be involved with them and we will see that that involvement went on for the rest of my career, on and off, in various ways. But going back to the decision: I got my feet on the ladder. I started my articles, the clock started ticking and when I came back from the war I found that the clock had run out, my articles were forgiven and I had only to do a year's practical before I could take the final examination for the chartered accountants and I was excused my inters. So from that point of view the decision was good.  What subsequently, much later in life, appeared to be the bad part of the decision was that I did miss the rather broader education that is given by the University - the mixing with people, the ideas that spread, that quite unconsciously get stimulated; and, indeed, if I had gone to the University I would have read law. I think my career would bound to have been completely different.

BA: Let's just go back a little bit.  You said that the Touche connection was a family connection of three generations?

DLL: Yes, they were the auditors of the Imperial Continental Gas and had been for a long time.  In addition, my grandfather knew and sat on an investment trust board with old Sir George Touche, the grandfather of Anthony.  My father knew at least three of his four sons - of grandfather Touche's four sons - and two were good friends of his. And so when I went there I was the next generation and Anthony Touche, who also became a partner in Touche Ross and one of the leading lights of Touche Remnant, is much younger than I am and came on afterwards.

BA: Had you overlapped at school with any members of the family?

DLL: No.

BA: And were you with the services during the War?

DLL: Yes.  I was with the anti-aircraft, all the time in this country.

BA: About when were you demobilised?

DLL: '46 I think it was.

BA: And you decided to resume your career in accountancy?

DLL: It would have been silly not to have done.  I mean its a very pertinent question, if I might say so, because the problems of, after five years, of picking up the academic training of one's mind to read a book and retain the salient knowledge in that particular chapter or chapters I found extremely hard.  But luckily I found a little chap who was earning his living by cramming private pupils after the War and he had analysed the questions in the various papers and so was able to focus one's mind on the salient principles that formed the basis for the different questions that occured from year to year.  But you must remember that at the time I qualified, which was '47, there was a grave shortage of chartered accountants, though they always said that the standard of results - the standard of the papers required for a pass - was never relaxed.  

BA: Did you also anticipate continuing the sort of City connections that your father and your grandfather had had?

DLL: Well, not precisely.  There was no reason at all why I should have gone into Imperial Continental Gas at that time which I suspect was recovering from the ravages of the War because all their properties were, as you probably know, in Belgium.  But yes, having qualified as an accountant it never occured to me that my future career was going to lead me to anything else other than the City.  

BA: Was this one of the original reasons why you chose accountancy?

DLL: I think probably yes.  I mean if you think of it at that particular time, it was a profession.  A professional qualification was even in 1936/37 a very desirable thing to have and certainly if one had, as the reason why I didn't go to University, the expectation that there was going to be a period of disturbance in the Western World, obviously a professional qualification was a better thing to have in such conditions than being, for instance, just a salesman, or, dare I say it, just an academic.  

BA: You returned to accountancy after the War.

DLL: Yes.

BA: Can you describe what happened to you then.

DLL: Well, I had the problem of taking the final in a year; and to take the final for a year I had to know all the academic side that was required for the intermediate examination.  I was allowed to take the final from a year after I rejoined my firm.  I believe it was a requirement that I had to do three months practical - going out as a junior auditing the accounts of firms - within that year.  Certainly that's what I did at the beginning and then the firm was extremely kind and gave me a seat in an empty boardroom and allowed me to come in and do my study during the day and then I went back at night and did the correspondence courses which were starting up and the normal way to do the thing.  It was, as I said, a fairly good nightmare in trying to retain that information but fortunately my mind responded and I did in fact pass at the first opportunity.

BA: And you were then practising as a qualified accountant?

DLL: Then I did a few months as a qualified being.  But those were in the days when a chartered accountant firm had really nothing very much to offer except auditing.  And I didn't really think that auditing was going to be the beginning and end of my working life.  It was true that Touches also had a side of the firm, which was distinct from the chartered accountant side, which dealt with the management of certain investment trusts that stemmed from the days when old Sir George Touche, the grandfather, had converted a number of companies - particularly South American utilities - to British investment trusts and my grandfather had done very much the same thing in one or two cases. And some of those investment trusts were managed and there was one particular Touche partner - member of the Touche family - who used to mastermind those.  But that was very much a separate department of the firm and the chartered accountant side of it had only to offer [auditing] - it hadn't expanded, it hadn't diversified as the big firms diversified and did diversify from the late '50s onwards - they only had auditing and so I began to look for another job.  I was offered a marvellous job with Shell which was to be a member of a small qualified chartered acountant team the objective of which was to put in order and to consolidate the accounts of the Royal Dutch Shell Group's subsidiary companies from North Africa to Scandinavia.  But, unfortunately, that would have meant being away from home for nine months of the year and I didn't feel that I could face that with a wife and a young family and having been away as much as I had in the War even though it was in this country.  So I turned that down and again I was offered a job to go to Canada and join the Touche firm's associate company there. But again I reluctantly turned that down because I couldn't envisage bringing up my children in Canada.  Perhaps, it would be more truthful to say, envisage bringing up my children in other than England.  There was nothing particularly wrong with Canada.  During the War I had been in the Birmingham anti-aircraft brigade headquarters with a person by name of David Blackwell.  David came to dinner with me and said if I was looking for a job what about becoming a jobber in the Stock Exchange and joining him.  I gave this some thought and the challenge of it appealed to me.  It was totally unlike anything that I had done, or anything that any members of my family had done.  There seemed that my training was not going to be wasted because at least there would be the analysis of the companies in which one dealt to be done and as it turned out there were other things on which I drew from my theoretical knowledge, gained from my training.  And although my father said to me, 'Why be a principal when you can make just as much money and live more peacefully as an agent?' I didn't totally appreciate the depth of that observation at the time. And I joined David Blackwell's and became a partner there, after a short time as a blue button, in 1948.  

BA: So you were about the age of 30 then?

DLL: So I was thirty, yes. 

BA: Was that relatively old for people entering the Stock Exchange?

DLL: Well it would have been if things were normal, but I suspect it wasn't relatively old at that particular time because of the gap of seven years of War.  If it hadn't been for that gap and that disturbance, I think people would have joined much earlier.  Certainly, as the '50s progressed, the age of the intake tended to drop.  But I do remember that the blue buttons at that particular time were people that I had known at school although perhaps they did tend to be a little bit younger.  Don't forget not many of them - I think none of them - had done a professional training as I had.

BA: Now could you say something about Blackwell & Co. at the time you joined?

DLL:  Yes. It was what we would call now a small firm dealing, at that time, just in the oil market.  There was one, two, three - three partners of about my age and one, who was David Blackwell's father, and who was very much older.  

BA: Had the father established the firm?

DLL: Yes.

BA: And as you say they jobbed in the oil market?

DLL: Only in the oil market to start with.  They did subsequently a few years after I joined them - some three years maybe - expand into the Rhodesian copper market, because it was the same sort of flavour of market.

BA:  And about how big was the firm in terms of staff then?

DLL: I forget but small.

BA: Quite small?

DLL: Yes. 

BA: Do you have any particular memories about Mr Blackwell's father?

DLL: My recollection of father Blackwell, as we knew him, was that he had a very simple pre-War - or what I regarded as pre-War - attitude towards the market.  After the war we began to - or David Blackwell began to - develop the technique of taking short-term positions rather than just trading - a buy against a sale, or a sale against a buy.  Father Blackwell, I think, never really fully appreciated this technique which clearly was different to that you would have adopted [pre-war].  He was the partner who kept the firm going during the War years, for instance, with some help from other people who weren't in the firm when I arrived.  

BA: And you said that the other partners were people of your own age?

DLL:  Yes, they were.

BA: Had they all returned from war service themselves?

DLL: Yes. 

BA: About how long did the older Mr Blackwell stay with the firm before retiring?

DLL: Well, we merged with Akroyd & Smithers in 1953 and I think that he must have retired perhaps one or two years earlier than that, but that is a date I am not very certain of.

BA: Did you get any sense about how the firm had fared during the War? 

DLL: No.

BA: How it had adapted?

DLL: No. Don't forget that it was a partnership and in those days, and I suspect now it hasn't changed, or it certainly hadn't changed by the time that I left the Stock Exchange, how a firm did, the profits of the firm, the capital of the partners and things were matters that were very confidential to the partners and were not shared with the staff.  I'm sure that in the immediate post-War period the private ledger which contained all those details was very much a book that didn't come out of the locked safe very often.

BA: Did you have a sense that you were starting afresh after the War?

DLL: Its difficult to remember. The partnership, the younger partners had been in the firm before the war and from that point of view they weren't starting from afresh.  I suspect though that if one had probed the situation - which one didn't, of course - but if one had probed the situation perhaps they would have said, 'Well, things are so different that we've had to start afresh.'  That's not quite the same as the question that you were putting to me.  So far as I was personally concerned, yes, it was a totally strange world to me. It was a market place; it was in the old building; the oil market was quite often an open-cry market. It was an area of the old building of the Stock Exchange which was entirely confined to the firms that dealt in oil shares.  There was an open market in that one went to bid for shares and offered shares which was part of a technique of trading in those shares.  There were a lot of old people in that market that had gone on throughout the war.  Some of them were very old and I remember one or two cases where there were casualties during the day from those old people.  There was a tremendous feeling of comradeship.  But competition - knife-edged competition.  But you wouldn't actually knife somebody but you would do everything that you could to get the business in a way that was regarded as respectable.

BA:  About how many firms were jobbing in the oil market?

DLL:  I would have thought that there was about 15 firms, small firms, in the oil market.  But that's a recollection and probably not very accurate. 

BA:  Let's return to you, for a few moments.  You started as a blue button with the firm.  Did you go through any particular form of training?

DLL: Well my training was really standing on the pitches, observing what the partners did.  Observing the trading that took place and trying to understand what it was all about, and being sent off to bid for stock from brokers' offices, and occasionally having to follow a particular broker who'd transacted business - who'd dealt - because it was not done for any of the partners to ask what firm he was in or what his name was. And this was before the days when everybody had to wear the badge of his particular firm.  So that one wasted an awful lot of time in tracing people - trying to avoid them noticing that they were being followed - tracing them to their various offices, and hoping that it was their office that they went into.  

BA:  And where did you progress to after being a blue button?

DLL:  Became a partner.  Again, I think that was probably accelerated. And it was accelerated because of my professional qualification and also because of the need that firms had for younger partners.  

BA: So you were given your own book?

DLL: Well, one was not given one's own book immediately, but one acted as a number two on a book.  But prepared to stand in if the number one on the book went out for lunch or went out for an interview with a broker, or whatever.  

BA:  And about how long did you continue as a number two, as it were?

DLL: It was a small firm, and you know one didn't have the sort of set hierarchy that you had to have in the bigger firm. It was largely brought about in the bigger firm by the need to have controls and to regulate the size of the books, etc, etc.  So that in a small firm you didn't really have that and I don't know how long it was.

BA: Do you have any particular memories of this time?

DLL: No, I don't think I do.  No. I think the only memory that I have was that it was a very friendly place, the oil market, whatever the age groups of the various people - and some were very much older - they were all extremely nice to one and there was a lot of sort of good natured joking that went on there.

BA: Would you have said that about the Stock Exchange, generally at that time?

DLL: Yes.

BA: Was there anything distinctive about the Stock Exchange then, that has disappeared since?  How would you characterise it as a place?

DLL: Well, it wasn't in terms of the '50s or the '60s.  Really the watershed came, I think, when the building was torn down.  The market is a living place and it develops.  It's living both in the terms of the movements of the shares and the people who occupy it.  The people who occupy it give the sort of atmosphere that I think you are refering to when you ask about changes. And if you are in the place the whole time you absorb those changes and they take place without you really noticing them because they take place gradually. But then something happens like the move of the market from the old building, which was very much an open floor with big pillars, to the new market with its booths and things.  It was totally different and there's no doubt that the atmosphere seemed to change.  Whether it actually did change, or whether it was just that we the participants in the market had something to hang a change on, I'm not certain.

BA: Do you have the sense though that the Stock Exchange wasn't an institution that had changed terribly much since the period between the Wars in terms of dress, in terms of the codes of behaviour were observed?

DLL: Well, it's difficult for me to say that it changed, if you are talking about the period between the Wars.  I wasn't actually there between the Wars.  One always heard that yes it did change just as life changed; if you look at life in the first half of the '20s and life in the last half of the '30s there was a tremendous change that took place overall - I'm sure that change must have been reflected in the Stock Exchange.  I mean, the wearing of top hats still went on right through the '20s and '30s and didn't actually stop until later on.  I was always told that brokers had to wear top hats....

Tape 1, Side 2

DLL: And jobbers on no account wore top hats, or any form of hat for that matter.

BA: Did you feel when you went into jobbing that there was a difference between brokers and jobbers, socially?

DLL: No, not when I went in, no.

BA: Do you think that distinction was beginning to become blurred?

DLL: Yes.

BA: Was there any particular reasons for that?

DLL:  Well, its difficult to say that any particular reason because, of course, I had no first hand experience of what went on before the distinction became blurred.  It may be that it was the type of people going into the jobbing firms, or even going into the broking firms.

BA: Perhaps we can talk a bit more generally about the jobbing system at this time...

DLL: Yes. 

BA: And perhaps we can compare it with the situation as it developed into the 1970s and the later period of single capacity.  There were more jobbing firms?

DLL: Yes. Considerably more jobbing firms.  Its interesting to look at that because the reasons for it have been I think not wholly appreciated perhaps.  In 1920, for instance...the period between 1920 and 1940 the number of jobbing firms - and I suspect that during that period the jobbing firms were very much the same - hadn't altered, didn't alter in size.  The jobbing firms were, in 1920 there were 411 and in 1930 there was 358 - not much change, therefore, in that period of time, despite the recession.  But then in the '30s there was a reduction.  1930, as I said, there was 358; in 1940 there was 278.  But that took account of two influences, I suppose, the influence of the situation in 1931, and also the outbreak of War where probably there was some people, who - and I don't know this for a fact but it would seem quite logical if there was some people - who said, 'Well, look here we are all of such an age we'd better wind up the firm and start again.'  Although, of course, the inclination was to try and get an older partner to keep the thing going so that you had something to come back to.  1950 there were 187, and 1960 100.  Its a steady decrease but then there was a dramatic decrease.  In 1970 there was 31 jobbing firms and in 1978, which was the last figures that I personally have, there were 14.  But, again, you mustn't be too influenced by the number of jobbing firms.  I don't believe, as I said that in the years between the two wars, that there was very much difference in the size of the average firm.  Across the whole market, the firms were small and that is my impression, although as I say I wasn't there at the time.  After the War you still had, as I said, 187 firms.  They were the remnants of those small pre-War firms that had had elderly partners carrying on the business, as I said had happened in Blackwell & Co.  

