Why we need more business history

Leeds University Business School, 22 September 2011

I want to do three things this evening, if you will allow me.

First, to talk about business history.  Not so much business history, perhaps, as the history of businesses and why I believe it is so neglected and so important.

Second, to tell the story briefly of some of the great British brands that rose and fell.

Third, to draw a few very opinionated conclusions.

My colleague Andrew Simms and I attempted to chart out a new direction for the history of businesses in our book Eminent Corporations.


And once we had told the stories, it was obvious that one theme dominated above all others – the struggle between financial businesses and other kind of businesses.

And the meaning of the dominance of financial markets in recent decades.

Because it seems to be that Britain, and therefore British brands, have been cursed as well as blessed by living cheek by jowl with the most sophisticated and successful financial operations on the planet.

I will try and justify that statement later, but first – before I do any of the things I said I would – I want to tell the story, as I see it, of the emergence of that financial power.

I want to go back a little in time – before the other stories in Eminent Corporations – right, right back (and for reasons which I will explain) to 1692.

It’s the year of the Salem Witch Trials and the Glencoe Massacre.  But let’s be precise about this.  Let’s go back to 11.40 in the morning on 7 June 1692.

Because this was the moment, at least as far as this evening is concerned, that marked the end of traditional British piracy and the beginning of a new kind of financial piracy which linked the City of London more directly with the sea.


Why so precise?  Because that was when the first rumbling was heard in the hills to the north of the city of Port Royal, Jamaica.

Shortly afterwards, the first of three enormous shocks were felt as the earthquake struck, each one more violent than the last.

By the time the third had shattered what remained of the city, two thirds of Port Royal’s notorious streets – where there was said to be one drinking establishment for every ten people – had disappeared below the waves.

What you might call seriously in the drink.


Morgan’s Fort, which guarded the city, and where many of the town’s citizens had fled in terror, collapsed under the water in just a few minutes during the second shock.

The city graveyard, including the body of the most famous pirate in the world, Henry Morgan, which had only just been buried, tore itself apart and disappeared into the harbour.

By the end of the disaster, over three thousand people were dead.  Many of them had been swallowed whole by the earth.

Afterwards, people talked about dogs that were seen gnawing on limbs which still stuck out of the ground.

Port Royal was then one of the richest cities in the world.  Its population of 8,000 was crammed into the streets by the harbour, spilling out on stilts over the beach.

It had two prisons, three large forts, and a maze of bars and brothels.    In one month in 1661 alone, 40 new licences were handed out to new bars in Port Royal to sell a rum punch called Kill Devil.

Port Royal was the premiere pirate city in the golden age of pirates.  It never recovered from the earthquake.

It was also a symbolic moment because it marked the emergence of the British involvement in the slave trade.

When Cromwell’s fleet took control of Jamaica in 1655 there were 400 black African slaves on the island.  Within half a century, that number had grown to 85,000.

Over the next century, 700,000 African slaves were brought to the sugar and tobacco plantations in Jamaica alone.  Many more would set out and die in mid-Atlantic.


Many more still would pass through Kingston and the slave depots and markets there for other parts of the Americas. The pattern was set for America as a whole.  The miserable ‘Barbados slave code’ came to dominate the lives of slaves as far north as Virginia.

The slave trade had been emerging for a generation, and the old Stuart regime had been involved in it.  But under Charles II and James II, the plan for Jamaica had been to fill the plantations with London’s criminals and street children: the slaves were going to be white.

After the Glorious Revolution, the triumph of the new financial service sector, the Bank of England and the Whig dominated court of William and Mary, the slaves would be predominantly black.

But it wasn’t just the beginning of the slave trade.  The end of Port Royal also marked the end of legal piracy and the beginning of financial speculation.

The new pirates were not made colonial governors like Henry Morgan.  Under the Piracy Act of 1699, they were hunted down.



Now that the Spanish threat was at an end, the policy shifted from buccaneering to a more sophisticated shifting of Spanish trade into English hands, via finance and speculation.

A second generation of pirates emerged, with names like Blackbeard, James Kidd and Bartholomew Roberts, even more notorious than those who had operated out of Port Royal before the earthquake.

They all knew Port Royal.  The former pirate capital clawed back some reputation for drinking, whoring and gambling.  But the climate was too dangerous to use it as a headquarters any more, and the so-called ‘golden age’ of piracy was at an end by the South Sea Bubble in 1720.

The new age of financial piracy had begun.

