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

Interview No. 36: Kenneth Hill

Interviewer: Bernard Attard

Home: 10 August 1990

Tape 1 side 1

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

KH:  I was born in June 1932, in South London, in Forest Hill, which is near Crystal Palace, just north of Crystal Palace.

BA:  What were the names of your parents?

KH:  My mother was Ethel Dora, she was a Gibbs before she was married.  My father was George Bertram. He was a Civil Servant, and he was in a part of the Treasury called the National Debt Office.

BA:  Had any of your grandparents also been in the Civil Service?

KH:  No, my grandfather was a builder, a small jobbing builder, that was on my father's side; and on my mother's side, my grandfather was in the Post Office.

BA:  Do you have any brothers or sisters?

KH:  No, all by myself. 

BA:  And where did your parents send you to school?

KH:  First of all I was at a prep school in Forest Hill.  And then in 1939, before the War, we came down and lived in Horley, and I continued to [go to] prep school there, and then  I went to Reigate Grammar School.  And that was where I stayed until I took what were then the Higher School Certificate, the equivalent of A-levels now.

BA:  Did you have any ambitions for your life when you were at school?

KH:  Not a great deal.  I thought, as everybody did in those days, you were more or less going to follow in your father's footsteps.  My father was in the City and I rather assumed I would go in the City as well.

BA:  Was your father still with the Treasury at that stage?

KH:  Yes, he stayed there until about 1975, I would think, 70 or 75, and he was what would have been - I think he was called Chief Clerk of the National Debt Office, which was a branch of the Treasury.  They were the Commissioners for the Reduction of the National Debt.  A job which they failed to do.

BA:  As a young boy, did you form much impression about what your father actually did?

KH:  No, I knew that he had a nice steady 10 to 5 job and, going back to the fifties, the climate was such that you just wanted a steady job and tended to follow in father's footsteps.  There weren't the job opportunities there are now.

BA:  So what did you decide to do when you finished school?

KH: When I was in National Service I didn't know what to do, and my father said to me one day on the telephone, 'I have seen the staff partner of Mullens'. Because the National Debt were one of Mullens' clients, and the staff partner had said to him, 'Hill, you've got a boy.  Does he want a job?'  And my father said to me, 'Would you like to go round and have a chat to them?' So I got a morning's leave from the Army, because I was based up in St. Johns' Wood, and I went there and I saw this gentleman, who was Sir Peter Daniell, as he is now.  And he said to me, 'Would you like to come and work for Mullens?'  I said, 'I would, Sir', and he said, 'We'd very much like to have you.'  We talked about the Army, nothing about my scholastic achievements at all.  He just liked me because he knew my father and he trusted father and that was good enough reference.  So I went in through that way.

BA:  Did you have much idea of what the Stock Exchange was about as an institution?

KH: Strangely enough I'd always been interested in it.  When I was at school I always read the Stock Exchange page. In fact I think probably I knew quite a few of the prices before I got there.  I knew vaguely, but I didn't know the machinery of it at all.

BA:  What would have been the attitude to the Stock Exchange or a City career among your peers at school, would it have been...?

KH:  Well Grammar schools in those days, particularly in this sort of area, Reigate - it was a sort of catchment area for the City.  A lot of people I was at school with went into Insurance companies, into banks and there are still several I know who are in banks in the City now.  I think there was a good take-off for the City there, yes.

BA:  And how old were you when you started work?

KH:  Twenty.  Just over twenty.  I was shot out of the army, demobbed when I was 20 and a quarter and I started practically immediately.  I had about a month off and that was it.

BA: What were the first jobs they had you doing?

KH: Delivering stock round the City.  You worked your way up in those days.  You did everything.  You made yourself generally useful.  You'd take the certificates round the City and run messages for people.  It was rather a good skive actually, because you'd be given the bus money, and if you played your cards right you could walk to wherever you needed to go and have a coffee and a cake in a Joe Lyons or an ABC tea room on the way there, by saving the bus money.

BA:  How would you describe the firm at the time that you joined it?  Was it a very big broking firm?

KH:  No, when it came to seniority in the City, there were much bigger firms than us, obviously.  We were a very small, select firm, but by the nature of the job that we did, we were the number one firm in precedence, the right of line.

BA:  Do you have any memories of the offices at the time?  The people who were employed in the office?

KH:  Oh they were lovely offices, really Victorian with small offices, none of this open plan. There were some very nice people in them.  In particular I can remember the office manager, who was a survivor of the First World War and had had his face shot away.  He, poor devil, could only think of the First World War because of the experiences he'd had there.  And another one of the rituals I can always remember, when the pubs opened at 11.30, I think it was, all the senior members of the firm used to troop out of the back door, straight into Dirty Dicks or Pinns, I think it was in Coleman Street.  11.30 on the nail they were out there.

BA:  What was the work routine like?  Were they busy offices?

KH:  Pretty relaxed.  I don't think there was any day when I ever had to stay after five o'clock for the first two or three years.

BA:  And about what time were you starting in the morning?

KH:  I used to get there at 9.30, but the more senior members of the staff waddled in at 10 to 10 or so.

BA:  What was the nature of the firm's business?  The Government was simply one of its clients?

KH:  We did the Government brokerage and then we had a lot of gilt-edged clients, insurance companies, banks, who we dealt for in the gilt market; discount companies, those sort of people. And we had several pension funds - this is going right back as far as I can remember into the fifties - a small number of private clients who were mostly friends of the family, more or less. We didn't seek private clients, because we were too small a firm to do it.  I suppose it was a fairly general mix of business, but with very much the accent on the gilt-edged stocks. 

BA:  And how did your own career with the firm unfold?

KH:  Well in those days, I was the youngest member of the firm.  I think I was probably the first person they'd recruited almost since the war.  I would guess, in 1952, they were all very elderly, and I was looked upon as the boy in the office, the baby of the firm.  What one hoped to do was go actually into the Stock Exchange as a blue button.  And by that course you became a red button first of all. Which meant you could go downstairs in the basement of the Stock Exchange and do what's called checking, which was yesterday's bargains.  You ran through just to see that they were correct with your opposite number.  And I did that for a year or so. Then I became a blue button, and by being a blue button I was in the Stock Exchange, and it was my job, as you probably know, just to collect the prices, and to run errands for my seniors.  If they wanted a packet of cigarettes or some theatre tickets, I was the man to get them.

BA:  So those would have been your first contacts with the jobbing firms in a sense, down in the checking room with...

KH:  Yes, taking messages, saying so-and-so can't come to lunch for ten minutes or something like that.

BA:  Do you have any early impressions about going into the Stock Exchange, or early memories?

KH:  I think probably the noise, and looking up at those great big domes which they had.  I think that was the thing, and seeing the coated waiters with their top hats on who seemed almost like gods to me.  They moved around like senior partners, by their aloofness. They were great characters.

BA:  As a blue button were you collecting prices in all parts of the market?

KH:  Yes, all round the market when I first went in.

BA:  And how long were you a blue button? 

KH:  I would think for two or three years.  I think you had to be a blue button for two years.

BA:  Were you attached to any particular partner, or were you general dog's-body?

KH:  No, just general duties.

BA:  And what was the progression after a blue button?

KH: Then I became an authorised clerk, which meant that I could actually buy and sell on behalf of the firm and then after that, after about six or seven years I became a member, which gave one status - no actual financial benefits at that stage.  And then I became a partner through people retiring.  My immediate boss had a heart attack and retired and I became a partner back in, I would guess, about 1970 or 71. 

BA:  So would becoming an authorised clerk be the first time you would be dealing directly with the jobbers themselves?

KH:  Yes.

BA:  And again, were you attached to a particular ...

KH:  When I became an authorised clerk yes, I was attached to the gilt-edged market, and I got to know them.  There were, I think, twenty-one firms of jobbers. There were really basically three big ones. Wedd Durlacher, or Wedd Jefferson as it was then, they later merged with Durlacher. They were the biggest. Then there was Akroyd & Smithers, who were coming up.  They had somebody called Hugh Merriman, who revitalised the firm by choosing some very good young people, and they got a lot of business through that. They came up.  And there was Francis & Praed, who sadly were one of the firms who'd never recruited any youngsters and they were just on the slippery slope and decaying pretty fast.  And they actually went. They dissolved themselves in 1973/4 I should think.  It might have been 75.  They went. And then there were masses of other firms.  There was a firm called Wilson & Watford, who were quite big.  Bruce & Hinton, who specialised in short-dated securities more.  And there were a lot of smaller firms who consisted really of just two or three people.  There was a firm called R H Prance, who had associate members.  I should think there were probably about ten of them.  But there were basically the three big ones with the hangers-on round them.

