A Prince Among Stones (8 page)

Leopold Joseph, the founder of the bank, had been born in 1863 in Michelstadt, a town in the Odenwald region south-east of Frankfurt. Leopold had moved to Frankfurt aged about ten. His father, a trader who had started providing banking services to his suppliers, had decided to formalise the arrangement and set up his own bank, A. S. Joseph, in the city.

Leopold Joseph joined the family bank, and rose to associate partner by his late twenties, at which point the bank was being run by one of his cousins. A. S. Joseph got into difficulties and collapsed, and Leopold relocated to London where he worked for Reuters as a reporter on banking matters, acted as City correspondent for the
Frankfurter Zeitung
and spent the 1910s as joint manager of the London office of Swiss Bankverein.

By 1919 he felt ready to set up his own institution, Leopold Joseph, which evolved through various partnerships, and then was expanded to include three of his sons, Bertie, Oscar and Teddy. Despite some losses during the Depression, the bank survived and flourished, so that the family members enjoyed a life of some comfort. Leopold died in 1940 – the
Financial Times
noted that ‘the City loses one who by his personal charm, strength of character and business acumen had become greatly liked and respected among the banking community'.

Of the three brothers, when I got to know them, Oscar seemed to me the cleverest and the one whom any organisation would have been pleased to have as a director. Bertie, the eldest son, was somewhat lacking in matinee-idol good looks and not particularly interested in meeting new friends and clients, while Teddy was more of a social animal.

Oscar Joseph apparently did not believe in spending time or money on entertaining during business hours. The story goes that one day the office manager was astonished to hear that Oscar had asked for ‘two coffees and a glass of port'. On further investigation this turned out to be a Chinese whisper: he merely wanted ‘two copies of our latest report'.

The dilemma faced by the bank after his death was that none of Leopold's sons had children, and, with no family succession, the three brothers spent much time throughout the 1950s and 1960s pondering the future of the firm. Various mergers were explored and approaches considered, but nothing had been resolved by the time the bank came into my sights.

In the official history of the bank, the story is told that Alexis and I sat leafing through a copy of the
Bankers' Almanac
looking for likely candidates, and deciding against any banks with knights of the realm on the board of directors as we thought they would be unlikely to sell. At Leopold Joseph we had a personal contact: a second or third cousin of Josephine's, Freddie Lowry-Corry, was working there. That it had been founded by a German called Leopold (my father's Christian name) was a neat coincidence.

Alexis and I initially made a bid for an 80 per cent holding in the bank, which was rebuffed as the Josephs did not want control of Leopold Joseph heading overseas. Undeterred, we then gathered a group of friends and clients together to form a consortium to purchase the bank. They included Anthony Berry from the Kemsley newspaper family – which at one time owned the
Sunday Times
, alongside the
Daily Sketch
and the
Sunday Graphic
– and Jonathan Guinness, whom I had known since Oxford (and who is still one of my closest friends). As well as being on the board of the family brewing company he had worked in the City at Erlanger's and moved to the board of Philip Hill when they took Erlanger's over. While on the board of an investment trust he had talent-spotted two bright young men at Rothschilds, Louis Heymann and Richard Cox-Johnson. Both Jonathan and I felt that we had to have some hard-working professionals involved, and he heartily recommended them both, since he was certain that they would want to leave Rothschilds where they felt they were being underpaid; he was right.

The news that we had acquired the bank was, pleasingly, announced on 23 July 1963, the 100th anniversary of Leopold Joseph's birth, and followed by a dinner at the Café Royal to mark his centenary.

We agreed that the Joseph brothers (who were then in their sixties, while most of the consortium were thirty years younger) should stay on the board for three years to teach us the ropes, but I soon found that some of those ropes were rather frayed. To be honest, they taught us very little. They were really like a nineteenth-century version of a merchant bank and, though a good one, out of touch with current practices.

