I consider both of these articles by Bloomberg reporter, John Glover, history lessons in their own right, and must-reads.

 

 

Stanley Ross Eluded Nazi Bombs to Transform World Bond Markets

 

Stanley Ross Who Changed Pricing Dies at 83

 

In June 2013 ICMA hosted a grand celebration at the Savoy marking the Eurobond's 50th Anniversary and this in a way is where Stanley signed off, so to speak, and he did in typical style with a marvellous speech, which you'll find below, courtesy of ICMA.

My Recherche du Temps Perdus Sixty three years ago, I joined Strauss Turnbull. It was a different world. In late afternoons, a little tiny man on a bicycle, rode the alleyways behind Cornhill, used the great long pole he carried, to light all the gas lamps…that’s how different it was. One day Julius Strauss on one of his walkabouts passed my desk, picked up Proust’s “La Recherche du Temps Perdus” looked at me incredulously, "You are hhhreading Proust?” went back to his office, called in his partners and said, wonderingly, “Zere iss a boy, in ze basement, hhrreading Proust I am going to give zat boy a chance” How lucky I was to learn my trading from the Master, how wonderful that his widow is here tonight. Mrs Strauss, Julius was a truly-great- man.

After years of dealing International equities with him and our small team, he one day came crashing in, bellowing in his own inimitable style “Rrrhhhhhoss you vant ze good news, or ze bad news?" It was 1963 good news, Strauss had been chosen to broker the first issue of a new financing, a ?Eurobond (?) bad news, we had to make a price in this thing and sandwich it into our always hectic, arbitrage activity.  Autostrada; the first such bond to enjoy a consistent after-market in the industry that developed, as new US tax laws bit. The early years were amazing. Equity arbitrage was swept aside by huge volume of trading in Finnish, Norwegian, Japanese, US, top name straights and convertibles.

And it was the Wild West. Nothing regulated: believe me, anything went. Want to raise some cash? Easy. Short some new Eurobonds. Payment on value date, delivery in due course. This led many firms not delivering some bonds for l or 2 years!! Not only did they use of the clients money all that time, but much worse, when bonds did, finally come, it was not unusual for them to cut off all the available coupons before delivering on.

In 1967, Kidder Peabody made me an offer I couldn’t refuse, and as other US trading firms rushed to London, competition became frenzied. It all came to a grinding halt as we ran slap bang, into the New York credit crunch. Weeden was the first to cease trading with a $50 million fail position. For 50 years, I add a nought and double it, thus a billion dollar fail position, one tiny firm. Think about it.

Problem was that since all bonds were dollar denominated everything settled in New York. Daily we sent instructions, receive and deliver. But only got incoming, nothing out, interest costs skyrocketed. I flew to New York, went down to Schroders vaults to see what was going on and met Wolfgang Kron, Deutsche, who said “Stanley in 2 weeks I turned a $23 million debit into a $13 million credit.” (add a nought and double it) I rushed to office and demanded Kidder sue them. They sneered “you make so much money, you absorb the goddamn loss”.

We had to deal with a mushrooming industry in almost total chaos. We thought of it as an industry we began, that fuelled our salaries, fed our families, gave us a standard of living of which most people could only dream. Mind you, in the UK thanks to that bastard Healey, we paid 83 % in income tax, but mark my words, that can, and may just be, about -  to - happen - again….

The anarchic state of our market made it essential that a trading association be formed and in 1967, about a dozen of us began what exists today, which led to the first meeting of the AIBD 1969 at the Great Eastern Hotel. I remember the first 3 words Dick Weguelin spoke, at our opening, “Mademoiselle Courtine, Gentlemen”, for in those far off days, in that entire hall, there was only one woman. The lovely Miss Courtine, where are you now. Are you, here? It was such a different world. Why, in Switzerland at that time women didn’t even have the vote. Happy Days. I jest.

Then we got busy - elected an 11 man Executive Committee, Rolf Halberg, became first Chairman, I became Chairman of Market Practices, which wrote the first trading rules, many of which I like to think remain unchanged. Simply establishing rules in a market where none existed, gave it a discipline and a credibility. We, who were there at the beginning, can, be proud of that which grew from our endeavours.

