Goodbye Baltic – Another London Exchange Goes East
Two years after decimalization Genesis' 1973 album was called ‘Selling England by the Pound’...
Bearing in mind the sale of our steel, car, aero-industries and much of the City in the years that followed, it might surprise the average man in the street that there is much left to sell. But it seems there is – The Baltic Exchange, whose sale will complete the disinterring of the final foundation stones of the old City of London.
There are many in the shipping industry – an occupation integral to our metal world – that may mourn its passing. For me, it brings to mind two topics – neither related to ships.
Here in Somerset, my neighbour, Julian Redman, owes his country-life existence to the IRA Bomb that brought down the front of the Baltic on 10th April 1992. Julian was a shipbroker and, as was the custom of his clients, they would wait till Friday afternoon to hand over vessels not placed earlier in the week. This usually meant Julian working late on a Friday, and then working Saturday. Julian left work early on Friday April 10th at 9.10 pm, saying goodnight to Tom Casey, the doorman. Ten minutes later the bomb went off, killing Tom and two others, and injuring 91. The IRA thought they were blowing up the Stock Exchange.
Later, when Julian returned to his office, which was directly above where the bomb had been placed, he noted the shards of glass from the shattered windows stuck in the wood panelling like darts in a dartboard. The site was never re-built and today the Gherkin stands in the same spot.
It was never rebuilt because, ironically, bearing in mind its proximity to Lloyds, it was under-insured. Built in 1903, The Baltic had a gloriously domed stained glass window (now in the Maritime Museum), marble columns and sweeping staircases. Julian, as a young man, would descend to the trading floor to place ships, whether from the Persian Gulf or Argentina, announce his purpose via the caller from the rostrum and was then advised to go to a booth where the phone would ring. Such deals could be discreet and personal. Trust, as ever, in the City of those days, mattered more than the charter parties. The motto of the market, ‘My word is my bond’, was the byword for this and all other markets in the City.
Perhaps the Baltic’s sale to the East will make little difference. In one sense the spirit left the building in 1992. The idea of non-contractual agreements is regarded as antiquarian as the building, so perhaps we need not mourn. The architectural features that English Heritage had wanted to preserve were originally stored in a field in Kent and finally split up and sold. Some of the glorious marble now serves as a kitchen work-top and shelves at a café called Alf Resco’s in Dartmouth where the lower Ferry is called the ‘Tom Casey’.
The Baltic has a personal idiosyncratic memory for me too. In about 1982, in a piece of City history of almost microscopic insignificance, the Baltic Exchange became home to the Potato Futures Market. How this august building came to house the humble potato market, I am not sure, but there, in the cavernous ground floor, room was made for it. In those days, the company I was working for, M.C.Brackenbury & Co, was a small commission house broker working primarily on LME but also on whatever softs markets its clients desired.
The bright spark who thought of creating a potato market cannot possibly have conceived of what he had unleashed, and yet its strange success provides a lesson about how to create a successful futures contract. The key essence of it was its simplicity and domesticity. There were three delivery months, I seem to remember, Oct, Nov and March; and the lot size was 40mt. With an average farm capable of producing 20mt per acre, it meant that even the smallest potato farmer could be a trade member of the market. While the large softs brokers and merchants, such as Czarnikow, ED & F Mann, Woodhouse Drake & Cary, Golodetz were kept busy sourcing weather reports from places such as Parapanema in Brazil to predict the coffee or cocoa crop, we just looked out of the window. Nor had I realised until then what wonderful gamblers farmers are. Here was a community whose annual profit was at the mercy of the British weather. Gambling on whether the year’s crop might have rust or be flooded out was hardly a culture shock.
It was via this route that I was introduced to a chap called Henry Bennett. Henry, I thought at the time, was quite elderly but in reality was probably not much older than I am today. At the inception of the potato market he had gotten an idea, a bit like Toad in Wind in the Willows, and decided the best thing since sliced bread would be the idea of having a booth on the new exchange. Behind him was a lifetime of contacts in the potato industry, the length and breadth of the land. Henry just wanted to see out his years on the floor of the exchange and for someone else to write all the contracts and liaise with customers. Customers on a plate? This was a dream.
It was not long before I knew all about Maris Pipers and Desirées. I was informed that a King Edward was a ‘red’ (because of the light red in its skin), I learnt about when new potatoes would hit the market in spring from Jersey or from Egypt (where they were grown on the banks of the Nile), or Cyprus. I learnt about how the Dutch potato, called the Bintje, grown on the polders, was best for crisp-making because they came in regular shapes that could be sliced easily. But I learnt one thing above all, which was about generosity in business.
Henry, who was an old East End Jewish trader, had made his money and did not appear to need much more. But what he wanted to do was honour his customers and contacts by providing them with a trusted route to this new-fangled market via our rather old fashioned and, dare I say it, honest broking firm. He wanted nothing in return except that we place the floor orders through him.
Soon I was receiving orders and calls from Cornwall, Herefordshire, Norfolk and Lincolnshire (wherever potatoes were grown). One potato farmer from Sleaford wanted me to marry his daughter and placed a bet for me on a horse, another invited me to speak to The National Farmers’ Union one cold night near Burnham Market. We were doing so many potatoes that my boss remarked that we were rapidly eschewing copper and had become Potato Merchants to the gentry.
But suddenly it came to an end. Some of the young clerks on the exchange saw Henry’s generosity, not as I saw it, but as weakness. Henry would get to his booth in the morning only to find the phones ripped off their housing with the wires hanging out like twisted guts. When he entered the ring to buy or sell they formed a cartel against him. For them it was a sport, and he was hounded out. A short time later I moved jobs, hoping to become a nickel trader, his booth was put up for sale and that was that.
Julian, the shipbroker, today, is a craftsman of wood. He made our boardroom table from fallen Somerset elm, based on a design by Japanese American, George Nakashima. He shares Nakashima’s philosophy about the two lives of the tree – its first, in which the tree shelters and is a home for all life. And its second immortal life, crafted by man. Nakashima just bought and stored wood that he liked, like we buy metal; the oaks and elms, each with their different blemishes and grains. He did not ever buy wood for a specific job.
He believed there would always be the ‘right plank for the right job’. Try telling that to the new owners of the Baltic and see what they make of it.
Published December 14th 2016 on www.lord-copper.com
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