NATIONAL LIFE STORIES CITY LIVES Martin Gordon Interviewed ... · medicine and did research into prehistoric man in Kenya, and he lived in Nairobi during the last thirty-odd years

NATIONAL LIFE STORIES CITY LIVES Martin Gordon Interviewed by Louise Brodie C409/134

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Martin Gordon C409/134/F5288-A/Part 1

1

F5288 Side A

[This is the 8th of August 1996. Louise Brodie talking to Martin Gordon.]

Could you tell me where and when you were born please?

I was born on the 19th of July 1938, the year of the Tiger. I was born in Kensington, in St.

Mary Abbot's Terrace. My father was an economist. And, my father had been born in Italy

at the beginning of the century; my mother had been born in China in 1913, where her father

had been practising as a doctor in Manchuria. Therefore I came from a very international

background, albeit my family was a Scottish-English family and I was born in London, but I

always had a very strong international inclination from my parents and from other members

of my family around the world.

[BREAK IN RECORDING]

Tell me a bit more about your father.

My father was born in Florence in 1903. His father was practising there as a doctor, and in

fact both my grandfathers were doctors, and there was some pressure from my grandmothers

that I should become a doctor myself. And, a doctor is a service industry, and investment

banking is a service industry, and Siegmund Warburg often compared himself to a family

doctor in the way he used to advise corporations, so maybe the fact that I went into banking

was not so different from being a doctor. My father had gone to, well my father was born in

Florence because his father had gone out there to practise as a doctor, and at that time there

was a large English and American community in Florence and it was quite well known,

including a lot of very artistic people. And it was said in Florence, the Ìnglese Italianato e il

Diavolo incarnato', and that was the Italian view I believe of the English and American

community.

You will have to translate that. It's the Devil incarnate.

Yes.

The English are...

Yes, the Italianate English is the Devil incarnate. [LAUGHS]


2

I see, lovely.

At any rate, my grandfather was something of a lady's man, I am happy to say, and he

appears to have been enjoying himself to some extent in Florence, and at some stage in,

around sort of 1906, I'm not sure exactly what happened, but he abandoned my grandmother

in Florence and left with some lady and went travelling with her. And my grandmother in her

outraged abandonment was very upset about this, and one of her friends was a rich American

lady called Mrs Dumauresque, and she financed the sending of Pinkerton's men, the

detectives, around the world to pursue my grandfather to prove adultery. According to the

family story adultery was proved in Tokyo. [LAUGHS] Hence another Far Eastern

connection in my family. In those days of course divorce was very disgraceful, and my

grandmother sued my grandfather for divorce after adultery had been proved, and this was

quite a scandalous item for several weeks in the `Morning Post' and the `Times' and other

newspapers of that period. And my grandfather eventually ended up, after various travels and

various posts he ended up in Nairobi in the mid-Twenties, where he found and practised

medicine and did research into prehistoric man in Kenya, and he lived in Nairobi during the

last thirty-odd years of his life.

Did you know him?

I never knew my grandfather, my paternal grandfather, nor indeed did my father know him,

and that's another of these sort of curious Victorian things at the beginning of the century.

My grandmother brought up my father to believe that his father had died. The disgrace of the

divorce was so great that it was...she pretended that her husband had died, and my father did

not know of the existence of his father until some time in the second half of the 1930s when

my father, who was then an economist and a statistician of some note attended a lecture given

by the authoress Elspeth Huxley about some African things, and of course Elspeth Huxley is

a very well-known Kenya name. And during this lecture Elspeth Huxley referred to the

anthropological researches of Dr Harry Gordon of Nairobi, and my father thought this could

possibly be a reference to his father, therefore after the lecture he sought out Elspeth Huxley,

who had left the lecture rather quickly, and so my father couldn't catch her. He therefore

traced her by contacting various London hotels and then went to see her, and got

confirmation that this was indeed his father. And he immediately wrote to his father in

Nairobi and they set up a correspondence, and as a result links with my grandfather's second

family were made, but the war came and my grandfather died either during or soon after the

war and so none of us met him. But there's a fair amount of correspondence and a fair

amount of understanding of his rather lively character and his strong Scottish accent.


3

You obviously think he was a great character, is that right?

Yes, I think that like most Gordons he was quite impossible, so I am told by the women in the

Gordon family, but he was obviously a tremendous character, and there was a wonderful

obituary of him in the East African newspaper of the time which we keep in the family

somewhere.

But your father must have suspected that he had a father if he made that tremendous effort to

follow Elspeth Huxley, is that right?

I suppose lacking any conclusive proof as to what had happened to his father and where he

had died and that sort of thing, he probably may have suspected things. But you know, this is

all the sort of, sort of Victorian background, and he never confronted his mother about it, he

considered it was going to be too difficult to do so. Any subsequent contacts we had with my

grandfather's second family were never known to my grandmother, who died in her 100th

year in 1966.

So tell me about her.

Her. Well, she was Maude Gates, a family which came from Steyning in Sussex. They were

a family, a typical family that had risen to prominence during the Victorian period. I think

her grandfather, or was it her father, I get the generations mixed up, had been a judge, and

had done very well coming up from being sort of a country boy to being a judge on the

County Court and was recommended for the High Court but then had deafness problems and

never went to the High Court, but nevertheless had done very well. My grandmother was one

of seven children and she had rather Victorian values, but considered herself to be in spite of

that a rather advanced woman, and I remember she belonged to a club in London called the

Sesame Club in Grosvenor Street, which was a ladies' club for very advanced women, and I

used to go and stay there sometimes when I was a schoolboy and all the ladies there were

very distinguished and advanced. I remember Edith Sitwell wandering around and all these

sort of very, sort of advanced liberal women. [LAUGHS]

That must have made a great impression on you as a boy, didn't it?

Well, yes, yes, it was, again it was a vignette of old London and old attitudes towards women

and that sort of thing which was quite interesting.


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And so, you've said already that it was a great decision for your grandmother to take this

divorce through to its conclusion. Why did she do that, rather than just...was it a sort of

feminist standing up for herself do you think?

I think she had been egged on probably by some of the ladies in Florence, including the

American lady who paid for Pinkerton's men, I think it sort of became a sort of logical

conclusion, I don't know. But divorces were really relatively rare in those days, and I have

the notorious distinction of being descended from two divorces, because on my mother's side

there was also a divorce. In the case of my father's family it was a first marriage, in the case

of my mother's family it was a second marriage. My mother's father was a Dr Harry Colman,

C-O-L-M-A-N, who came from the mustard family, although the family was then known

both for mustard and for textiles, because the firm of Selincourt and Colman was

subsequently merged into Courtaulds, and the Colman family in those days was well known

in both areas. My grandfather, Dr Harry Colman, was a member of that family. However he

was somewhat exiled from that family when he deserted his wife to marry my glamorous

grandmother, Emma Clark[ph], and that resulted in another divorce in the early part of the

century, and the scandal in the very distinguished Colman family was very great and it was

considered desirable that Harry should go out to China with his wife to let things cool down

for a few years. Therefore my grandfather went to China and settled in Changchun, which is

one of the principal cities of Manchuria, or now known as the North East, in China. And he

spent quite a lot of time acting as a doctor to the foreign community in northern China, which

included quite a substantial Russian community of people who were escaping from Russia

and going to Harbin, which was a great settlement place in that period. But my grandparents

spent five years in China living mainly up in the north but spending also quite a lot of time in

Shanghai and Quindao, Quindao where the beer comes from, and indeed they rented a house

from a Korean prince in Quindao and, whereas my mother was born in the frozen north in

Changchun, her younger brother was born in Quingdao. And so my mother's earliest

memories for her first five years of her life were in China, and in those days with a Chinese

nanny and everything she spoke Chinese. But that obviously is a very sort of strong

connection for what subsequently developed in my own life. After the end of the First World

War my grandparents returned from China across the Pacific to Honolulu, San Francisco and

overland to New York and on to the U.K. that way, including a shipwreck. And they settled

in Dorset where my grandfather bought a medical practice in Bridport where they lived for

twenty or thirty years.

Dorset must have been a bit quiet after all that travel and foreign experiences wasn't it?


5

I don't think so judging by some of my mother's accounts of life in those days. It sounded a

pretty lively county existence in those days, and...

Socially you mean?

Yes, I mean there was a lot going on, very lively activity, and a very amusing life. If you

read the recent unauthorised biography of Pamela Churchill the accounts of life in that part of

the world when she was a girl I think give an impression of the very lively Dorset county life.

It was obviously a very amusing place, and full of interesting recollections.

Do you remember your mother as being glamorous?

My mother? My grandmother was glamorous.

Oh your grandmother, sorry, your...you're quite right, you said that, yes.

Yes, yes. My grandmother was very glamorous. She died aged 91 and I remember, she

didn't have much money, in fact she was really quite hard up, and my grandfather had left her

very little, and she made do on really very little. But she always managed to dress herself

impeccably, but she made her own clothes and she would make her own hats, and she always

managed to look quite marvellous. And I remember taking her out on a picnic expedition

with some friends when she was 89 and I remember how beautifully she dressed on that

occasion and how she was the life and soul of the party, and what fun we all had with her for

several hours on that day, of which I have some lovely photographs just proving how

marvellously glamorous she managed still to be at the age of 89.

That's wonderful, great to have those memories. You also have a very long-lived family don't

you?

Well, not as long as, I mean, my grandmother... You're right, my grandmother, maternal, was

91; my grandmother paternal was in her 100th year. She was wondering, we were living in

Belgium, she was wondering whether the Queen would take note of the fact and would send

her a telegram when she became 100, and we said that we would make sure to inform the

relevant people so that she did. And she was also hoping that the King of the Belgians might

do something about it, but unfortunately she died a few months before her 100th birthday.

My maternal grandmother's parents both died at a very great age, and unusually they

celebrated an 80th wedding anniversary. He was 16 and she was 19 when they married, and

when they died within six months of each other he was 99 and she was 101. I mean it's just


6

formidable the ages that people lived; we somehow never thought it would be possible in

subsequent generations, and the sort of lives that we now lead. Certainly my father died

when he was 73 and my mother just died when she was 83, and...

That must have been quite a shock to you after, you know, that they hadn't lived into their

nineties.

Well it was a disappointment, let's say, a great disappointment. You always hope that people

will last longer, and...but there you are.

So how did you feel about your father dying at 73, that's...?

Well it was a big shock, yes.

So what, tell me some of the qualities that your father had. He was a statistician...no, yes,

and economist, yes.

Statistician and economist, yes. My father was an extremely brilliant man. He was educated

at an English prep school called Pelham House in Folkestone which subsequently moved to

Oakley Hall in Cirencester, Glos., and my brother and I many years later went to prep school

at Oakley Hall. My father's academic record at Pelham House and subsequently at Harrow

and subsequently at Oxford was of the most brilliant. I can't remember at what age he got a

scholarship to Oxford from Harrow, it must have been when he was 14 or 15, and he had to

stay on at Harrow for another two or three years because it was considered too early to go up

to Oxford. But he passed all these exams very brilliantly, went up to Oxford and was one of

the first people to do the PPE course at Oxford, Politics, Philosophy and Economics; he was

one of the students of the first year that course was invented, shortly after the First World

War. But he disappointed all his tutors by only getting a Second, and this was because he

devoted too much of his time to extramural activities at Oxford, especially acting. But he

was a very brilliant man, both at Oakley Hall and at Harrow, and my brother and I were

always being told that our examination results didn't compare with those of our father.

[LAUGHS]

That must have annoyed you intensely didn't it?

Not particularly. It was, we loved our parents very much and very much respected my

father's intellectual success and his many other excellent qualities, including his kindness and

his total integrity.


7

That's a very high recommendation.

Yes, yes.

So, go on about your family life. It was you and your brother, is that right? You were the

only...?

Well my brother and I were born before the war; my younger sister was born in Belgium in

1949, some time after the war, so there's a difference of eleven years between myself and her.

And so, my brother and I were a little bit closer but my sister obviously close also but rather

younger.

But you started life in England, you were born in Kensington. Did you live in England for a

while before you went to Belgium?

Yes. Well the war came very shortly, and we moved out to a suburb of New Malden where

we lived during the war. My father as an economist and statistician was drafted into the

Home Office as an expert where there were a lot of academic types including lots of Oxford

dons and so on, and he was in charge of the rationing system and also of trading with the

enemy, which was a very special part of the Board of Trade, because certain trade of essential

commodities went on even at the height of the war, and was not very well known but it did.

Please tell me more about that.

I don't know all that much about it, but, I mean, apparently certain trade does go on, you

know, in Third countries and that sort of thing. Well just like now, I mean, China doesn't

officially trade with Taiwan but in Hong Kong an enormous amount of trade carries on. So

in the war time I think that there were some things that got traded, and the Board of Trade

had the responsibility of seeing what should be authorised and what should not. And he also

had the responsibility, or part of the responsibility, for the rationing system, both with regard

to food and with regard to clothes.

Did he talk about that?

All I can remember is one story of two elderly women turning up at the Board of Trade to

return their clothing coupons, and they said, `We have so many things in our drawers, that we

really don't need any of these clothing coupons; we'd like to return them for the national


8

effort'. [LAUGHS] The vision of these two old ladies and what they had in their drawers

always amused the family. [LAUGHS]

Wonderful. Do you remember the war?

Oh yes. Well I was born in July '38, the war started I suppose in September '39, and my

earliest memories are mainly when I'm sort of about 3, and particularly when I'm 4. And so I

have quite a lot of memories of things that happened in the war, including doodle-bugs and

the various privations and so on, and the air-raid shelters that we had in the house, and

sleeping under the stairs to minimise the effects of the bombs and so on; as we were pretty

close to London we were very close to a lot of bombing. And so have a lot of memories of it,

including periods of evacuation when we went to the countryside for holidays in

Staffordshire and Cornwall and so on.

What, those were holidays or were they extended periods?

More holidays really. They were not particularly extended, but it was certainly very nice to

be able to get out of London for periods of two or four weeks or so, and to get to the relative

safety of the countryside, and particularly in the case of Cornwall less privation than in

London because in that distant county you could get fresh eggs from the farm and that sort of

stuff.

And you always went with your mother, did you, you weren't on your own as children?

Sometimes my brother and I were sent on our own, sometimes our mother came with us, and

sometimes my father would appear at a weekend. It was very interesting.

But it wasn't a situation, children evacuees being sent off to, they didn't know where?

No no, nothing like that. Merely slight touches of it in one or two cases but... I can't

remember, you know, which years and which months we went to which places, but I do

remember going to somewhere in Staffordshire where my brother and I went without any of

our, either of our parents, and being terribly unhappy, and that may have been something, we

might have been just shifted out during the worst of the bombing.

Well I was going to ask you if you remember that period with fearfulness or whether it was

an excitement for you, or, you know, it's a sort of, everyone had a heightened awareness

during the war and I just wondered how it had affected you as a boy.


9

I wouldn't say fearfulness. I mean frankly it was the world you were brought up into at that

time, you didn't remember any previous time, and therefore you rather took it as one of the

hazards of life.

And did you know, when you talk about privations presumably you're talking about food and

so on, are you?

Yes, although we didn't think of it as privations because we were never starving, and, you

know, we were growing our own potatoes in the garden and doing everything that everybody

did with various war efforts. And of course my mother was helping in the war effort in all

sorts of ways, driving ambulances and helping in factories and that sort of thing. Well it was

all part of life, and you just regarded it as, you know, as the normal thing.

Is there anything you remember about the war?

I remember the end of it. And I remember being in the centre of London on the day that the

war ended and the extraordinary convergence of crowds in central London at that time. I've

been in London on subsequent occasions for convergences of crowds, such as the Queen's

Coronation in 1953, her Jubilee in 1977, Winston Churchill's funeral in 1965, but I was more

impressed with the crowds when the war ended. Well I remember for example when England

won the World Cup in 1966 there was a tremendous convergence in the West End. But

somehow the one at the end of the war, of course I was only so high, I was 7 or whatever, so

the crowds were probably taller than at other periods, but it did seem to be an extraordinary

assemblage of people. And I remember late in the war looking up into the sky with these

amazing search lights and that sort of thing, and I remember my father pointing out an enemy

plane and the efforts that were being made to frustrate it and so on. I remember this guy

being absolutely lit up with search lights, and it must have been a clear night anyway, and

sort of, a memory of great lightness.

End of F5288 Side A


10

F5288 Side B

You were saying that you disliked the guns that you heard during the war.

No I wasn't referring to the guns during the war so much. The reason I dislike guns dates

mainly from when I did my National Service in the Royal Artillery between 1957 and 1959,

and occasionally I had to go and fire some of these artillery guns, and I found it extremely

unpleasant to have to stand close to the gun when it made these awful noises. And I think it

affected my hearing to some extent, and I've never been very keen on guns of any sort since

then. I've never wanted to go in for sort of rifle shooting and that sort of thing, and never

understand why people want to do it, particularly to kill nice animals. And I've disliked other

loud noises, for example discos, I can never understand why young people want to go and

have such loud noises since I recoiled from it so much when I was firing guns. [LAUGHS]

So that is not a wartime recollection as far as I know.

So were you still living in New Malden at the end of the war?

Yes, but we left almost immediately after, because at the end of the war the Inter Allied

Reparations Agency, I.A.R.A., or IARA, was started in Brussels, and my father was

obviously a natural selection to be sent by the British Government to IARA, and so he went

out to Brussels absolutely immediately after the war. We were there I think by September

1945, and the family moved out there and my father was one of the international civil

servants which had the responsibility for re-settling German industry after the war, which I

think was a very interesting thing, and we have all sorts of vivid memories of living in

Brussels in that period just immediately after the war when there were a lot of privations on

the one hand and a lot of interesting stories on how the Belgians had survived under the

German occupation, some doing considerably better than others, and the extraordinary black

market which existed during and immediately after the war when we got there. And in

Belgium somehow things got back to normal in terms of food and that sort of thing much

more quickly than in England. I think it was probably helped by the black market because

the speculation which existed, and there was a great deal of it at that time, meant that one way

or another goods were getting into the market, even if they were not getting through in the

official way. Well obviously they were more expensive on the black market, and a lot of

people couldn't afford them, and I don't think we could, but that they were there. And

whereas rationing in England went on for many many years, and, I can't remember when it

ended but it must have been at least 1952 or 1953 before rationing ended, but...

I think it was '55 but I'm not sure.


11

Was it as late as that? Could have been, could have been as late as '55, but, I mean that's ten

years after the war, I mean quite extraordinary that it went on so long when all the lanes of

shipping and that sort of thing were open and so on. But in Belgium rationing was over

remarkably quickly. And my brother and I used to commute to Belgium during our holidays,

and in those days we were at Oakley Hall preparatory school in Cirencester, and during our

holidays we would take the boat over to Belgium, and when we came back to England at the

end of our holidays we would always bring back various items of food and drink which were

unobtainable in England to increase our popularity at prep school.

[LAUGHS] Yes, I was going to say, it must have been good for your...

Tuck, tuck is very important for young people.

So, what do you remember of the prep school? Did you mind being in a different country, or

did it seem perfectly natural to you, I mean from your parents?

Well in those days it was simply remarkable how abroad Brussels was, and English people,

you know, regarded it as quite extraordinary to live in a place so distant. And, you know,

insularity of people in England is something that you come across again and again and again

and again over the years.

Well I almost said that, because I mean your parents had moved around, well your parents

and your grandparents rather, have moved around very considerably, and...

They certainly had, and other members of the family also, and therefore one thing was that I

was brought up with a mind-set which was completely international and I never ever had any

sympathy with excessive insularity in this country, including the current manifestations of

that.

Talking a bit more about your parents and your family life, were you religious, was it a

religious family?

No. My father was a completely free-thinker and must have been an atheist from quite early

in his life, certainly by the time he was at Oxford. My mother was, I would describe her

more as agnostic than atheistical. However my parents did not seek to influence us in our

thinking in that period, and so we went into a relatively strong old-fashioned Victorian

Church of England type education at Oakley Hall and Harrow, and during the periods when


12

we occasionally went through religious phases and that sort of thing our parents never sought

to argue us out of them, and they let us form our own opinions which we did over a period of

time at our own time as it were and leisure.

And are you still a free-thinker, or has that changed over the years?

I'm still a free-thinker; I became a convinced atheist at Oxford and that hasn't prevented me

from having a very nice relationship with the Church and with different churches. And if you

are, you know, completely atheistical then you can see the nice side of the Church and you

can appreciate the good things that the Church does do, and you can in many cases support

them, because a lot of things the Church does are not done by anybody else. And so without

believing anything, the philosophy that underlies the Church, you can still support it.

When you say what the Church does, do you mean in social terms?

In social terms, and also when people get born and married and die, and compassion for

suffering.

But you're not so interested in the spiritual side of things?

Well I don't believe in any of that. But nevertheless it was spirituality which enabled the

people of the Middle Ages and so on to build the wonderful cathedrals we have in our

country, and merely walking into these glorious buildings is so uplifting that although you

may not believe in the spiritual side you have a tremendous appreciation for what the

spirituality of others has achieved.

So you and your brother, was he an older brother or younger?

Yes, older.

Older. How many years older?

Seventeen months, twelve days.

Was that a cause for competition, the fact that you were quite close, or did you get on well?

I suppose there must have been some sibling rivalry of some sort, but we were extremely

fond of each other and still are.


13

And you had the same sort of interests?

Reasonably. I think my brother was more technical than I was, I think he had built his own

transistor set by a relatively early age and I certainly wouldn't be able to do one ever. So he's

always been a little more sort of technical, you know, you could open a car engine and he

might be able to recognise one part of it from another, and I don't think I would. But we were

both people on the art side, and we both went up through the classical side at Harrow and at

Oxford, both reading litterae humaniores at Oxford, Latin, Greek, Ancient History and

Philosophy. This was partly because the teaching of it in the schools that we happened to go

to was very good, and we were brought up in a classical tradition with plenty of Latin and

Greek at prep school, did well in entrance scholarships to Harrow in those subjects, and at

Harrow in a very old-fashioned way these subjects were magnificently taught and unless you

really had a very strong bent for science or mathematics it was quite glorious to learn Classics

at Harrow, particularly under the teaching of the then head of Classics at Harrow, Mr

Plumptre, P-L-U-M-P-T-R-E, who was a magnificent elderly gentleman who was a nephew

of Dean Plumptre who wrote so many of the hymns in our Hymnal. A very talented and

amusing and musical, very witty man, and learning from him was a particularly liberalising

and good experience, and people in his class invariably got excellent entrance to Oxford or

Cambridge, everybody did. And whereas most classrooms were like classrooms with desks,

his classroom was a table around which you all sat, and so it was like a conversation. Quite

magnificent.

You were very fortunate, weren't you, that sort of leadership, I mean teaching leadership

makes all the difference to...

It certainly does, and certainly having a liberal education in the best, best sense is a

marvellous asset for life. And just as I describe in my little memorial on Siegmund, how he

said to me, when he asked what I was studying at Oxford, Ì am so glad you are not studying

economics, Mr Gordon'. And, having had this classical education I felt that Siegmund was

absolutely right in saying that something like that is a much better preparation for life and

work than trying to read finance or economics or something sort of totally related to the

business that you are about to do.

Would you expand on that, why you think it is?

It is simply because you have a wider viewpoint, and I have just found that extremely

valuable, and I certainly found in the early Warburg years, particularly when I was


14

interviewing a lot of other younger people coming into the firm, that I found that people who

had a liberal education when they came into the company, well that was the time to learn the

business and what it was all about, and that you just got a wider viewpoint from such people.

And I know that business schools exist and you have to have all these professional trainings

and so on, but the best training I think is on the job, and preparing for a job by a particular

business or financial education, even now I think is of slightly limited value, although a lot of

people would howl me down I think.

So going back to Harrow for a moment, were you good at sport?

Neither my brother nor I were particularly good at sports, and Harrow, like all good public

schools, did emphasise the sporting side of life. And indeed my father had been even less

good at sports, and he therefore bequeathed us a tradition of the sort of intellectual side of

Harrow. And although, you know, the emphasis at Harrow and at other major schools was

very healthy and lots of rugger and cricket and swimming and so on, all of which we

indulged in and all of which we enjoyed, and did moderately at, but never very distinguished

at, and we were never in the school team I think of any of these things, but at Harrow there

existed a side-by-side sort of five or ten per cent minority that didn't worship games and

enjoyed things like art and music, even handwriting, which was taught at Harrow, and that

actually came in useful at a later stage, because of Siegmund Warburg's addiction to

handwriting reports. And although my handwriting was not particularly wonderful, I had

taken some lessons from the then art master of Harrow, Mr Percival, and I believe it's the

only school I am aware of in England that taught calligraphy. Whereas in the Far East, if you

go to China and Japan calligraphy is one of the main subjects which you learn, and the

beautiful handwriting is something by which people are regarded as civilised, in this country

and in Europe generally handwriting wasn't so. And certainly at Harrow we were expected,

particularly if we were on the intellectual stream, we were expected to pay attention to

handwriting. And I remember Mr Plumptre saying that if we had nice round clear

handwriting it would help us in our university examinations, because the fact is that

examiners when they read an examination paper which is well and clearly written may well

feel that the argument is good and clearer, and certainly those of us who came through the

Classical Sixth at Harrow did get an awful lot of scholarships. And now that we've moved

into this computer age where handwriting is even less respected one does remember that. But

of course I didn't know at the time that Siegmund Warburg liked handwriting, and submitted

handwriting to graphological tests, and when I wrote to Mr Warburg originally to apply for a

job I wrote in my ordinary Oxford handwriting, and maybe I was a little bit surprised at how

enthusiastic he was to interview me. [LAUGHS] And I subsequently found out of course the

handwriting had gone straight to Mrs Dreyfus, a handwriting expert, and clearly my


15

handwriting had revealed satisfactory things about my character. [LAUGHS] I never saw

the handwriting report.

Good for Mr Plumptre again.

Yes, good for Mr...and Mr Percival who taught the calligraphy. But, it is a fact. I mean in

the Far East, I mean calligraphy is regarded as synonymous with being a gentleman and with

good breeding and education, and there have been periods in English history when

handwriting was respected in almost a similar way, but by the middle of the 20th century that

had fairly well disappeared.

When was that so, that handwriting was so important?

Well I can't tell you exactly but handwriting was taught, particularly copperplate, at school

certainly in the last century, and I think possibly even before that, and when you're looking at

handwriting of previous ages you do come across, you know, very classical handwriting.

Well I suppose that's true for clerks in the 19th century isn't it, they obviously had to...

Well a lot more was done in handwriting of course in those days, and you know, it all

descends from a period when, you know, monks did it in monasteries I suppose, and monks

also taught people to write. So it must have had a reasonable strength over the ages; it's not

something I've studied extensively, but certainly at Harrow in those days there was the sort

of, the classical attitude that, you know, the hereditary principle and all the rest of it was that,

you know, good handwriting was a desirable object and worth teaching.

What did you do in your leisure time at Harrow?

What did we do in our leisure time? I suppose, we talked a lot. [LAUGHS] We read a lot.

We dramaed a certain amount. We toasted a lot, drank tea a lot. We had fires in our studies

and our own toasting things, and making tea in one's little study was such a pleasurable thing.

And occasionally one used to challenge the masters at bridge, because as a schoolboy one

wasn't allowed at Harrow either to play cards or to possess playing cards, and the only way

you could play bridge was by challenging the masters, because they had cards. [LAUGHS] I

still play bridge with some of the people I played with at Harrow.

Oh, that's a very good recommendation isn't it. And so, what about holidays, were your

parents still in Belgium during...?


16

Oh yes, all during my school days my parents were living in Belgium. They lived in Belgium

for 32 years, because after the IARA had completed its task in the late Forties my father

decided to stay in Belgium, and again became a journalist, which he didn't become overnight,

he gradually picked up assignments with the `Daily Telegraph' and the `Financial Times' who

were his principal employers over the subsequent years. But when he left IARA, again I

mean, he decided that he wanted to stay in Brussels. He felt there was a future for all this

European thing, which was sort of just beginning to bubble up with people like Jean Monnet

and Roland Ispaq[ph] floating around, and he was very interested in all of that. And he didn't

particularly want to go back to England and the provincialism and all that sort of thing, and

so he decided to stay out there, which was a courageous decision because he didn't have any

money, but he gradually picked up assignments and was really very successful as a journalist

and one of the earlier proponents in the English press obviously of the European community

and one of the first people to report on it and so on, and as such was very much respected by

the founders of Europe. And he stayed on in Belgium until he died in 1977, and one nice

thing about journalism is that you can carry on as long as you can really sort of manage to put

pen to paper, and so he did work until the very end, he was working the last morning of his

life, and he was very much the doyen of the foreign press in Belgium during the last fifteen

years or so of his life. And that was a fascinating group of people and full of characters, the

sort of, the foreign press in Belgium in those days were marvellous people, like the Reuter

people and the `Daily Express' people and the...it was a marvellous combination of people.

Have you ever seen a movie called `Roman Holiday' with Audrey Hepburn?

Yes.

Well, there was something of the flavour of that in the American journalists and the group of

journalists in Rome at that period. Well the journalists in Brussels were a little bit like that,

and something, I mean, very interesting people with interesting backgrounds, Russian

émigrés and so on. And they were all characters and we had wonderful friends from that

period. And as a result of that I've always had a tremendous sympathy for the press, and have

always liked contacts with the press, and in earlier days when I was more involved with day-

to-day things in London I had a lot of contact with the press on behalf of S.G. Warburg, and

because I liked the press very much they always wrote rather nice articles and that sort of

thing, because the journalists do appreciate being treated in a nice open way and they

reciprocate on the whole. And so it was a very, it was always a very nice memory and it

remains a very nice memory.


17

Well we'll certainly come back to that when we get to that period, because, well, the press

comes in for a lot of criticism one way and the other these days.

Indeed, and you know I have, you know, I have the greatest distaste for people who handle

the press wrongly, and particularly who try to be secretive towards the press and try to be

arrogant towards the press, and who try to treat the press as inferior in some way, because the

press is wonderful and if used in the right way it's just so useful and so productive.

Well it's very refreshing to hear that point of view, as I say we'll certainly come to that later.

Well I'm not the only person here who comes from a journalistic background; quite a number

over the years of journalists came into Warburgs, and notably among the early important

directors of Warburgs, Ian Fraser who subsequently went off to be Chairman of Lazards and

Rolls Royce and everything came to, joined Warburgs out of Reuter, was hired by Siegmund,

and Arthur Winspear, the most engaging gentleman, was Lex in the `Financial Times'. I don't

if he was the first Lex but I mean he was certainly a great architect of Lex, and it was while

writing sort of articles for Lex in the Fifties that he came to Siegmund's attention and he

offered him a job at Warburgs. And absolutely, Lex, well still has an excellent reputation,

and there have been some wonderful Lexes over the years, but Arthur Winspear was

extraordinary. But since then quite a number of people have come from journalism into our

business and there always was, particularly while Siegmund was alive, a tremendous

sympathy towards the press.

So, just finishing at Harrow. Where did you go on holiday when you were in your teens?

Well we always went to Belgium you see.

But you didn't go out to other parts of Europe from there?

Oh indeed we did. Sort of once you got across the Channel the whole of Europe was there,

so we were very early Europeans from that point of view, particularly doing a lot of

bicycling, and it was such a pleasure to get away from Brussels on the bicycle and go down

to the Ardennes and to Luxembourg and to the Moselle valley. Oh it was just glorious places

for bicycling. The Belgian coast, among the dunes, oh just heavenly, I have very happy

bicycling memories of that period.

What about girls in your teens, were they a significant part of your life?


18

Well we used to have a, what shall I say, quite an amusing time in that teen period, because

thanks to the efforts of some of the mothers we had in Brussels, you know, a very lively

coterie, I suppose a bit like my mother's childhood in Dorset, quite a lively coterie of young

people, and I think the mothers had organised sort of great Christmas parties and dances and

that sort of thing, and we all found lots of people we liked among that set. And in that sort of

expatriate community, well partly patriot, because some of them were Belgians or party

Belgian, there was a very nice mixture of people, and so we had quite a lively social life.

Is there anything else you want to say about Harrow before we move on to Oxford?

[PAUSE FOR THOUGHT] Well... I enjoyed Harrow very much. But I remember driving

away from it on the day I left it and thinking, I'm glad I'm getting on to the next stage.

Would you send a child - do you have children?

I'm not married.

So, I was going to ask if you would send a son of yours to Harrow, but, or perhaps that's not a

relevant question.

My brother didn't send his sons to Harrow, but I think he was more influenced by his more

free-thinking wife. I think on his own bat he would have done if he could have afforded it,

and we certainly, my brother and I, made it easier for my parents to afford by getting

scholarships and things like that, so the outlay wasn't too bad for my parents. But, I think

Harrow, and schools of that ilk, you know, have had their ups and downs, and Harrow itself

has had its ups and downs in the period since I was there, and I certainly judge schools like

that partly by how they do in university entrance, and I think Harrow's performance has not

always been all that good in these intervening years. On the other hand, in the period of great

social change in this country I think Harrow has sort of just got on with it in a tolerably low

profile way, and has continued to provide a good education and a particularly nice education

for the little intellectual stream. I think that has carried on, and some very nice people

became masters after I left, and I think therefore that over the years young people who have

gone to Harrow have benefited very much from that education, and they would have had to

have been extremely lucky to have had a State education as good as you would have got at

Harrow, albeit some people were lucky.....

End of F5288 Side B


19

F5289 Side A

[This is the second tape with Martin Gordon.]

So, you got a scholarship to Oxford, Oriel College. Why did you choose Oriel?

They chose me my dear.

Aha!

Get in where you can. [LAUGHS]

With a scholarship, you didn't have a...?

I had a scholarship. I had about... My father and his brother were at Brasenose, and our first

choice, both my brother and I, was Brasenose, BNC. Although my father had found it an

excessively athletic college, BNC had been very athletic in that period, and I think it remains

so, but my father actually found Brasenose to be quite difficult in the sense that an

intellectual there felt quite isolated, more isolated than at Harrow. And so he wasn't pushing

us to go into Brasenose but we both wanted to follow our father's footsteps. And both of us

were offered scholarships elsewhere before you were offered one at Brasenose, and so my

brother went to Hertford College and I was offered, when I took the exam in December, a

scholarship immediately to Oriel, but I was told if I would come and re-sit in January there

was a good chance that I would get one to Brasenose. But I'm afraid to say that the prospect

of having Christmas without studying and that sort of thing was better, and going to Oriel.

And Oriel seemed a perfectly nice college, with some very interesting traditions of its own,

including the religious movement of the 19th century, I think it was called the Oxford

Movement, or the Oriel Movement, and Cardinal Newman and Manning and all that stuff.

Oriel, and I knew various Oriel people, I had taken the exam, I had lived in Oriel during the

taking of the exam and found it a very nice place to be, and I was really quite happy that

Oriel gave me the scholarship, and I certainly enjoyed Oriel very much as a college and have

a great affection for it.

But this Oxford Movement, I mean you've said you weren't particularly religious; was that

just that it made it eminent in the historical way, that that made it distinctive shall we say?

Yes, but then I've always had a tolerance for spirituality even though I may not have had it

myself.


20

OK. OK. So did you have any particular tutors that you remember with affection for their

outstanding abilities?

Never in quite the say way, oddly enough, as the principal tutor at Harrow, who in my view

surpassed most of the tutors with whom I dealt at Oxford. But I had very nice teaching in

Philosophy from Richard Robinson, who of course was a very pronounced atheist, wrote a

book called Àn Atheist's Values', and who was a Platonist who taught Plato in a very liberal

way and gave you a tremendous appreciation for Plato, and I think a hearty contempt for

Aristotle. And then Richard Burton taught the Classics, Latin and Greek, very nicely, and

Peter Brunt taught Ancient History. A very nice combination of teachers. I think there were

probably one or two other teachers in the college who taught other subjects, learnt other

subjects which might have outshone some of these people but they did it very nicely, and for

other special subjects you went to other colleges to get special tuition from other people. I

remember particularly a very delightful lady at Lady Margaret Hall called Ann Jeffery who

taught me about Greek sculpture, on which I became a little bit of an expert at that time,

although she was more of an epigraphist, the science of inscriptions. And she was quite a

small and sweet lady, and I remember her saying, Ànd I've just produced this little volume,'

and this huge book was produced. [LAUGHING]

Lovely.

And of course one went to lots of lectures at Oxford, and of course Oxonians of that period

all remember the lectures of Sir Isaiah Berlin which were simply marvellous and, great

perorations, because he never seemed to look at a note and talked at full speed for a whole

hour. Wonderful. And, oh many other marvellous lecturers at Oxford at that period. And of

course great philosophers.

Did you make new friends, were the extramural things important to you?

Oh yes, and, as I had been in the Army for two years I came up to Oxford slightly more

mature than the average school leaver, in fact I was 21 by the time I went up to Oriel,

whereas most school leavers are sort of 18 or maximum 19. The result was, I made more

friends among, quote, `the mature undergraduate', namely other people who had done

National Service, and we were just about the last generation of National Service, and the

Rhodes Scholars. And I have a particular affection for my Rhodes Scholar friends, whether

they came from the United States or Australia, or South African countries like Nigeria and

Ghana, or even Ethiopia. And the Rhodes Scholars at Oxford were absolutely a glorious


21

crowd of people. If I had been in Oxford at the time of Bill Clinton I should certainly have

known him, because I knew all the Rhodes types and they were such nice people, and they

were a little bit more mature than the fresh school leaver, and they were more international

because they came from abroad, and so you didn't get caught in too much sort of English

prejudice. Although I do remember that one room just below mine at Oriel where I used

often to drink coffee after lunch, I think it was Philip Durrant's room, there was a young man

who was a friend of his from Lincoln College called Bill Cash, who used continuously to be

sort of sitting there after lunch drinking coffee and one would chat with him. And I was very

surprised subsequently when this gentleman became such a Europhobe. [LAUGHS]

But did the Rhodes Scholars sort of stick together as a group, or was it simply that they were

older and had a wider experience of the world?

I think they mixed fairly well. But you know, you just tended to mix a little bit more with

your age group and people who had seen, as you said, a little bit more of the world. And I

had so many friends somehow in that category, I always remember them particularly well,

lots of them.

I'm sorry, we missed out your National Service, I'd forgotten about that. You went there

straight after school, you did your National Service?

Yes I did, although I didn't need to, because I had a letter in my possession from Oriel

College offering me a scholarship and a place, and with that I could have obtained exemption

until after the date that the National Service was due to end, and so I could have avoided

National Service. However if I had avoided National Service it would have meant my going

up to Oxford in 1957, the same year as my brother, and it was felt in the family that it would

be much better if I went through the same process that he had gone, quite apart from the cost

that it would have been to my parents of supporting two children going up to Oxford at the

same time, albeit with scholarships therefore the cost was alleviated but there still was a cost.

And my father was never particularly well off, being a journalist was not a highly paid

profession, and I felt in all circumstances, and a little bit of schoolboy patriotism anyway, that

you know, you serve the Queen and do it. And I certainly have never regretted having gone

into the Army, it was a very nice experience. As people used to say, Ìt'll teach you how the

other half lives,' which is absolutely true, and I particularly...the first two weeks when you're

in the Army you are completely put in with a total cross section of people from the country,

of literally everybody who was born in July 1938, and included one or two people who had

been to public schools like me but people who had been just everywhere, and really of all

parts of our social system. And one of my most pleasing recollections of that period, of that


22

first two weeks, which is before any selection had taken place, the end of that two weeks one

of the young men in the barrack room with me, and they'd all been sort of complaining about,

you know, the way they were being sort of kicked around by the sergeants, and you know, the

tough life we were getting and that sort of thing, and to me of course this Army life wasn't so

very tough because I had been to public school, I'd been kicked around, I'd fagged and I'd

done all these things, and you know, one just got on with it. And it was such an enormous

pleasure when one of the young soldiers said to me, `You know Martin, you are the only

person in this barrack room who has not complained once in the last fortnight, when

everybody else has been complaining all the time.' And I was so pleased with that

compliment, and it hadn't occurred to me, you know, I didn't complain. One didn't. And so, I

always believe that Disraeli was right when he said, `Never complain, and never explain'.

That's a great line.

[LAUGHING] A difficult one to remember sometimes.

So where did you actually spend your National Service?

Well, because I...it was unfortunate that I was one of the last generation of National Service

men, and people of the last generation I think had slightly less interesting postings than some

of one's friends who had been doing it before, and there was quite a lot of pressure to

persuade you to sign on, to become a regular, even to take a three-year commission and that

sort of thing. But you know, people like myself who had letters from Oxford colleges or

Cambridge colleges giving them admission in the autumn of 1959, and among the various

barrack rooms and that sort of thing there were a number of that, and of course many good

friends were made in that group of people, if you had an admission to Oxford or Cambridge

waiting for you, you were unlikely to want to commit yourself for an extra year in the Army,

even though the incentive to do so was enormous. One was paid approximately twenty

shillings a week at that period, which if you work it out, about £50 a year, and although basic

food was provided, it didn't provide you any of the extra food of the NAAFI, which was so

nice, all the egg and chips and baked beans and things you could get at the NAAFI. Didn't

get you very far there. It got you your basic kit but no other clothes. And so one was really

quite hard up, and if they said to you, `Well all you have to do is to sign on for an extra year

and your salary is quintupled' and all that sort of thing, you know, people got quite interested

in that. And I also remember when I was a junior officer we had to pay people, and you paid

people cash in those days, and you have a pay parade, and as a newly commissioned National

Service officer and therefore getting National Service pay, you were paying the sergeants and

the bombardiers and corporals sums very much in excess of what you were earning yourself.


23

And again, they would say, you know, Ìf only you would sign on, you know, for just one

more year, you know...' [LAUGHS] `You know, you will be in an officers' mess.' Well, one

became an officer after about eight months of various trainings, and, you would be in an

officers' mess with your brother officers, you know, who had all signed on, you know, would

all be living in a much more comfortable way and that sort of thing, could afford cars.

[LAUGHS] But, yes, that was, you know, that was part of the challenge. And we had I

remember two weeks first at Oswestry in Shropshire, it was this first period; then the next lot

of training was on the Welsh coast in Towyn, the Tonfanau Camp, T-O-N-F-A-N-A-U. And

that was about three months of pretty basic training, and I have recollections of being on the

cleaning of the lavatory duty on a day when there was an outbreak of dysentery of some sort

in the camp, and there was therefore sort of blood and excrement in the latrines which one

had to clean up. But having done such a disagreeable and menial job, nothing in life after

that ever seemed disagreeable or menial, and therefore, I've done a lot of menial things over

the years but I've always assumed that, you know, having done that, you know, I could do

anything. And I also believed in the classical precept, I can't remember who said it, `Nihil

Humani Alienum Puto', `Nothing which is human do I consider foreign'. When you've

actually cleaned revolting lavatories and that sort of thing, you understand that, well I

suppose like nurses in hospitals dealing with difficult cases and that sort of thing, you get

used to that sort of thing.

So, just tell me a little bit more about the class system that you saw in the Army in those

days. You talked a lot about the internationalism of the British...