Of a dozen or more founding fathers, two names immediately spring to mind for their truly extraordinary work, month in month out, year in year out, their total dedication to those huge tasks, always struck me as incredible. Without them, the market could never have developed as swiftly and as efficiently as it did. The debt the market owes to Armin Matle and Walter Koller, cannot be overstated. To them, also, must go great credit for the commencement and continuation of the yearly Educational Seminars held in Montreax, further strengthening the markets’ development. 

Some of you may remember “The Week In Eurobonds” the first Eurobond letter of it’s day from 1969. Its irreverent style, stories about my boats, wives, kids, great Danes, what I thought about the government - my New York hierarchy, oh and just occasionally, about Eurobonds, built up quite a following. I felt strong enough within the industry, not only to be one of the first major trading firms to join Morgan’s Euroclear system, but to stipulate that since the new method solved so much, we would only trade with professional firms using Euroclear, who were struggling a bit at the time. I thought they might have sent me champagne for life for that. No such luck.

Now Kidder NY didn’t know the difference between a dollar and a Eurodollar, but looking happily at our bottom line, tended to leave us alone. Sadly, after about 10 years, political factors came into play and they took control. First they stopped my letter which infuriated a lot of clients, but they then went on to award me in 1979 the order of the DCM. Don’t Come Monday. I guess our 45 people in London, having, over one five year period, averaged 34% of the total annual income of a global firm sixty times our number, just wasn’t enough. Hey Ho.

So I set up and developed, a small firm called Ross & Partners at the prestigious address ‘One Finsbury Square’, the activity of which was to make me infamous in the eyes of New Issue fraternity, for our speciality was the so-called Grey Market and our activities changed the way the market functioned. People don’t like change, especially when it threatens huge earnings and in those days Managers competed so fiercely for the high fees on issues pouring out that they were frequently overpriced.

I first realised the opportunity to position our tiny company, when a manager offered me a new Japanese convertible less 5! New issues often dealt at discounts, but never at less 5 and from a manager, unheard of. Couldn’t sell a bond, but it duly came at par, yet was 2 weeks before the first tentative transaction, 88 l/2.

And it was then that I thought, if only I could make such things visible to more people there’s surely a turn to be made. And then, magic day, I had that visit from Reuters, about developing a screen system. And it all took off from there. Because, for us to capitalise upon our activity, it had to be transparent, and being the first to quote new issue prices on a Reuter screen, transparent our main page, RAPC, certainly became. For pre Reuter, in half a minute by phone, you gave a single client a price, post Reuter, in the same instant, the price went to hundreds of people because suddenly, we were at the beginning of a – whole – new - world!

I saw the strength of it, when a fault at Reuters one day meant those selecting my pages were met with the dreaded words “Selective Access” and our phones jammed solid the entire day, as huge numbers of people, many of whom we didn’t know, screamed at us to give them their screen back! And for nothing, they didn’t like me telling them there were going to be no more free lunches. From then on our volumes soared. 

Indeed Reuters told me gleefully, they had such enormous demand to get RAPC, particularly from Swiss Banks, that - they  could - not – install - the - screens - fast - enough. Thought I might have got champagne, from Reuters too, but I still wait.

I can think of no article that illustrates more clearly the turmoil in the market of those years than “Ali Baba and the Forty Bears”

Euromony September 1979. It sets it all out. Some years later, in an interesting postscript to that era the eminent Hans Joerg Rudloff, no less, finally pronounced on the Grey Market, Institutional Investor I think it was, he said “Stanley was right all along” Sweet music to my ears. He didn’t need to say that. But I was glad he did. (Pause) He didn’t send me any champagne either. (Hans Joerg,  I like Louis Roederer pink.)

In a speech for Deutsche in 1987, I quoted a statistic from the first year bond numbers were made available, 1972, showing that while market turnover grew a thousand-fold in that 15 years, the number of trading firms only increased by a multiple of four. Emphasising the trader’s importance I said, “We should not forget, that no matter how sophisticated the technology, or how great the transparency, or how huge the turnover may become, prices do not appear by magic.

