50 years on - and the cobwebs have been swept away

AT FIRST sight, the scene has a familiar feeling about it. There were roadworks on London Bridge, allowing only a single lane of traffic and there had been, inevitably unsuccessful, objections to the scale and bulk of a new office building.

Moreover, when the Queen 'processed' to the Guildhall 10 days after her Coronation, she was greeted by the Lord Mayor Sir Rupert de la Bere, as well as a Royal Salute of 41 guns fired by the Queen's Troop of the Royal Horse Artillery.

The celebration lunch was announced by the trumpeters of the Household Cavalry and the band of the Royal Artillery. But these were virtually the only features of life in the City in June 1953 that we would recognise today. To emphasise the fact, on her journey the Queen would have been surrounded by scenes of devastation, with much of the City still left as it had been after the air raids of the early 1940s with weeds growing all over the omnipresent bomb-sites.

Fortunately the post-war City had passed its low point. Sir Rupert may have been a deeply obscure Tory MP but he wasn't bent, unlike his predecessor in 1950-51, Sir Denys Lowson. A perfumed spiv, Lowson had narrowly escaped prosecution a few years earlier over the splendidly-named Texas Land & Mortgage Co and was reckoned a dubious operator even within the virtually unregulated world of those new-fangled organisations, unit trusts.

When he died in 1974, he had finally been indicted for fraud. But in those straitened times he had been the only person prepared to undertake the financial burden involved.

In 1953 London had almost completely failed to resume its historic role as the world's leading international financial or trading centre. As David Kynaston points out in his riveting history of the City of London 'for better or worse the City was locked - for the time being at least - into the fortunes of the British economy'.

This was even though many of the staple investments of the prewar years, such as those in coal and railways, had been removed by nationalisation. With the absurdly high tax levels this had imposed it made the City a hysterically bitter enemy of Labour.

Invisibles tripled

Nevertheless the Labour Government had opened the tea and cocoa market in 1951. When the Conservatives took over later that year they reopened the foreign exchange market, followed by other commodity markets, and, in 1954, the all-important gold market. Indeed the City's invisible earnings almost tripled in the first decade after the war.

The cosy clubs that comprised the Coronation City were supervised by Cameron Fromanteel Cobbold, Governor of the Bank of England since 1949, who acted as a combination of headmaster and nanny to the whole financial community, giving approval to the smallest share issue.

The merchant banks were inbred, family affairs in which lesser breeds were firmly excluded. At one, employees had to wait outside the partners' room for admittance, hoping that one of the dignitaries within would see them through the frosted glass door, for they would never have dared knock, let alone contact their superiors by telephone.

Whatever their status the bankers were not exactly overworked. An American banker who had worked at Morgan Grenfell at the time recalled how 'by Thursday afternoon at four, one of the senior partners would come across to the juniors and say 'What are we doing here? It's almost the weekend'.'

Not surprisingly the brokers and bankers were deeply averse to taking advantage of any new opportunities, reluctant even to invest in the shares of the steel companies the new Tory Government was privatising. The stock market was clubby and virtually moribund - the Stock Exchange refused even to participate in a radio debate on its future.

Nevertheless life was changing. Inevitably any newcomer, such as Philip Hill, headed by an enterprising former accountant Kenneth Keith, was unwelcome. The Bank of England still had to admit the firm to the select band of Acceptance Houses, with their preferential credit rates, when it merged with the old-established house of Higginson & Co.

Closed shop destroyed

IF YOU were foreign or Jewish, or both, you suffered even more acute prejudice. Julius Strauss, later one of the kings of the Eurobond market, was rejected for membership of the Exchange on the pretext that he had been naturalised only in 1946. But in Gresham Street that merchant banking genius Siegmund Warburg had set up shop. Within five years, his role in the bid battle for British Aluminium destroyed the closed shop of the City's merchant banking community.

But the most immediate threat came from a much more ruthless character, Charles Clore. Early in 1953, he was advised by Investment Registry, which was, like Philip Hill, one of that much-despised breed, a West End finance house. Clore then won a contested bid, itself a rarity, for Sears, owner of Freeman Hardy and Willis, a then-famous chain of shoe shops. As the departing chairman of Sears put it after the bid: 'We never thought anything like this would happen to us.'

Clore helped a more agreeable property developer, Howard Samuel, in his bid for the Savoy Group, which included not only that temple of financial gastronomy the Savoy Grill but also Claridge's and the Berkeley, which the bidders hoped to transform into much more profitable offices.

They were thwarted by the group's managing director, Sir Hugh Wontner, and his advisers, who contrived a buyback of the shares and a new voting system which left control with the Wontner family.

Nevertheless the notion of corporate raiding for capital gain had been established. In the words of arch-traditionalist Lord Bicester, who remained in charge until his death at the age of 89: 'I thought that if I talked to people, the nice people would play and lose the business, which would be taken by the nasty people.'

Gold-plated Daimler

LORD Bicester's notion of 'nasty people' would probably have included the mild-mannered actuary who rose at the AGM of the Birmingham Small Arms Company. He announced simply: 'My name is Leslie Brown and I represent the Prudential Assurance Company' and proceeded to cast the Pru's votes against the chairman, Sir Bernard Docker.

Docker was less well-known than his wife, who 'had only fallen in love three times, but all of them were millionaires' and who flaunted her wealth in a gold-plated Daimler, BSA's most famous product.

In far-off Bristol another actuary, the brilliant, bloody-minded, cocksure George Ross Goobey, the investment manager of the pension fund of Imperial Tobacco, was doing the unthinkable and investing in shares, rather than the gilt-edged and other fixed-interest bonds which formed virtually the whole portfolio of other pension funds.

It was not long before others followed suit. And perhaps the single most significant link between then and now is that in the 1990s Ross Goobey's son Alistair proved to be one of the most forward-looking and certainly the most refreshingly open-minded of fund managers.

A Very Different Country by Nicholas Faith is published by Sinclair-Stevenson at £16.99.