BA: This was the situation you found when you became a chartered accountant?

DLL: That's right.  And we're talking only about jobbing firms.  I don't know about the same figures for the broking firms. But if you look at the number of dealers employed - the total number of dealers,  and that means member and non-member dealers and partners - you get a very different picture: 1960 there was 799 dealers in jobbing firms in the 100 jobbing firms. In 1977 there were 528 dealers and only 14 jobbing firms.  It illustrates very clearly what happened in the '60s and the '70s which was the amalgamation of firms into bigger, larger firms.  The reason for that was commercial logic.  I remember in the black days of Blackwell of having long periods when the oil market did absolutely nothing.  You will remember that those were the days when the national economy was in the process of recovering; that there was tremendous government intervention, in the economy as a whole.  There was the regulation by one way or another and the development of the government in the method of influencing, but probably not controlling, but influencing the development of the economy - 'stop-go': the first 7 per cent Bank Rate which signposted the modern technique of using the cost of money to influence the supply of money.  And all those sort of things.  Now in the early fifties if you were just jobbing in the oil market, you had long periods when for one reason or another the development of oil companies was curtailed. Don't forget that petrol and everything else like that was on ration so there wasn't much of that; that you had to look for the developments within the big companies to justify the price changes, and if the nature of the economy was such that, whether in this country or in the US or in any part of the world, [it] was influencing adversely the development of these companies, inevitably nobody wanted to buy the shares, so you just sat and looked at yourselves whilst the overheads went on in their remorseless way. But in those days of course, it was, fortunately, in a rather small way because you were only a small firm. Nevertheless, you were a competitive firm, you lived in a competitive environment and therefore you got restless when there were periods of inactivity like this.  So one sought to diversify. Now, so far as Blackwell was concerned, the first diversification that we did was to go into the Rhodesian copper market - so completely different from oil shares and yet the profile of the Rhodesian copper market was very like the profile of the oil market. But the influences on copper were quite different from the influences on oil shares.  So you could see the reasoning that led to that small diversification.  But that was the way in which we were thinking in those days. And we were actually the first firm of jobbers in the Stock Exchange to take that thought process further and to contemplate a merger across the market into a totally different market.  And in 1953 we merged with Akroyd & Smithers.  Akroyd & Smithers at that time were one of the leading jobbers - in the gilt-edged market,  and a leading jobber in American and Canadian shares which was a leftover from the pre-War when the liquidity of the American market in this country compared to the US was much greater than Wall Street due to the tremendous, relatively large, holdings of American shares by UK and European investors. And it illustrates that a market will always develop where the liquidity of the shares is the best...  When the shares were confiscated, or whatever the technical expression was, during the War, in order to act as security for the War-time purchases from the US, the liquidity moved to Wall Street and we in England - in the UK - never got it back, so we never got the American market back again.  But there was always a need for a facility for dealing in American shares and Akroyd & Smithers at that time provided that facility for US shares and Canadian shares and they did it by means of having an arbitrage joint book with an American firm and with a Canadian firm. Well, that gave Blackwell - the combined firm - a tremendous spread across the market and it was some years before Wedd Jefferson - also the rival gilt-edged [jobber], one of the other two firms to Akroyd who were leaders in the gilt-edged market - there were three firms that were leaders at that particular time -  and  Durlacher who had a very big cover in the equity market [merged]. And when those two merged it was with the same thoughts, I believe, certainly the same theory applied as had been adoped when Backwell joined Akroyd. But those were the early days of mergers when I think it wasn't appreciated that the chemistry between the partners had to work as well as the commercial logic. 

BA: Well, let's pause at this point and review the different developments in Blackwells before it merged with Akroyd.

DLL: Yes.

BA: The first major development you refered to was the diversification into Rhodesian coppers.  How was it actually managed?  Did you simply start to quote Rhodesian shares?

DLL: Yes.  You didn't have to get permission.  One of our partners, with back-up staff, started jobbing in Rhodesian coppers.  

BA: Presumably a certain mugging-up had to go on before hand?.

DLL: Oh, yes, of course, familiarity with the companies but that doesn't take, you know, long.  You have probably to think about the price movements and things and you have to do a certain amount of homework in to what particular brokers dealt in their shares.  Don't forget that was the time when it was perfectly permissable, indeed part of the thing, of having mining finance companies who were acting as shops - in other words, traders - in the shares of the companies that they controlled or managed, or whatever.  

BA: How did the other jobbers dealing in Rhodesian copper feel about a new competitor?
        
DLL: It's a long time ago - I don't remember any resentment at all.  It was still the post-War period when markets were developing.  Of course, latterly, in the '70s, when competition was very much greater - the trading profits were more difficult to come by - there was opposition to new firms coming into markets that were deemed to be adequately served by the jobbers in them.  Because, after all, one must remember that the market itself in the seventies had experienced the fact that an excess of competition can destroy a market.  It's like that swing of the pendulum when a market hasn't got enough competition, it attracts people in - because there isn't enough competition and a competitive market needs competition - but if there is too much then the profits get so squeezed that the normal thing is for the number of people making up that competition to drop by the wayside until the market comes back to equilibrium.  But the pendulum never stops in the middle, it's always swinging.  

BA: What had been happening to the other jobbing firms dealing in the oil market?  Were they diversifying out or were some firms disappearing?  What happened in your recollection?

DLL: I don't remember very much about what they were doing.   There was one merger, I seem to remember, between the two relatively large firms - I mean they weren't large firms, they were relatively large firms, leading firms certainly - of oil jobbers which didn't disturb us really.  And, I suspect, it was a merger that stemmed from weakness and shortage of future partners rather than anything else. 

BA: So you then began, having diversified into Rhodesian copper, began then to think ahead to the next stage.

DLL: Yes, we did, yes.

BA: How did you actually go about managing a merger?

DLL: Akroyd & Smithers was at that time still a family-controlled firm - the Smithers family controlled it.  The leading Smithers brother of the older generation - there were two, again I think there were four brothers and two of those were Stock Exchange people with one son - the one who was really the power in the firm suffered from poor health and spent a lot of his time, and particularly in the Winter, down in the South of France. One of his brothers was on the floor of the House; and a son, I think it was, was also in the firm.  But the [negotiations werte with another partner and the brother] in the South of France who was a friend of David Blackwell's and David Blackwell got on well with him.  And the idea was floated and accepted by them and accepted by the Akroyd & Smithers firm at the time.  They had just done a merger with a firm called R.M. Long who dealt in water stocks and that merger, I think, was primarily there to - but I don't know - was primarily done to attract in or to absorb somebody who was going to become the new senior partner of Akroyd & Smithers, in other words, Hugh Merriman.  Between Langley Smithers and Hugh Merriman, the principle of merger was accepted. And you ask how it was done: technically, I have no recollection of how it was done.  I suspect it was just put together - there  must have been values put upon it and if values were put on it - we both used Spicer and Peggler in those days who were a firm of Chartered Accountants who even in those days specialised in Stock Exchange firms' business - and I suspect that we used them to arrive at a fair value.  But in those days there wasn't a great problem of goodwill.  It was really just a question of merging people's capital [and deciding the division of profits amongst the partners].

BA: You've already refered to the markets Akroyds dealt in at the time. Did they differ from Blackwells as a jobbing firm?  Were they a larger jobbing firm...?

DLL: Well they were a larger firm, yes.  And there was a greater distinction between the older partners with the control in Akroyd and Smithers whereas in Blackwell, of course, the control lay much more with David Blackwell and the others of us younger ones because Mr Blackwell, you know was considerably older.  But with the merger then Hugh Merriman was in place and, although at that time he wasn't particularly fit, he did become senior partner of the merged firm. And therefore the control and the policy and everything else, devolved from the older partners to the, at that time, younger partners.

BA:  This leads us to an interesting area and that is how firms and how partners actually managed their affairs, whether policy was decided by all partners together or whether more senior members had the real controlling influence over the policies of the firm and we can talk about this with respect to Akroyds but also jobbing firms generally at this time. 

DLL; I suspect that each firm is different.  I doubt that you'll get any sort of uniformity running through the answers to that question that you may put to people.  In general it must depend upon the personality and character of the senior partner;  the provision of capital, for instance, a senior partner with no capital would have to listen to a younger partner with lots of capital - [I] don't say he would have to be controlled by him but he'd have to listen;  the size of the firm - just to give you an illustration, if you had twenty partners and the particular time we are talking about, that was a statutory limit, but if you had twenty partners they couldn't all have a say in the running of the firm, you had to - if you were going to be efficient and if you were going to be able to come to decisions - you had to have a committee of managing partners similar to a board of a company.  You had the same problems [as a board] and the committee - the management committee - would have to be delicately balanced and carefully chosen. So that it did change, (coming back to your question), when Blackwell joined Akroyd because there were a number of new partners of different ages; there were a number of new markets; the oil market was no longer the dominant business of the firm, the gilt market was the dominant business; the capital that had to be used was primarily used by the gilt market which had calls upon it and was capital intensive.  The Smithers family had, if I remember right, a degree of capital in the new firm and therefore had to be listened to.

BA: Was it primarily your own capital you were using - that is to say, was it primarily the partners' capital. 

DLL: Oh, it couldn't be anybody else's.  One of the difficulties the Stock Exchange had about capital was that you operate with unlimited liability.  That means that if ever a firm, whether its a jobbing a firm or a broking firm, says that it cannot meet its liabilities or if a cheque bounced, the rules prescribed that the Council of the Stock Exchange would declare them defaulters and a set procedure whereby the official assignee, who was like a liquidator, would move in and start taking over all the assets of the partners. And when I say all the assets, I mean all the assets because we operated with unlimited liability, and that means that everything in the name of the partners went into the pot in the event of a liquidation.  Now you couldn't have - a lot of people criticised [this] and said if the Stock Exchange is short of business why don't they have outside capital - you couldn't have the official assignee knocking at the door of a non-member saying 'please, your house is my house.'  So only members could become partners because of the unlimited liability and because of the calls on their estates if the worst happened for any reason. 

BA: Now this is a bit different to the question of short-term finance, for example, to finance a position from one account to another.

DLL: Oh, totally different because the short-term finance came from banks and so far as the jobbers were concerned you negotiated limits with your banks - overdraft limits - but those overdraft limits always had to have a percentage cover, calculated day by day and varying according to the markets that you were in. For instance, gilt-edged had a far less cover requirement than oil shares, I've forgotten what the figures were but far less, like five to twenty - 5 % to 20 % - but I've forgotten, that's probably not accurate but something like that.  That you got from the banks all the time and you negotiated with the banks what you required and they had a look at your capital position and they listened to what you wanted which was related to the size of the books that you ran. And if you had any large orders you would normally in the period of negotiation whip round to your bankers and make certain that if it was over and above what you had agreed with them they were prepared to back you and advance the finance.  And this is one of the reasons why, because it was a day to day cover etc, etc, you very rarely had, during the inter-war years, the failure of a jobber.

BA: And so this would have required a fairly close relationship with the bank?

DLL: Yes - banks.

BA: Lets take this again specifically to Akroyds; that you did have a fairly good and close relationship with the bank?

DLL: Oh, heavens we had to.  Any gilt-edged firm had to because the amount of stocks one had to run, particularly latterly in the seventies, was quite large.

BA: About what level in terms of seniority in the bank, for example, the bank with which Akroyd's had its account would you have been dealing with?  Would it have been the manager of a big branch in the City or would you have been dealing with head office or...?

DLL: No, I can't remember any time when we dealt with head office of any particular bank.  We dealt with the manager or the appropriate official of the branch with which we dealt with. But our banks in the City were the large city branches.

BA:  Let's return to Akroyds at the time of this merger.  About what size was the company then?  Had it become a large jobbing firm or was it still...?

DLL: Well, it was one of the larger firms within the Stock Exchange at that time.

Tape 2, side 1

DLL: It's difficult to remember back that far, but I would suspect that we were one of the bigger firms within the Stock Exchange at that time because it was before the Wedd Jefferson - Durlacher Godson merger. And we covered quite a bit of the Stock Exchange which was unusual in those days.  We did it quite deliberately in order to try and minimise the effects that we had felt with the controlled economy - how government action, unexpected government action could in fact affect adversely the markets in which you dealt. And if it affected adversely it meant that the volume out of that market disappeared and you were faced with accumulating and mounting overheads and no business, no profits because there was no trading to produce the profits to conteract the mounting overheads.  So Blackwell, which was actually jobbing in an active oil market in those days and from a time-to-time active Rhodesian copper market, with Akroyd & Smithers who were dealing in gilt-edged, in Corporation stocks, which I don't think actually at that time were very active but had a modicum of business, [in] Commonwealth stocks which, again, were in the same sort of category and in American Stocks, American and Canadian stocks, a market which was not all that active but which had moments of excitement.  It covered a large range and tended to insulate us in that when there was a stop on the industrial side there was probably a little activity going on in the gilt-edged side.  The actual cycles of the industrial activity and the fixed interest activity, tended to be slightly stepped and slightly different.  As to partners, of course, it is difficult to recollect but at that particular time we were limited. Every partnership throughout the country was limited by statute to a total of 20 partners.  I don't think we were anything like that.  I have no recollection of how many we were but I would think that it was not more than 15 and not less than 10.  10 to 15, therefore.  Staff - I have no recollection at all.  We had to have quite a number of staff to do the actual settlement, remembering that the settlement for oil shares, Rhodesian coppers were for the account and the settlement of gilt-edged, Commonwealth Corporation stocks etc., were for cash, created as it were two settlement sections within the office and, therefore, probably required more staff than the average firm that only dealt in account stocks.

BA: Was the oil market still an open-[out]cry market?

DLL: Oh, yes.  It remained an open-[out]cry... Now you mustn't be mislead by that expression.  It's a modern expression mainly used nowadays, in connection with the option markets. [In] both the oil market and in the old Kaffir market, in other words South African mining shares, one used to bid an offer stock openly but not all the time. So far as the traded option market is concerned, any activity is on an open-[out]cry basis.  You can't actually deal unless you have an open cry, or its more difficult to do that, in the modern market.  In the old Kaffir and oil stock market, the jobbers only went in and bid and offered stock if they wanted to move the price; or if they felt that another jobber in the market was making an unreal price and they wanted to test him; or they wanted to make him alter his price so that the price that the jobber offering or bidding for stock was the important one, then he would go into the market but not otherwise.  