For regardless of how many people see the same facts at the same time, it is given to few people, creative and intelligent traders, to have that innate capability to think - to feel- and to actto put up that all important price. Such people, a mixture of trader, salesman and analyst, will always be a firm’s most precious asset. Ain’t that the truth. Well, that’s how it was, but not having been in a trading room for decades, how sad would it be, if, in today’s brave new world, it’s now the computer that makes prices appear, - as if by magic….……

So finally, let me say that in our day, we traded in a system with  very few constraints on any of our activities, and I loved every single minute of it, although I would say to those still in today’s industry, working under the increasingly dark, and seemingly inescapable, shadow of the European Union, that  I – do – not - envy – you – one  - little - bit.

Thank you for listening.

Two Choices

What would you do?  You make the choice. Don't look for a punch line, there isn't one. Read it anyway. My question is: Would you have made the same choice?

At a fundraising dinner for a school that serves children with learning disabilities, the father of one of the students delivered a speech that would never be forgotten by all who attended. After extolling the school and its dedicated staff, he offered a question:

"When not interfered with by outside influences, everything nature does, is done with perfection. Yet my son, Shay, cannot learn things as other children do. He cannot understand things as other children do. Where is the natural order of things in my son?"

The audience was stilled by the query.

The father continued. "I believe that when a child like Shay, who was mentally and physically disabled, comes into the world, an opportunity to realize true human nature presents itself, and it comes in the way other people treat that child."  Then he told the following story:

"Shay and I had walked past a park where some boys Shay knew were playing baseball. Shay asked, 'Do you think they'll let me play?' I knew that most of the boys would not want someone like Shay on their team, but as a father I also understood that if my son were allowed to play, it would give him a much-needed sense of belonging and some confidence to be accepted by others in spite of his handicaps.

I approached one of the boys on the field and asked (not expecting much) if Shay could play. The boy looked around for guidance and said, 'We're losing by six runs and the game is in the eighth inning. I guess he can be on our team and we'll try to put him in to bat in the ninth inning.'

Shay struggled over to the team's bench and, with a broad smile, put on a team shirt. I watched with a small tear in my eye and warmth in my heart. The boys saw my joy at my son being accepted. In the bottom of the eighth inning, Shay's team scored a few runs but was still behind by three. In the top of the ninth inning, Shay put on a glove and played in the right field. Even though no hits came his way, he was obviously ecstatic just to be in the game and on the field, grinning from ear to ear as I waved to him from the stands. In the bottom of the ninth inning, Shay's team scored again.

Now, with two outs and the bases loaded, the potential winning run was on base and Shay was scheduled to be next at bat. At this juncture, do they let Shay bat and give away their chance to win the game?

Surprisingly, Shay was given the bat. Everyone knew that a hit was all but impossible because Shay didn't even know how to hold the bat properly, much less connect with the ball.

However, as Shay stepped up to the plate, the pitcher, recognizing that the other team was putting winning aside for this moment in Shay's life, moved in a few steps to lob the ball in softly so Shay could at least make contact.

The first pitch came and Shay swung clumsily and missed. The pitcher again took a few steps forward to toss the ball softly towards Shay. As the pitch came in, Shay swung at the ball and hit a slow ground ball right back to the pitcher.

The game would now be over.

The pitcher picked up the soft grounder and could have easily thrown the ball to the first baseman. Shay would have been out and that would have been the end of the game.Instead, the pitcher threw the ball right over the first baseman's head, out of reach of all team mates.

Everyone from the stands and both teams started yelling, 'Shay, run to first! Run to first!' Never in his life had Shay ever run that far, but he made it to first base. He scampered down the baseline, wide-eyed and startled.

Everyone yelled, 'Run to second, run to second!'

Catching his breath, Shay awkwardly ran towards second, gleaming and struggling to make it to the base. By the time Shay rounded towards second base, the right fielder had the ball, the smallest guy on their team who now had his first chance to be the hero for his team.

He could have thrown the ball to the second-baseman for the tag, but he understood the pitcher's intentions so he, too, intentionally threw the ball high and far over the third-baseman's head.  Shay ran toward third base deliriously as the runners ahead of him circled the bases toward home.

All were screaming, 'Shay, Shay, Shay, all the Way Shay'

Shay reached third base because the opposing shortstop ran to help him by turning him in the direction of third base, and shouted, 'Run to third! Shay, run to third!'