The historian Ralph Hale Mottram, whose father was chief clerk of Gurney’s Bank, one of the Quaker network of banks around Barclays, or which more in a moment, wrote about it like this:


“Up to about the year 1690, there still existed a chance that a united and determined body, a church or other society, might have resurrected the old taboo on usury and money-changing, and have preserved, for a period at least, the economic innocence of the world.”

But it was 1692 and it was too late.  So the destruction of Port Royal marked a shift from one kind of piracy to another.

Let’s be precise about this.  For the purposes of this talk I’m going to pin the blame on one man in particular.  Sir Josiah Child, known primarily for his dominance of the East India Company.


Child died in 1699, the same year that the Royal Africa Company – which he and his colleagues were 25 per cent shareholders – lost its monopoly of the Atlantic slave trade.

His new piracy was wholly legal.  It was respectable and dominated by the London money markets.  You didn’t have to risk your life on the high seas, but it would make ports like London, Bristol and Liverpool immensely rich.

There had been bribery and monopoly in buckets in the history of money and politics, but Child was at the heart of the very first generation of financial markets.

He was the first exponent of all those skills stitched together, the ruthless combination of financial and political power to make himself and his supporters rich beyond the dreams of those who went before.

He was the first financial buccaneer.

Child was already writing economic tracts urging the adoption of free trade, and his Indian imports – damasks and cotton – were pouring into British ports and causing consternation in the English cloth industry.

But when it came to his own company, he was no free-trader.  He needed capital, royal privileges and a new royal charter.  Bribing kings was like bribing governments to this day and £10,000 a year bought a trading monopoly for the East India Company.

“Does Sir Josiah sell or buy?” asked Daniel Defoe in his tract The Villainy of Stock-Jobbers.



“If Sir Josiah had a mind to buy, the first thing he did was to commission his brokers to look sower, shake their heads, suggest bad news from India; and at the bottom it followed, ‘I have commission from Sir Josiah to sell out whatever I can’, and perhaps they would actually sell ten, perhaps twenty thousand pound… and initiated the crowd of jobbers into that dexterity on tricking and cheating one another, which to this day they are the greatest proficients in that this part of the world ever saw…”

Defoe was imprisoned for his next pamphlet, aimed at the Anglican church.  In those days, you could end up in prison for saying some of the things I’m saying tonight.


So there we are.  Enough about the Caribbean.  What I’m saying, in case the police are listening, is not that financial innocence was lost precisely in June 1692 – but that history is important when we look at our companies today.

Where did they come from?  What are they for?  What do they mean?  And I’m saying we don’t have these conversations very much.

There are obscure tomes of corporate history which only academics read.  There are cursory notes – written by marketing departments – that appear on websites.  Otherwise that’s about it.

We live in an age where the PLC is almost the proudest institution on earth.  But actually, seen through an historical perspective, they are flimsy, fragile, insubstantial things, which flower briefly and then disintegrate into their constituent bits – a few brands there, a vice-president here, an office block again there.

More like multinational mayflies than megacorps.

Yet because there are no histories of these corporations, no back stories, no roots – we let them control our lives with stories about them conjured out of the air by whatever director of marketing they last employed.

The result is our strange, one-dimensional view of corporations.  We suffer under the delusion that the great names of corporate power – Coca-Cola, Procter & Gamble, Wal-mart – were knocked together by God some time on Day Six of the creation of the world.

We don’t know where they came from.  We don’t know why.  We don’t know what they really are.

So it occurred to us that what the big brands needed was a dose of what Lytton Strachey did for the Eminent Victorians – an experimental new kind of mini-biography.


Like the Victorian giants he wrote about, we have an absolute avalanche of information about the corporations that dominate our lives – but very little actual knowledge.

Strachey published Eminent Victorians in May 1918.  Bertrand Russell read it in prison, where he had been sentenced for writing an article urging that should have accepted German peace offer.

In fact he laughed so much that the warders came and reminded him that prison was supposed to be a place of punishment.

|Reading it nowadays, it isn’t quite so obviously funny.  Nor is the theme so obvious.  Because Strachey believed that the Victorian giants he wrote about had led them directly into the First World War.

But the basic problem for his eminent Victorians and our eminent corporations was much the same.  Too much information.


“Concerning the Age which has just passed, our fathers and our grandfathers have poured forth and accumulated so vast a quantity of information that the industry of a Ranke would be submerged by it, and the perspicacity of a Gibbon would quail before it.”

