Through the summer of 1976 Arab oil money continued to leave London. The heads of Arab banks now became powerful figures ... Denis Healey began a series of savage cuts in public expenditure. It was the only way he believed for Britain to get a loan from the IMF and avoid bankruptcy. But it was clear to many in his party that he had given away control of the economy to the markets. ibid.
Stirling’s mercenaries returned home after twenty years of trying to keep Britain powerful. The country they came back to was very different from the one they had left. ibid.
1In the 1950s Britain was dominated by a small group of men – the captains of industry. They were eminent industrialists and bankers who met together at the court of the Bank of England. Men like these were powerful because of the vast industrial empire they controlled. They worked in partnership with the politicians to shape the future of the nation. What these men did not realise was that within fifteen years their whole world would be destroyed. Their power would be taken away from them and their factories torn down and sold off. And the man who began their destruction was a suburban accountant called Jim Slater. To do it Slater awoke a force that had been dormant since before the war: the Stock Market. And as he grew powerful, Slater became an ally of politicians, but what neither he nor they realised was that the force he had awoken would overwhelm all of them. Adam Curtis, The Mayfair Set II: Entrepreneur Spelt S.P.I.V *****
The stock market was something that frightened both the politicians and industrialists because it was unpredictable and threatened their control over the economy. Both lived with the terrible memory of the crash of 1929 and the unemployment it had caused. And as the boom continued to grow and excite the public interest, the Bank of England became worried. ibid.
He [Jim Slater] decided to try and work out a way of predicting which shares would go up and which would go down. ibid.
In 1964 Slater formed a company with a young Tory MP called Peter Walker. Slater-Walker was an investment company, and as the market continued to boom, Slater became rich managing other people’s money. ibid.
Jim Slater had discovered that the Coote family no longer had a majority shareholding [Cork Manufacturing]. And he decided to try and take the company over. He [Slater] made a hostile takeover. ibid.
He [Slater] immediately sold off large parts of the land, the factories: they were demolished for property development. Slater had invented a formula which he now repeated. The sales of assets from each takeaway were then used to fund the next and bigger one. ibid.
A group of takeover men grew up who began to break up the old paternalist world that had dominated British industry. The social centre for the takeover men was the Clermont Club, a gambling club in Berkeley Square in Mayfair. It was run by a right-wing aristocrat called John Aspinall; he was a ferocious professional gambler, and those he admired and let into his club were those he described as risk takers. ibid.
Goldsmith now became a close friend of Slater’s. Goldsmith specialised in targeting food companies. ibid.
To the establishment the Clermont set were a group of destructive gamblers. They were tearing up British industry and fuelling a dangerous boom in the stock market … ibid.
But Jim Slater was to stop being a despised outsider. Politicians were going to turn to him for help and make him an influential force in British politics. ibid.
In 1964 a Labour government had been elected. They came to power promising to create a modern prosperous Britain. But almost immediately they were faced with a crisis: the boom the Tories had begun five years before had gone out of control. British industry simply couldn’t cope with the demand created by the boom. A new government faced growing inflation and a balance of payments crisis. They had to cancel many of their election promises and cut spending. ibid.
What Slater argued was that he was using the stock market as a tool to reshape industry. He sold off any part of a company that didn’t make a healthy profit. What remained automatically became more efficient. And he pointed to his phenomenal growth in profits to prove this. ibid.
The Labour government copied Slater’s methods. Under Tony Benn’s guidance they masterminded massive takeovers and mergers in British industry. Old companies were forced together to make new conglomerates. Upper Clyde shipbuilders was created on Clydeside. And in the process, as with Slater’s takeovers, thousands of workers were sacked. It wasn’t just shipbuilding. Britain Leyland was formed by the forced merger of old car companies. ibid.
Slater and the other takeover men were not the saviours of industry they pretended to be. ibid.
The wave of takeovers created by the Labour government had little or no effect on productivity. The British economy stubbornly refused to grow. But the takeovers were having a hidden revolutionary effect on the structure of power in Britain. Both Slater and now the politicians were liquidating many of the assets of industry. They were feeding them as cash into an ever booming stock market. In future it would be the millions of small shareholders who would decide where that money would go. The market was now increasingly shaping the future of the economy, not the politicians. ibid.