BA: Now you mentioned earlier that large jobbing firms would have committees of partners that would decide things like policy.

DLL: Oh, yes but the large jobbing firms at that time didn't exist in the oil market, they were all small markets, we're talking about '53 to '56 now and they were all small firms then.

BA: Thinking about Akroyds - you say with a partnership of about 10 to 15 - how did you decide policies as a firm?

DLL: I don't know that I remember very clearly about that but I suspect that there was allocations of capital within which one had to make one's book and that that is the traditional way of controlling the books within a jobbing firm.  I suspect that we began to develop that. In other words, the person, the partner, in charge of the oil stocks had a global figure beyond which he was not permitted to go without reference.  The partner, in charge of the gilt stocks had a similar figure but those figures were arrived at by negotiation between the partners concerned, remembering always that [with] oil stocks you only had [to] settle on account day and therefore were dealing for the account, gilts were cash and you dealt with [them] for tomorrow, which was one of the attractions of the gilt market.  

BA: Which particular market were you dealing in?

DLL: Well, I started life in the oil market, as I told you, and then on the merger I was nominated as the Blackwell partner who went over and was allocated to the gilt-edged market, which meant that I had to learn the techniques of another market.

BA: Did you find this a very difficult exercise?

DLL: Difficult, no; different, yes.

BA: Could you suggest the ways in which it was different?

DLL: Well, we're talking about '53 and one must remember that it wasn't the same as the late '60s and '70s.  The big development of the '50s and '60s I suppose was the emergence and growth of the savings institutions and the way that they became big market factors.  In the [early] fifties the market was still dominated by the private individual.  A market dominated by the private individual meant that it was a relatively liquid market in that the range of private individuals has a variety of influences, applicable at any one time.  An individual has his own private wealth, that is invested, say.  But from time to time he will have calls on that investment:  whether it be to finance the purchase of a new house or whether it be to provide the funds for a settlement of a daughter that's getting married.  There's a whole variety of influences which are applicable to various individuals within that but those influences being all different.  As the savings institutions began to grow in importance and grow as a specialist investment factor -  and they grew because of the tax incentives that were given on the various types of savings; for instance, the tax deductability of an individual's contributions towards his pension and the need for the trustees of that pension fund to invest the proceeds of that for the long term - you find a completely different form of influences coming into play in the market.  And not only different in the way that those influences were satisfied - for instance, a pension fund invests for the longer term.  It is in theory at least, but probably not so much in practise these days, but in theory at least able to ignore a number of short term fluctuations that the individual would not be able to ignore because the variety of influences on his investment policy, such as buying a new house, such as setting a daughter up when she is married, such as financing a son going into business for the first time, and right across the range.  Those influences are much more short-term than the investment of a pension fund, in theory, anyway.  And so you got during the '50s and the '60s the change in the type of the market - the moving away from the market dominated by the individuals that existed pre-World War II - that began to affect the market as the market recovered from after the end of World War II; and then the growth of the savings institutions stimulated deliberately by government, but as to the attractiveness of individuals investing in that particular way and the influence of that on the market concerned.  So that you had, therefore, a change in the type of market, and jobbing firms had to adapt to that.

BA: Were the institutions very interested in investing in gilts in preference to equity shares...?

DLL: Yes, of course they were, because if you look at it a life company or a pension fund has at any one time a known actuarial demand on its funds.  Therefore, it satisfied that known actuarial demand with fixed interest investments.  That became a mathematical equation at any one time.  Alright, the influence of the market came into that in that it might be more advantageous to wait than to do it immediately, depending upon which way you read the market movement in the future, so that the savings institutions tended to concentrate on the fixed interests and had always done, in their growth gradually; although their growth only began to gather pace, I suspect, but I don't know the statistics of this, I suspect that it only began really to gather pace in the late '50s and onwards.  But there was the cult of the equity and the rate of inflation grew, so the cult of the equity grew and institutions and savings institutions realised that although the mathematical solution to the provision of a pension or the satisfaction of an actuarial calculation on a life policy might be obtained through investment in fixed interests,  nevertheless, in an inflationary era there was a bonus to be obtained by investing in equities where the yield, if you made the right investment, was unlikely to go down; and because of the inflationary tendencies - and don't forget during the period of the socialists governments in the 1950s and 1960s, the rate of inflation grew at a rate that would be totally unthinkable now - that was reflected in their equity investments and that gave them a bonus on their performance. And I suspect that if you look back onto the '50s and '60s you would find - and I'm no judge of this because I was the jobber only reflecting it; it was the brokers, and their access to the institutions' thought - you would find that during this period there was a growth of the cult of the equity and the greater proportion of investment of their portfolios, was entrusted to the equity market because it was difficult to foresee any cessation in the growth of inflation. And, I think it was the pension trustee of the Imperial Tobacco Fund called Ross Goobey [who] was the tremendous architect of the institutional investment into the equity market which on the right terms provided a real bonus for those that invested in their policy - their with-profits policies - as opposed to the investments that were provided on a purely fixed interest basis.

BA: If we could focus a little bit on the actual mechanics of jobbing in the gilts market in contrast to you experience in oils, were the actual mechanics different?

DLL: The mechanics were different in that first of all you dealt for cash.  Although you were able to extend the delivery period, or the office was able to extend the delivery period, in fact it was a bore to do that and basically speaking you had to be prepared to [deal for cash] - that was the form, the basis on which you dealt, you dealt for cash tomorrow, [but] it was possible to delay.  Gradually the money brokers' role in this grew and you were able to borrow stock in order to satisfy that.  It was a complicated procedure.  It was a procedure that became accepted in offices but nevertheless involved staff and overheads, etc, etc.  The techniques in dealing in the equity market where you dealt for the account were rather more simple in some ways.  You dealt for the account day.  The account day was fixed, it wasn't a moving account.  It was for, normally, a  fortnight on from the beginning of the account and that period gradually got less as you approached account day. It wasn't therefore a rolling account which a number of people thought of at one time.  You could deal within the account. The individual investor could deal within the account without suffering stamp duty and therefore for the speculator he was able to take a view within the account. If he took the view over the account, he had to be prepared to pay the stamp duty or alternatively he had to be prepared to risk the ability to contango, in other words to defer the settlement on interest rate terms, which I don't know is the official definition of a contango, but that's in effect what it meant.  

BA: Were there many jobbers dealing in the gilts market?

DLL: Oh, yes.  It was a very free market, even at the beginning, even when I began to know it in 1953.  It became infinitely freer, of course, when the government began to use the interest rate - the Bank Rate - as a weapon in the attainment of its economic policy and the Bank Rate - I don't think I shall ever forget it - moved unexpectedly and totally without warning in 1957 when it was moved up from 5 to 7 per cent.  

BA: Can you describe the actual immediate effects of that?

DLL: The immediate effect of it was absolutely dead silence.  Everybody was stunned.

BA: You mean no-one wanted to deal?

DLL: Well, no, in periods of uncertainty people don't want to deal.  People only want to deal when they think they can see their way.  Whether that way is a clearly defined change, or whether its no change, but if you have immediately injected a period of uncertainty, then nobody wants to deal and therefore the market dries up completely.  In that particular time I shall remember it very well because the market was bubbling, there was the demand.  People were coming in to invest.  The Bank of England were sellers of stock but they insisted as they sold stock on raising their price.  Now generally at that particular time and more so after it, everybody was very sensitive about the Bank of England's open market operations.  They were sensitive because at that time, and subsequently, the Bank operated under a closed mouth basis.  In other words, it did not believe, like the Federal Reserve in the US believed, that if you have a policy the more people who know about your policy, the more likely you are to succeed. And in that context you aren't afraid of opening your mouth and telling everybody what you want to achieve.  The Bank of England at that time, I don't know why they took this particular view, but they took the view that it was better that nobody should know what their policy was and the market should absorb the results of that.  We got into a situation prior to the 1957 - I think it was 1957 - rise in the Bank Rate by two per cent for the first time in God knows how many years, from 5 per cent to 7 per cent suddenly... during the period immediately prior to that, they had been selling stock but they had been raising their prices.  So that indicated that they were not exactly upset about the demand for gilt-edged [stock] and for the resulting reduction in the interest rates that occured because they raised their prices at which they were prepared to sell stock.  That happened up to the previous night and then, the next morning they raised the Bank Rate from 5 to 7 per cent. And of course you can understand that anybody who is involved in any way in the gilt-edged market was absolutely stunned at the comparison between what had happened the previous day and what actually happened with the 7 per cent bank-rate. I think it is quite possible that the connections between the bank and the market generally - not the jobbers - but the market generally, wasn't totally appreciated and that this was a new development of the market.  But from that moment on I think it began to be accepted that their open market operations in the gilt-edged market, were a weapon to achieve the appropriate economic policy that they and the Treasury wished to achieve and that within that they accepted immediately that the outside world scrutinised the behaviour of the gilt-edged market, which was dominated by the Bank's supply of stock or not as the case may be, and the conditions under which they supplied the stock, whether they held their price, or whether they raised their price and therefore, accepted a reduction in yields.  They accepted that people were looking at that and that the professional fund managers of the funding institutions - the savings institutions - looked at those results very carefully - the market results, the way the market reacted - and from that moment on there developed a complete reappraisal of the open market operations.  

BA: Who were the main jobbers dealing in gilts at the time apart from Akroyd?

DLL: Wedd Jeff[erson], and Francis & Praed were the other two big firms.

BA: Did you have a particular relationship with the government broker, I mean the big jobbing firms?

DLL: I think it would be totally wrong to say that we had a particular relationship.  Obviously, since we tended to be the vehicles (although they were very fair about this) the vehicles through which their open market operations [were conducted], because we saw the bigger business that came in, one had to keep closely in touch with the dealers of the government broker. But I wouldn't want you to think that we had any prior indication of any changes of policy.  They were very realistic from the very beginning that that would, in fact, destroy the outside confidence in the market and that they had to be very level-handed in their treatment of the market but equally I think they appreciated on the 7 per cent Bank Rate particularly after the Bank Rate tribunal - the famous Bank Rate tribunal which came out of that 2 per cent rise - I think they realised full well that the degree [to] which the response of the market to their open market operations were examined by the outside world.

BA: Could you describe, perhaps, your relationship with the brokers dealing in gilts.  Were there particular brokers who specialised in gilts?

DLL: Yes, there were, yes.

BA: Would they then go and get a price from all the jobbers dealing in gilts?

DLL: Oh, yes, they were subjected to the rules of the Stock Exchange in exactly the same way as everybody else. In transacting a Stock Exchange order in gilts they had to deal to the best advantage under the rules. The best advantage under the rules meant, because they were acting as agents for their clients, the best advantage of their clients. They, therefore, had to check the prices of the market in general.  Now, if they were dealers in a big order, they would probably only test the market from the big jobbers.  It was their expertise that had to decide as to whether this was an order that could be completed in the small market or the big market.

BA: Was there a pecking order in terms of the jobbing...?

Tape 2 Side 2

DLL: There was no pecking order as such.  But I think it was generally known that there were some firms that were able to deal in, and were prepared to deal, in the bigger orders and some firms that didn't have the resources to deal in the bigger orders. So therefore the brokers tended to go to the bigger firms in the bigger orders.  Now, of course, they might want to also go to those firms in the medium size orders because the medium size orders didn't have the same degree of risk as the bigger orders. And therefore they were prepared to take the bigger view and feed the bigger firms with the medium size orders which they could perhaps have carried out with the medium sized firms.  But the informed and thinking broker had to remember that it was no use dealing with a jobber too keenly all the time because unless the jobber made a profit out of his trading, he wouldn't be there tomorrow to carry out the brokers' business.  And that was part of the expertise of a broker in knowing where and with whom to deal.

BA: So was there a shake-up taking place with the jobbers dealing with gilts?  Was the number of jobbers dealing in gilts, beginning to contract?

DLL: No, I think the gilt market was always a big market, it was always an active market.  It was a market in which the activity grew.  Don't forget that the economic conditions of the '50s and '60s until Thatcher came in was the situation where gilt-edged stocks had to be sold to the public in order to finance the terrible internal deficits that occurred in that period - therefore it was a market that was always growing.  The equity market wasn't that sort of market.  Yes, it grew in that new companies came to the market but they were never very big companies.  Inflation had a completely different affect on the equity market: it tended to make people long-term holders unwilling to sell, and therefore reduced the liquidity. Whereas on the gilt-edged side it was quite different: it had two things, first of all inflation ate into the fixed return from gilt-edged and therefore made it less attractive for people to hold, unless they were holding it against an actuarial outcome - life insurance, pension funds, etc. - when they could disregard the diminution of the real return. That was on the one hand, and equally on the other hand you had the government requiring to raise new money in order to finance the deficit.  They could only raise new money if they did it on terms that were attractive to the fixed interest investor who, because they were the savings institutions and because they in fact had their contributions from the public encouraged by taxation incentives - taxation reliefs that acted as incentives - so you had that flow of money in. All you had to do as a government was to make the new issues on terms that the fund managers of those institutions regarded as attractive.  Now that created a demand against which the government could sell its stock, it also to the extent that it sold its stock successfully. And don't forget, rather like the water issue recently, unless the government funds it in a way that is attractive the investors will not be there for the next funding.  So that even during all this period when the government had to raise the funds in order to finance its deficits in market conditions which would have been regarded normally as unattractive because inflation was eating into the real return on these fixed interest stocks, the Bank of England had to achieve the balance which attracted.  Now the achievement of that balance at whatever mathematical return the yield was, had of course its affect on the equity market - there was the link.

BA: Now, if we could return to Akroyd.  Had the merger with Blackwell been successful?

