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

Interview No. 18: Peter Stotesbury. 

Interviewer: Bernard Attard

Institute of Historical Research: 19th April 1990.

Tape 1, side 1

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

PS:  I was born in Beckenham, South London, April 4th 1937.

BA:  And who were your parents?

PS:  My father's name was Donald, my mother's was Eileen.

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

PS:  He owned some properties, but he was really a small builder.

BA:  And what did your mother do?

PS:  She was a housewife.

BA:  And did you have any brothers or sisters?

PS:  One brother and he's still alive, he's younger than me, Michael.

BA:  What did he go on and do?

PS:  He's a chartered surveyor, and owns his own firm in the West End.

BA:  Where did your parents send you to school?

PS:  I went to prep school in Worthing on the South Coast and then went on to Lancing College, also on the South Coast.

BA:  Did you know any of your grandparents?

PS:  Yes, I did.  On my mother's side I knew my grandfather and my grandmother, who - that's probably why I came to the Stock Exchange in the first place - my grandfather was senior partner of a firm of stockbrokers.

BA:  Did you know this particular grandfather?

PS:  He died before I came up but I did know him, yes.

BA:  Would you say he had any particular influence on you?  Did he tell you about what the Stock Exchange was like?

PS:  No not really, I was too young, but we kept in touch with the firm and so on.

BA:  What was the attitude to money in the family?

PS:  I think they were very careful.  I think it goes with a lot of people of that age, remembering the thirties, the twenties and thirties. 

BA:  And while you were at school, did you become interested in pursuing any particular career?

PS:  I can't say I did, no.  When I left I hadn't a clue what I wanted to do.

BA:  Was there a particular attitude among your peers at school to a career in the City or the different careers that one might have.  Did people think the City might be a desirable career or was it regarded as somehow less interesting?

PS:  Not particularly, no. In those days school seemed to be an isolated world, an unreal feel about it.

BA:  So what were your plans as you came to the end of your school education?

PS:  Well, I thought I was going to do National Service, and in fact I was regarded as medically unfit, which was a bit of a joke, and so I was left with time on my hands, as you might say, and had to make a decision as to what I would do.

BA:  And what decision did you make?

PS:  I went to my grandfather's firm, a small firm of stockbrokers, just for a short time - or the idea was for a short time - to see whether I liked it or not.

BA:  When was this?

PS:  This was back in 1955.

BA:  And what was the name of the firm?

PS:  A firm called Davey & Candy.

BA:  And what did you do with them?

PS:  I did everything, from making the tea to dealing with clients.  It was a very small firm and unfortunately it wasn't under the best management; since my grandfather had died they'd lost a lot of partners.  It was alright while times were good but it wasn't so good when it got more tricky.  But at least I learnt how to do a lot of things.

BA:  How would you describe it in other ways?  Was it mainly a private clients broker?

PS:  Yes it was.

BA:  And did they specialise in any particular stocks?

PS:  They did have one particularly good client in Schroders, but otherwise it was private clients.  No, they didn't specialise in any particular stocks.  They did have some foreign business, originally through Schroders, which had certain expertise there which lasted a little while anyway.

BA:  And were they small in terms of the number of partners.

PS:  Well, unfortunately they only had one real partner, and this was the firm's undoing.

BA:  And what was the office like itself in terms of the accommodation?  Was it fairly simple accommodation?

PS:  Oh, yes, it was pretty small, simple, adequate.

BA:  And did they ever actually send you on to the floor of the House.

PS:  Yes they did, I went on as a blue button, and worked my way up, managed to get hold of clients myself, and I could make an adequate living through salary and commission.

BA:  So at one point you were also authorised to deal?

PS:  Oh yes, I became a member and dealt, did everything really.

BA:  At that time, what were your impressions of jobbers?  Did you feel that they were a different breed?

PS:  Yes, I did.  The last thing I wanted to be was a jobber.

BA:  Why was that?

PS:  I don't know.  Perhaps I felt, quite wrongly, that they were an inferior breed, I haven't a clue.  I think it could be. 

BA:  In what ways would you gain that kind of impression?   Was it simply a general attitude among your peers on the Stock Exchange or did they seem to come from a different type of social background?

PS:  It's difficult to say. I think the skills of jobbing were very different to the skills needed for broking.

BA:  How would you contrast those skills?

PS:  Well, they're traders, jobbers, so they need to be very quick witted and canny; stockbrokers needed a more, perhaps broader approach to life and business.

BA:  As a broker, did you have to develop an expertise in dealing with the jobbers in the sense that you had to be alert to the different types of ways the jobber might deal, and be alert to make sure you weren't taken advantage of or you always got the best price for your client?

PS:  Yes, you learnt the hard way, through experience, through getting on with people, through standing up for yourself when you had to.

BA:  Do you have any recollections of particular experiences in which you feel you learned?

PS:  Oh, occasionally I handled one or two large orders, and the experience of handling them and dealing with different characters and how they reacted - yes, I have a very vivid memory of one or two occasions and instances.

BA:  Could you describe one of those occasions?

PS:  Yes; I had a block of shares in a company which, although it wasn't a controlling interest in this particular company, it carried a lot of weight as far as votes were concerned, and it was a deceased account.  And I, having checked the price, soon realised that they were very interested in the fact that I was even checking the price.  It was creating a bit of a stir.  And eventually one dealt, and the whole thing probably took a couple of days to do because I didn't rush the thing.  In the end the jobbers were chasing after me, of course, and one was happy from my point of view - things were getting better and better.  Eventually one decided to deal and one jobber who failed in the particular transaction, when he heard that I dealt, left the pitch and wasn't seen for days afterwards.  He was in a leading firm of jobbers and in actual fact I hardly ever saw him after that.  He was very upset, but he was a very volatile character.  I hadn't realised at the time I was going to have that effect.  He'd always been a sort of demi-god to me.  It was an interesting experience.  It taught me a few things, I think!