BA:  How would you contrast the gilt market with the other markets in the Stock Exchange? Was there a different atmosphere?

KH:  Yes, I should think the other markets started up at 9.30-ish and the gilts were rather regarded as gentlemen, because they started at 10 o'clock, and it was rather frowned upon to do anything before 10 o'clock.  In fact it was damned difficult in those days to do anything at that stage.  But I think probably the type of person might have been slightly different in the gilt market.  They were - I don't know - not of a different background.  I suppose they grew accustomed to the place.  They were - I don't know what the word is for it - you've got me stuck there rather. But they were slightly different, I think, the gilt jobbers.  I don't quite know why.

BA:  How was the dealing side of Mullens organised?  At that stage were still a lot of partners going in?

KH:  The partners went in.  We had what was called a little box outside the market where they would stand and wait for their orders to come through, and then they would go and get the dealer.  At that stage, we used to do the Government brokerage, and it wasn't split off from the rest of the firm, as it later became split.  So you divided the business into short-dated securities, those under five years, and the longer dated mediums and longs, and one person dealt in shorts, and one person dealt in mediums and longs.  And he would deal both for the Government and for the general client business, which was slightly awkward. But in those days you could be fairly fair about it and there wasn't so much of a conflict of interest.  But as time progressed there began to be a conflict and that is why Mullens split the job and the Government side was done by a very closely-knit team, who had no contact with the commercial side.

BA:  About when did that occur?

KH:  That happened in 1975, I would guess. These are pure guesses.

BA:  Yes, it gives an indication.

KH:  I don't know if you knew that.

BA:  And what kind of business were you as a young authorised clerk entrusted with?

KH:  I was just doing the small business.  I used to deal for the country brokers, who were people who lived out in the country and would phone through and try and deal in London.  We would charge them a small commission.  In those days you were dealing in £1,000, £2,000, and thinking it was a reasonable sort of order, whereas now it would be nothing.  In those days if you got an order of £50,000, I mean this is going right back into the fifties, if you got an order in £50,000 worth of stock, you thought it was quite a large order.

BA: [How did you learn] your skills as a young dealer, or were skills involved in dealing...?

KH:  I was taught by the preceding dealers, my superiors, and also you picked it up.  You just realised what to say and when to say it, and not to talk too much.  Because it's much better not to talk and let somebody else tell you the whole story.  And you did exist on a fairly strict etiquette of what to say and when to say it.  You asked a price and you would say, for instance, if somebody says 1/8th to a quarter, if you innocently said to them, 'Will you come inside that?', and they said an eighth, three, which meant an eighth to 3/16ths, you were then committed.  But if you said to them, 'Will you come inside that my way?', they could then come in, alter their price. But if it didn't suit you, you could still walk away.  You will have probably opened, but slightly  of what you wanted to do. But you didn't have to deal with them.  But that code was very strictly observed, and you had to obey the code, as everybody did in the gilt market.  And in the rest of the Stock Exchange.  Because once you were known to be a liar, or to tell little porky pies - lies - you were out.  You couldn't trade any more, and that was it.

BA:  How did people react to you as an authorised clerk with Mullens, as opposed to any other firm?  Did they regard you as the sort of Rolls Royce in the gilt-edged market?

KH:  Yes, I think they did, and that sounds frightfully boastful, but I think we were also very, very careful not to throw our weight around.  This sounds awfully pompous and boastful, but I think if we had thrown our weight around, you could squash them very effectively.  But you just didn't do that, because you knew you had the power.  That sound very pompous - I am pompous, I suppose!

BA:  What were your feelings when you first started as an authorised clerk?  Did you feel ready for it?  

KH:  Terrified!

BA:  Could you elaborate on that a little bit?

KH:  I think it was the most nerve-wracking if you went in on the morning of a new issue, knowing that you had a lot of either stock to buy, or stock to sell.  It really got the adrenalin going when you waited for the stroke of ten and you wanted to sell your stock at perhaps the best price.  Very often it was a matter of luck whether you stood in the right place, because if there was a crowd you had to get in the right place where you thought somebody was going to bid up for them, and if you thought the premium was going to be a quarter or so, and it turned out it was 5/16th, you damn well had to sell it then and there.  It was no good walking, or running round the corner and trying to see somebody else.  Because the price would have changed possibly.  And woe betide you from the partners, from your bosses, if the price was higher elsewhere and you'd misjudged it.  Hopefully you didn't misjudge it.

BA:  Was this some kind of judgement you had to make about how much time you felt you had to go and check a price with all the different jobbers?

KH:  You had to, yes. But on the morning of a new issue, you had to go to the jobber. You'd probably spoken to him before ten o'clock, which was the operative time for starting a new issue.  You'd probably spoken to him and got a rough idea, of what his price was going to be.  And you had to the person who you thought was going to be the best buyer or seller, whichever way you were.

BA:  Would you only go to certain jobbers for certain types of orders?

KH:  Yes, depending on which year it was.  You wouldn't have gone to Wilson & Watford with an order in quarter of a million of a Corporation stock on the first morning, but you would have gone to Wedd Durlacher, because you would have known that they would be willing to deal with you, whereas Wilson probably wouldn't, or Campion & Pawle - £50,000 was their size.  You knew the size they were making it in by instinct and by continually dealing, as you did with all the other stocks, you knew the sizes they were making stock in.

BA:  How would you contrast the gilt market when you first went in as a dealer with the later periods, say, towards the point where you retired?

KH: Well I retired from the Bank of England.  I liked dealing. I dealt for so many years face to face, I just didn't like dealing on the telephone. Because I enjoyed being in a market and seeing where the people were moving around me.  I knew who the others were who had similar orders to myself, and you could tell by their movements whether they got orders or whether they were relaxed or wound up. You could get the feeling of it. It was a market-place. You knew exactly what was going on, because you could see your competitors moving round you.  When you're on the telephone holding on, you just don't know what's going on.

BA:  Were there any jobbers who stand out in the memory from the earlier part of your career?

KH:  As characters?

BA: As characters.

KH:  Well on the dealing side, I suppose, there were all sorts of people like Jimmy Priestley, who was a super dealer.  Dick Wilkins was a great character who was senior partner of the firm of Wedd Durlacher. This is going down the Wedd Durlacher people.  Dick Russell, who was a super chap, a very smooth sophisticated Noel Cowardish character, very smooth Englishman, typical Englishman, interested in hunting more than anything else, I think.  There was Cecil Wheatley, who used to do the swaps to show you what it was like.  Many many years ago, they gave Cecil Wheatley the swap book, because there weren't many swaps between gilt-edged stocks.  And when Cecil Wheatley had gone out to lunch, nobody could do a swap, because he always took his swap book with him.  That shows how professional it was.  But there were masses of people.  I mean Herbert Wilson of Wilson & Watford, he was a very good jobber, and Johnny Johnston with him, as well, known as the Bishop. They were good.  Garth Harvey, with Wilson & Watford; he was very good - a perpetual bear; he'd never buy stock, always wanted to sell it.  Then there was Stanley Mumford, Pike & Bryant; he was a good man, and Peter Black.

BA: What were the qualities of some of these individuals that made them good jobbers?

KH: I think they were friendly, extrovert types, who people would go to. As I said before you needed to have trust, and if the jobber was willing to talk to you and tell you what was going on - he didn't give away too much, but he fed you a little bit of information, he kept you in the picture and therefore you'd like to go and see him and talk to him.

BA: What kind of information would that be?