Yes, yes, yes. Well the funny thing, I mean, looking back on it, maybe they thought I was

some horrid little public school snob, I don't know. I remember once one of the sergeants

saying, you know, `We've got all this class system, and people like you who become officers,

and we remain sergeants,' and that sort of thing, and I mean I felt terribly upset by that

because I had thought that I had got my promotions through merit and that sort of stuff, and it

certainly had required a lot of merit in the sense of others of my school friends and that sort

who hadn't passed these exams and stuck in the ranks and so on. But, you know, I suppose

there was, and the fact that, you know, I had been to a very good school and had a scholarship

waiting for me and that sort of thing, I think maybe prejudiced the officers who were

interviewing you in the direction of, you know, further promotion. But somehow I never

thought of it in that way because I, you know, I tried very sincerely on my own and had never

considered myself a privileged person particularly, because I had had to work my way into

Harrow, I'd had a scholarship, I hadn't sort of, I had never been part of the rich stream in

Harrow, as my father had not been either, and I had always been Saturday's Child. Saturday's


24

Child works hard for his living, and that has been my life throughout, I've always had to work

hard for my living.

Good, so, did you finish in Wales, or...?

Oh, there were two months in Wales and then, if you passed the War Office Selection Board,

WOSBY, you then became an officer cadet and were sent to, if you were in the Artillery,

which I was, you were sent to MONS officer cadet school in Aldershot, and you went

through another three-month period of officer training, unless you got relegated, which I was

once, I think I got a six-week relegation, hence...

What does that mean?

It means you had to start again, the officer training, if your drilling isn't good enough or

something like that.

Had you ever failed an exam before?

It wasn't an exam that we failed, it was simply they didn't consider us quite officerable

enough, and, our drill was sloppy or something like that. And, it was a marvellous

experience being at officer cadet school at MONS because it's similar to Sandhurst in many

ways, and you were drilled by sergeant-majors from the Guards, the absolutely, the best

sergeant-majors who of course are frightfully tough but when you look back on, I mean what

a privilege it was to be, you know, taught by people like that. There was an extremely

military and disciplined atmosphere, and you were made to believe that you really were a

soldier and that sort of stuff. And you got punished for bad turn-out or if you blanco wasn't

properly done, if your drill wasn't good enough or you fell over. I remember one weekend in

the autumn I was considered to have done very badly and I was made to spend the 48-hour

weekend, everybody else had a 48-hour leave and I was made to stay in the camp, picking up

leaves. And, it was a job like Sisyphus' stone, it was never completed, because every time

you picked up a leaf another one would fall. And the whole weekend, you know, I was being

made to pick up these wretched leaves. But I wasn't the only one to get relegated, and a lot of

very amusing people were in a similar position. Auberon Waugh was an exact contemporary,

and Paul Betjeman. It was very amusing. A lot of these people, being National Service and

being officer-selected, a lot of them were people whom one subsequently met at Oxford or at

Cambridge, and so, we were having a very tough time and being drilled mercilessly and that

sort of thing, but it was very humorous and one can only have nice memories of something

like that. Well I have one recollection of a bicycle accident. I was on my bicycle and I


25

wasn't looking where I was going, and I bumped into a Jeep, one of the Army Jeeps which

was being driven by somebody, and, in any case this was considered an offence and I was

had up on the Adjutant's orders, and I remember some sergeant giving evidence. `Well I was

walking down here and I heard a bump and I looked round and I saw Officer Cadet Gordon

flying through the air.' [LAUGHING] I was then fined. [LAUGHING] My bicycle had

been ruined, I had suffered personal injury, and then they fined me. [LAUGHING]

I think you're doing very well to laugh about it.

That was being taught one's place.

So, you obviously took it in good part.

Oh yes, of course you had to, I mean, and...

But you could have been simmering with resentment.

Yes well luckily enough, I mean I'm terribly lucky not to be like that, and I've somehow

always sort of got up and dusted myself off in life generally, and I am terribly sorry for

people who simmer because I've seen the simmerers and goodness, how their life is ruined by

simmering.

Yes, I quite agree. But it's hard as you say.

Yes, yes. You know it's almost, it's a matter of your disposition; if you are lucky enough to

have a disposition that doesn't, it's so nice.

Is there anything else you would like to say about the Army?

Oh well, then after that, oh, it was a lovely two years but they were all in the U.K. I was

saying that previous generations of National Service people got glamorous postings to Hong

Kong or at least to Germany, or they went off to Suez and so on, but because we were as it

were not signing up and not getting the extra money, I mean one of the incentives they would

give you was, you know, `We'll send you off to Germany, or to Hong Kong or something like

that, Aden, Cyprus,' but they kept you in England on the whole, our last generation. Some

people got away but... But even so, because I was such an internationalist I saw more of

England when I was a National Serviceman than at any other stage of my life, because after

the period at Aldershot I got sent to East Anglia, to Colchester, and I remember my second


26

summer in the Army, newly-commissioned, was the most glorious summer in which we were

in the delightful officers' mess in Colchester, a lot of very nice people there; the weather was

delightful. The Royal Artillery owned a yacht in those days and you were encouraged to go

sailing on the St. Barbara, St. Barbara being the patroness of artillery, on which I was

extremely seasick when we sailed over to Ostend one weekend with Brigadier Morris who

was a brigadier of our corps, and I looked very stupid as a result. We rode horses, the battery

owned horses, and so we used to go riding at 6 o'clock in the morning and come back to the

mess at sort of 7 or 7.30 and wolf down the most colossal breakfast, the breakfasts of youth,

of well exercised youth, porridge, bacon, kippers, everything, you had such an appetite by the

time you came to breakfast. And then you got on the list of certain military wives in the

region, particularly those who had daughters that they wanted to get off, and so you got

invited for weekends or to balls and that sort of thing. And so there was a lot of sort of late-

night amusement and, you know, very nice social life. And that whole area around

Colchester, you know, all the Constables, Dedham Vale, Lavenham and Long Melford,

Brightlingsea, West Mersea, these marvellous coastal places. Delightful memories of that

summer. Then in the autumn I was posted to Salisbury Plain, to the, I can't remember,

Larkhill Camp, still a very big military camp, and our mess then was one mile away from

Stonehenge, and in those day Stonehenge was not wired up or anything like that and it was,

you know, a modest walk there, and you could actually see Stonehenge from the mess, and if

you go to Stonehenge now you can still see that mess building about a mile away up the hill.

And very frequently one would go down there and walk round these louring stones in the

middle of winter and nobody would be there and it was wonderful. And again it was quite

horsy and we had horses, and, it was only in the Army that I ever rode horses but a lovely

experience. [BREAK IN RECORDING] .....never rode horses, and of course there was a

strong horse tradition with Artillery, you used to drag your guns around with horses, so they

kept the horses on for some time. They can't have them now but in those days we had them.

And they of course, Salisbury Plain was a rather sort of dull place on a winter evening, and as

something of a bridge fanatic I got bridge going in the mess, and most of the officers when I

arrived at the mess were sort of endlessly sitting in front of the television, but once I got a

bridge school going I managed to get about half the officers playing bridge in the evenings,

and `Sergeant Bilko' and other things on television got ignored in favour of a terrifically

successful and a very amusing bridge school, which was very nice. Salisbury Plain, you

know, it's another part of England which is very nice to get to know, and apart from having

had my basic training in Wales, and we also got sent on posts, once to Cumberland, to

Millom in Cumberland, and then one at Epsom at the very end, and you know, I did military

exercises in Brecon in Wales and, quite sent around the country doing military exercises of

various sorts, I have very nice memories of England during that period, and because I have


27

lived so much abroad and been so much abroad in my life it wasn't such a bad thing for me to

have had a lot of England during that period, and Wales of course.

Well you've made it sound like a very good experience actually.

Well it was, I mean it was such...it was a very nice experience. And the strange thing was

that most people treated the experience so badly, and there was a sort of, a `roll on de-mob'

attitude, and people sort of had the diary on the wall of the days to their de-mob, and it was so

unproductive. I mean if you had to do it, you might as well make the best of it, sort of, and

you know, we had a group of friends who, you know, who sort of very much despised that

attitude and had a wonderful time, and you know, I still keep up with some of those people.

Oh well that's interesting.

Mm.

OK, so we really took Oxford out of sync. Is there anything else you want to say about

Oxford before we come on to Warburgs? We covered your sort of academic time.

Yes, I think that's sort of...I mean that's...yes, that's Oxford. A very nice experience. Very

fortunate to have been through it.

End of F5289 Side A


28

F5289 Side B

You were admiring the pictures here on the fourth floor of 2 Finsbury Avenue, and I was

going into a Proustian diversion on the subject and remembering how the old character of the

Warburg executive offices, the ones that I originally remember at 30 Gresham Street, were

these very beautiful antique furniture which Siegmund Warburg and Henry Grunfeld and Eric

Korner liked to buy for the bank, and hence we had these lovely desks and beautiful

cupboards and marvellous pieces of furniture for tables and side tables. This nice series of

Chinese pictures of people working, which I think Mr Grunfeld had originally bought, Mr

Grunfeld being a tremendous collector of Chinese art. And a very exquisite but very classical

collection of furniture, and a little bit of art but mainly of furniture, because it was furniture

that they went for. And it was always, I think I referred to it in my memorial on Siegmund,

the way that they wrote the furniture down to nil in the balance sheet, although actually it was

appreciating in value all the time, it was such wonderful furniture. But it was the ùncles' as

we used to call them, were devoted to, you know, fine furniture, and they believed that they

were the sole arbiters of taste in matters of this nature. Well, some years into my own career

I was for quite a long period the deputy head of the International Department, and effectively

I ran our Eurobond operation which was one of the major cores of the bank, right through the

Seventies, and we had developed into really a rather large room, because we had a very

successful department, we were doing a lot of Eurobonds, and it was very profitable, and

because we were very profitable and there were nice articles being written about it in the

press and all the rest of it, I think that Mr Warburg and the others were quite indulgent

towards us, and I therefore once had the temerity to suggest that I might buy some pictures

for the department. And I had in mind a series of Graham Sutherland pictures of bees, and

just as Mr Grunfeld had bought originally these Chinese pictures of people working, I fancied

having this set of twelve or sixteen Graham Sutherland pictures of bees, because they're busy

bees and they're all the pictures of busy bees doing busy things, and I thought it was a nice

piece of vanity to have these pictures surrounding the old International Department of the

1970s. But when I made the proposal to spend £2,000 on these pictures it was one of the

most difficult negotiations of my long business career, because the ùncles' were very

sceptical that I actually would have sufficient taste to choose pictures which would be

suitable for our offices. And in the end I simply carried it off by force of goodwill, but it was

not something I ever attempted to repeat, and I've never regarded myself as someone

particularly with a lot of taste, but the pictures were warmly welcomed by everybody in the

International Department and we thoroughly enjoyed having them there, and they became a

sort of feature of the Warburgs of the Seventies. But it was a very difficult thing and I

thought they were, for an easier life I could have avoided such negotiations again. I suppose

that was a modest success, but aligned with it in approximately a similar period, one of my


29

major defeats is worth recounting from that period, and that is with relation to breakfasts.

Business breakfasts were something which were just coming in in London in the Seventies,

being brought over by the Americans, and Salomon Brothers, which was then a very

successful Wall Street firm, was noted for its famous breakfasts and they used to invite

people to breakfast and so on. And I thought that business breakfasts were simply wonderful,

I was a very keen young man at the time, and I thought that, you know, it was a really

excellent thing to invite people to breakfast. And there are a whole series of advantages to

having people to breakfast, among them was the fact that, people in the City of London were

still known for being very lazy and not coming into their offices before 9 or 9.30, so if you

invited people to breakfast at 8 o'clock it would impress the client that you were keen and

industrious, and particularly if you invited Far Easterners over who thought the English were

extremely lazy and always on strike and all that sort of thing, it was going to be, you know, if

you brought them along at 8 o'clock in the morning it would be very impressive. And so I

thought that alone was a good reason for having breakfasts. I also thought that being a City

of London institution, and as breakfast in England, one of the nice things about it, I think

Somerset Maugham said that if you wish to eat well in England you should eat three

breakfasts a day. And we had beautiful silver because the ùncles' collected lovely silver, and

we had lovely chafing-dishes and very nice silver salt-cellars, and very nice silver objects for

the dining-room table. Therefore to serve an elegant English breakfast was something which

showed the good side of the City of London, compared with the famous City lunches, which

of course were not Warburg lunches but City lunches generally which had a reputation for,

you know, lots of wine and going on eating and getting drunk and that sort of thing - not at

Warburgs but at other houses - but that we could make our breakfast to be rather a fine

institution. It seemed to me that all the logical arguments in favour of breakfast meetings

were there. And another one was that if a client wants to meet you for breakfast and wants to

meet you in the West End, say at the Ritz or the Dorchester, say you have breakfast with him

at 8 o'clock, the breakfast is over at 9 o'clock, then you have to hit all the rush-hour traffic to

get into the office, get into the City; whereas if you got the customer over to the City at 8

o'clock in the morning you come in before the rush of traffic. I mean everything, all the

logical arguments were there. It was invincible I thought on the subject of breakfasts.

However, I hadn't really reckoned with Mr Grunfeld's interest and interference in this matter.

Of most importance to him, and the firm was still relatively small in size, was that we only

had one cook. She had certain assistants but basically the cooking at Warburgs was done at

lunchtime by one woman who came in five days a week and gave Siegmund and Henry and

people like that a lunch which was to their digestive taste. She did just the sort of dishes they

liked, meat cooked simply and well, some, a little bit of exoticism when it came to the

puddings, maybe a lemon meringue pie, rising a little higher than you'd get anywhere else,

and a nice bit of smoked salmon, and, the food was very much to the taste of the elderly


30

ùncles' that controlled Warburgs in those days, and anything which might remotely upset the

cook was not to be contemplated. And if you were to say, `But I do not need that cook, I will

hire a different cook who will come in and do the breakfasts, and will leave it all clean by 9

o'clock, by the time the cook proper arrives to do the lunch for the ùncles',' that was not good

enough because the cook didn't want anybody interfering in her kitchen. And whereas access

to the people at the very top of the firm might be difficult for some people, it was not difficult

for the cook, she could walk straight into Mr Grunfeld's office and complain about the mess

that Mr Gordon was causing in the kitchen by insisting on having these breakfasts. Then

there was the famous story about, well we were told that we could continue to have the

breakfasts if they were made simpler, and there were no bacon and eggs or anything, all that

sort of thing, all that was abolished, but we still had the silver polished and so it was still

quite nice, although there was just toast and croissants and coffee and a little bit of orange

juice there. And then, I was giving one of these breakfasts and Peter Darling, Peter

Stormonth Darling, who subsequently was Chairman of Mercury Asset Management, you

may have interviewed him, if you haven't you should, you would find it amusing to do so,

Peter Darling ordered a banana, and the waiter, perfectly happily, brought the banana. But it

came to the notice of the cook that something as exotic as a banana had been asked for, and

this was reported to Mr Grunfeld, and the story of Mr Darling's banana became the straw that

broke the camel's back and I was told that no breakfasts would forthwith be served.

[LAUGHS] That was the end of breakfasts at Warburgs, until much later. And both these

stories I've told, about the art and about the breakfasts, by the mid-Eighties, by Siegmund

having passed on and the firm having become much bigger and Big Bang and so on, all these

things, you know, happened, so that Bob Boas was able to come in and order lots of pictures

and go to art galleries, so that this executive floor here is surrounded with some very nice

pictures, and if you come up to our seventh floor at 8 o'clock in the morning you will find any

number of breakfasts being hosted, both internal and external, and so on. But in the mid-

Seventies when the old rule still prevailed I was soundly defeated on what I thought was a

totally logical and utterly convincing argument.

Great stories.

Mm.

Well let's come back to your starting with Warburgs in '63. You'd looked at other merchant

banks, hadn't you?

Yes I had.


31

Take me back to that.

Yes. And I think I told you a little bit last week about the impression of going round being

interviewed at other merchant banks, and I think I said to you that other merchant banks, the

first question they asked you was where you had been to school, and although I had been to a

perfectly respectable school it annoyed me that that was the first question they asked, it was

such a sort of class-conscious question, and I had had such an interesting life already, and I'd

been to so many places, and I'd served in the Army and got a degree at university and all that

sort of stuff, I felt that, you know, asking me, you know, checking out whether I was at

Harrow, Eton or Winchester, which was all they really wanted to know, was not a very nice

question. And I also felt that the other firms were still very hidebound in their Englishness

and that they didn't really look overseas in a particularly interesting way, and their attitudes

were I thought very insular, very provincial. Whereas the moment you met Siegmund

Warburg, or walked along the corridors of Warburgs and met people like Mr Grunfeld or Mr

Grierson or Mr Whitman or Mr Korner, all these people who were on the third floor of 30

Gresham Street at that period, the moment you walked there and felt the marvellous

international atmosphere and you talked to Siegmund Warburg and saw his extraordinarily

humane and liberal and philosophical attitude towards life and the very borderless and

unprejudiced impression that he gave, you couldn't possibly consider working for anyone else

if you could get the people here to accept you. And so one got on to one's persuasive form to

do so. [LAUGHS] One of the periods in life when you really tried hard to get something.

Well tell me more. How did you?

Well, the other thing was that Siegmund Warburg said at the time that he liked people to

come who had either a legal or an accounting background, and that most people who came in

were either qualified lawyers or qualified accountants, and he recommended me strongly to

go over to Peat Marwick and become a CPA. I wasn't at all keen on that because I was

already about to be 25 years old after four years at Oxford and two years in the Army and I

didn't want to hang around any more in a sort of student-type existence, and I told Siegmund

Warburg that I was very keen to join straight away, and that I would do some accountancy in

my spare time, which I did. And so he agreed to take me on, and I think I told you, or may

even have written in my memorial that I remember Siegmund calling Mr Licence, the

Personnel Director, into the room and saying, Òh Mr Licence[ph], what do we pay young

people like Mr Gordon when they join us at the present time?' And Mr Licence said, Òh,

£720 a year.' And Siegmund Warburg then sort of started looking at a list of something or

other and said, Òh, but I like my young people to be rather wealthy. We will pay Mr Gordon

£840 a year.' LAUGHING


32

Wonderful.

Of course Mr Licence was outraged. [LAUGHS]

Yes he must have hated you then. Well that's great. And so what were your first

impressions?

Well, Siegmund said that I would join the Investment Department, and the Investment

Department then was a relatively small department, there must have perhaps been fifteen

executives maximum, which included Milo Cripps, subsequently Lord Parmoor, and Nic

McAndrew and Andrew Smithers, and Leonard Licht, and Peter Chudleigh, and dear Mr

Sharp, who died last year at the age of 96. There are so many stories about Mr Sharp, they

just go on and on.

Give me an example.

But my personal story that I liked with Mr Sharp was, once I went into the big Investment

Department, and his desk was the first one you came across, and he was wearing a fairly

bright tie, and I said, Òh Mr Sharp, what a nice tie'.' And he said, Àh! If you notice a

banker's tie, he is wearing the wrong one.' [LAUGHING]

That's marvellous.

But there are endless stories of Mr Sharp, and Mr Sharp goes right back to the pre-war Berlin

days and that sort of thing. He only joined Warburgs after the war, I think in about 1948, but

he was known to some of the founder directors in those very early days before the war.

Did he tell you about those early days?

I had occasional stories from him. Just as Mr Grunfeld sometimes talks about the Thirties

and when he got arrested by the Gestapo, it's quite a well-known story.

Would you like to tell it to me now?

Well, all I can...I mean it's a very simple tale. Mr Grunfeld was arrested by the Gestapo, and

he was at that time in, say, 1935 or '36, a very successful young businessman in Germany, it

may have been a year or two before that, it probably was, and had surrounded himself with


33

many fawning friends because of his success. And he said that he was only in prison for 36

hours but what was so interesting was that after he was arrested, how all his powerful friends

somehow disappeared and were not somehow at his disposal, and were obviously afraid to

put up their hands to help him. And Mr Grunfeld has always said that that has been one of

the formative experiences of his life, and he's had a sort of basic distrust of human nature and

great caution about people's so-called affability ever since then, and that that has helped him

as a banker over the years, but has given him a healthy caution with regard to all sorts of

people who come up with very fine stories to try and persuade the banker. But Mr Sharp,

there are one or two pre-war stories but I really can't remember. He only died I think about

last year, aged 96, and he was very lucid until the end, and I used to go occasionally to visit

him in St. John's Wood and have tea with him, and I do remember some of the late

conversations that I had with him, including the last one I had with him was when we were

having our difficulties after the aborted merger with Morgan Stanley, and Maurice Thompson

had left us and Deutsche Bank was indulging in some rather wholesale heavy chequebook

recruiting from Warburgs. And at the time we had been mandated, and are still mandated, to

play an important role in the Deutsche Telecom privatisation, which still hasn't taken place

yet, I think is due to take place in November of this year, because it's something that's been

taking some time to work on. One of the reasons why Deutsche Bank were so keen to hire

people away from us was, they wanted people on their staff who understood what it was all

about, and they really didn't have anybody, and so they, you know, pinched people from us.

And Piers von Simson, who has since left Warburgs but had been with Warburgs for many

years, Piers went to one of the drafting meetings in Germany for one of the big meetings with

all the bankers and lawyers there, and in front of the assembled lawyers and other bankers he

made a formal complaint about Deutsche Bank's pinching of our people and saying that our

ability to staff it had been somewhat affected by Deutsche Bank's extraordinary behaviour.

And this got into the press, and some people were saying, well, why is Piers von Simson

complaining in that way, it's, you know, just crying out of school sort of stuff. But Mr Sharp

wrote him a letter saying that he very much supported Piers von Simson for saying this in this

way, and that it was very unseemly of the Deutsche Bank to behave like this; they had never

done so in the past, and it must be a very different Deutsche Bank that was doing this sort of

thing. And Piers von Simson had been extremely pleased to receive this letter from this 95-

year-old man, and had written back a very very nice letter by return. And so when I saw

Piers at the directors' meeting the next day I said, you know, `You've no idea what pleasure

your letter has given this old gentleman.' And, in any case, when Mr Sharp was telling me

this story he said that he had actually joined Warburgs from Singer & Friedlander in about

1948, and when Siegmund and Henry decided to hire him they actually went round to the

Hochs at Singer & Friedlander to ask for his release in the most courteous formal way, and

they knew it was going to be all right and that sort of thing, and so Sharp moved over. But


34

the politeness which existed between firms in those days, Charles Sharp was comparing with

the sort of way in which people were scalping in present times. I certainly belong to a period

when that sort of courtesy used to be observed, and I remember the first Japanese that we

hired from other Japanese banks, and the immense trouble we took to go around and observe

the courtesies and that sort of thing; of course that's all completely disappeared. But

Siegmund Warburg was a tremendous admirer of the Deutsche Bank, and he used to

consider, and I think I said in the memorial, that there were two or three really first-class

banks in the world, Deutsche Bank was one of them, Morgan Guaranty was another, J.P.

Morgan, and Paribas was another. And, I think he also regarded the Stockholms

Enskildabank as one such bank, and the Bank of Tokyo he regarded as very special, and

rightly. And that the really first-class firms were so first class; it's very difficult to define

what made a first-class firm, or indeed to define what I say in my last paragraph of my

memorial about what a sense of standing means, but it's a very high quality thing and it's

something you learn after a lifetime in the business and so on. And so, Siegmund had a very

close relationship with Dr Abs, who was the leader of Deutsche Bank in all the post-war

period, and they very much respected each other, and Hermann Abs and Siegmund Warburg

are the two perhaps greatest bankers of the second half of the 20th century. And so, for

Deutsche Bank to behave in the way they've done in the Nineties, to anybody who used to

know what the Deutsche Bank was, and access to what the Deutsche Bank was, is now very

much available because the Deutsche Bank has sponsored this enormous biography of the

bank which has come out in the last year and been translated into English, and I think it costs

you about 50 quid or something, but, it's quite a light little volume you know. [LAUGHS]

And the Deutsche Bank has gone very honestly through its, what happened in the war, and

how it collaborated with the Nazis and that sort of stuff. But the Deutsche Bank was just

such an elegant, and it was always being held up to us by Siegmund as bank that did things

properly, and the behaviour of Deutsche Bank people was always regarded, you know, as

impeccable. And it was, I mean they were very particular, Deutsche Bank, and we had, I had

a lot of contacts with them in those days, and it was always impeccable. And so, sort of the

antics of the 1990s, you know, Charles Sharp was absolutely right to draw my attention to

them. And the other thing I particularly remember in a conversation over tea with Charles

Sharp in St. John's Wood referred to Latin America, and when I was a young man in the City

there was a fair amount of built-in scepticism about Latin America because of the experience

that City of London firms had had before the war and before the wars of Latin American

defaults, and Brazilian railways that never paid their debts and numerous other Latin

American experiences. And then during the Seventies when there was this enormous

recycling of money going on as a result of the oil crisis, the huge wealth that the Arabs had,

the Arabs were depositing this wealth mainly with the American banks and they were

recycling it with colossal loans to Mexico and Brazil and Argentina and everything. And the


35

theory was at that time, was that sovereigns wouldn't default, and you could lend any number

of hundreds of millions of dollars to these countries and it was going to be all right. But there

were still quite a number of people in London, including the ùncles' here, who had a very

sceptical attitude towards Latin America, and who were not about to lend or indeed to

sponsor loans for any Latin American country. And Siegmund and Henry and that sort of

thing were keeping that at a very firm distance. And, in 1982 Mexico had its famous first set

of problems, or first set of problems of the modern age, and the prudence of some people in

the City of London with regard to Latin America was proved to be fairly justified, and the

American banks, and the Japanese banks who had followed the American banks, all lost a lot

of money, and I think on the whole London banks hadn't lost as much in Latin America,

although I don't have the figures, but certainly Warburgs had kept its distance. However, you

know, the Eighties went through into the Nineties, and the Latin American equity market

started getting very interesting, and indeed they're very popular at the moment, and now we

have quite a number of offices of our enlarged group in Latin America and a lot of activities

going on, and Argentinian issues and so on. But Mr Sharp about two years ago when I called

on him in St. John's Wood said, [WITH GERMAN ACCENT] Òh Mr Gordon, I have been

reading some articles about Warburgs investing in South America, and I really hope zat zis is

not going too far, because zey have failed to pay zeir debts in the past, and zey vill fail again.'

[LAUGHING]

Marvellous.

`Please do not do much business in South America.' [LAUGHING]

Wonderful.

And so I came back and sent a little note up to Scholey saying... [LAUGHING] I don't think

it affected what we were doing at the time, but it was very delightful. But, Siegmund

Warburg was a man of principle in all sorts of different ways, and he had emerged from the

dictatorship of Nazi Germany and he did not like backing dictatorships, and I remember the

very strong attitude he took towards, for example doing business with the South African

Government. I mean he wasn't even very keen on the South African private sector but that

was more or less all right, but he absolutely refused that our firm should even underwrite

somebody else's loan in which it carried guarantee of the South African Government. He was

totally opposed to apartheid all through the period of apartheid, and kept our firm very much

away from it when all the other London firms were milking the South African economy very

comfortably thank you, and, total disapproval of that.


36

Interesting.

And he refused that our firm should have anything to do with the Soviet Union. He said that

Mr Kruschev says at a public meeting that he will bury the English and that he will destroy

capitalism; we are not going to do any business there. Of course, in those days one was a

much smaller firm, and you could choose a little bit where you wanted to do business, and

through his experience with Nazi Germany and that sort of thing he simply wasn't going to

support people he considered to be of that ilk, and he took a most principled stand on all these

subjects, and it was a great pleasure to see it. His principle stand I remember also at the time

when a lot of people were being kidnapped and there were a lot of hijackings going on,

Middle Eastern terrorism was at its height, and.....

End of F5289 Side B


37

F5290 Side A

[This is the third tape with Martin Gordon.]

Sorry to cut you off in the middle of your story.

Oh, I was rather sort of digressing so it doesn't matter. I was saying how in the middle of the

hijacking and general Middle Eastern problems Siegmund Warburg circulated a note

internally to say that if he should be unfortunate enough to be kidnapped and demands were

made for ransom, it was his absolute instruction that the bank would be nothing to release

him. It was totally against his principles that any giving way to terrorists should be done.

Interesting.

And as so often in Siegmund's life, he circulated this note at a particularly sort of poignant

moment, and it had an enormous effect on sentiment within the firm at the time. I'll give you

another example of him doing something in that way, and this is a public thing. In about

1981 when Mrs Thatcher was at the most difficult stage of her Prime Ministership, before the

Falkland crisis and that sort of thing when everybody was criticising her and her popularity

ratings were at their lowest, he wrote a letter to the `Times' which the `Times' published as its

leading letter, saying basically that there was no alternative to what Mrs Thatcher was doing;

she had the courage to take the difficult decisions and she was being criticised for her

courageousness, and that anybody who has any understanding of what the problems are and

the only possible way to reach solutions, should draw the conclusion that Mrs Thatcher was

doing the right things. Of course Mrs Thatcher was enchanted to get such a letter, but you

know, what Siegmund said in 1981 of course became established thinking, you know, three

or four years later, before Thatcher herself peaked and started declining in the late Eighties.

But it was again, Siegmund had chosen an extraordinarily good moment to sort of draw

attention to that, and he was constantly like that.

Well that's all absolutely fascinating. I'd now like to take you back to where we started with

Mr Sharp on your first time in the Investment Department.

Well I never got into the Investment Department, because, although I was hired to join the

Investment Department I never spent a day there in my life, which is, you know, one of those

strange ways that life goes. But, Siegmund said after that interview that I would go into the

Investment Department, and, `Mr Licence, please put Mr Gordon in the Investment

Department when he joins us in six months' time'. And so, when you arrived at Warburgs


38

with my sort of lack of knowledge, I was asked to do a one-year training in different

departments around the firm. There was no training scheme as such in those days, you know,

in this tiny firm that we were, but I spent I think three months in the Cash Department, three

months in the Stock Department, three months in the New Issues Department. Well that took

me through from September till the following summer. And I was told that it would be very

good for me, and that I would learn a lot about how the bank worked through being in the

Cash Department, seeing how the money flowed; being in the New Issues Department, doing

the clerical side of the new issues; the clerical side of stock, and so on. And it certainly was,

I mean it gave me a marvellous, basic education, working with the excellent clerks that we

used to have in those days, still do but they were very excellent people, very nice people, and

very considerate, they would always give you time to explain things and so on. And so those

first nine months were an extremely interesting training period. And I worked very

diligently, I would always be there very early in the morning, and nearly always the first

person to arrive, and I was very keen. And, I think you know the Gilbert & Sullivan song, Ì

polished up the handle so artfully, and I am the ruler of the Queen's Navy'. And, you know, I

did my best to fill in the books very well and generally to learn as much as possible. And

occasionally during that first year there would be a request from upstairs for some junior to

come up and help on some menial task, and I told you I am very good at menial tasks, and,

none too menial for me, and so I would have to read some proofs of some issue we were

doing, or prepare some lists or whatever on some, you know, quite interesting transactions

going on. But, any case, whenever a call came for a little help like this I was always

available, particularly if it was early in the morning, someone screaming for assistance at

8.30 a.m., you know, I was there. And so I managed to get into the good books of some of

the sort of young managers on the third floor.

But were you doing it deliberately, or were you enjoying it all sort of as a challenge?

Well I enjoyed everything, I've enjoyed everything in life. I don't always say that but when

you look back you...

I'm asking how ambitious you were, even at that age.

Oh, well, I would not describe myself as violently ambitious, because a lot of ambition means

treading on other people's toes on the way up and I frankly don't like doing that, and I don't

believe that my career has involved that in any significant way. And so I was ambitious but I

never wanted to make the compromises which so many ambitious people make. You know,

other people may think differently about me but I don't think I did. So, I mean I was very

keen to get on, and very keen to get the experience, particularly the international experience,


39

and so I was very helpful, and I think I had a reasonable idea of what was wanted, and you

know, managed to get it done always very quickly and so on. And so it did mean that the

people in the small corporate finance of Warburgs of those days, which was strangely enough

called the Syndicate Room, I don't know why, but that's what it was called, I think it's a slight

Americanism or whatever, but the heart of our old corporate finance was there, and it was

those people who asked me to do things for them. And after I had been in the firm about nine

months they put in a requisition for me and so I went up, you know, within a year of joining I

was a junior in the Syndicate Room or corporate finance team, and once I had got there I was

never moved away, and the Investment Department was quietly forgotten. And the

Investment Department has since risen to become Mercury Asset Management, one of the

most successful companies in the City of London, but I never spent one day with them,

although I always got on with them very well and cooperated with them tremendously. It

broke my heart when they separated from us at the time that Swiss Bank took us over. I

remain a very large shareholder in Mercury Asset Management, because we got shares in it

when the separation took place, and continue to have cordial relations in respect over there,

but I never actually spent a single day amongst them.

Could you just go through the structure of the bank at that time. I mean, we've talked about

the Cash Department, Stock, New Issues and the Syndicate Room. Tell me what other

departments there were at that time, in '63.

It's very...yes, this is early in the life of the bank. The Syndicate Room is on the third floor of

30 Gresham Street, and that is also the basic executive floor, and on it you have Siegmund

Warburg himself, and Mr Grunfeld, and you have a little sweat-shop in between with two or

three desks in it in which at that period you would probably have John Nott, who

subsequently became a Member of Parliament and therefore left us after he became an MP,

went off to be Cabinet Minister during the Falklands War and Chairman of Lazards, one of

several chairmen of Lazards we seem to have produced. But he would have been in that little

sweat-shop in between. Also in that sweat-shop you would have had Piers Dixon, I think his

father or uncle was Sir Pierson Dixon who was famous a diplomat. But, I remember that

Piers Dixon got, I musn't tell too many tales out of school, but he got sent to New York on a

secondment for two or three months or something, and I think articles started appearing in the

press about elegant parties which he was present at, sort of the local `Tatler', and something

of that got back to London and, he didn't seem to last much longer after that. You're not

meant to have a social life when you work for Warburgs, at least you weren't in those days. I

remember when David Scholey joined he was put into this little room between Siegmund and

Henry, but that was a year or two later, it was 1965 that David came on board, and, with

Arthur Winspear, who I've mentioned, who used to be Lex, was in that room and constantly


40

being asked by Grunfeld to do things. At a later stage I was in it myself, and had quite an

interesting time looking after these two gentlemen.

Was it a sort of hothouse for the, I mean they were keeping a special eye on you, do you

think?

Well, yes, but I mean you were there because you were thought to be useful.

Sure.

You then had a bigger room which is the old Syndicate Room with about ten desks in it, in

which you would have had, in that sort of 1963 people period, Spencer Seligman, otherwise

known as Bobby Seligman, who is still alive and one of the Seligmans of Seligman Brothers

that was taken over in 1957 by Warburgs. You would have had Bernard Kelly, who was a

lawyer from Simmons & Simmons, but who crossed Siegmund fairly firmly at various stages

and therefore went off to Lazards at some stage. Peter Spira would have been there, or here, I

can't remember exactly, but of course, you know Peter Spira very well. And you would have

had Michael Bentley, and he left us when Ian Fraser of Lazards asked him to go and run their

merchant bank in Seoul, Korea, which we had declined to do when the Koreans asked us

because we didn't have anybody to staff it, and so then Ian Fraser pinched somebody from us

to do it. There was a guy called Donald Warburg who wasn't really a Warburg, and, nobody

knew quite whether he was or wasn't, but I mean he was only related by adoption I think to

the Warburg family. Robin Jessel, who is still around, had a nervous breakdown in the mid-

Sixties and disappeared for some time but is now back sort of in the heart of things. He's a

son of Sir Richard Jessel who was one of Siegmund's original backers in the 1930s, and

because he was relatively wealthy he was able to disagree with Siegmund occasionally and

get away with it.

Now you say because he was wealthy; did that really make such a difference?

That was said, that was said at the time. I mean I've said my reasons for being rather careful

about disagreeing with Warburg were more that he had the irritating habit of being right.

[LAUGHS] Mr Licence was in that room at that time, I mentioned him as the Personnel

Director; he didn't last long, he got involved with a transaction which went rather astray, and

he didn't survive. Then there was David Horne who went off to Glyn Mills I think, or

Williams & Glyn's or whatever it became, that's now absorbed into something bigger. And a

guy called David Thompson who was a very competent accountant, I don't know what

happened to him, he didn't last all that long. There was quite an interesting crowd. But


41

basically all, the new issues, the Eurobonds, the debentures, the M & A deals that were being

done by Warburgs, were all being engineered in this room. And you would have Siegmund

and Henry in those rooms; you would have Mr Grierson in another room; you would have

Geoffrey Seligman in another room; you would have Frank Smith, marvellous Frank Smith,

in another room, a real key to all the U.K. deals; Billy Straker-Smith, although he didn't last

very long, in another room. But this room here was, you know...

The hub.

Goodness, it worked hard. Edgar Koerner, who was a nephew of Uncle Eric Korner who was

around the place then. '63, we still had the liaison with Kuhn Loeb in New York, although

that broke up with big rows with the shifts about a year later, but in those days Kuhn Loeb

people were on our board, we were on their board, six-monthly board meetings in New York

and London and that sort of stuff and, you know, a very effective partnership it was, when it

was working well, as it did work very well in the Fifties and was certainly a key to building

up the Warburg business, a very strong link on the other side of the Atlantic.

So tell me about Frank Smith, you just mentioned him. What did you think of him?

Oh, a marvellous accountant, corporate financier. Extremely, I mean a very clear thinking

and speaking person. Lovely anecdotes. There was a gentleman called Lord Gladwyn who

had been Sir Gladwyn Jebb and had been the British Ambassador in Paris, and I think, and

therefore very...and he was quite strongly Common Market and that sort of thing, and I think

that at some stage Siegmund was very impressed with Sir Gladwyn Jebb and invited him to

join as a non-executive director. But once he had joined everybody realised that he was

useless. And there was an occasion when Lord Gladwyn had been brought into a signing,

and Lord Gladwyn said, `What is this I am signing?' And Frank Smith had said, `Yer name

Lord Gladwyn, yer name.' [LAUGHING]

Marvellous.

It was cruel but it absolutely... [LAUGHS]

Did you, I mean what was your relationship with Frank Smith at the beginning?

Well I say, he was somewhat sceptical of me at the beginning because I was not a chartered

accountant. Although I had taken, you know, quite a lot of evening classes in my first year

when I still had evenings, after I got into this room, evenings ceased to exist.


42

Well I was going to say, when you said you were going to work in the evenings, doing your

accountant...

The night club of 30 Gresham Street, I mean it was, you know, you worked until all hours,

you know, when other firms did not, and you know, we worked very hard in there, and it was

inconceivable to carry on with evening classes after my first year, you know, with that crowd.

But then you really got on the job, training far superior to anything you learnt in the

classroom.

Are you suggesting that other merchant banks didn't also work very...?

Absolutely I am, yes, I mean if you remember what they were like in the Sixties, I mean, they

were all off by 5 o'clock, and trying to get anybody before quarter past 9 in the morning or

after 5 o'clock in the evening, and I mean the clearing banks this practically continues to

survive even to this day. But, oh, I mean it was... The Japanese started arriving in the sort of

early, mid Sixties, and they kept the same sort of hours as we did, and I always used to say

when I came out of the office in the evening, the only other people I would ever see would be

Japanese bankers, you know, they're famous for their late hours. Of course by the Eighties,

particularly Big Bang onwards, everybody was working, you know, very long hours in the

City, and Warburgs was no longer exceptional. But I mean it used to be known as the

nightclub of King William Street, it was in King William Street before Gresham Street, and

the lights continued to burn, and things would just carry on and on and on. And you know, it

was the secret, we would have everything, the next day when it arrived would always be

prepared for, and you were always a few steps ahead of everybody else, you would always

have been in the office for an hour or two before any other bankers came into the City. Of

course you were ahead of them. And, you know, I remember when Japanese bankers came

along and felt that they didn't, you know, you could ring Warburgs at 7 p.m. and still talk to

competent executives, it was rather nice, and of course we got all the Japanese business in the

early days.

So tell me about the ùncles'.

I was talking about Uncle Frank, I mean not that Frank Smith who was really an Uncle, but,

you know, I hadn't quite sort of finished him. I mean he was a very very good accountant,

and was on all the, working for Uncle Henry in a lot of the original big takeover deals and

that sort of thing, and would put the current story into figures very fluently, and his

memoranda were always frightfully clear and that sort of thing. It was all pre-computers,


43

everything was done by hand, all little machines that went round, you pushed them round

yourself, and you used to make a lot of clicking as you were doing your sums. And, you

know, I learnt from him how to prepare very concise memorandum. I did some pretty bad

ones before I did some good ones, almost got sacked.

Almost got sacked?

Almost got sacked, yes, at one stage, I produced a horrible memorandum. We all make

mistakes.

Whose job would it have been to sack you?

Oh well these things were not taken individually, it was a sort of group sort of... There was a

sort of... In any case, I think that Siegmund intervened and...

He had a soft spot for you?

Well, obviously my handwriting report was good or something. In any case, you know,

before I had sort of got the technique, you know, I had one or two uncomfortable moments.

But I'm sure Siegmund did intervene, but I don't know how the argument had gone and that

sort of stuff, but in any case I survived.

Did he sort of haul you up in front of...?

No, it was all done behind things and that sort of thing; you only heard afterwards that the

debate had taken place.

Oh dear.

Oh, frightfully uncomfortable. But, at any rate I survived, and then I got quite good at it, and

to the extent that Frank Smith who had been very sceptical about me brought me into all his

interesting deals and so I learnt some very interesting bits of corporate takeover business and

that sort of thing in the U.K. But then I sort of gradually got taken away from that area onto

more international things, and you know, I was on more and more Eurobonds, I was more

and more in the aeroplane. I got sent to America more often, and then I got involved more

and more in the Far East and that sort of thing, till eventually I ceased to be domestic at all

and was totally international, and then over the years more and more Far East and so on. So I

sort of left that sort of area around him as the years went by, and people who stuck in


44

England more did that business. But I was very lucky to learn it from a master like Frank

Smith, and, I mean he was absolutely excellent and very very particular. Well everybody was

very particular, I mean you know, it's legendary at Warburgs that a comma being wrong, you

know, was the end of the world and that sort of stuff. And you know, you just, you were

taught to be very very particular in every respect, and you know, it was jolly good discipline.

I'm trying to marry up the impression you're giving me with people like Frank Smith being

helpful to you together with the fact that there was obviously an enormous turnover in staff

and if you didn't measure up you were out at once.

You can't...I mean there was at any rate, and I was saying, Mr He fell off, Mr He fell off, Mr

He fell off; never a Mr She. [LAUGHS]

Well I was going... I'm coming on to that.

Well that's a completely different subject which I of course can make comments. But, there

was in fact a tremendous steadiness and continuity at Warburgs.

Really?

And you know, he went off to Parliament, he went off to Lazards, he went off...but, you

know, just even now, if you read the newspapers now, you would think that Warburgs had

totally disappeared, until you start walking through the passages and see the number of

people who are still here. There's a lot of people, particularly the younger ones, who are still

around, and excellent ones. I mean you would think we hadn't got anybody of talent left from

the way that Deutsche Bank and everybody has been running around pinching staff and so on.