As Shay rounded third, the boys from both teams, and the spectators, were on their feet screaming, 'Shay, run home! Run home!'

Shay ran to home, stepped on the plate, and was cheered as the hero who hit the grand slam and won the game for his team

'That day', said the father softly with tears now rolling down his face, 'the boys from both teams helped bring a piece of true love and humanity into this world'.

Shay didn't make it to another summer. He died that winter, having never forgotten being the hero and making me so happy, and coming home and seeing his Mother tearfully embrace her little hero of the day!

AND NOW A LITTLE FOOT NOTE TO THIS STORY:

We all send thousands of jokes through the e-mail without a second thought, but when it comes to sending messages about life choices, people hesitate. The crude, vulgar, and often obscene pass freely through cyberspace, but public discussion about decency is too often suppressed in our schools and workplaces. If you're thinking about forwarding this message, chances are that you're probably sorting out the people in your address book who aren't the 'appropriate' ones to receive this type of message.

Well, the person who sent you this believes that we all can make a difference.

We all have thousands of opportunities every single day to help realize the 'natural order of things.'  So many seemingly trivial interactions between two people present us with a choice:

Do we pass along a little spark of love and humanity or do we pass up those opportunities and leave the world a little bit colder in the process?  A wise man once said every society is judged by how it treats the least fortunate amongst them.

You now have two choices:

1. Delete

2. Forward

May your day, be a Shay Day.

Some years ago Stanley sent me the original copy of a speech he gave to Kidder shareholders in 1977.  He used to send me stuff he wrote, and vice versa. And this particular speech is considered to have been his downfall; he was fired that year, yet I can't see what's wrong with it. To me, they shot the messenger. The original is faded so I have typed it up, just as it appears on the original, and share it here because I think it demonstrates Stanley's vision, his talent for articulate expression, and above all his courage. 

MEETING JANUARY 1977 - NEW YORK

THOSE OF YOU WHO HAVE LISTENED TO ME AT THE PAST TWO MEETINGS AND LET’S FACE IT WHAT-ELSE-WAS-THERE-TO-DO-AT-THE-TIME WILL KNOW THAT I’VE ALWAYS MADE SOME REFERENCE TO MY FRIEND THE

BISHOP AND HIS ONGOING RELATIONSHIP WITH A SEEMINGLY PERMANENTLY HORIZONTAL  ACTRESS.

THAT SHE IS STILL CO-OPERATIVE AFTER ALL THIS TIME AND THAT THE BISHOP’S ENTHUSIASM HASN’T WANED IN THE SLIGHTEST PERHAPS SUGGESTS THAT THIS STAMINA RESULTS FROM SOME DEEP COMMITMENT TO THAT INCREDIBLE ALL AMERICAN HABIT OF JOGGING, OR EVEN, WHO KNOWS, MAYBE THAT HE SIMPLY DOESN’T SMOKE OR DRINK.

I’M SORRY, INCIDENTALLY, THAT UNLIKE SOME OF THOSE WHO SPOKE BEFORE ME, I DON’T HAVE A SLIDE PRESENTATION ON THEIR ACTIVITIES ….

BUT OF COURSE THE REAL THEME OF THIS PERHAPS SOMEWHAT BIZARRE, BUT LONG RUNNING RELATIONSHIP-IS-PROFITS-AND THE ABILITY OF KIDDER PEABODY SECURITIES TO KEEP IT UP, AS IT WERE, ALL YEAR LONG.

PERISH THE THOUGHT ….

 

WELL THIS YEAR I HAVE TO TELL YOU THAT IF WE WERE COMPETING IN ANY FORM OF OLYMPICS,

I GUESS WE’D HAVE WON-A-BRONZE-INSTEAD OF A GOLD. 

FOR-IN-1976-WE-MADE-LESS-MONEY-THAN-IN-1975.

 

NOW THAT-DOES-NOT-TRIP LIGHTLY FROM MY TONGUE, BUT LET ME JUST ADD THAT IT WAS, NEVERTHELESS, OUR SECOND BEST YEAR EVER WITH GROSS PROFITS OF 4.3 MILLION DOLLARS WHICH GIVEN OUR GROSS TO NET RATIO OF 53% EQUATES TO SOMETHING LIKE 2.3 MILLION DOLLARS NET TOWARDS THE TOTAL STOCKHOLDER PROFITS.