KH:  Going back on the commercial side, he might just say to you, 'We've seen a lot of business today. They all seemed to be buyers or they all seemed to be sellers, because they're worried that something's going to happen in the Middle East or the gold figure's going to be bad or' - the only figures I think we looked at in those days were the gold and convertible currency figures, so it was one set a month, which made life a lot easier.  That was going right back.  But they would tell you all sorts of things.  Then in my official capacity they knew that I wasn't telling anybody else anything, except the Government broker and then if we thought it wise on to the Bank of England, and they would tell me everything. They would name the brokers who were doing big business, if I asked them; and you made the habit of not asking people too much, and you would find that if you didn't ask them too much, they would tell you, usually.  And if you specifically wanted to know something about somebody, you would say, 'I would like to know about XYZ, what do you think of him?', and they would tell you.  If there was some suspicion that somebody was going bust, they would give you all the facts and we would then relay it.  But that was in our very privileged position, and we did, strangely enough, only keep it within a very few souls who knew about it.  I would get them to tell me, and I used to use the phrase, on the record, and off the record, and if they told me things off the record I wouldn't even tell the Government broker, because I just thought it was by them knowing that, one got their confidence.  I hope I got their confidence and I think I did.

BA: And this even occurred while you were an authorised clerk in the sense that you kept your ears open for information that was important from the point of view of the firm?

KH:  Yes, I think it was only when, I'd been an authorised clerk for a few years, that they'd be willing to tell me quite a lot.  They would tell me things probably to start with because they felt a bit sorry for me.  I was a young man in an older man's world.  But I think my time span in there - I have difficulty in thinking whether we're talking about the 'fifties or the 'sixties, or the 'seventies, but they certainly, towards the latter -  from 'seventy onwards, they told me everything.  Or the majority of them did.

BA:  In the earlier part of your career, perhaps not tying it down to particular dates, what would be the kind of problems that, as a man working for Mullens, you would be alert to?  For example, you mentioned a few moments ago when a firm was in trouble....?

KH:  You would hear if somebody was over-trading and you would get to know if they were having difficulty in settling their bargains. That was usually the first indication, if he couldn't stump up the money. There would be a query over it, and people would say, 'I'd be a bit wary of X, because he hasn't settled his bargain', or 'he wants to buy new time in the equity market'. There was always a question over the people, and you got the sniff very quickly.  And you could tell by looking at people as well, strangely enough. You watched them and if they looked worried, you knew that something was up. And peoples' faces; when you're with them for six or seven hours a day, you can usually winkle it out fairly quickly.  And you had your friends, and if you got to hear of certain things about somebody, you might say to them or I might have said to them, 'I'd be rather careful of X because I think he's up to something.'  So yes, it was by just watching them, and possibly the settling of bargains and that sort of thing.

BA: Bond-washing is one thing that's come up in some of the earlier interviews that I've conducted. My impression is that at the end of the nineteen sixties, that was clearly being stamped out. Was that quite a common occurrence during the early part of your career?

KH:  Yes it was. We didn't do it as a firm, but it was. When was the bond washing business? I suppose it was about 1960. There were a lot of firms doing it, the smaller people, and a lot of them were wise enough to make the money and stop doing it when they saw the red light, and didn't get caught in.  But of course as you've probably found out there were three firms which got severely censured, I think,  I don't know whether it's right to mention them or not, really.  Well, it is actually a fact: Francis & Praed, Campion and Edwards and Chandler.

BA:  What was the main objection to bond-washing?

KH:  Because it was claiming a dividend which you actually had never been basically rightfully entitled to.  You were buying stock cum, and selling at ex- and then selling it ex and buying it cum, to reverse the positions, in various ways.  That basically is it.

BA:  When was it felt that it was time to do something about it? - again in general terms.

KH:  I just don't know which year it was - I would guess the early sixties.  It was so many years ago I should think early sixties.  But it was even to me, as a youngster, it was quite apparent that people were making so much money out of it, it should never have been allowed.  It was a loophole which they did, and they were warned, and some of them continued doing it, and got the rap for it.

BA:  How did that occur?  Was it, again, something which occurred on the floor of the House, a person in Mullens and whoever went and spoke to the people concerned?

KH:  I honestly don't know the answer to that but I know they were in front of the Council several of them, and I think they were lectured by the Stock Exchange Council, but I don't honestly know.  I think it must have been the Council who took measures against them.

BA:  Were there any comparable problems associated with the gilt market?

KH:  Apart from the Bank Rate tribunal, which might have been something. I think that was probably just intelligent anticipation of the facts, there, but I don't think we ever had another one like that.  I can't remember anything, unless you can think of anything to prompt me there.

BA:  Had you been authorised in 1957 when there was that 7% Bank Rate and then the tribunal?

KH:  Yes.

BA:  Do you have any memories of that time, the effect on the market, the effect on the firm, or just the effect on the jobbers?

KH:  I think everybody was quite surprised, by what I remember.  The Bank Rate would have been announced.  It was always announced by our senior partner, who did the full ceremonial of coming up from the Bank of England at a quarter to twelve each Thursday morning, whether it changed or not.  And when he got to the end of Capel Court, a man called - later on he was Sir William Herbert De Wett Mullens - Mr. Mullens he was in those days, and he would come up Capel Court, absolutely typical stockbroker, black coat and striped trousers...

Tape 1 side 2

KH:  As he came round the edge of Capel Court, he would come up escorted by this waiter and if there was no change in the Bank Rate he would just move his umbrella slightly from left to right or right to left as if to say 'nothing going on' and everybody would go away, who was crowding on the steps.  And of course, if he didn't move it he would walk into the Stock Exchange, take his hat off and by the bar of the House there was a seat, which was occupied by Pike and Bryant, and they would anticipate he was going to change it, and he would then stand on the seat and say 'gentlemen, the Bank Rate is X for today' or the Bank Rate is X, and then get down, and everybody would rush round to the telephone and it would flash up in lights all round the House, what it was, and that was the Bank Rate change, which was part of the ancient ceremonial.

BA:  What would a jobber do when the Bank Rate was changed?

KH:  Market conditions were dictating  that it would change, and most of them would have stopped dealing more or less at about half past eleven and worked out that if it went up or down by a half per cent, their prices would be altered by half a point, say or a quarter point, and they would have their new set of prices ready.  But they would also probably go to the Government broker's dealer, which was me in the later days, and say ' have you got any lead for us, do you want to do anything?'  They might come and say, 'we're absolutely loaded up with stock, will you make a bid for it?'  In that case you would say, 'How much stock have you got?', write it all on a bit of paper, and they probably would have done that already, and you would collect all the bits of paper from them and make a bid for it, just to smooth the operations for the market.  And we frequently on times when there was anxiety on the official side, we would go to them and say, 'What do you want to sell?' We would then make a bid for it, and we'd probably get it.  Then in the course of 48 hours, you'd start selling it again, at a profit probably, take an eighth profit on it, which was fair trading.

BA:  On what basis would you decide what bid to make?

KH:  We would just take what I thought the middle market prices were, what the fair market price was, and knock something off. You might knock a quarter off. You might knock half a point off.  It depends in which years we're talking of, but we would knock a bit off.  And you'd go round to all the small ones. It used to be quite an effort when there were twenty odd jobbers to go round to all of them and say, 'Do you want to sell me anything?'  But some of them did, some of them didn't.  It meant quite a lot of book-work.

BA: How did the kind of work that you were doing as an authorised clerk change?  You mentioned at the beginning you were mainly working, doing orders mainly for country brokers?

KH:  Yes, country brokers, the London banks, any ordinary banks. Then, when I went onto the Government side for a few years, as I say, we did the duplicate job of dealing on the commercial side and for the Government, so I would have to do both jobs together, running them in parallel. Then when it became just doing the Government business, I existed by myself in a small room, and I would go into the market. I used the firm's price boards.  The rest of the dealers kept the prices up, and I would collect my own and I would make up my own mind as to what we ought to bid.  I'd say to the Government broker, 'the prices - they're trying to keep them up against us, and they're not really that when it comes down to it, when you test them, but they say they're such and such'.  And then perhaps instead of being an eighth down you'd bid a quarter down. Just to make them aware that you knew what was happening.

BA: What was your relationship with the Government broker?  Were you talking to him a lot during the day?