Absolutely untrue. We were always such a hothouse of talent, and the Uncles, you know, if

they came across an excellent person, they would hire him. Grunfeld used to say it was like

selecting a tie; you're not particularly looking for a tie but if you see a nice one you buy it,

and you know, nowadays if you're trying to hire somebody, you know, `Well is it in the

budget for your department for you to hire this person?' and that sort of stuff. And, you

know, that sort of thing. It drives me absolutely crazy. If you find a bright young potential

for our business, you should buy the tie, it's a nice pattern, and get it into the firm, and you

should have a nursery. I mean I think Paribas used the word nursery. You put them in a

nursery and then see what they do. If they're no good, out they go, and that applied to a

number of people, but if after a year you had shown that you had the talent, you're there, you

stayed. I remember, I don't know whether I mentioned it last week to you, but there was a

lovely thing called the Èconomist Financial Review', which was a subsidiary of the


45

Èconomist', which was edited by, do you know Marjorie Deane? A marvellous dean of her

profession, and an old economist hand, and she produced this thing which talked mainly

about the capital markets and some of the people and that sort of thing, and she was always

chatting with Mr Volcker and other sort of very high-flying financial people. And she did an

article once about all the - or it was done in her publication - about all the changes that were

going on in the City of London, and we're talking now of the sort of post-Big Bang, sort of

relatively late Eighties, I can't remember whether it was pre- or post-crash, but you know, the

colossal changes that were going on in the City of London, and American firms were

withdrawing and old firms were disappearing and that sort of thing, and she went on and on.

And then at the end of her article she said, Ànd now we come to S.G. Warburg, where the

internal telephone list changes so infrequently.' I'll never forget that expression. `Where the

internal telephone list changes so infrequently.'

Wonderful way of expressing it.

And, of course, you know, after that it all started to change. But we did manage to maintain

this extraordinary continuity. Obviously things like Big Bang made big changes and that sort

of thing, but even for some time after Big Bang it was still immensely solid, and, partly

because Rowe & Pitman had the same quality only in a different way, and that had people

who had been there, you know, you would go to the tea party for the 25-yearers and you

would find the room packed with people, and certainly when it came to dealing in the Far

East, which became over the years my speciality, and dealing in Japan where, lifetime

employment and all that sort of thing. I mean one of the things we used to say, well of course

if you do business with Warburgs you'll be dealing with the same people, look at us, you

know, Mr Smithers has been here for 20 years, Mr Gordon has been here for 25 years, Lord

Roll has been here, you know. Well it was true, we had all been there for a long time, and

people liked dealing with a firm where they felt they were to get tremendous consistency.

And in the post-SBC merger period, people like myself, as I mentioned, have been

appreciated by our new SBC masters because we do carry this continuity, and if they can

keep that continuity in the expanded firm, of course we're going to get lots of business from

it, and you know, in the Far East generally it was enormously appreciated that we had this

continuity. And although we were the youngest of the merchant banks in London, of the big

ones, they all preferred to do business with us because we gave, I mean such solidity, as well

as the other Warburg qualities which I've described in my memorial.

Well let's come back to the other three Uncles, these three Uncles.


46

Uncle Eric, Uncle Henry and Uncle Siegmund. Oddly enough, Uncle Henry is the Uncle

with whom I had least to do over the years; that means I didn't have, not negligible, I mean I

had a lot to do with him over the years, but I was always, I was less in his room and less

doing transactions with him than I was with Siegmund Warburg and Eric Korner. And, I

mean, Uncle Henry, Mr Grunfeld, was a corporate finance wizard and a financial and an

accounting wizard of, you know, an amazing extent. I think that, I'm talking of stories of

Uncle Henry, when it came round to the annual results and the preparation and presentation

of the accounts of Warburgs, Mr Grunfeld sort of went off into a room for weeks on end to

think them through, and to make recommendations to Siegmund Warburg and so on, and that

sort of deep thought with regard to our finances and that sort of thing was one of the sort of,

the keys to, you know, building up the really solid firm that Siegmund wanted to build. And

the sort of deep analysis and philosophical thought and that sort of thing was a rather rare

beast as he used to see it. And Grunfeld sort of maintained his interest, and he still does, but

of course in the way the thing had expanded over so many areas and different.....

End of F5290 Side A


47

F5290 Side B

.....and things like people's salaries and so on, never interested me, and I know that you had to

have salaries and you had to do that sort of thing but I'm afraid I've always considered that

very boring and I've always been much more happy with transaction, with clients, and out in

the field. And so, he was always the anchor of the firm, the person who stayed at home,

didn't travel and looked after the shop, and my goodness you need such a person in any major

firm.

Of course.

Whereas Siegmund and Eric were the, you know, the international genii and so on. I think I

mentioned to you that my contact was originally with the Korners, because Tony and Peter

Korner, or Peter and Tony Korner, were at Harrow with my brother and me, and I had this

impression from Tony that Warburgs was a violent and back-stabbing place and that it was

the last place I'd want to go to, and it was only after I actually met Siegmund Warburg that I

felt that I really had to join Warburgs, and discovered that in fact it was a very nice place to

work and have very thoroughly enjoyed working in such a place, and for such brilliant

people. And, Uncle Eric was not all that easy to get to know, and it took me some time to as

it were get onto his wavelength, but...

What was his wavelength, what were his qualities?

Well, international markets were very much his thinking, so he was very interested in what

we were doing in the Eurobond market, and when he felt over a period of time that I had

acquired the feeling of the market, and when he felt that my judgement on transactions was

right, then he would give me tremendous support. And I found that even when he was in his

eighties he would have a market touch which was absolutely impeccable, and if I explained

something to him he would see at once what I was meaning. And once he was convinced, he

would tell Siegmund, and, `Mr Gordon is right on zis matter,' and Siegmund would totally

support you, and you would go ahead with all the risks that that involved. And you know, I

can think of very few occasions when we got it wrong. You know, I relied upon him also, I

mean you know, his market views were very relevant to the final judgement that I would be

taking, but when I had taken the final decision it was nearly always right; I don't want to

seem boastful, but I mean we did manage to get a lot of deals successfully done. But I relied

tremendously on his market judgement to argue it through, and then his telling Siegmund it's

OK, and then you go ahead and do it, and it was very very interesting to be able to work in

this way. You know, these days people say, Òh well the market was so small in those days,


48

you know.' It certainly was not, I mean it was a very competitive and a tough market, and

people were falling on their faces all the time and losing packets of money.

Can you remember an occasion when you suggested something that Eric Korner thought was

not a good idea?

I can't particularly, but there would have been, I mean there would have been plenty I think.

Oh well... [LAUGHS] Well when one's young one makes a lot of mistakes.

Well of course, that's how one learns.

And has a lot of errors of childhood.

Your whole attitude to life is one of trying things, and I would expect you to reach for the

stars and sometimes they wouldn't quite be where you thought they were.

Oh indeed, indeed, indeed. But to go through one's more amusing mistakes, of which of

course there were many, and you can't do business without making lots of mistakes, but one

particular picturesque one was in some time mid-Seventies, I can't remember when it was,

maybe even have been earlier, it could even have been the late Sixties. We started receiving

invitations from the American houses into some of their big domestic equity issues, and the

reason they were doing it was because they wanted us to reciprocate by giving them business

in our Eurobond deals, because we had basically in those days defeated the Americans and

they badly needed to get back into the business. They had originally been very arrogant, and

saying that we're not entitled to do the business being foreigners, but then we dominated the

market and so they had to come to terms with us. And one of things they did was to bring us

invitations into some of their equity deals, and as we were building up a little office in New

York at the time, you know, it was quite flattering to be invited into some of your I.T.T.,

everything like that. In any case, we got an invitation from Leob Rhoades, which has since

been absorbed into Lehmans, to underwrite an issue which was going to be very popular, for

Playboy Enterprises, Mr Heffner and his Bunny Girls. And it was a very successful thing and

they were coining money and that sort of thing. And I got an invitation from Loeb Rhoades,

which was a completely blue chip house on Wall Street, and I went up to Mr Gunfeld's room

to ask permission. And it so happened that Mr Grunfeld was sitting there - no, he was

standing at his desk, and around him were sitting Siegmund Warburg, Mr Geoffrey Seligman,

and two or three others of the elder statesmen of the firm at the time. And, I said, `Well

we've had this invitation from Playboy, and I came up to ask whether we could accept it.'

And there was a complete silence around the room, and you know, I thought, you know,


49

Siegmund was looking at me reasonably benignly, but nobody was saying anything, complete

silence. And Mr Grunfeld said, `Well, what is your view, Mr Gordon?' And, I said, `Well, it

comes from Loeb Rhoades, a very profitable company, I think we should make a few

thousand on it. I think we should accept it.' Silence continued. Then Mr Grunfeld said,

[GERMAN ACCENT] `Zis firm vill never have anything to do with this gambling. I am

very surprised at your recommending this.' At which stage everybody else in the room said,

`Shocking! How could you! Disgraceful!' They were sitting there silently, waiting for Mr

Grunfeld. [LAUGHING] So I went away with my tail between my legs. And, you know,

I've never forgotten that experience of course, and of course over the years there have been

clients that did gambling among the things they did and that sort of thing, and I've always felt

very careful about it. But actually it's true, and it's one of the things, if you want to be first

class you should know that you shouldn't have anything to do with people that gamble, or

business with people that gamble, and anything with a gambling touch to it nearly always

turns out to have criminal connections and other things like that. And you know, you should

be supporting proper, solid industrial or service companies and good manufacturing and so

on, and not gambling. And you know, so it was quite a sort of lesson to have learnt, and

although it was slightly uncomfortable at the time, it was a good lesson to have learnt.

[LAUGHING]

So, would you like to say anything else about Eric Korner?

There are so many stories on Eric Korner. I think Peter Darling is the best person at telling

those stories, he somehow worked more closely I think with Eric than most, and he has a very

vivid recollection of some of these things. I can't sort of on the spot sort of think of any; I

might during the course of our conversations think of one or two more. I mean, one thing of

course is, they had such strong accents, and Mr Korner's accent was the strongest of all.

Oh really.

And of course he was the principal banker to the Austrians, he was Austrian, and it was a

great thing of pride for him that we should be the bankers to Austria, and we got enormous

credit in Austria for helping them during the difficult periods of the Fifties when Austria was

still sort of a little bit East-West and, you know, could easily have gone the other side of the

Curtain and so on. And Siegmund and Korner and that sort of thing were immensely strongly

supporting Austria, and when Eric Roll arrived, you know, he was part of it, and one had a

relationship with the Government of Austria which was just unbelievably close and they were

always in Vienna, and of course Mr Korner was always in Salzburg in the summer time at the

festival, and he would see all the top people there anyway, and, I mean business and pleasure


50

were completely together and, you know, successive chancellors and finance ministers of

Austria were received here and would ring here for advice and that sort of thing: all sorts of

things. It was an incredible relationship when you see the sort of relations which investment

bankers have today, I mean, you know, just extraordinary. And so, they were determined

that, or the Uncles were determined that we would get all the business that came out of

Austria, which we do to this day, thanks to all their efforts in the early days. I remember one

particular incident when there was some very important Austrian loan coming on stream and

I think they had been sort of romanced by some of the American houses, and Mr Korner went

to the Bundesministerium at 6.30 in the morning and sat there until the Minister arrived and

walked past him into his office - walked behind him into his office, past any secretaries that

stood in the way, and insisted, and got, the business. [LAUGHS] It was...I mean that is a

typical story of him. And...

Would you like...sorry, were you going to say something?

I mean the Arab boycott of course is something that, you know, I talk about in the memorial

and so on.

Well, I'd like to come on to that sort of in the, in the sort of chronological side as your career

moves forward.

Yes, yes.

And, I was just going say, wouldn't you like to summarise for the sake of the tape,

Siegmund's characteristics now. I mean I know we could go on forever about him, and you

obviously hold him in great affection, but for the sake of the tape could you put those in, put

your thoughts into words?

I do think I put them into my memorial.

You have, you have, and that will of course go...

And I do think the memorial note is an attached appendix to anything that...because...

OK. All right, well let's leave it like that.

And I do think that I have placed into that, you know, my summary of Siegmund's principal

characteristics.


51

Fair enough.

And the greater the distance that time separates from him, the more strongly one feels one's

respect for that gentleman. And, I think I mentioned to you that Siegmund did good by

stealth.

Yes.

And was a man I think of great charity in the nicest sense, Pauline sense of the word. And,

you know, I...that sort of humanity and consideration, I still find very few people who sort of

come up to that level in the experience in the wide number of people that I've got to know

over the years. And politeness and courtesy. I don't know, I can't remember how much I said

about politeness and courtesy, but one of the things is that because one does business in Asia,

and one comes across the people who are the top drawer of Japanese and Chinese society,

one comes across some very remarkable examples of what politeness and courtesy mean, or

`manners maketh man', to use Wykeham's expression. And the reality of manners and

consideration for others, which is the real basis of all manners. And Siegmund was regarded

by the Japanese as being quite outstanding and remarkable in his consideration for others, and

going to Japan, the way he sort of handled them and that sort of thing, the Japanese could

easily recognise that here was someone who had a courtesy as developed as they in their most

finest developed courtesies felt. And again, I mean that was one of the reasons we got

business in Japan, because they really appreciated these utter considerations which Siegmund

had. And in Japan of course Mr Jiro Shirasu as the outstanding example to us. One thing

that is worth picking up is the biography of Princess Chichibu, which has been translated into

English and published in the last year. Princess Chichibu died about two or three years ago.

She was the widow of Emperor Hirohito's younger brother, but she was born in England, I

think her father was Ambassador or something here, and her best friend was a lady called

Masako Kabayama, who subsequently became the wife of Jiro Shirasu, who was, Jiro Shirasu

was...Jiro Shirasu was Siegmund's best friend in Japan. And when you read this actually

quite simple book called `The Silver Drum', which has just come out in the last year, there are

endless references to Masako and Jiro Shirasu, and all coming out in the most delightful way,

and you get a sense from what Princess Chichibu says of the lovely courtesies of a man like

Jiro Shirasu and his consideration to them during the war time and that sort of stuff, quite,

quite lovely. And certainly there is a sort of golden glow when you sort of think of people

like that, and Siegmund and, you know. The memory of people like that, you see, I mean

they had elephantine memories, and for so many details and so, somehow thirty years on they

would remember something, and you know, draw it to someone's attention in a courteous


52

way. Extraordinary. Of course Mr Grunfeld was like that too, but I mean with Siegmund it

just was so much deeper. David Scholey has some of these abilities, and that was one of the

sort of things that makes him an interesting person, but Siegmund just had it to a degree that I

never ever met in anybody else.


Could you continue with your experiences of the older men when you arrived?

Well, I was saying, one was very lucky to be able to have association with people like that,

and to be able to appreciate the older people. Not all younger people have the patience to sort

of listen to what the older people say. Now that I am becoming one of the older people I am

hoping that I can find a few young people around who will appreciate sort of length of

experience and all that sort of stuff. Eric Roll comes in on a slightly different stream,

because he only joined Warburgs at the age of 60 when he had completed his career as, well a

civil servant, international and domestic civil servant, and economics professor and so on.

He, I think his first business experience was Warburgs at the age of 60, and, well he's now 88

and so that must have been 28 years ago, so it must have been 1967 or 8 that we're talking

about. And so I'd already been in Warburgs about four years and was a somewhat established

very junior executive and with a lot of young tigers around who were young directors, like

Peter Spira and Bernard Kelly and Ian Fraser and David Horne and so on. And I remember

when Siegmund brought Eric Roll in at the age of 60, how the young tigers very much

resented his coming along and very much wanted to minimise his role and, well the sort of

fight you get in any investment bank I suppose. I have one memory of Eric walking into the

room where I was sitting with about four or five of these young tigers discussing something,

and Eric being literally told to scram. [LAUGHS] And very humbly he walked out of the

room. But all those people have gone by the wayside as the years have gone by and Eric is

still here, so it shows something about survivability. And Eric was in fact a very quick

learner, and did get onto the wavelength of the things at the bank very well, and so he

managed to become a businessman in spite of his background. Some people don't even

particularly regard him as a businessman even now, in that he is so urbane and cultivated and

so literary and has produced so many books and made so many speeches and so on, they say,

Òh yes he's a very nice ambassador but he's not a real businessman'. But that's not fair,

because he actually follows the business very closely and can further that business very

successfully if he is following it closely and can be very impressive in arguing for a piece of

business to come our way and so on, and has worked very closely in the past, you know, with

Siegmund himself, with Grunfeld, in following these transactions along, and you know,

makes a tremendous contribution to them. And it is very interesting that now you have these


53

two survivors from this past who are still there, and who are still basically in the office every

day, Mr Grunfeld at the age of 92 and Lord Roll at the age of 88.

That's fantastic.

And I think I mentioned to you the extent to which I felt that they had, you know, once the

decision had been taken to merge with Swiss Bank Corporation they took such a positive and

forward-looking attitude towards it, always thinking about what future business could be

done, how we could use the new connections, how we should help the Swiss understand the

spectacles through which we looked at things through the Warburg training, and so on. And

the fact somehow that they have been appreciated and have survived through into this period,

that they're still there, and this attitude certainly has influenced me very much during this last

year of great change, and you know, we are talking now, you know, a year on from all these

rather momentous events in the history of the firm, at a time when the firm feels, you know,

considerably stabilised after many events. And I do think that the old gentlemen, the two of

them have done a great deal to further the stability and to explain things to the Swiss.

I was going to ask you what practical, apart from the fact of being there and the continuity,

what practical ways did they...?

Well I did say, actually, I mean last week when we were just talking, and I would certainly

record the impression, that Warburgs when I joined it was a very European organisation, very

Germanic and French and Italian and everything, and with tremendous contacts and

numerous travelling backwards and forwards, and very international thinking, also very

North American. And it was that great stimulating atmosphere and vibrancy that one joined,

that one wanted to join. And then, particularly during the last decade, post-Big Bang, joining

up with very fine but very domestic firms, Warburgs had become very Establishment,

something which Siegmund Warburg had always feared, and in the Nineties we were...our

Chief Executive was an earl, and we were absolutely at the pillar of the British Establishment

and very much supported by the Government as such and so on. And then when the merger

with SBC came you had a number of people who were quite shocked at, you know, all this

Swissness, all this Europeanness, all this Americanness about them, but older Warburgers

could hardly be shocked because we had always been like that in the past. And although you

had some Warburg directors resigning to go to BZW, Barclays de Zoete Wedd, because they

wanted to be with an English firm, to anybody who had been in the firm for a relatively long

period of time the fact that we had directors holding attitudes like that was quite a surprise.

Good, well, shall we leave it like that for this morning?


54

By all means.

End of F5290 Side B


55

F5291 Side A

[This is the 18th of September 1996, the second session with Martin Gordon. Tape Four.]

Could you tell me what you remember of Anna Warburg?

I got to know Anna because Siegmund used occasionally to invite me to his home in

Switzerland, and Anna and her late husband, Dov Biegun, and her little daughter Batya,

would often be there. And one had many family dinners with them, with Lady Warburg, in

the house in Blonay. And Anna was a very cheerful, intelligent and interested person, a little

bit quiet when surrounded by Papa and everybody, but very engaging and very nice and a

very sweet daughter. And, of course we all had a tremendous admiration for Lady Warburg,

for Eva Warburg, she was such a gracious lady and very attractive even in old age, and

unfortunately she only survived a year after her husband died, and therefore Anna and

George were left alone. I had never got to know George particularly well, and therefore in

relating to what was left of the Warburg family I communicated much more regularly with

Anna. And Anna as you had lost her husband about a year before Siegmund died, which was

something that had upset Siegmund very much and needless to say Anna. So Anna was

therefore a widow with a daughter, and so, I remember I corresponded with Anna a fair

amount. She was living in Israel. I promised to go and visit her but never did; however the

promise still is good and will one day be fulfilled. But we did keep in touch, and Anna used

to like to come to London, because her old cook used to live in Wimbledon, Josephine, or

Phine, and I think Anna, having been brought up in a rather formal way by her parents, gave

a lot of her filial affection to the cook, Phine. And Phine lived to a great old age, surviving

Anna's parents by quite some years, and she only died a couple of years ago I think, well in

her nineties. I am told that Phene[??] had put her very modest savings in to shares of our

company, Mercury Securities it was then called, right at the beginning of her relationship as

cook to the Warburg family, and that these shares had appreciated many hundredfold by the

time she died and that Phene[??] surprised them all by dying quite rich, although she never

gave any indication of her wealth. And certainly one of Anna's characteristics, which I have

mentioned before, is her great modesty, and you wouldn't think for a moment what sort of

family background she came from, although physically her face is remarkably like Siegmund

Warburg's, and when you are sitting talking to her you are feeling like Siegmund is in the

room, and she has about her the kindness and consideration that was very much part of

Siegmund's own character but which people do not always recognise because they also saw

his business side, which of course was very business-like, but fundamentally of course he was

an extremely kind man, and the examples of his kindness after his death were many.


56

Tell me about Dr Abs and what you knew about him and his relationship with Siegmund.

Well, again others can tell you a great deal more, someone like Mr Grunfeld I suppose. Of

course the Deutsche Bank has now published a so-called warts-and-all history; I have not yet

read this newly-published version of the history of the Deutsche Bank. Abs played the

critical role in the post-war revival of the Deutsche Bank and its rehabilitation in German and

international society, and Siegmund's relationship with Abs was, I would regard as one of his

very core relationships in establishing his business. Of course the tiny firm of S.G. Warburg

over the late Forties and Fifties and Sixties was such a minnow compared with the mighty

Deutsche Bank, but because Siegmund was intellectually on a level with Abs and Abs

enjoyed discussing things with Siegmund, it did create a mutual respect between our tiny firm

and the great Deutsche Bank, and it was a very pleasant thing. Siegmund was always

pointing out to us that Deutsche Bank was the bank which was truly the most first-class bank

in the world, and he, I may have mentioned before, applied this to Paribas and to J.P.

Morgan, and to some extent to the Bank of Tokyo in Japan. And so, Deutsche Bank was

always being held up as an example that we should copy, and they always did things the right

way and it was really very elegant, and that was what `haute banque' really meant, and so on.

And we were to cultivate the officers of the Deutsche Bank and be friends with them and try

and do business with them and so on, and one was always doing that. So although I

personally never met Abs, I was brought up in the aura of this sort of Abs relationship, and in

the international banking field, the fact that Siegmund and Abs were good friends was

something that was respected, and I remember for example the Industrial Bank of Japan in

Japan having a close relationship with the Deutsche Bank but always giving more respect to

S.G. Warburg because they knew that this relationship existed, and that we enjoyed this

goodwill from Abs and his bank. And, I mean I've said before that Siegmund always

required great meticulousness in communicating with other financial institutions, and for

example letters to the Bank of England had to be unbelievably careful. So any letter to the

Deutsche Bank or any communication with the Deutsche Bank, Siegmund would be watching

very closely. And of course when it came round to the creation of the Eurobond market,

where Siegmund had such a pivotal role, Siegmund was very keen to bring the Deutsche

Bank into the transaction, and if you look at the files of, our old files of the European Coal

and Steel Community, which was the candidate for the first Eurobond issue, you will see the

wonderful correspondence between the then executives of the Deutsche Bank and Siegmund

Warburg and Gert Whitman and other Warburg seniors of that period, and you can see the

sort of, the dialogue which led to the creation of the first Eurobond deal, which was in the end

not done by the European Coal and Steel Community because when we told the ECSC that

the time was right for doing the deal, they said that they didn't want the money at that

moment, would rather to wait. And so, I think it was through their instrumentality that the


57

original borrower was produced which was the Italian Autostrade guaranteed by the Italian

Government, and so Autostrade became the first borrower. But all the preparatory work had

been done in connection with the European Coal and Steel. But one saw in that period the,

you know, this tremendous sort of linking with the Deutsche Bank, and all over the years, and

of course, Dr Abs survived for a very long time, maybe he's still alive, I mean he has great

longevity, although I don't think he's doing much with the bank, but he has been very much a

long survivor. But all during those subsequent years the relationships with Deutsche Bank

were always very carefully regarded and Siegmund was always interested to know and have

memorandums on conversations that you might be having with any of the Deutsche

executives, like Dr Grasnek Gaertner and so on. And, certainly sort of, the behaviour of the

Deutsche Bank people was pretty impeccable. Although I remember an incident quite fifteen

or more years ago when I was, I suppose I was deputy head of the International Department,

and we had one quite bright young man whom we had hired from university, and in those

days more than now it was the custom among high-class institutions to send trainees to each

other, so they get experience of the other firm, make friends in the other firm, then come back

with enriched experience. And I sent a trainee to the Deutsche Bank, a young man who

spoke German and I thought it would be very good experience for him to spend six months

with the Deutsche Bank. At the end of that period the Deutsche Bank called me in some semi

embarrassment and said, `Well this young gentleman would like to stay with us. He likes

living in Frankfurt, and he likes the bank, and would rather not return to S.G. Warburg.' Well

that was a very strange incident to come from the Deutsche Bank, and we discussed it at the

time, and Siegmund was aware of it and so on, and we decided not to make a fuss about it,

we regarded it as a little blip in the behaviour of an otherwise first-class institution, to show

that even Jupiter nods. And I would not even mention the subject now had you not seen what

has happened in more recent years, and of course in more recent years Deutsche Bank, acting

largely through its subsidiary, Morgan Grenfell, has scandalised the market by going out and

buying large numbers of people from rival institutions including our own, but from many

others, with their grand new plans to build an investment banking thing. We have resented

this, and other firms have resented it, other firms like I.N.G. have even sued the Deutsche

Bank, and certainly some of the big Americans have sued or threatened to sue, and their

behaviour has been certainly unlike the Deutsche Bank one used to know of old.

Who is responsible for this new policy at Deutsche Bank do you think?

Well, one assumes that it comes from the very top, but the division of responsibility in the

Deutsche Bank these days, and I'm not a real Deutsche Bank watcher, expert, is slightly

divided. The role of Dr Koppe as the so-called Chief Executive of the Deutsche Bank, he is

only I think spokesman of the supervisory board and not chief executive in the way that Gut


58

and Christians were joint chief executives at a previous stage, and which Abs was at a stage

before that. And so he is as it were the primus inter pares of the supervisory board of the

committee. It is said that the executive on the supervisory board who has the responsibility

for all this stuff is Rinaldo Schmitz, and of course Rolf Breuer[ph] is the other one who is

resident in London at Morgan Grenfell implementing this strategy. But how it actually goes

within the Deutsche Bank I couldn't be too sure. But we all felt that the behaviour of the

Deutsche Bank has been, you know, very disagreeable, and of course very very unlike what

the Deutsche Bank used to do. And we also fundamentally disbelieve that you can build a

business by hiring a few stars, and we thought that the lessons of Big Bang in 1986 were that

those firms which pay good money to buy expensive high quality firms prospered, whereas

those who attempted to hire a few stars with high salaries from all over the place did not

succeed, and the fundamental reason for this is that in our business you need to have people

who have worked together through difficult as well as easy times and whose likely reactions

and motivations and that sort of thing you understand and trust; whereas if you put together a

group of stars you will never ever get that. Now, it's very easy to say, I told you so, over

what had happened to Morgan Grenfell in the last month, but it is a clear case of a star system

which, something which old Deutsche Bank would never have had, and I am sure if you read

the great history of the Deutsche Bank, going back to whenever it is, you would find that

there is nothing about a star system at any stage. And, I had a rather sweet little incident on

this subject, I'm not sure whether I mentioned to you, about Mr Sharp.

We did talk a bit about him but tell me...

Well Mr Sharp...

Was it the letter?

Yes, the...yes. The letter that Mr Sharp received from Piers von Simson, did I tell you that

one?

Yes you did, yes you did.

Yes. Any case Mr Sharp, when I called on him at the age of 96 in his flat in St. John's Wood,

saying, you know, reminding about how he had been hired by Siegmund from Singer &

Friedlander in 1948, and how Siegmund and Henry had gone round to Singer & Friedlander

to ask permission for Sharp to be transferred, and the whole thing was done so elegantly.

And he said the way in which Deutsche Bank does it now, and indeed other banks do it now,

is so extraordinary. But it was an incident, and you know, which, you know, which illustrates


59

the difference between the Deutsche Bank then and the Deutsche Bank now. Oh I think that

the Deutsche Bank will be going through a little bit of self analysis after this latest incident,

and that people in Frankfurt who have disapproved of this sort of new Deutsche-Morgan

Grenfell attitude will have views which may prevail over some of the more modern lot. I

mean, we are at the moment going through a lot of very crazy things, I mean this whole, this

Morgan Grenfell asset management affair is a very crazy thing; the Barings thing doesn't lie

down; Jardine Fleming and therefore Robert Fleming have had an embarrassment in Hong

Kong. And these are all examples of crazy things that happen in exploding markets where

controls and standards are not properly kept, and one hopes that things will eventually sort of

return to type a little bit in this changing market.

Quite so. Shall we come on to Shirasu and the Japanese connection?

Yes. I wrote a short paper on Siegmund Warburg and Jiro Shirasu. I don't know whether I

gave it to you.

I've only got the memorial.

The Siegmund one, yes.

Which of course mentions him, but...

Yes. Well if I can find the one on Jiro Shirasu I will let you have it.

That will be excellent.

And, we have a portrait of Jiro Shirasu that hangs in our Tokyo office, which was done by

the...well it was done from a photograph by the same painter who did the portrait of

Siegmund which hangs in this office, and we've deliberately got the two portraits side by side

in the Tokyo office. And, Jiro Shirasu, well one needs to understand Japanese a little bit to

know a great deal about his character. There are books and things about him in Japan, but, he

was a marvellous Japanese of the old school and with very very high standards of behaviour,

and he was one of the, as it were, noble families which disapproved of all the Japanese

militarism of the 1930s, and like Roman nobles when they disapproved of things, when

things went wrong and that sort of thing, he went to the country, and so he retired to the

country in the war and after the war he was therefore very unblemished, and he was the right-

hand man of Prime Minister Yoshida after the war and he, apart from Yoshida, was one of

the two people who enjoyed the confidence of General MacArthur and was one of the few


60

people who could tell MacArthur where he got off on any particular point, and therefore was

very valued by the Japanese. And as a sort of chef de cabinet to the Prime Minister during

that period he had very tremendous influence in the post-war period, and he was notably

somebody who would speak his own mind, and Japan, where it was often difficult to get a

real expression of an opinion, because everything came out through the consensus, Jiro

Shirasu's views were always very nice to hear. I remember him once saying that he would

never accept an honour from the Emperor, who was responsible for the death of three million

Japanese. I'm not sure that that's a remark that he would have wished to have been recorded

as it were, but he said it. And, it didn't stop him at a later stage recommending Siegmund

Warburg for a very high honour from the Japanese Government, but he wouldn't have

accepted one himself. Jiro Shirasu I suppose was about the same age as Siegmund Warburg,

and he was originally introduced to Siegmund Warburg in 1962 when Siegmund made his

first ever visit to Japan, and the story goes that Sir Andrew MacFadyean, who was then a

director of Warburgs said, Òh you must look up Mr Jiro Shirasu when you go to Japan. You

will find him a bit of a crank but then, so are you, so...'

That's lovely.

Any case, they met, and that first visit to Japan by Siegmund Warburg, he made sort of two

particular connections which always remained with him; one was Jiro Shirasu and the other

was Kichi Miyazawa, who many a year later became Prime Minister, and who was in any

case a protegé of Jiro Shirasu. But, Jiro Shirasu's personal relationship with Siegmund meant

that he always took a great interest in what we the Warburg people doing business in Japan

were doing, and we always kept in very nice contact with him, and we always had a, you

know, a great deal of pleasure in the contact.


Jiro Shirasu was this marvellous individual personality of great courtesy who treated us

Warburg people coming to Japan, and in those days it was only a handful of Warburg people

coming to Japan, it was not like in the latter years when you sent sort of hundreds of people

over and they were all dealing in all sorts of instruments. It was a very chic little group of

people, from Peter Spira, Andrew Smithers, Christopher Purvis, Stephen Kaempfer, people

like that, all a really rather high calibre crowd. Martin Edelshin, Andrew Dalton later, and all

the people whom Jiro and others in Japan would consider English people who were

acceptable in Japan. He considered that Warburg people didn't have colonial attitudes like

most of the staff of Shell or British American Tobacco, and that Siegmund gathered round

him people who, you know, lacked arrogance and were a pleasure for the Japanese to meet,

and to such an extent that you sometimes found Japanese hostesses saying, Òh there'll be no

foreigners there, except of course people from S.G. Warburg'. [LAUGHS] We were not


61

treated as foreigners, and thanks to sort of Jiro's constant encouraging of us we were always

sort of put into a rather separate character, and it was his sort of constant recommendation of

us which helped us to sort of get the sort of particular sort of very very high-class impression

that we had, particularly in those early days when the business was relatively small. And

under Siegmund's leadership and interest we dealt with the Japanese in a manner which they

liked very much. We minded our p's and q's; we were always very presentable, very

thoughtful; we came up with good ideas without being aggressive about them; we treated

them very nicely when they came over here; and generally recognised the high quality of the

Japanese people. But Jiro's sort of advice and counsel all the way along was a great help to

us in doing that, and also Jiro, because of his great admiration for Siegmund Warburg and his

belief that Siegmund Warburg was several cuts above the people who were then leading the

older traditional London merchant banks, like Schroders and Rothschilds and people who had

been doing business in Japan before the war, and he was always telling his old powerful

friends in Japan that S.G. Warburg was absolutely the best in London. And so in the early

years of our doing business in Japan we still found that we were being regarded as rather

second to some of the older names; by Seigmund's death in, well, in 1982, but well before

Siegmund's death, we had been accepted by the Japanese authorities and financial society as

absolutely the number one merchant bank in London, and the only firms that compared with

us were Deutsche Bank in Frankfurt and J.P. Morgan in New York. We were an absolutely,

in a sort of very sacred position in Japanese society which peaked during I think the Eighties.

And we had a decline during the latter years of the early Nineties during which our

management was not quite the same as it had been, and at the moment it's going through

something of a restoration, because the merger and that sort of thing is working in Japan, I

would say pretty well, and things are in a much sort of stable and high quality level.

Did Siegmund groom you young men for going to Japan? It's very different...

Oh not for going to Japan, no, there was nothing about going to Japan in the way that he

groomed us. He groomed us, I mean he liked people who, when they went abroad would

represent the firm and the country and foreigners generally in a nice way, and anyone he sent

abroad, whether it be to the United States or to Japan or to Sweden and so on, you know, he

expected to reflect a good image on the company.

End of F5291 Side A


62

F5291 Side B

So, what do you remember about your earliest visit to Japan?

Well my earliest contacts with Japan and our Japanese business go strangely right back to the

beginning of my Warburg career, because one of the mandates that we were working on

during the very beginning of my time at the end of 1963 was a convertible Eurobond for

Toyo Rayon, which subsequently became Toray Industries, which was a member of the

Toray Group, and as a junior junior junior at that time, and I was still a trainee in one of the

departments, I was summoned up to read the proofs of the Toray Industries, Toyo Rayon

document. And so, and I met one or two of the Japanese staff of Toyo Rayon at that time,

and it gave me, in my earliest months, a little feeling of our Japanese business, which I found

very exciting.

Why?

Why? A company from so far away, and this interesting culture and so on, and just making

its first steps into Europe. Oh it was very interesting. And, then, I would say my next

experience was pretty soon after, in 1964, at St. James's Park tube station. I used to live at

that time in a little street market called Strutton Ground, Westminster, and there was a

Japanese gentleman who used to get on to the tube at St. James's Park also. As you know, St.

James's Park is an area of mainly offices where people get off the tube, and he and I were the

only people who used to get on the tube at St. James's Park. And I often used to see this

elegant gentleman. Well one of these days as we got onto the tube I said, `Well I bet this is a

good deal easier than your famous rush-hour in Tokyo,' assuming he was Japanese. And in

any case, we chatted, and it turned out that his name was Kei Egashira, and he was the

manager of the new London office of Nomura Securities, which was the first securities house

to open, and that it was Nomura who would introduce the Toyo Rayon business to us

anyway, and therefore he knew a number of our senior people like Ian Fraser and Peter Spira

and so on. And by the time we got to Mansion House we had already become friends. Such

are these things, the way they develop. And during, as the Sixties progressed I got involved

whenever we had an international transaction with a Japanese flavour, and there were some

other ones that took place. In the late Sixties I was mainly shuttling to New York and so

didn't see much of it, but I remember in '69 they needed someone at the London end to spend

more time on the accumulating amount of Japanese business that was coming, and so I was

brought in as a Japanese junior, but not permitted to visit Japan at that time. And I had a very

strong desire to visit Japan, having learnt more and more about it and read various Japanese

histories and so on, but these things don't come to pass in those days as quickly as they may


63

do now, when young executives get onto aeroplanes before they know it, hurled into other

societies with which they may or may not be equipped to deal. So, I had had actually quite a

lot of contacts with the Japanese community in London before I made my first visit in

October/November 1972. And we had also received in London the visit of Jiro Shirasu, he

must have come some time in '70 or '71 or, to visit Siegmund, and I would have been brought

in to some of the meetings, and Jiro was very kind, taking an interest in me and said to

Siegmund, `When are you going to send this young man to Japan?' sort of thing.

That was nice.

And, oh, and, in any case, towards the end of '72 it happened that both Lord Roll and - or Sir

Eric Roll he was then, I can't remember whether he was a lord or not, in any case Eric Roll,

and Peter Spira, were both due to go to Japan consecutively for slightly different types of

marketing, Lord Roll being decidedly more elevated and Peter Spira more practical company

managers sort of thing. And I was sent over I think for the best part of three weeks as a sort

of common junior to carry bags for the two of them successively. So that was my first and

very fascinating exposure to Japan, accompanying these gentlemen at all their meetings,

meeting all our clients, spending a lot of time with Jiro Shirasu, and enormously appreciating

the things that I saw in Japan of 1972.

What did you see?

Well, Japan seemed to me a calmer place than somehow you had seen in the television, you

know, you've seen these sort of television scenes of people being pushed into subways, and

yet Tokyo, although it had its busy streets, had its quiet back streets, and was a more

charming and cleaner place than you might have believed; I mean you had heard quite a lot

about pollution but they seemed to have got that more or less under control by then. I, on that

first trip I went to, did a little side trip to Kyoto which I found very interesting, and one or

two of the banks took me out to, I remember going up to the Saitama prefecture and looking

at where all the bonsais are grown, and visiting certain temples in Kyoto which are of course,

I mean, of matchless splendour when you see these things for the first time. And, I think it

was the first time that I got to know some of my friends in Japan who remain my friends now,

some of whom are in very high positions, for example Takagaki, who is now the President of

the biggest bank in the world, he was a deputy general manager of the Bank of Tokyo in

those days; well the Bank of Tokyo has in the last year merged with the Mitsubishi Bank to

be the Bank of Tokyo Mitsubishi, and Takagaki is President of it. And there are quite a

number of people that I met at that period who were sort of assistant manager level, and who

have since risen to be presidents and chairmen of their companies. And there's not such a


64

surprising thing that that should be the case, because the number of bright young executives

in these banks and securities houses and trading firms that were sufficiently international and

so on to understand, you know, what was needed of Japanese companies to expand into the

big wide world, was relatively limited, and you had a pretty good level of sophistication but

narrow level of sophistication in most Japanese institutions on which you called at that time.

And Japanese corporates on whom you called then had relatively few people who understood

foreign languages and so on, and so, meetings with Japanese companies in those days were

more complicated than now. The most internationalised Japanese companies now can take

any number of foreigners in and out, they employ quite a few, and in a superficial sense have

a great deal of similarity with Western companies.

In those days, were their ways of doing business very different, when they were not so used

to Western ways?

Well, I don't think so. I mean, I don't believe that ways of doing business change anywhere

particularly, you just get sort of variants, and I believe that things sort of go down to

established practices most of the time. Of course we now have...and for the Japanese the

invention of the fax was one of the most marvellous things; it was of more value to them than

the invention of the telex because with a fax they could write down all their beautiful

Japanese characters and put it on the fax machine and then it would turn up in New York

simultaneously. That didn't matter; we were not so keen on the fax because the telex machine

quite satisfactorily told everything we wanted because it was ordinary writing, but I

remember the Japanese were into fax machines much earlier than we were because it really

helped them. But I mean techniques like that of course are very important, but, I mean I

learnt from the earliest days in Japan ways of doing business which the Japanese have, and

which have not changed, nor would I expect them to change. In particular the emphasis on a

personal calling on people, and in the West they tend to hit the telephone very quickly,

whereas the Japanese will find endless excuses to call on your clients and your contacts and

that sort of thing. You find endless opportunities for meeting, and just like when we had Big

Bang in London, and our London Stock Exchange trading floor virtually ceased to exist and

everything went onto the screen, the Japanese managed to keep a stock exchange years

afterwards in which people were on the floor and seeing each other's eyes and that sort of

thing, and the Japanese had a strong feeling that you have to have the personal contact and

that you learn much more by seeing people's faces and looking into their eyes and that sort of

thing if you talk to people. And that is just as important in Japan with all its modern

communications in 1996 as it was in 1966, and I've personally learnt a great deal from that,

and I've found that in many other totally non-Japanese situations that having the sense to call

on people regularly, not necessarily when you have anything particularly to discuss but just to


65

keep the facial dialogue with people whom you are doing business with or are likely to do

business with, is absolutely integral to getting deals done. And I have often advised our

younger people, you know, `Don't use the phone, go round there,' and that sort of thing.

Although going round to places is not as easy as it used to be. You have to go through

security in so many offices these days, and the unpremeditated call on people, the call

without an appointment, which is very much a part of Japanese society, and was to some

extent part of our society here, becomes harder when you have... `Do you have an

appointment? Will you fill in this form?' You know... [LAUGHS] And the sort of array of

secretaries and that sort of thing that you have, and security people that you have to go

through. But I still do it, and...

Do you? That's interesting.

My colleagues in Japan still do it, and it is absolutely essential at certain moments to make

the unappointed call. And over here too it sometimes has a dramatic effect, making the

unappointed call. You may find your party is just not there, but if the party is there, there's a

certain moment in a business situation, it has a dramatic effect, and is very much to be

encouraged.

Interesting.

And one should never be too grand to do it. Of course Siegmund was very very clever at

knowing how to do that, and would follow business transactions very closely and wasn't

above going round to the Union Bank of Switzerland and calling on a deputy manager whom

he knew from our dialogue to be a very decision-making person, and you know, the young

man would suddenly receive a visiting card saying, `Sir Siegmund Warburg'. [LAUGHS]

And he would quickly go into a meeting room and receive, and, you know, Siegmund would

talk to the young man, avuncular way, and, it might give them some business, might not, but

you know, it was something that would never be forgotten.

It would certainly have an effect.

Yes, yes.

That's a very good example. Are there any other examples?

Did I tell you how I took Siegmund round to Eddie George?


66

No.

Well in the mid-Seventies I was very much involved in day-to-day dialogue with the Bank of

England on the financing of the nationalised industries and the public sector generally, and

there was a policy then to raise money in the foreign markets for the nationalised industries,

most of which have now been privatised, you know, British Steel, the National Coal Board,

the Post Office, you know, pre-British Telecom and so on. And I got to know a lot of the

executives at the Bank of England who took the decisions on these things, such as Brian

Quinn and Roger Barnes and Eddie George and Ian Plenderleith, and David Nendick, those

were the people I most dealt with over a period. And all very excellent people. And of

course in good Warburg form I recorded these things in internal notes, which Siegmund

digested. Many of those notes I still have, because quite a lot of my old spares from the

Seventies, which was a particularly busy period when I was deputy head of that important

department doing many deals, I took them away, when my secretary said, `Shall I throw them

away?' I said `No no, I'm going to take those home'.

Excellent. Oh, you must keep them then.

And so I have actually got a lot of very sort of relevant and very contemporary notes of that

period. And, any case, Siegmund said that he was so interested in the accounts of my

discussions with Mr Eddie George, would I care to introduce him. So I rang up Eddie

George and said that Siegmund Warburg would like to meet him and can I bring him round,

and with due humility we walked round to the Bank of England and Siegmund by then, who

must have been about 78 or something like that, and Eddie received him in his room. And

the most delightful conversation, and...

