In the City
Mr Benn and the square mile
Tony Rudd
As the City slopes off to enjoy its holiday Pursuits from a little grouse-shooting to an excess of suburban gardening, those who live and work there should determine to spend a little time this weekend thinking Over their contingency plans against the possible return at the next election of the never-to-be-underestimated Mr Tony Benn. Of course he may not actually win the next election; miracles may happen; pigs may fly and Mrs Thatcher's team may yet romp home with a successful economic policy. It's just that at this moment that doesn't look likely. Nor, let's face it, does the election of an SDP government; organisations, not a selection of outstanding candidates backed by a good idea, win elections. Which leaves Mr Tony Benn as a candidate with more than just an outside chance. What is the City going to do if, Peradventure, he wins?
The sad answer is that nobody in the square mile has the faintest idea because they haven't actually grappled with the problem. Intellectual grappling isn't of course what the City is best at; day-to-day dealing is more to its taste. But what it should realise is that some of the overseas organisations to which it is very pleased to play host have a less parochial outlook and a smaller aversion to the fundamental use of grey matter; they have made contingency plans. And by and large these amount to packing up and leaving.
Look at it from their point of view and start, for instance, with overseas banks. At the moment there's a queue which stretches all the way around the Bank, up Moorgate and halfway to the Moorfield Eye Hospital of those waiting patiently for the favour of that seal of legitimacy, a Deposit Taking Licence, to be bestowed on them. This near-two-year waiting list would, in the event of Mr Benn's translation to power, disappear like Scotch mist on a June morning. Worse than that, those who had already set up would, in large number, move off. Take the Arabs. They like London; it's a convenient and convivial Place (very expensive) in which to live and do business. The City has wonderful services to offer and a certain independence from the dollar. But what the Arabs can't stand is any hint of socialism. The French have discovered that since their rash election of Monsieur Mitterrand. The Arabs would be off in one 747-load to New York, Houston and other points west, if the UK looked like voting in a socialist government. This country would become strictly a place to overfly. The American banks might be Slightly slower to leave but they too would be off in due course. The Eurodollar market doesn't have to operate in London; Zurich, Frankfurt, Brussels and Paris could easily take up the slack.
Then there are the commodity markets. Mr Benn probably would't approve of commodity markets anyhow. The socialists didn't last time. Admittedly they didn't actually shut them themselves but they were certainly jolly slow to reopen them. It was the Conservatives who got the terminal markets going, one by painful one, in the late Fifties nearly twenty years after they had been shut. Socialists disapprove of free commodity markets. First because, while they exist, it is extremely difficult to control all imports of raw material (which is bound to be central to their policy) and secondly because terminal markets represent, in their book, plain speculation. And that, of course, is sinful. So they too would pack up, and basically the business would move off to the eager competition of Chicago, New York and the other American centres. The currency markets would probably close down too because the socialists would be keen as mustard on fixed exchanges in a straitjacket. Presumably events would follow the blueprint of September 1939 with the recruitment by the Bank of England of those who had been employed in the foreign exchange markets into the newly reconstituted exchange control. This would once again open for business in its recent offices at New Change. If ICL had its wits about it. it would be writing clockwork programmes for the Exchange Control Act (1984) now.
The big changes therefore would be in the field of international business. It would be mainly the international markets and facili ties which would be worst hit. Domestic business might still do quite well. But even this would turn out to be much affected. Pension funds would undoubtedly be placed under some clear central direction so that they ceased to waste their substance on foreign investment, service industries and unworthy recipients of the nation's savings. They would be directed to invest in industrial Britain, or what was left of it.
It can be argued that the City has seen this kind of thing before and has survived. The combination of Dr Dalton and Sir Stafford Cripps was pretty formidable; they were much cleverer than anybody of equivalent views around today and they were exteremely antipathetic to the free market system. Both combined this with fairly comfortable personal circumstances, which so often seem to go hand in hand with certain kinds of extreme left-wing views. But the durability of City institutions demonstrated during the Forties should not lead to complacency now. Once the war had begun in 1939 the City apparatus was by and large mothballed. The Stock Exchange operated, but only on a cash basis. A large chunk of its membership went off to war in various yeomanry regiments. Meanwhile the mobilisation of the country's wealth was quite properly put in hand through the Treasury and the Bank of England. So complete was the job that the immediate postwar years, dominated by 'cheap money' and exchange control, none the less represented a degree of relaxation; things were better than they had been during the actual wartime experience. And then there was always the hope that eventually the Conservatives would be returned to power. This time round, the market mechanism would be almost totally dismantled in time of peace; the contrast would be depressing beyond belief for those living and working in the square mile and the outflow of talent would doubtless be, in consequence, almost total and, probably, irreversible. The prospect may be too awful to contemplate, which is exactly why it should be contemplated.
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