It is the same for us trying to get a clear picture of the history behind our own brands.  There is no shortage of information.  Screeds and screeds of it.  Most of it utterly irrelevant to history.

But that was the central idea.  We wanted to do for Corporations what Strachey did for Victorians.

That meant developing a new kind of corporate biography, short, easy to read, fun – and providing a clear narrative.

It is worth asking, for a moment, just why businesses and brands have managed to rid themselves of their histories.

I would suggest it is because it is inconvenient.  Histories tie them down.  They bind the hands of the brand managers and the CEOs.

They don’t mind the idea of a corporate centenary or a simple statement of when they were founded.

But the idea that, behind their assertions about what the brand means there might be some very inconvenient FACT, is just too challenging.

And to be fair to the brand managers, we have lived through a period when the politicians felt much the same.

New Labour deeply disapproved of history, I think, for same reason.  They were after all the most utilitarian government since they stuffed Jeremy Bentham and put him in a glass case.


History and public relations kind of cancel each other out.

I realised this almost exactly three years ago, when the banks and everything seemed to be unravelling – when I ventured into the City Business Library to start researching the book.


I used to spend quite some time there, when I was writing about the history of money.  I remembered it – perhaps wrongly – as a font of hidden knowledge.  Piles of ancient American business magazines stuffed into boxes.  Funny 1960s books of business predictions.

They’d all gone.  I asked at the desk and was told that it was now the library’s policy to dispose of most material after three years, and all of it after five years.

This was very strange.  Wall Street and the City of London had allowed the banking system to collapse because their risk software had little or no memory beyond ten years – barely longer than the business cycle.

Most of those taking day to day decisions about risk in the City were in their twenties and had little memory of the great rises and falls of the market.

Their lack of history had hampered their ability to see events and risks for what they really were.

I don’t suppose the City Business Library’s decision to bin anything dog-eared contributed to this historical vacuum – it was symptom not cause.

But it can’t have helped.

And, let’s face it, the excision of history from business commentary and corporate life – and its replacement by marketing mush – was definitely one of the major causes of the current miserable economic climate.

So this is the point I wanted to make.

History matters.  And I hope in a very small way tonight, we can drive forward a new kind of tradition of business history.  If so, we can with a clear conscience, go and slake ourselves in a pint of Kill Devil.


Second task.  To dip a little into the histories of these brands.

And here you can discern another reason why corporations are reluctant to look closely at their own histories.

Because some of them are not quite the bold, inexorable tales of endless expansion and imagination that they would prefer to tell.

Some of them are actually mythic tragedies.


Take Barclays, for example, which began life as the upright and obsessively moral Quaker establishment about the same time as Port Royal disappeared beneath the waves.

The usual charges levelled at Barclays seem to me to be pretty unfair.  They did not own slaves, except by accident, as their American critics say now.

Even their involvement in South Africa in the 1970s was driven, I think, by the same underlying ethics that made Barclays International the biggest bank in the world.

On one occasion their Kenyan mobile bank was stolen in its entirety, a really brilliant example of a successful heist.

But the problem with Barclays is that it is now such a paradox.  Gone is nearly all memory of the ethical bank of the 18th century.

On the outside, we had a safe retail bank with the familiar British logo – the trustworthy utility to look after your money – presided over by chief executive John Varley, married into the Barclays aristocracy, and a man so traditional that he still wore detachable collars.

Barclays was a bank so conservative that it banned left-handed people as employees in the 1920s in case their smudged the ink in the ledgers.

But the other side of the divide is the casino, presided over by the mega salary and mega bonuses of Varley’s successor, the American Bob Diamond and his American cohorts.

On the one side is Barclays retail operation, promising to go carbon neutral in the UK and increasing its use of green electricity to 50 per cent.

On the other side is San Francisco-based Barclays Global Investors, the world’s biggest investor – strap line ‘quietly conquering the world of finance’ – which was busy voting down environmental proposals in companies they part owned, including Exxon, ConocoPhilips and ChevronTexaco.

Bob Diamond’s Barclays bears little or no relation to the roots of the organisation.  I don’t know if that’s a tragedy or not, but I’m inclined to think that the founders would have thought so.


Then there was Cadbury’s, another massively successful Quaker company and staggeringly successful British brand.

Under George Cadbury it became a byword for imaginative new approaches to employment.  Their company village at Bournville wasn’t just a factory, it was innovative new kinds of housing, arts experiments, adult education experiments and much more besides.

My understanding is that it was the decision to be innovative and ethical in the 21st century which marked it down for hostile takeover – all because they went entirely fair trade.