What sort of a conversation?

Oh I forget what it was about now, but... Almost, I just remember that it happened. And, I

mean Eddie George of course still remembers it with great pleasure, he treated Siegmund

very nicely, you know, he has beautiful manners, and it was just a very nice meeting. And

you know, it wasn't about a particular deal or anything like that, but of course the interest

shown by the very senior in the day-to-day transactional flow was bound to have a good

effect on the client, and you know, in the very dominant amount of business which we were

doing in those days I'm sure that that had a good effect.

Quite.


67

And I see the same thing happening in our Asian business again and again. Now we have

offices in Tokyo, Osaka, Shanghai, Beijing, Seoul, Taipei, Jakarta, Kuala Lumpur, Singapore,

Bangkok, Manilla, I mean all these offices all over the place, far too many, and, Siegmund

never believed in proliferation of offices, but in any case we have all this enormous network

of offices in the Asian area which I happen to cover, and most of the day-to-day transactional

stuff is being handled by the younger executives on the spot. But the enormous strength that

we have if the older people, including people like Lord Roll, myself, other senior people who

we have out in the region, are seen by the clients to be following the transactions and taking

an interest, and if a transaction gets into difficulties, and if you are doing business you are

bound to get some that go into difficulties of some sort, the immediate call from one of the

older generation to the chairman or the vice-president of the bank or whatever it is, company

involved, saying, you know, Ì'm following this; we know the market's doing this; we're

determined to get it right,' that sort of thing, you know, is very different from people who are

just dealing with other young people in other firms...

Quite, yes I see that.

...where that senior tradition doesn't exist. And that is old Warburg practice, and I think our

Swiss friends have been very impressed with how effective that can be.

That's interesting that they hadn't sort of latched onto that before, and that you've...

Well they did some of it themselves, but Warburgs were past masters at it, and Siegmund

strongly believed in maintaining relationships over long periods, and relationships really

mattered to him, and I have told you that old friends came before new friends and so on. But

a lot of that, you know, is dissipated in the sort of hectic markets of the 1990s, but people

don't entirely forget it, and where it is still seen to apply it is unbelievably tight and well

locked in.

Excellent. OK, so your early days at the bank, what was the first transaction, the first

important transaction, that you really had a hand in? I mean you were following papers and

so on right from the beginning, weren't you?

Well, I mean apart from sort of talking about the Toray transaction, or the Toyo Rayon

transaction which I have just mentioned...

Oh yes, you mentioned that. Why don't we take that, can we take that, in more detail?


68

Well, I would say that was one on which I was a sort of, such a junior junior, all I ever did

was to read the proofs. Subsequently, as I got more involved in Japan, I got to know the

people whom I had met in the most junior capacity rather better, and the Toyo Rayon

company, as it was then called, was a member of the Mitsui Group, and was founded by the

Mitsui trading company, Mitsui & Co. I can't remember when it was founded. But the

founder was a rather wonderful sweet Anglophile gentleman called Mr Tashiro, and he was a

dear, small man with a moustache who lived to a great age, I think he died when he was

nearly 90, and he was the representative of Mitsui & Co in London before the war, and

always had a comfortable feeling about London before the war, and in fact I can give you a

couple of other interesting examples in that context which tell you something about Anglo-

Japanese business.

Good.

But, Mitsui is the oldest trading company in Japan, and was a very aristocratic place, run by

the Mitsui family who still have Mitsuis in the group, but you know, as of sixty or seventy

years ago the Mitsui family was still very dominant in it, I would say very much less now, but

it was very aristocratic, from the best universities, and they were always very nice people. So

Toyo Rayon as a prime member of the Mitsui Group was full of people who it was a

particular pleasure to know, and I got to know the founder, and I used to call on him and

exchange postcards with him and that sort of thing until his death. And I knew all the people

under that over the years. And because the relationship was such a good one, and based on

tremendous mutual respect, when we had our own little difficulty in the sort of Seventies with

the Arab boycott and a lot of companies, particularly in Japan, were wanting to distance

themselves from us to please the Arabs, in the mistaken feeling that this would please the

Arabs, Toray was one of the companies in Japan which banged the table and said, `Nothing is

going to prevent us from doing business with S.G. Warburg,' and when I came back to

London and quoted what the executive vice-president of Toray had said to me, needless to

say Siegmund and co said, `Well, that is the top of our white list, we will never ever desert

Toray, we will always help that company, however difficult the situation may be'. And of

course they were in textiles and fibres and that sort of thing. They had their ups and downs,

but we always ruthlessly helped them in the most difficult periods, and we were always at

their side, and there was always, you know, use our good name to the full extent to say, these

are people you can trust, and that sort of thing. Japan can sink into the sea but Toray will

always pay its debts and that sort of thing. And they knew it. And so it's a tremendously

precious relationship. I remember when I took Siegmund to Japan in 1978, when he received

his high honour, and, he was received with very great distinction in the various corporations

on which we called, and when we called on Toray we were received by the founder, Mr


69

Tashiro, who was then a very old man, and Mr Koyasu the executive vice-president, and

others, and it was the only occasion I have ever made a business call on a Japanese company

when the door opened, and instead of the normal tea lady coming in, a lady in Japanese dress

came in and performed a tea ceremony, a traditional tea ceremony, in front of us.

Oh, it's a great honour.

And bade Siegmund to drink from the cup. And I was absolutely amazed, and it is the only

time I have ever seen that in, you know, all my years of business in Japan. And it was quite

wonderful.

How very moving.

Mm. I mean it's a very simple thing, but it was absolutely astonishing to see it, and I have

never ever seen it again, never heard of it even. Rather like a little bit when...when Siegmund

Warburg died, I happened to be in Japan. At that time we had a tiny office in Japan about as

big as this room, and I was visiting Japan, and the chairman of one of the Japanese banks

came round to our poky little office to bow. It was absolutely extraordinary, and you know, it

just, these are sort of amazing gestures that the Japanese like to do to express enormous

politeness, and sometimes over the years I've learnt lessons from this type of politeness and

have managed to reproduce in this country gestures, not as brilliant as theirs but nevertheless

tried to think up exceptional gestures to express exceptional appreciation. And of course...

What have you done?

Well, I can't...I mean not even sort of think... But, for example, I mean, taking a whole group

of visiting Japanese for a lovely weekend to Scotland so that they could see the beautiful

countryside, and... But you know, things that just show you are not treating them just as an

ordinary visiting client, that you are treating them as something quite unbelievably well

bonded to you. And, of course if you have that sort of connection it is utterly unbreakable in

a Japanese, and I believe also in a Chinese context, although we're still early in understanding

the Chinese, but making progress. But in the Japanese context this sort of thing is

unbreakable, I mean totally unbreakable, unless you break it yourself. And of course,

international investment banks over the last five or ten years have been so busy breaking

these things themselves that very few of the old relationships still exist.

This is why I asked you if you were sort of specially groomed, because in order to receive

that sort of honour you have to understand its significance properly, don't you, so that...


70

Well I think Siegmund felt that if people were well brought up...

They would understand.

They would understand these people, this sort of thing. And, you know, I think that, you

know, Siegmund did hand-pick people, and I think, you know, someone like David Scholey

would perfectly understand the deepest meaning of a gesture like that, and what was needed.

I think Peter Spira would also do so. Christopher Purvis I think would totally understand that

sort of thing, and also be pretty imaginative about his ideas of how one would reciprocate. I

mean Siegmund liked to have people like that. The same as Leigh-Pemberton, who used to

work for us, would come under that category. And just as.....

End of F5291 Side B


71

F5292 Side A

[This is the fifth tape with Martin Gordon.]

And we're talking about the Oriental mentality. Would you continue?

I think that in Japan it's part of the sophisticated Japanese culture to make a great deal of fuss

about manners maketh man, and to demonstrate examples of deep courtesy, the deepest

courtesies often being the ones that are invisible, or only get found out about later.

Oh, give me an example of that.

Oh, I mean, I only think that manners is always consideration for others, and then, you

sometimes find later that someone has done something considerate for you that you hadn't

realised at the time, as simple as that. But the Japanese amongst themselves, sophisticated

Japanese, have almost got a pleasure and a delight to show off to each other just how

considerate you can be, and if they feel that a foreigner can as it were perceive these things,

then they are delighted. And somehow you've entered into a game with them, and so they

enjoy the more to have you amongst them. But basically, I mean all you have to be is, you

know, a nicely brought up, polite person who is considerate, and it doesn't mean that you are

always getting up when a lady comes into the room, but it means you are thinking about what

people want and need and is going to make them as helpful and so on, to the enth degree.

And nicely brought up English people very often come into this category, you know, we do

have an education system, or partial education system, that helps that sort of thing, and

therefore has helped some international people. I don't say it's nothing peculiar to the English

necessarily but, you know, nicely educated foreigners can fit quite well into a Japanese scene

like that and find themselves very happy in it.

How did you get on with the consensus method of making decisions?

Well... [LAUGHS]

Western people often find that very confusing, don't they?

Of course it's not universal in Japan; sometimes the decision does get taken by Mr Big,

sometimes by Mr Small, but usually it sort of rattles up. And, I think foreigners get fairly

used to a situation in Japan whereby you have to, you know, get people at different levels

accustomed to what you are talking about, and the benefit of it is that of course that once the


72

consensus has been reached and the decision taken, action is very fast in Japan and can be

repeated continuously. So, you know, all the preparatory work, or the nemawashi which they

call it, is worthwhile. Nemawashi is this lovely expression for when you are transplanting a

tree, and when you are digging the tree up you've got to be careful of every little shoot and

that sort of thing and have it all sort of carefully sort of put together and bowled and then you

take it away and then reassemble it, and the tree then flourishes in another place.

Do you have anything to say about the Japanese sense of humour? You yourself have a great

sense of humour; how did you get on in that respect?

On the whole I've found the Japanese have a pretty rollicking sense of humour.

That's not the impression they give.

Well, it depends how well you know them, but you can get them into a fairly sort of

humorous state. I wouldn't say that I am an expert on Japanese humour, but when you are on

their wavelength I think that they can be very humorous, and I think if you tell jokes at your

own expense and generally make yourself look a little bit foolish it gets them a little bit more

relaxed and the sort of atmosphere more humorous. People generally say that Chinese are

more humorous than the Japanese, and I would say that probably is the case, and the Japanese

as a very corporate person fitting into a certain sort of box rather, and it's sometimes difficult

to sort of get out of that box. But if you have a little impression of what the box is actually,

the shape of the box and that sort of thing, you can sometimes rat it around and get some very

humorous reactions.

Did you get to know any Japanese...

You see I don't think one should generalise about people in that sense.

No no, I don't think you should. Did you get to know any Japanese women well?

Well yes. I was just talking to you about old, long-standing relations with this country, and

one of Jiro Shirasu's protegées was a rather remarkable lady called Mrs Aso, A-S-O, and she

happened to live in Tokyo in a rather grand house just round the corner from the house that I

was renting in the two years that I was living in Tokyo, and Jiro told her to keep a check on

me. [LAUGHS]

Lovely.


73

Which was very sweet. And, she just died earlier this year, aged only about 80, and she

seemed always such a dynamic woman, we never thought that she would die so young. But,

her father was Mr Yoshida, who was the Prime Minister of Japan after the war and the man

who had such a high position and for whom Jiro was the sort of, the chef de cabinet. And Mr

Yoshida before the war was Ambassador to the Court of James's, and so Mrs Aso's earliest

memories were as the daughter of the Ambassador in London as a child, and that very nice

memory carried her through, and she married Aso, of Aso Cement, a very wealthy family,

she had several children, one of whom married into the Imperial Family, and so she has one

daughter who was a princess and with all the complications that entails.

Yes, quite.

And, her various children did all sorts of interesting things. But she had tremendous

Anglophilia and has been the sort of, the patron of the Anglo-Japanese society in Japan for

donkey's years and successive ambassadors quaked before her and, you know, if the Queen

made a visit to Japan she was very much around, and she was made a DBE, and a very, just a

remarkable lady. And because of Jiro's recommendation she always treated me and other

young Warburg people very graciously, would have us to dinner and, you know, we wouldn't

be made to feel quite as frightened as some of the other... But it is another, it's another

example of the sort of, the Anglo-Japanese link going back a long way. The third one that I

was going to give on that side was, I mentioned that Takagaki of the, now President of the

Bank of Tokyo Mitsubishi, well his father, who actually died a few, a month or so ago aged

96, his father was the representative of Mitsubishi in London before the war; just as Tashiro,

who subsequently founded Toyo Rayon, was representing Mitsui, Takagaki was representing

Mitsubishi. And so Takagaki as a child was in London, and therefore had an affection for

this country going back to his childhood, and these are, you know, very precious things, and

you know, if properly remembered can be of immense value, and you know, when Takagaki

had his posting here as resident managing director of the Bank of Tokyo ten or twelve years

ago, you know, it was a very sort of special period for him, and I saw a lot of him at that time

and he was extremely happy to be here. Otherwise, when you talk about Japanese women, of

course in business life there are almost no Japanese women. One or two exceptions to that,

but on the whole there's hardly a single woman whom you've met in the entire Japanese

corporate or ministerial structure. Japan Socialist Party used to have a leader who was a lady,

a Mrs Takagaki, although she never became Prime Minister after the, whatever it was three or

four years ago when the reshuffle took place and it was a Mr Miyazawa who became Prime

Minister, representing the Socialist Party, which never did anything socialist after it got into

power. Not the first example.


74

No, quite.

And, so Japanese women you almost never met in business circles. Now, perhaps the most

remarkable woman, even more remarkable than Mrs Aso, that I have known in Japan is Jiro

Shirasu's wife Masako, who was Masako Kabayama, and I did say that if you read Princess

Chichibu’s `The Silver Drum', you read a certain amount about her there. And, I think I

mentioned her in my little note on Siegmund how when we had this dinner for Siegmund,

when the maids of the Kitcho discovered that Mrs Shirasu was amongst our guests they

completely ignored Mr Miyazawa and Mr Nagayama, and totally paid attention to Mrs

Shirasu who is legend in Japan, her writings are very well known on historical and other

things, she is a great expert on Japanese history and literature and is just a fascinating and, I

mean a real imperial person, and a great warmth of character and soul and great perception,

artistic, and kindness. And so Mr and Mrs Shirasu were, I mean, what an unbelievable pair,

each tremendous personalities in their own right, tremendously in love with each other but

both with their own lives and therefore both on his and her side of people I have most

respected and loved in Japan.

That's lovely.

She's still going strong, bless her heart.

Did she speak English?

She does, reasonably well, and you know, she went to have a couple of years in America as a

schoolgirl when of course this was a very unusual thing to do. But she says, `Nobody who is

anybody in Japan speaks English. You never hear anything interesting in Japan from

anybody who's speaking English,' and that sort of thing. [LAUGHS] And of course it's

entirely true, I mean you know, there is this sort of unbelievable, fascinating Japanese society

seething away at your feet when you go to Japan, you know, with a fascinating and historical

literature and tradition and that sort of thing. And very few foreigners penetrate very far.

Do you speak Japanese?

No I don't, and the people who, you know, see the superficial English-speaking exterior of

Japan think they know Japan and of course don't. I at least know that I don't know Japan,

whereas a lot of people just think they know Japan.


75

Yes.

And because I've had the good fortune to know a lot of wonderful Japanese people, I've had

glimpses of Japan, and some people who have devoted their lives to it have had, you know,

very much more knowledge of Japan, but I've been very fortunate to have got as far as I have

got.

Well, you have got a long way. And we've spoken a lot about the Japanese and Japanese

culture and so on, but let's get back to some more of your business career shall we?

Mm. You were asking about transactions, early transactions that I worked on.

Yes, I was.

Well, Toyo Rayon then I've dealt with. I would regard as deals on which I worked at a very

early stage as a junior that were very interesting, of a very different character, one would be

the Eurobond issue for L.M. Ericsson, the Swedish telephone company, which has grown and

grown and grown.

Can we talk about that, because I'd like to hear about Warburg's pivotal responsibility for the

whole Eurobond set-up.

Yes, right. I talked about how the European Coal and Steel Community was the original

customer for which we were planning a Eurobond, although they didn't actually issue the first

Eurobond, but in the period that I joined Warburgs was the period that President Kennedy

had proposed the Interest Equalisation Tax, which gave the momentum for the Eurobond

market to come into real existence, and so somehow that was the, that sort of coincided with

my arrival at Warburgs, and so I am a child of the Eurobond market from that point of view.

And I as a junior therefore got involved in quite a lot of the sort of early deals that we were

doing.

But in general, the Eurobond market, were you, I mean you had actually started, Warburgs

had actually started, or that's the story, although I think Hambros claim a bit of authorship as

well, don't they? I mean were you aware that you were coming into something that was very

new and special and exciting?

Oh yes, very much so. There was a very strong feeling. And I think that the Bank of

England was very proud that these deals were being done in London, and that the Eurodollar


76

market, you know, before it became a bond market, the Eurodollars were being traded in

London and the American banks were coming over here to do it, was just what the Bank of

England wanted, to make London an international centre. And Siegmund was very much at

the forefront of making it into a long-term bond market. Of course other people got involved,

but, I think I've said to you before that most people would say that S.G. Warburg and the

Autostrade deal were really the beginning of it. I mean we had deals of our own before that

which resembled it, but that was the sort of purest, and it happened just after Interest

Equalisation Tax, it was in dollars, and I think most people regard that as the beginning. And

Siegmund himself, and of course he had all his people working with him, such as Ian Fraser,

Gert Whitman and so on, but if it hadn't been for Siegmund, you know, these things would

not have happened. But I was involved, as I say, in a very junior capacity in some of these

earliest deals.

So the L.M. Ericsson you mentioned...

I mentioned L.M. Ericsson because that was the first one on which, I mean I think it's the

beginning of 1966, we had been doing Eurobond issues since late '63, and I had been

working, I may have been doing other proof-reading for some of the deals that we did at that

period, like, I mean we did one for the City of Oslo, we did...we did the first European Coal

and Steel one which came about a year after than they originally intended. Some of those

very early deals I may have worked in some humble way, but on the, L.M. Ericsson was the

first time that I was assigned as `the junior' to a deal, which Raymond Bonham-Carter was

the director in charge of, and I was sent out to Stockholm with the lawyer in beautiful snowy

January to stay at the Grand Hotel looking over the ice-covered waterways and that sort of

thing, to work on the prospectus, and to meet the fascinating people at the Stockholms

Enskildabank, let alone the people at L.M. Ericsson. [BREAK IN RECORDING] .....and I'm

at the Grand Hotel in the middle of the snowy winter and ice everywhere, and meeting for the

first time the executives of the Stockholms Enskildabank, who are the joint leaders of the deal

with us; in fact I think the Svenska Handelsbanken is also in the deal, but all the shots are

being called by Stockholms Enskildabank, because Stockholms Enskildabank is the bank of

the Wallenberg empire, and the old Marcus Wallenberg is still alive and still calling the shots

in the entire Stockholms Enskilda and Wallenberg group in the same way as our dear

Siegmund was calling the shots at whatever age he may have been. Well in 1966 Siegmund

was still quite young, he was only 64, and, I don't know the age of Marcus Wallenberg,

whether they were exactly the same age or not, but they were the same age group. But

Marcus Wallenberg, you know, breathed the same terror into Stockholms Enskilda and the

Wallenberg group that Siegmund breathed into us. I mean it didn't matter what title he had,

whether it was chairman of anything, or no title at all, all decisions were taken that way. And


77

I always think of modern Singapore as rather the same, because Lee Kuan Yew founded

modern Singapore and he now just calls himself Senior Minister, he's got all these other

people as presidents and prime ministers, but if anybody takes a decision in Singapore on

anything without consulting Lee Kuan Yew, you know, he'll have their guts for garters. And

it was something always to remember at Warburgs that you had to be deferential to the old

man as long as he was alive, whatever title he was, and however many times he told you that

he had retired and had nothing to do with the firm any more, he was still very much into it,

and I know from my conversations at the very last month of his life that this was still very

much the case. And certainly Marcus Wallenberg really pulled the strings. It's been a sad

story. His elder son was Mark Boy Wallenberg, and he was being groomed for succession at

that time, and he, you know, we were being introduced to him as the coming person, you

know, and the young directors like Bernard Kelly were being very careful to try and sort of,

to go and have dinner with Boy Wallenberg and all that stuff. And, any case, at some stage, a

year or two after that, Boy Wallenberg went into a wood and shot himself, and this seemed to

be a very good example of someone who was having to take over a very, enormous

inheritance and it was too much for him. And when the other day Amschel Rothschild

hanged himself in a bathroom in Paris, it seemed to me exactly the same age at Boy[ph]

Wallenberg, about 41, an almost exact parallel of a sort of dynastic refusal.

Yes.

So, certainly in the Stockholm of the 1960s, I mean the Wallenberg empire was still

dramatically powerful and strong and was full of legends. For example one of the legends

was the Swedish match legend, and the Kruger Swedish Match story was the fabulous

bankruptcy of the late Twenties, early Thirties, which brought down a huge amount of

Swedish industry, and the legend goes that old Marcus Wallenberg, you know, was shown all

sorts of wonderful proposals by Mr Swedish Match Kruger or whatever his name was, and

eventually said, `You know, I really do not understand these proposals. I think, I know we're

probably missing some very good business, but I think we will not do it.' [LAUGHS]

Splendid.

Anyway, that was a typical example. And, I mean the history of all my business life, there

have been so many examples of people who are clever enough to say they do not understand

this or that project, and then miss it. Like, only yesterday one of my former colleagues was

calling me and saying, you know, the fall of Mr de Benedetti in Milan, Ì have been waiting

for this day, because,' he said, `ten years ago I told our colleagues not to trust this man, and


78

not to do business with him, and I was overruled, and I knew as sure as day follows night that

all these things would happen. It's taken ten years, and it's happened.' [LAUGHS]

A big occasion.

But you know, Siegmund and Henry of course, you know, again and again, I mean had this

unbelievable touch for picking out people you shouldn't do business with. It sometimes

caused a little bit of concern, because often people that you were uncomfortable with were in

the bank talking to them and discussing things, but actually it was their method of trying to

find out whether they were genuine or not.

Yes, quite.

And, you know, things then came to nothing and it emptied out, you know, the people here

had learnt a lot in the process.

So...

We're in Stockholm.

Yes.

And we're meeting for the first time these people in the Stockholms Enskildabank, a bank I'd

never heard of before, and seeing this extraordinary atmosphere which prevailed in this

private bank. And, I mean Stockholms Enskilda of those days was an absolute first class

financial institution, it was one of the impeccable houses of Europe. And it's worth

mentioning that IOS, the famous Bernard Cornflake catastrophe of the mid-Sixties. IOS's

underwriting was declined by S.G. Warburg, Lazard Brothers, N.M. Rothschild London, but

not by Rothschild Paris, which underwrote happily. It was declined by Stockholms

Enskildabank. I'm not quite sure who else in Europe declined it, not very many others;

virtually everybody accepted it, but Stockholms Enskildabank. And you know, Siegmund

Warburg said, Ì do not believe in miracles,' and all sort of... IOS had within its pay all sorts

of high-sounding people, and you know, it's always easy to buy ex-diplomats for a few

thousand a year, ambassadors and that sort of thing who are rather hard up, and there were all

sorts of people like that who had approached some of our directors saying, you know, Àll we

want is to just deposit some of our money with you,' and Siegmund saying, `We don't want

any of that money'. [LAUGHING] And my goodness, after all that to happen, you know,

and the houses that had underwritten IOS were so shattered as a result, including Rothschild


79

Paris, Smith Barney, Drexel, never recovered, and you know, it was another step up in our

reputation when we were able to say, `You never saw our name connected with that,' you

know, it's just another step up. But Stockholms Enskilda...

Back to Stockholm.

Stockholms Enskilda is in that inner category of super first class firms, and L.M. Ericsson

telephone company was one of the companies in that inner Wallenberg circle along with

A.C.A. and other super first class companies. And it was a very precious company and the

position that Warburg had, to be invited by Stockholms Enskilda to come up and work with

them on this, partly reflected our early success in the Eurobond market, but partly the fact

that Siegmund Warburg had helped to unravel the old sort of post-war Ericsson shareholding,

some connection I think with I.T.T. or something going back to the Fifties or Forties or

previously, but it was a post-war unwinding, the details of which someone like Grunfeld

would know but I can't remember. But we had been helpful and placed some shares in a

sensible way for them in the Fifties, and so we were therefore in good odour there, and it was

a client that we stuck with for many years, and very, highly first class. So it was a lovely

example of Swedish.....

End of F5292 Side A


80

F5292 Side B

It was a very enjoyable deal to do. I can't remember how much money we raised, and I'm

sure we have it on file, but I would suggest it's probably $20 million, and in those days $20

million, in 1966, was considered to be really a rather large amount of money and you worked

rather hard to raise this sort of thing. These days, you know, anything less than $200 million

is regarded as absolute chickenfeed and unmarketable, and we even did a Eurobond issue this

year for Mexico of $6 billion, jointly with J.P. Morgan. And, the sort of sums involved of

course are very much larger these days, but in those days it really was an important amount of

money.

So can you remember how you did it, any crucial points in the transaction?

In a rather episodic way. Because I was the junior working with the lawyers, helping to get

the prospectus written, and to understand the company and so on. Fortunately one was

dealing with a very first-class group of people so information was very readily available,

accounts were very well maintained, lawyers were of the first class, the company was entirely

transparent, you know, it's the pleasure of dealing with the first class which Siegmund was

always recommending us to do etcetera etcetera, was entirely there. But I do remember some

of the efforts we made in sort of trying to place the bonds, you know, in Europe, and meeting

with for the first time someone like Julius Strauss of Strauss Turnbull, who was one of the

sort of, the earliest brokers to back the Eurobond market, long gone now, and some of the

Luxembourg players like the Banquet Internationale à Luxembourg and some of the other

Continental banks that came into the deal. But most of all I remember the agony of pricing

the deal, and it was a wonderful example of dealing with firms where there are old men in the

background who really control, and the official pricing I think was sort of people like Bernard

Kelly, Bonham-Carter, Peter Spira and myself, with Rolf Hallberg and one or two of his

colleagues from Stockholms Enskilda, and probably someone from Svenska Handelsbanken

like Carl Erik Feinsilber. But, it was absolutely clear that the person who was calling the

shots was at the other end of a telephone in Sweden, and that it was Marcus Wallenberg.

[LAUGHS] Siegmund, I don't think he was in the room with us when the pricing took place

but he was on the other end of a telephone and, you know, we had these two gods to deal

with, and it was a very hand-wringing sort of selection. And I think the Swedes sort of, were

pretty successful in the way they pushed us. [LAUGHS] But, in any case the deal was

successfully done, was launched, and I think traded OK, and I think everyone at the end of

the day was extremely satisfied with it. But it was the first Eurobond on which I had worked

in any, as a proper executive instead of just, you know, reading proofs and that sort of stuff,

and therefore I have a sort of particular joy and memory of it. After that, after I had sort of


81

got my feet wet on that I did hundreds, and got more and more influential in the handling, and

very often took the principal responsibility for them as the years went by. But that was a first

and sort of glorious example. The first fascinating example that I ever had on the sort of, the

M & A side was when Reed Paper made the offer for Wallpaper Manufacturers, and that

must have been approximately the same date, and was one of the major seminal takeovers of

the early Warburg era. I mean obviously after British Aluminium, but...

So what date would the Reed Paper have been then?

Around 1966.

Oh, I see, as early as that was it?

Yes, I mean it was that sort of period. And, I mean British Aluminium is 1958, but you

know, these very big deals didn't come, you know, one after another quite the way they do

now. And Reed Paper was a good client with whom we had done a number of moderate

deals, and I remember Uncle Henry advising Reed that he thought that there was a good case

for going for W.P.M. And I was brought in as a very junior junior, it was the first example of

a sort of, a major deal where I came on as a junior and working under Grunfeld, Arthur

Winspear, the former Lex who was a genius on this, Frank Smith, and, although I was doing

all sorts of junior jobs I was present at most of the vital meetings and saw the transaction

through from beginning to end. It was a very hotly contested one; the, quote, Èstablishment'

was rather anti Warburg for daring to go to something as entrenched as Wallpaper

Manufacturers, but the judgement of Grunfeld and Smith that it could be done was vindicated

and we had won. And, you know, it involved, you know, one of those days early days of

these sort of late-night sessions over at the printers, and making sure that what you had

decided by midnight was already reflected by 8 o'clock in the morning in beautifully-printed

documents and all that sort of stuff.

Did you enjoy that?

Oh it was wonderful for a young executive.

Adrenalin.

Yes, yes, yes, lots of adrenalin. And of course it's always nice to succeed.

Quite.


82

And it's always nice to work for people you consider much more intelligent than you are,

because you learn more, and you know, people like Grunfeld, Smith and Winspear, golly,

you know, fantastic people, so subtle.

So subtle, that's...well that's interesting that you should say that. You think that they won

negotiations by that means mostly, do you? I mean that was the prime quality that they

brought to this sort of negotiation?

Yes, well I mean subtle is, you know, is you know, an extreme intelligence, and you know,

sometimes when you distinguish cleverness from wisdom, and Siegmund was supremely

wise as opposed to clever, you know, he just saw so many moves ahead, and would often not

go for things that other people thought were easy and obvious because he foresaw difficulties

several further steps down the line and just didn't want to get involved. And so, very subtle,

in the nicest sense.

So all this time you were gathering experience and being given more responsibility, and then,

I think it's '72 you became...

Well, yes...

Was there a sort of step up?

Well there are sort of two periods, I mean, by '66 I was sort of working as a junior on major

deals.

Yes.

And then in the period '66 to '69 I was commuting to the United States.

Oh were you?

And I had these three periods of between four and six months working as a junior in our new

New York office. This arose, though I'm not quite sure how familiar you are... When I

joined Warburgs in '63 we still had the old exclusive relationship with Kuhn Loeb, and I may

have mentioned or you may have heard from others that Kuhn Loeb did all its international

business, or certainly all its European business, with Warburgs or through Warburgs.


83

Yes.

And the Warburgs did all its American business through Kuhn Loeb. And that all went back

to the old inter-marriage of the Kuhns or the Loebs or, particularly the Schiffs who were the,

by then the rich family in, or the Schiffs inter-married with the Loebs sort of thing, but the

Schiffs were the rich family partners of Kuhn Loeb, and Warburg Hamburg at the beginning

of the century, and it's all in the Warburg book, so, X married Y and A married B and they

were all frightfully closely connected. So the old M.M. Warburg-Kuhn Loeb relationship

matured into an S.G. Warbug-Kuhn Loeb relationship, and during that period of the,

particularly in the Fifties, you know, Kuhn Loeb after the war, you know, were stuck in the

United States; Siegmund brought them back into European business and other international

business, and enabled Kuhn Loeb therefore to be one of the earliest American firms to sort of

get back into the international market after the conflagration. And so that continued until the

time that I joined the firm, and people of Kuhn Loeb were always treated with special

consideration. There was even the `Standard Instructions to Secretaries' which said that when

writing to the United States of America you should call everybody Mr, except lawyers and

gentlemen of Kuhn Loeb. So if you were writing to Nat Samuels in Kuhn Loeb it was `Nat

Samuels Esquire', but to somebody at J.P. Morgan it was `Mr Morgan'. [LAUGHS]

Wonderful.

But that's about well into the Sixties.

Is it?

This lovely idea that gentlemen of Kuhn Loeb would be addressed as Èsquire'. Any case, as,

you know, Warburg had been expanding and expanding, their sort of jealousies arose with the

Schiffs, and John Schiff didn't like the way Siegmund was doing things. I knew a lot of

jealousies, I can't tell at this stage, you know, what the rights and wrongs were, but you

know, our business was expanding very much, and we were now challenging the American

houses in their own field, because we were competing with them to do all the Eurobond

deals, and you know, and on a number of transactions we had beaten the famous American

firms for mandates. So there was bound to be more competitiveness. So the old relationship

with Kuhn Loeb was broken up in about 1964, and Warburg deliberately set up its own office

in New York some time around '66, and to have a flag waving in New York and to

demonstrate in America that we were prepared to work with other firms. And it was very

fruitful for us to work with other firms because when the other Wall Street houses saw we

were no longer tied to Kuhn Loeb they were happy to bring us business, so we did Eurobond


84

issues with several houses at that time, including occasionally with Kuhn Loeb, I mean, there

was always a relationship with Kuhn Loeb continued, until they were taken over by Lehmans,

you know, there had been times, and there were negotiations for Warburg to acquire Kuhn

Loeb but the personalities never worked out. But, in the late Sixties we had this sort of rather

small operation in New York run by an ex-chemical banker called David Mitchell, whose

father had been one of the old J.P. Morgan partners in the old days, and a very respectable

New York family, and, so we had this little operation, and I was one of the three or four

commuting juniors to sort of help sort of carry David Mitchell's bags and look after things in

the New York end and keep in touch with a few clients. And that was a very interesting and

amusing period, I think, these three sessions over there. And one thing is, getting experience

of the New York and American market is a very important part for any budding investment

banker.

Of course.

So I enjoyed that a lot. Back in London in '69 after the third of such trips was just when they

needed a junior on the Japan side, and that's when I therefore started on a regular basis to get

involved in the flow of Japanese business that was coming through, and there were quite a lot

of Japanese deals coming through, and a lot of Japanese visitors turning up and so on. And I

got on very well with all these people, and so there was the sort of three-year period, '69 to

'72, when I was more and more doing that, but not exclusively, I was still doing lots of other

European deals and so on. But '72 was when I had first trip to Japan. After the first trip to

Japan I was a regular visitor, I mean then I went four or five times a year.

Yes.

Never stopped, never have stopped. And built up and kept, and at no stage did I allow my

Japanese contacts to disappear, even when I was sort of in other directions and that sort of

thing. And because I was involved very much with the creation of our Japanese business

from nothing, you know, people in Japan regard me as part of the foundation of the Warburg

relationship, it gives me... It's different from being an executive who is put onto it and taken

off it and that sort of thing; you know, we of that period were the people who were building

from nothing what Warburg became, and although we were insignificant compared to the

Siegmunds of this world, we were still part of the creation of the edifice, and we could point

out the blocks and boulders on the building and windows that we had constructed, and

chimneys that we had done, and you know, we did have a hand in the building itself, and it

was visible and people knew it, and it gave it that sort of extra touch. And it gave some of

the older people the motivation that we now have, still to keep doing it, because we want to


85

make sure that this nice edifice which was Warburg continues to look a little bit like it used to

in the extraordinary global thing that we are. And of course the clients love it. So, I think, I

talked about those periods, the starting of the Japanese one originally in London from '69 to

'72, and then from '72 to '79 I was sort of rising very fast in the International Department, and

getting responsible for more and more of our deals. In the middle of it was the Arab boycott

crisis.

Yes, well I want to talk about...

Which peaked in 1975. And then after that, it was interesting that, you know, Japan was the

country where we had our greatest difficulties; because the Japanese were so, you know,

terrified of upsetting the Arabs and so on, they didn't want to do business with us except for

just a few, like Toyo Rayon who banged the table. And then in, a year or two later, once the

Japanese had seen that we had overcome the crisis and that the crisis had not affected us, they

came back to us in larger volume than before, and the recovery of our market position in the

'77 period, the Japanese were immensely helpful in, and I remember very well some of my

colleagues saying, you know, if it hadn't been for the Japanese, we would never have

recovered to the top of the league table that we became by the late Seventies, and the

Japanese had shown that, you know, once they had got over their doubts, that their loyalty

was the greater.

That is interesting isn't it.

It was very interesting, and you know, when they saw the market position they were very

helpful.

But were they followers in this, or did they, the fact that they...were they the first to show,

having got over their initial doubts, were they the first to show faith in you, therefore bringing

other people back as well?

Not the first, not the first. They needed to follow, to follow some examples. But when they

saw that we were establishing some examples, incontrovertibly demonstrating our continued

presence in the business, they were very quick to follow.

I see.

And then, you know, and then became quite an avalanche.


86

Was the Arab...

Then we did some very...you know, 1977 was the annus mirabilis, and we started it off with a

marvellously successful deal for Sumitomo Heavy in the first week of January, and Daiwa

were so pleased with this and the advice that we had given that they brought to us the opening

of the Euroyen market, and we did these first Euroyen issues for the World Bank, the Asian

Development Bank and the European Investment Bank. And...

Now, sorry, I don't really know...the Euroyen market you opened, did you?

Yes, yes.

I don't know anything about that.

Jointly with Daiwa Securities.

Right.

And, this particular episode, what happened was that, I talked about an issue we did for

Sumitomo Heavy, and it was pure market skill. Sumitomo Heavy wanted to do a Eurodollar

bond issue; we were the book runner but we had to work with two other houses, namely

Daiwa and something which was then called Sumitomo White Weld, which has since been

absorbed into Sumitomo Finance International but it was then called Sumitomo White Weld,

and it had one or two non-Japanese executives there who thought they knew the business a

great deal better than us, and they said, `Well we'll start the issue on the 7th of January,' or

something like that, in the new year, after the holidays and that sort of thing. And I

remember saying, `Well you can do that if you want to, but if we're going to be responsible

for the deal, I want it started the day after Christmas Day. The market is good, there's a lot of

money around, there'll be no other deals in the market after Christmas. I feel sure that we can

get the whole thing subscribed by New Year. Just take advantage of the froth in the market.'

So I brought the staff in on Boxing Day, and so the day after Boxing Day when people came

into their offices, and people still did work in those days between Christmas and New Year,

the only invitation they had was the one from Warburgs on Sumitomo Heavy. And

everybody was dying to get some more bonds into their portfolios before the new year, and

we had a tremendous book, and you know, sure enough by the 31st of December we were

multiply subscribed, we priced it quite aggressively, and any case, I mean Daiwa and

Sumitomo Heavy and Sumitomo White Weld were delighted with the advice that we had

given.


87

I'm sure.

And then, about, very early in January President Carter made some statement about

something which mucked up the bond market. So if we had stayed and sort of waited till the

new year as the others had been advising, the deal wouldn't have been done, and Daiwa were

so impressed with, you know...

Mm, I bet.

All foreigners always assume that the English are idle, and are doing nothing but tea breaks

and everything like that, but bringing in my staff over the Christmas holiday, getting people,

sort of lawyers working on prospectuses and that sort of thing on Boxing Day and that sort of

stuff, in a Warburg context I thought the most natural thing to do. [LAUGHS] Any rate,

apparently it was one of the...

Did you feel that you were taking a risk, or were you absolutely sure that was the right thing

to do?

Well I knew the market was right; the risk in my view was waiting till the new year. And one

thing you do know as an operator in the market is, if the market's there you move heaven and

earth to move at once, and you do not wait and say, `Well it's more convenient...' And one of

the things with the Japanese which you always had to play games with is that any Japanese

issue was always hypothecated on the theory that the president of the company or someone

high up would fly over from Japan for the signing ceremony, and so the signing ceremony

had to be fixed before anything else, and the president's schedule was so important and that

sort of thing. And I would say, Ì don't care when the chairman comes over and signs the

thing, I want to do the deal now. We'll give a document for your chairman to sign if he wants

to come over on such-and-such a date, but we must do the deal now!' [LAUGHS] Of course

the Japanese were so unused to that, and so... But I mean it's elementary if you are operating

in the market when the market's there. And you never know when Saddam Hussein is going

to invade Kuwait, or anything is going to happen in the market; if the market's there you've

got to move, and it seemed to me a very clear case. The market was there. I mean everybody

said the new year market was going to be strong too, but I said the market's there this week,

let's take it. And anyway, Daiwa were absolutely overjoyed, and so around the sort of 3rd of

5th of January in walks Mr Uemura of Daiwa to say to me, you know, `We are so delighted

about how you have done this transaction, I now want to tell you about something much more

important. We are in confidential discussions with the Director General of the Ministry of


88

Finance, and we are also in discussions with the European Investment Bank in Luxembourg,

and we have got an agreement in principle to launch the first ever Euroyen issue, January

1977. We wonder whether you would like to work with us on an equal basis in this

transaction, because although we understand all the Japanese angle, we recognise that you on

the European side have got a great deal of technique for us, and we would like you to work

with us.'

What a wonderful coup.

And, any case, it was a coup on so many levels, because it was the first ever Euroyen issue

and anything pioneering like that is always fun; and secondly, we had never led an issue for

the European Investment Bank. It was notoriously one of the most difficult borrowers in the

market. Monsieur André Georges was the man who ran its finances in succession to a

Monsieur Cassagnes who was killed in an accident, but I think Monsieur Georges was

already the financial manager of the EIB. He was notoriously tough on bankers and would

have quite a lot of difficulties with the EIB. And had never led one of their issues. Now we

were still a developing firm. And, any case, I sailed over to Luxembourg with Daiwa, and

delightful meetings with Monsieur Georges, who seemed to me to be not nearly as

frightening as some people had said, and he was very excited to be the first borrower to do it.

And we had very good joint discussions and that sort of thing, and, I forget exactly when we

launched it, it must have been a month or so later. It was a wild success. The yen was the

fashionable currency of the year, and so again we were able to price it very aggressively, and

it was one of those really, you know, marvellous deals. Everybody was satisfied, and the

Japanese authorities thought it was the best possible launch for the, you know, the measured

launch of their currency as an international currency in the market, and you know, everybody

was screaming at us for bonds and that sort of thing. It was a lovely position to be in. Well

having done that deal, the World Bank took an interest and, you know, I called the Treasurer

of the World Bank, Mr Rotberg, and, I'd like to come and see him in Washington and discuss

it, and he said I'd be extremely welcome and could I come at once sort of thing. And over I

sailed to Washington, and you know, before you could say Jack Robinson, Daiwa and we had

a similar mandate for the World Bank. And you know, Warburgs had never done a deal for

the World Bank before, because when the sterling syndicate for the World Bank had been

constructed after the war, it was before Warburgs was important enough to be in it, and there

was a group of six old-fashioned houses. And, I mean Siegmund was unbelievably pleased

when suddenly we were there with the World Bank. And I knew another thing, which was

never said, but, Gene Rotberg and a lot of the financial establishment on the American East

Coast were Jewish people, and, I'm not Jewish but I've worked for the greatest Jewish

bankers of the generation and all the rest of it, and I have had a very substantial role in


89

fighting the Arab boycott, and everybody knew I had done that, and I know that when Gene

Rotberg gave that business to Warburgs he wanted to have Warburgs to have a very

important piece of business from the World Bank because of all that.

Yes.

And it was just part of it, and, I mean nobody said it at the time and that sort of thing, but I'm

sure it was true. And it was just, you know, a very lovely moment in...

For Siegmund.

For the development of that market. Yes, very lovely for him.

I mean, as I see it, Warburgs had been sort of the outsiders really, hadn't they?

In the City?

Yes.

Yes, yes, yes, yes.

And so is this the sort of vindication of their real coming-of-age in a sense?

This was very coming-of-age, and in the sort of '77/78 period, and I regard '77 in many ways

as the sort of, the absolute peak, we swept right up to the top, we were top of the league

tables, head of Deutsche Bank, White Weld, everybody. And also in '77 we got what I called

my Japanese hat trick. We did four Japanese corporate issues, one in each quarter, one with

Nomura, one with Nikko, one with Vamaichi and one with Daiwa, and to actually get all of

these four highly competitive Japanese.....

End of F5292 Side B


90

F5293 Side A

[This is the sixth tape with Martin Gordon.]

So you had...