DLL: The merger was a wonderful example of what is generally known now and wasn't known in those days because it wasn't realised ... that a merger is not dependent solely, particularly in the service industry area, on commercial logic. It was totally right, commercially, logic.  It was the first of its kind to my knowledge, certainly in the size, and it was right. But it failed after three years.  And it failed because none of us appreciated, and it was the early days of mergers, that commercial logic is of course essential in any merger but equally essential is the chemistry between the individuals concerned.  And the chemistry between the senior partners concerned didn't work and so the thing broke up in 1956 and I on a matter of principle was the only partner in Blackwell who was left on the Akroyd & Smithers side. So I had the dreary job, having put the whole thing together from the Blackwell side in 1953, of taking the whole thing apart from the Akroyd & Smithers side in '56.  And I suppose I was only that because I was in both cases [responsible for the office]. In the Blackwell time when I was made a partner I was - because of my professional qualification as a chartered accountant - given the responsibility for the back office.  The office manager tended to report to me.  I tended to be the partner who had an over sight of the office which in those days was of course really a small matter.  In Akroyd, in the combined firm, it became a bigger matter and when we split up in '56 I was left with the responsibility from the Akroyd partners' point of view of arranging a fair demerger and then they left me with the responsibility of looking after the office from there [on].  I was on the floor of the house at the same time but I had that as a specific responsibility.

BA: Was this quite a novel situation for a jobbing firm to actually have a demerger, after a merger a few years before?

DLL: Oh no, I think the merger was quite novel in those days, from what I remember - and its a hazy recollection - but I think a merger was sufficiently unusual. A demerger was, yes, at that time, exceptional.

BA: And was there a new David Blackwell & Co.?

DLL: Yes, Blackwell went on, they reverted to their oil and copper shares.

BA: Akroyd shed their oil and copper books?

DLL: Yes, that's right.

BA: Was it managed fairly amicably?

DLL: Yes.

BA: And so can you explain a little bit now in more detail - you continued to job on the floor of the Stock Exchange and also were given particular responsibility for the administrative side.

DLL: Yes, but at that time it was relatively simple, it really was.  Akroyd was operated, I think at that time, as an unlimited liability company which is really a form of an incorporated partnership.  It's only a partnership under another name. And we had a very efficient office manager and it really worked very well on that sort of basis.  But one had to have regard to the size of the positions, to the bank facilities, etc, etc, etc,.  And at that time the question of taxation was beginning to loom very largely in the management of firms in the Stock Exchange, whether broker or jobber.  You'll appreciate that with the growth of inflation during the '50s and '60s the capital requirements of member firms - both brokers and jobbers for that matter - became more and more pressing, the need for new capital to finance the trading in the equity market of the growth in the business and the higher prices of the securities involved.  Now that normally is taken place [i.e. met] by either profits or the introduction of partners with new capital.  Profits were being taxed at the astronomic levels that existed for personal taxation because these were partnerships, by and large, throughout the Stock Exchange.  There were some, like Akroyd & Smithers, that operated, because of the difference between individual tax and corporate tax, as an unlimited liability company, which was taxed as a company although operated really as an incorporated partnership. But by and large throughout the Stock Exchange [firms], particularly the jobbing firms, operated as partnerships.  That meant that all profits had to be distributed at the year-end and those profits in the hands of individuals were taxed at the astronomic rates that existed under the Socialist government of those times.  There was, therefore, beginning to grow up a real shortage of capital  which was talked about throughout the '60s and '70s and which really were one of the features underlying the reduction in firms because of the amalgamations which took place in those times.  [You can] understand that when Akroyd and Blackwell, for instance, came together, you did achieve a degree of flexibility in the allocation of capital.  If the gilt-edged market was running, it was unlikely that the oil market in the shape of the equity market was running at the same time.  You could therefore, if you were properly organised and had the proper co-operation between partners, reallocate the capital that was set aside to be used in the equity market towards the gilt-edged market because that was the market that was running. [This] was one of the benefits of the larger firm across the market.  But, of course, not everybody wanted to do that and not everybody had the facility of doing that.  And the thing that really saved the capital situation in the Stock Exchange, I think, was a provision under the Finance Acts that applied to the taxation of partnerships, called the Partnership Change Provisions. And that enabled, in certain circumstances, with a certain pattern of profits, a particular year to fall out of assessment for tax.  Now if you got the cycle of your annual profits right you could benefit under the normal tax regulations which applied to a butcher, or a baker, or a surveying partnership, or a trading partnership.  You could actually add to your capital in that way.  A number of people were able to and that eased the demand on the capital of member firms which grew increasingly as the bull market developed, as the price of the shares went up, as the market [changed] because of the transfer from the individuals to the savings companies, and the portfolios of a savings company in any particular share is infinitely greater from that of an individual.  So the demands for capital of the jobbing market demanded.

BA: You say bull market, was there a specific bull market towards the end of the '50s?

DLL: Well, yes.  I mean, there was a market, I've forgotten now, when it actually began, but if I remember right, speaking in general terms, stocks and shares were one of the last to reflect the dimunition in terms of the currency and real values.  But they did, in fact, reflect it in the end [causing] the tremendous bull market. As the people's wealth increased because of earnings, as the savings institutions' portfolios increased because of increased contributions, which were a percentage of individuals earnings [that] went into their pensions, went into their life policies, so the market itself - which is only a reflection of what everybody wants to do or can do, and so many people forget that; so many people blame the jobbers and blame the market for actual movements but it is only a reflection of what people are doing or want to do - as the inflation got a hold and had its effect on people's wealth and people's institutional savings so that was reflected into the bigger demands on the market. Then the requirement of having to finance those bigger demands on the market had its effect on the jobbers' capital and that the only new capital coming into jobbers up to 1969 was in fact [that brought by] any new partners they could get. And those partners at that particular time didn't have [capital]- inherited wealth had been massacred by taxation policies, the post-war taxation policies. So that there wasn't the individual wealth for new partners coming in and the only way they [i.e. firms] could [obtain] that was to generate it internally.  The only way they could generate it internally, because they were partnerships, was to take advantage of the tax change provisions.

BA:  Can you talk about this with specific reference to Ackroyd?

DLL:  Well, the specific thing about Akroyd was slightly different at this particular time and we are talking about the '50s and the '60s.   Every firm needed more capital, would have felt more comfortable with more capital.  I can't remember a particular time when we were consciously short of capital.  We were operating at this time through the medium of an unlimited liability company from what I remember.

BA: When did you actually become incorporated?

DLL: Well when did we become incorporated? Oh, I don't know when they became incorporated, I think it was towards the end of the War and I think the excess profits tax had something to do with it - but I'm talking about history and I don't actually know that - but my recollection is that there was something to do with excess profits tax in it.  I don't remember.  But then you could have a controlling partnership, holding the shares in the unlimited liability company and things like that, all technical, all involved in trying legitimately to minimise the tax liability.  We remained in that form until the Stock Exchange allowed us to convert to a limited liability company and then until we actually went for a listing in 1975, but that's another story.

BA: Well,  if we can now begin to look at your career with Akroyds, setting aside the Stock Exchange Council, right up to 1981 when you retired, would you be able to describe the main milestones for Akroyd's during that period from 1959 right up to 1981?  Was the company steadily expanding during that period, did it have a conscious policy for expanding or was it a process of continual development?

DLL: Yes, we did. Obviously, when the Blackwell divorce took place in 1956 we had a period when we had to pick ourselves off the floor and recover our confidence.  I mean this was a blow. We had taken a step that nobody else had taken before and to have that step fail, not on commercial grounds but purely on temperamental and chemistry grounds required a period of readjustment by the remaining partners and I'm looking only at it from the Akroyd point of view now.  But as we did, we realised that that was a chapter and that that was over and there was nothing to do about that and we had to live and life had to go in the context of the Stock Exchange as we saw it at that particular time.  And at this particular time, I don't think its exaggeration to say that the think tank as it were was Hugh Merriman and myself. And we thought that the policy and the theory which lay behind the Blackwell-Akroyd merger was still correct and the reasoning behind that - the rationale behind that was that if you were astride markets you developed a strength which arose from the flexibility of allocation of capital between markets; allocation of staff between markets; a rather more reasonable mixture of earnings so that in the 'fifties and the early 'sixties when the Stop-go policies of goverment, etc, related down the economic line, began to have its effect - when one market went dead another market would be running.  With the advantage of having, as it were, the anchor in the gilt-edged market which we thought would always, or practically always, have some activity or another because of the need of the government to finance the country etc, and finance it by raising money in the gilt-edged market; nevertheless we wanted that protected by an interest in the equity market. So that we began to regain our confidence and everything and I think that at first we began to look for firms in the equity market to merge with.  Well, because the first full merger had failed, we found a firm of relatively - relative to the market in those days - a large firm, or medium size firm anyway, of James Case which dealt in chemical tobacco and a range of other shares and some preference shares which were interesting because we dealt in no industrial prefs, so it began to round off the fixed interest shares that we dealt in.  We found them and we arranged that we wouldn't have a full merger.  They wanted to merge because they had a series of elderly partners, not many younger partners and the older partners had the capital.  So that when the older partners went out there was a problem (a) of replacing them, and (b) of replacing their capital.  We arranged that we would live in sin with them - in other words, to run a joint book with them - so that we could make certain that the chemistry between the various partners was reasonable and was not adversely affected.  That we did for, I don't know, two or three years I think, perhaps. We had a terrible time at the earlier stage when we were putting the two firms together because they moved into us and used our office machinery. The punch-card system that we were using, and we were putting them on because they were manual before [then], developed a fault which everybody said was absolutely impossible. We had in the end to fly - or the company had to fly - somebody out from Canada to put it right because it suddenly developed an inability correctly to multiply, which was always considered the one thing that it was absolutely perfect on. And if you can imagine translating the deals of 1567 shares at 47s. 8 1/4d. each, the inability to multiply, and this has to be done during the night in order that you can check with the broker the next morning and so that it can go into your respective ledgers and then settle on account day, you can imagine what absolute chaos it caused.  It's a period that I was [the partner] in charge of the office and I shall never, never forget it - it was diabolical.  Anyway, in the end we overcame that.  In the end the chemistry worked perfectly alright between the various partners and in the end we became an integrated firm with a substantial, industrial equity interest but not as substantial as the Wedd Durlacher interest in the equity market because Durlacher was so much bigger and Wedd were at least as big, if not at that time, bigger than we were in the gilt-edged market but nevertheless it was a start of being across the market.

BA: About roughly when did this take place?

DLL: Well roughly when, it’s difficult to put a date to these things, I think it was probably [the mid-60s].

Tape 3, Side 1

DLL: The next phase of development that we did, bearing in mind our policy of being a big firm astride the market, was to merge - and this was a full merger - with a firm called Anketel Fletcher who were jobbers in the investment trust market.  There were only two jobbers in this particular market, and we examined it and we thought that this was a good market to be in and we entered into a full merger arrangement.  The reason why they wanted to merge was the usual business of having their capital in the hands of elderly partners, of feeling the need for having access to bigger capital resources, and the acceptance of the view that we shared that the development of the Stock Exchange was such as to benefit the larger firm being astride all markets so that you were not unduly affected if any particular market went, for any particular reason, outside one's own control, such as politics or economic management or whatever - that any particular market went dormant.  Our final merger - which again I think all these took place I believe in the '60s - was with a firm called George Atkin. This was a firm that dealt in the very profitable brewery market. The disadvantage was that the opposition was Wedd Durlacher, who as you can imagine, after ten years of a successful merger or whatever it was - it was something like ten years at that particular time - was a very successful and powerful competitor. Atkin again for exactly the same reasons as Anketel, if I remember right, wanted this merger.  We had a full merger.  I had known the senior partner who was the deputy chairman [of the Stock Exchange] and I had known him as a co-Council member and the merger worked very successfully.  They came into the office; we merged our businesses; we inherited a very efficient small office which we blended into our own.  They were very advanced as an office - advanced in computer technology - and they helped us to create a computer based office, dealing with both account stocks and - the more difficult from the mechnical computerised point of view - the more difficult gilt-edged "settlement" tomorrow stocks.

BA: So by now you had more or less completed the phase of mergers that you had passed through.  About how big was Akroyd's?  Had it become one of the bigger jobbing firms?

DLL: Oh, yes, it had by then, certainly.  I don't know in terms of figures how big it was.  All I know that I had to produce some figures about four, five years ago and if I remember right, by 1978, Akroyd employed 390 staff.  That figure included a number of dealers, etc, on the floor of the Stock Exchange.  By that time we were a limited liability company and therefore we were structured in the form of a board and employees.

BA:  About when had you become a limited liability company?

DLL: We became a listed company in 1975.  I seem to remember that before then we were a limited liability private company.  I don't know exactly when that took place it wasn't very many years ago because we were of course controlled by the Stock Exchange in becoming limited liability.  And there were certain special provisions applied to Stock Exchange limited liability companies. For instance, in order to preserve the unlimited liability nature of a trading company within the Stock Exchange and in order not to be able to be accused of imposing a degree of favouritism on a limited liability company we made - the Stock Exchange made - all the directors of that limited liability company assume unlimited liability for the debts of the company and that was achieved by a special rule.

BA: Could you describe a little bit of the background to Akroyd becoming a limited liability company?

DLL: Yes, again, this emerged from our thinking aspect of trying to make certain that Akroyd & Smithers was adequately equipped to deal with the future.  We had a number of reasons for this.  First of all, the people with capital in the firm, were the older people.  It was unlikely that when they retired they would want to leave all their capital in.  It was quite reasonable to assume that they would leave some of their capital in because after all the company had provided employment and way of life for them for all the period of their working [lives]. And so that when they retired, it was reasonable to hope that they would leave some of the capital.  But that capital wasn't going to be all that the company would require.  The pressures on the Stock Exchange, because of the change that we referred to previously of the dominance of the market by the small investor, because of the taxation incentives that are being given to corporate savings, of pensions, of life insurance, etc., the profile of the market had changed completely.  It was no longer a market made up of relatively small bargains, each produced by clients - private clients - where a variety of different influences affected [an investment decision] at any one time.  It was dominated now by institutions, with inflation, with the tax incentives, [and] showed absolutely no sign of the tendency for those institutions to grow naturally being reversed, what so ever.  The effect on the profile of the market was two-fold really.  First of all the bargains that were done by these people were infinitely bigger, therefore required infinitely greater financial requirements.  Secondly, you will perhaps have heard about the criticism of institutional fund managers - that it certainly existed in the '70s and exists in part as I understand it now - the sheep-like tendency of them all tending to do the same thing at the same moment.  Now I understand about that - its not meant to be in anyway a criticism of fund managers.  They have two things which activate them in this way.  First of all, and this is a minor consideration, there is the degree of cross-directorships. You get an individual who is a director of one institution who attends a board meeting in one week and he hears that his fund manager say, that after reflection and analysis by his research team - the institution's research team - he has decided that he would sell of xyz because he thought they were over priced. And that particular board member - non-executive board member - takes that on board as he is meant to do and maybe makes an observation and maybe asks a question, assures himself that it's the right answer.  But there a cross-directorship and he goes in two weeks time to another savings institution and he knows that savings institution has a similar fund [i.e. investment] and so he sees that that hasn't been sold and naturally, its part of his duty to ask has the fund manager considered this or that or the other situation.  Inevitably, there is a sort of sheep-like mentality.  That's one way it arises. It also arises of course from the fact that institutions now and particularly the bigger savings institutions, as they got bigger, increased their size, have their own research departments and don't necessarily rely solely on the broker.  And their research departments operate primarily on the same fund of information. And if the basic fund of information says that the xyz shares are over priced you would expect both the research departments of both institutions to come up to their fund managers with a recommendation to sell.  So that inevitiably there is a much greater sheep-like mentality of all selling at the same time, than ever you had when the market was dominated by private individuals who relied upon the stock brokers'  research department to advise them and not all the stock research departments of all the brokers got onto the same thing at the same time.