KH:  Yes, I would talk to him. When the market opened. He would stay in the office and I would go across to the market, and I would phone him up as soon the market had opened, hopefully within five to ten minutes, and let him know if they were bidding, if they were offering, or if I'd sold anything. Because he'd given me the rough idea.  He might have said, 'we've got such and such a stock on the book. You know the prices we've got it on at. You can sell it at a quarter point profit'.  That's all very simple, so I would tell him at 10 o'clock.  He would then come across to the market at quarter to eleven, and walk round the market and talk to two or three jobbers, collect a few bits of paper which had got the prices all written on by the girls in the office, and take them across to the Bank of England. I would, before he went, tell him what I thought about the market, whether it was steady or whether anybody had been doing any business, which you could see, because you were standing there. You could tell. You could see people. He would go to the Bank of England.  He might go straight back to the Stock Exchange or he might come back to our office, which was very conveniently situated in Moorgate, close to the Bank.   He would then phone me up, perhaps, and say, has anything altered. And if anything undue happened, I would get him in the Bank of England on the telephone, or phone him again in the office.

He then, presuming he was back in the office, would walk across to the Stock Exchange at half past twelve, by which time I would have written out any business I had done for the Bank that day so far, and with the cash position of what we'd raised, or what we'd spent.  He would then take that across to the Bank. He had an appointment there at a quarter to one. He would then get back to the office at usually just after one, then we broke for lunch.  And nothing disturbed that ritual until about ten years ago when people got rather professional and didn't observe the lunch hour.  And then we had to jump up and down at our lunch seats which was very boring because I didn't have a duplicate, I didn't have a number two to understudy me. I then would return to the Stock Exchange some time just after two, having had lunch, and they could always get me at lunch-time or usually. We would go on dealing until 3.30 when I would give him an up-to-date pr‚cis of what we'd done throughout the day.  He would go to the Bank of England once again.  I would go back to the office then and do the office side of work, and talk to the jobbers on the phone. You used to phone them up, say one every ten minutes, or one every quarter of an hour, so you got the feeling, so you didn't quite go to sleep.  And about quarter to five, I'd say to the office, 'There won't be any more contracts tonight for the Bank.'  They would do all their contracts and the Government broker probably walked across to the Bank of England at about ten to five and we all went home then.  That was that.  That was in the nice days.  But then as it became more professional, we continued dealing later and later, up until about half past five on some occasions, which was very boring.

BA: What would you say the particular skill was involved in your job?

KH:  It was really basically knowing what the market needed, just keeping them all happy, being prepared to listen to them.  They were very much like farmers, none of them ever had a good time. They were always faced with colossal losses. You never heard about the triumphs they'd made.  They would never tell you when they'd had a good time.  But you just had to be fair to all of them and I like to hope one was fair to them - probably wasn't.  You had to have no favourites and you had to treat them all equally, according to the size of the books, but that was just a... You couldn't sell the same amount of tap stock to a small firm, say R H Prance, or Wilson & Watford, as you would sell to Wedd Durlacher, because you knew that would be unfair to the bigger firm.  You had to allocate it fairly.  And if they didn't think you'd allocated it fairly you would find that you'd have a damn' good bleat from them.  And you learnt. I'm sure I made lots of mistakes and I learned by my mistakes.  With tapstock, they would phone us up in the office.  Perhaps there was a 500 million tapstock. And they would phone up and say, 'We've got buyers for 150 million', and somebody else would come on and say they'd got buyers for 250 million.  Then somebody else would come on with 50 million they wanted to buy.  And they all worked out the price they wanted which was, say an eighth premium or a quarter premium, and you would end up by having people wanting 600 or 700 million when you'd only got 500 million to sell.  So you'd say to the Government broker, 'We can sell it at a quarter premium, is that ok?' 'Yes,' he'd say, 'sell the lot.' And you would then on the back of the proverbial envelope, go up and down the kerbs walking from Moorgate to the Stock Exchange, working out exactly who'd got what.  I used to do it in proportion to... Some of them got wise and knew it was going to be scaled down, so they'd ask for far more than they'd actually wanted to get, actually what they wanted.  You got a form where you would sell those that you thought dealt in equal amounts, you'd sell them 20% each - say the three big jobbers - and then you would know that you'd got enough to go round the rest of the market.  You kept everybody happy like that.  You used to end up with what we used to call a little rump of stock - just a tiny bit left - against disasters of somebody having made some dreadful error.  But I would hope perhaps with a 500 million, that you would end up with say 20 million left, just in case there was a disaster, that somebody had made a genuine mistake somewhere.

BA:  What kind of mistake would that be?

KH:  In totting up, they might have... In their excitement, they were never frightfully good mathematicians. They would add it up frightfully quickly, and probably forget to turn a page over.  And you would trust them. They would come to you and you would see a list of the people - they'd say, 'Look, we've asked for 150 million and you've only given us such and such, but we have got these applications, and it is genuine for 150 million.'  Well if I'd got 10 million left over, you could say, 'Well wait a few minutes,' and within ten minutes you could sort the whole thing out. I suppose you could say it was a sort of family atmosphere there.  You dealt fairly with all of them.  It wouldn't do these days because you just wouldn't know the characters you were dealing with. There'd be far too many of them.  But they'd say you were being unfair to certain people.  But you weren't being unfair because you tried to treat them all the same, and if you knew that some had had a thin time, you would perhaps give them just that little bit extra stock, or put a sweetener their way.  You wanted to keep the market going as a market.  You didn't have favourites. You tried to be fair, give them all a bite of the cake.

BA:  Did you mix socially with people on the Stock Exchange?

KH:  No, not very much.

BA:  Was that discouraged?

KH:  I think we did.  It was a sort of unwritten law. You didn't mix socially.  You'd go to things perhaps, cricket matches, those sort of things; but I think for the job I did, this is talking of the Government brokership side, if you mix socially, you were invariably going to get too friendly with somebody, and it just wouldn't do.  I didn't encourage lunches or anything like that, except the only people you would encourage it with would be brokers in those days, but not with the market-makers, the jobbers, because if you were in their pockets, it would soon be talked about, and once mud is slung, some of it is always bound to stick.

BA:  By contrast, did you have much contact with the broking firms that were doing a lot of the gilt-edged business?

KH: Yes. They'd come. They'd tell you their problems.  I think probably for the last ten or fifteen years of my life, they probably treated me very well...  They got to know me, and I'd grown up with them, so they knew who they were talking to.  They would say, without inviting comment from me, 'I think I've been unfairly treated this morning. I've been charged such and such and I only was given half of what I wanted in my tap.' And I wouldn't say anything.  But if I knew that the tap allocation had been, say that the market had got three-quarters of what they applied for, I would say to the chap, 'Who did you deal with?', in a non-committal way, and they would tell me.  I would then go to that jobber and say, 'I think you've been rather unfair. Why did you only give so-and-so half? Are you keeping some on your book?' Because that was not what they were supposed to do. They were supposed to be acting for clients, they were bidding.  It was a very knife-edged business as to whether I should have said it, but they would always accept it, and they might say, 'Well perhaps I'll give him a bit more.  I wouldn't say anything to the broker, that I'd been to the jobber, but the jobber would go to the broker, make some excuse perhaps that he'd found a little bit more on his book when he'd added it up, and everything was fine.  But the great thing was to listen to people and not to throw your weight around, and by not throwing your weight around you found you got far more cooperation from people. That is life really.  If you dictate to people what they should do, they don't do it.  There were times when we did come down and tell them. There was a great spate in the, I suppose, mid-'seventies, where the Arab world got interested in buying stock in the gilt-edged market, and they came on the floor as visitors.  It was possible to take them, and I can remember one or two of the high-spirited crowd were slightly rude and flippant to the visitors.  I can remember saying to people, 'I don't think I should do that if I were you. They are  visitors, they are our guests, so for heavens' sake behave yourselves'.  And they respected that.  They didn't argue with me.  One acted slightly like a village policeman.

BA:  Were you conscious of the number of jobbers in the gilt-market thinning out?

KH: Yes, I think you were.  When each one went as was inevitable, because so many of them were very old men, the half commission men, that was those who were attached to firms... They were most marvellous people, a lot of them, great characters.  They would only deal in very small amounts and they became aged and they retired, and it was rather sad to see them go.  And by having a lot of people you did have a lot more of a market, because, going back to the days of the 'fifties, the early 'sixties, if you had an order in £25,000 stock, it wasn't everybody who wanted to take you on, and you could flip from one little firm to another, buying £2,500 here and £2,500 there.  It was actually quite fun to do it. It gave you a kick, and you dealt in your £25,000, which you'd now do these days as a flea-bite. But all those old boys were lovely men, they really were great characters, experts on all sorts of things, as I said to you earlier, which had nothing to do with the Stock Exchange, stamps and coins, silver, china.