BA:  When you checked your price, did you go around to all the jobbers dealing in that particular stock, or did you go round to particular jobbers?

PS:  Oh yes, one checked with the jobbers, but it was only the leading firms who were prepared to put up competitive terms. 

BA:  When you say the jobbers in the end were chasing you, what did that mean?  Were they contacting you at the office or were they sending their blue buttons after you?

PS:  Oh yes, that's right.  They were contacting myself, personally.  But very rarely did I have that opportunity, mostly the business was rather small and probably rather mundane to them.  But that was just one experience amongst a number.  And I think I grew up and it did me a lot of good to handle that sort of business.  I was still quite young at the time.

BA: About how old were you at this stage?

PS:  Oh, I think I was probably early twenties, twenty-three something like that.  Difficult to say.

BA:  Did you find these kinds of episodes nerve-racking for you, did you feel the weight of responsibility, responsibility on behalf of your client, or was it simply a case of doing a job?

PS:  I felt the responsibility of dealing for my own clients, particularly the 'widow and orphan' variety, because in those days one freely gave advice to them.  They expected you to, very often, look after their portfolio of investments, and one felt very much more responsibility than when one was a jobber and dealing for one's own self.  If you made a mess of it as a jobber, well, bad luck it's only your own money.   But if you made a mess of it with your investment advice, you felt terribly irresponsible and this did weigh heavily with me.

BA:  How would you describe the Stock Exchange at this time?  What kind of place was it?  Was it still a fairly old fashioned place, if that's one way of putting it?

PS:  Oh very much so.  When I first dealt, there were many many jobbers and most of them didn't have price boards up or anything and you had to find your own way around.  You had to learn the hard way where to check prices.  It was only later they put their names up and you learnt who was who, and it's amazing how quickly you learn when you've got to.   And it was very much a club.  People were very helpful, if you respected age.

BA:  Were there a lot of fairly elderly people working in the Stock Exchange?

PS: Oh yes, very much so.  They seemed to stay up there and work until they dropped in those days.

BA:  Was it primarily a work place or did you feel people also simply enjoyed being in there because of the club aspect?

PS:  Yes primarily it was a place of work - business, but yes, there were lots of people who carried on because of the clubby atmosphere, because they enjoyed life there.

BA:  Now, you didn't stay with the broking firm?

PS:  No, I didn't.

BA:  How did it come about that you moved; for example, what were your reasons for moving?

PS:  I told you that it was effectively a one partner firm, a very unhealthy situation, and I felt the firm was going nowhere - in fact I felt it was going downhill.  So I made a move to secure some sort of control over it by asking the senior partner what plans he had as far as partnership was concerned, the way he saw things going; and the way he didn't give me a straight answer, and then eventually offered me 10per cent at not very good terms, made me feel that he didn't know where he was going; and I wanted to be in a firm where I could have some say in the running of affairs, since my whole future was tied up with it.  I didn't have a large clientele.  The period of indecision, I suppose, lasted two or three years and eventually a small firm of stock jobbers, Charlesworth, who I was very friendly with and did a lot of my small gilt business with, asked me to join them.  Well I didn't take any notice.  I just laughed, and then six months later, they again approached me and, I think I'd had a bad day; and again I approached the senior partner, and again, he seemed to be full of indecision and I decided, even if it was a short term move, I would join Charlesworth.  If I didn't enjoy it, at least I would come in contact with a lot of other brokers and probably would be able to get back into stock broking without too much difficulty.  So I committed myself to the move, much against my family's - they weren't very happy about it.

BA:  Why was that?

PS:  The old family tradition I think, the fact it was my grandfather's firm originally.  He was the Davey of Davey & Candy. 

BA:  And what happened to your own clients?  Did you pass them on to ....

PS:  I passed them on to someone in the office to look after.

BA:  And how did you feel about making this change?  Did you feel as if you were starting all over again and you had to learn new skills or was it a fairly easy transition because you already basically knew what the jobbers did?

PS:  It wasn't too difficult.  They were fairly easy with me, and in those days one didn't ... Gilt-edged jobbing was not going through a very good time.  It was a contracting industry at the time, a contracting business; and a lot of people thought I was mad, but I'd seen the figures and I could see the potential, and so it proved.  I went in at just the right time.

BA:  When was it that you joined Charlesworth? 

PS:  I've got to work this out.  I was about 30-31 at the time, so that was 20, 21 years ago.

BA:  And what were the reasons for the partners in Charlesworth encouraging you to join them?  Were they looking for more partners.

PS:   They were fairly elderly, except for one who was my own age, and the one of my own age was obviously looking for someone else to continue on the business with him.  There was no need for capital.  They were over-capitalised.  To give you some idea of the health of the firm from a financial point of view, they could run the whole outfit, pay all expenses, and have change, just from the interest on the money in the firm.  

BA:  Is this because the partners themselves were fairly wealthy individuals?

PS:  They were comfortably off and you could run a small firm of jobbers in those days on a shoestring.  You didn't pay the staff very highly.  

BA:  And were the overheads otherwise quite low.

PS:  They were, very low.

BA:  How would you describe the firm at this time.  You said it was a small gilt-edged jobbing firm.  Was it a fairly old firm?

PS:  Yes, we believe the history goes back to the early part of the last century, but we've got no ...  Unfortunately, in a move about wartime, everything went up in smoke.  I think somebody put the old files on the bonfire.  We've got records, or at least the Williams & Glyn Bank, which became Glyn Mills and then became [Royal Bank of Scotland]. They've got records going back to 1870 that we were banking with them.  We believe it goes back quite a way before that.