Yes I was describing how 1977 had been, and 1978 had been very much annus mirabilis for

us in the Eurobond market and was a sort of peak of achievement on what a lot of us had

been working on over many years under Siegmund's leadership, and Eric Korner also, who I

connected so much with all this. And being the year that we were able to introduce the

Euroyen, and all these other Japanese deals and other deals coming in from elsewhere, was a

very high point in our reputation. I forget whether it was '77 or '78 we were named Bank of

the Year and so on. So it was a very good moment in our reputation, and one could hardly go

wrong at that time.

And a very good moment for your reputation too, within the firm.

Yes, that was quite a good period. Shortly after that I went to the States, to Warburg-Paribas-

Becker in 1979, early 1979.

Was that your choice?

My father had died in 1977, and often when things like that happen you want to make a

slightly different move. We had taken this investment with Paribas in A.G. Becker; I thought

it would be interesting to spend a period in the United States and see what Wall Street was

really like, and therefore I asked Siegmund whether this will be possible, and it was made

possible in early 1979.

And so how did you find it? You'd been there previously for a matter of months, as you said.

Yes, but that was when we were operating a very small office of our own. Now we had a

minority stake jointly with Paribas in a national firm dealing in a very wide variety of

instruments, particularly in commercial paper, and being at the fringe of the major bracket in

New York, in other words our A.G. Becker, Warburg-Paribas-Becker was not a Morgan

Stanley or a Goldman Sachs, or a Smith Barney[ph], it was rather on the edge, and Siegmund

always hoped that by beginning with a W it wouldn't matter so much to people to let us into

the first bracket, because we would be at the end of the first bracket. [LAUGHS] Which to

some extent worked, but not always.


91

But it was a big change for you, wasn't it, sort of leaving...

It was, but then it was very good for me to do it. Things didn't work out as I might have

expected, but then I don't know what I had the right to expect anyway. The sort of, the

impact of moving into such a very fast-moving trading firm, and this was a firm that was very

successful on the fixed income market, quite a strong bond firm, and particularly because of

its commercial paper business and so on very Chicago as well as New York, the heart of the

firm beat in Chicago where it had originally been founded in the 1890s, but it was a very

large firm full of very brash Americans, many of whom I discovered were Irish Americans.

And I remember with amusement finding so many Irish Americans on the staff, and in very

important positions in this firm, and when an Englishman came over, well of course I would

try to say, well I'm not really English, I'm a Scot, but even so, someone coming over from

London was regarded by the Irish Americans as the enemy, and I was personally responsible

for the potato famine and all other sufferings of Ireland in the last century. And one felt that

most of these Irish Americans were contributing handsomely to the IRA fund-raising efforts

and that sort of thing, and they had very, what I call romantic ideas of what the old country

was like. And I remember one of the ways in which I earned the confidence of these people

was the fact that I actually knew where Ireland was, and I knew people in Dublin, and one of

the accounts on which we had worked during those early years of the Eurobond market was

that of Ireland, and we were the principal bankers to Ireland, a position which we had taken

away from Drexel Harriman Ripley because we were much more aggressive than they were

in the mid-Sixties. And so we enjoyed a very favourable position with the Irish Government.

And I remember saying to some of the senior people at A.G. Becker, Warburg-Paribas-

Becker, you know, `You're so Irish, when did you last go to Dublin?' Òh well, Rosie and I

have never actually been to Ireland.' [LAUGHS] Again and again that conversation was had.

And so I said, `Well, I'm taking you over.'

Marvellous.

And, this guy, Jack Donahue, who was the head of the fixed income and an enormously big

and powerful person, you know, typical of that. And, so I took him over to Dublin, and I

asked Howard Guinness, who was then working for Warburgs, and who would had been

responsible for our Irish business out of London, I asked Howard Guinness to join me in

Dublin to help me to introduce Jack Donahue to the top people in Irish financial matters, so

we called on the Finance Ministry and the Central Bank and the leading banks and that sort of

thing. We were received with immense warmth, and of course Jack Donahue was a very

warm and delightful person. But for him to have been, the way he was received and to be


92

back into sort of his ancestral country and that sort of thing, and to see what people were

really like, and of course then, when he went to Dublin he realised that the romantic thing had

long gone, and that people lived day-to-day existences in Dublin, and that you had to come to

terms with the present day and not live in the last century. And so, he brought back with him

a message to his Irish American colleagues in our office which was very very different from,

you know, what they had been used to.

Quite.

And after that period, because we were then known in Dublin as a firm that was behind

Ireland, the Irish officials would always call on us in New York, and so I would introduce

these people from Dublin, all up and down, you know, and I would give dinners in New York

for these people from Dublin and that sort of thing. And of course they thought it was

absolutely...and they longed within their deepest heart to do business for Ireland and to help

them in Irish transactions in New York, and to find out what Irish people were really like. So

I did quite a lot to dispel certain prejudices. We didn't in the end do an awful lot of business

with Ireland, but, the Irish wanted to do more business than we could actually achieve, and

there was always the romantic side of what you wanted to do for Ireland with the hard

business side of what some of the really sticky New York institutions were prepared to do, at

what levels. And so one didn't do as much as one might have done, but certainly we were

offered every bit of business under the sun from the Irish, but couldn't do as much of it as we

wanted to do. And we got to know the Irish industrial companies, they came over and saw us

in New York and that sort of thing, and I established a very nice liaison. But it was an

amusing reaction to a situation of whose existence I was totally unaware. I mean the whole

sort of Irish-Americanism of a lot of New York was not something that I knew about in New

York, and it was only when you actually go and live in New York and take part in a New

York firm that you see this, and this terrific prejudice that exists in New York which for

example would enable someone like Mayor Edward Koch to snub at the Prince of Wales

when the Prince of Wales was visiting New York.

Yes, exactly, terrible.

And something which people over here couldn't understand, but as a political gesture in New

York, you know, earned him lots of votes.

What about the Jewish influence in New York?


93

Well, coming from a Jewish house, I mean Warburg was essentially a very Jewish house in

those days, less so of course after Siegmund died and by the Nineties, and one, therefore

representing a Jewish house one certainly didn't expect any difficulties in being received in

any Jewish circle in New York. But as it happened, the firm that we had bought into, I would

regard as far more Irish than Jewish.

I see.

And was, you know, there were a number of Jewish people around but...and they on the

whole came to you, came to me, as a member of the family and as a saviour, you know,

coming over from S.G. Warburg which had fought the boycott battle which was the, you

know, great Jewish name, you know, they were so proud to be connected with us, and you

know, and every Jewish door in the firm was wide open from the first day.

Quite.

Never, never any jealousy there. But it was not so very many people, but such as were were

very very open.

It is very strong, isn't it, these connections like that, make a tremendous lot of difference in

your business.

Yes, yes.

Were there any other sort of groups of people, groupings that you noticed there?

Well of course the different Wall Street firms had sort of different characters from that point

of view. Some were more waspish, some were more Jewish and so on. But it just so

happened the firm that we had bought into was more Irish, in my perception, than anything

else.

Yes.

Complete surprise to me.

So, what about other differences that you found in New York in business terms?

Well, you just couldn't believe how vicious people were to each other in New York.


94

Really?

Not only in the firm into which we bought, but in other houses on the Street. And there are

books written about it, like for example the book written by, I think Mr Auletta on Lehman

Brothers called `Greed and Glory on Wall Street, the Story of Lehman Brothers'. I regard it

as a very good example of that sort of thing. Of course when Mr John Gutfreund, who was

the dynamo of Salomon Brothers, who subsequently was disgraced, but while he was still a

dynamo at Salomon Brothers and he had taken over the senior partnership from one of the

Salomon family, and he decided that he was going to take the firm public, thus tripling the

value in stock market terms of their asset-based share capital, and taking a decision at an all-

day meeting of his office on a Saturday, and then sending someone round to inform Mr

Salomon on the Sunday. [LAUGHS] This was an unbelievable example of true discourtesy,

as only Wall Street could manage it. Of course, in London we've learnt a great deal about

discourtesy in recent years, and we're now more or less right up to the highest exquisite levels

of the New York discourtesy, but in those days London was still, well let's say discourtesy

was practised in a more quiet way, but Wall Street it was far more outspoken. But generally

the way people would treat each other in New York was always very much rougher than in

European financial circles. And there were a lot of interesting examples of that. And how

the flattery which people received when they were up, and how quickly the carpet was

withdrawn when they were down. I mean Warburg-Paribas-Becker for example was run by,

after Paul Judy we brought in Ira Wender to run it, and during this about three years when Ira

was Chief Executive, and his secretary, Rita Barren was his secretary, you could see how

people sort of went down the corridor and sort of knelt before Rita and sort of fawned before

Ira. But literally within an hour of Ira's fall from grace, you could see nobody was going

down to the end of the corridor where Rita sat, nobody was even going there. They were

simply completely dropped, you were a non-person, you know, it was so... And, again and

again one saw in New York, I mean this sort of immense harshness.

That's really hard. It's interesting too because I remember at the beginning of your career you

talked about Tony Korner saying that everybody was really quite vicious; he didn't use

that...or you didn't use that word.

Yes, yes.

But, and then you found the opposite in Warburgs, and here you were finding it in New York.

Yes, yes. Yes, well I think Siegmund ran a tough shop but it was a workable one.


95

Well he obviously got rid of people when he didn't like them, from what you say.

Yes, yes. And when they opposed him. But because he really led it, you know, you knew

where you stood. But Wall Street, it was very rough, and now I gather that Wall Street is,

you know, is even worse in that sense, the toughness, the way things are done. And of course

now we're a global, you know, we're all global and that sort of thing, so we expect it to be

pretty tough and rough here, but most people say that, you know, we are at least a European

equivalent of that at the moment rather than one of the sort of, the big three our four in New

York where it's pretty hard. But then, of course the rewards these days are even higher than

they were in those days, and the simply absurd salaries and things, bonuses, that people get

now were not heard of in those days. I mean of course there was quite a lot of fair

remuneration around, particularly in Wall Street. I remember when Sape Stheemen of

Warburgs was hired away by Goldman Sachs at a salary of $100,000 a year. That must have

been mid-Sixties.

Mid-Sixties?

Mid to late Sixties. And, I mean, over here we were completely, you know, we just couldn't

believe it. There was Sape, you know, sailed away at $100,000. Of course, I mean he soon

got spewed out by Goldman Sachs, you know, he didn't last. But, it was just thought, you

know, Christ! if the Americans are going to offer salaries like this...

So you were doing very different sort of business really in New York from what you had

done before, is that right?

It was very different. I mean I think Siegmund wanted to try and have as Warburg-Paribas-

Becker, with the goodwill of Warburgs and Paribas, a major bracket house bearing his name

that would compete on equal terms with other Wall Street houses. But, although A.G. Becker

was very strongly entrenched in the commercial paper market and certain other markets, it

was not in corporate finance terms an accepted house, and with all the goodwill that

Warburgs and Paribas could put into it, it never managed to get over that step. We did do

occasional landmark deals out of Warburg-Paribas-Becker which couldn't have happened

before, but we never got into that sort of cosy circle where really the market was developing,

and so, that Warburg-Paribas-Becker thing was never the success that Siegmund had prayed

for. And it had other things that created difficulties, one essential element of which was the

fact that you had two foreign shareholders owning 40 and subsequently 50 per cent of

Warburgs and Paribas, and the Americans were able to some extent to play off the French


96

against the English, and the responsibility for making the American investment work was

never centralised in one house. You know, you had Scholey; you had Pierre Haas on the

French side; you had Pierre Moussa; Siegmund himself. If somehow Warburg and Paribas

had left it to one person, either English or French, to have the absolute responsibility, it might

have worked, but they were always able to say, `But Pierre Haas says this,' or `Pierre Moussa

says that,' or, you know, and there were always, the French were always wanting to make,

you know, to give the impression that they were the really people who cared and then the

English people wanted to be... So that was a sort of, a thing that didn't work out. And Ira

Wender didn't turn out to be the right chief executive, didn't...he wasn't able to pull things

properly together. He had a legal background, not a banking background, and in the rather

rough-and-tough markets there were at that time, didn't work. So we took the view that either

we sell out to the French or the French sell out to us, and the French were keener to buy us

out than we to buy them out, at least they were prepared to pay us a higher price than we

would have paid them, so we sold out to them, at a fair, actually quite a nice profit. But the

day we sold out to them I had the choice of going back to London with my Warburg hat

firmly on again, or staying out there as part of Paribas-Becker, which was subsequently all

sold to Merrill Lynch. If I had I would probably now be in Merrill Lynch, or would have

been gravitated into Merrill Lynch. But I had no doubt at all that S.G. Warburg was still the

prime firm to be with, and was the one that I had always given my loyalty to, and although I

had some very encouraging noises from my American and French colleagues I didn't think

twice about it, I just went back to London in 1983 and resumed Warburg life. Of course a lot

of my colleagues thought, who is this person who is coming back, you know.

Yes.

Most of my seats had been filled, and, don't let Martin Gordon think that he is going to come

in on this and that. And, what difficult jobs can we give him that will both keep him out of

the way and give him plenty of rope? And the difficulty job that was thrown at me was

Indonesia.

Sounds very exciting. I'm sure you took it on board with great aplomb.

Well I don't know about great aplomb, but it was very funny, because, you know, it was full

of these, one of these threatening pathways, on the left Scylla, on the right Charybdis; a nasty

bog ahead of you, and so on. And, although I had become something of an expert in the Far

East over my career Indonesia was not on my patch, and I had rather kept my distance from

Indonesia because other colleagues who handled our advisory contact with Indonesia, I had


97

always felt that Indonesia was the sort of thing that, once you got into it it was going to be

very difficult to get out of it.

Why?

Because it was a big complex society, and so on. And that once you started sort of engaging

yourself in their problems that new ones would appear, and so on. And, any case, at the time

that I was returning in 1983 from New York we were having, I mean it's not known outside

the firm of course, I don't mind saying here, we were having quite a few difficulties with

Indonesia, and our relationship was at a bottom. It was a relationship, the contract had gone

on since the beginning of 1975; there was new Governor of the Central Bank who didn't see

why they needed advisers like us. I think one or two of the people we had sent down to

Indonesia to handle that account had been somewhat arrogant people, not the sort of people

whom Siegmund himself would have sent to look after this sort of thing. Our contract was in

a state of some threat at that time, and we were quite worried that we might lose it. Any case

this was the perfect thing to throw at Martin Gordon.

Yes, quite.

Because, Martin Gordon had a reputation for being good with Orientals, a), and b) it would

get him out of the way. [COUGHING] Keep my coat on. The air conditioning is working.

So, I was rather alarmed at the prospect of having to take over the Indonesian account, and

several people had warned me that it was going to be very difficult, but the people who were

responsible for telling me that it would, you know, `Don't worry Martin, it'll be all right,' all

said to me, `Well don't worry Martin, Shinje Assenuma[ph],' who was at Lehmans or Lehman

Kuhn Loeb, all that sort of thing, ìs on the account with you,' because we did it as a troika

with Lehmans, Lehman Kuhn Loeb and Lazards, Lazard Paris. `Don't worry Martin,

Shinje's[ph] there, Shinje[ph] knows everybody, Shinje[ph] will see that you don't do any

wrong.' And, I knew Shinje Assenoma[ph] and a high respect for him, an extremely nice

Japanese guy, and so I felt, well at least if Shinje's[ph] there I'm not going to go seriously

wrong. Less than a month later I get a call from Shinje[ph]. `Well Martin, I want you to

know that I am leaving Lehman Kuhn Loeb to go and work for the World Bank, and I am

therefore leaving the Indonesians in your hands.' He said, Ì've been wanting to do this for

some time, Martin, but I felt that I couldn't do it and leave the Indonesians in the lurch. But

now that you are on the account, I feel that I can leave with a clear conscience, and have so

informed the Governor.' [LAUGHING]

Oh well that's a wonderful recommendation for you, but you must have been horrified.


98

It was absolutely awful. And, I don't think I had even been down to Indonesia. So I didn't

even have Shinje[ph] on one visit to Indonesia. He did introduce me to some of his friends in

Jakarta, and therefore I was able to sort of tap some of his goodwill, but sure enough when I

got down there I found that the new Governor was extremely brusque and it was clearly

going to take me some time to charm him. Some of the other officials at the Central Bank

were more accommodating, and clearly Shinje[ph] had helped in sort of preparing the

ground, and other people in Jakarta, you know, you find friends when you go to foreign

places, and gradually, you know, confidence built up, and within about a year, or certainly

eighteen months, you know, I could walk into the Governor's office whenever I wanted to,

and you know, the secretary would just say, you know, anything, meetings would be

interrupted, you know, you just... All fine. But...

Who was the Governor?

Governor Arifin Siregar, a very brilliant man who subsequently became Minister of Trade,

and...

Why do you think he was so against the advisory situation?

Well I think that, I think that he resented, well, he was new, and new brooms sometimes...

And I think that some of the people that we had been sending down had been extraordinarily

arrogant, and you know, I think some of our people had taken things for granted, and, you

know, and had rather talked down to the Indonesians, which is, you know, not Siegmund

Warburg's style.

No, absolutely.

And, Siegmund Warburg's style, as I said before, is to have people who appreciate the genius

of the Chinese, the genius of the Japanese, the wisdom of the Hindu, and the subtlety and

cleverness of the Javanese. And the people of Java and of Indonesia are people who are very

clever and very deeply subtle people, and the fact that they do things in a different way

doesn't mean that they are less clever or anything like that; if you get to know them you

realise their immense depths of culture and loyalty and other wonderful qualities. Any rate,

you know, I think that we had made some of our own mistakes, and things were very rocky

then, but within a year or two things were absolutely back, and very comfortable. And I

transferred to Japan in 1985 and that was the period that the oil price was under threat.


99

End of F5293 Side A


100

F5293 Side B

I was saying that I transferred to Japan in 1985, and I handed on the leadership of the, or

coordination of the Indonesian account to another of my colleagues in London, but remained

very closely involved with Indonesia out of Japan, and after all it was only a six- or seven-

hour flight down to Jakarta. And the Japanese banks were very influential in the financing of

Indonesia, and I had of course very good relations with the Japanese banks which were of

value to the Indonesians. And during late 1985, the oil price started getting a little bit

difficult, and there were signs that a very substantial oil price fall could occur, and indeed in

early 1986 it did happen, and some of the worst expectations of the market were fulfilled.

During that period we, the advisory group, including myself, were saying that Indonesia

should gather in a harvest before the storm and raise substantial facilities from the market,

and Japan was obviously a very key place to do that. And so, all through that late '85, early

'86 period, I was extremely active with the Indonesian central bank, the Bank of Indonesia,

helping them raise some huge dollops of facilities and money to bolster their reserves, which

meant that when the collapse occurred with a real, quite a bang in the spring of '86, Indonesia

was in a moderately strong position, and enjoyed very good support from Japan, the financial

system and the Japanese Government, and were working very closely with the Japanese

Government, and thanks to a lot of Shinje's[ph] original introductions to me I knew a lot of

the right people in the Japanese Government who were likely to be helpful and to anticipate

disaster rather than to wait for it to happen. And, so we were able, and the Indonesians very

much recognised it, we were able therefore to anticipate the disaster, and whereas other oil

producing countries in Latin America went down the spout at that time, like Venezuela and

so on, Indonesia remained pure, with a great deal of help from everybody but we contributed

part of that help. And, you asked me what we did as advisers, and one of the things that we

did as advisers, and there were many requests made of us by the central bank and by the

Ministry of Finance, and by other senior Ministers in the Indonesian Government, but, one of

our jobs was to be the interface between the Government and the market, and we were

expected to keep regular dialogue with the leading financial institutions in the world, and

some of the other major investors, industrial investors in Indonesia. We were expected to

keep a dialogue with them about what was going on in Indonesia, and Indonesia then, and

even to some extent now, and the current problems of Indonesia, you know, are not unrelated

to the problems of twenty years ago, or ten - no, actually, ten years ago, but... Indonesia is a

large, diverse and complex place, and it's often difficult to get information right on the spot,

accurate and so on, and the Indonesians very much like to have a troika of Warburgs, Lazards

and Lehman Kuhn Loeb, to be always on the spot and to maintain these contacts with the

banks. So, if something went wrong we were very quick to call the banks and tell them what


101

was actually happening, and if people get up-to-date information and know exactly what the

situation is, they become much less alarmed than if it's something they don't know.

Yes, quite so.

And, so during that period we were able to say, we were able to call banks, visit banks, all

round the world and say, you know, this is not like the Pertamina[ph] crisis of 1974; this is

not like the current situation in Mexico or Venezuela. Indonesia does not have a short-term

debt problem, there is no outstanding short-term debt beyond a few hundred million. It has X

number of billions funded from this; it has this facility from the inter-governmental group; it

has this from the Export-Import Bank of Japan; non-oil exports are now rising at this rate.

All that, we were able to say then and there. And we had access to everybody in Jakarta, we

were allowed, you know, we had the complete confidence of the Indonesians, and so we were

able to... And, you know, the conversations we had in good Warburg style, we recorded

them, we sent them round the Ministers and that sort of thing, so they knew exactly what

people were saying, and we encouraged bankers to come down and we'd tell them which ones

were influential and needed a little bit of extra attention and so on. And when in the

Indonesian Parliament for example you had fractious Members of Parliament getting up

saying to the Government, you know, `Why are we straining ourselves to pay these awful

debts to the Japanese and the Americans, when Argentina and Brazil have happily defaulted

and life goes on very well in Argentina and Brazil?' And the Minister said, `Well please,

help, advise us, how we should answer these questions.' We bang in the memoranda

explaining what happens when you default, and you know, the years it will take ever to

recover credibility, and that sort of thing. And so, the most determined responses were

always being made. And so...

Looking at that from the other side, what happened about, did you have, you didn't have

advisers for the Latin American countries? I mean not necessarily you personally, but did

they have advisers similar to what you were doing for Indonesia?

No, not on the whole, not on the whole. We actually acted as advisers to a lot of countries

around the world, and over the years we've probably advised some 40 countries, including on

occasions, you know, Brazil and so on, but never in the sort of consistent and trusting way in

any Latin American country that we advised Indonesia. I mean there are other examples of

countries that we have advised over the years in a consistent and trusting way, Gabon being a

very good example in Africa, but Indonesia, I mean it's terribly difficult to compare Indonesia

with any other country, it's so enormous.


102

I mean what you are suggesting to my ears sounds as though you saved them in fact from a

lot of the fate that the South Americans suffered, and I just wonder why, was it that the South

American governments in general didn't want that advice, or though they could get away

without it, or just weren't prepared to listen, or, why were Indonesia listening?

Well the Indonesians were sufficiently sophisticated to realise that it was worth having that

sort of advice, and it was worth paying quite good fees to very top firms to have them on your

side. And I give a particular credit on that to a certain Indonesian-Chinese gentleman called

Karam Awam[ph], who was at that time the Executive Director of the International Monetary

Fund, whose parish included Indonesia. And at the time that Indonesia got itself into a hell of

a mess at the time of the oil crisis of 1973, and it had this Pertamina[ph] oil crisis, it was

Karmawan[ph] who recommended that Indonesia should take in three houses, which was

eventually narrowed down to those three houses, as financial advisers, and although the

actual, the role of the advice developed in various ways over the years, it was the genius of

Karmawan[ph], matched with the reciprocal genius of what is sometimes called the Berkeley

Mafia in Jakarta, the group of senior Ministers and central bank Governor and so on who

were advising the President in those days, and who said that they would get value for money

out of having these three houses involved. And so we remain the advisers to this day.

Well that's very good.

Although of course the character of the firms advising has changed, but some of the people

who have been involved throughout are still there. For example Herman Vanderwick[ph] is

one of the people who has been involved from the very beginning, and still goes down quite

regularly to Jakarta, and for example with some of the problems in the last couple of months

in Indonesia, I mean Herman has been frequently down there and, you know, sort of telling

them what the market thinks, telling them, you know, please do this, please do that, and

similarly making sure that our dialogue with the market gives an accurate picture of what's

going on in Indonesia and not a journalistic flamboyant picture of what's going on. Of course

other countries, had they wanted that advice could have paid for it, and some of them did so

occasionally but not so often on a consistent basis. And of course in the whole of Latin

America you have a defaulting culture; I mean for the last hundred years or more the Latin

Americans have defaulted time and time again. Did I tell you my conversation, another

conversation I had with Mr Sharp?

No.


103

In his mid-90s, calling on him for tea at his flat in St. John's Wood. Here he sits, you know,

drinking his tea at the age of 95. [GERMAN ACCENT] `Mr Gordon,' he says, Ì have been

reading these newspapers, that S.G. Warburg has been doing some business and investing in

Latin America. I really hope you will not do zis. Zey will not repay ze money you lend or

invest there. Zey have defaulted before many times, and zey will default again.'

[LAUGHING] That was just before, you know, the most recent Mexican crisis. And, you

know, but certainly it is, I am afraid, part of the culture of Latin America to default, and

whether Latin America has really moved into a new age on that, you know, has still to be

seen. And I think we're living in a mad market now anyway, the market of this 1996, these

extraordinary bull markets and lots of money have been made in derivatives and that sort of

thing, I mean, I can't help thinking we're riding for another fall of some sort. How it's going

to occur, but, you know, if we have this conversation in a year's time I think we will be

looking back on some quite bloody floors and carpets.

Mm. Is there anything else you'd like to say about Indonesia? I think we'll leave your time in

Japan for the next session, but is there anything further you'd like to say about Indonesia at

the moment?

Well, what a beautiful country. [LAUGHS]

I've been there on holiday, and wonderful, I'd love to go back.

What beautiful people. Oh it's been such a wonderful pleasure, and, one of the things that,

you know, because, when I went to Indonesia I didn't just go to Jakarta, I tried very hard to

visit different parts of Sumatra and Sulawesi and other parts of this enormous country, many

of which were far too far to get away for a weekend, the distances being so enormous, and,

the Indonesians greatly appreciated having people like us who actually took an interest in

their country. And of course Suharto as President of that enormous country constantly

himself has gravitated around the country, constantly forces his Ministers to have meetings

one day in Northern Sumatra, another day in the Moluccas, another day up in Sulawesi and so

on, in order to sort of get people sort of moving around the country. And, it's all very well in

a country like England and Scotland and that sort of thing, you can move up and down very

quickly, but in a country like that you've got to do that. And in my understanding of China

some of the things that I've taken as read in trying to understand China in more recent years

has been that when you are dealing with a country spread over a very wide area, you've got to

adopt a policy of trying to be everywhere and so on, and I see in the way the Chinese

Government do things, a lot of what Suharto has done in Indonesia. The other thing is that

with a country as big as Indonesia with so many borders, the Indonesians discovered that


104

exchange control is something totally impossible to police, and at a very early stage they

abolished exchange control and they said, you know, the exchange rate had better be

wherever it happens to be, but we can't try and artificially control it. And the dear Chinese of

course for many years as a closed country had very rigid exchange controls, they are, quote,

`moving towards convertibility at the present time'; I've been telling everybody, including

people in China, that they will move to total, complete and thorough convertibility sooner

than any of them think, because they will not be able to police it. A country as big as that

with borders to the east, west and south, a coastline of thousands of miles, and trading with

everybody, and planes and boats and trains coming in and out all the time, how can they have

exchange controls? They'll have to accept a market reality, and I think things are moving in

that direction very fast.

Interesting, interesting.

But certainly having had the experience of advising Indonesia, you know, it is very useful in

helping in China, and in any other country too, because with Indonesia we were on the

borrower side of the table and therefore saw things through borrower's eyes, and... I mean

another thing is that when you are a borrowing country and you are going through difficult

conditions, you don't expect banks to come in with miraculous offers of money on miraculous

rates of terms; maybe somebody will make you a gesture but you won't get much from that

way. What you want is that your financial friends should keep in touch with you, and when a

country, or a company, is in difficulties, it's so important to keep visiting it. And I remember

being in Jakarta during this difficult period and being so pleased when old Mr so-and-so of

J.P. Morgan paid yet another visit to the country; he wasn't offering any money, but it was so

nice to see him, and to feel that, you know, he was watching, and that when things were

better, of course he would help, and... So many bankers feel that if they can't offer anything

particular on that day, they shouldn't bother to come, and you know, that I regard as the

banker of the new product school of banking, which will never in the long term win the

battle.

I think that's a good moment on which to end, don't you?

Mhm.

End of F5293 Side B


105

F5294 Side A

[This is the 16th of October, seventh tape, third session with Martin Gordon.]

So, let's start off in 1985 when you were senior resident director of the Far East.

Yes, well in 1985 and 1986 till the beginning of 1987 I was resident in Tokyo but involved in

a lot of activities with our business in many other parts of Asia. It was an extremely

interesting time to be out there, because on the one hand Japan was still in an extremely

economical and financial shape and this was almost the apogee of the sort of pre-bubble

excellent period in Japan, but it was also a very interesting time in connection with a number

of other countries, and there are a number of sort of major episodes in that two-year period

which were significant and fascinating. One was China, because you know, the Chinese door

was opening progressively from 1977 onwards, and that whatever it was plenum of the

Chinese Government in late 1984, November 1984, there was a further opening of the

Chinese door, and I remember we were advised in London by our dear old friend K.C. Wu of

the Bank of China that we needed to get into China on a much more active basis if we were

now seriously to do business there. Previously the visits had been rather ambassadorial,

mainly done by Lord Roll, and had been infrequent, once every year or two, but we were told

that we needed to be far more active in China. And therefore on my arrival in Japan at the

turn of the year, 1984/1985, I constructed a programme of going at least once a quarter to

Beijing as well as to other places, but the big emphasis was Beijing, and even now in 1996 I

still think that Beijing is the most important place to go to to do your business in China; so

many decisions get taken in Beijing, opinions get formed in Beijing. And so I started doing

the regular visiting to China, and I was the first person to do sort of really regular cultivation

of China and got to know the Bank of China people particularly well, as well as other

institutions in China. The Bank of China was very helpful indeed, and it was, they were very

much opening the door themselves and it was very interesting to meet these excellent people

at the Bank of China. And also at that time China had very limited access to the capital

markets, partly because the opening of China was still very new, the Cultural Revolution

having ended only in 1976/77, and people therefore not having really made up their minds on

Japanese credit, although the Japanese, who were very keen for all sorts of reasons to get on

well with the Chinese, had been doing I think one or two capital market transactions in yen

for the Chinese, which the Chinese subsequently regretted very much because the yen

became a horribly revalued currency, and the Chinese, who thought they had borrowed rather

cheap yen, found that when they had to repay it at twice the principal cost because the yen

had appreciated so much, were very upset indeed with the Japanese. But there hadn't been

much activity apart from that in the capital markets, and the Bank of China and China


106

generally was very interested in doing something in the market. Now one of the problems

which stood in the way at that time was the old bonds and the old debts of the pre-

Revolutionary period, the bonds which had been issued by the Qing Dynasty and those issued

by the Kuomintang, and the Government of the People's Republic of China, which had been

formed in 1949, did not recognise pre-Revolutionary debt. On the other hand there were

various claims, apart from bond claims, that, for example U.K. persons had in China, and

there were various claims which Chinese people had of U.K. persons and other international

persons. And so there was a sort of claim and counter-claim situation between the

governments. And in any case it's all very well to stand away from...to, what is the word, to

repudiate the debts of a previous regime, but what happened to the money that was raised by

the previous regime? A lot of it was thrown away, no doubt Chiang Kai-Shek did lots of

corrupt things, but for example a lot of railways were built, a lot of them were railway bonds,

and those railways are still operating in China. So, the foreigner could say, `Well you still

have the railways, why aren't you paying back the money which China has had?' So, there

was that thing. And the U.K. Government was quite keen to come to a resolution of this

matter, and the Foreign Offices or Foreign Ministries of the U.K. and China did enter

negotiations; the Bank of England had a lot of input to it, and we put various input into the

Bank of England, and sort of explained the market situation to some extent, and a resolution

was achieved by some time during 1987, and we were very happy to do the first London-

based Eurobond for the Bank of China in the autumn of 1987; it was actually in the same

month as the great crash of 1987, which was some, a further interesting aspect to the

transaction when it came about. But the many visits which I made with differing colleagues

in 1985 and 1986 and early 1987 to China, while I was resident in Japan, were the

groundwork for doing the transaction which we did in the autumn of 1987, which was an

historic transaction for China, you know, its first deal by the People's Republic in London and

was very important in all sorts of psychological reasons in China, and historical deals matter

a great deal in a country like China where they keep a lot of records and so on, and, you

know, we were very happy indeed to do that. So my mid-Eighties secondment to Tokyo was

extremely interesting from the point of view of China alone, irrespective of all the other

things that we were doing, and it was a great pleasure to visit China about once a quarter and

to get to know a lot of the people who were coming up in the Chinese organisations and

ministries and so on.

Could you say a little bit more about the Chinese people. You call them excellent and so on,

but how did they strike you, these Chinese bankers who were coming up?

Well, my first exposures to China in a serious way were both with Bank of China people.

One was K.C. Wu in London, and the other was Dr Fong Shan Kwei in Hong Kong. And


107

these contacts pre-dated by several years the contacts I made when I started going to China

regularly from the beginning of 1985. K.C. Wu is someone I'm sure many people will talk to

you about. He joined the Bank of China in Rangoon, now Yangon, in 1939, and his family

came originally from Amoy, A-M-O-Y, now called Xiamen, X-I-A-M-E-N, on the China

coast in the province of Fujian, and, I'm not quite sure how he came to be in Rangoon but

both he and his wife came from the same part of China and were down there. And K.C. Wu

must have turned up in London at the Bank of China's branch in about 1944, but his career in

the City of London goes back to that period, and if you want to interview anybody from the

Chinese side you ought to get round and call on K.C. Wu at the earliest possible opportunity.

Don't forget to put the OBE after his name, he is very very proud to have been honoured by

the Queen three or four years ago. And successive Governors of the Bank of England have

shown him enormous consideration. He understands the City inside out, and to generations

of people in the City of London K.C. Wu was the person who epitomised China and who

gave people their first contacts in China, and certainly my first ever visits to China relied

upon the introductions of K.C. Wu. And I must admit K.C. Wu originally, in the mid Sixties,

when of course China was just beginning its very difficult period of Cultural Revolution and

so on, and it was very difficult for the Bank of China to operate during those very very

difficult years for China, far worse than anything which may exist in China at the present

time, however difficult things may still be in China. And K.C. is a man who knew the City

very well, and a very intelligent person, and also highly respected in China. Just as proud as

he is of his OBE, some few years ago he was appointed to, I think it's called the Senior

Consultative Committee of the People's National Congress, which in China is a wonderful

way of rewarding the elderly, but it's a sort of House of Lords of China, and the Senior

Consultative Committee comes once a year to the annual meetings of the People's National

Congress in Beijing in March of every year. And I think K.C. Wu may be the only person

resident in England who is a member of this, of the Senior Consultative Committee. I don't

think it has a great deal of influence but it has a lot of prestige and it's very nice that he is

brought back every year to China to do that, and it is certainly an indication of the respect

with which he is held in China, and over the years I have had a number of examples of the

respect in which K.C. is held and the amount to which he is trusted by the Chinese. The other

one I mentioned was Shan Kwei Fong - no sorry, Fong Shan Kwei, of the Bank of China in

Hong Kong, and I first met him I suppose in about the mid-Seventies, it must have been

about 1974 or 1975. And this is old Hong Kong for you, this is the Hong Kong of at least 21

years ago, and I personally regarded the Hong Kong Anglo financial establishment in a

somewhat distant way, and generally speaking that establishment was not very appealing

either to me or to our firm; it was a very small, croneyish group of people who practised their

financial skills in a far less regulated place than the City of London, and therefore did things

that we wouldn't have done in the City of London, and even in that distant time I felt, and I


108

think that the senior people, and Siegmund and others felt, that this was very much on

borrowed time in Hong Kong, but Hong Kong's position as part of China was something that

we should never ignore. And I, when I visited Hong Kong in that period one tended to make

courtesy calls on the Hong Kong establishment, such as the Hong Kong Bank and Jardine

Matheson and so on, because after all they were the, very much the rulers of Hong Kong in

that period. But I didn't feel particularly comfortable with that group, and, you know, I hate

to talk about colonial attitudes but Siegmund Warburg was the antithesis of colonial attitudes,

and nor do I wish unnecessarily to criticise the people who built up Hong Kong, I mean some

of the British firms did a lot of good things in Hong Kong, but there was this croneyish and

somewhat colonial attitude which we had been brought up to eschew. And I remember on

one of my earliest visits to Hong Kong around that period, '74/75, visiting one of my Bank of

Tokyo friends, Yasushi Sakashita, who had in the late Sixties been in the London office of

the Bank of the Bank of Tokyo and had gone to be manager or general manager in Hong

Kong. And it was so interesting to see Hong Kong through Japanese eyes, and Sakashita, an

extremely intelligent person, and understood the City of London very well as well as Hong

Kong, and had very interesting perspectives on China. And I remember him saying to me,

Òh Martin, well let me take you into the Bank of China in Hong Kong, because they have

some very interesting people there.' And so, he immediately set up, and took me in to meet

Dr Fong, and Dr Fong has been as famous in the Far East as K.C. Wu was in London. And,

you have to remember that that period, the Cultural Revolution was still raging in China;

there was no travelling between Hong Kong and China, and there was very little information

about what was going on in China, because any journalists who had been there had been

locked up, or worse, and so, you knew that China was in a ferment but you didn't know the

details of it until actually many years later. Even now stories are just coming out about the

Cultural Revolution, the Chinese were so reluctant to talk about this difficult period in their

life. And, any case, Sakashita took me in to visit Dr Fong, and I was absolutely amazed at

this extremely urbane man who must have been 60 or so, and who spoke the most fluent

English, and whose understanding of the financial system and the way that the banking

system worked and the IMF worked and all these things, was totally fluent, and he talked

about world financial conditions, and you felt you could be calling on the Governor of the

Federal Reserve, I mean his knowledge was, and his authority was so great. And this was a

very forcible lesson to me of how important China was to become, and if people like that

were representing them, and were able to talk with such freedom, when only a few miles

away the Cultural Revolution was raging, it really was one of those sort of early glimpses of

the future, all of which of course has been very much sort of proven in subsequent years and

will be more proven I think in future years. And Dr Fong and one or two others in the Bank

of China in Hong Kong are people I've called on over the years, he must I suppose be over 80

now but can still be seen from time to time, I think he's still with us. I haven't seen him for a


109

year or two, but, but what an outstanding person, I mean you know, really riveting. And

within the Bank of China one has met over the years quite a number of people of more or less

similar standing, but, really very excellent people. And the Bank of China as an institution in

China was somewhat similar to the Bank of Tokyo in its position in Japan. The Bank of

Tokyo was the international bank par excellence of Japan; it was the one which had branches

all over the world, and the Bank of China had branches all over the world - well I shouldn't

say, not all over the world, in the mid-Seventies it didn't have branches all over the world, it

didn't for example have anything in the United States because this was, I forget when...when

was the Nixon shock? I suppose it was 1971.

Was it as early as that? I suppose it was.

When Nixon...

The Watergate thing you mean?

No, I'm referring to when Nixon recognised China.

Oh I see, I don't know.

I can't remember whether it was as long, back ago as 1971 but, the Taiwanese lobby was

powerful in the United States during many decades after the war, and the Americans

recognised Taiwan, or the Republic or China as it was called, as the de facto ruler of China

for many many years after these people in Taiwan had ceased to have any influence at all in

China. And it was one of those anomalies, and Nixon acting on Kissinger's advice broke that

link. I think it was 1971 but my memory of the dates is wrong now and it's fearful ignorance

of me not to be able to give it to you precisely. But that was the sort of the great shock to the

time, and the easing and the starting of the sort of restoration of the relationships between the

U.S. and China which remained very difficult relations over the years, and even now in 1996

the relations between the U.S. and China are pivotal to what may happen in that part of the

world. But, as I was saying, the Bank of China was the par excellence international bank,

and just as in our early connections in Japan, the Bank of Tokyo was very influential in some

of the original introductions that we had in Japan. Also Nomura and some of the other

securities houses were, but the Bank of Tokyo was very very important, and we had nice

contacts with the Bank of Tokyo in London and so on over the years with some very

excellent people. And similarly any Japanese company that wanted to do business abroad or

wanted to visit London and to meet London firms and that sort of thing, the Bank of Tokyo

would effect that introduction. And even now the successor firm, the Bank of Tokyo


110

Mitsubishi, is still regarded as, you know, the international firm to talk to, and even though

the other Japanese banks are competing very much more. And I'll give you a little bit about

what happened in Japan, because what happened in Japan is a little bit of a sign of what will

be happening in the future in China. So, just as the Bank of Tokyo introduced us a lot during

the early years of doing business in Japan, I found that the Bank of China was a very useful

source of introduction and information in China in my early years of doing business there.

Of course when I first went to China in January 1985 in the very very cold wintry weather,

people were saying, Òh, you're so late, you know, why are you so late in getting into China?'

But of course, you know, people always tell you you're too late wherever you go, but soon

they start saying, Òh well look at Warburgs, they've been going there since January 19...'

[LAUGHS] So you just have to go on and do things. But the Bank of China at that time was

very helpful with providing introductions; when one went to Shanghai their Shanghai office

would tell you everything and would introduce you round there, and similarly in other cities

in China. I mean they had a good network all over China. Although within China as a bank

they were relatively small, they were much smaller than the offshoots of the People's Bank of

China, such as the Industrial and Commercial Bank of China and the Agricultural Bank of

China, the little mini banks with half a million staff in each one and so on, but in international

terms, I mean the Bank of China was in those days the only name. And I think that the Bank

of China with its international network is still many years ahead of any other Chinese

financial institution, and I keep telling the Bank of China they've got to take full advantage of

that and that the other Chinese institutions will be spreading into Hong Kong and around the

world, already are doing so. Although they don't seriously compete with the Bank of China

yet, in five or ten years' time they'll find that, you know, these other big firms are far more

competitive with them. But the Bank of China, I'd like to repeat, are a par excellence

international house and a very interesting institution. One of the things that I used to say, I

mean, coming to China as a graduate of Japan, Japan, I can't even tell you what the

population of Japan is now but, say it's 150 million, I mean China is maybe eight or nine

times that population, and the geographical area of China must also be a similar type of

multiple. And I had been doing business in Japan for, I can't remember how many years

when I first went to China but, say fifteen years, and I had over my fifteen years of doing

business in Japan, we're talking about, I must have started doing business in Japan, say

around 1970, although there was previous stuff but I mean, say 1970, so fifteen years, 1985,

fifteen years in doing Japanese business very intensively. I felt that after fifteen years I knew

a tiny corner of Japanese financial system and society. How was I ever to know any

proportion of Chinese financial society when I was coming in sort of later in the day with a

society which was so much larger? Therefore the Bank of China seemed even more

charming to me, because I felt that if we had a really excellent relationship with the Bank of

China one could look a little bit through their eyes in doing business in China, and so it was


111

important to be very helpful to the Bank of China over in London and anywhere else we

could be helpful to them, and that one should take a great deal of trouble to get to know some

of the people within the Bank of China and really exchange courtesies as much as possible,

and hopefully build up business also. And...

That was your primary job was it, to build bridges like that?

Well, to get business.

Yes.

But in the early days, I mean, there's no businesses on the table.

Exactly.