BA:  Was this thinning out of firms something that was always happening during your time on the Stock Exchange?

KH:  I think it was, and then the financial pressures, particularly the last fifteen years, when you got Regulations, a lot of people just didn't... You had to weld yourself into a bigger unit. You had to have so much more supervision, quite naturally, because the stakes were higher.  It became inevitable that it would be a thinning out.  But those older people were the sort who didn't go. I don't suppose many of them read the Financial Times. But they just hung on by the seat of their pants.  If it was going up they would buy stock, and if it was going down they'd sell stock, and it was as simple as that.  They were the traditional jobber.

BA:  When had most of them gone?

KH:  I should think by the mid-sixties.  They were people who'd held on, I think, holding firms together through the War. They were too old for army service a lot of them, so I suppose they would have been 55 in 45; and they stayed on because they liked the life until they were 70 or 75, so that took them into 1965 - 70 region.

BA:  Were you ever concerned that there were not enough jobbing firms in the market?  I suppose, jumping forward a little bit, particularly after firms like Francis & Praed and Pike & Bryant had gone.

KH: I think you did get the worries, but even if you had two firms, you could still break them up by hinting to one that the other one was being very knify on his prices.  They couldn't form... They tried to form price agreements once or twice, but that was broken very very quickly.  No, I think that the two firms Akroyd and Wedd were very very competitive against each other.  And partly because you could go up and needle one and say, 'Old so and so with the other firm would do it, and of course you're not quite what you used to be in this market.'  And they would rise to the challenge and do it.

BA:  Did you ever feel some of these firms were getting a bit too big in the sense that they may have felt they had too much influence in the market - or even if one of them had gone out of business, the market would have been in trouble?

KH:  That would have been a great worry, but earlier on I was saying how one tried to give the smaller firms a little bit of the taps; you were doing that to encourage them and give them perhaps a little bit of bread and butter business, so that they could compete on those bases.  I suppose if anyone was investigating what I did they'd say I'd done wrongly now, but I think at the time it was suited to the purpose.  You encourage the smaller firms to keep going slightly, by helping them.  And you told bigger firms to help them as well, particularly if a bigger firm on a crisis had offered you stock and you had bid for it, and a small firm had not quite seen what was going on. You jolly well told the big firm to go and help him a bit.  And they would; they were very co-operative, the Akroyds and Wedds.  I think they probably made enough out of their transactions to realise that they wanted the smaller firms to exist, and partly also because they weren't interested in doing small business.  Small firms were there to do the small business - the two and three thousands pounds worth of business.  Wedd and Akroyd didn't want to do it.  It was a great thing for them to have those small firms there.

BA:  Did you ever feel it was important to try and get some other firms into the market?  I'm thinking that in 1972, Smith Brothers made a temporary entry and then retreated, and then eventually Pinchin went in. Was this something you were encouraging?

KH:  Yes, we encouraged it. But it was very sad. Smith Brothers, for a variety of reasons...  The gilt-edged market, they didn't appreciate. They took over a firm called R H Prance. They took over the stump of R H Prance, what was left.  But they thought they could come in and bang the prices up and down just like the industrial market, and they sadly hadn't really thought out the gilt-edged market.

BA:  Why couldn't you do that in the gilt-edged market?

KH:  Well, because you had to be a little bit more subtle.  I remember standing in front of their board and as soon as they'd sold something they would mark the price up in blue.  Now the great thing to do if you've got the nerve to do it is to mark it down in red, and everybody would think you've just bought something, so you'd get perhaps a broker who'd also want to sell a bit.  But all that would happen with dear old Smith Brothers was that they'd mark it up in blue and then a fly-boy would see it going up in blue, and go and buy himself a bit as well: wouldn't buy it from Smith, buy it round the corner. Then he'd come round and buy a bit from Smith and get them to mark the price up further, and they were on a dead loss from the word go.  They weren't subtle.  I can remember R H Prance's people telling me about this. And they made the same price in unmarketable stocks as they made in marketable stocks. There were certain things which you didn't get the eighth price in.  You didn't get an eighth price, a quick one, in Redemption, but you did in War Loan. But they treated everything the same.  Everything was alright in 250,000 and they just walked into trouble, left right and centre.  And there were one or two rather naughty people, who took advantage of it, and who can blame them?  Pinchin sadly was the other firm which came in in, I can't remember when that was, late 'seventies. But they never seemed to get their act together.  I don't know why. They had very, very nice people, all of them were very nice, but they just seemed to flounder from one crisis to another.

BA: Would you say that each firm had a different character?

KH:  I think so, yes.  They did.  As I said before, Francis & Praed were an ageing firm. As long as I knew them, very few young men went into the firm.  They didn't really recruit from outside, or they recruited, but they didn't recruit people who were good enough to run books.

Wedd Durlacher had a very good policy, and they were a very nice firm.  Akroyd had a very good policy.  Wilson & Watford did.  Wilson & Watford were a very sort of holy firm, literally holy, because the senior partners were very religious men.  So they did have different characters, yes; all the firms did.  And it was laid down by the people who were more senior.

BA: When you say they had a good policy, what do you mean? A good policy in terms of the personnel that they had?

KH:  The personnel they had, yes.  They recruited wisely.  I think Hugh Merriman was a great picker of men.  He was Akroyd.

BA: What would you say were the qualities of the successful firms as opposed to the ones who were a little bit less successful?

KH:  Well the qualities of the firms was to pick the right person. And to pick the right person you had to have somebody who had, firstly not an academic brain, but a mentality for trading, and to see what could happen and was fairly quick at figures.  You didn't have to be an academic.  I think the people that one could think of, a lot of them, were certainly not academics. They came from a wide variety of backgrounds.  But they had to have a quick grasp of whether they were buying or selling basically.  Whether to mark prices up or to mark them down.  Really nothing more than that.

BA:  Talking about the 1970s, one jobber I've interviewed has spoken about the Government Broker as virtually being a forced seller, because of the amount of stock the Government was issuing.

KH:  Yes, I can well imagine who that was.  He was. There were certain times when no reasonable bid was ever turned down almost. But you had to manufacture a demand, and the key to it was the bank rate, where the interest rates were, and therefore you'd bring in stocks which would lie around the interest rates and prove attractive.  In the 'seventies there was always a weight of money which was hanging around.  It was either on deposit in the street, as they say, or it was invested in the market.  And there was always some money waiting to come in from somewhere, providing it looked attractive.

BA: Do you ever feel that it made your job a little bit more difficult than it would have had to have been, in the sense that there were always stocks that you had to sell and the jobbers knew that?

KH:  Yes, but you had a commodity and it was there.  Well, the Bank Rate, the level of interest, created a demand at some stage. 

BA:  Was the market an important place in which to learn what was the appropriate bank rate, in the sense of the level of selling, the level of demand?

KH:  Yes.  The key thing was the Bank Rate, and the Bank Rate was influenced in those days by the Dollar rate, to a certain extent; that was the key which we all watched, and it would have to respond to that.  If we firmed up against the dollar you would find that you'd got a bit of demand coming in, or if there was encouraging news of some sort. But I think basically we depended on what the rate was.  In the early days I think that was what we watched most of the time.

BA:  I've seen what have been described at times as 'gilt strikes' in the sense that buyers holding off from the market.

KH:  Nobody bought anything.

BA:  Yes, were those things that did happen in your experience?

KH:  Oh yes, I can remember, they used to say 'strike on' about not buying gilt-edged securities. But once again, if the people who wanted to invest in gilts - there was always that money to come in. But they were just waiting for the right moment, and the right moment would come when you raised the bank rate, and the price of the gilts fell and then we were able to sell again.

BA:  Do you remember any particular periods when that seemed to be occurring?

KH:  I think the man who did most of the gilt sellings was Tommy Gore-Brown and that would have been in 1975-80; yes, I should think 75-80.  Is that when we had a Labour Government? Yes, it would have been.  75-80, I would guess was the great time.  But we had taps. Just as I said earlier on, one was scudding across from Moorgate to the Stock Exchange, working out how much you were going to allocate to everybody.  There was a £500 million tap came out, and it went.  You didn't sit and look at it.  Years and years ago you used to think you've sold 50 million, 100 million a day, it wasn't too bad a go. But sadly you used to sell the whole lot in one scoop, and then sit twiddling your thumbs until the next one came, which you would sell then about three or four days later.