BA:  Was it a family firm?

PS:  Yes it was.  There was a Charlesworth.

BA:  And what kind of staff did they employ at the time?

PS:  In fact the last Charlesworth to be a partner died, or moved out, in 1920. 

BA:  And was there any family connection after that?

PS:  Not really, we did actually employ somebody who was a Charlesworth up to the time we were taken over, but he wasn't in a senior position.

BA:  And about how many staff did you have?

PS:  The partners and staff together came to about a dozen, with about five or six messengers.

BA:  And, again, what kind of offices did you occupy?  Were they simple, did you have much in the way of equipment, or ...?

PS:  Dickensian is the answer to that.

BA:  Could you elaborate on that a little bit?

PS:  Before I joined them, when they paid for stock or deliveries took place, in fact I went round there a few times.  All it lacked was the quill pen.  Otherwise you could have gone back to Dickens' time.

BA:  And they dealt in purely gilt stocks?

PS:  In effect, yes.  Occasionally they dealt in corporation stock, when it was a new issue or easily marketable, but you could say that, yes.

BA:  And did the senior partner at this time have any particular idea about what he wanted to do with the firm in the sense that this was a period when a lot of jobbing firms were merging together, and also firms were trying to spread their coverage over a wide range of the market,  and some firms were also trying to enlarge their capital base.  Were these ideas that were ever in the minds of the senior partners?

PS:  No, not at all.  They were happy in what they were doing.  They weren't working terribly hard.  In those days the gilt market didn't open till 10 in the morning, and you got away quite early in the afternoon.  It was a very simple but good life for them, and they were doing enough small business to ... They had no ambitions to grow, as long as they could keep in good terms with the brokers who'd bring them the small business on a regular basis.  And prices were competitive.  They didn't have to have large positions.  One didn't go home in the evening and wake up in the middle of the night screaming because you had a large bull or bear position, you didn't have to have those in those days.

BA:  Were you dealing in a different kind of business to the business that the larger firms like Wedd Durlacher or Akroyd & Smithers were dealing in?

PS:  Yes, they were doing the large business.   We were doing the small business.  Charlesworth knew its place.  It was a small jobber.  If you had too big a position, then you used to undo it with one of the large firms.  They were happy for you to exist because they didn't want to handle all the small business.  And so you knew your position.

BA:  Was it a competitive market?

PS:  Yes it was, because there were quite a lot of small jobbers.  So you were jealous of the small business and if one of your brokers dealt with somebody else you could get a little bit upset. 

BA:  And did you see different brokers to the sort of brokers who Akroyd & Smithers and Wedd Durlacher were seeing.

PS:  Yes, you saw the brokers with the private client business.

BA:  Could you say then that, in the sense you were dealing with private client business rather than institution business, that the fluctuations in your market were slightly different to those in the bigger sized bargains that the Wedds and the ...

PS:  One did the occasional larger bargain and some of these people tried to catch you out in case you were making the wrong price or it might suit you occasionally, but you didn't get the fluctuations in business that you got later in those days.  But that was the same in the large business as in the small business.  The movements were exactly the same.  The prices were basically set by the large business, by the Wedd Durlachers of this world.  In fact it was Durlacher - I'm not sure if the merger had taken place - it was Wedd in those days; the merger hadn't taken place I don't think.

BA:  Now, how would you describe the gilt market physically at this time?  You were still in the old stock exchange.

PS:  Yes, we were one end of it.  All the jobbers were dotted around.  We had our own little bench, and Wedd was opposite us, on the pillar; Alexander Thompson, I think, was behind us; Akroyd was on the wall.  Francis & Praed were on another bench further away. Woolf Christey were on a bench to our right; the other side of the pillar I believe was Prance and Wilson was on a bench further away, out in the middle somewhere.

BA:  Did you basically keep an eye on what the others were doing, or were you generally so busy yourselves, dealing that you simply didn't have time?

PS:  Oh, you had plenty of time.  You didn't do that many bargains in those days.  You had to be aware of the changes taking place in price and so forth, because you didn't want to be out of line.

BA:  And are there any particular individuals, or characters from the gilt market at that time who stand out?

PS:  There were lots of them. There weren't just one or two.  I'm trying to think of a few of their names.  I'm sure other people will remind you.  My memory's suddenly gone.

BA:  Well let's return more specifically to your own career.  You joined Charlesworth.  Did you join as a partner?

PS:  No, I didn't.  I particularly wanted to be an employee for a period of time to see how I got on.

BA:  So what were your first jobs with the firm?

PS:  Oh, I came on the floor immediately and started dealing.  Obviously I took advice and so forth.  I came straight on and ...

BA:  So you were there as an authorised clerk?

PS:  Yes.  I was a member.  In fact I had more success than I thought I was going to; because, the fact that I was a broker before, a lot of the broking fraternity knew me and they saw a friendly face which they recognised.  In those days the gilt market had a certain mystique about it, and to find one of their number who had actually become a jobber, they came and dealt with me very often.  So I added to the list of brokers who were dealing with Charlesworth by quite a considerable margin during the first few months of working there, I seem to remember.

BA: Were any particular comments made at the time by your former broking colleagues that you'd gone over to the other side as it were?

PS:  Oh, some of them were surprised.  Yes, I think they were quite surprised.

BA:  And what were your own feelings, the first few occasions that you stepped into the house now as a jobber rather than a broker?  Was it a difficult transition, was it something you were apprehensive about?

PS:  Well naturally one was apprehensive.  But in retrospect the transition wasn't as traumatic as I thought it might be.

BA:  And how did you learn your jobbing skills?  Were you standing with a particular partner in the firm?