But you have to get to know a country, and just as, I mean Eric Roll's earliest visits were, you

know, very ambassadorial and didn't lead to any significant business in those early years, but

you can't get down to the real business until you've found your way around the country. And,

you know, there are many corpses on the China shore of foreign firms who have tried too

quickly to do business in China without understanding that complicated market and those

complicated people, and you know, we've made our own mistakes but we've seen other

people make far bigger howlers than we have in China. And as China, here we are in 1996,

as China gets more and more powerful the reserves of China's central bank, the People's Bank

of China, are now in excess of 90 billion U.S. dollars. This they proudly say, and they've

been saying it for the last three months, when I believe they exceeded the reserves of Taiwan

and those of the United States of America, those reserves are the second largest in the world;

Japan is the only country which exceeds in foreign exchange reserves, China. And in all sorts

of other respects, you know, the Chinese economy, its tentacles are widening and widening,

and for lots of more reasons, not least the fact that they are taking over Hong Kong next year,

you have to take account of the Chinese, you cannot ignore a country which is such a large

proportion of the world's population, and although you may disapprove, as I do very strongly,

of many aspects of a police State like China, and a lot of things are done in a way which is

very unacceptable to us, you cannot ignore such people, you've got to communicate with such

people. They will never become international unless you communicate with them, a little bit

like South Africa in the Eighties. And so, you know, we have to sort of continue to get on

with them.


112

Did you ever discuss their sort of human, any political issues like human rights with them? I

mean obviously it would be tactless in a business situation, but, did you find that individuals

were aware of this?

Well, of course they were, and if you got to talk to them on their own, particularly if it was

abroad, and they would be more relaxed, of course you know, you could get greater frankness

out of them. And, you know, I still, after at last a hundred visits to China don't understand; I

said how little I understood of Japan after fifteen years, well I've now been travelling to

China for about twelve years and I still understand very little about China, but at least I know

more than a lot of people who claim to know everything about China, and who say that they

are the last word on China. I find China is immensely difficult to understand. If people ask

me what will happen in China in the next year or two.....

End of F5294 Side A


113

F5294 Side B

I was saying that trying to tell what is going to happen in China I regard as absolutely crazy,

because I can't tell what is happening in China now. The best I can do is give an estimate of

what happened in China a couple of years ago, and even that I'm not the best expert on, so,

it's very very difficult to understand China.

So, we've talked about China a lot, but were you doing the same sort of thing in Japan? You

were getting business, cementing relationships in Japan while you were living there, or were

you out of the country a good deal?

Well both, and, after all, I already, when I went to live in Japan at the beginning of '85 I

already knew Japan as well as virtually any other foreign banker, and I already knew an

awful lot of people in Japan, and so, I divided my time, about 50 per cent in Japan and 50 per

cent outside Japan, and of the time I spent in Japan I would say about 50 per cent of it was in

Tokyo and 50 per cent of it was in other parts of Japan, because I took a lot of trouble while I

was in Japan to visit clients and potential clients in Osaka, Nagoya, Fukuoka, Sendai, you

know, other parts of Japan. And Christopher Purvis was our branch manager in our Tokyo

branch, we got our licence around that time, and he spent more time in Tokyo, seeing the

Tokyo scene, and running the office, and I felt that it was my duty constantly to be calling on

clients, to be entertaining clients, and to be developing our business that way. And we were

executing a lot of Japanese transactions at that period, and there was a whole sort of series

and succession of business that went on, and all sorts of interesting Japanese transactions

were being done at that period, and thereafter. So that was a very interesting time to be

meeting a lot of people and doing a lot of business in Japan. Our reputation in Japan was

extremely high, no doors were closed to us, we could really talk to practically anybody we

wanted, and it was a very nice situation.

While you were there, there was the deregulation of the markets here. How did that affect

Warburgs?

In Japan? Well, of course the Japanese looked somewhat askance at the deregulation of Big

Bang, and the powerful people at Nomura were coming over here and studying it as it were,

many Japanese, and were saying that on no account would they permit such things to happen

in Japan, sort of rather nice cosy arrangements the securities houses doing their broking and

the bankers doing their banking, the insurance companies insuring and investing and so on.

And it's taken many years for Japan to follow even a third of the way down that course and


114

they are still about that far down it, and as a result Japan - well Tokyo, is not a financial

centre in quite the same capacity as London is, or New York is.

So you came back to London in '87; was that your choice or was that a natural term, the end

of your natural term, or...?

Well before I come back to London in 1987 I should say a few more things about the Asian

region.

Oh good, good.

And, I've given you a small insight into China, but during that period of '85, '86 to the

beginning of '87, I was fortunate enough to be involved in business in other parts of Asia as

well, particularly Korea, Singapore and Indonesia.

Indonesia you had known a bit already of course.

Yes, I had been, the previous couple of years I had been running the Indonesian advisory

group for Warburgs, and it was very much wished that I would continue to maintain my

Indonesian connections while I was in Japan. It was a mere 6½-hour flight from Tokyo to

Jakarta if one flew Garuda, the airline of Japan]. There was a saying in Jakarta that, `Fly

Garuda and you have the whole aeroplane to yourself'. And certainly there were occasions

when the first-class section you were the only person in the Garuda plane.

Isn't Garuda the Indonesian airline?

Yes.

Oh, you said Japanese actually.

Sorry, Indonesian airline, yes.

Yes, right, right.

Japan Airlines in those days did not fly non-stop to Jakarta, and the JAL flight went via Kuala

Lumpur and therefore took about three more hours, and it was very tedious to take JAL, so I

used to take the Garuda, and indeed there were not many other passengers in the First or

Business. But on the whole it was very satisfactory. But, I was very glad to be in Japan at


115

that time on behalf of Indonesia; the Indonesians took the relations with Japan extremely

seriously, and the senior Indonesians were frequently up in Tokyo, not only for financial

discussions but every time they wanted to go to the hospital they went to Japanese hospitals,

so sometimes I would call on senior Ministers of the Indonesian Government actually in

Tokyo hospitals, and it was a very good way of having nice quiet chats with them. But, as

the years have gone by the financial power of Japan had been increasing, and as in any case,

Indonesia being a fellow Asian country with Japan the Japanese felt a greater responsibility

for Indonesia than, say, for Mexico or Brazil or some African developing country, and all

sorts of linkages over the years justified this. And therefore to be able to see our good client,

Indonesia, through Japanese eyes in a much more intimate way when I came to Tokyo was

very valuable; the Japanese banks were very welcoming to me to call on them, to talk about

Indonesia, because I knew a fair amount of what was going on, and they had a lot of

information of their own which was useful. And in fact by then the Japanese banks were by

far the most important source of credit for Indonesia in the international capital market

generally, and we arranged heaps of Japanese transactions for Indonesia during the time that I

was in Tokyo, particularly at the end of '85 when the oil price started to wobble, and in early

'86 when it collapsed we were very active in getting together loans and facilities in Japan

which would enable Indonesia to tide through this difficult period, which Indonesia did very

well, and we worked very cooperatively with the Export-Import Bank of Japan and with the

Japanese banks and the Government generally in helping Indonesia through this crisis. And,

I mean you couldn't have had a more interesting time to be there. So, I was in Indonesia, I

was there at least once every six weeks, and I used to shoot down long telexes to them with

all the latest opinions from the Japanese financial firms about their attitude towards

Indonesia, and my telexes would circulate to all the key Ministers in Jakarta and were always

the source of a lot of sort of latest sort of gossip and information to them, because...

A great relationship.

Because I would shoot these things down terribly quickly and they would always be very

fresh and very up-to-date information, and I would copy them to our colleagues in London

and New York and Paris and that sort of thing. It was very interesting how the attitude

changed, but basically we used to get good support from Japan and, you know, we did help

Indonesia not to be a basket case, as so many Latin American countries which repudiated

debts in that period, or defaulted on debts, Indonesia never did, and of course their credit

standing has emerged of course much better than some of these other countries. So Indonesia

was a very interesting place to visit during that period. And because I was living in Asia and

it didn't matter to me if I spent the weekend here or there, during that period I did take the

trouble to visit a lot of places, and you know, if I had a spare weekend I could go up to


116

Sumatra or to Sulawesi or to Yogyakarta or Solo in Java, or Surabaya, the great port of

eastern Java, or to Bali. There were so many places you could visit (of course distances in

Indonesia were very great), and the same in China, you know, one, in that period one had

opportunities to sort of glimpse a little bit more than just the main parts. And I may say that,

I don't know if said it before, but if you actually take an interest in the country and the

countryside of the places that you are visiting, your host country is very very pleased, and our

friends in the central bank in Jakarta and in the Finance Ministry were very pleased to hear

that I had been up to eastern Sumatra over the weekend, or to Yogyakarta or wherever, and

some of them had come from that part originally and so on. And so I felt that it was a very

good thing to do, and, the same has applied in any country that I visited over the years, just as

when a Japanese businessman comes here and tells me he's spent the weekend in the Lake

District I'm much happier to meet him than someone who just flies in and flies out. But, the

Indonesians are very interesting people; some people call it the Java empire, because the

Javanese are so influential over this very wide area, and quite a large proportion of people in

government in Indonesia are Javanese by birth. They're very intelligent people, when you get

to know them the more you respect their wisdom. And so, it was a very enjoyable

experience. While down there I used to keep up, alive, my relations in Singapore, and we

had a very interesting time in Singapore at that period, including the privatisation of the

airline, Singapore Airlines, and I became aware of this through our friends at the DBS Bank,

the Development Bank of Singapore, in early '85 on one of my visits while I was doing

Jakarta, and I was able to orchestrate the Warburg's presentations to Singapore Airlines in

cooperation with the DBS, and we were one of the three or four lead managers of that, you

know, very early privatisation, and, which was quite good for our market position generally.

And so, I did quite a lot in Singapore during that period. And the other one I mentioned was

Korea, and of course Seoul is a two-four flight from Tokyo, or less, and I had been visiting

Korea for some years before that episodically, but while I was in Japan I made a habit of

going, I suppose every couple of months. And we did two very interesting transactions in

1985; we did the first pure sterling issue for the Korea Exchange Bank, and we did - which

was the first Korean sterling issue - and we did the first ever Korean convertible issue for

Samsung Electronics in December 1985. So that was very a interesting and important period

for market opening in Korea. So the combination of Japan, Korea, China, Singapore,

Indonesia, plus a few other little things in the region, I mean was the most glorious two years

and absolutely fascinating. I wouldn't like to start talking about 1987 until I'd sort of covered

that ground.

Yes, absolutely, I see that.


So, in 1987 you came back to London.


117


I came back to London in early 1987, after these two very exciting years in the Far East,

resident in Tokyo, and when I look back on it I had only been in London about fifteen or

eighteen months in late '83 and the whole of '84, since the beginning of 1979, so I had

become a little bit of an expatriate, and had even been during the period that I was in London

in '83/84, I was still travelling very actively to the Far East, I was in charge of the Indonesian

account, which meant I had to go to Jakarta practically monthly, and I was maintaining a lot

of links in other parts of Asia, especially Japan. So when I came back to London in early '87

it was the year in which I became 49, and the firm had gone through a dramatic change in the

previous two or three years with our Big Bang merger, and although the jury was still out as

to whether our merger had been a success, and some people have criticised Warburgs for

jumping more deeply into the Big Bang pool than anybody else by merging with such large

firms, which of course cost us a lot of money, as Rowe & Pitman, Akroyd & Smithers and

Mullens, but certainly after Big Bang actually took place in October '86, until the crash of '87,

was a period of immense activity and profitability, and so generally speaking people were

pointing to Warburg Securities and the Warburg group, S.G. Warburg everything, as having

been a great success, and the conspicuous U.K. success of Big Bang when people saw how

much money we were making. And therefore when I returned to London as something of an

expatriate in early '87 I found that I was jumping on a very fast-moving train, and things had

developed quite a bit during my absence, and although I kept in touch with things very

closely during my absences, nevertheless there were dramatic changes and there were many

more zeros on the profitability, and so on. When I had basically left London for the United

States in early '79 I had been at that time head of the old International Department of S.G.

Warburg and I was responsible there for transactions for our clients around the world; I was

doing deals for Canadian provinces, for the British Government, for British municipalities,

for Australian entities like CSR, for innumerable Japanese companies and Japanese

Government guaranteed entities, for people from all over the world. For ICI, for Grand

Metropolitan, for all sorts of people, for L.M. Ericsson[ph] in Sweden, for the City of Turin

in Italy, for N.L., for... There were, you know...you know, you met all the important issuing

clients of the firm, and therefore I had my fingers on all sorts of interesting different clientele

at that time. But as the period of 1979 to 1987, during which I was in London so little, but

during which I maintained an enormous amount, an increasing amount of relations in the Far

East, I think that I returned to London very much as a Far Eastern specialist, with strong

credentials in Japan, Indonesia and elsewhere in the region, and I could have attempted to re-

assume life with more of an English or a European emphasis, but I had all the Far Eastern

contacts, and it seemed to make sense in the way the firm and the market was developing to,


118

and everything was getting much larger than it had been previously, and it was therefore

difficult to have the sort of global coverage that one had had in the Seventies, it made sense

to keep hold of the Far Eastern speciality, and to be strong with one's connections over there.

At the age of 49 of course a lot of younger people were coming up, and the younger people

weren't keen that you should sort of take over positions they had assumed during your

absences, and furthermore, if one wishes to survive in the investment banking business, and

for better or worse I have survived 33 years in Warburgs, at the time of speaking, you never

know, I may not be here tomorrow but I'm here today, and if one wishes to survive in this

business one way is having a close grip on central management in London, and the other is

strong client relationships where the clients will be far more inclined to give business to the

firm if you are there than if you are not there. And as I was always an internationalist, and

always I believe stronger as a client man than as a management man, it seemed to me that it

was the only choice, and during the subsequent years my strong connections in the Far East,

at this period of terrific transition in the City, in the international financial community, in the

firm itself, during these years and right up until now, until the absorption of the firm within

Swiss Bank Corporation's group, it has been very valuable to an ageing investment banker to

have extremely strong connections in the Far East. I say until the end of the Eighties,

probably Japan was the dominant part of it, and in the Nineties progressively China entered

more into it, and I can talk more about that later. We're still talking about 1987, '88 and '89

when I was living in London, but travelling relentlessly to the Far East; we're talking about a

period where Japan still dominated certainly the profitability of the business that we were

doing. And although the deals that I can refer to in this period are not all Japanese deals, and

in particular in 1987 the deals that come to mind are the primary share issue which we did

with DBS, for DBS Land, in September 1987, one month before the crash, and I remember

that we had this excellent relationship with the DBS and we had done business for them, we

had done the Singapore Airlines business together in 1985, and so when DBS Land, their real

estate subsidiary, came to the market for the first time it was natural that we would have a

prominent role in it. And I remember the executive vice-president of DBS discussing with

me during the summer and saying that if they really rushed at it they might be able to do the

deal by September, otherwise the next window of opportunity would be December 1987.

And I remember saying to Tan Soo Nan at DBS, `Well you know Soo Nan, the markets are

very good at the moment, you never know what it's going to be like by December.' And old

banking principle, I mean, if the market's there, you jolly well rush and do it, and you don't

sort of think about it for another month or two. `You know, I think you really should make

an effort.' So we did work terribly hard with DBS to help them to bring that issue to the

market in September 1987, and we did successfully place it, and it was a very nice deal, and

needless to say after the crash, it crashed with everything else, but the deal had been done,

and it was very nice for us to have been able to do it and to have given the right advice. And


119

I mean it's a standard principle, you know, in this business, you know, when people want to

do a deal it's nearly always right to do it as soon as you possible can and not dither, because

you never know what the market may be. The market may improve, but it can just as easily

fall entirely out of bed, and you may have to wait a year or two before the transaction can be

done. So that was a very interesting piece of business. The next piece of business is China,

and in, some time in early August of 1987 I was told by our floating rate note traders in our

Bond Department that the floating rate note market was pretty good, and that even for an

unfamiliar name like China we might be able to do a successful transaction. And, this is

where the Chinese behaved in a manner which was, don't think of the characteristic of the

Chinese. I sent a telex some time around the 7th of August 1987 to Mr Zhang Guowen, the

General Manager of the Foreign Exchange Department then of the Bank of China, saying that

I thought we could do a transaction at that time in floating rate notes for the Bank of China in

an amount of about $200 million, provided you kept the maturity conservatively to five years.

And I got a reply the next day. [LAUGHS] `Dear Mr Gordon. We are very interested in

your proposal. Could you please come out to Beijing this weekend at our expense and

discuss it.' You don't often get that sort of message from China. And so I...

China is another place where they take corporate, I mean, decisions, with lots of people

involved, like Japan, is it, normally?

Yes, I mean the decision process, I mean is very much a corporate decision, certainly not an

individual decision, and China even more than Japan, you are talking to the corporation rather

than to the individual. I mean it's certainly very much the case in Tokyo, in Japan, that you

are talking to the corporation.

Yes, we've discussed that.

But in China, even more.

Oh I see, right.

And they are constantly trying to reduce the role of the individual, as in Japan the individual

is occasionally allowed to be prominent, although not always successfully so. For example

the Sumitomo Corporation's famous copper trader, and the mistakes he made earlier this year.

Anyway, sorry, back to China.


120

But we got this message from, I am talking about August 1987, and of course August is a

period when a lot of people are on holiday, but I have always though that August is a very

good month to do business in, because the market actually continues even though a lot of

people go away on holiday, and if you are around you can sometimes pick up nice little

pieces of business. And so I went over to Beijing that weekend, must have been about the

12th of August I suppose, with Tony Herbert of Allen & Ovary, who had been the partner of

Allen & Ovary with whom we had most worked on Eurobonds over a very long period of

time, I think he's still at Allen & Ovary, a real sort of, sort of lion of the Eurobond market

from the legal point of view, and a very experienced Eurobonder, a very nice person to have.

And I think the other person who accompanied me on that visit was Michael Page of

Warburgs who was our principle expert on documentation at that time. And I remember the

Chinese lodged us in a, not the best hotel in Beijing, and when we got there, there were only

two rooms available for the three of us, and I'm afraid I pulled rank and made them share the

room; I had a room to myself. [LAUGHS]

Quite right.

Well I'm usually very humble, but there are occasions when you have to do this sort of thing.

And I remember also when we arrived there, there was a rain storm and being up on this

rather old-fashioned hotel on the main drag in Beijing and the rain cleared away and the sun

came through, and there was one of those complete rainbows, you know, from end to end.

Magnificent.

You very rarely see a complete rainbow from end to end, the full arc. And I remember

looking out of the hotel sort of balcony window out in a sort of easterly direction over Beijing

at this sort of lovely rainbow, and I thought that was a very good omen, augury, for our visit

to China on this important transaction, on this very historic mission. I mean the whole

problem of the foreign bond holders had only been resolved, I think the previous month, and

so this was all very part of the history of China. And, any case the next morning we went

round to the new Bank of China building on Fuxing Mennei Dajie, I challenge you to spell

that, which I think had only gone up in the last year. In our earliest visits to China we had

called at the very old Bank of China office on, forgive my pronunciation, Xijiao Minxiang,

which was actually on Tiananmen Square, and from which office of course they had run a

soup kitchen for the students during the Tiananmen affair, and where the conditions were

pretty primitive at that old office, but any case we were now at their, quotes, `spanking new

office' on Fuxing Mennei. And we were placed in a room at the corner of the top, 20th, floor,

for our negotiation, and the principal negotiators on the Chinese side were Mr Zhang


121

Guowen, who was the general manager of the foreign exchange department, who had lived

quite a lot in Hong Kong in the past but his English was not very good, but a little bit of

English; then there was the formidable Madam Wang Yuyin, was the deputy general manager

of the.....

End of F5294 Side B


122

F5295 Side A

[This is tape number eight.]

Do continue with this formidable lady.

Madam Wang Yuyin, the deputy general manager of the foreign exchange department, and

clearly seemed to be quite a sort of powerful Communist cadre in her own right, at least I felt

like that, and she certainly appeared to be dressed in rather Maoish uniform much longer than

anybody else was. A lot of the women had discarded these for pretty blouses by then, but she

was still looking pretty severe. And then there was another charming lady who was a deputy

manager in the foreign exchange department, who at present is resident in London, called

Madam Li Yan Yan, and Li Yan Yan I subsequently discovered - you never know in China

who people are married to, it's part of the confusion, they don't bear their husband's names -

and she is now living in London because she is married to C.G. Wu who is in charge of the

new Bank of China in investment bank which is being started off at the present time. Any

case those were the three principal negotiators. Oh, and Madam Sung Ping Fen from the

International Department; the International Department sort of is the coordinating department

with foreign firms, and was not so much a negotiator, more a coordinator. And Madam Sung

Ping Fen has since been posted to Bank of China's first ever branch in Africa, I think it's in

Zimbabwe or Zambia, I forget. Maybe it's Zambia. Any case, Madam Sung was the lady in

the international department who was responsible for the U.K. banks, and therefore she was

our coordinatrix in all matters in connection with relations with the Bank of China and its

clients. So those were the four people on the Chinese side. There was a young lady lawyer

who would arrive in the morning looking very fresh as a daisy on her bicycle, and then there

was the three of us from London, so there were about eight of us around this circular table.

However, when it came about that any serious matters were being discussed, I would be

taken on my own into a somewhat darkened room next door by Mr Zhang and Madam Wang

Yuyin, the formidable. And I would be taken there, and so it would be the three of us would

go off into the darkened room with a bright light. And they would then discuss, you know,

the margin over the London Inter-Bank Offered Rate, and the costs and expenses of the

transaction and so on. And I have some delightful memories of those particular more private

negotiating sessions, and I remember for example when they were trying to argue about the

out-of-pocket expenses of the transaction, I remember saying, Òh well Madam Wang, you've

always said to us in the past that you wanted us to make profits in our Chinese business.

Now you know, Madam Wang, to the last cent how much it costs to do this and this and this,

and what it will cost us therefore to mount this transaction and what we are likely to make or

lose on such a deal. And, I mean you have always, you know, said you wanted to make us a


123

profit. I mean, how can you ask me to reduce the figure any more than this?' And then, Mr

Zhang entered in and said, `The reason I am offering such generous terms is because you are

English, you are European. If you were Japanese I would be cutting off this,' pointing to my

left arm, ànd this,' pointing to my right arm, ànd this,' pointing to my left leg, ànd this,'

pointing to my right leg. But as you are English I am being generous to you.' [LAUGHING]

Any case, I...

How wonderful.

I discovered in this process that a little bit of humour in the negotiation is very important, and

this is something which differs from a Japanese negotiation, that humour must enter into it.

At any rate, after, I think it was the first sort of session in the private, darkened room, we

went back into the big room which was better lit, having windows on at last two sides and not

having curtains drawn and so on, and I could see from the expression on the faces of the

Chinese people there, particularly Madam Li Yan Yan, a sort of slight expectation of what I

would look like after the third degree. So I decided to act up to it, I don't know why, it was

one of those instinctive things that one does, and so I entered the room making, Òh ooooooh

ooooooh!' you know, supposing I had bruises all over my body and that sort of thing.

[LAUGHING] And the entire room collapsed with laughter, including Mr Zhang and

Madam Wang, who followed me in the room. They completely fell about laughing. And

after that the negotiation went dreamily, virtually everything that we proposed was accepted,

and somehow everything went right about the deal. Now, I can tell you a little more about

what went right about the deal. We went back to London and then got onto work on the

details of the deal, and on the discussion of the syndicate, and we had all sorts of discussions

with the Bank of China in Beijing and London about which houses to bring in to the deal, and

I mean it was absolutely fascinating. Contacts with China then were very unusual, of real

serious business nature; even now I mean you know, if your phone call's from Peking you

still feel it's a bit odd, but in those days I mean it was incredible. And you know, I put

together this syndicate and this transaction trying on the one hand to bear in mind what the

market realities were, on the other hand to try and see what they wanted to do and who, what

relationships they wanted to respect and so on. And, you know, you're talking about 1987,

and this was before the Wall came down in Berlin, this was all, you know, this is ancient

history. And the crash had not occurred then, I said that it occurred during the transaction.

Any case, the Chinese seemed to want to move pretty fast, and of course the IMF meetings

happened around the end of September anyway, I forget whether they were in Washington or

wherever that year but, I think they probably were in Washington, and we were at them, as

usual. And we announced the issue, I think we deliberately announced the issue more or less

to coincide with the IMF meeting so that it created a lot of publicity at the time of the IMF


124

meetings, and it also meant that everybody in Washington was coming up to congratulate us

on getting the deal, because it was, it was the absolutely, the first proper deal in the

international market for China; I mean there had been other deals in other markets, but this

was the first deal in the real central market, and it was very much watched. And, at any rate

we launched the deal, and I remember just after we announced it, I got a telephone call from

Moscow, and it was the, God! what Moscow bank was it? I'd have to look it up, but it was

the, something like the Foreign Trade Bank, but it had a Russian name, I forget, I mean

forgive me, I'm so bad at my Russian, I've forgotten which Russian bank it was. But any

case, this Russian bank, a Soviet bank then, called us and said they wanted to be in the deal,

and, well you know, I mean, I wasn't going to interpret Russian-Chinese relations. I know

they are moving into a more pragmatic phase now but in the mid-Eighties...

Mm, quite.

It was rather delicate. And so I quickly, I communicated with the Bank of China in London,

because I think they had an open line to Beijing, and said, `This call has come through, how

you wish us to handle it'. `Leave it to the Bank of China, we'll handle it as you wish.' And

then, Peking came through to me within half an hour, and they were delighted to hear that

this major Soviet institution had applied for $10 million and wanted to be in the syndicate,

and yes, that would be OK. So I called Moscow, you know, it was so exciting. [LAUGHS]

International statesman and all the rest of it.

Marvellous, marvellous.

And, it was just another of the extraordinary features of this deal, I mean, on and on the

extraordinary features. Any case, you know, to do a deal for the Bank of China in the

European market at that time was fairly ground-breaking, and it, you know, we did it

successfully, and the Chinese were absolutely delighted with the deal, they really really liked

it. And, you know, we've never, you know, it was something that's been a tremendous help to

us for all subsequent time in China. But we're talking now of October, we're syndicating this

deal and signing it, and pricing it, and I think that the mechanism is that you sign a deal on

such-and-such a date but the actual pricing of a floating rate note is a few days later, more or

less at the time of the closing, or the completion, of the transaction, because the floating rate

note is always done in relation to a margin above the six-month inter-bank, or the LIBOR

rate, London Inter-Bank Offered Rate, and so, although you fix the margin at the time of the

signing, the actual LIBOR rate that applies is the one at the date of the closing, or the day

before the closing or whatever. Any case we signed the deal before the great crash, before

October the 19th, but we closed it after the great crash. Now one thing that you may


125

remember that happened with the great crash was that the central banks of the United States

and around the world reduced the interest rates. Now, maybe I've got it the wrong way

round. No I think what it is, we fixed the interest rate just before the crash, and it was paid

for just after the crash, and interest rates were still very high, were up in the tens, in dollars,

in short-term, you know, in that heady period up to the crash, but Volcker on the Federal

Reserve and everybody cut interest rates very sharply the day of the crash to try and sort of

reduce the sense of panic in the market, and interest rates went down to sort of around 7-ish.

And the result was that we had fixed the coupon in tens, when the prevailing rates went down

to the sevens, and as the interest rate was changed every six months it meant that the interest

rate was up in the tens for the first six months, and so this suddenly became a very popular

bond, because it was one of the ones that still had the old interest rate attached to it.

Of course, yes.

And it was just one of those lucky things, you know, you say of the great crash, it's an ill

wind that blows nobody any good, and it was absolutely fascinating that this thing happened.

And so we, you know, I remember our dealers ringing me up on October the 19th and

October the 20th and after that, and sort of saying, `This Bank of China deal's so successful.'

And nobody here thought it was possible to make money in China, and you know, we made,

we didn't make a fortune on the deal but we made a respectable sum of money on it, and

certainly more than compensated for the travel that we had done over the years, and just, this

proved the theory that Chinese business was always going to be a sacrifice.

Yes.

So it was a very happy deal in all sorts of ways. I remember another thing, in 1987, and, the

deputy chairman of the Bank of China, Mr Li Yu Min, came over to London for the signing,

and I was told that I had to arrange a full day of activities for him outside the pure signing.

He wanted to spend a day in our firm and have a dinner with us. And I arranged for him to

visit various departments, and then I had a sort of little secret, and that was to arrange a

meeting with our Chinese staff. And, I'd noticed that the number of Chinese in the firm had

been increasing. Of course these were overseas Chinese or Hong Kong Chinese, they were

not people on the whole from the People's Republic then; more recently we've been having

people from the People's Republic but in those days they were sort of, more like foreign

Chinese, some of them not even speaking Chinese. But if you are Chinese from China you

are much more comfortable with people of your race, even if they don't speak Chinese, than

you are with any white person, even if that white person speaks Chinese.


126

I'm interested...

And, I remember that we had a couple of young Chinese staff in Mercury Asset Management,

called Andrew Wong and Kenneth Long, and I said, well we've got to go through, find out

who all the Chinese are. And our Personnel Department didn't keep records of people's racial

background, why should they, so I couldn't...when I said to Personnel, `Can you give me a

list of all the Chinese people in the bank?' they couldn't, so we went through the telephone

list, telephoning anybody with sort of Chinese-looking names, anybody with a name like

Chan or Tan or Li and that sort of thing. And I remember, we all alighted on a girl called

Miss Ing, I-N-G, and we assumed with a name like that she had to be Chinese, and she got

telephone calls from me and from these two Chinese boys in there, saying, `Hello, are you

Chinese?' And, she kept saying, `No I'm not Chinese, Ing is a very old English name.'

[LAUGHING]

Lovely.

Any case, by the time that Mr Li Yu Min came from China I had assembled a group of about

14 people of Chinese race, and I arranged that at 12 o'clock they would all come up to the

room I was sitting in with Mr Li, and I said, `We are now going to have a meeting with our

Chinese staff'. And you know, 14 Chinese boys and girls walk into the room, and Mr Li, `We

can't believe it,' and Mr K.C. Wu of the Bank of China is in the room too, he said, Àre these

all your staff?' And I said, `Yes, these are all our staff, and this proves to you that we are a

Chinese bank in London and you've got to all your business with S.G. Warburg.' [LAUGHS]

And there were raptures, it was so wonderful.

That's a very good PR thing.

And I mean it was just marvellous, and such an easy thing to do in a way, but it absolutely hit

the spot with the Chinese. And they were terribly terribly pleased. And then we brought in

sort of drinks and they stood around, and had a sort of, a sort of pre-lunch drink with them

and that sort of stuff, all orange juice but I mean it was all...but such a nice atmosphere, and it

sort of set the tone for a very good feeling. And I remember dinner that night, again, I've

never had any nonsense about Western restaurants as far as Chinese visitors are concerned,

you know, I have to take them to Chinatown, and I got a private room in one of the Chinese

restaurants in Chinatown and we had about 24 of us round a table including lots of Bank of

China people, and I had Sir David Scholey hosting it, and it was, you know, the atmosphere

was very very good. And you know, I can tell you that if you are trying to entertain people

from China and you try and give them, however luxurious a dinner, at the Connaught or the


127

Savoy or the Mirabelle or whatever, you will get approximately one out of ten, but if you take

them to a Chinese restaurant you will get nine or ten out of ten, and there's no point in fussing

around with what we consider luxury, you've got to do what they like. And we had a dinner

in this very nice Chinese restaurant, not a very luxurious Chinese restaurant but the food was

good, and, I remember David Scholey saying to Mr Li, Òh well, Mr Li, this $200 million

we've raised for you, what are you going to do with it?' And Mr Li said, Ì shall be opening

another 200 branches in China.' And so David Scholey said, Ànother 200 branches? How

on earth are you going to staff them all?' Mr Li said, `We have a lot of people in China.'

[LAUGHS]

That's splendid.

There's another of the charming aspects of this deal. I said that I was going to make a little

remark to you about ladies in China.

Yes.

And, ladies in China and the ladies in business in China is always a very interesting thing.

You know, I remarked to you that one of the things I discovered about the negotiation with

the Bank of China was that humour is absolutely essential in any Chinese negotiation. But

also I discovered that when it comes down to serious financial decision-making the ladies are

all-important. There was Madam Wang Yuyin, there was Madam Li Yan Yan, there was

Madam Sung Ping Fen, and certainly in my earliest visits to China I had been exposed to

some very powerful ladies. When I first started going in 1985, January, to China, the

Governor of the People's Bank, the central bank, of that time, was a lady of even greater

formidability called Madam Chen Mu Hua, and she I believe was a veteran of the Long

March, and she dressed in very well-fitting Mao uniforms of excellent material, and she

dominated the financial scene at the time. One of the deputy governors was Madam Qui

Qing, who subsequently went to Hong Kong as Chairwoman of Everbrite, and again a very

powerful lady on that scene. And the President of the Industrial and Commercial Bank of

China at that time, and I believe still, is Madam Zhang, another very formidable lady, and

ICBC is one of the huge, massive banks of China. So there are some women in some quite

important strategic positions in China. But I felt even more when it came round to the actual

negotiation and that sort of thing that the women were even more prominent, and certainly in

my relations with the Chinese financial institutions women have played a very important part,

including in the Nineties, for example our most important client in China is Yizheng, Y-I-Z-

H-E-N-G,, which is the biggest polyester company in China and is the apple in the eye of the

Textile Council, whose Minister was Chairwoman of Yizheng, Madam Wu Wen Ying, and a


128

lady in her early sixties, of great power and force, who we managed to make excellent friends

with and has been one of our best PRs in China. There's nothing like having a Minister in the

Chinese Government going around saying that Warburgs is the best there is. And, everybody

knows that the Minister of Trade in China is Madam Wu Yi, again ultra formidable. So,

although, you know, the beginning of the century Chinese women may have had their feet

bound, and indeed I have still seen elderly women in China who have had their feet bound,

because their feet are very tiny and they have to walk with a stick and all the rest of it,

certainly in the China of the Communists of the People's Republic of China, women have

come very much more into their own. I'm sure this is actually, it's a very complicated thing

and there are wheels within wheels, and I said before that one of the problems about China is,

you don't know who is married to whom or it takes you some time to find out who is married

to whom, but if you are involved at all in Chinese prosopography and want to know how the

wheels turn in the financial system or anything else, you need to know who is married to

whom, and all sorts of interesting things emerge when you know who is married to whom.

And of course the Chinese women, there are no housewives, they all work, and some of them

therefore are in very important positions. Sometimes the wife is far more important than the

husband and vice versa.

Yes, that's a very interesting social difference isn't it.

Mm.

With Japan as well as with this country.

Well, with Japan, I mean it's so extraordinary, I mean it's such an enormous difference with

Japan. I mean, women in Japan are like women in Victorian England, you have a few who

are famous in their own right and who have broken all moulds, but virtually in the whole of

corporate Japan there's not a single woman on any board in Japan, I mean it's unbelievable

how the women are suppressed. And yet like in Victorian England the woman in the home

has great power, and the man is like putty in the woman's hands. So the women exercised

their power but in a different way.

Quite.

But in China they are far more out front, and very interesting as a result.

Good. What else about your time in London? You had other deals, didn't you?


129

Well, 1987 ended in the post-crash mood.

Yes.

And, I think there were two very important transactions for the firm at that period, and neither

of which I was involved in in any important way, or, in certain ways I was but not in any

important way. You can't pass over that period without mentioning them. One is BP, which

was the famous underwriting which Nigel Lawson persisted in going ahead with, in spite of

the crash in the market; and this dreadfully unfortunate incident, so bad for Britain, so bad for

British Petroleum, took them many years to recover from the stigma of that deal. All I would

say about that is, I remember later in 1987 being at a dinner party where I sat next to the late

Lord O'Brien of Lothbury, who as Leslie O'Brien had been Governor of the Bank of England,

and I think was the, before Eddie George was the last Governor to come up through the ranks

of the Bank of England.

Yes, that's right.

And was an extremely professional man. And I remember saying to Lord O'Brien, you

know, what a, you know, unfortunate thing this had been, this BP thing they'd had to live

through, and he said, `The trouble with that Lawson, he thinks he's Tarzan. Doesn't he know

that those BP shares, the Government's got the shares, they are not going to go away. Can't

he listen to the market? If he postponed the deal, nobody would mind, they would be pleased

that he listened to the market, and the market opportunity would come back at another time to

sell the shares. He's still got them, he can sell them whenever he wants, and if he sells them

in the right market he'll get a better price for them. But he thinks he's Tarzan, he has to go

ahead and tell the House of Commons he's done...' Lovely remarks from Lord O'Brien of

Lothbury.

Yes, splendid.

So, that's all I would say about that unfortunate episode. But the other deal in late '87, which,

I think that we are, you know, very proud of, was doing the first equity offering for

Eurotunnel, and of the many financings for Eurotunnel as it lurched from one difficulty to

another, which eventually resulted in the tunnel coming into existence, rather like railways in

China, doing that equity offering for Eurotunnel in November of '87, when the market was in

a state of post-crash quiescence to say the best, I think was one of the most remarkable deals.

I mean the market was absolutely frightful at that time, and I thought it was a terrific

achievement of our house to have got it through, and it represented, you know, an enormous


130

amount of goodwill accumulated over many years, as well as market knowledge. And it was

very, it was very nice. Going back to BP for a second, I said I hadn't finished...I said that that

was enough of BP, but I think I should say that with BP, it also had a Japanese side to it, in

that we underwrote a significant amount of the issue in the Japanese market, and I would say

that the Japanese institutions behaved particularly well over the BP episode, and they took the

underwriting on the chin, far better than the Americans and the Canadians who screamed blue

murder and got the Federal Reserve and the White House to intervene when Mr Lawson

persisted in that deal. But of course the American houses, you know, lost between them I'm

sure at least £100 million; the Canadian houses were almost annihilated by it, I mean Wood

Gundy was finished after the BP underwriting. But the Japanese houses, and of course the

Japanese market had recovered fairly well from the crash, and the Tokyo market was still

going all right in November '87, after initial shudders immediately after the crash, and the

Japanese had a certain amount of confidence gained from the accumulated profits of the

previous year or two. And although, I mean they were obviously very unhappy to take a hit

like that, and whereas a Western underwriter takes the hit on the nose and sells the stock and

takes his loss and immediately gets on with the next thing, the Japanese underwriter typically

holds the stock until it comes back again, and he's quite prepared to hold it for two years or

more, or three or more years, until he gets rid of it at a profit.

What an interesting difference.

It is an interesting difference. Well, you know, the Japanese don't like to take this sort of

loss. Now, I think on the whole the Japanese will probably have lost less money on the BP

than.....

End of F5295 Side A


131

F5295 Side B

I'm saying, the Japanese houses probably lost less money on BP through holding the stock for

longer. But of course it tied up their liquidity for longer, but it is more the Japanese way.

But I have one sort of particular memory of that period, which is not a personal memory, it's

one which was sort of related to me, but, there was a sort of after-dinner meeting, I don't

know whether it was in Warburgs or the Bank of England or wherever it was in the City, but

it was the evening when Mr Lawson made his statement in the House of Commons that he

was going to go on with the issue, and all the leading underwriters were gathered together in

some office in the City, and waiting for Mr Lawson to make his statement. And the English

bankers were all sitting there looking desperately serious and concerned and that sort of

thing, but firm, and the American bankers who were apparently there were all sort of, you

know, had their little lines open to Washington and New York and they were biting their

teeth, and they were crying and generally screaming and howling. And then, apparently enter

Mr Kasui, K-A-S-U-I, who was then head of Daiwa's London office, in a dinner jacket,

having had quite a good dinner judging by the sort of exuding of wine and cigar, and, you

know, in an entirely relaxed way, sort of pushing out the ashes from his cigar into the ashtray,

and saying, `Well, what's the score chaps?' or the sort of Japanese equivalent of it. And then

the news came through, Mr Lawson. And the Americans threw themselves on the floor and

the English sat there solidly, and Mr Kasui was laughing. [LAUGHS] Contrast to the rest of

us. Of course Kasui was a very exceptional man from Japan, and it was just, you know, a

typical marvellous Daiwa personality. But of course the Japanese won on points in that

particular negotiating session. [LAUGHS]

Let's talk a little bit about the personalities back here at Warburgs. I mean Sir David Scholey

for instance, how did you...you came back from overseas; how did you see Warburgs running

in this difficult period?

Well, I mean I think one of the things about David Scholey is that he is very good in difficult

times, and he is one of the best people to go to in a crisis, and I think that it is absolutely

undeniable that he handles crises very well. And I remember Siegmund Warburg telling me

in the past, I may have told you, that you know, when there's any very difficult thing where

you get your hands dirty, Scholey is the man, and you absolutely have to give it to him that,

you know, the worse the condition is, somehow the better Scholey performs. And it was

certainly I think entirely satisfactory that Scholey was our Chairman and Chief Executive

during that period, undoubtedly, he never flaps, and very resourceful. He is a terrific talent,

is Scholey.


132

And what about Peter Spira, John Craven?

Well Peter Spira had long left us.

Yes, that's right.

We talked about personalities right at the beginning; I'd just like to pick up on some of these

people whom you obviously knew.

Well Peter Spira is someone I regarded a tremendous help to me when I was a young man at

the Bank, and again he was someone who was very cool and much more...I mean I would say

more outgoing than David Scholey possibly. Scholey has his outgoing sides too in a different

way, but more obviously outgoing I think than David Scholey. But very accessible, and so if

things were in difficulty you had immediate access to Spira, as you did to Siegmund. I

wouldn't say you didn't have access to David Scholey, but I think that David Scholey was

very protected by protective secretaries, and therefore people didn't feel they had access to

David Scholey as much as he genuinely wanted people to have access to him. Whereas Peter

Spira was a door you could walk through at any time very easily. With Scholey, if you got

past the secretary you were always very welcome, but it was difficult getting past the

secretary. And of course David Scholey was not as good at organising his time, and the poor

secretary I think had such a job organising him because he was so disorganised, in his time, I

mean organised in other ways but, you know, he was always very unpunctual, whereas

Siegmund was always very punctual; Peter Spira was always very punctual. But I have

retained a very good connection with Peter Spira over the years, and he's always had very

sensible things to say about the market, and he's always had a great fondness for the Warburg

firm and he's always been a member of the Warburg club, even though long parted from it,

and a great understanding of, you know, what makes investment banking tick and the

atmosphere and that sort of thing. And, I was...you know, I liked him so much, and still do,

and I remember being with him in 1974 when he was writing his resignation letter, I was on a

trip to the Far East with him, and he was complaining away about Siegmund and you know,

the old men, and, I was telling him he should adopt a more conciliatory line, but, you know,

he...I think he sort of felt that he was in the prime of his career and you know, he didn't want

to be sort of interfered with, and so on. Any case, you know, the magic seemed to break up

between him and Siegmund, and it was something I often discussed with Siegmund until

Siegmund died, until the end of Siegmund's life, because I was always encouraging

Siegmund to try and sort of bring Peter back, because I thought Peter was such a very good

person to have around.


133

And he wouldn't do that?

Well, Siegmund talked about Peter without bitterness, particularly at the end, but somehow it

would never have been possible to have got Peter back into that sort of inner council and

confidence that had been the case. You know, it was the, the prodigal son couldn't come

back. Whereas David Scholey was far more subtle in handling the old men, and it was part of

the character and the strength of Warburg that we had the old men around, the Uncles, and

these people kept us out of all sorts of horrible business situations, some of which I may have

mentioned to you, which other firms dominated by younger people rushed into and made

mistakes. And the experience of the older men was immensely valuable, and in my handling

of our capital market business in the Seventies, being able to discuss the problems and the

markets with people like Siegmund Warburg and Eric Korner was absolutely fantastic. And

so, I mean I greatly appreciated the older men. But I mean Scholey handled it in terms of his

own career and that sort of thing with, I think he had a greater appreciation for the elderly

people, but he also had a greater patience and so on, and hence left himself in control of

events. I always used to think that, I mean Siegmund always liked to create competition, and

he didn't want anybody to be sort of comfortable in their position, he wanted them all to be,

always to be working for their position, and in Siegmund's latter days I think the competition

for the chief position at Warburgs, from the way I saw it, was between David Scholey, John

Craven and Jim Wolfensohn. And David Scholey of course was the insider. John Craven

had been in the firm twice, and coming back once was one thing but to come back a second

time was going to be a little bit strange.