Tiny Rowland now became a close friend of Jim Slater and the other takeover tycoons. They dined together at the Clermont and sold each other companies. All of these new tycoons were making fortunes by tearing up an old system of industrial power that had dominated Britain and its empire for over 100 years. ibid.
The government would assert control over the economy. Heath now went to the other extreme: he poured money into the economy. He increased government spending and relaxed borrowing. It was called the Dash for Growth: but much of the money went into making a stock market bubble that did nothing to make industry more efficient. Above all, it invested in the new companies of the takeover men. And Jim Slater’s share price soared to astounding heights. Using the power of his extraordinary share price Jim Slater now became the dominant force in the City of London. He set up his own banking operation and a network of satellite companies each of which set about asset-stripping British industry. He gave thousands of pounds to the Tory Party, while his former partner Peter Walker became a Cabinet minister. Jim Slater was now all powerful. ibid.
The takeover tycoons had finally supplanted the old captains of industry. They had forged a new partnership with politicians. But what few people realised was that their success was based on a facade. They were doing nothing to reconstruct British industry. They were merely profiting from its decline. But drunk on this moment of power they portrayed themselves as the inheritors of the great industrialists of Britain’s past. They also forced the captains of industry to bow down to them. ibid.
But the tycoons’ brief moment of power was about to be destroyed. By 1973 it was clear that Heath’s Dash for Growth had failed. It had created rampant inflation, and when the government tried to hold down wages, it led to violent strikes. ibid.
Edward Heath publicly called him [Rowland] ‘the unacceptable face of capitalism’. ibid.
No-one controlled the market. In 1973 the Arab vs Israeli war broke out. One of the consequences was that the Arabs put up the price of oil by 400%: the effect on the western economies was disastrous. In Britain the stock market was pushed over the edge to a catastrophic crash. It finally made the politicians realise they had no control over the economy. ibid.
The summer of 1976 was one of the hottest on record. Berkeley Square in Mayfair became infested by a plague of caterpillars. They got everywhere even inside the Clermont Club. One of the few Clermont members left in London that summer was James Goldsmith … Goldsmith was suing the satirical magazine Private Eye. Adam Curtis, The Mayfair Set III: Destroy the Technostructure
Goldsmith’s belief that he was powerful was a fantasy. The men who really had the power were the bankers. The men who really had the power were the bankers. They were using Goldsmith’s bullying nature as a weapon to break down the corporations. But the banks themselves were about to fall from grace. And Goldsmith would be left helpless and exposed. ibid.
The New York attorney [Giuliani] revealed that the takeover movement was riddled with corruption … ‘a substantial systemic problem in the financial community was revealed and revealed in a way that moved us to try to make changes.’ ibid.
Boesky’s arrest came as a shattering blow to James Goldsmith … But the revelations of corruption started by Boesky kept growing. They now spread to Britain. As in America, the Guinness scandal exposed a network of illegal share-dealing, but unlike America, only four men were convicted. Evidence of a much wider system of corruption was quietly buried. ibid.
5,000 miles away in the Mexican jungle … He was Tiny Rowland and he too had been marginalised by the on-rush of the economy. Rowland believed that the Conservative Party had been corrupted by the boom. Both these men [Rowland and Goldsmith] wanted vengeance for their loss of power. And both now set out to destroy the Conservative Party. And they would be joined by a third vengeful tycoon who had been cast aside: Mohamed al-Fayed. Adam Curtis, The Mayfair Set IV: Twilight of the Dogs
Tiny Rowland was doing the same in Africa: he was taking over the old British-owned companies that had once dominated the empire. Rowland used ruthless methods to build a vast industrial empire; this included bribing the new rulers of independent Africa. They were methods that shocked the merchant banks in London. ibid.
The Conservatives’ boom had turned sour. It had led to inflation and industrial violence. And in November the Arab oil price rise pushed the market over the edge. It fell further than in the crash of 1929. The politicians now turned on the tycoons. When Rowland’s corrupt methods were revealed, Edward Heath publicly called him ‘the unacceptable face of capitalism’. And Goldsmith was now seen as a greedy spiv who had torn British industry apart to make himself a fortune. ibid.
The bankers not the politicians would change Britain. ibid.
Rowland knew that he had been stopped because of his corrupt past. He was furious because to him it was the height of hypocrisy. Rowland knew that underneath the new shiny enterprise culture there was a growing mass of corruption, corruption on a far grander scale than anything he had indulged in. ibid.