PS:  For the first few days I was.  And I used to get advice from him.  I didn't really start to learn how to do it until he fell ill for a couple of months within a month of my joining the firm, and everybody came to me, and I had to learn the hard way.  Just as it had been the hard way - the best way to learn broking

Tape 1 side 2

BA:  You mentioned a particular episode from your days as a broker in which you felt that you'd learnt from the experience.  Are there any similar episodes in connection with your early days jobbing, which you feel you learnt from experience.  Did you have any particular disasters or any particular successes?

PS:  Well I felt things were going my way for the first year; because I didn't make a fantastic amount of money, neither did I lose a lot of money, but I felt that the amount of business that Charlesworth was doing was increasing all the time, and I felt that I contributed to it rather earlier than I expected to.  There were a lot of young dealers on the floor in those days and I was still comparatively young and people liked dealing with people their own age, people they could get on with.  And I felt that my first year had gone as well as I could have expected.

BA:  How did your career with the firm progress?  At some point did you become a partner?

PS:  I got a bit bored, because compared with life as a broker, we weren't doing that many bargains a day; getting in at ten, leaving at 3.30, sometimes going home then, really I wasn't being pushed, I wasn't being stretched as much as I felt I should be, as a person.  And I think it was boredom.  I was getting a little bit bored with it after a year, and I was making moves to go back into broking, purely for that reason, not for financial reasons at all.  And I saw several firms about the possibility.  I had one or two offers, and Charlesworth got to hear of it, but I was quite open about it.  I think it coincided with an upturn in business and I was doing a bit more.  Anyway I changed my mind and I was offered a partnership and I took it, and so I'd only been with Charlesworth for eighteen months and I became a partner, again on terms which I thought were quite favourable.  I was earning ever so much more than I was as a broker, and I was only doing half the work!

BA:  What did partnership entail in terms of responsibility within the firm?

PS:  Well, you were on your own.  Anything you made or lost was relevant to what you were going to make or lose.   So when decisions were made you were fully consulted.  Although you were junior in age to the others, one felt you had greater responsibility.

BA:  How many other partners were there with the firm, at this time?

PS:  There were three very elderly partners.  One who was a sleeping partner, whom we saw only very occasionally, but he left his money in the firm.  Two other older partners, one who never worked on a Wednesday...

BA:  Why was that?

PS:  He'd never apparently worked on a Wednesday all his working life. In those days he could get away with that sort of thing.  So he was hopeless on Thursday because he couldn't remember what happened the previous day because he wasn't there!  And then there was Reginald Block, who was there every day, and his son Richard, who was roughly the same age as me.

BA:  Did you have many dealers, many blue buttons?

PS:  Yes from time to time, but not many, no.  We had the odd blue button.

BA:  And how was the business actually organised?  Did you have a separate long book, a separate short book?

PS:  No, in those days we did everything, nothing was divided at all. It was only [in] later years that we set up [a separate short book].  In fact we were one of the last firms to have a separate book, shorts and longs.

BA:  So how did you interact, as it were, when you were all standing there together?   Were you all dealing with similar-sized business or was there a kind of rising scale?  Were you consulting with each other, chatting with each other?

PS:  Yes, we were all together, so anybody who got a large order, they could consult if they wanted to.  I suppose I did the smaller business because I hadn't been there long enough.  The others had more experience.

BA:  And about how much capital did you need to run your book?

PS:  Not a great deal.   If you want to, I could have a look and consult my old balance sheets.  I can't remember exactly what it was but I've got some details in the bag if you're interested to hear.

BA:  Were you conscious of the jobbing firms around you, in the sense that there was a diminishing number of jobbing firms and that smaller firms like you, more often than not, seemed to be either disappearing as older partners retired or were merging with other jobbing firms?

PS:  Yes; but to us it didn't seem to matter, because we seemed to be picking up the business from them, so it didn't do us any harm.

BA:  You've already mentioned the larger jobbing firms in the gilt market, in the sense that you would often go and undo business with them.  How often would his happen?  Was it fairly frequent, was it a daily occurrence?

PS:  It depended how much business was going on really.  Yes it might be once or twice a day.

BA:  And were they very competitive in the sense that if you were in a corner, they would, not take advantage of you, but either get you to lower your price?

PS:  Yes, I think they were.  They felt it was their duty possibly to give us reasonable terms when dealing with us.  We weren't in those days really encroaching on their business at all.

BA:  And did you have particular relationships with one or two of the bigger firms or, if you wanted to undo a position would you go and check a price with all of them?

PS:  Yes, in those days probably we did more with Wedd than with Akroyd; difficult to remember.  They were nearer to us.

BA: Did you often see the Government broker.  

PS:  In those days he dealt with the larger firms.  We didn't really have much dealings with him.  It was only later that we had more dealings with him.

BA:  And what caused that?

PS:  The business widened, we took on probably larger business, and there were more tap stocks around, more new issues and so forth.  Preference was still given to the larger firms.

BA:  Now, you mentioned earlier that when you did join Charlesworth the gilt market wasn't a particularly profitable market.  Did this change?

PS: Yes, I think gilts became a better market, and I think there were more people holding gilts and dealing in gilts.  You make money when the market is moving, one way or the other.  If it stays without moving for too long a period then there's not much money to be made.  I think back in whenever it was, markets started moving and we were making much more money.

BA:  This is a period, if we go forward a little bit in time to the early 1970s, when a number of jobbing firms either disappeared from the gilt-edged market, firms like Francis & Praed, or you had a firm like Smith Brothers, trying to come into the market, but only lasting for a short time, and then withdrawing.  Again, was this something that you as a smaller gilt-edged jobbing firm were conscious of?

PS:  Oh yes, this was the time of the - was it the White Paper? 

BA:  Yes. 