Did you know him well?

Oh particularly when he was working here obviously very closely. And Jim Wolfensohn

never worked for us, although various efforts were made to get him to work for us at stages,

and Siegmund liked him very much, and David Scholey and Jim Wolfensohn were very

pally, and they've been very much together in the last year since the events at Warburgs of a

year or so ago, David Scholey has been helping Jim Wolfensohn at the World Bank and

advising on how to reorganise the IFC, the integral part of the World Bank, where David

Scholey I am sure is doing a very helpful job for Jim Wolfensohn. But Jim somehow was

always sort of fairly close in, and was always watching very closely, and I had always

cynically assumed that he was interested in the top job here if it was available; somehow that

trio were fighting it out, although David Scholey was the only person in the firm, and I think

in Siegmund's last year or two David, I believe he read the riot act to Siegmund and said, you

know, Ì'll stay on if I'm Chief Executive, but I don't want any more fuss,' and I think

Siegmund eventually confirmed him. This is simply my reading of how it was, but... So, I


134

mean, these were the characters one saw around the place. And of course John Craven went

off and did other things.

The other person we haven't actually talked about is Eric Roll. Would you like to say what

you know about him?

[MG POURING WATER]

Gurgle gurgle.

Yes, a good response.

Yes. Eric Roll... [LAUGHING] Shouldn't of course reply in that way. Eric Roll I think

joined us at the age of 60, at the end of a successful career in the Civil Service and academe,

and, you know, most people end their careers around then and for someone to start their

career then is fairly remarkable. And the bank was full of Siegmund's young tigers when Eric

Roll joined; Peter Spira; Bernard Kelly; I think John Craven was around at that time, if not he

was very shortly after; Michael Valentine. These were the people who were the up-and-

coming junior directors with power in their hands transactionally. And they were not very

keen to see this elderly gentleman being foisted into the inner councils and that sort of thing.

And I remember once being in a room with some of these younger directors and Eric Roll

walking in and being told by these young tigers virtually to scram, and yet Eric Roll has seen

them all off by many a year and has shown extraordinary survivability over the years. Eric

had a reputation during those early years of being too much big picture and not much

practical business, and of course he came in with a different background, and he didn't know

the deal sort of thing. But he was a very brilliant man who would learn awfully quickly, and

I've always felt with Eric that if properly briefed he can handle that brief simply amazingly,

as a senior civil servant should be expected to do. But he has been far more successful and

practical in business terms in Warburgs than any other civil servant I have known in any

other financial firm, and of course ex-civil servants line up for jobs everywhere down

Threadneedle and Throgmorton Street, not to mention Wall Street, I mean you know,

Governors of the Bank of England go off to J.P. Morgan or Morgan Stanley, or permanent

secretaries at the Treasury like Sir Douglas Wass turn up at Nomura, you know, they go

anywhere where they can get a salary once their meagre Civil Service stipends are finished.

But in no case am I aware of a civil servant who has done such practical successful work as

Eric Roll has done, and he has been entirely exceptional from that point of view. Of course

he is fluent in German and is of Continental European background, and was able to

communicate with the Uncles very easily in various languages, and got on to their

wavelength and so on. And I found over the years that Eric Roll is very interested in all


135

aspects of our business. I mean he still loves to go off to a conference with Kissinger and

Helmut Schmidt and Carli and Volcker and people like that, the odd ex-Governor of the Bank

of Japan and so on, but he still keeps his eyes on the ball as far as business is concerned. And

it is, I think I've mentioned, remarkable how Mr Grunfeld and Lord Roll have in the post-

SBC merger situation maintained their eye on it and done their best to maintain the soul of

Warburg in the new organisation. And also as I was saying earlier, I think that their efforts

and those of some others have been successful and that so far the soul of Warburg has

survived quite well in the organisation. And I don't say that in any partisan way that, you

know, Warburgs six, Swiss Bank Corporation five or anything like that; I simply say that

Warburg has been a very precious thing for Swiss Bank Corporation to acquire. They hardly

realised when they acquired it how precious it was. They have been learning. Henry

Grunfeld and Lord Roll have done so much to enable them to learn, and to advise them how

to do it and how to handle people, and that is why I am saying that the spirit of Warburg has

survived so far remarkably well in the SBC group. A lot of people said at the time of the

merger the name Warburg will disappear in five years' time, rather like the Kuhn Loeb name

disappeared when Lehmans took it over after a few years. It was Lehman Kuhn Loeb for a

bit, then it was Lehmans again. This may happen in the future in the Swiss Bank group, but

certainly after a year this is not the impression that I have, and Warburg has survived very

well. So Eric Roll has done very well in that, and has performed very well in many pieces of

business we do, and is still enormously appreciated by a number of clients including many

clients in the region in which I am most familiar these days, namely the Far East.

Is there anyone else you would like to mention as being significant at that period when you

came back?

Well I suppose that the Lord Garmoyle, subsequently Earl of Cairns, cannot be overlooked,

but I think at the best he can be regarded as someone who was good on the corporate finance

side but was over-promoted when he became Chief Executive and simply didn't have the

capacity to understand the whole of the firm's business. I mean the other, I mean, very high

quality person was Peter Wilmot-Sitwell, who was former chief partner of Rowe & Pitman.

And of course another of the old survivors, Herman Van der Wyck.

Oh yes.

Who has again shown excellent survivability since the merger and is a very long-term

member of the firm.

Good. Well what about other deals that happened?


136

The late Eighties.

Yes, the late Eighties.

Well, I mean, I'm moving to sort of '88, '89. I think that the things that are most in my mind

are the succession of deals in Japan, and in particular it was the halcyon period of the warrant

issues out of Japan when Japanese companies seemed to be able to raise money costing

virtually nothing. And some of the Japanese companies have rued the day they did these big

issues, but it seemed to be very attractive to them at the time, and they were doing issues of

increasing size. I remember when Mitsubishi Corporation did a transaction of a billion-and-

a-half, that was pretty big for the market even then. And there were a lot of deals being done.

And at that time we had brought in a very nice gentleman from the Bank of Tokyo which had

come about through our very good relationship with the Bank of Tokyo, in particular with

Takagaki, who subsequently was President of the Bank of Tokyo and now President of the

Bank of Tokyo Mitsubishi. Because of the good relationship he had assigned Tsugawa to us,

T-S-U-G-A-W-A, who was a very dynamic, hard-hustling guy in the Japanese market, and he

did a lot of excellent work in helping to get a lot of our relationships on side and to develop

new ones in that period, and therefore although that market in Japan was dominated by the

big four Japanese securities houses, of the non-Japanese houses we were the number one in

market position. And in '88 and '89 before the Japanese bubble burst we were able to make

really an enormous amount of money, and in that post-crash period when there wasn't much

money coming in in other parts of the world, these Japanese profits were very attractive. It

was the end of the golden period in Japan, things in the Nineties became much more difficult

in Japan, and we, Warburgs did not have the Japanese recipe right in the early Nineties. By

the mid-Nineties it's fine, particularly since SBC moved in, the combination has worked very

well, but the early Nineties were a very difficult period for Warburgs in Japan, and one of the

things that Cairns as Chief Executive was not able to work out. Some houses were making

money in Japan, like the top two or three Americans and one or two other houses, but we

failed to do so in the early Nineties, and that period, as I say, I became a little bit more

involved in China and in the new securities market of China which was just being given birth

to, and a little bit less in Japan, partly because the people we were having in Japan in the

early Nineties were not people that I was on a wavelength with and they didn't sort of see

things in the way we always had done in the past, and they were much more cost-cutters than

business creators, and they were not handling our Japanese relationships in the way

historically we had done. And in any case Tokyo was such a sort of disaster area in terms of

the firm's profitability and that sort of thing that, apart from sort of maintaining the contacts

in Japan, which I did in my capacity anyway as Chairman of the Japan Committee, I did a


137

little bit of switching to China as main emphasis in the early Nineties, although taking care

not to lose entirely the principal Japanese contacts, most of which I managed to keep. I've

mentioned the, I said that I was Chairman of the Japan Committee, I should say a little bit

about that.

Yes, definitely, you set it up, didn't you?

Because it was quite significant. And I think it must have been pretty soon after my return to

London in 1987 that I got a call from Lord Limerick at Kleinwort Benson asking me to go

round and see him. He told me that the Bank of England and the Board of British Invisibles

wanted to create a Japan Committee to advise on the financial relations between the U.K. and

Japan. The remit of the Japan Committee was fairly vague, but what was clear was, at that

time there was a lot of difficulty on the financial side between Japan and the U.K., and Mrs

Thatcher in particular, 10 Downing Street, was very unsympathetic, and the DTI was very

unsympathetic to Japan. And in that period you had on the one hand some of the Japanese

banks, you know, we were still talking of the bubble period in Japan, were queueing up to get

licences here, for London, particularly at the Japanese regional banks, like Hokuriku Bank

and all these other banks that were trying to get banking branch licences in London. And you

know, even these Japanese regional banks were very large banks, national standards. But

there were also people like Barclays Bank were trying to get securities licences and seats on

the Tokyo Stock Exchange. We, because we were early in Japan anyway, got these things,

you know, without any Government interference, beneficial or maleficial - that's not a good

word but you know what I mean. But people like Barclays were screaming that, you know,

why should the Japanese be allowed to do this and that in London if we were not allowed to

do this and that in Japan? And there was also industrial disputes, like for example Cable &

Wireless was trying to get sort of various things in the telecoms industry in Japan, and Mrs

Thatcher was saying, well unless Cable & Wireless gets X in Japan, we are going to tell

Nomura and the Bank of Tokyo that they can't work in London any more. And so,

relationships had got terribly tense, and the Bank of England was finding it very difficult,

because the Bank of England couldn't move on any aspect of Japanese licences or Japanese

businesses, because any step they would take would be overruled in Downing Street, so it

was quite a difficult time for the Bank of England. And I was asked, and it was clear that,

you know, the DTI's attitude in this was very hawkish, and they were expecting me to come

out with very sort of negative recommendations. The Bank of England was much more

balanced; the Foreign Office of course was involved and was again, you know, quite sort of

pro-Japan; and there was mixed feeling in the City generally. When it came to actual

practitioners in Japan, people on the whole were doing quite well out of Japan, in, you know,

lawyers, like Slaughter & May were making packets of money writing prospectuses for


138

Japanese companies' issues, and accountants were doing quite well out of it, and we bankers

were doing a lot of transactions like warrant issues and making quite a lot of money. And so

in financial terms the City was doing a jolly good job in Japan, and even though the odd

licence may not have been given, the overall position was very satisfactory and there was no

reason at all why we should adopt too hawkish an attitude. Any case, I certainly considered

that one of my jobs in the sort of, the initial stages of the Japan Committee was to point out to

the Government that the financial sector and the City was doing quite well in Japanese

business, and that we should be awfully careful about trying to upset things and certainly not

try to upset people like Nomura, the crumbs of whose table were very delicious. And in

putting together a committee which was partly City and partly Government people, Treasury,

Foreign Office, Bank of England, DTI, as well as Lloyds and various banks and other City

houses all in it, I did my best to bring together what I called successful practitioners in the

market, people who could demonstrate that it was worthwhile having an accommodating

stance, and that you could make a lot of money out of it. And so I got the signature of all

these great and successful houses in terms of making recommendations to Government and

we certainly altered the attitude. And during the five years that I created and ran that

committee it took a lot of my time, but it was also not un-useful in a business sense, because

the Japanese knew the role that I had been playing, that we had been playing, and were very

grateful for it, and you know, they got more business out of it, we got more business out of it,

and - I say we in a quite general London sense - and since then there has never been a

problem on that side. Of course the Japanese houses as a whole have become less powerful

in the Nineties, but not that much less powerful. I think you would indulge, some people

were indulging in schadenfreude with the Japanese, thinking they were finished, but that was

far from being the case; the Japanese houses are still very rich and powerful, and you have to

take them very seriously.

End of F5295 Side B


139

F5296 Side A

[This is the 6th of December 1996. Fourth session with Martin Gordon.]

So, just as a rider to the crash of '87, tell me the story of Siegmund will you?

Well I was just giving you this little anecdote. I remember many years ago that Siegmund

was asked by some visitor about the share price of Mercury Securities, which was then our

holding company, and the visitor said, Òh, your shares do seem to be very attractive Mr

Warburg, and it must be a very good thing to buy them at the present time'. And Siegmund's

reply was, Òh no, no no no. They're far too high. They must come down.' [LAUGHING]

In fact, if someone had bought on that negative recommendation of Siegmund, they would

have made a great deal of money, but it was typical of Siegmund always to play down these

things, just as the annual reports of Mercury Securities year in, year out, used to say, `Well of

course we have had a very good year in the last year, and things have, contrary to our

expectations gone rather well. However the future is extremely difficult to predict; it's very

difficult to think that we will ever be able to make any more money'. [LAUGHS] The sort of

tone of the sort of deep pessimism from our annual reports was a great pleasure to see. The

newspapers often used to say, you know, `Mr Grunfeld says how difficult things are going to

be,' and that sort of thing, but anyone who had read these reports year in, year out, would

have realised that it was part of the normal banking prudence of the house of Warburg.

While we're talking about Siegmund again, tell me about Miss Wassermann.

Well Doris Wassermann, I can't think quite how long she has worked with us, and of course

you can talk to her herself since, she was 75 this summer and for most of the last year she has

been coming into the bank very regularly because both our Swiss colleagues and old Warburg

colleagues are quite keen to have some work done on the archives, and she has been doing

that, and trying to put things together to see what we should keep and what we should not

keep. And we are keeping quite a lot, I'm glad to say, because the records of the Warburg

bank are very interesting; Siegmund always insisted on such meticulous records of telephone

conversations, meetings, letters and so on, that our files are deeply fascinating.

And what about her herself, what sort of a person did you find her to be?

Oh, she is a very wonderful, very loyal lady of, I think her family comes from Berlin I

believe and is, I believe, a well-known Berlin banking family, and I think she is related in


140

some way to the Warburgs, but she very much comes from that background and has a very

good understanding of the sort of Anglo-German principles that put the firm together.

Good. OK, well let's return to your career then shall we. You went out to Hong Kong in

1990 we were saying.

Yes, I think it was 1990. David Scholey asked me to go back to try and sort of continue with

the work that I had already done for a long time but based out there. And we were growing

quite fast in Hong Kong, and I was going to continue to keep in touch with clients in the

Asian region, not just Hong Kong. And as someone who has been to China a great deal and

someone therefore who has seen Hong Kong continuously through Chinese eyes, it was very

interesting to go there at a time when the Chinese were taking all sorts of steps with regard to

their assumption of control of Hong Kong in 1997. And Chinese policy towards Hong Kong

in financial terms has been remarkably consistent over the years. I'd say, I mean in two areas

that I talk about, one is in the securities area, and one might be in the banking area. I think it

was August 1991 that I was invited to go to Beijing to make a speech at the inaugural

conference of the Securities Association of China, and I was amazed to find on coming to

Beijing that a hundred or so securities firms had been founded in different parts of China, and

that plans were afoot for a substantial escalation of the securities business, and that there were

also plans for foreigners to purchase Chinese shares. They were just talking about A shares

and B shares, this has been expanded since, but the planning was well under way and must

have been going on for at least two or three years to have got as far as it had at that time,

although frankly outside China people were not generally aware of what was going on. So

that was very interesting. The initial transactions that were available to foreigners were these

B shares which were listed on these nascent, embryonic stock exchanges of Shanghai and

Shenzhen, very new stock exchanges and quite strange to the modern Chinese mind, because

they don't fit entirely with socialist philosophies. But of course in China things are not

necessarily done according to socialist philosophy, it's done according to socialist language,

but the actual things that are done are often much more capitalist. But when I first went to

China in the mid-Eighties, and for example going to Shanghai where one was pointed out the

old building of the Shanghai Stock Exchange which used to flourish before the war, and

officials would tell you that such evil things would never ever happen again in China, these

capitalistic speculators would not be permitted, etcetera. And yet within a relatively short

period they had revived the Shanghai Stock Exchange and created one in Shenzhen, and were

moving along with it. As I said, these early deals were either A shares being sold to Chinese

domestic investors or some B shares available to foreigners. The companies which the

Chinese permitted to approach the B share market were relatively small and unimportant, and

the whole thing was very experimental in Chinese eyes, and I think that they only wanted to


141

start in a way in a small corner to see how it worked without it affecting any of the sort of

major heights of the Chinese economy, particularly the State enterprises. And frankly these

early issues were pretty speculative, and I think that the first issues must have come off the

ground, I can't remember exactly now, must have been during 1992, maybe the end of 1992,

and their market was getting pretty frothy and they were being very much over-subscribed.

And I remember one of the incidents which upset the Chinese authorities very much was

when some share speculator in Shanghai hanged himself after a fall in the market, and he had

been speculating on his own behalf and had been investing the money of his family and his

friends, and when it all fell apart he committed suicide. And the Chinese authorities were

very much brought up on that, to feel that they didn't want to have the sort of market where

people jumped out of windows. But those were the early speculative days, and the Chinese

learnt a very , a number of lessons about the development of the stock market at that time,

and of each stage of the development of the Chinese stock market they've been drawing

conclusions from their experience, and I suspect over the next few years they'll be drawing a

lot more conclusions as they build up a stock market which will be quite enormous. There

are various comments about when the Chinese stock exchanges will have a capitalisation

which exceed any other country in the world including New York, but it is not at all difficult

to predict that sort of thing happening some time around 2,005 or 2,015 or whatever it is.

But, I was saying, in the early experimental stage they dealt with relatively small companies

and this was fairly unimportant business, and major international institutional investors would

not be interested to buy that sort of thing. But by 1993 the Chinese had decided to carry the

experiment very boldly forward and were prepared to bring some of their best companies to

the stock market with listings in Hong Kong, and the stock exchange authorities of Hong

Kong, and the Hong Kong community, advised the Chinese very well in this area, people like

Paul Chou who is just retiring, Chief Executive of the Hong Kong Stock Exchange, and

others in that Hong Kong Stock Exchange area did give very good advice to the Chinese,

because investors do have confidence in Hong Kong and in the mechanisms of Hong Kong,

and so if a Chinese company had signed a listing agreement with the Hong Kong Stock

Exchange then there was a greater likelihood that international investors would trust the issue

and would believe that the company was going to behave properly. And you know,

international investors had doubts about the sincerity of the Chinese in opening up their stock

markets, and continue to have such doubts, but they are still, you know, the investors are still

watching it very closely, but they have put a fair amount of money into that market now and I

think that they will over time put a great deal more into that market. When the H share

market, which is the listing in Hong Kong of Chinese shares, started, it was about June or

July of 1993, and the first two issues, one was Shanghai Petrochemical and one was Tsing

Tao Brewery. Now Tsing Tao Brewery is a pretty familiar household name around the

world, anyone who has been to a Chinese restaurant anywhere in the world has probably had


142

a glass of Tsing Tao, and it was very notably founded by Germans at the beginning of this

century and the Germans brought their beer-making methods to Tsing Tao, which was I think

a German treaty port at the time. And above the city of Tsing Tao, which is a very beautiful

city by the sea, there is a mountain called...I think it's Laoshan, but, forgive me if I've got it

wrong, down which there trickled in scintillating streams this very nice, slightly salty water

which is the source for the most famous Chinese mineral water, and also for the beer-making

of Tsing Tao. And the fact that the Chinese were prepared to bring a household name of that

class to the market was very very interesting. And the issue for Tsing Tao was

extraordinarily over-subscribed and went to a colossal premium, but it was a somewhat sober

story afterwards, because the management of Tsing Tao had, and I use the old pronunciation

of Tsing Tao, the modern pronunciation is Qing Dao, but the beer is generally known as

Tsing Tao in restaurants around the world. The management was simply not used to being a

public company and wasn't ready for the disciplines that being a public company imposes

upon you, nor had they ever had the experience of huge sums of money suddenly coming into

their coffers, and they lent some of this money out and spent some of it imprudently, and then

when the credit squeeze in China started to bite they couldn't get it back from some of the

people that they were lending it to, and they therefore had to postpone some of the investment

plans on which the original issue had been hypothecated, and their results were extremely

poor, and the shares dived thereafter.

I mean, I'm interested in this whole management thing, because, I mean obviously it's a

complete change isn't it for everybody, this capitalist way of doing things. I mean was there

any preparation in the firm?

Well I don't know, when you talk about capitalist-socialist, but I mean we've been through

exactly the same thing in the United Kingdom in the Eighties, and, I mean we had a lot of

State enterprises, or we call them nationalised industries, which looked like a lot of spent

volcanoes in the late Seventies, where there was no good senior management because all the

good management had gone off to the private sector because they would be better paid in the

private sector, so the management was inefficient. And they were all loss-making, not only

because of inefficient management but because the Government tried to keep inflation down

by controlling the price of electricity or gas or telephone or whatever and not putting it into a

free market. So, twenty years ago we were in a pretty similar position in the United

Kingdom, and although the Chinese State enterprises are probably more archaic than the

British ones were at that time, you can draw some very good comparisons. And you know,

it's something that I frequently tell the Chinese, if they think that bringing a State enterprise

into the modern competitive economy with good management and that sort of thing can be

achieved overnight, this is certainly not the case, and our own State enterprises, like British


143

Telecom or the old Post Office as it was, or British Steel, British Airways, all these firms, I

mean after privatisation, it took them some time to get on to the really truly...it's only really in

the Nineties that you see them as sort of genuinely internationally competitive firms, but they

ceased to be drains on the Exchequer fairly soon after they were privatised, because they did

become more competitive, and of course they got rid of a lot of costs. I mean these

nationalised industries in the U.K. employed in some cases hundreds of thousands of people

unnecessarily, and that's exactly the same in China at the present time. The State enterprises

in China employ with an iron rice bowl huge numbers of people, and you can't put them all

onto the street straight away, this is very much not the case, and if you call it socialism in

China not to want to put all these people on the streets straight away, well then call it

socialism, but it's an absolute necessity for any government to deal with that. Added to that

in China you have the particular problem of the transmigration from the inner provinces to

the coastal areas, and you cannot stop the great surge of people wanting to get into the coastal

area and to the more prosperous towns, and the Chinese have the big problem of trying to

absorb these people, and you can't just send them back to the countryside and lock them up, I

mean we're not in the Cultural Revolution any more and people are, I mean, quite restricted

in China but they actually do get around more than meets the eye. And people outside China

don't understand these great movements of people which are going on, and which come to a

head every Chinese New Year.

What, that's because they're going back to their families for the Chinese New Year?

Yes, it's a big moment of travelling.

Yes.

And people just head off for the cities and that sort of thing. People in the cities often head

off for the country to their...but then come back to the city afterwards. But it is a period

when, you know, you can go to the railway stations of Canton or Shanghai and see literally

hundreds of thousands of people assembling and trying to sort of work their way into the

local economy.

What effect did Chris Patten have in Hong Kong while you were there, on the whole market?

Well, I wouldn't go into particular depth on the subject of Chris Patten, because I am not such

a long-time Hong Konger, but I do understand some of the Chinese sensitivities. But, in my

view Chris Patten started off on the wrong foot, and if you are dealing in business with

China, or indeed with a lot of other places, if you start wrong it's often very difficult to get


144

back right. And Chris Patten arrived in Hong Kong in, I think it was July of whatever year it

was, whenever the election was, was it 1992? Must have been the '92 General Election.

Yes.

Yes, because we are about to have another one.

Yes, yes that's right.

Having lost his seat in Bath. And he stayed in Hong Kong in the next three or four months.

He then made his first visit to Beijing as Governor of Hong Kong in October, and came out

with these somewhat shattering pronouncements, because they were quite unexpected by the

Chinese, about the growth of democracy in Hong Kong and how he was proposing to do it.

And the Chinese were completely unprepared for it. And one thing that I have discovered in

China over the years is that the Chinese have a great sensitivity about people who form views

about China in too quick and superficial a way, and there are numerous examples over many

many years of the Chinese irritation at foreign attitudes towards them which are gathered too

quickly. They consider that China is rather a large country with quite a large number of

people, and a very complicated and a long history and culture, and if people walk in and

express opinions too quickly they pay very little attention to those opinions and are very

irritated if these opinions are particularly critical. And so, Patten's remarks which were by

implication extremely critical, and may have had a great deal of justification, but in the views

of the Chinese they had been formed too quickly and they were expressed impolitely. And, I

think that anybody who would be Governor of Hong Kong in the last five years of its colonial

rule would be having a very difficult time and would be criticised left, right and centre;

there's no way in which any British last colonial Governor could come out of that job

smelling of roses, the obstacles are just too great. But Chris Patten, even if you say he had

the best will in the world, which he may or may not have done, I don't know him well enough

to say, by falling into this trap with the Chinese he lost all credibility and, you know, has

been very much discounted by the Chinese ever since. And of course if you read Sir Percy

Cradock's book, it appears to indicate that Patten, and indeed his boss Mr Major, overruled

the recommendations of the Foreign Office in the line that they came out with in 1992, and

although the Foreign Office of course had to toe the line, Sir Percy Cradock, as a former

member of the Foreign Office, didn't feel so restrained, and rather exposed the difference

between this political line taken by Patten and Major and the diplomatic line which the

Foreign Office had pursued over the years.


145

The other thing of course in 1992 here, was ERM; did that, what effect did that have in Hong

Kong, any? I mean, the whole Norman Lamont business.

I...I mean that is just one incident in many in the general distrust which foreigners have of

sterling. I mean I wouldn't say that...I mean Hong Kong having been a sterling area in the

past and that sort of thing, but by 1992 there were not many people in Hong Kong who had

much faith left in sterling.

I see. It's pretty damning isn't it?

Well, I mean when you'd seen how much it had gone down year after year, it didn't matter

whether you were sat in Frankfurt or Hong Kong or Tokyo or San Francisco, I mean your

view about sterling would have been one of continuous deterioration over the years, and

sterling as a rogue currency which could suddenly fall out of bed, as it has this week, is, you

know, a reputation that just continues, and as it looks less and less likely that we will be part

of the single currency this rogue currency factor is likely to continue.

Mm, quite.

But, I mean the most important thing in Hong Kong on a currency stand-point is the link with

the U.S. dollar, and this was established, I don't know when, perhaps in the early Eighties

some time, but it's something that, it suited Hong Kong very well to establish that link and to

give it credibility, and the People's Republic of China likes that very much and...

Why do they like that?

They like it because it's a stable thing; it's a maintainable thing; it's something that you can

have confidence in; and the Chinese financial people are very conservative and like to have

things done in a sound way. The Chinese are extremely aware of the enormous responsibility

they take in having responsibility for the Hong Kong financial system. They are prepared to

take enormous steps to maintain confidence in the period leading up to and after the

handover.

That's interesting.

Their attitude is very conservative. There is a big charm offensive going on at the moment

since September with the Governor and Deputy Governors of the People's Bank of China,

arm-in-arm with the Governor of the Bank of England and the Hong Kong monetary


146

authorities, and the Hong Kong Bank and so on, and the Bank of China, all very much arm-

in-arm saying we're going to keep things going exactly as they have been after the 1st of July

of 1997, and the Hong Kong dollar is going to be kept, the Chinese Government is not going

to sort of go and loot Hong Kong's reserves, the Chinese currency will remain a foreign

currency in Hong Kong, the Hong Kong dollar will remain a foreign currency in China, and

things are going to be run in a very conservative way. Bank notes will continue to be issued

by the Hong Kong Bank and the Standard Chartered Bank, as well as now by the Bank of

China. And, I don't know if I told you the story how I once commented to one of our banking

friends in Beijing that there was no office of the People's Bank of China in Hong Kong,

whereas every other major city of China there is a major office of the People's Bank of China,

and that the People's Bank of China is seen to dominate the financial system in all these

particularly provincial capitals around China. And as near at hand as Shenzhen there is a

large People's Bank of China building with PBoC having a very important role. And my

interlocutor in Beijing said, Àh yes, but we don't want to do anything which is going to upset

anybody in Hong Kong. The Bank of China has been established in Hong Kong for a very

long period; people in Hong Kong are very familiar with the Bank of China. We would much

rather work through the Bank of China than try to impose ourselves heavily on the Hong

Kong system. If the People's Bank of China were to open a large branch in Hong Kong,

people would think it rather like the PLA marching in, and we don't want to give that

impression to the people of Hong Kong.'

Interesting.

It's another, I mean, example of the great sincerity of the Chinese with regard to their desire

to maintain confidence in Hong Kong, and there will certainly be people who will try to

speculate against the Hong Kong currency next year, just as there were people who tried to

speculate against the Hong Kong currency when Mexico had its latest financial crisis a

couple of years ago. But any speculator is likely to get burnt, because Hong Kong's reserves

are very substantial, China's reserves are enormous, and if the Chinese wish to maintain the

Hong Kong dollar-U.S. dollar parity, then they have ample ammunition to do so, and it would

require a great many George Soroses to change that.

Now while you were there there were a couple of issues weren't there?

Well the...well I'm talking about the H share market, I mean the.....

End of F5296 Side A


147

F5296 Side B

OK, yes.

Well we were lucky enough in the early days of the H share market to obtain two very good

customers, and one of these was Yizheng Chemical Fibre, which is near Nanjing, which is the

heart of the textile industry, the old textile industry of China, and this is the largest polyester

company in China. And what was particularly attractive about it was that its plant was very

new indeed, it had all been built in the Eighties, and the general manager of the company was

relatively young, I think he was about 49 at the time, and he had sort of been with it since its

inception. And it was a very modern and very efficient plant on a very wide acreage, very

close to the Yangtze River, and indeed all the production was put onto boats on the Yangtze

and this wide and sparkling river, it was very interesting to see all the production being

loaded down the river towards the sea. And so many Chinese enterprises had very archaic

plant, and some of the companies we had visited were still using plant that had been built, for

example in 1919, with no attention to pollution control and, you know, workers who, you

know, must have suffered all sorts of diseases as a result, and therefore to deal with such a

sort of sparkling modern company was very nice. But the Chinese wanted to advertise their

good companies, and so when we took international investors from New York and Zurich and

London and Edinburgh to visit Yizheng, I mean they were of course very much impressed,

and hadn't realised. Before this time nobody knew anything about the Chinese corporate

sector; no Chinese company published anything like a Western style annual report, and I

mean if you asked a Chinese company for information about the company, you would be

given some sort of coloured brochure, the first few pages of which would be photographs of

distinguished party leaders from Beijing coming down and shaking hands with the local

management; then there would be marvellous bits of calligraphy of Madam Chen Mu Hua or

Madam Wu Yi or whoever it was from Beijing, beautiful Chinese letters wishing good luck

to the socialist work of the labourers and all the rest of it. And you might have a photograph

of some of the facilities and so on. But no statistics and figures, and profit and loss or

anything like that, all this was sort of very well concealed. And when the H share market

came into being the Chinese had been advised that if they wanted to get international

investors to come to this market they would have to have proper audited accounts, audited by

the big six accounting firms, and conform to international standards. And what was so

tremendously interesting was the efforts which they took to come up to the very high

standards.

Really?


148

And some of those earliest prospectuses were very informative indeed, and although this has

still only touched a relatively small part of China, you now have at least some understanding

of the Chinese corporate sector, which of course increases your understanding about China.

And when people ask me sort of vague general questions about China and the future of China

and this and that, I often find it very difficult to talk about generalities, but if you ask for a

particular point about China, an area in which you have worked with the Chinese and seen

how they react and so on, one can only be enormously impressed with some of the things

they have done. I mean this process has also exposed some of the weaknesses of the Chinese,

but it has also revealed some enormous strengths, and...

What do you see as their weaknesses?

Well, I mean the Chinese have a great passion for detail, which of course is a strength, but

they will also quibble over detail to such a degree that you sometimes fail to see the wood

from the trees, and the Chinese are known to be very tough negotiators. Well if you're trying

to get an issue off the ground, you've got to price in a manner that's going to encourage

people in, especially in a new and massive market, and so if the Chinese try and push too

hard on the negotiation well they're not going to have a successful issue. And there were

cases in these first rounds of issues where the Chinese were not entirely straightforward with

the information which they revealed, and tried to sort of put too much profits into the year at

hand in order to justify a higher P/E ratio. Now, in the early issues one had such good

support from Beijing that one could really insist that things be done properly, but not all

investment banks were so demanding, and in some cases the issues did very badly afterwards

because the prospectuses were not so well informed. But on the whole these State enterprise

issues were very revealing, very informative, and cast a whole new light upon China, much of

which was favourable, and the Chinese had said, `Well you tell us how to do things the best

way, and we'll do it,' and they did it, and...'

That's tremendous.

And in the, I mean dealing with some of the officials who were responsible for the new

securities market, these people came from the Reform Committee, which is the State

commission for the restructuring of the economic systems, and from the State Council, and

from the People's Bank of China, and also from the newly-created Securities Commission,

which was the China securities regulatory commission. And it's interesting to me that the

sort of people that they assigned to these tasks, they are really some of the brightest of the

young people of China, and my contacts with some of these quite young people, and in China

you are always dealing with the pre-Cultural Revolution people or the post-Cultural


149

Revolution, well these are the post-Cultural Revolution people, brilliant people in their

thirties, and they have assigned to their Securities Commission some of their very best young

people. We had a sort of little incident this summer, we had a group of about five of these

people came over to London in some of the sort of finalisation of the discussions with the

London Stock Exchange and the Treasury about the Memorandum of Understanding between

the U.K. and China on securities issues and some of the listing of Chinese shares in London.

And I took this group of five people out for the day to Cambridge and Ely, and discovered a

certain amount about these people during the course of the day. It is a well known thing in

Chinese history that the university entrance examinations and the Civil Service examinations

throughout the entire sort of Mandarin period under numerous successive emperors,

especially the Ming, was that these entrance examinations were the most important things in

China and if you did well in your entrance examinations, you know, you went in a very very

fast track. And that's something which continues in China, and of this group of five people

who came over, they were all in their sort of early, mid-thirties, one of them was the person

who when he sat his university entrance exam came number one in the whole of China.

Oh, gosh!

And you know, I felt I was looking at the whole course of Chinese history when I saw this

very agreeable gentleman.

How did you know that, did he tell you?

Well I discovered it in conversation. And then, a lady who was part of this group, turns out

that she came number one in the whole of Liaoning Province, you know, which is a very

major province of China. And, we were talking to people who are so cultivated and so

intelligent, and, just spectacular people, and it was just such a delight to deal with people of

this very very high quality. People who also, you know, are very keen to develop relations

with our country.

That is wonderful isn't it.

Mm, mm.

I was going to ask you what your particular role in all this, all these committees, the Reform

Committee and so on, I mean was your role a sort of oiling of the wheels or was it much

more hands-on than that?


150

I think, you know, these early days it's a bit of everything. And, I mean I see my role in

China, I am regarded in any case as something of a pioneer in the Asian markets, I mean...

You mean here you are regarded as a pioneer?

Oh in the Far East, I am regarded as a pioneer. I mean people in the Far East central banks

and governments and major corporations have seen my face around the place for at least 25

years, and I've been one of the most consistent people coming from the London market over a

very long period of time. You know, firms do keep changing all the time, and there are not

many firms where you get this sort of consistency. There are, you know, a small number of

other people in the City of London who have done this over the years and are very much

respected as a result, and there are one or two American bankers who come into this category.

The odd German. But, there are not so many, you know, who have been consistent faces

over a very long period of time. So, you know, one is recognised as a pioneer, and this is

appreciated in China, and the Chinese do have a respect for older people, and for experience.

You regard yourself as an older person, do you?

And, I am 58, and compared to an awful lot of people playing around at the investment

banking business these days one is very much an older person. You know, it's very much an

industry these days for younger and younger people, and it's very nice if one can continue to

fulfil a useful role as an older person.

But do you offer advice, whether it's subtle or overt? I mean are they actually coming to you

for...?

Oh indeed they are. And, I mean the great thing about offering advice to anybody, not only

China, is, if you like the people, they know it, and if you are offering advice, sometimes quite

critical advice, then they will not mind what you say if they feel you like them. But if they

sense hostility in your mood, whether the advice is friendly or otherwise they will not be

pleased.

Well I agree with that.

It's not so different from anywhere else, but, it somehow tends to be annunciated a little bit

more out there. But, one is stumping around officialdom and corporations and that sort of

thing in China, and one is usually accompanied by younger people who speak Chinese or are

Chinese, and they are looking for a certain amount of guidance about how to move forward.


151

And the thing about China is, the whole thing is so undeveloped and at such an early stage

that people who have had some sort of pioneering experiences in other markets in that region

often have useful insights into how things are likely to work in China. They won't work in

China in quite the same way as they work in other countries in that region, or elsewhere in

the world, but at least it gives you some sort of guide of how to move forward, and you learn

quite a bit on the way.

And enjoy it into the bargain I hope.

Oh it's tremendously enjoyable, and, I mean they are, I mean you are dealing with some

absolutely marvellous people. And, of course when you see something like Tiananmen

happening, I think I've mentioned it in the past, you know, it's a horrible thing, but if you

allow that sort of thing to turn you away from the country then you will never help all these

bright young people who are trying to change China, and who themselves were students very

recently, and who in many cases were helping the students and taking noodles to them on

Tiananmen Square. And, you know, a lot of the sort of repressive atmosphere of the police

State which is China, you know, you will never ever cope with it unless you have a proper

dialogue with it, and you know, I think this is something which is accepted very much, for

example in American policy, as well as European policy.

I'm sure that's right, I mean what I found interesting in what you say is how prepared they are

to change, how much they, once they see that, you know, they are prepared to...

Well if you deal with any particular aspect of Chinese business and so on, and get down to

the details, the nuts and bolts, you do see a tremendous preparedness to get on with things.

And also much more intellectual honesty than the world's press credits them with.

have you got an example of that?

I think that they...they are prepared to be quite open about the problems of a State enterprise

for example, and the weaknesses, and the numerous things they've got to do to cope with it.

Although there's a familiar statement, there is no bad news in Chinese newspapers, and if you

read the average Chinese newspaper and brochure and so on, you know, it's full of very sort

of, full of praise and how wonderful everybody is and so on, and of course things are far from

wonderful, and when you get people to talk frankly they will admit, and when you are on that

basis, you know, it's very nice. So they are prepared to change.


152

So, do you meet ordinary people in China? I mean how far does the sort of wish for change

go down do you think?

Well, I think that, I've met quite a lot of people in China, and, I think there is... Well there is

a deep-rooted wish for a better standard of living, and you have to remember that a lot of

people are coming out of poverty and privation, particularly self-induced privation during the

Cultural Revolution, and therefore the desire for a better standard of living is pretty deep, and

of course it's been spreading all over China much more now, and my niece, who was teaching

in a fairly remote town, all sorts of stories of how, you know, things have been trickling down

into the local economy.

What sort of things?

Oh no, to a standard of living, you know, people who five years previously couldn't even buy

tea, and you know, rice was scarce and all that sort of thing, I mean, things have become

much more available, and improving the standard of living remains very important for a lot of

Chinese people.

There was another big client you had at that time wasn't there?

Yes, that was in an entirely different part of China, and was also in a very important industry.

This was the most northerly big city of China, Harbin, and if you are in Harbin I think that

Russia is to your north, to your east and to your west. And, it has a few onion domes in it,

and it's very close physically and spiritually to Russia and to the Russian far east, and Siberia,

and looks like Siberia, it is Siberia. And it's a place where a lot of white Russians fled to at

the time of the Revolution, although once they hit some of the Chinese Revolutions they

found it pretty uncomfortable, but amazingly quite a lot of Russians have survived there. A

lot of Koreans there too, in the Chinese north-east, there are some generations of Koreans

from North Korea and South Korea, you know, the Korean peninsula generally. And it is a

very interesting part of the world, in winter extremely cold. Any case, we were fortunate

enough to act for Harbin Power Equipment, which was the largest maker of equipment for

power stations in China, and therefore in an industry which is very important, since China

certainly needs an awful lot of power and can continue producing power stations for a very

long period of time before they have enough power. It's a very interesting experience. Of

course a lot of the people who were up there and who were managing this factory were

people who came originally from Shanghai and from other parts of China, but generally

speaking in that cold north-east of China the factories are very well run and people work

quite hard, and there's a very high level of integrity. People sometimes say that, you know,


153

you get more corruption in the south, particularly in the sort of area around Canton, which is

so close to Hong Kong, and that up in the north people haven't learnt how to be corrupt yet.

[LAUGHS]

Who says that? [LAUGHING] So you found them very different sort of people up there, did

you?

Well to some extent. I mean basically all parts of China are different, and it is like many

different countries in the same, a very large country, and you always get tremendous local

differences, not to mention even differences in language, in different Chinese, parts of China.

What else would you like to tell me about your time in Hong Kong? Is there anything else

that we haven't covered? I'm sure there are lots of things.

I think the development of the Chinese securities business was probably the most riveting

thing in that period, and it was also part of the changing aspect of what Hong Kong was

going to be, and it brought to Hong Kong some very powerful industrial companies for

listing. And previously the Hong Stock stock market had been known for financial counters

and property counters and trading counters, but not manufacturing, industrial counters in a

major way, and the Hong Kong authorities, by persuading these Chinese industries to list in

Hong Kong, were actually broadening the scope of the Hong Kong Stock Exchange to a

tremendous degree, and also demonstrating to the People's Republic of China one of the

many areas in which the experience of Hong Kong was going to be of value to China. And

the stock exchanges of Shanghai and Shenzhen inevitably had to look to Hong Kong to see

how things should be done. There are an awful lot of people in Hong Kong, in foreign firms

in Hong Kong, who know very little about China, are very ignorant about China, and in quite

a lot of cases never go to China. If they go on holiday they go to, you know, some place like

Phuket or Bali, some sort of holiday resort, but, there are an awful lot of people who just

don't get involved in China, and consider going into China as somewhat disagreeable and to

be avoided, and primitive and so on. And this sort of mentality, how can you possibly carry

on in Hong Kong in the late Nineties if you have this sort of mentality? You must be as dead

as a dodo. But the fact is that here we are in the threshold of 1997, and you will still find in

Hong Kong people like that. When my niece emerged from two years in China, and she

stayed in my Hong Kong flat and went out socially in Hong Kong a little bit, she was

amazed, talking to some of these, I'm afraid British, people. She had one conversation with

somebody who had been there in Hong Kong for seven years and when Natalie said, Òh I've

just come in from two years in central China,' the girl she was talking to said, Òh yes, yes,

well, I have been thinking of going to China for some time, but really haven't got round to it'.


154

[LAUGHS] There are so many people who just haven't been into China, they don't

understand what is next door. As a matter of fact I sometimes tease the Singaporeans in the

same way, because, if you know your geography, Singapore lies in the very heart of Sumatra,

and if you ask Singaporeans whether they have been to Sumatra, you will sometimes get a

similar lack of understanding. And, how people can understand, you know, where they live

and what makes the place tick if they haven't been into the big country which lies on their

doorstep. I mean it's like people, you know, living on the Isle of Man who have never been

to the United Kingdom, or people in the United Kingdom who never go to Europe, I mean

it's...

