When Big Bang blew apart the bowler hat brigade
Published by The Daily Mail (17th November, 2016)
Crash Bang Wallop: The inside story of London’s Big Bang and a financial revolution that changed the world (Sceptre)
Shortly after Labour returned to power in 1974, the government took control of British Leyland, a broken-down car maker. So when Prime Minister James Callaghan later needed new official cars, his office ordered two smart new Rovers from the company.
After they had been bomb-proofed and 34 mechanical faults fixed, the PM took his new cars for a spin. It was a warm summer’s day, so to open the window he pressed the electronic button. The glass instantly fell into his lap.
Callaghan and his collapsed car window symbolised a creeping national decrepitude that Margaret Thatcher was determined to tackle when taking power in 1979.
And at the heart of her radical revival lay the privatisation of state-owned firms and the spread of a share-owning democracy.
Key to this was Big Bang, which marked the moment computerised share-trading systems were switched on 30 years ago this month.
Foreign journalists gathered to see ‘how bowler-hatted gentlemen with rolled umbrellas’ would cope with the digital age. They sniggered when the new systems crashed within half an hour, unable to handle the huge flow of traffic.
Yet, as the journalist Iain Martin shows in this lively book, its ultimate success played a core role in Thatcher’s transformation of the City of London, the wider economy and the country — and Big Bang, for better or worse, became central to her legacy.
Martin delves back several centuries to show how scandals and bubbles have always plagued markets, rather than being ushered in by yuppie Eighties culture as is so often assumed.
Thatcher’s removal of exchange controls in 1979 was followed by the arrival of an army of bankers from America, Europe and Japan who shattered the City’s cosy way of doing business.
Martin clearly enjoys the clash of cultures between the old-style City, with its long lunches, short days and deals done on handshakes, and the new wave of financial titans, wielding new-fangled mobile phones as big as bricks.
Henry Angest, a Swiss banker, tells the author he saw dirty London as ‘a hardship assignment’, with ‘inedible food’ and ‘streets full of potholes . . . a really backward country’ where it ‘seemed to take a year to install a telephone’.
Martin does not ignore the downsides in the financial boom — the obscene hikes in pay and the soaring costs of regulation, rising from £20 million to £673 million a year in less than two decades.
One striking aspect is how little people seem to learn from past mistakes. Take one senior City figure interviewed on election day in 1987 — just weeks before Black Wednesday bought the Eighties’ bull run to an end and revealed a series of fresh financial misdeeds. ‘I don’t think we are going to see any more scandals on a large scale,’ he told viewers. ‘I think people have learned their lesson.’