PS:  It was the time of White Paper when it became a freer market.  Movements became much greater and you had to be on the ball.  And I suppose the expertise which we'd built up saw off the newcomers, and the opportunity was there for us to do a bigger percentage of business.  That's the time when we started dealing in larger amounts.  We were forced to really, because we were expected to deal in larger amounts.

BA:  Can you elaborate on that a little bit?  Why were you being forced, and where was the pressure coming from?

PS:  Well, actually, position in the market.  This was the time when the Stock Exchange, in our particular case, where you were in the market actually physically, did have quite an important effect.

BA:  By this stage had you moved to the new House?

PS:  This was the transitional stage when the old Stock Exchange was being re-built and we were in a temporary building.  Our particular pitch was the most uncomfortable pitch in the whole temporary building.  We were in a narrow passageway, it was very cold and a terrible place to be really, and it was the last place we really wanted to be.  But in actual fact it couldn't have been better, because we had Wedd on one side of us, and Akroyd the other, and to get from one to the other, everybody had to pass us.  We were fully aware the whole time of what was going on, and so we were very rarely caught out when there'd been a change in the market.  We started dealing large in shorts and things like that which we'd never dealt in before, and we were doing very well, because anybody who was dealing was passing our pitch, almost had to brush past us, and it kept us on our toes the whole time.

BA:  So did this mean you were seeing different brokers?

PS:  Yes, we started dealing with a much wider range of brokers, and we became more competitive.  The risks were there, but the risk not only to lose money, but also the opportunity of making money.

BA:  Was this a cause for concern for you as partners, that somehow you were dealing in larger size and therefore you were a lot more vulnerable to moves in the market.

PS:  Oh, very much more, yes.  Gone were the days when you went home with a level book or anything like that.  It became a bit more fraught.

BA:  Were there situations where you were caught out?

PS: Oh yes, sometimes; but more than made up for, the other times.

BA:  Do any particular instances stand out in your memory?

PS:  Well, what's the expression about not taking prisoners?

BA:  Hostages to fortune?

PS:  I think it was one Christmas.  We were up at some broker's party and we, Richard Block and I, were both up there, leaving one elderly partner on the pitch. There'd been quite a lot going on but it was lunchtime, and it's usually quiet.   Knowing where we were, the partner on the floor dealt with this particular broker in a very large amount of stock, larger than we would normally deal. They were known to be tricky customers - we'd been caught out before by them - and of course it was a terrible error. There we were, being wined and dined upstairs, and had been taken to the cleaners on the floor.

BA:  How did you get yourself out of these positions?  Did you then go to the large jobbers and unwind a position, or did you ever go to the Government broker?

PS:  One used to go and try and get out of your positions with the larger firms, and it sometimes suited them.  Because sometimes the business that you were doing was opposite to what they were doing.  And yes, I suppose it was about the time we started dealing with the Government broker more often, but he was still dealing mainly with the larger firms.

BA:  Can you explain what dealing with the government broker involved.

PS:  Well, you are aware of what went on when there was a tap stock around?  You could always put up terms to him.

BA:  Can you explain that in a little bit more detail?

PS:  Well, you could do business with him by taking tap stock against other stocks and so forth, rather than just plain taking the tap stock.  He's aware of the prices and he wouldn't always give you a straight answer.

BA:  Was the technique in gilt jobbing different to the technique one would have used in equity jobbing?

PS:  I would say it was.  I think this is where Smith Brothers came unstuck. They came onto the floor and immediately started wheeling and dealing in Government stock.  Equities all move in different directions, depending on what stock it is, and the gilts tend to move together.  There's not a great variety of different prices between [them], they either all move up or all move down.  But they seemed to be treating each stock independently, because of their lack of experience.  That explains the difference I think.

BA: By this stage, again, fixing the focus on to you, were you feeling as if jobbing now would be your career on the Stock Exchange?  You'd given up thoughts of returning to broking...

PS:  Oh yes, long since given up thoughts.  I'd been out of broking too long by then. 

BA:  Had you married?

PS:  Yes, I'd married - in fact I'd married before I changed over from broking to jobbing.  I'd just got married.

BA:  How had you met your wife?  Was it through connections in the City?

PS;  No, from home really.

BA:  Where were you living at this time in the early 1970s?

PS;  I was living in Beckenham.

BA:  Perhaps you could describe the daily routine at this stage, in the sense, a typical day in your working life from leaving home and so on.  About what time would you leave in the morning?

PS:  I don't know when we started getting up early.  But it used to be very gentlemanly. I used to catch the 8.47 I remember, from Beckenham in the early days.  Then I was too early, I had time to kill.  The market didn't open until ten.  I forget when we went back to starting at 9.30.

BA:  What was the first place you went to?  Was it the floor of the House or was it the office itself?

PS:  I think we went straight to the floor very often.  I think one of us used to go up to the office to get the books.

BA:  Which newspaper were you reading?

PS:  I used to take the Telegraph, and somebody used to take the Financial Times.  We all took different newspapers I think, and if there was anything interesting in them, we used to exchange information when we got there.  There were always plenty of Financial Times around.

BA:  So about 10 o'clock you would converge on the pitch?

PS:  That's right, yes.

BA:  And then what would happen?

PS:  One took stock of the situation and whether there were likely to be any changes and so forth.  And one didn't deal before you were aware - this was going back to the floor before the temporary market, before the White Paper - you had to be aware of what the large firms were doing really.  It was important to somehow get hold of information as to the sort of prices they were making, because you were very much reliant on them.

BA:  How would you go about doing that?

PS:  Oh there's certain information you used to get hold of, through friendly brokers.  There was a fairly good underground system of knowledge going around.

BA:  Would you be chatting with the other smaller jobbing firms?

