The End

James Buchan

  • The City of London. Vol. I: A World of Its Own, 1815-1890 by David Kynaston
    Chatto, 497 pp, £25.00, February 1994, ISBN 0 7011 6094 2

This book found me in the midst of a prolonged, if not necessarily profound, contemplation of the market for insurance and reinsurance known as Lloyd’s of London. What interests me about Lloyd’s is not the misfortunes it suffered in the late Eighties or its spectacular losses, the evident incompetence of its professionals and functionaries or its silly building, but the conduct of the passive investors in the market known as the External Names, about thirty thousand families of the English and Scots high middle class.

These men and women, presented with losses on underwriting for the years 1988, 1989, 1990 and 1991 many times greater than their investment and even their net worth, have responded in unusual fashion. They have rebelled and many seem bent, Samson-like, on bringing the Lime Street temple down about their ears. This seems to me a novelty in the glorious annals of British commerce. For Lloyd’s, with its folklore and its barbaric mixture of caution and dizzying risk, is an institution peculiar to this country and one that is incomprehensible to foreign nations, even those with strong commercial traditions; and the refusal of the Eighties’ Names to take their commercial knocks seems to me a break in British commercial culture. Is this the end of British commerce, which – abetted by a talent for warfare, diplomacy, public administration and espionage – made this country a world power?

In this meditation I found David Kynaston a sympathetic companion. Not that he has anything of interest to say about Lloyd’s: this oversight is one of my many frustrations with his excellent book. But he is deeply interested in the nature of the City, in what made it successful then and now, why some businesses are still good two hundred years after their founding and others have fallen to bits or withered away. His taste in quotation is refined, and I found some of my answers.

The first comes, fittingly enough, from Nathan Rothschild, perhaps the greatest figure ever to adorn the international capital markets, greater even than J.P. Morgan and Michael Milken in their primes. At a dinner in 1834, someone expressed the hope that the Rothschild children were not too attached to money and business: the rentier cast of mind had already set by this period. Nathan answered:

I wish them to give mind, and soul, and heart, and body, and everything to business; that is the way to be happy. It requires a great deal of boldness, and a great deal of caution, to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.

These two sentences should be engraved above the portals of every ruined golf club and burned manor house in Southern England. For how could these Names believe that they could protect their inheritance by consigning it to some florid Members’ Agent at Lloyd’s, reeking of kümmel and pomade, simply because he spoke proper and had been to the same school (though sacked, of course, for failing Trials)?

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