 

NOT SO BAD, PERHAPS.

MAYBE WE SHOULD AFTER ALL AWARD OURSELVES A SILVER INSTEAD OF THAT BRONZE.

 

BUT WHERE DID THOSE PROFITS COME FROM?

 

THE ANSWER IS THE SAME AS LAST YEAR, FROM THE ORIGINAL BASE OF THE KIDDER PEABODY SECURITIES EXISTENCE, EUROBOND TRADING.

 

THE EQUITY CULT MAY NOT BE DEAD BUT WE NOTICED MORE AND MORE INTERNATIONAL INVESTORS BECOMING DISENCHANTED WITH THE FEEBLE PERFORMANCES OF EQUITY MARKETS GENERALLY.

 

IN FACT, THIS TIME LAST YEAR I SAID AND I QUOTE “THUS I PERSONALLY AM SLOW TO ACCEPT, HOWEVER HARD EVERYONE, SAM INCLUDED, TRIES TO MAKE ME, THE WIDELY ACCLAIMED WORLD RECOVERY FROM RECESSION”. UNQUOTE

 

“BONDS ARE BEAUTIFUL” WAS THE MESSAGE, IT SEEMS, ALL OVER THE WORLD AND MORE THAN ANY OTHER THAN I CAN REMEMBER.

1976 WAS THE YEAR OF THE BOND.

NEW ISSUE VOLUME ROSE A STARTLING 94-PER-CENT-OVER-1975 WHICH WAS IN ITSELF THE RECORD YEAR IN THE MARKET’S ENTIRE HISTORY.  MOREOVER, THE SIZE OF INDIVIDUAL ISSUES BEGAN TO COMPARE WITH SOME OF YOUR OWN OVER HERE.  LOANS OF OVER A HUNDRED MILLION DOLLARS PUBLIC AND PRIVATE WERE NOT UNUSUAL, AS WELL AS SOME OF 300 AND EVEN ONE OF 500 MILLION DOLLARS.

INDEED THE INTERNATIONAL BOND MARKET UNQUESTIONABLY CAME OF AGE IN 1976 AND FINALLY PROVED ITSELF AS A VIABLE ALTERNATIVE CAPITAL RAISING MECHANISM TO THE UNITED STATES.

 

BUT YOU KNOW, I CAN JUST IMAGINE WHAT RALPH MIGHT BE SITTING HERE THINKING, “OK, OK, BIG DEAL, STANLEY” HE’S PROBABLY MUTTERING TO HIMSELF, “IF EVERYTHING IN THE GARDEN WAS SO GODDAMN ROSY, HOW-COME-YOU-MADE-LESS-BREAD?”

 

IT’S A FAIR QUESTION AND ANYWAY IN HIS POSITION I’D PROBABLY BE ASKING THE SAME.  SO LET’S TRY TO ANSWER IT.

 

THE REASONS PROBABLY FALL UNDER FOUR MAIN HEADINGS.

THE FIRST OF THESE WAS CURRENCY CONSIDERATIONS - WHERE, DUE TO FACTORS QUITE BEYOND OUR CONTROL, THE ADDITIONAL INVESTMENT CURRENCY VALUE OF OUR TRADING PROFITS DECLINED VERY SUBSTANTIALLY.  ALSO, UNDER AN FASB-8 TYPE OF SITUATION, THE DOLLAR VALUE OF THE STERLING THAT WE MUST HOLD FOR OUR PREMIUM DOLLAR TRADING OPERATION SUFFERED A HEAVY FALL. 

 

SECONDLY, WE LOST SOME MONEY TRADING GOLD SHARES LAST YEAR, WITH THE RESULT THAT AS YOU MAY KNOW I CHOPPED OUT THAT PART OF OUR ACTIVITIES IN THE SUMMER.  IT MUST BE SAID, THOUGH, THAT THAT OPERATION, THOUGH UNSUCCESSFUL IN LONDON, UNQUESTIONABLY ENABLED KIDDER PEABODY INCORPORATED TO ASSUME THE USEFUL ROLE IT NOW PLAYS IN THE TRADING OF GOLDS IN NEW YORK WHERE, OF COURSE, THE MARKET INCREASINGLY LIES.