PS:  Oh yes, we used to do business with them sometimes.  We may have been competitive, but we were also very friendly with them.  Oh yes, some of your best friends were your competitors.

BA:  And then presumably you would start dealing with the brokers as they came in or sent their dealers in?

PS:  Yes, that's right.  They used to come in waves very often.  You'd do nothing, then a lot of business, then nothing again.

BA:  Would you take a break for lunch at some stage?

PS:  Oh yes, in those days it was very gentlemanly. You'd take your hour, and you were even able to have a couple of pints of beer sometimes.  That was why it was so relaxing, really, because if you weren't doing a lot of business you could do that without any worries at all.  It was a very sociable sort of situation.

BA:  And about when was the House closing at this stage?

PS:  3.30 I think.

BA:  And what were you doing then?  Were you going back to the office?

PS: Yes, we went up to the office.

BA:  And what were you doing there?

PS:  We used to take telephone calls from brokers who wanted to deal with us.  In fact before I joined them, Charlesworth used to go home very early.  After hours it was almost impossible to reach them, I used to be so annoyed.  I think it's one of the things I did change.  I managed to persuade them that we ought to do more after hours business, from brokers who wanted to deal.  One used to calculate ones profit and loss.  In those days by hand; didn't have calculators, one used to do it by hand.  I was never any good at maths but I somehow used to work these things out satisfactorily.

BA:  Were computers and that kind of thing beginning to impinge?

PS:  Not really, it was only later, very simple calculators, but it was only later that computers started rearing their ugly head.

BA:  And about what hour of the day would you be shutting up shop and going home? 

PS:  Well, when times were quiet one used to take turns to go home at four; but, yes, five, five-thirty.

BA:  And about how much time were you taking in the way of holidays?  Was it fairly flexible?

PS:  As long as you didn't clash with anybody else, it was alright.  Naturally the older partners had the first say.  I suppose one took - you never took more than three weeks, I don't think, in those days.

BA:  By about 1973 you'd moved into the new House, but also the economy was beginning to go into a fairly severe recession in 1974.  Do you have any particular memories of that time when Stock Exchange values crashed and there was a loss of business confidence, there was the oil crisis, there was the three day week?  Was it a difficult time for business?

PS:  I don't think it was ... It was difficult, but it didn't seem to affect our business too much.  In fact we probably profited from it, actually.

BA:  In what ways?  Was your particular jobbing technique suited to those kinds of situations, suited to a bear market?

PS:  One used to make more money in a bear market than in a bull market.

BA:  Could you elaborate on that a little bit?

PS:  Well, you are actually receiving interest in a bear market, instead of paying it out.  Unfortunately we probably didn't make as much money as we should have done, in that some of the partners hated being a bear.  It was against their natural inclination, the older partners.  They always wanted to be a bull.  I think as younger partners, we were happier to be all square or to be a bear, but could never get through to the older partners that there was more money to be made in a bear market than in a bull market.

BA:  By this stage were you beginning to think ahead to the future of the firm and trying to map a path for it?

PS:  Yes; the older partners gradually went away and by that time one had built up a certain amount of capital, so the firm could keep running without any ... But the expenses of the firm were rising, it wasn't an armchair situation, one had to be aware of the expenses of running a firm and you couldn't run it on a shoestring any longer.  It was becoming a very different sort of business. 

BA:  Were you being encouraged to take on more business as more gilt-edged jobbing firms disappeared?

PS:  I think you were, yes I think you were taking on more business, so one had to update one's systems and probably employ more staff. We went into bigger offices, which were only a stone's throw from the Stock Exchange, very good.  Obviously you were paying out more in rent and rates.  But it was a pretty good life.

BA:  Did you ever contemplate joining with an equity jobber and trying to expand the firm in that way?

PS:  Only later during my time there, but that was squashed.  Not seriously, I don't think.  Not until later, anyway.

BA:  About when, when you say later?

PS:  I think we were having a difficult time, probably about 1980, I think.  Or the early 80s.

BA:  And were there other firms around looking to merge with a gilt jobbing firm?

PS:  Yes, probably there were.  They were trying to spread their risks, I suppose.

BA:  We think of the latter part of the seventies as a time when the Government was issuing a lot of stock and when a lot of the business in the Stock Exchange in terms of value certainly was gilt-edged.  Did you feel that you were in the particularly lucrative end of the Stock Exchange?

PS:  Yes, that was the end to be.  There was a lot of money being made.  You had fixed commission rates in those days and so brokers were making money hand over fist.  And they were issuing loads of Government stock.  The more stock that was issued, the more turnover there was.  There was a lot of money to be made.  But the market was volatile.  You had to keep on your toes.  If one was sensible and kept within one's ... didn't overtrade, there was money to be made, no doubt about it.

BA:  Were you feeling any pressures on the single capacity, on the jobbing system.  Were you conscious of any pressure to change single capacity?

PS:  No, I don't think I was.  There had been, over the years, mutterings and so forth, but we felt it was a good system, a competitive system. The amount of money we took out of it was small compared with turnover, very small.  All along the return was minute, and I felt the jobbing system, all along was a very good system.  A person could always deal, they could always deal at a price.  And the fact you had a buffer, a jobbing system there, meant that it cut down on the volatility of the market.  Jobbers might buy a lot of stock and instead of, as these days, the fact that it gets around there'd be a load of selling on the market, and everybody marks the stocks down, they might have even put the stocks up on the board.  I believe that used to happen in the equity market.  You know, it masked the fact ...

Tape 2 side 1

PS:  It was a great regret to me that they changed the system, because I felt, although the jobbing system was unique to this country, I felt it had something which other systems did not have.

BA: Could you explain what they were?

PS:  I felt that the buffer system that the jobber system was actually did cut down on volatility and made for a better market. 