It was a weakness that the financial markets could exploit.

And so it was the Cadbury’s was bundled off to the American food giant Kraft, in a deal financed by the government-owned bank RBS.


But perhaps the biggest tragedy was Marks & Spencer, a company founded here by a Jewish Polish itinerant pedlar called Michael Marks under the slogan ‘don’t ask the price, it’s a penny’.

The slogan was one of the most famous in brand history, and was chosen deliberately in order to minimise conversation.  Marks couldn’t at that stage speak English.

But it was Israel Sieff’s concept of long-term supportive relationships with suppliers that really gave M&S its character in the past century.

Sieff had to fight for his idea against the wholesalers in the textile depression of the 1920s, starting in Leicester at a textile company called Corah, whose famous brand name ‘St Margaret’ was taken from the statue of the shepherdess saint outside the factory.

They refused to see him.

It was not until Sieff’s fourth visit to Leicester that the chairman of Corah agreed to meet, only to inform him that they could never accept a direct order.  On his way back to his chauffeur-driven car, Sieff was followed by the plant manager, who had overheard.  In a brief conversation, they agreed that the orders would be placed using a secret number that only they would know about.

It was inevitable some months later that the secret would come to light and the plant manager was sacked.

Sieff went back to Leicester and successfully argued for his reinstatement.

His plan was to build close supportive relationships with these suppliers.  To give them the knowhow they needed and help them invest in the plant, and guarantee them the prices too.

It was primarily a moral idea, about providing security that would allow a long-term, trusting relationship to thrive.

“We do not forget that it was through (Sieff’s) inspiration, perception and encouragement that the names of Marks and Spencer and Corah have become so closely associated so uniquely, in our trade and industry,” said the Corah annual report four decades later.  “In 1966, we are forty years on from the opening of the account in 1926.  At heart and in fact our relationship has never stood so strong as it is today.”

The St Margaret brand had been registered on the very first day of the 1875 Trade Marks Registration Act, which made it the oldest brand name for knitted goods in the world.

Marks’ energetic son Simon was impressed.  He wanted his own trademark and chose his father’s name

For the next six decades, ‘St Michael’ was instantly recognisable on the company’s gold and green bags.

Even into the 1960s, Marks and Sieff protected their favoured suppliers by subsidising tax increases themselves.

Once the financial markets called the tune, it was all different.  The supply chain was squeezed over and over again to provide the earnings to meet a profit target of £1 billion.

After the disastrous boardroom battle of 1999, the trusting long-term relationships with the British textile industry were over.

Most went to the wall.  William Baird, which had supplied M&S for 30 years, was given six months notice.  Their chief executive pleaded with M&S to delay the decision so that his merger with Coats Viyella could go through, but M&S refused and the merger failed.

Sixteen factories closed and 4,500 textile workers lost their jobs.  It was the end of the British textile industry.

M&S decided it could survive with just three British clothing suppliers, Coats Viyella, Courtaulds and a much reduced Dewhirsts, most of them manufacturing mainly in Morocco, Sri Lanka and China, largely now middlemen – exactly the opposite of Sieff’s original intention of cutting out the wholesalers.

Even the biggest, Coats Viyella had shrunk from 45 factories in 1990 to just fourteen (five of them part-owned).  They finally shocked the business world by making a pre-emptive announcement that it was no longer profitable to work with Marks and Spencer.

In response to Philip Green’s first takeover bid, the M&S board agreed to squeeze the suppliers again, promising the City to save £100m from the supplier chain for no other reason that they could.

Corah, the start of Israel Sieff’s quest for long-term relationships, was already gone.


It was taken over by the finance company Charterhall in 1989 and then broken up.  The statue of St Margaret which had inspired Sieff and Marks stood by its vacant factory in Vaughan Way, Leicester, for some years, until it was bought by a local charity and moved into the nearby church.

You might say that the story of how M&S destroyed the British textile industry is just one of those things.  Maybe it is just business.

But in branding terms it was a tragedy and it explains a little about why we don’t feel the same about the M&S brand as we did when they making one on four children’s socks worn by the nation.


What does all this mean?  Well, I want to say three things about it.

First, I wanted to say something about finance.  Because so often in these stories, it is the way that the markets have corroded that authenticity and vision that has been absolutely fatal.

This is hugely important.  Because it isn’t just that financial services, as they have developed in this country, have evolved to the point where they cannot support entrepreneurs.