It's a very good analogy.

Yes.

Good. OK, so when did you come back from Hong Kong?

I suppose I must have trickled back in, towards the end of '92. I say trickled back, because

these days you don't sort of move suddenly from one place to another like an ambassador

returning his credentials and that sort of thing, because you go back one week and back

another and back another and back another, you know, the date on which you hang your hat

in one place or another is much less easy to define than used to be. And I kept a flat in Hong

Kong, I bought a flat when I was out there, which so far seems to have been rather a

wonderful investment, and I keep it as my sort of Far Eastern pied-à-terre, which I still find

very convenient for my Far Eastern travelling. And for example I've just come back from

four weeks in the Far East during which period I've been in Tokyo, Nagoya, Beijing, Tianjin,

Harbin, Shanghai, Hangzhau, Singapore, Kuala Lumpur as well as Hong Kong, and having

therefore Hong Kong right in the middle of all that has been quite delightful. And that sort of

trip is very effective in that you cover a lot of ground very well in a very thorough way, you

get on to the local time zone, and if you had to have four consecutive weeks in hotel rooms it

would drive you mad, but by having a day or two here and there in your own Hong Kong

home is, it just makes it that much more tolerable.

What do you do when you have spare time in Hong Kong?

Eat, eat. [LAUGHS] And eat. Well at this time of year people hike quite a bit, and it's a

lovely time of year, a lovely season in Hong Kong, and it's, people don't realise that even on

Hong Kong island you can take a quite remote walk over peaks and valleys and over, with

lovely views of the sea everywhere. Yes, Hong Kong is quite an agreeable place, although of


155

course it's not a capital city, but a lot of attitudes are relatively provincial compared to a place

like Tokyo or Beijing, and of course it's very much a business...

Can you give me an example of that?

It's just a, it's a business city. And although Hong Kong with its enormous wealth and its,

particularly its wealthy Jockey Club and that sort thing, does bring, you know, visiting sort of

Royal Ballets and Bolshois and that sort of thing, on the whole the people of Hong Kong

aren't terribly interested in that, I mean they're very very interested in food and money.

End of F5296 Side B


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F5297 Side A

[This is the ninth[sic] tape with Martin Gordon.] [ACTUALLY THE TENTH]

So, we're coming up to the Swiss Bank Corporation episode.

Well the Swiss Bank Corporation as you know is headquartered in Basle, and is therefore a

little bit different from the two famous Zurich banks, the Credit Suisse and the Union Bank of

Switzerland, and has a number of different sort of cultural backgrounds. And in the early

days of the Eurobond market we used to cooperate very amicably with Swiss Bank

Corporation; they were very first-class people to deal with, it was, you know, a very very

first-class, somewhat old-fashioned house, and they did not compete with us in the primary

business in, I'm talking right back in the Sixties. And they were really everybody's favourite

bank, because UBS and Credit Suisse went into the competitive investment banking business

earlier than SBC, and people tended to invite Swiss Bank Corporation into all their deals

because they came in politely and they didn't try and mess the deal up, they were happy to

buy some of the bonds but they weren't taking business away from you. If you invited UBS

or Credit Suisse, I mean, and ten minutes later they'll be calling on the client saying they

could do the deal better than you could. Now, SBC of course over the years started learning

that trick too, but in the early days it was always one's sort of favourite one to deal with,

and...

Is that what you mean by the cultural differences, when you...?

Yes, well it was, you know, it was...

Because it was less aggressive?

A rich, well behaved, very first-class bank in a different centre from the main Swiss

commercial banks. And so, I have memories of dealing with various Swiss Bank people right

back in that period, and they were first class, and first class is first class, and you know, it

was always nice to deal with those people, and they have not lost their first-classness, even

though they of course have become very aggressive and competitive, and have played their

markets very well.

Well I'd really like you to take me through the takeover here, the merger, whatever you like

to call it.


157

[LAUGHS] Well, I think I may have referred to it before as the right deal at the wrong time

on the wrong terms, from the point of view of Warburg shareholders. We are now, I mean

the deal became effective in July of last year, and we're now in December, so we are now

virtually a year and a half into it, and one probably looks at it now a little differently from

what one did at the time of the actual merger. Warburgs fairly consistently over the years

wanted to be a leading player in the international corporate finance business, as a Eurobond

house, after Big Bang as a Euro equity house, declining of importance in those days in the

Eurobonds, as an M & A house; we wanted to be in the very core of the business. And it was

never really our style to be too much of a boutique, and therefore a merger with Swiss Bank

to create a European colossus is not entirely out of keeping with the strands that sort of

governed Warburgs over the years. You could read it differently, and you could have run it

differently, but you know, I don't think Siegmund Warburg would necessarily have

disapproved of a deal with Swiss Bank Corporation, although Swiss Bank Corporation was

not one of the names that came up in sort of general discussions about mergers and that sort

of thing over the years when Siegmund was alive, I mean those days Deutsche Bank was

much more spoken about, and there was all the great admiration for the old Deutsche Bank,

which of course has changed very much now. And Paribas, J.P. Morgan, Morgan Stanley

were the sort of, most admired houses in that time. And so it wasn't surprising that Morgan

Stanley was talked about, and a possible merger for Warburgs in, when are we talking about,

late '94 I'm talking about now. But things were not right, and not propitious for that. One

reason was that Morgan Stanley had changed a lot, and was far from being the gentlemanly

firm that, you know, we had dealt with twenty years previously, had become much more of a

trading-dominated house, and we were unlikely to be comfortable bed-fellows with those

people, and furthermore we were negotiating from weakness since we decided to enter into

these negotiations at a time when our profitability was poor. And, I say it was a deal on the

wrong timing, if we had taken the strategic decision that we needed to do such a thing, and

there were some people here who had held that view for some while, then it would have been

much better to have done it when things had been better. However, we eventually found

ourselves doing it when we almost appeared to need it, and then with the collapse of Barings

we appeared more naked than we might otherwise have been.

Why is that?

Well, in all previous financial panics, Warburgs had always seemed a rock in the storm, and

we had somehow been strengthened by difficulties that had occurred in the financial markets.

Because the Barings thing occurred at a time when we were seen to be making very little

money, if not losing it, and we had already shown our vulnerability by entering into

discussions and then having them terminated with Morgan Stanley, it made us just look that


158

much weaker. And so, it was the first time that a crisis like this had occurred, and of course it

was a much bigger crisis because Barings was one of the inner core everybody had assumed

would be protected by the Bank of England, and when it was shown that it was not going to

be protected by the Bank of England, well then all round the world people said, well you

know, can we trust Rothschilds, Warburgs, Schroders, Lazards, any more? And so, if you

wanted to continue to stay in the mainstream of business, then a merger seemed much more

likely. So, that meant that when we did the deal with Swiss that it was a deal where we were

doing it at the wrong time, and inevitably if you do a thing at the wrong time it's very likely

to be on the wrong terms. And whereas, you know, people like New Court, Smith New

Court, got a very nice takeover package from Merrill Lynch, and Kleinworts was quite well

bought out by Dresdner Bank, the price which Swiss Bank paid for Warburgs was pretty

cheap.

What was it?

Well, it was said to be book value, and I think it was book value minus rather than book value

plus, but it was approximately book value, so the Swiss took no financial risk in acquiring it,

and even the most superficial survey of Warburgs, when you look at the figures, indicated

that our book value was genuine and there were no nasty surprises, and we were extremely

liquid. So they bought the entire Warburg franchise, you know, came in for nothing. And

when you consider what S.G. Warburg was, that was a very nice deal for SBC. So, it was

very disappointing to the people who had held shares in Warburgs for a long time, and had

seen for example Warburgs paying a premium to acquire Pitman, Akroyd & Smithers,

Mullens and various other things, that they allow themselves to be bought out without a

premium. So that left a bad taste in the mouth of quite a number of people, both within the

firm and outside it, and led to something of a sort of Warburg eclipse.

What part did you play in the negotiations?

None whatsoever.

And what did you feel about them?

I was...I was very unhappy at the time. But you know, you have to go on with things, and...

But here's a man you respect, I mean why did it happen, you know, how did...?


159

Well, I mean I think that it was, the firm was not well managed in the early Nineties, and I

think that, you know, it's a very simple thing but I think that Lord Cairns didn't have the

qualities to lead a group of this size; he didn't understand risk control; he may have been quite

good at corporate finance but didn't understand the overall business and the challenges ahead;

and it was a mistake having him as our Chief Executive. I think that it was David Scholey's

mistake, and I think that David Scholey rather left Cairns to handle things, and it was not

done well. And you know, that was the basic thing that went wrong. And... Any case, when

it came to having a merger I think that we were quite keen to have a merger with people we

felt that we would be compatible with. It's fairly well know that National Westminster Bank

also had proposals on the table, and that our leaders didn't feel anything like as comfortable

with NatWest as they did with Swiss Bank Corporation.

Why was that?

They didn't consider them good enough, and although that may have been a slightly arrogant

thing to say, Swiss Bank Corporation is a very well managed and a very forward-looking

firm, and the Swiss have done a remarkable job in absorbing Warburgs. And of course it has

been a marvellous feather in the cap of SBC to have done that deal, not only on the price they

got it at but as the months have gone by again and again it's been seen that the fit has been a

very good one.

Do you mean it was complementary in the areas that you were weak in and they were strong

in?

It was complementary. Of course not everybody was complementary, so there was some fall-

out; some of it was forcible and some people went away in sort of outrage and so on.

Was that...

I am still here.

Good for you.

But, you know, I took the view that you needed to stick around and see how it went, and that

you shouldn't judge the Swiss too quickly. And, you know, on the whole I think that they

have done, you know, a very good job, and we are in a very changing world, and it's nice that

SBC Warburg is one of the companies that competes most actively with the big Americans,

and most successfully and most profitably, and it's nice to see that in spite of the enormous


160

publicity given to various people who have departed from Warburgs that a colossal number

of Warburg people have stuck with it and have prospered well.

The people who were asked to leave, was that handled well?

Well, not always, but these things are sometimes done very quickly, and some cases handled

well. On the whole people were dealt with pretty generously, and got quite nice packages, if

they were asked to leave, their redundancies were very generous.

I assume not all parts of Warburgs were dismayed. I mean obviously some parts were

strengthened I imagine by this merger, is that correct?

Yes, I mean I think that to take corporate finance as an example, Warburgs had declined in

the bond market very severely, but had remained strong in the equity markets. Swiss Bank

Corporation had been rising and rising in the bond markets, so the combination of the fixed

income and the equity made us a very powerful financing firm, and plus all the derivatives

and so on, we were really right out in front, and easily the number one European firm. So

from that corporate finance point of view, that was very satisfactory. From a second

corporate finance point of view, particularly corporate advice and M & A, the jury is to some

extent still out. Warburgs did lose one or two of its long-standing prestigious clients who felt

that they would no longer get the same sort of, sort of very hand-holding financial advice that

they had had in the past and the sort of, the collegiate way in which it was done, sort of

Oxford high table-ish advice. And that sort of atmosphere within the corporate finance

department was never exposed to sort of more modern influences, or more American style

influences, where things were done a little bit more on a sort of product basis than on a

consistent relationship basis. And, I don't know whether we've sort of completely sort of

worked our way through that. I mean, old Warburg sentiment was always that, you know, the

relationship mattered very much, and I was very much brought up on that and still hold that

view, but the more modern view of, you know, we are more product-directed people. Thanks

to a reasonably good leadership since the merger we have achieved some sort of compromise

between the two, and we have been very aggressive on the products, but have managed to

demonstrate to some of our new colleagues that the old relationships mattered very much.

An example is the big Russian Eurobond which was done the other day for I think a billion

dollars, and this was awarded to J.P. Morgan and SBC Warburg jointly, and the position of

SBC Warburg was entirely because of the advice that we had given the Russians over the

years, and they were grateful for our advice and the relationship we had, and it wasn't

because of our market position we got it. And there have been heaps of other deals over the

last year where solid relationships really bring the business along. And so I think there's been


161

a sort of, a bit of a learning process on both sides. On the relationship side, the old Warburg

side people realise that you can't rely upon the relationship these days to deliver the business,

and on the product side the people learnt that the relationship matters also. And of course,

those of us who have been here a long time and have learnt the trade from Siegmund, you

know, are reasonably sure of our ground in saying that things need to be done in a certain

way, and with all the modern products and so on, you know, there are still fundamental

principles of banking and integrity and all that sort of thing which apply just as much.

Do you think that's something that you, I mean Warburgs, have taught SBC, or do you think

that their old cultural backgrounds, as you were describing them earlier, predisposed them to

that viewpoint anyway?

I think that, I think you are quite right, I think that both those elements exist. I mean the way

SBC had developed, you know, in its acquisition of other companies in the United States and

so on, it had become a pretty bold and brassy firm, and there were conflicts within that firm

before we were joined to them between the sort of, the old-fashioned Swiss bankers and the

more modern sort of derivatives-led people, and I think the modernists have on the whole

been winning, particularly because in the recent years Switzerland has been going through a

recession, a very severe recession, very much because the strong Swiss franc has made Swiss

companies uncompetitive internationally, and as a result there have been an enormous

amount of bankruptcies in Switzerland and therefore all the major Swiss banks have been

riddled with bad debts, and therefore the people who have been handling the old-fashioned

commercial banking business in the Swiss banks have been somewhat on the defensive and

therefore the modernists with their new techniques and that sort of thing have been able to

triumph over them. But there is still, you know, within a firm like particularly the Swiss

Bank Corporation, a sort of combination of sort of old-fashioned attitudes and modern brassy

thinking, and Warburgs appears to have fitted not so badly into that organisation, and one

doesn't want to say, you know, that Warburgs has taught the Swiss a lot, but I think quite a lot

of the Swiss would admit that they have. And you know, an awful lot of people were saying

at the time of the merger that the name of Warburg would be annihilated like Kuhn Loebs

was when Lehmans took it over and so on, but there is absolutely no sign in the marketplace

of the Warburg name disappearing; there is every sign that I see that the Warburg franchise is

very much respected within the Swiss Bank group, and having got through, you know, this

transitional period I don't see why it shouldn't continue on this basis.

How... Sorry. How have you personally got on with some of your opposite numbers, I mean,

you take them to the Far East, the Swiss Bank Corporation people, or is that not relevant?


162

I think they're absolutely fascinating. The only thing is that we're such a big company now. I

mean we were already getting pretty big, you know, before the merger, but it's very much

bigger now, and we do have some simply terrific people around the place, and I am just

constantly being surprised, and it's an endless flow of surprise because you are constantly

meeting new people with different responsibilities, not to mention all the new people who

have been joining the firm, and really a lot of people coming in, particularly in recent months,

the firm has been in such a winning position. And, you know, it is just so interesting

constantly to meet people with different skills and backgrounds and so on. I mean it's a very

talented group of people. A major challenge for the principal executives to keep together.

How do you mean?

Well, to keep a group of very brilliant people together requires quite a lot of good

management.

Oh, they're all sort of prima donnas you mean, to...or...well not prima donnas, all leaders.

Well, there are a lot of prima donnas, yes, and, not only that but...and we're dealing in a lot of

quite complicated financial instruments, taking risks which we believe we understand and so

on and which we appear to be understanding. But you know, it's a, you know, a very big

organisation taking a lot of positions, and very important therefore that the top executives of

it understand what's going on, and one has the impression that they do.

Good. So, I mean how would you see the position in five years' time? Is it possible to look

so far ahead?

Oh there...I mean, you know, trite to say, you know, there will be more consolidations, I'm

sure there will be. One thing is of course the Swiss currency and the English currency are the

two currencies which appear to be outside the sort of, the single currency, and there is almost

a common interest there.

So you think that we will definitely stay outside, do you? And what effects...?

No, I don't...I mean I wouldn't like to make any assumptions with regard to that.

Very difficult. But what difference would it make to your business if we stayed outside for

instance?


163

Well Switzerland's going to be outside it anyway.

Yes.

The British currency could join it if Labour gets in, although I have no idea whether it's more

or less likely, if Labour gets in with a large majority whether it's more likely or whether it

gets in with a small majority, you know, Mr Blair has been far too careful not to show his

hand, and say what he really thinks, and after all will depend upon the political situation at

the time. The Chief Executive of UBS the other day after announcing the awful results of

UBS and saying that they would be assigning various top management to be based in London

and so on, the UBS man said, `Well, EMU or no EMU, London is still going to be the capital

of the financial markets of Europe,' which I am sure is going to continue to be the case.

Do you think so? Oh, it won't sort of move off to Frankfurt or any of these...?

No, I mean you just have to go to Frankfurt or Zurich or Paris...

I haven't.

To see what hollow places they are, compared to London. So, I really don't think, I genuinely

feel the single currency won't make any difference from that point of view. And one of the

things that the Swiss have discovered in taking over Warburgs is that, you know, London is

London, and you see constant transfers taking place from Switzerland to London, very few

the other way round, and you know, the meetings on important matters again and again are

taking place in London, and if you want to know what's going on in the European financial

markets, well London is your first stop.

So who do you see as your main competitors, SBC Warburg's main competitors?

Three American houses, Goldman Sachs, Merrill Lynch and Morgan Stanley.

Is that because they have the same breadth and depth as you?

They have a lot of breadth and depth, and they have a lot of American distribution, which we

wish we had. But you know, those three houses are the three strongest survivors. There's

going to be a lot more change in the American market in the time to come, because Glass

Steagal go and so on. And so the American market is going to be very competitive, and

American firms will continue to be very active in competing for all the major international


164

deals. But those three houses are the ones that have really done well, and the other U.S.

houses we don't regard as competitive to us.

Right, well let's turn back to you. Does your social life impinge on your business life?

Well, I took the view very shortly after I joined Warburgs that you didn't really have a social

life, and you know, the way people work in investment banks, or major investment banks, on

both sides of the Atlantic, it's difficult to see anybody having a social life. I mean they're

here at the weekends, they're here at midnight, you know. Admittedly, I'm not as hard-

working as some of the younger people, although I do maintain a very very substantial

programme, but this all night and all the weekend and that sort of thing, I think I've just got

beyond that by now, and that will...

You've earned your sleep.

Well that way lies heart attacks. Well you don't get to sleep if you have jet lag all the time,

but...but that really is for younger people.

So what do you enjoy doing in your leisure time, such as it is?

Oh, playing bridge.

Oh right, you have a regular bridge four do you?

Oh I, well I play at my club where there are a lot of very nice people and...

Which club is that?

The Oriental Club, of course. [LAUGHS]

Oh right, of course. [LAUGHS] Silly question. Very nice too.

But, no, I mean I read, and I travel.

But does bridge bring you your main group of friends would you say? I mean do you go

there to meet specific people, or do you just go for bridge evenings? I don't know how it's

organised there.


165

You know, bridge is a favourite diversion and has been over many decades.

End of F5297 Side A


166

F5297 Side B

So do you play to sort of competition standard?

Not these days.

Oh you used to?

I used to, I used to. Any case... People in our business, I suppose a lot of them sort of go to

the opera a lot. I'm...

Don't you?

Well I don't go to the opera so much, but a few years ago I bought some seats at the Albert

Hall, and I live in Kensington, it's particularly nice to sort of walk along to the Albert Hall,

particularly in the summer time in the Prom season. And it's so nice to have tickets for

virtually everything automatically, and the tickets you don't want you return or you give

away, to the hospital and so on. And so it's nice to sort of go through the programme and see

what you don't want to see rather than what you do want to see and have the frustrations of

applying for tickets and being refused and that sort of stuff. And I love the Albert Hall, I

think it's a marvellous room, and it doesn't have any of the elitist image of Covent Garden.

And of course Covent Garden produces the most wonderful music but, you know, at £120 or

£140 a ticket, I mean it's almost immoral, and results in corporate entertainment being the

sort of, the main thing that goes on there, like Glyndebourne and Wimbledon, which is

reduced to corporate entertainment. And I have a really quite active dislike of corporate

entertainment, and if I take clients out, which I do frequently, I like to do things on a very

personal basis, and I never respond to all these e-mails saying, you know, we have tickets for

this or that, Glyndebourne or Covent Garden or this or that, I never ever respond to these.

And I just can't bear the thought of taking, you know, business people out to, you know, the

company's tickets, and with all the company hamper and the company car and Glyndebourne

and all that sort of stuff.

So you enjoy taking people, you said you took a group to Cambridge and Ely for instance.

Oh yes, well that was, yes, that was a nice thing to do. It was a Sunday, and the Chinese were

absolutely delighted. Cambridge is quite a famous place, and to take them on a punt down

The Backs on a beautiful Sunday morning, you know, it was a very sort of personal thing one


167

did for them, and you know, enormously appreciated. Whereas of course your average bit of

corporate hospitality is totally unsuited to Far Eastern visitors.

How do you mean?

Well some Japanese may like going to Covent Garden, the opera, they've trained themselves

to that sort of thing, but I mean your Chinese visitor has no understanding of that sort of

thing. And again, if you take a Chinese to the Ritz and give him an expensive Western meal,

he will not be particularly grateful to you; whereas if you take him to a somewhat down-at-

heel but delicious Chinese restaurant, he will always be happy.

So when you went to Cambridge did you not go to King's College chapel or Ely Cathedral

or...?

Indeed we did, and one of our colleagues is a graduate of Cambridge University and she did a

lot of the showing us around. I am not a Cambridge person and so it was nice to have

someone who came from there. And of course these buildings are of timeless, and in global

terms, attraction. And, I mean going down The Backs on a beautiful Sunday morning with

the odd church bell ringing and this extraordinary scene that you have, I mean it must, there

are very very few things in the world, I mean, of course there are lovely things in China,

lovely things all over the place, Venice and so on, but it is one of the most exceptionally nice

things, and had a very good impression upon the Chinese. And there's some Chinese poet

who came to Cambridge, I think it was before the war, probably in the Thirties, and he wrote

a poem about Cambridge which has become, sort of really got into the canons of modern

Chinese literature, and I'm not quite sure how the poem goes but part of it is, `Quietly I came,

and quietly I went away'. And any case, it's very movingly written in Chinese, and they were

sort of quoting this poem as they went down the Cam. It was very charming. But the

building, you know, more than King's chapel, more than the gardens of St. John's, the

building which completely transfixed the Chinese was Ely Cathedral.

Why was that I wonder?

I had assigned, you know, about half an hour to sort of do Ely Cathedral. I couldn't get them

out of the building. You know, this extraordinarily Norman splendour, the wonderful way

the light flows in, the antiquity and yet the modernity and the user-friendliness of this

building, and the way it's set and that sort of thing. And the choir was practising and the

music was going up to the rafters. And it was really very nice to see how our lovely cathedral


168

completely bowled them over, and I simply couldn't get them out of it, it was, they were so

happy to visit this building.

That's interesting, because it's often overlooked isn't it, with other cathedrals in the area and

so on.

Yes, yes. Well, it is. I haven't been there for about thirty years, and so revisiting after many

years I was also very impressed. But when it comes to looking after clients, you know, doing

things like that, you know, shows you care, and you know, some of my good Japanese

clients, you know, I've taken tremendous efforts for, and I've taken sometimes, I remember

one weekend there were visitors from one of our favourite Japanese clients, I took them down

to Devonshire, and we stayed at the, I think it's the hotel at Moretonhampstead, this lovely, I

think it's the Manor or something like that. A beautiful hotel with lovely view and such

lovely countryside. And took them down, we had a wonderful dinner on the Saturday night,

and, I think we were 27 for dinner or so that night. I mean it was when a lot of senior

management were coming over from Tokyo and we had some of the London staff; we invited

the Nomura people. And you know, people will never forget that sort of warm hospitality,

and you know, it doesn't cost more than half a dozen Wimbledon tickets to do that sort of

thing. And on another occasion, or once or twice, or, no, more than that, Scotland is a great

place to entertain people, and I've done a lot of entertaining up in Scotland, and going off to

country hotels, a little bit of golf, the odd bagpipe, and some nice sort of wholesome Scottish

food, whisky and so forth. And lovely countryside and heather, and lochs. And I must say

Japanese, Chinese, any foreign visitors, and somehow, the Scots are very hospitable, says he,

but... [LAUGHS] The trips to Scotland always seem to work. And as in any case you go to

up to Edinburgh a lot to see, call on the investing institutions in Edinburgh, you know, you

can say, `Well let's do Edinburgh on the Friday, and then I'll take you up to Pitlochry or the

Isle of Skye,' and you know, they're in seventh heaven.

As you say that's very personal compared to other forms of corporate entertaining, and very

time-consuming too; I mean do you think that people...

Oh yes, of course you have to give the time, and of course some of these over-worked young

executives are not so keen on that.

Well, I was going to come back. I mean if you had a wife and family, do you think that that

would be a hindrance rather than a...?


169

Oh I often got people's wives to come along too. Sometimes their children also. Oh, you

know, you can do all sorts of things, you know, if you're not too much sort of stuck to

convention.

So you think that younger executives aren't prepared to give that sort of time?

They rarely believe it's worthwhile, and, little do they know.

Well you say that, I mean it's interesting because you've...well we started off with Siegmund

Warburg, who obviously felt it was worthwhile, and you've followed in his footsteps. I mean

have you not been able to persuade your juniors that...?

Well, you know, I mean some of them understand it. But the fact is, I mean if you want a

client to remain absolutely loyal to you and that sort of thing you are far more likely to do it if

you are prepared to give that bit of extra time than, you know, if you maintain a somewhat

more perfunctory relationship.

Mm. In 1994 you got the OBE.

I was very fortunate to get it, and it was particularly nice that my mother was still alive, and

one was allowed to take three people to the Palace, and it was particularly nice that the Queen

was dishing it out the day that I was there, and to be able to take one's mother to Buckingham

Palace as well as my brother and sister for an occasion like that. It may seem trite but it was

a very very nice thing to have been able to do. My mother actually was in hospital having an

operation for what eventually killed her, and, one isn't meant to tell people that you are going

to get this thing, and indeed in my case, because I am so peripatetic I didn't even know for

some time that I had got a letter saying that I was going to get it, because, they write you a

letter, you know, something like six weeks in advance, saying, you know, `We're going to,'

whatever it is, `recommend to the Queen, or the Prime Minister wants to recommend to the

Queen,' all that sort of thing, ànd you musn't tell anybody,' and all that sort of thing. Any

case, I was travelling on one of my numerous trips, and I mean two weeks had passed and

they hadn't heard, and I remember calling into the office from San Francisco and my

secretary saying, Òh would you please ring Mrs so-and-so at the Prime Minister's office'.

And, I rang in and they said, Òh, we wondered, we hadn't heard from you, because we want

to know whether you want the OBE.' And, I said, `Well of course I want it, I'd be delighted.'

And so, I actually got back to London the day after then I wrote an acceptance. But you are

meant to keep it secret, and there was about a month to elapse, and so, the night before, the

evening before the announcement I remember driving down to the John Radcliffe Hospital


170

where my mother was emerging from an operation, and I showed her the letter, and the whole

hospital knew about it within about ten minutes. [LAUGHS] It was just as well I hadn't

mentioned it before.

That's wonderful, absolutely wonderful.

So, that was very nice.

What did they cite as reasons, do they give you reasons in the letter? They do, don't they?

Well, in the newspaper it said, `for services to industry', although when four or five months

later I was wheeled down to the Queen, they said, `For services to banking and finance', so

they seemed to have changed it a little bit in the process. But I think it was mainly

involved...well, a variety of things but I think the Japan Committee had been the sort of thing

that had really caused me to be recommended. And you never know who has recommend

you, but you do get some sort of an idea from the letters of congratulation that arrive rather

quickly, the sort of people who are likely to have put you up, such as the Treasury and the

Foreign Office and so on.

Well that's splendid.

Oh well. I mean it's not a very distinguished title, and you know, there are lots of others

grander ones and so on, but it's the thought that counts, and I thought it was a very nice

thought indeed.

Marvellous, and well deserved.

I don't know. But anyway, but it was so nice to be able to take my mother to the Palace, and

gave her such overwhelming pleasure, and it was...of course it would have been nice if both

one's parents had been alive, but still, at least one was.

I'm very sorry your mother died of cancer.

Yes.

Do you believe in an afterlife?


171

No. There are more things in heaven and earth, Horatio, than I'll...whatever it is, in our

philosophy, but, that I do not unfortunately believe in an afterlife, although sometimes you

can give yourself a little bit of a comfort by thinking that there may be. And if there is, well,

it will be a nice bonus, but... It's very easy to see how one makes up an afterlife, it's a very

easy thing to make up, and when you miss people very much you tend to sort of console

yourself by thinking that they are watching and so on. But, I don't believe it.

Does any religion play a part in your life?

No. I mean I think I became a fairly convinced atheist when I was at Oxford, before that I

was quite well behaved.

You did talk about it then, yes. But some people, you know, have different feelings as they

get older.

Yes, and I think I would...I think, I may have commented to you that I still maintain nice

relationships with people who are in the Church or of it and that sort of thing, and that I think

that the Church deals with a lot of these things very nicely, particularly with death, and so, I

certainly have found that the help of, you know, of priests and so on has sometimes been very

useful, even though I don't believe in all the... And not that the priests actually sort of force

that stuff on to you, on the whole, they're just, they'll just be nice and helpful.

Was your mother religious then?

No, not at all, not at all, nor was my father, he was a free-thinker.

So why did you go to priests then?

Oh because you have to have a service, you know.

You had a religious service?

Well, I mean, well, you don't have to, but you know, the Church does it better, and you know,

it's much nicer to have a beautiful service with well-known hymns and a lovely anthem, you

know, it makes not only you yourself and your family but the visitors and friends and that

sort of thing feel very uplifted if you have some beautiful singing and lovely playing and so

on, and eulogy and so on. It doesn't do the dead person any good, but it helps the survivors to

carry on.


172

Yes.

And the Church does it very well. And, I happen to have had quite a lot of contacts with the

Lutherans, mainly because the Lutherans that I happen to have met are very musical, and do

things very nicely in a musical sense, and it doesn't mean that I have any sort of particular

sort of Lutheran leanings or anything like that, but I like the people very much, and so I

occasionally turn up at their services, and obviously contribute financially, it's a pleasure to

do so.

Talking about contributing financially, you were telling me about your charitable ideas for

exchanges between China and the U.K. Would you like to tell me about that?

Well, a little, but there's not very much developed yet, but I do believe that in this country

nursing and medical care is particularly humane, and that although you do come across

wonderful examples of kindness in other parts of the world you are slightly more likely to get

it in this country than many others. And I think that the hospice movement in this country is,

you know, very much a leader, and helping people to die gracefully is, it's a very nice thing.

When my mother was dying in the hospice at Adderbury near Banbury I remember her

saying to me that, you know, Ìt's very difficult to receive kindness but in this place it

somehow is natural to receive it,' and, you know, it was a very nice thing to hear.

Interesting.

And, I think that actually how you treat people, you know, the dear old bedside manner, both

my grandfathers were doctors, and in terms of medical treatment I know so well that, you

know, all the modern treatments in the world are nothing compared to kindness, and listening

and holding a hand, and that sort of thing. And so, it is really in terms of, I say not only

nursing care because I think a good doctor knows this, and you know, if one can teach a little

bit of these methods I think it's, you know, a good thing. But once one sort of enters into the

charitable world, you know, you find all sorts of sort of mixed elements there, and you know,

I don't terribly care for the atmosphere of the sort of, the big institutionalised charities, and a

lot of charitable functions leave me extremely cold, and when I find myself being phoned and

asked whether I want to go onto a ball committee or something like that, I mean God!

[LAUGHS] If that is charity... Again, if you want to apply money to charity it's nice to try

and see that the charitable pound, you know, goes for charitable purposes, and you often feel

with the big organised charities that it goes into a machine and not somehow benefits directly.

But the more you enter into this the bigger the responsibility and you know, it's all very well


173

for somebody to say to you, Òh well I think your ideas are so very nice and I'm going to put

a lot of money into your charity'; well that gives you even more responsibility to see that, you

know... So I'm at a sort of quite an early stage of doing this, but I'm quite interested in doing

it, and in my visits to China I've been meeting some of the top professors, and this is another

aspect of Chinese life which is very pleasing to come across, it teaches you a bit more about

it, and of course I've been meeting some very wonderful medical people in this country, with

whom I would not otherwise have had contact, and it's very impressive.

That's excellent.

I expect you have the same experience in the charity on which you are working.

Well, yes, it is, it's...

Many times over probably.

What do you see yourself doing in your retirement?

Well, I don't believe in retirement. [LAUGHS] But it'll...but, I don't know how much longer

I shall be permitted to stay here, my shelf life having gone on for so long.

Well that's great, that's good.

But, you know, if I...

What would happen if they wanted to get rid of you?

I suppose my desk wouldn't be there the next morning.

No seriously, I mean someone as senior as yourself, you can't just say that.

Well, it depends what your attitude is towards clients. I mean, people like myself have a lot

of very strong client relations, and the key to survivability is that.

Yes.

But you also have to let the young people come forward, and... You know, I have no

particular intention to depart, but you know, in this changing world, you know, you may find


174

yourself asked to step back, in which case, you know, that's fine. If I find myself in that

position, I will probably not go the sort of non-executive director route. A lot of my friends

do that, and they like getting on to a lot of boards, but I have somehow never been interested

in that. I think if you are in the business, you've got to be in the business, and right inside the

action, and I don't fancy being sort of on the edge in the sort of non-executive director type

way, and I am not keen on picking up non-executive directorships. A lot of people think that

it's a very good way to span your sixties, is to do a lot of that sort of thing. So, I would be

much more likely to get more deeply involved in the charities I think, if, you know, I was

removed from day-to-day business here. And, you know, you can find all sorts of different

lives in life, and you shouldn't feel that this is the only one.

No, that's absolutely right. But it is interesting, as you say, that you've been in this one

particular stream of merchant banking.

Yes, in the same firm, well, although of course it's all a very different firm now, but it is very

interesting to have been there so long.

Is there anyone else that you know who has actually survived as long as you in...?

[GERMAN ACCENT] Mr Grunfeld has been here 62 years. [LAUGHS]

Well you've got a long way to go then.

Though there are not so many, not so many that have been around so long.

No, not so many I'm sure.

But also, it leaves you with a sort of, in a sort of, almost a sacred position.

Back to religious terminology here.

Well, yes, a sort of almost spiritual position, because someone who has been so identified

with the, you know, the growth of the firm and that sort of thing over a long period of time,

you know, has a standing which is slightly different from people who have only been around

for a short number of years. And you know, you sometimes underestimate the respect with

which long experience like that is held. A lot of people count it for nothing, but, I think from

one's own point of view one discounts it substantially, but actually in a strange way it is liked

by a lot of people.


175

Well again you use another term, spiritual.

Mm. Well it's a very spiritual business, banking.

[LAUGHS] I wish I had a video camera ready to show your face at the moment. Come on,

you'll have to explain that.

[LAUGHING] Oh, I think one goes back to, you know, the sort of, the more philosophical

principles of, you know, underlying banking again. It sounds like a lot of claptrap, but if you

worked for Siegmund you didn't work for the money. Of course the money was important

but somehow, you know, it was so interesting to be creative, and to work for first class

institutions, and to be somewhat at the cutting edge of the financial world, to be helping

clients to see ahead by being just a tiny bit ahead of them. And concepts of service and duty

and all that sort of thing are very nice, I mean, the sort of Germanic principles that Siegmund

brought, you know, were very fulfilling. The City of London is a very wholesome place, City

of London qualities mean the best financial business practice, and when you've been around

for some time you can see how rare and how precious is excellent business practice, and first

class behaviour, and so on. So appreciating all these things is wonderful and stimulating.

Well that's very interesting. What else should we say about, well, general philosophy of

banking?

[PAUSE FOR THOUGHT] I know one could say it shortly or go into it at length, but, say a

little more about...

Oh well go into it at length.

No no, well, I don't want to get too boring.

It's not boring at all, it's fascinating.

But, I don't know, did I tell you the story about the underwriting of the Playboy issue?

When they turned...you brought it up and they turned it down.

Yes, yes, yes, yes.


176

Yes of course, yes, no you did tell me that.

It's a little bit like that, you know, that is sort of the sentiment that I am trying to convey. I

don't think I would add much to that.

Do you think that the, you were talking about creativity; do you think that the openings for

creativity today are greater than they were previously, or less?

I think they're greater, and the world, you know, everybody is in the world now, and...

That's what makes it more...?

Yes, so I think for young people coming into the business, there is a much bigger world to

grasp, and that is extremely interesting and challenging.

But are we talking about different products, like Eurobonds, or are we talking about different

cultures and how that makes differences?

Both. You know, frankly in the world since the Wall came down, you know, there just seem

to be many more countries around, and many more cultures to come into contact with, and...

But does the fact that the culture is different make for different types of product? I mean

surely it's not like that, is it?

Well, to some extent it is.

Is it?

I mean, because I think a lot of products are being made all the time, and there is, you know,

a continuous development. But you know, by contact with China.....

End of F5297 Side B


177

F5298 Side A

[This is the tenth[sic] tape with Martin Gordon.] [ACTUALLY THE ELEVENTH TAPE]

Yes, so we were talking about, well you were using China as an example in that case.

Yes, I think we were flying at a rather high altitude, and we may have lost the earth, dare one

say, at this stage. No, as an example, we have been doing a big project finance deal in China

this year, which is the first of its type, a power project in the relatively undeveloped province

of Guangxi, and it's the first one in which the Chinese have been negotiating a Build Operate

Transfer, BOT deal, and it's the one the Chinese are using as the basis for the laws that they

are now enacting on these transactions. And, you know, when one is dealing with a

developing country in this sort of area you tend to say, well this is the standard

documentation, you know, which our lenders and other investors are interested in, and if you

deviate too much from this the lenders will feel it's a bit too complicated. Well the Chinese

don't buy that. They say, Òh no, we want to go through all this and we want to see exactly

what fits and what doesn't,' and you therefore have this process of going through everything

sort of dot by comma. And at the end of the day of course when it's been gone through with

Chinese attention to detail, you've actually created something which has got a lot of new

things in it, because they have questioned everything along the way.

I see, I see.

And, I mean this particular deal, the Laibin B deal, you know, has proved to be a sort of,

quite a novelty and you know, even from a non-Chinese point of view it contains quite a

number of elements which are quite unfamiliar but people think quite, nevertheless very

good, and at the end of the day China is building these power stations at a very good price.

In general, how do you see, I was going to say the market in London, but actually we should

really talk about global markets I suppose; I mean how do you see them developing? Do you

see them developing along the same lines, becoming more global, more mergers? I mean can

you see any trends that you would pick out as likely to happen?

I don't think I have anything particularly illuminating to say about it. [LAUGHS]

One thing that came to my notice recently was that really governments can't control the

economy any more, because the money markets are uncontrollable; would you agree with

that?


178

[PAUSE FOR THOUGHT] Yes, I'm not a particular expert on how these things function, but

it is perfectly true that it is much harder, I mean governments are much more, have to listen

much more carefully to market forces, and it's one of the things that does help to change

society.

What, the fact that the money markets help to change society? How do you mean?

Well, that a government cannot follow a particular policy if the markets go against it, so it

has to maintain certain standards otherwise people will sell your stock market or sell your

currency. And most governments these days are in the privatisation game one way or

another, and they are trying to sell securities of their State enterprises of various sorts, and

they like to keep the stock market looking fairly juicy as a result.

So what effect do you think that has on society then?

[PAUSE FOR THOUGHT] Well, it makes it a little bit more related to the market. Again

I'm not going to make anything illuminating beyond that.

Well I find it interesting talking to someone who is more powerful than the Government.

[LAUGHS] I'm not more powerful than the Government.

But you influence the market.

The market as a whole maybe, but not the individuals.

Right. Well what have we left out do you think? Do you think we've...we can't possibly have

come to the end, surely.

Well, I think that, I think we have perhaps gone far...I was a little bit doubtful about your

starting this new tape.

Oh. Well I usually have a sort of section on summarising yourself, achievements,

weaknesses, that sort of thing.

Mhm.


179

So shall we turn to that? What do you regard as your greatest achievement?

I don't regard myself as necessarily a very great achiever, and nor a great expert on anything

in particular. On the other hand when I look at some other people, at the end of the day,

maybe I have contributed a fair amount here and there which has been worthwhile.

What would you point to in particular? [ADJUSTING MIC] What in particular would you

point to?

Well, I mean when it comes to sort of being an expert on things, you know, in my various

contacts, particularly with Far Eastern countries, I don't consider that I know a great deal

about China or Japan and so on, but when I look at the next man I usually feel that I know

more than he or she does, and, so although I really do not regard myself as an expert or

understanding these things, I probably make fewer mistakes than some others.

What have you enjoyed most, or what...?

I'm one of the lucky people who has on the whole enjoyed the job throughout, and of course

it wouldn't have been possible if I hadn't been able to have a pretty varied career in terms of

business done and geographical areas involved with.

So you think that variety was the key for you was it?

Yes, variety combined with continuity. [LAUGHS]

Continuity with Warburgs, and variety in application.

Yes, yes, yes. Well I think Japanese companies go through that principle. If you join a

Japanese company you usually join it for life, but they keep moving you around within that

company.

Do they still keep you for life? I thought they had really changed a bit recently.

Oh no it's still there, it's still...

Is it?


180

Well it is changing of course, but most of the people you are dealing with are lifetime

employees.

So, if...do you have any weak points? [LAUGHS]

Well I mean I am entirely weak points, I have very few strong points.

If you had been dealt another hand, would you have increased your hand in some areas?

Oh, I don't know, I'm a strong believer in playing the cards that you have as well as possible,

and of course as you get older you probably get a better understanding of those that you do

have.

That's a very good answer. And do you have, have you had any major disappointments in

your life?

Oh, yes, I mean of course. But at the end I don't look back with any sense of disappointment.

I have done enough interesting things to overcome disappointments.

Do you have any unfulfilled ambitions?

Oh well if one had one's life to live again, you know, you would have other choices to make,

and other things that it would have been nice to do, other paths to follow.

Like what?

Oh, I could have been an advocate, I could have been, you know, all sorts of things. But,

having had the good fortune to join a very excellent firm, and have the inspiration of the sort

of leadership that I had, all things considered it's quite a nice thing to look back on, although I

am not a backward-looking person and, you know, I like to look forward. I'm very much

stimulated by the forward-looking attitudes of some of my oldest colleagues, like Mr

Grunfeld who are always sort of looking forward to try and do the next deal and so on.

You were talking about the good leadership that you had when you were young. How do you

try to pass that on to the next generation?

By example.


181

Do you think that...go on.

Example and proximity, so that people can see the example. I mean you must never isolate

yourself. I think a lot of people ivory-tower themselves and it's such a mistake.

Yes, yes I'm sure you're right. Would you like to finish this tape with a quotation? What I

most enjoyed about our discussions is your great literary background. Have you got a

quotation that sums up your life?

[LAUGHS]

It's not always one meets a merchant banker with so many ready quotations at his fingertips.

[LAUGHS] I can't think what is wanted at the moment.

OK, well thank you very much.

Vixi et quem dederat cursum fortuna peregi.

What does that mean?

I have lived, and what fortune gave me I have passed through.

Oh that's splendid. Perhaps a little downbeat?

[LAUGHS]

Right, good. Thank you Martin.

End of F5298 Side A

End of Interview

Documents

NATIONAL LIFE STORIES CITY LIVES Martin Gordon Interviewed ... · medicine and did research into prehistoric man in Kenya, and he lived in Nairobi during the last thirty-odd years