I was sent over to New York to report on the banking contacts we had there. I returned somewhat horrified by the fact that the Josephs had not secured their lending arrangements with Salomon Brothers, who were their principal money brokers there, in the way that was normal for banks at the time. The profit that banks in London usually looked for in the transactions of taking and lending vast sums of monies was a quarter of 1 per cent. With Salomon Brothers Leopold Joseph took one-sixteenth of a per cent.

When I relayed this, the Josephs were not at all put out. They said, ‘We're perfectly happy with our arrangement with Salomon Brothers. Old Mr Salomon and our father were great friends; one went to New York and one went to London and we trust them completely.' This, alas, was not good enough for us, and so we had to tighten up a few of those relationships and to try to open up a few more. At a board meeting in September 1966 the three brothers stepped down together, finally ending the family involvement.

At Leopold Joseph the work was much tougher than it had been with Bache, which was a vast organisation. I had to work harder, but I was making much more money. All to the good. There was a trade-off, of course. I no longer enjoyed those long months in Europe. I did have one or two ‘deals' with European counterparties and some real estate transactions in Paris which allowed me to travel a certain amount, but the
dolce vita
days were over.

Nevertheless, I found new acquaintances in the banking world who were equally entertaining. I was a keen bridge player and joined the Portland Club, reputed to be the oldest bridge club in the world.

The form was that members could take in a guest on a Monday night and the guest would be placed on the right of our club chairman. One evening, in the early days of running Leopold Joseph, I took as my guest ‘Jack', an extremely competent, and very nice – though somewhat gung-ho – American investment banker, who was the son of the senior partner of a large, respectable New York investment bank. Accordingly he sat next to the then chairman, Quintin Hoare, of the bank of the same name.

Halfway through dinner, Quinnie opened a bleary and Angostura-tinged eye, realising that he was obliged to talk to this savage visiting from over the water. ‘I suppose you work in Wall Street?' he asked. ‘Yes sir,' answered Jack brightly. ‘I certainly do. I am at my desk at seven every morning, have a quick bite for lunch, sit and work doing mergers and acquisitions until six or seven every evening, and return home at eight. I usually go to the Regency Club to play a rubber or two of bridge and my wife Cathy, she'll probably go riding.'

Quinnie studied him, ‘Goodness me!' he said in a deeply bored voice. ‘I get to my desk at about ten most mornings and go upstairs to our dining room at around midday, have a few drinks and a damn good lunch with a few friends, then get back to my desk for a little while to sign my letters, but I am never at this Club later than about 3.30.

‘I'm the head of a family bank which started in 1672, and we have been very keen on keeping the bank for the family, so that however stupid they are, at least they can get a job. Studying genetics, as I have always had to do out of necessity, I have realised that most of my relations are far too stupid to run a bank and the few that
are
able, I teach carefully that the one thing they have to do as bankers is to lend money to people that don't really need it at a higher rate of interest than what we have to pay for the deposit. That way we have survived.' My American friend, I am sure, reported this
in extenso
to his father.

I met the developer Walter Flack – whose head was being sculpted by my mother – and raised money for his company in the City. There was one hilarious meeting at Warburg's with Siegmund Warburg. Before it started we overheard him asking his secretary with whom the meeting was scheduled: was it Alexander Fleck, the industrialist, my man Flack, or Friedrich Flick, whose family owned Mercedes? At one point we overheard Warburg snap at a hapless minion, ‘Are you talking about Fleck, Flack or Flick?' Finally, having apprised that the client was in fact Flack, Warburg leant across the table and said, ‘Mr Flack, if everything went well for you, what would you have really liked to do with your life. My dream is
not
banking. If I could I would have a garden to cultivate, like Voltaire, outside Geneva, walking, discussing literature and philosophy.' Walter Flack answered, ‘I'd like to have a horse in the Derby declared the winner after two objections were raised.'