BA: So Akroyd decided the best way of coping with this was by achieving greater capitalization ....

DLL: You had to make certain of your capital.  Now, we found that the partners, the elderly partners were retiring.  We had some good younger partners but they didn't have access to capital resources.  The only availability of capital resources was the public.  Therefore, it seemed totally logical to take advantage of the Stock Exchange rules, become a listed liability company, have access to the capital markets - the public - when you wanted it.  The individuals partners then had shares, you were no longer responsible for - you, the senior partners, the management - were no longer responsible if an ageing partner wanted to reduce his interest, you no longer had the responsibility of having to find a member of the Stock Exchange with resources to buy them, or somebody connected to buy them.  He could do that through the market in the normal controlled way.  

BA: Would you say this had been one of the main problems for jobbing firms previously, that there had been older partners, who had got to the point where they had decided they wanted to retire...?

DLL:  Oh, yes, oh yes.  And there's nothing wrong with that - it wasn't the question of the profitability of the firm's concern it was really a reflection of the confiscatory taxation policies of the governments in the late '40s and '50s.

BA: How had your career with Akroyd unfolded since the merger?

DLL: Well, if we go back, my career in Akroyd really didn't alter very much, which sounds a very funny thing to say I suppose, but after I had dissolved the merger from Akroyd & Smithers' point of view, I became...because I think perhaps of my personal qualifications and everything, I was put in charge of the administration. The office manager tended to talk to me on day-to-day matters - on policy matters of course he went to the senior partner.  Although never actually described as such, I became as it were Hugh Merriman's number two: I took his place in the gilt-edged market when he was absent and - that was in 1956 - and I remained his number two until he retired in 1975.  I used to combine the jobbing on the floor with the responsibilities in the office until the debacle with James Case and then they needed a partner in the office all the time in order to sort out this problem that we had with the mechanization within the office.  It wasn't James Case's fault, it was entirely due to the mechanization and I was in the office then. And then in 1961 I went onto the Council and that began to take a lot of the time, because the technique employed by the Council was that its members were allotted to various committees covering the range of responsibilities within the Council.  The Committees met either in the mornings or immediately after lunch in the afternoons.  Sometimes we all had lunch together - the committees had lunch together - and you couldn't really satisfactorily run a book and be off - and have to be off - the floor of the House, because the market is an alive thing and you had to be there to feel sometimes without ever knowing why, feel the changes that occur.  Many of the older people could walk into the old Stock Exchange -  I don't know that it quite applied to new one but certainly the old Stock Exchange - and from the very nature and degree of the noise in that Stock Exchange, they could tell whether a market was running or not, whether it was bubbling, or whether it was in the last stages of despair.  A fascinating sort of feeling.  You had to be there all the time.  If you were responsible for running a book, you had to be there - your moments of turning that book, or taking a position only occured when the broker was in front of you.  You might make a broker a price and he might turn away, and you might be wanting to buy back stock even at a loss because you thought the market was going to go better, and as he turns away you've got to have the feeling that perhaps he's a dealer and perhaps he might sell if you just raised your bid price a little.  Now you can't do that sitting upstairs doing committee work, so that then I began to be responsible within Akroyd much more for the general administration. And by that time, of course, the firm was getting very much bigger and there was a need for a partner to be available to control the staff, to provide support for the manager and to make certain that the integration was being achieved efficiently - because so often, it isn't only the chemistry of the partners, its the chemistry of the staff right the way through, otherwise you get a loss of morale,  a dip in morale.  You get a feeling that the people upstairs, to use a television expression, the people upstairs don't really know what's going on, and you've got to have somebody there whose spotting it and feeling it and watching it and are available to people for as much of a day as you can - the bigger you get, the greater the necessity.

BA: Had staff problems, management problems, become more important by the 1970s, the early '80s?

BA: Well, yes, because people were getting bigger, firms were getting bigger.  I would say they were becoming important, they were beginning to become important at the beginning of the '60s but grew in importance as we got bigger and as the strains and the stresses of market activity of volume of stocks, of turnover and everything else like that got greater.

BA: Well, now, briefly to conclude this particular stage of our conversation.  How would you have characterized Akroyd at more or less the year in which you retired, 1980-81, thinking about the firm as you had joined it, when the merger with Blackwell had taken place?

DLL: Oh, it was chalk and cheese.  It was quite a different animal.  To begin with, we were a listed company in '81, had been a listed company for 6 years.  We were subjected to all the criteria - the rules, regulations, the expectations - that the Stock Exchange as a whole had on its listed companies. And it was quite right and proper.  A number of people thought that it was a pity that we went that route.  But it was actually, I personally believe, absolutely right that some of the bigger firms in the Stock Exchange should have subjected themselves to the same discipline that the Stock Exchange applied on the outside companies.  So it was that. I was saying [earlier] that we were perhaps a thinking firm.  We had begun to think about what was going to happen.  Whether the Stock Exchange could remain in its present form.  Don't forget that I said that in 1978 the number of jobbing firms had been reduced to 14 even though the number of dealers was not relatively proportionately reduced.  The outside world was getting worried about the viability of the jobbing system as such.  The outside world sees the peg on which to hang their coat of criticism - the fact that capital was getting short.  But in fact, so far as Akroyd & Smithers were concerned, I have said on many occasions, that even at that time, let alone now, I couldn't remember, at any time, refusing to do an order because of lack of capital.  What actually happened then was quite often that the fund managers, sending their brokers in with their big order, had got fixed in their mind a price below which they were not prepared to sell stock.  But their assessment of the risk and the jobbers' assessment of the risk quite often did not actually coincide.  The volatility of the market was something that the jobbers had to assess. And they didn't always come to the same conclusion as the fund managers.  There was a conflict of interest of course.  If the jobbers took the stock, they had to take it at a level, where even though it might take three or four days to unload, they could still unload at a profit.  The fund managers were only concerned with what they dealt with at the moment.  And very, very few of them took the longer view.  You can understand it, it's a perfectly natural thing.  What was wrong was the conclusion that they came to that the capital in the market would have made some difference.  [It] doesn't matter how much capital you make you actually, when you buy stock, have to buy it at a price [at] which you hope [you] will be able to sell it at a profit.  So it [the problem] wasn't really capital.  Obviously the level of capital had to be such that kept your bank managers happy.  And it also happened to be at a level that enabled you to sleep peacefully at night, which you didn't do if ever you thought that you were overtrading.  

BA: Now we had by this stage five big jobbers - Wedd Durlacher, Smiths, Bisgood Bishop, Pinchin Denny, and youselves Akroyd - what would you have said, briefly, was distinctive about Akroyd, if anything? You said you were the thinking jobbers.

DLL: I don't know.  It's awfully difficult to say when one is giving an opinion for posterity and you are going to ask the same question to all the other four.  I don't know what was particularly the facet that would have distinguished us, except to say again that I think that we, perhaps, were regarded as thinking more about trends and analysing them, and perhaps not being such rugged traders as some of the others that you mentioned.

BA: Were you covering most markets?

DLL: Well, no, because, as I said, we didn't cover the Kaffir market. There were various other sections that we didn't cover. But what we did cover was a significant part of the industrial equity market and it was sufficient to balance the business that was very big [in gilts], as the deficits became financed, as the Bank [of England] began more and more to use the market to achieve the monetarism - that was a policy that was mopping up the available money by pushing the level of gilts down so that they became attractive for people to buy - and generally using the gilt-edged market as a means of influencing their monetary management.

BA: I think we'll break here.

Tape 3, side 2

Interview continued 3 January 1990

BA: ....[Do you know how it] was that you became a member of the Stock Exchange Council in 1961?

DLL: Well, individuals really quite often haven't the slightest idea about that but I think that it was that at that time I was on the American book of Akroyd & Smithers - that time being about 1960 - and I do remember being asked to go and give evidence before a Stock Exchange Council Committee about certain aspects of running an American book and the joint account basis that one had with an American firm.  After that meeting, a Council member approached my senior partner at that time and said that the committee had been quite impressed with the evidence that I had given and would it be possible - would he allow me - to stand for the Council.  I don't know whether you are aware that the Council consisted in those days, I think, of 25 people, one third of which were elected each year for a three-year period and had to stand for re-election at the end of three years so that every year there was an election of for 12 or so Council members.  People could stand again if they wanted to or they retired and new people had to be found.  And I stood in 1961, was elected in '61.

BA: So you were spotted by a Council member who felt it would be useful to have you?

DLL: Yes, yes.

BA: Would the reverse process happen that firms would put an individual up if they wanted?

DLL: Yes, I think you had to have a number of sponsors, I've forgotten how many it was, but any member could stand.

BA:  Did the council try and maintain some kind of balance between jobbing members and broking members?

DLL: I think that there was from time to time if the jobbing representation got very below what was regarded as correct, there was an effort by some senior Council members to get a jobber to stand or jobbing firms were encouraged to put up members for election.  I don't readily recall that it became a problem. Although, of course, serving on the Council was difficult to fit in with one's pure jobbing way of life.

BA: Could you describe some of those difficulties in detail?

DLL: Well, there was only one end product for a person having a career in a jobbing firm and that was to become a partner in the jobbing firm. Until we got very large, when we had to have a partner or director in charge of administration. There was only one product and that was to run a book - to take part in the day-to-day trading.  The day-to-day trading didn't only consist from half past nine to the moment when the House shut at half past three, it also went on on the telephone after hours until five o'clock.  If ever you were away at any particular time, you lost the thread of the market, - you lost the ability correctly to guess, correctly to form a balanced judgement as to what the market was going to do, which you gained from making prices to brokers as they came along, and talking to them and everything else in that way that went on in the market place.  Now the Council work - the Council met once a week, on Monday afternoons, and you had to be away from the market for that period.  But the Council also had various committees - standing committees - and you were expected to play your part in those.  Now the more time that you spent away from the floor of the House, the less you were able to carry out your function as a trader.  And I think people who came onto the Council - jobbers that came onto the Council - did find that it interfered - tended to interfere - very much with their way of life, unless they were a partner in charge of administration, etc.  

BA: Was it, nevertheless, regarded by jobbers, if one was a member of the Council, as an important and necessary activity?

DLL: Absolutely, because, don't forget, that the operation of the Stock Exchange was the bargain between brokers and jobbers: jobbers who said, 'Well we won't deal with outsiders, providing that you the brokers bring all the business to us'.  That was the very core of the Stock Exchange procedures, enshrined, yes, by rules, but the Council only governed by consent and so those rules when they were brought in 1908-1912, were actually the result of the pressure from the membership as such. So that as the Stock Exchange operation was an amalgam or the product of the deal between the brokers and the jobbers,  the jobbers couldn't surrender the government by consent aspect of the Stock Exchange Council solely to the brokers, nor, do I believe, that the brokers would have wanted it.  They always wanted the jobbers' input into any situation.  They might not have agreed with it but they wanted to know and to be able to take it into consideration. And indeed that's really the basis of government by consent, isn't it? - that you have your arguments but you actually support what eventually comes out of them.

BA: How in your case were you able to resolve the tension between your commitments to Akroyds and your commitments to the Council?

DLL: Well, it was at the time, really, I went onto the Council just before we began to expand.  I did try in the early days, and of course it was easier when one only had the responsibilities of an ordinary member of the Council, not a chairman of any particular committee, it was easier as an ordinary member of the Council not to go to meetings occasionally, etc, and in the early days I did try and combine trading on the floor of the House with Council work, but I soon found that it interfered very considerably.  At the same time, you will remember I think that I said, that because of my training and everything I was responsible for the administration of Akroyd & Smithers. And as we began to expand with our mergers with these other firms of jobbers, so the call on the administrative side became greater and greater.  Now this was easy to fit in with the Council work because you rarely had to be anywhere at any particular time and if it was that it was usually for a meeting and you could normally arrange your affairs so that the meeting didn't clash with calls for Council work.  So that as Akroyd expanded, so I got more drawn into the administrative side of Akroyd & Smithers full-time, and so I was able to fit that into my growing responsibilities in the Council. You see I became Chairman of one of the Standing Committees at the end of my first year - in 1962 - and that began to take up a very considerable amount of my time.

BA: How would you describe the Council as a body at the time that you joined it?  Had there been, for example, members who'd been serving on the Council for many years? 

