the world of private banking

HEREDItARy CALLING, INHERItED REFINEmENt 269
with heavy use made of the Tribunal’s proceedings, there appeared in the journal
Manchester School the pioneering analysis by Lupton and Wilson of ‘The Social
Background and Connections of “Top Decision Makers”’, arguably the academic
dry-run for Anthony Sampson’s massively influential Anatomy of Britain that
would be published in 1962. One of their categories comprised the directors and
partners of fourteen merchant banks or discount houses. For them, Eton easily
outnumbered all the other schools put together; White’s and Brooks’s were the
most favoured clubs, with the more intellectual Reform scoring a duck; and a
series of intricate diagrams demonstrated the interplay of kinship connections in
this privileged sector and at the top of the City generally. 19 Overall, on the eve
of the 1960s, the more perceptive of the merchant bankers surely felt that their
image did not chime well with the desire for a professional meritocracy that was
palpably starting to become the national mood, a mood that at a political level
would culminate with Wilson coming to power in 1964 and Heath becoming
Tory leader the following year. Could the merchant banks, seldom reticent about
boasting of how they lived on their wits, re-invent themselves?
Inevitably, taking the 1960s, 1970s and first half of the 1980s as a whole,
the answer is mixed – not least in strictly business terms, where a particularly
authoritative assessment is to be found in the 1984 edition of the so-called ‘Annual
Report’ on the City’s accepting houses issued by the leading stockbrokers Laing
& Cruickshank. They identify a particular cycle, repeated several times in this
period, comprising three distinct phases: first, innovation, reflecting the generally
small and flexible scale of operation; second, profits, reflecting the way in which
(in the report’s words) ‘as inflation in the 1960s and 1970s swelled corporate
banking requirements’, so ‘lending became a lever into fee-earning services
provided in conjunction with more complex transactions’; and third, withdrawal,
with what the report calls ‘the entry of the bigger brethren’, mainly foreign banks
with much stronger capital ratios and with no family element anxious to maintain
a significant degree of control. Many of these foreign banks had been brought to
London by the rapid growth of the Euromarkets, and once their competition began
to bite, especially by the 1970s in the Eurobond market, it is arguable that of the
merchant banks only Warburgs really stayed the course. 20 Even so, and despite their
reluctance to raise their capital base, the City’s merchant banks did undoubtedly
over this quarter of a century hugely increase the scope of their activities: one has
only to read the relevant chapters in the histories of Kleinworts, Morgan Grenfell
and Schroders to realize this. 21 They may have been only medium-sized players in a
global sense, but the ‘buzz’ was quite different from the preceding four decades.
19
T. Lupton and C.S. Wilson, ‘The Social Background and Connections of “Top
Decision Makers”’, in Manchester School, Jan. 1959, pp. 30–51.
20
Laing & Cruickshank, Accepting Houses – 1984 Annual Report (Sept. 1984), pp.
10–11.
21
J. Wake, Kleinwort Benson: the History of Two Families in Banking (Oxford, 1997),
chs 11 and 12; K. Burk, Morgan Grenfell, 1838–1988: the Biography of a Merchant Bank