BA:  Were you very conscious of Charlesworth being one of the smaller jobbing firms?

PS:  Yes, I was.  One was being pushed into dealing in larger and larger amounts of stock. We were taking much greater risks.  We still had a very small capital.  I was fully aware of that.

BA:  Were there any occasions when the firm actually got into trouble because it had taken on a bit more than it could handle?

PS:  There was the odd occasion when we were helped out.

BA:  Could you describe one of those in very general terms, without necessarily going into the details, because I think it helps in contrasting the differing positions of the smaller firms with the larger firms, and the differing kinds of problems that small firms encountered.

PS:  We found ourselves with a cross-book, too many large positions.  The market had moved and we found ourselves having difficulty in undoing our large positions.  Certainly if we undid them at the market prices we'd show an unacceptably high loss.  So I think the Government broker encouraged one - in the rare occasions it ever happened - the larger jobbers to help the smaller jobbers out.  It was a very rare occurrence.  It did happen to us on the odd occasion, when we'd taken on unpopular stocks, we couldn't get rid of them; we'd sold popular stocks, and we were left with cross-positions which were costing us money.

BA:  In these circumstances was jobbing becoming so risky for you that you'd ever considered as a firm actually closing down, not continuing, for the same reasons for example that a firm like Francis & Praed got out in the early seventies?

PS:  I suppose it must have gone through our mind, it certainly went through my mind once or twice.  By that time, the older partners had retired.  One's own personal capital in the firm was such that without it the firm would have - the firm needed you.  And you thought, if you withdrew, how would you close it down, you know  - and all the problems.  And so you took a deep breath and went on, and hoped that things would get better, which they did.

BA:  In what sense did they get better?

PS:  The market became better or you started making money again; basically the market became more favourable to you and you managed to unwind your positions, and you found a formula to make more money.  I think the formula for us in the late seventies, early eighties was the growth of the low coupon market in shorts, which I tended to specialise in.  A lot of small people were finding that with high tax rates that the low-coupon stocks with a redemption within five years were a very good way of preserving their capital and not paying out too much in tax.  And so we were doing a very good business in those.  And they were the non-professional firms who were doing this business, so it was great, in that they were coming to you rather than going to Akroyd or Wedd; and you were building up an expertise in them.  We probably had as much expertise as the larger firms had, and one built a reputation on that.  It was particularly pleasing for me, that. And in fact for some years that type of business kept the firm going.  We were probably losing money on the longs and making money on the shorts.  Not the high-coupon shorts, but the low-coupon shorts.  And there was money to be made; because, I can't remember, but if you had the right position when the stock went ex-dividend and so forth, and got it right, there was quite a lot of money to be made.  And I think that's how we got out of one or two holes!

BA:  How had your own career with the firm developed, going right up now to 1984?  Were you personally acquiring more responsibility?  Did you become particularly responsible for areas of the firm's running?

PS:  I started off, I can't remember when it was ... We were about the last firm to have a separate short-dated section, and I agreed some time during the seventies to start up a short-dated section because there were too many stocks.  It was alright when you only dealt in about twenty something stocks.  When you were getting a list of sixty or seventy stocks, it was quite impossible for everybody to deal in every stock.  So I agreed.  I said to Richard, I couldn't see how we could possibly make money on shorts which were very much a big jobbers' market, but we needed to have a separate section, and I was prepared to start it; so I took a young dealer on and we had a little bit of help from one or two brokers to see we weren't too far out on prices in the mornings!  Because we needed it, and we weren't in such a good position in the market physically in those days. On the wall we were in the new Stock Exchange we were rather a long way away from the major firms of jobbers.  But lo and behold, instead of losing money we actually made a little bit of money, which was pleasing, and we took the pressure off the rest of the dealers who could concentrate on doing longs.  And I enjoyed that.  Because I felt a bit of an understudy.  I came into the firm after Richard Block.  He was a very charismatic character, volatile.  We were both quite different characters, and I felt the time had come really when I wanted to do my own thing; so I was quite happy to take on the shorts and to do my own thing there, let him carry on with the longs; and it seemed to work.  It was quite a good formula.  He was very good, he was very fly and all the things that a jobber should be - volatile character.  And we got on pretty well.  But we were very different, and then we developed after having a separate short section, we started specialising on low coupon stocks, which until they changed the tax legislation, was great.  We were doing very well on them and kept the firm running for a few years.

BA:  Now I note in one of the lists of Stock Exchange members for the 1980s you are listed as the Finance Partner and Administrative Partner?

PS:  Well, yes; this happened like all small firms;  everybody knows everything about the firm and being a small firm, it was up to every partner to know everything about everything that went on.  I seem to remember they changed the rules and you had to nominate somebody, I think it was probably during the seventies, I can't remember exactly, you had to nominate somebody as financial partner and somebody as administrative partner.  I think I made the mistake of going away on holiday!  I came back to find I was Financial Partner and Administrative Partner!  Yes, if there were any problems with the Stock Exchange or any problem over your accounts or anything, then you had to go and sort them out.

BA:  Did you as a firm have much contact with the powers that be, as it were, the Stock Exchange Council?  Were you involved in the general running of the Stock Exchange or was it something that really went on over your head?

PS:  We didn't have anybody in the firm who was on the Council like that.  We couldn't afford to.  You needed every partner on the floor of the House. We couldn't afford to let somebody put up for Council.  You knew the Councillors, and if you had a moan, you could moan at somebody, but we didn't have anything to do with the running of the Stock Exchange at all.

BA:  What was your feeling in 1983 when Nicholas Goodison came to his agreement with Cecil Parkinson to reform the rule book.