DLL: Yes, there had.  But when I joined it in 1960 [i.e. 1961], it was beginning to change.  I think one has to look back and see what was actually happening in the Stock Exchange as a whole and I believe the '50s - if you look at the figures for jobbing firms, for instance - you will see that they were not wildly different from the end of the '30s.  So this was a period in the Stock Exchange, of picking oneself up, dusting oneself down, as it were, and starting all over again.  People came back from the War.  People started to try getting their firms going again, but they were all small firms and they were all under the influence of the conditions at the end of the War.  Those conditions you will remember were where the wealth of the Country was in the hands predominantly of the individuals, and the growth of the savings institutions, such as we know now, hadn't taken place.  So in the '50s was getting the system going, getting the firms going. Yes, there were some amalgamations and things, I mean, Blackwell and Akroyd amalgamated in 1953.  The need for the bigger unit was beginning to be felt but it wasn't transparently obvious at that time.  That was the '50s.  When you came onto the '60s you began to get the pressures of the growth of the financial institutions.  You had the period of 'pink socialism' as it were - heavy rates of taxation on both income and then capital gains tax.  You had the fiscal encouragement to save through pensions etc and life assurance, you then had the consequent growth of the pension and the life funds.  You had the transfer of the creation of wealth from the individuals that had existed before the War into that, so that the firms themselves were changing and the pressures on the firms was changing.  Now that, of course, reflected itself in the composition of the Council.  During the '50s there wasn't much time for the active member of the Stock Exchange to devote his working day to council matters because he was really very concerned with getting his own firm going and profitable, and adjusting, and trading, and making his name, and making his firm's reputation, etc.,etc.  In the '50s, therefore, there was a period when the Council representation tended to be people of a certain age and with lots of old experience. At the same time people on the floor were beginning to feel that there was a change in the air and the Stock Exchange was not responding to that change.  In the late fifties there was formed a ginger group and we did get two of our members onto the Council - not as representatives of a ginger group - but because they were supported by [it], if you see the distinction.  As so often happens in these matters when they got there we found, or they found - the two new Council members found - that most of the things that we, the ginger group, had identified as being in need of Council study, were in fact being studied but there had been a complete lack of communication, between the Council and the membership.  In fact, I mean the lack of communication, or the difficulties of communication was one of the facets, I think, that dominated the post-War period.  As the period of change in the Stock Exchange affairs progressed, so those members who had come back from the War had succeeded in establishing their firms, providing for younger partners to come on to do the trading, to do the Stock broking etc. and that released younger people to go onto the Council.  Therefore, in 1960 [i.e. 1961], when I went on, younger people were beginning to come onto the Stock Exchange Council and it was beginning to change then.

BA: Can you say a little bit more about this 'ginger' group, in the sense that how did it come about?

DLL: It's a very long time ago, I think it just came about by the fact that some of us felt a certain degree of malaise, as often occurs when you are governed, and governed by consent, by the equivalent of a Council that is elderly and appears out of touch with what is being required - although in fact they were in touch - but had overlooked the need for communication, which is particularly important when you govern by consent.  

BA: And had it arisen out of your normal social contact outside the Stock Exchange?

DLL: Oh, yes, it was not a formally constructed group at all.

BA: And it was young jobbing members as well as...?

DLL: Well, relatively.  No, it wasn't only jobbing, there were brokers too, and there were only very few of us.

BA: And you felt it was good to have some of your number elected onto the Council?

DLL: No, not some of our number.  But what we did was to try and get two people who we knew were of our way of thinking onto the Council, in other words they were not there as representatives of the ginger group, they were there because we knew that they took, what we regarded, as a progressive view of what the Stock Exchange should be doing.

BA: You said 1960 was the point at which new blood was coming into the Council.  Were there any particular individuals who joined the Council at this period of the early '60s who would later make significant contribution?

DLL: No, I can't remember any off hand, just like that. I know that Jock Hunter of Messel was one of the people that we, the ginger group, supported.  And there were some others - Douglas McKechnie was another one at that time and they stayed on for a long time, but I don't remember any individuals at that particular time - it's a long time ago.

BA: Can you describe, briefly, the functions of the Council?

DLL: Yes.  As I said you [i.e. the Council] governed by consent.  We used to meet weekly, there were a number of standing committees and a number of ad-hoc committees.  The standing committees covered, for instance, quotations; for instance Property and Finance, which was the property and finance of the Stock Exchange itself.  That was the senior committee, then there was Quotations, there was Membership, then there was latterly, Firms' Accounts, and Settlement committees and a few more standing committees.  And then, from time to time, the Council would form an ad hoc committee to consider a special aspect.  All the committees had a terms of reference, we operated within those terms of reference.  The standing committees normally produced a report.  They had a weekly meeting and they produced a report to each Council meeting and those reports were the subject of debate comment, etc, and had to be adopted by the Council.  The ad hoc committees reported when they were ready according to the terms of reference that they had been given.  And their reports again had to be accepted and approved by the Council.  They were the basis on which the then executives operated - the executives being the whole time employees of the Council. 

BA: In what way was the Council accountable to members?  Was it through election, through Annual General Meetings?

DLL: Through annual election, I think, but of course, and there was an AGM every year in which all members were able to voice their complaints, or criticisms.  At some stage, and I forget when, but I suspect that it was towards the end of the '60s, it may have been earlier, we had a half-yearly meeting.  I have a vague feeling this was to reflect the half-yearly reports that we demanded from listed companies.  Otherwise, one mustn't overlook that fact that the Stock Exchange at this time - the core of the Stock Exchange - was the jobbing system, the trading system - the trading took part on the trading floor, all the jobbers were there, the brokers came in to see what the market was doing, to talk to the jobbers on a particular share, or whatever it was; and so when Council members came in there, there was an opportunity, at least for the jobbers, and certainly for other brokers who happened to be in at the same time to indicate to the Council member concerned, how much they disapproved of this action or that action by the Council, or even in some cases approved.  Though of course it was always the disapproval that wa voiced and rarely the approval.

BA:  What were your duties when you started with the Council?

DLL: When I started with the Council, I was put onto two standing Committees, I think.  The one was Firms' Accounts Committee but then I don't remember the others.

BA: Well, if we go through now the different main highlights in your term as a Council member which went for 20 years.

DLL: At the end of the first year that I was on the Council, in other words in 1961, I was elected Chairman of the Firms' Account Committee. I think this was solely because of the responsibilities of that committee and that because of my training as a chartered accountant.  Whether I was the first trained chartered accountant on the Council of the Stock Exchange, the first one ever, I doubt, but certainly I was the first one post World War II.  When I got onto the Council in 1960 [i.e. 1961] and was appointed to that committee as an ordinary Council member, two things had happened: first of all, the famous rule 79a had been passed by the Council.  Now this provided for member firms to have, and it seems almost incredible at this stage to say, properly audited accounts provided to the partners. And parallel with that it formed a compensation fund, to protect financially those members of the public who suffered in the normal course of business through a default.

BA: Was there any particular reason why this rule was passed at this particular time?

DLL: Don't know, wasn't on the Council at the particular time.  I suspect it was, because at the end of the '50s there began to be a tightening up - there began to be a realisation that the Stock Exchange could only provide confidence for its investing public in its operations if it protected them from losses in the normal course of business.  I stress in the normal course of business because there are obviously various operations, various transactions that could be done which were not in the normal course of business and would have tended to provide funds for a defaulting broker, which was no part of any member of the investing public so to do.  Now those rules were passed but the 79a rule had to be put into operation.  And if you can imagine an organisation like the Stock Exchange, which had never had a rule regulating, in a financial sense, the affairs of its member firms, it was quite a business to bring that in. And it had to be brought in on the basis of going as far as one could by consent initially and there the particular committee was advised by a very super partner of Deloittes called Laurence Culshaw who helped me implement that rule, because when I became chairman of that committee the rule became operative - it had been passed in '60, it became operative and it therefore had to be implemented.  Now, inevitably, it caused those firms [which] were operating without adequate funds to become defaulters because of the pressure put upon them.  The need, therefore, was to fine tune that rule all the time, to bring the accountants into it, to get it operating and at the same time to get the compensation fund accepted and the principles that were applied. And we were lucky in that during this ten-year period - slightly more than ten-year period - we got the situation right within the Stock Exchange so that [in] the financial collapse of 1974 and the secondary banking collapse, which caused the Stock Exchange prices to fall so acutely and caused a crisis within the Stock Exchange, it meant that the affairs a lot of the weaker firms had already been brought under scrutiny and the appropriate measures had been taken so that the Stock Exchange at '74 was a very much stronger animal than it had been in the '60s.

BA:  Did you remain Chairman of that particular committee?

DLL: I remained Chairman for a long time - for ten years - which was unusual.  I gave it up in 1971, and became Chairman of Property and Finance, I think, in '72 and became the senior Deputy Chairman in 1973-76.  Deputy Chairman being a three-year appointment.  You asked me what my achievements were in the Stock Exchange - to go back before I go onto the other things.  Well, 79a, the default procedure: to understand the default procedure which arose out of raising the financial standards required of member firms...

Tape 4, side 1

DLL: Because the Stock Exchange members traded under an unlimited liability, the partners of the various firms, whether they were brokers or jobbers in the '60s had unlimited liability - that meant that you were responsible for all the debts of the firm.  If the firm was insolvent the partners went bankrupt and if the house that they lived in was in their names, and not in the names of their wives, then the official assignee, who was the Stock Exchange official responsible for winding up the firm and dealing with the debts, took over the ownership of his home.  So that was a discipline that was applied to prevent overtrading, gambling, speculating, overspeculation, etc.  It hadn't been used very frequently until we brought in the financial standards in the form of rule 79a.  Then, of course, a lot of cases began - a number of cases - began to come to the surface and the various rules of procedure on default had to be formalised, developed to deal with most situations. And we got drawn into it, not because we were responsible (we the Firms' Accounts committee) [...] for the official assignee, who acted directly under the Council, but much more because we were involved with the default side and the compensation side compensating those members of the public that had lost money through it.  So we developed that.  Now at the same time as this was going on there was also the pressures from inside the Stock Exchange and from outside for new capital.  Member firms in the '60s and particularly the late '60s were finding that their older partners were tending to retire and that because of the fiscal policies and the inability to create capital in the post-World War II period, the younger partners did not have the capital to bring into the firms to replace.  Equally the old partners were reluctant to leave their capital in the firms if they were not there taking an active part in supervising the affairs of those firms.  Indeed, major problems developed when the elderly partners died, because non-members were at that time not allowed to contribute towards the capital of the firm.  When they died their executors became possessed of their capital and it went to their wives or their children, the executors' wives and children were non-members, so immediately the firm suffered from a shortage of capital.  There was a movement then to relax this a little bit, but because of the rules of unlimited liability, you couldn't have a situation where a non-member had provided capital to an operating member firm which had defaulted and you couldn't have the official assignee knocking on the door of a non-member, saying, sorry, I now possess your house, so we had to devise - and it fell to the Firm's Account Committee to devise - a system whereby we gradually introduced the ability to provide capital - to provide limited liability capital. And this we did initially, I forget the date but it was somewhere towards the end of the '60s I think, by allowing 10 per cent (I think it was 10 per cent) of the capital of a member firm to be provided by limited partners.  This was an Act, I think, of the early 1900s - might have been 1908 - but it was somewhere like that which had not been extensively used in this country but had been extensively used - or the equivalent had been extensively used - in the US.  A partner could subscribe capital to any partnership in the country on a limited liability basis providing he took no part whatsoever in the management of the firm.  And we adopted that.  It wasn't widely used, but it was the beginning of limited liability.  It was adopted because it was thought possible that it would help the smaller partnerships.  From there we - again the Firms' Accounts Committee - the next step they took was to allow Stock Exchange firms to trade as limited liability companies, with outside capital, providing that that outside capital didn't exceed a set percentage, and I think that was 10 per cent again then, and providing that the Directors of that company, who were confined to members of the Stock Exchange only, accepted the rule that imposed unlimited liability on them. So that you got a company - 10 per cent of its capital was subscribed by outsiders, but the directors were all members of the Stock Exchange and the directors by rule had accepted unlimited liability so you preserve the concept of unlimited liability for the effective managers of the company.  That was used rather more extensively - we in Akroyd, for instance, used it and brought in two institutional shareholders.  Wedd Durlacher used it by bringing in Rothschilds Investment Trust, although I believe that that was brought in as a limited liability partner, but you would know from your research, but anyway it was all part of the same thing.  And then, finally, the Firms' Accounts Committee got the Council to agree to move to the final stage here which was the ability for member firms to operate as limited liability companies with a listing.  That was all done to try and provide new sources of capital to member firms, leaving it to member firms to use it if they wanted to, but providing the freedom for them to use it if they wanted to within certain regulations; [it] preserved the balance between member firms, so that nobody got an unfair balance - and don't forget that during all this period the jobbing firms, and indeed, I think you'll find the broking firms were consolidating and becoming bigger units all the time.

BA: Had these been difficult decisions for the Committee to make?

