At the zenith of London's global influence, the public demeanour of success within the financial establishment was austere and conservative. As David Kynaston makes clear in a variety of telling ways in the second volume of his planned trilogy about the City of London between 1815 and 1986, the culture of the financial establishment in the late 19th-century City "placed a deliberate emphasis on eschewing anything that smacked of the flash, the modern or conspicuous consumption". As this stress on outward austerity and conservatism suggests, appearances counted for much in the City at the turn of the 20th century.
The shifting interplay of appearance and reality is a theme that runs throughout this big book's narrative. The space allows Kynaston to build up a rich mosaic portraying the endlessly complex and evolving City in three distinct layers. At the most elemental level, he seeks to convey something of the texture of the lives of the hundreds of thousands of (mostly) men who worked there, often in a state of quiet desperation, carrying out tedious clerical chores for well over 60 hours in a normal week, year after monotonous year, yet without losing sight of their more fortunate colleagues who comprised the City's elite and who spent their time rather more agreeably, albeit often with the same need for sustained, all-consuming concentration. The next level consists of the debates over the key policy issues of the day - including bimetallism, the adequacy of Britain's gold reserves, the reform of company law, and the desirability of free trade in an increasingly protectionist world. The final level adds sharp, easily accessible, well-documented thumbnail sketches of critical events during the period - the "Kaffir" boom and bust, the Boer war, the Marconi scandal, the launch of new industries, among others. In all of this, Kynaston seeks - generally to very good effect - to let the City of the "golden years" speak for itself through its newspapers, court cases, administrative files, public pronouncements, correspondence and memoirs.
The picture that emerges from this masterful treatment is one of sharp contrasts. On the one hand, long-established reputations were accorded much deference and family connections among the wealthy were highly valued. On the other hand inertia was not everything: ultimately reputations had to be maintained by new achievements and the City was open to talent. This openness was at once a source of great strength and a grave weakness. It was a strength in that it propelled capable and energetic "outsiders" to positions of enduring power and influence, whether they came from the lower middle class at home or from abroad, as did the large number of Germans who collectively contributed so much to the late Victorian City. It was a weakness in that the prevailing institutional laxity periodically allowed fast-talking, glib but unscrupulous company promoters wide scope for their visionary but devastating talents.
Moreover, such men as Ernest Terah Hooley, Horatio Bottomley, and Harry Lawson had an uncommonly free hand with industrial issues. John Baring - the brittle and unloved second Baron Revelstoke whose direct descendent was, more than a century later, to preside over the ruin of the family business, may have been expressing an extreme opinion when he wrote in 1911: "I confess that personally I have a horror of all industrial companies and that I should not think of placing my hard-earned gains into such a venture." But this view, if somewhat moderated, was widely shared by his contemporaries. The reform of company law needed to restrain malfeasance evolved extraordinarily slowly given the repeated damage being done. Perhaps unwisely, the spirit of the age feared government interference more than it feared fraud.
Nor was the Stock Exchange itself moved to curb the excesses perpetrated by recurring plagues of rogue promoters. In these circumstances, there really was not much for stockbrokers to do. With typically little capital behind them, they could rarely amass the shareholdings necessary to regulate managers from a position of strength as elite German and American investment bankers systematically did, and with such limited disclosure required of companies, there was too little hard information to disseminate to clients to warrant distinctions based on research capacity. So differentiation among brokers had to occur in some other, less meaningful way. As one of the City's many papers put it succinctly in 1892: "To become successful on the Stock Exchange it is necessary to have a reputation for something - no matter what. A well-founded reputation of being a greater fool than your neighbours has been known to serve in default of something better, but, on the whole, there is nothing much more effective than a really first-class gilt-edged fame in athletics."
The languid golden years, with their evolving, fascinating mixture of success, scandal and missed opportunities, ended abruptly and tragically in August 1914, as the cosmopolitan City, with its strong German connection, plunged into what has become known as the European civil war.
This book will certainly advance the understanding of London at its zenith and should be required reading for all those who wish to comprehend better the ongoing evolution of sophisticated financial markets.
William P. Kennedy is a member of the department of economic history, London School of Economics.
The City of London: Golden Years, 1890-1914
Author - David Kynaston
ISBN - 0 7011 3385 6
Publisher - Chatto and Windus
Price - £25.00
Pages - 678