BA:  Why did that change take place, was it simply the world was changing?

KH:  The world was changing, and there was more money around.  There was more money coming into the market. It was the oil boom. I suppose there was a lot of Arab money coming in - terrific the demand was from the Arabs.  You got all sorts of peculiar brokers appearing in the market, who you'd never heard of, who'd got these great Arab buyers.

BA:  The early seventies had been a recession in this country and firms like Rolls Royce and Ferranti had been in trouble, and in 1974, there was this great bear market, which also affected the gilts market.  Do you have any memories of that time? Was that a difficult time for jobbing firms, were they coming to you for help?

KH:  No, I don't think they did.  I can remember it very well. I can remember when Burmah went bust, just before Christmas was it? Or just after. And I remember being told that something was going to ...

Tape 2 side 1

KH:  I can remember waiting to see what was happening.  In those days, he didn't tell me exactly which the firm was, but I knew something was going to go bust.  It was a very sad time.  Everybody was looking over their shoulders, and there were certain broking firms whose cheques weren't accepted, which was a thing which was unknown before.  They had to present bankers' drafts to people, one or two of them, which was very much against the spirit of the City, because our words were our bond.  And very genuinely so.  It was a very sad and a very worrying time.

BA:  You've described earlier periods when the jobbers would be bidding you for stock, and you'd be trying to decide how to allocate it in a fair way.  In what kind of circumstances would you find you'd be buying stock from a jobber?  What would be the general factors in the stock market?

KH:  If they thought there was going to be a change in bank rate. This is going back into the sixties period; the 'sixties, early 'seventies. If they thought there was going to be a change in bank rate, or if there was going to be a crisis of some sort; perhaps the Middle East, once again, worries out there, because there always seemed to be worries out there. They would come and offer us a certain amount of stock. Invariably they would offer us in the hours 9.30 to quarter to ten, and we would make a bid for it, which used to be an eighth off in the shorts, and a quarter off in the longs.  But the strange thing about it, I can remember to this day, it was always the same amount of stock which seemed to float in, and when the market was good they would always bid for the same amount of stock.  That amount of stock used to be around 25 million, which is a very small amount compared to the amounts we're dealing in these days.  It was made up probably of a dozen bargains at least. But it never seemed to be more than 25 million. I can always remember saying to the Government broker how futile it was. It was always 25 million in or 25 million out.

BA:  Were there any circumstances in which you'd refuse to take stock?

KH:  I think by and large in those days there was always a time; if you're thinking of later, it wasn't generally accepted that we were buyers of stock; the market had to make their own way on it towards the end of my business career.

BA:  I believe in the early 'seventies there was a slight change in policy. The Government issued a thing called 'competition and credit control', which some jobbers said they found created difficulties for them. 

KH:  Yes, I suppose it might have done; the smaller jobbers I think.

BA:  What was the change in policy?

KH:  The authorities weren't going to automatically support the market; they were only going to do so at times of their own choosing, which covers an awful lot, doesn't it?

BA:  Did that actually happen?  Or in practice things didn't alter terribly much?

KH:  I suppose it did to a certain extent. I think you should ask the Bank of England that one.

BA:  Did you find that with the polarisation of the market, with big firms like Wedd and Akroyd basically competing against each other, that there was pressure on the smaller jobbers to try and deal in size to provide a bit of an alternative?

KH: I think there was.  I think a lot of them got hungry for big profits which they thought were just around the corner, and they didn't see enough of the big business. What would happen was that somebody might take them an order, probably one of the newer firms who wasn't used to dealing in the market so much, and they would take them an order which they couldn't do elsewhere and they would give it to one of the small jobbers, and possibly one of the small jobbers, one of the younger members might try and do it and would get in a muddle over it.  It would be a loss not a profit.  He thought he was breaking into the big time and it would turn out that he wasn't.  As life went on, so we became more and more professional and trade passed from the old traditional hands into, I wouldn't call them hot-heads; but probably if I'd had the guts to do it, if I'd been in a jobbing firm, I might have taken them on as well, not quite realising what I was taking on.  I think for that reason they got the second-hand business, which brokers knew the big people wouldn't do, but would try the smaller ones and give them a bit of the gift of the gab; they would take it on and it would be a loss to them.

BA: What would your attitude to that be? Would you simply say, 'well that's the risk they take in trading', or would you feel, because you wanted the firms to continue in business, that ultimately you'd step in and help sort them out?  

KH:  You might try and sort them out the first time. We did. You tried to help them, and you could help them sometimes, but sometimes it wasn't possible.  There were one or two firms who I could think of who did it continuously and got their heads in the noose, and they always imagined that you were holding back and that you could actually help them but you weren't willing to.  That was when there was a little bit of bad blood between us and one or two others, because they thought we could help, and we couldn't help.  But I think that big firms of jobbers, without letting away any secrets, helped one or two of their smaller colleagues once or twice, and also got slightly fed up with doing it, because these people were taking unnecessary risks.  It was because we were dealing in such colossal sums of money, that basically the small jobbers didn't have the funds to facilitate the turnover they were attempting to do. 

BA:  Did you ever feel that these firms should have tried to equip themselves to deal with the new type of business, or did you see any way of resolving this?

KH:  Yes, you realised that they needed a very large backer.  They should have had a... I don't know, the traditional way in the old Stock Exchange was you got a very wealthy person.  That's why we had so many interesting characters, who were very little use, but had a lot of money, and they could finance the firm, perhaps rather like a Lloyds syndicate; there were people who put the money up. But the Stock Exchange probably did grow, and as much as we all disliked the Big bang and what went on, it was quite necessary; whether it should have happened quite in that way, I don't necessarily think it should have done. But it enabled, mind you, a lot of us, to scramble out with more money than we'd ever thought we'd have, and retire early.  But I think that they did need a transfusion of capital, yes.

BA:  Did you ever feel the type of person who was going into the gilt market as a jobber was different to the type of person you were in contact with in your younger days?

KH: [They] probably realised they got bigger chances in the jobbing world and they were going to get up the tree much faster than I had; but I think still basically they were a very nice, honest crowd who went in.  They were driven because the capital rewards or losses were so much greater; they were possibly a little bit more aggressive, but they were still the same, quite nice people.

BA:  [How would you] characterise the relationships between the  brokers and the jobbers?  Did you find that broking houses would have established relationships with particular firms?

KH:  Yes, I think they did, very much so.  There were certain firms, a broker more or less allied himself to a particular jobber, and gave him the majority, say two thirds of his big business, and the other third would go to one of the other two; but by so doing, he would  get fed quite a lot of information about what we were doing.  Once again jobbers knew what they could say about our operations and what they couldn't say, and there certain things which we said we didn't want repeated. And they were very good on that.  But a broker would use a particular jobber more than t'other.  And therefore they lunched together, they went out and had more of a social life.  As I said, we didn't have a social life because we didn't think it was right, not on the Government side.

BA:  Did you ever feel that the relationship could get too close?

KH:  Well it didn't. We would say, probably slightly sarcastically, that they were living in each other's pockets, but that was their affair.  It slightly, possibly, nettled me when everything that we did was known by the other firm; well, not everything but three-fifths of it was known.

BA:  Now you've mentioned that you'd tell some things to the jobber; what was the kind of information you felt it was useful to feed to a jobber, and what would be the kind of thing you definitely wouldn't tell them?

KH:  You would tell him, many years ago, the sort of level of prices that we were looking at.  You would also say, if you thought that somebody was up to a bit of skulduggery, 'watch out for such and such' or if you knew that there was going to be a bad political announcement coming out, you would pay particular attention.... If I was told that something was going to be announced at half past eleven or half past twelve or something, I would say to the jobbers at sort of twenty-five past twelve, 'What's going on, have you watched the tape recently, anything come out recently?  Thought there was going to be some news.' Just little hints, which didn't tell them, but just warned them, so that if anybody did get a very early warning and new it, they couldn't take the jobbers for a ride. You would protect them in that way.  You weren't telling them what it was. You were just saying that there was something. And you wouldn't tell them if it was adverse or to the contrary.  It was just to warn them that there's a yellow signal coming up.