DLL: These were very difficult decisions to make because, although the younger members of the Council, according to my recollections, found it easier to grasp.  It was such a change from the past that the older members of the Council were always rather reluctant to take these measured steps, and that's why when you look at it in the way that I have said, you could see the logical progression. You may wonder why these steps had to be made but each time, one was governing by consent, you had to take the Council with you but not only the Council, you had to take the members with you.  During the ten years, therefore, as my Chairmanship of the Firms' Accounts Committee, we achieved the formalisation of the rules for the compensation fund; the implementation and extension of the fine tuning of the rule providing for financial regulation of member firms' affairs; a substantial move towards trading with limited liability; and the introduction of outside capital, retaining the balance between trading partnerships and listed companies all the time, which was achieved through providing that the management of those companies were always done by members and therefore the Stock Exchange Council had control over those members and through them the member firms, and that the member firms in charge of the management of the firms had retained the imposition of the discipline of unlimited liability.  That was achieved in the ten years of which I was Chairman of that committee.  I think that perhaps if you talked to the employees of the Council during that period, you will find that I was one of the Chairman who adopted a hands-on approach.  A chairman was able to run his committee in any way that he thought was reasonable.  But he was responsible to the Council for the reports that they produced and he was responsible to his committee for getting those reports through. And I found it easier to discharge those responsibilities by adopting a hands-on approach. I ceased to be chairman in 1971 or 72 - I forget which it was - and I became Chairman of the Property and Finance Committee, in either '72 or '73.  This was the senior committee of the Stock Exchange, which normally one of the Deputy Chairmen chaired and I became Deputy Chairman in 1973.  It was responsible for the financial affairs of the Stock Exchange as such, and for the property of the Stock Exchange as such.  One of things that I discovered when I took over the chairmanship of the thing, and it seems again slightly remarkable, to put it mildly, at this stage, but it was not so exceptional at that particular time, was that the Council had only the very roughest form of annual budget and didn't have any [financial] projections for three or five years, which is normal in these things now.  I had a projection done, I think it was for three years, and I was appalled to find, that because of the monies being spent upon the computerisation of the settlement of the Stock Exchange, we would have run out of funds on the projections made within three years.  It was, therefore, absolutely essential that we should raise new money.  For some time the Committee had been looking at ways of raising new money and had not found any way of doing it.  The Stock Exchange was financed in two main ways.  First of all, quotation fees - that's fees paid by listed companies for their initial quotation, and for their annual quotation.  They were, of course, limited by the need to get as many companies of the right sort listed, because that provided the means of trading within the Stock Exchange. But you couldn't press that too high because then you started getting complaints from merchant banks and brokers and you began to put suitable companies off being listed, which was not in the interests of the membership.  And the other way that the funds came was through membership fees.  Well, no member liked paying membership fees, so there was a natural discipline there that you couldn't raise that, particularly when the Stock Exchange was not doing very well and the activity wasn't very great and profits were not being made by member firms.  So one had to try and find, and other committees hadn't found, a way of raising new money.  It was a difficult business to solve and it caused some sleepless nights but in the end one devised a charge for general services, which was a charge on the gross profits, or gross revenue, a small charge on the gross revenue, before the expenses had been charged.  The reason for this was first of all it was a very small percentage and you can see that if it was charged on the net it would have been a very much higher percentage.  The small percentage was therefore  much easier for member firms to accept.  Secondly, you didn't have to provide for what could be charged against the gross - you just took the gross. Thirdly, by this time, the annual balance sheets of member firms were being looked at by their auditors and a report was being made by the auditors to the Exchange accountants - there were two firms of accountants who acted for the Stock Exchange in this matter.  This was part of the duties in 79a that I had explained.  And fourthly, this was a charge that became less when firms were doing badly - because their gross revenues were reduced - and became more acceptable, even though greater, when firms were doing well - because they had greater profits.  And this was eventually accepted, after some difficulty, by the Council and by the membership as a whole in 1974 and indeed formed the basis for the funds for the computerisation of the Stock Exchange, which like all matters of computerisation took longer, and cost more, than was originally envisaged.  I think that again was something that as Chairman, I had a major hand in both developing the idea, the concept, and also getting it through the Council.  And it was one of things that as [Deputy] Chairman of the Stock Exchange, I felt was a good achievement.  You asked for my achievements in the Stock Exchange.  Well, then there was the period of Deputy Chairman, I suppose, and I was the senior Deputy Chairman for the three years - that was just an accident of election.  During that three years, I don't think anybody else has ever had the responsiblity of acting as senior Deputy for three different Chairman.  George Loveday was elected as Chairman on Martin Wilkinson's retirement, on the understanding that he would only do it for a year - that was in '73-4.  Then Michael Marriot was elected and he did it for six months and then unfortunately died of a heart attack in '75. I've got a year out somewhere - I think Michael did it perhaps, for longer - he died in '75 and in January 1976, Nicholas Goodison was elected as Chairman and I retired as Deputy Chairman in June that year.  After that - I think it was after that - I was given the responsibilty of chairing a Stock Exchange inquiry Committee who were given the responsibility of enquiring into certain problems involving a company called Suits, a company called the House of Frazer and dealings by Sir Hugh Frazer.  This inquiry, this committee, was given the responsibility of interviewing non-members for the very first time, and providing a report on the circumstances of certain transactions within the Stock Exchange which had been the cause of considerable adverse press comment.  This was the first time that the Stock Exchange had interviewed non-members.  The procedure, therefore, had to be devised as we went along but I was helped by having a solicitor sitting beside me.  Following very much the procedure that I had adopted in my ten years as Chairman of Firms' Accounts. When I was interviewing a firm about certain aspects of their balance sheets or revenues, I insisted on them bringing their auditors with them. And in order to balance it, I had the Exchange accountants sitting beside me but acting as my advisor, so I put the questions, I did the examination.  During the Suits inquiry, I did exactly the same thing - I had a solicitor sitting beside me and my Council members of the Committee on either side and interviewed both individually, members and non-members, with the solicitor there.  The solicitor wasn't the Stock Exchange's normal solicitor because he had to withdraw as he had a conflict [of interest] - one of his partners was advising one of the people that I had to examine.  It was an unpleasant situation because I had to examine Sir Hugh Frazer about certain transactions of his own and the reasons for those transactions.  He brought his own solicitor and in the end I had to, as the report will show, examine his bank account. I found that very distasteful, but it was very necessary and the report did satisfy the media unease in that it dealt with the situation.  Had it not then there would have been unfortunate repercussions on the Stock Exchange who would have had to have answered a charge of covering up etc. So that it was a dicey situation but we did, I think, satisfy everybody out of it.  It was the first time that that had ever been done, and having been done once, of course, it followed then afterwards.  The next thing I suppose that I was really involved with was [that] I was given the responsibility of chairing a committee that had the duty to prepare the evidence for the Wilson Committee.  The Wilson Committee, you will remember, was appointed by the Labour Government, the Callaghan Government, probably in order to reduce the pressure from certain left-wing elements within the Labour party for the nationalisation of the banks and things.  They were enquiring into the operation of the whole of the financial sector - not just the securities business.  The Stock Exchange, so far as I'm aware, had never up to that moment, set down officially its objectives and what it was meant to do, how it saw its role, etc, etc; the difference between a broker and a jobber and why, and all that.  From time to time, experts had written books on broking or an aspect of it but the thing had never been fitted together and I don't think to my dying day, I shall ever forget the feeling of complete horror that we had as the Committee sat down at its first meeting with blank bits of paper.  Those bits of paper were still blank at the end of an hour and a half's desparate conversations as to where we should start.  However, with a lot of hard work and a lot of major assistance from the members of the Committee and from experts that we consulted, we got out that evidence and that is published and available and is a very good, now of course historical I suppose, summary of how the Stock Exchange worked, what it sought to achieve and indeed why this system of broking and jobbing - the separation of capacity, etc. - how it came about and why it came about.  After that and almost immediately after that the Office of Fair Trading started its case against the Stock Exchange, and I again was given the responsibility of chairing a committee with the duty of preparing the evidence for the Stock Exchange against the Office of Fair Trading.  Now the preparation of the case started by having intimately to brief the solicitors and the Council on how the Stock Exchange worked and why it worked [in that way].  We were subjected to the discipline of having to explain ourselves, again for the first time, in a thoroughly logical and disciplined way.  Fortunately, we had had the experience of going through the process, albeit in a much more simplistic way, because we were not subject to the disciplines of legal interrogation of the points we were making.  We had been subjected to this in a simpler way when we were preparing the evidence for the Wilson Committee and but for that accident of timing we would have found the preparation of the case for the Stock Exchange against the Office of Fair Trading infinitely more difficult.  We had, as well as the lawyers, some expert economists who were part of the team and were going to hopefully to give evidence for us.

Tape 4, side 2

DLL: During one of the meetings with the lawyers and some of the experts, it became fairly obvious that they were somewhat gloomy on the prospects of being able to justify minimum commissions by themselves.  Now this posed, for the Stock Exchange side, a real difficulty, because minimum commissions were absolutely vital from the broking point of view that they should be maintained if the Stock Exchange was to win its case.  During the conversation that followed, it again became clear that if the question of the retension of minimum commissions could be linked with the separation of capacity, or some other aspect of the Stock Exchange procedures, there would be a more realistic hope of retaining it, compared to just fighting for it in its single aspect.  I took the problem away and during the weekend it suddenly became clear to me that there was of course a link between the retension of minimum commissions and the jobbing system.  That this link, in fact, had been obvious in the period of 1908 and 1912, when the jobbing system was formerly enshrined by rule and that occured in 1908, and in 1912 they had to bring in minimum commissions in order to create the inability of a broking and a jobbing firm to channel the business through and escape the commission and trading charges.  We had discovered that in the research that we had done for the Wilson Committee, what we had not done was to link it with the minimum commissions.  This argument was developed within the committee with the lawyers and everything and became known as 'the link' and was incorporated in the Stock Exchange's case.  Finally, I was given the responsibility of chairing an ad hoc committee that was given the duty of providing for a new disciplinary procedure within the Stock Exchange as such.  All members were subject to the discipline of the Council and this was a procedure that was imposed by rule.  Up to the new disciplinary procedure which was eventually adopted, the form was that a member was charged with certain offences under the rules and the basis for his charge was an inquiry by a committee of the Council members.  He then had to appear before a formal meeting of the Council to answer those charges.  Questions were put by the Chairman of the Council, 'in order to assist the Council in coming to a conclusion in this matter', was, if I remember correctly, the formal words that were used - in other words, it was very carefully devised so that the Chairman was not there as a prosecutor but on the other hand he did ask the pertinent questions that were needed to carry forward the examination and any questions that had arisen, either by the defence or by the consideration of the committee's report.  The defendant member was allowed a member to speak for him, but was allowed no outside representation.  And the Council, at the particular time that I was given the responsibility, had expanded to something like 35 or so, or more, members because of the federation of all the country exchanges which had taken place and come into it.  It was therefore a very awe inspiring procedure for the poor member who was being charged, and I, personally, had felt that it was wrong that it should be done that way.  It was also coming under certain criticisms because the concept of natural justice was beginning to gather speed, generally, outside the City.  And during the period of the committee's examination of the new procedure, the Stock Exchange Council was challenged on one particular case, by a member who complained to the Courts [that] the principles of natural justice had been breached, but fortunately, the judge found in favour of the Council in that particular case. But I really did believe that we were vulnerable.  And eventually, the Committee brought out after consultation with legal experts - QCs and [other] people - the Committee brought out a report which set in motion a new disciplinary procedure, whereby the individuals charged were allowed legal representation, had to answer their charges before a disciplinary committee, thereby providing an appeal to the Council and there had been no previous appeal procedures.  The Council accepted that scheme at that time.  I think it's been adapted rather naturally since then, particularly in view of the new set up.  And I was appointed Chairman of the disciplinary Committee and I had a number of cases in the two or three years that I was Chairman of the Disciplinary Committee, when I had QCs defending members before the Committee.  I found it certainly an adrenalin-making procedure, bearing in mind that I was presiding over this committee and its procedures, and had had no legal training whatsoever.  Nevertheless, I had the Council's legal adviser sitting beside me to whom I could always turn, and who would always intervene if I made too much of a nonsense of it. But the fact that in my estimation anyway, that if I made any form of nonsense about it would not be exactly good for the Stock Exchange Council and its procedures as a whole, made the whole business very anguish making.  However, one managed to get through without any complaints of any sort, and hopefully, that that new procedure was started, and I enjoyed doing it, in the end.

BA: Did particular problems of discipline recur or was each case different from the previous one?

DLL: No, each case was [different from the] previous, I don't recall any ones being the same.

BA: Was this your last major responsibility as a member of the Council?

DLL: That was my last major responsibility, yes.

BA: Reviewing that twenty years of your membership of the Council, had the Council itself changed as a body in terms of its outlook?

DLL: Oh, yes.  The Council had changed very considerably as a body.  For instance, the new disciplinary procedure and the principles of natural justice - I don't think the old Council at the time of 1960 would have accepted it at all.  I don't believe in 1960 they would have accepted the limited liability concept that we eventually got through.  I mean all the things that I have talked about were evidence of the changes that were occuring and a reflection of the need for the Stock Exchange to be seen to be adapting in response to the changes that were occuring outside.  In every one of those cases, I think I was particularly lucky in being given the assignments that I was given, in having perhaps my chartered accountant training, and the experience that I had outside the Stock Exchange;  the fact that I was given responsibility of the administration of Akroyd & Smithers and therefore wasn't confined purely all the time to the floor.  I couldn't have done what I've just been talking about - the responsibilities within the Stock Exchange - if I had had to be on the floor the whole of the time.  Sometimes  I was working for a major part of the day on Stock Exchange matters of one sort or another, because you know, the matters that I've been talking about required very careful drafting of the reports put in to the Council.  They had to be accurate as to fact, they had to be backed up by legal opinions - it was absolutely hopeless producing a report that you hadn't cleared with a solicitor and if the Chairman's Room, who had to pass all the reports before they went to the Council, said, 'I don't like the sound of that - let's get the solicitor's opinion', and then you finding as Chairman of the Committee that the solicitor was against you.  You had to go through all those hurdles and you had to think of all those hurdles first, as a hands-on Chairman.  And it was impossible - it would have been impossible - to have jobbed on the floor, to have traded on the floor, to have had during the day to have absorbed the various things going on in the market that could have had an affect on the next price that you made, whilst you were upstairs thinking of all these things.

BA: Would you say, then, that you had had an untypical career as a jobber?

DLL: Oh, yes, I think it was very untypical.  I think, as I said, really there was only one end product for a jobber and that is becoming a partner in charge of the firm or a group of books of a jobbing firm and trading all the time.  But my life, although it started like that moved much more into the administration and into the Council affairs.  My training as a chartered accountant, as I indicated, helped me, I think, to get a broader view over the problems that I had to cope with.  My investment trust interests which took me outside the Stock Exchange and right out into the client's side - that was unusual for a jobber and did give me a completely different light onto the matters that I had to deal with.  I was also, in 1974, asked to be a member of the City Capital Markets Committee.  This was a committee that was chaired by Ian Frazer [recently] of Lazards.  He was formerly Director General of the takeover panel and then went to Lazards, I think as Deputy Chairman.  It was formed by the Governor of the Bank of England, who I think in 1974 formed two committees: one dealing with Company Law and one dealing with City Capital Markets. We were appointed in our individual capacities.  We didn't represent the institution or the firm from which we came, we were appointed in our individual capacities. And we formed a group of people who, in the environment at that time, which was the end [i.e. the middle] of the '70s and was just beginning to be a period when the need for changes were becoming quite obvious. And I think the Governor needed at that particular time a group of people separate from any of the institutions, speaking only collectively with their own individual responsibilities and own individual knowledge - not responsibilities - knowledge and experience [who] could report on the various matters that were bubbling through at that particular time.  I remember that the Committee's first pronouncement was a pamphlet on the differences and reasons for and against statutory regulation, and self-regulation.  It was a booklet which was well-written and full of extremely useful statements many of which hadn't been brought together at that particular time.  And I re-read it two or three years ago, and it was as true then as it was when it was written.  So that all those things helped me, I think, combine a view from the outside with my knowledge and experience of what was happening on the inside. My Council assignments which we've been talking about - the special assignments - which we've been talking about also enabled me to concentrate very much more on that sort of thing.  And I think those sort of experiences was totally untypical of jobbers and I can't recall, a single senior partner of a jobbing firm who had the same outside interest views, and overview if you like, in that way.

BA: By 1980 you were thinking of retiring from Akroyd & Smithers?

