‘Catch Them Young’

Bullion trader Robert Stein unusually did not begin his career at one of the five traditional market fixing companies of the City of London. Instead, he entered the Chase Manhattan Bank in 1971 – a year that marked a new era for British economic, social, political and popular cultures. It was the year when Chancellor Anthony Barber, appointed by Edward Heath, oversaw a major liberalisation of the banking system. Showing the eagerness of the Conservative party to join the EEC, Barber gave the economy ‘a nudge in the right direction’, abolishing Purchase Tax and introducing Value Added Tax (VAT). Later that year, Geoffrey Rippon, the Cabinet’s EEC negotiator, declared that a very satisfactory deal had been reached for Britain to join the Common Market. Subsequently, a House of Commons voted 566 to 244 to back this move. Pounds, shillings and pence gave way to the new decimal currency. The media branded Education Secretary, Margaret Thatcher, the ‘Milk Snatcher’. Rolls Royce, the symbol of British engineering excellence, collapsed. Astronauts drove on the moon. Fashion revolutionary Coco Chanel died at the Ritz in Paris. Hot pants were the height of fashion. The charts included Middle of the Road’s Chirpy Chirpy Cheep Cheep, T Rex’s Get it on and Benny Hill’s Ernie (The Fastest Milkman in the West). Manchester United’s legendary forward, George Best, became the first victim of the ‘referees’ revolution’, being sent off the pitch as part of the FA’s determination to bring the conduct of players in line with their continental competitors. 1971 was also the year that the Bank of England applied Competition and Control Credit, replacing controls on borrowing and competition for credit by means of interest rates. The intention was the breaking down of functional barriers between the clearing banks’ cartel and other finance companies in order to create a uniform credit market allowing market forces free rein.1 Generally speaking, the reshaping of the City had begun as protected markets started to open up to the new possibilities appearing with the prospect of ‘cross-border’ lending and international funds seeping into London from American and foreign banks.

Robert Guy, former Chairman of the LBMA, featured on the left, with Robert Stein.

Robert joined Chase Manhattan Bank in April, much to the despair of his parents – both were doctors and wanted him to pursue an academic career. He had announced on leaving school at 18 that his preference was to pursue a career in the City, rather than follow the preferred destination of many of his contemporaries who attended University. Robert did not fully turn his back on his studies. He subsequently enrolled at the Institute of Bankers, working by day and studying by night to gain his banking qualifications. Responding to an advert placed by Chase Manhattan in one of the national papers for young, progressive, potential bankers, he was offered a job two days after his interview and, better still, on his first day at the bank was given a pay rise.

‘Catch them young’ was the recruiting policy of many of the City’s commodity firms.2 In 1973, Robert moved to the well-known merchant bank, S.G. Warburg, and after 18 months, he moved internally, joining the trading desk at the London Metal Exchange (LME) trading company Brandeis Goldsmidt, a subsidiary of S.G. Warburg. Brandeis dealt in LME metals in addition to the rare and exotic. This global company employed approximately 150 people, principally in London and New York. Thanks to Chief Executive Walter Rothbarth, who happened to be a distant relative by marriage, Robert was recruited internally to Brandeis where he was first exposed to trading gold and silver. He had the privileged position of sitting next to Walter in the trading room. Robert recalled how one day Walter said, “let’s get involved in the gold and silver business”, even though at the time the company’s principle activity wasn’t gold and silver. It was his exposure to the bullion market over the next five years that led Robert to join Derby & Co. in 1979. This was at a time when after the London bullion market closed, the American gold market extended the trading day and the emergence of the Hong Kong market led to an earlier start, thus a new trading framework for a round-the-world and round-the-clock trading day developed.3 Gold proved an effective hedge against the weakening dollar. As the price of both gold and silver increased, more firms were eager to exploit this profitable market (in 1980, gold hit the record price of $850 an ounce). In 1979, Prime Minister Margaret Thatcher swept away the UK’s exchange controls. Thereafter, the London bullion market was open to the world, competition increased, and foreign banks scrambled to establish London dealing rooms. Throughout much of the 1970s, there were only seven or eight dealers handling all gold and silver trading.4 The role of the bullion dealer is learned rather than taught, so the recruitment of staff came from within the London market as the American houses came in.

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Robert joined Chase Manhattan Bank in April, much to the despair of his parents – both were doctors and wanted him to pursue an academic career. He had announced on leaving school at 18 that his preference was to pursue a career in the City, rather than follow the preferred destination of many of his contemporaries who attended University. Robert did not fully turn his back on his studies. He subsequently enrolled at the Institute of Bankers, working by day and studying by night to gain his banking qualifications. Responding to an advert placed by Chase Manhattan in one of the national papers for young, progressive, potential bankers, he was offered a job two days after his interview and, better still, on his first day at the bank was given a pay rise.

‘Catch them young’ was the recruiting policy of many of the City’s commodity firms.2 In 1973, Robert moved to the well-known merchant bank, S.G. Warburg, and after 18 months, he moved internally, joining the trading desk at the London Metal Exchange (LME) trading company Brandeis Goldsmidt, a subsidiary of S.G. Warburg. Brandeis dealt in LME metals in addition to the rare and exotic. This global company employed approximately 150 people, principally in London and New York. Thanks to Chief Executive Walter Rothbarth, who happened to be a distant relative by marriage, Robert was recruited internally to Brandeis where he was first exposed to trading gold and silver. He had the privileged position of sitting next to Walter in the trading room. Robert recalled how one day Walter said, “let’s get involved in the gold and silver business”, even though at the time the company’s principle activity wasn’t gold and silver. It was his exposure to the bullion market over the next five years that led Robert to join Derby & Co. in 1979. This was at a time when after the London bullion market closed, the American gold market extended the trading day and the emergence of the Hong Kong market led to an earlier start, thus a new trading framework for a round-the-world and round-the-clock trading day developed.3 Gold proved an effective hedge against the weakening dollar. As the price of both gold and silver increased, more firms were eager to exploit this profitable market (in 1980, gold hit the record price of $850 an ounce). In 1979, Prime Minister Margaret Thatcher swept away the UK’s exchange controls. Thereafter, the London bullion market was open to the world, competition increased, and foreign banks scrambled to establish London dealing rooms. Throughout much of the 1970s, there were only seven or eight dealers handling all gold and silver trading.4 The role of the bullion dealer is learned rather than taught, so the recruitment of staff came from within the London market as the American houses came in.