I also had to learn to deal with the Bank of England. There we were controlled by Mr Hilton Clarke, principal of the Bank's Discount office. Any misbehaviour in the banking system was monitored and stopped by the Bank of England if Hilton Clarke raised his eyebrow. I recall an occasion when the directors of Leopold Joseph, including the three brothers, were all summoned by him. Jonathan Guinness arrived a little late and after a while it became apparent that a tin of condensed milk in the pocket of his mac had found its way upside down and therefore was leaking through the hole he had punctured in it. What Mr Hilton Clarke made of that he did not share with us.

So at work I was in a world rooted in tradition. Even in the 1960s I would wear a bowler hat and had I been in the money market I would have worn a tall hat. Some elements of City life were evolving, however. We realised that business would have to follow the American line, much more serious, much less time to oneself, no swilling down of dry martinis in the middle of the day. Even during my first visits to New York for Bache in the 1950s I had noticed that people by and large didn't drink at lunch whereas in London that was the whole point.

Outside the Square Mile there were significant changes afoot in the life of English society, which altered the way that people dressed, thought and ran businesses, and it was imperative that it did, otherwise it would have become moribund. Social life was changing. The presentation of debutantes at court ceased in 1958. Many large houses were being sold. Normal dinner parties for fourteen to twenty guests in dinner jackets gave way to a much more casual approach.

Josephine and I had dinner with a great friend of ours and when we arrived at 8.45, apart from our hostess all we noticed were about ten people sprawled on sofas or sitting on the floor not speaking a word. Josephine and I looked at each other and said, ‘Now we understand what it means by people being stoned', and from then on we got used to the fact that at certain parties – not all, by any means – this would be repeated, and more and more people we knew started behaving in the way that became so popular in the 1960s.

Five years on from the purchase of Leopold Joseph I was contacted in my office by Christopher Gibbs. We had met, in that wonderful French phrase,
dans le monde
, a party here, a party there, in no particular way. Christopher was a bright young man about town, from a large and rich family, whose wealth, like Arturo Lopez's, had originally been built on guano.

Christopher knew Mick Jagger, and Mick had asked him to find somebody to advise the Rolling Stones on their financial situation, which was not good. Mick had realised that he had made a tremendous mistake in listening to the approaches of Allen Klein. The Stones' first manager, Andrew Oldham, had no professional qualifications at all, but was a breezy young man who arranged their first gigs and thought that he might make some money out of the Stones for them and himself. By comparison, Allen Klein was a very knowledgeable, highly intelligent, if unconventional chartered accountant, who'd set up on his own in New York and specialised in giving advice to rock musicians.

But it was now clear to Mick that something was wrong. He was deeply worried. He knew the group was doing well and had a good contract with Decca. Their singles and albums were selling strongly, and they were playing to enthusiastic crowds. He couldn't understand why they weren't seeing a penny. By and large they had no money. They were all overdrawn.

Unhappy with what was happening, Mick turned to Christopher for help. From Mick's point of view Christopher was an Establishment figure, a young man from the upper class, which in those days still mattered tremendously in the City; he had the requisite entrée into the City. Christopher may have had the entrée, but he could find no one interested in looking at the finances of what virtually everyone in the City viewed as degenerate, long-haired, and, worst of all, unprofitable layabouts. When Christopher spoke to me he said he had talked to a friend who worked at a large firm of accountants, ‘and I outlined what we were talking about and he said they weren't able to do it'.

Any large firm of accountants of the day, whomever he had gone to, be it Deloittes, be it Price Waterhouse, would have had the same attitude. Christopher had also introduced the Stones to a firm of solicitors, who were hopeless, which he realised after a certain time. So he telephoned me.

‘Could you look after the financial side of these friends of mine, Mick Jagger and the Rolling Stones?' I just said, politely, ‘Let me call you back tomorrow morning', not having heard of the Rolling Stones in any connection with anything that I might do or want to do, let alone thinking that this could form the basis of a business association.