OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi THE CITY OF LONDON AND SOCIAL DEMOCRACY OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi OXFORD HISTORICAL MONOGRAPHS TheOxfordHistoricalMonographsseriespublishessomeofthebest Oxford University doctoral theses on historical topics, especially thoselikelytoengagetheinterestofabroadacademicreadership. Editors P. CLAVIN J. DARWIN J. INNES J. MCDOUGALL D. PARROTT J. SMITH S. A. SMITH J. L. WATTS W. WHYTE OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi The City of London and Social Democracy The Political Economy of Finance – in Britain, 1959 1979 ALED DAVIES 1 OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi 3 GreatClarendonStreet,Oxford,OX26DP, UnitedKingdom OxfordUniversityPressisadepartmentoftheUniversityofOxford. ItfurtherstheUniversity’sobjectiveofexcellenceinresearch,scholarship, andeducationbypublishingworldwide.Oxfordisaregisteredtrademarkof OxfordUniversityPressintheUKandincertainothercountries ©AledDavies2017 Themoralrightsoftheauthorhavebeenasserted FirstEditionpublishedin2017 Impression:1 Allrightsreserved.Nopartofthispublicationmaybereproduced,storedin aretrievalsystem,ortransmitted,inanyformorbyanymeans,withoutthe priorpermissioninwritingofOxfordUniversityPress,orasexpresslypermitted bylaw,bylicenceorundertermsagreedwiththeappropriatereprographics rightsorganization.Enquiriesconcerningreproductionoutsidethescopeofthe aboveshouldbesenttotheRightsDepartment,OxfordUniversityPress,atthe addressabove Youmustnotcirculatethisworkinanyotherform andyoumustimposethissameconditiononanyacquirer PublishedintheUnitedStatesofAmericabyOxfordUniversityPress 198MadisonAvenue,NewYork,NY10016,UnitedStatesofAmerica BritishLibraryCataloguinginPublicationData Dataavailable LibraryofCongressControlNumber:2016960542 ISBN 978–0–19–880411–6 Printedandboundby CPIGroup(UK)Ltd,Croydon,CR04YY LinkstothirdpartywebsitesareprovidedbyOxfordingoodfaithand forinformationonly.Oxforddisclaimsanyresponsibilityforthematerials containedinanythirdpartywebsitereferencedinthiswork. OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi Acknowledgements I am grateful to the University of Oxford and the Arts and Humanities ResearchCouncilforgivingmetheopportunitytoundertakethedoctoral research onwhichthisbookisbased.Iamalsothankfulforthefinancial support provided by the Winton Institute for Financial and Monetary History. I wish to express my utmost gratitude to Ben Jackson for his enthusi- astic supportfor this project, andfor his helpand assistance throughout. In always providing invaluable guidance, but never seeking to direct my research, he hasbeen theidealsupervisorandeditor. Iwouldlikealso to thank Jim Tomlinson and John Davis for examining my doctoral thesis, andforrecommendingitforpublication.IamgratefultoJohnWattsand theOxfordHistoricalMonographscommitteeforagreeingtopublishthe book, and to the anonymous referee who provided such useful feedback on the original thesis. I would like to thank Hugh Pemberton for his support and guidance while I turned my dissertation into this book, and IamalsogratefultobothRogerMiddletonandMartinDauntonfortheir helpfulfeedbackandadvice. Thisbookowesitscompletiontothesupportandencouragementgiven tomebymycolleagues,friends,andfamily.Thestaffandstudentsofthe OxfordUniversityEconomicandSocialHistorygrouphavebeenasource of intellectual inspiration and academic assistance throughout. I am par- ticularly grateful to Harold Carter, Nicholas Dimsdale, Rui Esteves, AnthonyHotson,JaneHumphries,NickMayhew,AvnerOffer,Deborah Oxley,FlorianPloeckl,andKevinO’Rourkefortheirsupport.Inprepar- ing this work I have also benefited from the comments and suggestions made by attendees of various seminar and conference papers I have delivered in Oxford, London, Paris, and York. I would also like to thank the archive and library staff at the various institutions listed in the Bibliography,andMichaelJ.OliverandGordonPepperinparticularfor their assistance in researching Chapter5. Furthermore, I am grateful to CathrynSteeleatOxfordUniversityPressforhersupportthroughoutthe publicationprocess,andtoHilaryWalford,whosecopy-editingskillshave beeninvaluable. Mansfield College provided a friendly, egalitarian, and supportive working environment while I was in Oxford. I am grateful to all the collegestaff,andespeciallytoKathrynGleadle,whowasagreatsourceof OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi vi Acknowledgements encouragementthroughout.Undertakingdoctoralresearchcan,attimes, be a lonely and difficult experience. If not for the friendship of many peopleinOxfordIwouldhavestruggledtocompletetheoriginalthesison which this book is based. Special mentions must go to Keian Noori, ChelseaSutcliffe,ColinSeepersad,JulienLabonne,andAndrewSeaton. IamgratefultoJane,Gerwyn,andCatrinDaviesfortheirpatienceand supportwhileIresearchedandwrotethisbook.Iamespeciallygratefulto my Dad for lending his bike to me while I was living and working in Oxford.IwouldalsoliketothankJillandIanCherryforalltheirsupport andencouragement. Finally, I would like to thank Kate Cherry. Without her constant support I would never have started this project, and I certainly would nothavefinishedit. OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi Contents ListofFigures,Table,andBoxes ix Abbreviations xi Introduction:TheCityofLondonandSocialDemocracy 1 1. ‘PensionFundSocialism’:InstitutionalInvestmentand SocialDemocracy 37 2. ThePoliticsofBankingandSocialDemocracy 75 3. TheLimitsofFinancialReformandtheChallengeto SocialDemocracyinthe1970s 108 4. TheCityofLondonandthePoliticsof‘Invisibles’ 140 5. TheCityofLondonandtheEvolutionofBritish Monetarism 181 Conclusion 215 Bibliography 225 Index 245 OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi OUPCORRECTEDPROOF–FINAL,5/5/2017,SPi List of Figures, Table, and Boxes FIGURES 1.1. TotalfundsheldbyUKpensionfunds,1957–78 39 1.2. DistributionofshareownershipontheLondon StockExchange,1963–81 40 3.1. Grossoperatingsurplusofcorporations,%ofGDP,1955–85 128 3.2. Ratesofreturnontradingassets,1963–80 128 3.3. Internationalprofitabilityofmanufacturing:netpre-tax ratesofreturn,annualaverage,1960–78 129 4.1. Advertisementsreferringtoinvisibleexports 169 TABLE 5.1. Medium-termfinancialstrategytargets,1980 184 BOXES 4.1. MembersoftheCommitteeonInvisibleExports 157 5.1. Moneysupply(£M3) 184