It is that the financial markets act as a corrosive leveller, enforcing a bland uniformity on the corporate world.

Pouncing on ethics or innovation as signs of weakness.

Enforcing the relentless short-termism of companies with no vision.

Undermining the very essence of being an entrepreneur, which the late great Anita Roddick defined as someone who can see the world differently.

But it’s worse than that.

That corrosion of imagination and innovation is part of a far bigger corrosion.  Because London’s financial services are so profitable and pay so well – normally of course – that it threatens to drive out other kinds of economic endeavour altogether.

You can see the same thing happen in offshore financial centres where financial services have priced everything else into oblivion. In places like Jersey in the Channel Isles, it’s the cuckoo in the nest.

Jersey’s offshore status has made it rich, and yet there isn’t any longer a Jersey agriculture sector to speak of, and the tourist sector is well past its prime. Why? Because nobody but bankers can afford to live and work there.

That is the threat we face from the current power of the financial markets.  The future of British brands depends on some kind of new dispensation.  Some new and more effective ways of raising money. Some more innovative forms of ownership.

Second, I wanted to say something about brands.  I am sceptical of most of the discussion around brands these days, which is no doubt very old-fashioned of me.

I’m sceptical about the language.  As if brands were really any different from reputation.

As if we really can control how people regard us or our carefully designed logos.

With history, that control is circumscribed by everything the brand has been before.

Without history, though, brands are flimsy insubstantial things, without soul or roots or content – and how can you trust one of those?  Why would you?

I am very much of the opinion that brands that survive will be real.

They will have three dimensions.

They will have a fallible human team behind them.

They will have flaws, because real things are not shiny and flawless.

They will have depth.

That is why history is so important.

Let’s not pretend that corporations and brands are actually as strong and indestructible as they claim.  Of all the names on the first Dow Jones Index a century ago, only one remains – General Electric.

All the rest have gone, broken up and forgotten.  Their powerful boardrooms made into matchsticks.

My name is Ozymandius PLC.  Look on my works ye mighty and despair.

And one of the reasons they have gone, it seems to me, is that they stopped being real.  They lost their roots and their vision and they petered out.

Which brings me to the last thing I wanted to say.  About authenticity.

Once again, there is a lot of nonsense talked about brands, it seems to me, especially in advertising agencies.

Yes, there are a few nutters around who want to be buried in Harley-Davidson coffins.  We all go through brief periods of enthusiasm for new brands occasionally.

What the brand consultants forget is how much this is outweighed by the opposite.  How brief our enthusiasm tends to be – with a few exceptions – and how long and intense our dislike.

Of their hideous call centres.

Of their promises to behave in a human way, and abject failure to do so.

Of their shiny bland nothingness.

Brands require authenticity, it seems to me.  And that means lots of things these days.  It means ethical or personal or beautiful or traditional.

Above all, it seems to me that it means human.  That there is a human being behind the product.  Someone who fried this packet of crisps or grew this vegetable somewhere specific.

Someone who laughs and cries real tears.

That is hugely difficult for brands hoping to stay human in the mass market.  It may even be impossible, but the hope is that it is the direction of travel that is important – the effort made to be human.

Anita Roddick used to criticise the depths of the inhumanity of so many of our corporate monoliths, public and private.

She said that they could only feel two emotions – fear and greed.  Like a great brontosaurus.

That great gulf where a human soul ought to reside at the heart of the brands that dominate our life actually, when we think about it too closely, can send a shiver down the spine.

Barclays is a Tyrannosaurus Rex of intense greed.

Cadbury’s a fleeting memory, maybe a ghost, clinging to life in the belly of Kraft.

Virgin – well don’t get me started – a brand name which owns almost nothing, licensed out to the highest bidder in transport and telecoms.

A great vacuum at the heart of it.  Or, more accurately, a database.

There are great British entrepreneurs who will create more great British brands.  Maybe you.

But so many of the names of the great British entrepreneurs of the last, from Matthew Boulton to William Morris, are unappreciated, half remembered.  Half forgotten names.

Their identities swallowed up.  Their brands consigned to history.

So I think we should demand of our brands that they should have histories.

That they should be three-dimensional things.

And that they should be human too.

That is the key to authenticity.

In the meantime, I can only give the same advice that C. S. Lewis gave in The Lion the Witch and the Wardrobe.

“If you meet anything that’s going to be human but isn’t yet, or used to be human once but isn’t now, or ought to be human and isn’t, then keep your eyes on it and feel for your hatchet.”