BA:  Now I know that insider trading is something you talk about with reference to equity markets.  Would that be the equivalent in the gilt markets, a broker knowing that something was going to happen politically, or knowing that something was going to happen that would influence the market?  I mean, I know it's not the same word.

KH:  Whether you could say 'insider trading' or not, I don't - I think insider-trading's slightly more definite than that.  I suppose it is a branch of insider trading, yes.

BA: When you'd say you'd warn a firm if you thought there was a firm up to some kind of skulduggery, what do you mean by that, again in general terms?

KH:  If I knew that somebody..., and frequently if somebody had come to us, say, and we'd got a bit of tap left, and suppose we'd got 25 million left, a jobber would come along and say, 'I've got Y firm of brokers who want to finish off your tap', which you've got left, because you would have told them it was there (and everybody knew you'd got a little bit of tap left).  If you sold him that amount - say we'd sold him 25 million - and we knew that the broker's order was actually 30 million, I would go possibly to the other firms - well, I would have gone to the other firms - and said, 'You be careful of that tap.  I may use it internally.' That was the great phrase used. It meant it would be going internally in the Bank's books between one department and another, and therefore wouldn't be available to the jobbers.  You would just warn them that it might not be available. So if you thought that the broker with the buying order had still got stock to buy, he wasn't going to slip round to the other poor devils and buy 5 million or 10 million off them, and then expect that they could rush to us and immediately get it.  You had to be careful not to go rushing round the market - you could have done; it depended; sometimes one would have done - and said that we've got rid of our tap and that's that, because it would have spoilt the brokers' business, and there might have been sellers from outside the market who were still willing to sell stock; so the original jobber might have been able to pick it up from other sellers.  But it was just you were protecting the interests of the jobbers, if I've explained that, and trying to be fair in doing so.

BA:  What would be the information you definitely wouldn't tell a jobber?

KH:  If I was told that the Bank Rate was going up, I obviously wouldn't have said that; or if I'd been told what the trade figures were going to be, or anything like that, you wouldn't say that; or if there was going to be a new loan that evening, you would never say that, never hint at a loan.  You wouldn't even hint at a loan coming out that evening. You knew full well that it was on the cards.  You could have guessed by seeing the demand for stock. You could have guessed 48 hours ahead that it was coming, but you would know whether it was definitely coming at 11 o'clockish in the morning. But you wouldn't hint, you wouldn't dream of hinting to a jobber that it was coming.  He probably would already have been able to guess it as well.

BA:  Did you ever concern yourself with the way investors were behaving and using the Stock Market?

KH:  You took an interest on what the sort of demand was.  That would have been the feedback from jobbers who would have told you that they'd seen a lot of small investors either buying or selling; yes, they would have told you that, and I would have said to the Government broker, 'Look there's a good deal of demand from the small man'; that sort of phrase - or 'from the big man'.  I would find out whether it was insurance companies or whether it was overseas all those sort of things - the general background.

BA:  By the late seventies people were seriously discussing the way the Stock Exchange worked. Large investors were worrying about the level of commission they were being charged. And by all that I mean there was a general feeling that the Stock Exchange might have to change itself in some way. Did you ever feel from the perspective of the floor of the Stock Exchange that there was any pressure on single capacity in the way business was organised, or did it strike you still as a viable way of organising a market?

KH:  I think we liked single capacity, but I think you're absolutely right on the commissions that were charged.  It was a slightly worrying thing, because you were either on the crest of a wave or you were absolutely down in the doldrums.  There were some days when you did very large orders; you were quite embarrassed at the amount of commission you got, really.  But then on the other hand you might go another week without doing a thing.  I can remember when I first went into the partnership, being worried sick, when I saw for about two and a half months we hadn't done a damn' thing.  What were we going to do in the last quarter?  Then suddenly in the last fortnight, some big orders came, and we were saved, the expenses were paid and that was it.  But once again, going back to the Government side, I often thought that there should have been some sort of cut-off point with commission with certain companies, where you got to a certain level and then you did it for relatively nothing.  Because if we on the Government side had charged commission all the time, you wouldn't have wanted to do the business, because you would have been continually embarrassed that you were charging commission.  What we were technically known as was the Commissioners for the Reduction of the National Debt, and we did that business for the princely fee of £2,000 a year.  And we did a hell of a lot of business for them.  We used to turn over £300, £400 million a week.  But it was only out of that £2,000 a year.  But it kept me busy.  It was quite easy to do, actually. Then we got the Government brokerage business from the Bank of England at the same time on which we charged a commission.  But then we also had a cut-off point there.  When we earned a certain amount of commission each six months, we would stop and we would do the rest of the business for nothing.  And when you got up to that sort of level, your cut-off point, which you hoped you'd do damn' quickly - we always seemed to get to it fairly reasonably - it was a slight relief because you could turn round and say, 'I should do this, and I should do that', and you would know that you weren't earning commission on it.  And funnily enough it was a relief to me to know that I wasn't earning commission.  I liked to earn the commission to start with and then you'd got it under the belt, but then you felt yourself slightly freer.  But that was a unique position. We were one-off in doing that, but I felt that that policy could possibly have been adopted with one or two of the other firms, where they were company brokers; that it should have been allowable in some way that they would earn a certain amount of commission; perhaps you could gear it to the size of the share issue or something like that, and have that cut-off point.  And it would avoid these very large sums being earned.  But I'm sure that there were several brokers who felt... There was the great feeling of excitement felt when you'd earned the money, but in the cold light of the evening you began to wonder whether you really ought to have done.  And then there were other times when you didn't earn a damn' thing.  So you could say that the lean years were paid for by the fat years.  Pity the Inland Revenue didn't think of it that way!

BA:  You've described the way the business for the Government was organised with Mullens and you also said earlier that when you started there was no separation between the client business and the Government business.  What were the circumstances in which that was separated?  You mentioned that around the mid-'seventies...

KH:  I think it was because there was a far greater turnover and it became realised that you were placing on the dealing person in the market a very unfair burden by expecting him to deal for both the commercial and the Government side of business.  And as honest as anybody might be, somebody was bound to sling mud and say, 'You favoured your own firm, your partner got the stock and we tried to get it' - however unjustly. And as I said before, you can sling mud and some of it is bound to stick, and I can quite understand why it would stick. So we split the two entirely and the Government side became a tiny cell within the firm.  Which was a funny sort of life. So many people just didn't believe that it could ever happen.  I think particularly foreign people just didn't imagine it.  I can always remember one black man came in and I explained to him how we gave the jobbers the stock to help them do the business, and he said, 'What's in it for you?'  And I had to explain that there was nothing in it for me.  I knew exactly what he meant by what's in it for me, because there would have been a bribe where he came from, but he just couldn't understand how I didn't get a Cadillac from somebody for helping them.  This digresses.  It did give the person who was dealing a little bit more freedom.  It was a funny way though. One could go in and see the rest of the partners in the dealing room.  We kept our office shut.  There was just the Government broker, the deputy Government broker and myself as the dealing partner in there. We'd keep our door shut and we'd go in and look at them and listen to them talking on the telephone, and say, 'How much tap are you going to buy today?'  And they'd say, 'Why should be tell you?'  You'd say, 'Come on you can tell us, trust us', and you'd find out.  You could look on their pads and they wouldn't dare say anything to me.  They used to say, 'clear off', or stronger, and I'd say, 'The Government broker wants to know,' because he was the senior partner.  I used to look on their pads and see exactly who was buying.  It just gave you a lovely bit of the picture. It helped you to form what was going on.  And as partners they would also come in and say, they knew the drill, they'd say, 'We've heard from so and so that this is going to happen', or 'there's going to be devaluation, or the rate's going to go up', and they would say it in such a way that they wouldn't be wanting anything. They would just feed it in as information.  It was quite a spirit of co-operation, one way.  It sounds very strange.  Unless you were in the trade and you knew the people involved, you wouldn't have believed it could have worked that way, but it did, strangely enough.  Hopefully by your other interviews, you haven't found too many people who wanted to besmirch our name.  I think we were fairly trusted by that, really.

BA:  How much were the views of Mullens taken into account when the Government was planning to reorganise the gilt market?

