It had to happen. A few years ago I announced the demise of the City of London. The old place in its old form had enjoyed a great run but was on its way out, and would now be relaunched as Hong Kong West. As the flag comes down from Cazenove’s masthead, we can witness power being handed over. By nature independent to the point of idiosyncrasy, Caz now believes that this model no longer works, and is putting the core of its business into a joint venture with the vast American bank currently known as J.P. Morgan. The aspiration must be that JPM Caz will go straight to the top of the deal-makers’ league. With Caz’s connections and Morgan’s muscle, it could be unstoppable. In much the same way, Bernard Shaw proposed a joint venture to Mrs Patrick Campbell: ‘Just imagine a baby with my brains and your looks.’ She demurred: ‘Yes, Shaw, but what if the baby had my brains and your looks?’ Even so, and however the gene pool is split, this infant’s destiny looks preordained. Morgan has taken an option to buy Caz out in five years’ time, and Caz has an option to sell its stake to Morgan. You do not need an MBA in applied deal-making, or a Caz partner’s finely tuned instincts, to guess how this deal will work out. The war of independence has been lost.
Our man in sandals
The pass was sold when the Cazenove partnership turned itself into a company and announced its intention to bring its own shares to the market. ‘We shall never go public,’ Luke Meinertzhagen had promised thirty years earlier. ‘It is not fair on the future partners if the existing ones sell their goodwill once and for all.’ That sense of a duty to posterity made Caz, in its way, a good club or, more precisely, a good regiment. ‘Jelly is not officer food,’ Cedric Barnett had told the partners’ room, ‘and shoes have laces.’ Few will have dared, as I did, to enter Caz’s townhouse in Tokenhouse Yard wearing sandals. The sergeant-major on the door was able to keep a straight face. I was accommodating an ingrowing toenail, but it struck me at the time that one of Caz’s own would have cut off the offending toe and concealed the stump within a shoe from Lobb’s — with laces, naturally. Even today, noting two subalternly figures striding briskly across Moorgate, their umbrellas rolled as thin as pencils, I am pleased to observe this visible evidence that Caz is still in business.
It must be fun
Cazenove style had a point. ‘It is harder to say No than to say Yes and very important to learn how to do so,’ said Sir Antony Hornby, most senior of partners. ‘Cazenove should be hard to get.’ And: ‘Our business has really been built up on trust and confidence. We are known for being able to keep secrets absolutely.’ And again: ‘One spends all one’s life more or less in the office. It must be fun.’ All this made Caz punctilious but self-assured. When the newly established Takeover Panel dared to rebuke his firm, Sir Antony rebuked it: ‘All new things have teething troubles. When I buy a new Rolls-Royce it tends to go wrong at the beginning, when it is being run in.’ When the police came to arrest the partner who acted for Guinness, they found that he had caught an early train into work, to raise a billion pounds for Barclays. Caz commissioned its own independent inquiry, was satisfied with its findings, and backed the partner — in effect, betting the firm on him. The charges were dropped, and today he is chairman of Cazenove.
Bucking the trend
Style and self-assurance have carried Cazenove through hard decisions before now. After the second world war, the firm’s best clients at home and abroad were all nationalised. Caz came back as its friends among the big investors learnt to look for growth in shares. (Barings still disdained to dirty its hands with share issues.) At the time of the Stock Exchange’s Big Bang, twenty years ago, all Caz’s major competitors sold out to banks. John Kemp-Welch, then senior partner, later knighted as chairman of the Stock Exchange, stood out against the trend: ‘We do not believe it right to sell the goodwill of the firm to a big brother.’ Instead, Caz bolstered itself with new capital and virtually cornered the market as a provider of independent advice. Perhaps, after all, its new and very different form is what the times require. They, too, have changed.
Markets without frontiers
I can see that JPM Caz (even if the Caz is silent) will be at home in the Hong Kong model City. On or off the Thames’s muddy shore is a financial centre to match or outmatch the Pearl River’s temples of Mammon: one country, two systems. This is a marketplace that knows no frontiers, a pure example of globalisation in action. In those terms it may be a positive advantage if the dominant firms in the markets, in London as in Hong Kong, are owned and controlled from overseas. Local talent will find its rewards on an international scale, with bonuses whose obvious effect is to drive up the price of housing, on the Peak and in the Boltons — but the businesses’ owners will allocate the key appointments and, in the end, will call the shots. In that sense the City is not in command of its destiny. It remains vulnerable to taxmasters, to regulators, to tidy-minded Eurocrats who find its economic anarchy offensive, and to their political allies who envy London’s advantage and would like to take it away. Its greatest mistake would be take its own success for granted.
Houses of refuge
The Cazenoves themselves were refugees once — Huguenots who took flight when the Edict of Nantes was revoked — and the Barings resented the Rothschilds as Johnnies (or Nathans) come lately. Later on came the Hambros and Kleinworts and, later still, Siegmund Warburg: names of power in the City a bare generation ago. The Rothschilds remain. ‘Half my pleasure,’ wrote Francis Baring, ‘is to work for a house which we intend to be perpetual.’ That was asking too much — of life, of a house and of the City — as we may now see once again. Samuel Johnson was wiser in the hope that he expressed for his Dictionary: ‘Giving longevity to that which its own nature forbids to be immortal.’