PS:  Oh, horror really, very much against it.  We felt completely let down at the time and thought it was wrong, could see disaster occurring. The Stock Exchange, probably, hadn't realised how the world was changing;  we were living in our own little world and probably hadn't modernised or updated our systems, how we went about things in the Stock Exchange, for too long. But I regret the wholesale change that took place, which was very unhealthy, and I still maintain that to this day;  that it was a wrong move and it shouldn't have happened.  Certainly it shouldn't have happened as it did happen then.

BA:  Now what did you as a firm decide to do in this new situation? Did you want to try and keep going as long as possible, or did you really feel the game was up?

PS:  We weren't making money.  We were having a pretty difficult time.  Our limited capital was beginning to tell; and you wondered how long the capital would last too, if you were losing money. It was not a situation we were used to.  The brokers realised that the game was up with them unless they managed to join with the market maker.  Wedd and Akroyd didn't have much difficulty in finding willing partners there, and Grieveson were on the look-out for a market maker, because the Bank of England were encouraging these mergers and so forth, and we linked up through contacts with Grieveson Grant.  And that's how it happened.

BA:  What was the atmosphere like in the Stock Exchange during these last few years when you were conscious that the system was going to change, but it still hadn't actually changed yet?  For example, I've been told by some people that there was a lot of competition for market share, and also that a lot of the old standards went.  Now, again from your perspective as a smaller jobber, perhaps you may have been a bit more detached from this.

PS:  No, I don't think we were.  The type of people.  It was a club in the old days, and if you're club members you don't tend to let in people that are unacceptable.  It's a bad system but it worked!  Young people without any background and from a different way of life started trading and dealing and so forth.  Nothing against them - they did a very good job, but they hadn't got the background and perhaps the stability the older people had.  And everything seemed ... I mean one hasn't heard the expression 'My word is my bond' for years, but that was on everybody's lips in the old days and it very much was that.  That sort of .... morality slipped, but it was slipping well before Big Bang.  I would say that the morality of dealing and so on was slipping badly.

BA:  In what ways did it show? 

PS:  A lot of people could hardly have said 'My word is my bond'.

BA:  So you were feeling that the people you were dealing with were perhaps a little less trustworthy?

PS;  Very much so.  You see in the old days if somebody was untrustworthy they'd find it very difficult; if they let you down once then you'd never deal with them again.  But those standards were slipping.

BA:  Now at the same time, the early 80s, the Government itself wanted to change the system for issuing Government stock.  Was this due to pressures that you were aware of on the floor of the House?  Did you welcome the change in the Gilt Market, or, again, did this feel as if it was something that was going to be imposed upon you?

PS:  I think, the old system of issuing stock ... I think the Government often did give money away to people like ourselves.  I think we did do well out of it.  There were a lot of taps, the old system of taps and so forth, there was a lot of money to be made on that.  Yes I think it probably was rather wasteful.

BA:  Now, you've already mentioned some of the strengths of the jobbing system, were there any weaknesses?

PS:  Yes, I suppose the weaknesses were that until Big Bang there were only two large firms dealing, Wedd and Akroyd. They had the market carved up between them. It would have been better if there'd been a third large force.  And a lack of capital.  The smaller firms lacked capital to compete effectively.  Yes, undoubtedly, with bigger turnover, large amounts of trading going on, I was constantly aware that we were overtrading really for the size of capital we had.  I did have a few sleepless nights, quite right.

BA:  Did you feel jobbing had been a risky business to be involved in as opposed to broking or many other different professions?

PS:  The latter part of my life on the Stock Exchange,  yes; the early years, no.  One didn't have to take risks to make money in the early days.

BA:  What would you say were the qualities required to be a successful jobber?  Say for example, in your case, what qualities did you feel were required to be able to go out there each day to stand on the floor of the House and to do business?

PS:  I believe, you had to be quick witted.  You had to make instantaneous decisions, all day long.  I think you had to be a judge of character, you had to be a judge of ... I felt I used to know, when a dealer came up to deal with me, I used to be able to read him, the sort of business he had.  Sometimes I could guess whether he was buying or selling, purely by the way he went about it.  They all had their characteristics.  The way they walked sometimes; whether they went twice round the pillar - all this came into it.  As soon as you started dealing on the screens, all this was completely lost to you.  People phoning on the phone, it wasn't the same thing as actually dealing face to face with somebody.  I used to find I had a sort of second sense, I felt, and I could tell.  Perhaps a small broker had a rather larger order than he was used to handling and you could tell he was a bit more shifty or a bit shaky or a bit diffident, or behaving in a different way.  And I also felt I believed people thought I was honest and straightforward and that definitely helped.  I don't believe it helps anybody at all these days, but perhaps I'm wrong!

BA;  Now, if someone had come up to you, a partner in a Stock Exchange firm, in the 1970s and asked you for your advice about whether they ought to go into the Stock Exchange, what would you have said to them?

PS:  I would probably have said 'no'!

BA:  Why was that?

PS:  Because the character had changed and the type of people coming up were different.  Well, certainly not to do what I was doing.  Certainly I felt there was scope for the research side and that sort of thing, but perhaps not the trading side.

BA:  Looking back from the perspective of 1990 on your decision to be a jobber rather than a broker in the long term, how do you feel about that?

PS:  In the light of my experiences at Davey & Candy it was the right decision to make.  I think if I'd been with a different firm of brokers I might have stayed as a broker.

BA:  Do you feel your original attitude to jobbers when you'd first gone into the Stock Exchange, had changed through your experience of being a jobber yourself?

PS:  Oh, I think so.

BA:  Did you feel, though, at the end of the day that the jobbers were a different type of person to the broker, or did you feel that they were more or less the same?

PS:  Yes, they're different.  Different skills, definitely needed.

BA:  Did you feel they were a different class of person?

PS:  Yes, but not the same extent.

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