KH:  Well, we gave a little bit of thought to it, in conjunction with the Bank of England, who were the main instigators.  I wasn't on that side of it, but I think the person who gave a lot of thought to the Bank of England was the late Lord Cromwell. And he talked to them.  I don't know how much. They had meetings, but I wasn't privy to them.

BA:  On the basis of your experience as the dealer in the gilt market during the seventies and early eighties, what would you have said could have been done to have improved the system? Would you have said that you thought it was running fairly smoothly and there was no real need?

KH: I think it ran quite smoothly, but unfortunately we got one or two other vehicles coming in.  There was the futures market which I found was a pain in the neck.  We had pressures on us from there.  They started off as being pressures, but perhaps they weren't too much.  It was basically the lack of cash. The market was getting very very large and the private ownership of the jobbing firms just didn't have the cash to run it, quite honestly.  I think one needed an interest from outside to inject capital.  That was it. 

BA:  Let me start asking you a few questions in conclusion.  You went into the Stock Market during the 1950s.  How would you contrast it as a place with the Stock Market shortly before Big Bang?  So while you were still a physical market place.  Had it changed very much?

KH:  The average age was a lot younger.  It was far quicker, things were moving much much quicker there. You didn't break for lunch. Things moved very very quickly. It had changed quite a bit.  We were getting very professional.  It wasn't the easy-going place of the fifties.

BA:  I asked you in the early part of this interview who were the particular outstanding jobbers during the earlier part of your career.  Who would you say were the people that you remember for the later period as being the good jobbers, or people who made an impression on you?

KH:  I would think Brian Peppiatt with Akroyd was a very good and very capable chap, never flapped at all. I never saw him flap.  He was in Akroyd.  There was a chap called John Hutchinson, who was at Wedd for a time, and then went to Merrill Lynch who took over Giles & Cresswell.  He was a very interesting character. He made an impression on me in some ways, because he was always willing to have a go at any business that was going around.  There was Michael Everson, I think also of Wedd Durlacher. He was a very nice, very honest guy, very capable.  Probably those are the three I would think of really.

BA:  Would you say the qualities they had in being successful were similar to those of the jobbers of the earlier period?

KH: Yes. I think they were basically traders, and those three actually came from very widely differing backgrounds.  I'm sure they wouldn't mind me saying so.  Brian Peppiatt was Winchester and Michael Everson was probably the same as myself, and dear old John Hutchinson came out of the East End.  You couldn't have had a wider spread of their backgrounds.  And I don't think actually, whenever I've been in the Stock Exchange, that anyone has really ever sneered at anybody's background, quite honestly.  We've all got on well  together.  There may have been flippant remarks here and there, but ....

BA:  Was it an irreverent place?

KH:  Oh yes. Anybody that was pompous, they'd take the piss out of them like mad.  They really would.  Going back to the leisurely days, it was a super [place] - probably to you it's a silly, a rather childish place, where I can remember an old boy who used to go to sleep by the bar of the House.  The bar used to be the official end of the House. And they would tie his shoe-laces together, and all sorts of damn' silly things like that.  They'd make tails for people out of paper and then set them alight, or they'd float balloons up in the air and fill them with water and then prick them.  There were so many silly things like that.  But I think one of the things I can always remember is the tramps who used to go outside the Stock Exchange.  They each had their own set pitch.  The waiters' job at 3.30 in the afternoon was to empty the cigarette ends, because there was no smoking allowed in the Stock Exchange until 3.15.  The members had to stub their cigarettes, throw their cigarettes in to the bin just on the edge of the floor, before they went in.  And the tramps would wait at 3.30 for these bins to be emptied out in the courtyard and they would pick up all the stubs. And the story was that they would sell the tobacco to people in the East End to make cigarettes out of.  I can always remember the terrible fights which would go on if one tramp got on another tramp's ...

Tape 2 side 2 

BA: At any point in you Stock Exchange career, could you have ever conceived of yourself as doing a jobber's job?

KH:  I felt at times I would like to have done, because I thought one or two of them were so damned hopeless!  But I don't think I would have wanted to switch, not after getting into the swing of doing the Government brokerage side.

BA: Did you ever feel that the broker was a different kind of animal to the jobber?

KH:  Yes, I think you did; you felt the broker was possibly slightly smoother and got (to use the jargon) to talk to the general public, or the clients, anyway.  I think probably the broker was the smoother of the characters because he was well-versed in saying certain things.

BA: Would you say the single capacity system had any particular strengths?

KH:  Yes.  If you had dual capacity you never quite know if everybody'd telling you the truth, whether they're talking their book; whereas if it's single capacity, you know the man is definitely trying to do the best for you.

BA:  Would you say it had any weaknesses?

KH:  No, I don't think so, can't think of one.  No.

BA:  I'd like to just finally conclude with how your own Stock Exchange finally concluded. You became a partner in 1970? 

KH:  I think it was about 1970, yes.

BA:   What did that entail for you in terms of your responsibilities within the firm?

KH:  Well, I think you began to feel that you were responsible for people. Because we were roughly round the hundred level.  We were either 90 or we were 110.  And you realised that an awful lot of people who were dependent on you, it slowly dawned upon you that not only their lives, their wives and their children depended on you. And being a small firm, and being the sort of firm where people came and stayed, you got to know them very well.  Perhaps we were paternal, but in the nicest sort of way.  You knew their wives, and I'd seen them grow up with me, and I'd seen their children when they were born, and you'd know all about them; and you did worry about them and take an interest in them. I'm sure all the partners did.  If staff were in trouble through wives being sick, or something like that, it was a slight worry to you.  Not a big worry, perhaps. It would be wrong to say that, but you did think of it.

BA:  Did you find you had a slightly different perspective being the dealing partner, the one who went into the House?  

KH:  I think probably being the type of firm we were - the partnership was terribly aloof, very Victorian in its attitude, almost Georgian, I would say, when I joined it - that the dealing partner got to know people far better because he was used to talking to them.  Whereas other members of the partnership were more inclined to treat it in a very general way and would delegate the office manager to find out if anybody was alright.  But that was in the old days, and then with the advent of younger partners like myself,  I think we became more in touch with the staff.

BA: What happened to the job of the Government dealer-partner, as it were, with Big Bang in 1986?

KH:  Well I was asked by the Bank of England if I would go in to the Bank to see if I could train them and oversee the movement, and bring the Bank into it. Because they were going to do the dealing. So I went into the Bank for three years, and trained them, and they were all very good and seemed to get the grip of it much quicker than I did, actually, because I could never alter the television programme properly. So after three years there I actually retired.  I think they're doing a very good job - a darn sight better than I could.

BA:  What was the difference in dealing?

KH:  It was all screen dealing, with a lot of people. This is why I said to you earlier, I'd been in the old system, meeting eyeball-to-eyeball, and with people whirling around me.  Speaking on the end of a telephone, or looking at prices on a screen, I think it's just a different world to me.  I didn't like it awfully much.  Because I like going out and talking to people.  You see, a lot of people would not tell you things on a telephone.  They used to ask, 'Are you recording this?'  Well, we never recorded anything, and I wouldn't dream of recording anything. If you're speaking to somebody you're supposed to trust, you either deal with them or you don't deal with them.  But if you're recording things, people are not going to tell you the truth or give you the nod on something.  You've got to see them face-to-face.  They don't know if the telephone's bugged by somebody else. You've got to be damn' careful when you're using the telephone, I'm afraid.

BA:  What happened to Mullens?

KH:  Mullens became part of Warburgs.  We decided when we knew Big Bang was coming, that we needed to go in. First of all we thought we could do our own dealing, and I said we couldn't.  I was told that we could, and I was told by those who wouldn't have to do the dealing that we could, but I said it was a very different thing. So we decided in the end to go in with a firm who we knew, and we decided that we'd try Akroyd.  Akroyd responded favourably to us, and I don't think - at least I hadn't realised, of course, that they'd got a tie-up with Rowe & Pitman, who also had a tie-up with Warburgs. So therefore the whole marriage came about.  But I think we probably..., and I don't think I do anybody an injustice by saying that we didn't realise the implications of our tie-up with Akroyd, but it worked very beautifully really.

BA:  How have you felt about your Stock Exchange career?

KH:  I think I went in at the right time; yes, I think I definitely went in at the right time.  I had a lovely time there.

BA:  Good, I think we can conclude on that note. Thank you very much.