DLL: Yes in 1981, I reached retirement age in Akroyd & Smithers and I was immodest enough to think that I still had something to contribute so I was able to look around and think about filling in the years.  I was then 63, I think. I was on the board of Touche Remnant as a non-executive director at that particular time, and had been since 1974, and it was the management company of the investment trusts of which I was non-excutive director.  The Chairman, Jimmy Remnant, had a need to have somebody to - 'mastermind' would be the wrong word - but to organise the movement of Touche Remnant from its concept as a management company in the late '70s to one in which it was going to be regarded as a thriving, thrusting organisation in the '80s.  And so he asked me to come in and to be, for a limited period, a Deputy Chairman with the executive role. I came [in] and my first job was to organise with the brokers, James Capel, and with the merchant banker, Kleinworts, the reorganisation of the trusts and the re-definition of their investment policies.  So that investors had a greater choice of investment trusts, not specialising but confining their investments towards certain aspects of the market, such as confining their investments to the American market, or to technology, or to property or whatever it may be.  

BA: What had been the inspiration behind these policies you were seeking to implement?

DLL: I think like Topsy they grew out of somebody having the responsibility and talking to people.  So often these things do happen like that.  Until you identify a problem, and give somebody the responsibility of solving that problem, you don't get the conversation, the arguments, the consultations going round that particular subject, so it tends to get brushed off because it's nobody's responsibility.  Once you get somebody with a defined responsibility, you get the answer to the problem, the solution to the problem.

BA: How did you find the transition from the Stock Exchange Council work?

DLL: Well, difficult because it was totally different of course, although I had been on the edge of the investment trust thing through my directorships of the three investment trusts.  So it wasn't all that much difficult.  In 1980, also, Touche Remnant had formed an investment holding company  called T.R. Energy, in 1981 this was, which they floated.  It was not a very successful company because it was floated on a concept that although nobody knew it at the time, was absolutely right for the end of the '70s but not right in the bear market in oil and in oil shares that began in 1981.  But for me it was a new field which required to be absorbed and understood, and at the same time I was put on the board of a firm called Century Power and Light, which operated in the North Sea as a producing company in the North Sea.  Two of the investment trusts of which I was on the board had a major holding in it and I was put on the board of that oil company.  So that expanded my horizon a bit from the outside world.  I was then asked to be the non-executive Chairman of a foreign exchange broker, called R.P. Martin.  That firm was formed by the amalgamation - merger - of a large German firm with a slightly smaller British firm.  It had offices in the major centres around the world and it was very interesting because the foreign exchange market, although a telephone market, had very many of the same sort of facets as the Stock Market although there were obviously differences, considerable differences of detail and things.  That was eventually taken over by a private company in 1987 and I stepped down from the board on the takeover.  Finally, I was asked to be a non-executive chairman of Henry Ansbacher Holdings which owned Henry Ansbacher bank and that I remained Chairman of until 1988 when I retired, as I did from practically all my interests, on reaching the age of 70.  I have now only one interest left and that is to be a non-executive chairman of a small firm in Bristol which provides financial advice and management for individuals.

BA: Well, you've seen the change in the City from several different angles, you've seen it from the Stock Exchange Council angle, you retired from the Stock Exchange Council at the time when the case before the Restrictive Practises Court was pending but remained in the City.  Do you have any reflections arising out of that experience, on the change, how it benefitted the markets?  

DLL: Well that's a very big question and let me try and answer it very briefly.  I think the only reflection I have is that change was inevitable.  It was inevitable because of things that were happening totally outside the securities industry.  Because there was a complete revolution in the forms of communication, satellites, minurisation all those things played its part in this. It is so easy now to communicate with any part of the world, compared to... Well I remember very well one personal example of this.  It was at the time of President Kennedy's assassination.  I was having a drink party at home and in the middle of the drink party, a colleague of mine in Montreal rang me up to say that we had a joint position open and he'd just had a report from a friend of his in Texas that President Kennedy had been assassinated, did I want to liquidate the position?  I gave him the appropriate answer and I immediately telephoned - this was from the old manual country exchange in Surrey - I got through eventually to my colleague in New York, where I also had some positions opened and this was all whilst my cocktail party was going on, being looked after by my wife, and I gave instructions for those things and he said, 'Why are you doing all this?' and I said, 'Because...' and he said, 'Well, we haven't heard that', and I had got that information from Canada before it was into the New York market.  Now that couldn't possibly happen now, not possibly happen.  So all the communications and the speed of communications and the extension of the ways of communicating and everything and the development of the principle of communications etc, have all led to the creation, quite suddenly, of the global market - Tokyo, New York, London, and through London - hopefully through London - the European Centres have all now been totally integrated or are in the process of being integrated.  Certainly big deals in any one of those markets, may or will have its affect on the other markets.

Tape 5, side 1

DLL: [This would have a] tremendous effect on the Securities Market, globally.  How in those circumstances, could London pursue its old structure of separation of capacity, of jobbing firms, brokers dealing with the outsiders, no dual capacity as is practised in Japan, as is practised in New York, practised in Europe?  How could it continue practising on true self-regulation when all those other countries have got statutory regulation?  Inevitably, there had to be change.  Change came, as so often happens, in a totally unexpected way through the need for the Stock Exchange to avoid the Restrictive Practises Court.  If change was imposed - if you can't beat 'em, join 'em - it had to join the procedures and structures of the other centres of the world with which it was competing.  

BA: Do you feel it had been a successful change?

DLL: Oh, too early to say.  And it depends how you define 'successful'.  If you are defining 'successful' as to the means of integrating, yes. It has provided the market with the ability to adapt and integrate itself.  If you define success by achieving the happiness that existed in the old market, all I could say to you is that I find it an exception to find anybody who is happy in his work now, whereas, in the old '60s and '70s it was an exception to find anybody in the securities business who was unhappy in his work.

BA: In conclusion now are there any particular personalities you remember from your career in Akroyd & Smithers and as a member of the Stock Exchange Council?

DLL: Well, one could talk for ever about that.  Let me just choose some names at random and starting perhaps in chronological order and without any other form of preference at all, I suppose the first one that I should mention is Ken Ritchie - Ritchie of Dundee. He was Chairman of the Stock Exchange, I think, late fifties, early sixties.  I remember his tremendous ability of controlling the Council and getting it to vote, voluntarily, the way that he wanted things.  He was an excellent Chairman in that particular way.  I remember, I think rather sadly, I suppose, the way that in his prime, he was cut off by having cancer of the vocal cords and had to go in for the operation at that particular time.  I remember being told that his surgeon had the tremendous presence of mind on the day before the operation to send into Ken who came from a Scottish family and was a Scottish Presbyterian with everything that that means, the surgeon sent into Ken, a Roman Catholic priest on the day before the operation, who had had the same operation about 18 months before and was at that time preaching sermons in his church.  A wonderful example of foresight and indeed therapy, I suppose, to do that to a man who had been cut off in his prime and was going the next day to be deprived of the one aspect of his life that would have enabled him to go on. And then to cap that particular story, I suppose, I remember he was succeeded by Martin Wilkinson, and he came back in a specially devised post which was known as a Deputy Chairman Supernumerary - in other words an extra Deputy Chairman - and he helped in a number of meaningful ways.  One of which was Martin Wilkinson's leading the Council in the decision to rebuild the Stock Exchange. And in one of the early meetings of the Council in the Stock Exchange, Ken Ritchie by that time was certainly beginning to intervene in Council debates, through the help of a transistorised amplifier which they had developed by then which helped to magnify the vocal sounds that he was making and he could intervene effectively and intelligibly.  We sat down for our first meeting in this new Council chamber with a new vocal loudspeaking equipment available, into which Ken Ritchie plugged his machine and he turned it on in order to intervene. And we were all absolutely astounded to hear a conversation between three or four cab drivers - taxi drivers - and their control and in some magical way the electronic engineer had wired the communication system in the Council chamber into a network of taxi-cab controllers.  He [Ken Ritchie] was a splendid person.  He was succeeded by Martin Wilkinson, an even more remarkable person, I think.  Whereas Ken had succeeded through deviousness, I think it would be generally accepted, but acceptable deviousness, Martin succeeded through sheer ability and the ability to charm in the most outrageous way.  He was a very effective Chairman of the Stock Exchange and he carried through some tremendous achievements: the federation of the Stock Exchange, the bringing together of all the country Exchanges into one Stock Exchange, was a very great achievement of his, and at the time of course, the rebuilding of the Stock Exchange was  another one.  Then there were three other council members that one must mention.  All different in their way.  I had the greatest respect for Graham Greenwell.  Graham Greenwell was the senior partner of the broking firm, Greenwell & Co.  He was probably the longest serving member of the Council at that particular time when I came on the Council.  He was a renowned liberal, a renowned non-conformist.  He loved speaking against the majority opinion and he was one of those curious but most effective people in committees who really could argue very eloquently, very logically, and in a very structured way for his own opinion and if he was in a minority of one, that pleased him the most.  He loved young people and was very good with them and yet he really found it difficult to embrace new thoughts and new ideas without subjecting them tremendously to the discipline of having to answer the lessons of experience in the past.  Then there was Jock Hunter.  Jock Hunter became senior partner of Messel.  Came onto the Council in the late fifties.  He was a Scot.  The Stock Exchange, like many concentrations of males who worked and joked and became friends together, had often applied to the people that they were fond of, or that they liked, outrageous nicknames and Jock Hunter was always known as 'the poor man's John Knox'.  Which was a little bit unkind because it did actually seize upon the fact that in his character everything was black or everything was white and there was no grey at all.  He became for a long time became Chairman of quotations and with the Stock Exchange official who was head of that department - Wilfred Wareham who was a really outstanding person of the Stock Exchange; Jock and Wilfred Wareham did actually put the quotations department and the quotations regime of the Stock Exchange, absolutely on the mat.  They raised the ethical standards required of listed companies and they introduced many of the things that are nowadays regarded as absolutely routine but in those days needed persuasion and faith to get them introduced and accepted. I'm sure the Stock Exchange owes a tremendous debt of gratitude to Jock for his ethics and for the tremendous standards that he imposed.  The last member of the Council, I think that I want to talk about is Douglas McKechnie. A senior partner of a small broking firm, was on the Council for a long time, unmarried, batchelor, loving the good things of life, marvellous series of stories against himself, including being the only person that I've ever met anyway, who admitted - he commanded the HAC at one stage of his career - and he said he thought he was the only serving officer who commanded a parade on horseback, starting in front of the parade but taking most of the parade from the back of the parade because his horse wouldn't stand still and would only go backwards.  But he was a tremendous realist and used to bring us all down to realities with a few well-chosen words.  One needed people like that on the Council as well as the others.  Going away from the Council I think, of course, again one could talk forever about Stock Exchange people and although, you know the regime in the late '60s and '70s wasn't quite the same as the '50s when there were lots of market personalities, I suppose the person I remember most outstanding in the market as a whole was somebody called Dick Wilkins.  Dick was senior partner of Wedd Jefferson, which was the other competitor of Akroyd & Smithers in the gilt-edged market, and they merged with Wedd Durlacher and Dick and Esmond Durlacher were the two top senior partners in that very large firm.  Dick was a tremendous personality within the Stock Exchange: a person who was tremendously mischievous, loved creating trouble, but mischievously and never with any real spite or venom.  But on the other hand he was a super person for taking your troubles to, providing that you remembered to make him promise to keep your troubles to himself and not tell anybody about it, and if you remembered to do that he always respected your confidence; if you forgot then you really had only yourself to blame for any problems that did ensue.  We had on the Council latterly a very able person called Gordon Simpson. He came onto the Council as a Deputy Chairman at the time, and as a result of when the country exchanges joined the Stock Exchange into the Federal Stock Exchange.  He was senior partner of a firm in Edinburgh and when he retired, which was I think about the early '80s he became Chairman of General Accident.  Gordon was a tremendous help to the Chairman of the Stock Exchange and the Chairman's room in voicing the opinions and the views of country brokers at a time when it was most important that their wishes and their views should be taken into account.  The country exchanges - Edinburgh, Glasgow, Manchester, Liverpool, Birmingham, Dublin, and I probably have left one or two out - they found it difficult, I think, to contemplate joining the Stock Exchange in London and certainly did for a long time before they actually joined, mainly because it was like joining 'Big Brother' and one's always suspicious of 'Big Brother'.  Somebody had to speak for them, they had their representatives on the Council and everything else like that but it was extremely difficult for them to take part in the Committee work, etc. And I think that after the Federation of the Exchanges, which took place I suppose in '70/71 something like that [the] measure of the success, of the lack of real problems that we had, was a measure of Gordon's success in representing their views and perhaps also in the way that their views were quite often taken into account - always taken into account - by the Council in coming to any final decisions that they made.  And then the last person, I suppose that I shall remember in the Stock Exchange - and as I said there are many many people that I've left out and shouldn't have done - that the last person is an ordinary Stock Exchange member called Marcus Colby. And Marcus is still coming into his office and dealing for the [client] - he no longer has a floor of the Stock Exchange to go onto.  He was what in other places would be called a dealer's dealer.  He always said that he was the oldest rear gunner in the RAF in the War - a very brave man - and yet he was a broker and he made his job that of dealing professionally but with friends whenever possible, with the dealers and with the jobbers in the Stock Exchange.  I say friends whenever possible but I've never known anybody who has had a greater range of friends and was more respected by one and all for his fairness, for his judgement.  He didn't know anything about yields or dividend cover or any of the modern techniques of broking, but he did, and I'm told still does, know how to deal to the best advantage of his clients.  I think those are all the people that I can readily remember just like that.

BA: If I can ask you one concluding question, looking back on your career in the Stock Exchange, in the City since 1947, is there anything you could pinpoint as the achievement that you're most proud of during that long career?

DLL: I don't know that there's anything that I ought to be most proud of.  Anything that I managed to achieve was as Chairman of a Committee or Chairman of Akroyd & Smithers or whatever it must be and as Chairman, although you may hope to lead, you certainly only reflect the desires and the wishes of your committee or of your board or whatever it may be.  I think at my great age looking back now, I'm left with two thoughts: one is the hope that somebody will write the history of the Stock Exchange and the tremendous changes that were made between the end of World War II and Big Bang, and to write it before it's forgotten and before it is impossible for them to talk to some of the people who were there when some of it happened;  and the other thing that I have to remember at this great age is that when one retires and finally gives up, it's extraordinary how little one has accomplished in the context of the City as a whole. And if what one has accomplished is helping in some small way the reputation of the City, the furthering of the reputation of one's firm, one's institution or the system of the City as a whole, 'dictum meum pactum' for instance, then one will have achieved something even though the rest of the world doesn't recognise it.

BA: Good.  Thank you very much.                                                                                              .