Last exit from Lombard Street. This week Barclays begins to pack up and move out. The bank’s founder set up shop there as a goldsmith 315 years ago, and Barclays has been established on its corner site under the sign of the black eagle since 1728, periodically building and rebuilding. The post-war head office, a massive stone money box, was knocked down to make way for a lumpy effort in the Moorish taste, known to its City neighbours as the Islamic Cultural Centre. The directors never liked it — they had to go downstairs to tomb-like lunch-rooms in the basement — and four years ago put down an order for a tower in Canary Wharf. In May, when the move is complete, Barclays will have 5,000 of its staff all toiling away under the same lofty roof. Such is banking fashion. HSBC has a taller tower next door. Whether its move will help to bring Barclays closer to its customers can be debated. In other kinds of business, vast and imposing head offices with a department for everything have now been superseded. Only Shell, with its Kremlin near Waterloo Station, still survives from these corporate bureaucracies, and Shell has lost its place as an example of how a great company ought to be run. Already thoughtful bankers worry about keeping so many of their precious eggs in one steel and glass basket. Barclays ordered its tower in the week before the World Trade Center was attacked. Perhaps the next fashion in banking will be for dispersal, but when Barclays has gone there will not be a bank left in Lombard Street.
Street of ghosts
It is like waking up to find out that the last ministry in Whitehall has moved to Milton Keynes. Lombard Street has been the home of money since the Lombard bankers colonised it in the thirteenth century. In Thomas Gresham’s day, this street was thought the handsomest in London, and his sign, the grasshopper, still hangs there. Walter Bagehot called his Victorian masterpiece ‘Lombard Street’, and not ‘The Money Market’, because, he said, he was dealing in concrete realities. He surveyed its inhabitants — theirs, he said, was a watchful but not a laborious trade — and summed up their achievement; this was by far the greatest combination of economical power and economical delicacy that the world had ever seen. Eighty years ago, Lombard Street was paved not with gold but with rubber, so that the sound of the traffic would not disturb the bankers. Only the other day or decade it was still a street of banks, from Lloyds at one end to Barclays at the other. Now it is a street of ghosts.
Playing war games
,br>The Bank of England is still in Threadneedle Street, but must be feeling lonely. The Old Lady always liked to have all her brood close to her skirts. Like that, she could keep an eye on them and see what they were up to. Nowadays they have a nanny in Docklands to supervise them, under the odd dispensation which put the Financial Services Authority in charge of individual banks but left the Bank of England responsible for the stability of the banking system. I have long thought that the next disaster would happen because something fell down a hole between the two of them. The Bank is sufficiently concerned to have been playing war games, practising its responses with the FSA, and trying harder to hear what is being said in the market. Bagehot understood this: ‘A hundred people are talked about, and a thousand think: am I talked about, or am I not? This floating suspicion becomes more intense and more diffused.’ That, so he said, was how panics begin. So they still could.
Hollow square mile
What has changed is the hollowing out of the City. The trading floors have gone to the big financial factories in Canary Wharf. The dealmakers have gone to the West End to be closer to their customers, and also, of course, to their tailors and wine-merchants. Number One, Lombard Street, once the home of Smith’s Bank, is now a restaurant. ‘Must be a jolly good restaurant,’ said a Smith, ‘to make more money than a bank.’ It certainly seems to be busy. Perhaps the customers are out to lunch from banks located somewhere else. London, if not the City, still has its 500-odd banks and the lion’s share of the biggest money market of them all — the market in currencies, which sends more than $1 trillion spinning round the world every day. The City itself has always thriven on innovation and change: ‘The principle of variation’ — Bagehot again, citing Darwin — ‘which, in the social as in the animal kingdom, is the principle of progress.’ In its latest variation, the historic square mile is relaunching itself as a square theme park, complete with smart new hotels and boutiques full of rich shoppers’ toys, though not yet, so far as I can see, full of rich shoppers. Barclays’ building might make a superior coffee-house or possibly a mosque. I suspect that, along the way, something is being lost, in continuity, in knowledge, in instinct. A market’s staple commodity is information, so will the new markets trade information as well as the old ones? The Old Lady and I may have to go out and look for it.
Read, mark, learn
Halfway down Lombard Street, at the corner of Birchin Lane, stood the house of Overend and Gurney, whose collapse ended England’s last railway boom — this was 1866 — and cost the Bank of England half its reserves in a morning. The next day, in a Cambridge college, the fellows met with grim faces. Overends were the college’s bankers, its money was sure to be lost, they were ruined. All these clergymen (for Victorian dons took holy orders) stared stonily at the bursar, the only layman in the room. Would he break the news to them gently? ‘I am pleased to report, Master, that the college’s funds are secure.’ ‘But we understood....’ ‘Just so, Master, but when I was in London last week, I happened to call on Messrs Overend and Gurney, and looked in on the manager. I came upon him reading the Bible. So I at once withdrew our balances.’ That is how information transmutes itself into intelligence. Lombard Street used to be good at it.