 

THIRDLY, AND PERHAPS THE BIGGEST PROBLEM - COMPETITION.

YOU MAY REMEMBER THAT I SAID LAST YEAR THAT IT’S A PRETTY SAFE BET THAT ALL THOSE EARNEST YOUNG MEN THAT ONE SEES AT AIRPORTS WITH THEIR BROOKS BROTHERS SUITS AND MATCHING NIEMAN MARCUS BRIEFCASES ARE ALL PROBABLY EMPLOYED BY THE C.I.A., THE K.G.B. OR GOLDMAN SACHS.

TODAY THOSE RANKS HAVE BEEN JOINED BY OTHER HEAVYWEIGHTS AND YOU’LL PROBABLY AGREE THAT THEY DON’T COME MUCH HEAVIER THAN THE LIKES OF SALOMON BROTHERS AND MORGAN STANLEY, DREXEL BURNHAM, LOEB RHOADES ETC. ETC.

 

WE KNEW THEY WERE COMING.

 

WE SAID THAT WHEN THEY DID THEY’D BE HERE TO STAY.

AND THEY ARE.

AND THEIR ONE JOINTLY AVOWED OBJECTIVE IS TO REMOVE KIDDER PEABODY SECURITIES FROM ITS COMMONLY ASSUMED NUMBER ONE POSITION IN EUROBOND TRADING.  INDEED YOU MIGHT BE INTERESTED TO KNOW THAT IN THE LATEST INDEPENDENT POLL OF INSTITUTIONS IN OVER 46 COUNTRIES, KIDDER PEABODY SECURITIES FOR THE FOURTH YEAR RUNNING COMES OUT FIRST, IN TERMS OF THE FIRM WITH THE BEST EUROBOND EXECUTION CAPABILITY.

 

BUT THE INTELLECTUAL GIANTS OF SALOMON BROTHERS SEEM TO HAVE ARRIVED AT THE BRILLIANT DECISION THAT THE BEST WAY TO STEAMROLLER OPPOSITION IS TO INFILTRATE ALL THE MAJOR ACCOUNTS BY WRITING OUT AS MANY TICKETS WITH THEM AS THEIR COMPUTER CAN HANDLE -USUALLY-AT-A-LOSS.

IN SHORT, TO BUY YOUR WAY BY SHEER FINANCIAL STRENGTH INTO THE TOP LEAGUE OF THE MARKET AND TO HELL WITH THE COST.

I CAN SEE THE LOOK OF HORROR ON BILL LOVERD’S FACE FROM HERE.

WHAT-WE-HAVE-TO-REALISE-THOUGH-IS-THAT-EVERY-TICKET-THEY-WRITE-IS-POTENTIALLY-A-LOST TRADE-FOR KIDDER-PEABODY-SECURITIES.

 

AND THERE’S MAYBE WORSE TO COME.

FOR IN 1977 MORGAN STANLEY WILL ACTUALLY BE COMING ON STREAM TO BE, AS -ARCHIE-COX-TOLD-ME-PERSONALLY, THE BIGGEST AND THE BEST TRADING FIRM IN THE BUSINESS.

AND THEY’RE PULLING NO PUNCHES IN THEIR EFFORTS TO BEGIN ACHIEVING THIS OBJECTIVE.

INCIDENTALLY, IN TRYING TO LURE AWAY SENIOR EUROBOND PERSONNEL, INCLUDING, I MIGHT ADD, MOST OF THE KIDDER SECURITIES STAFF, THEY HAVE BEEN ABOUT AS DISCREET AS IT WOULD HAVE BEEN TO TAKE ZSA-ZSA GABOR TO EL MOROCCO OR ANNABELS.

IN FACT THEY ALMOST CLOSED DOWN ONE OF OUR COMPETITORS BY HIRING THEIR KEY TRADING TEAM.

BUT HOWEVER THEY GO ABOUT IT, THEIR PROMINENT POSITION IN THE INVESTMENT BANKING WORLD WITH THEIR ENORMOUS POTENTIAL CLIENT FOLLOWING, PLUS THEIR DECLARED COMMITMENT AND INTENT MAKES THEM IN SOME WAYS MORE FORMIDABLE THAN SALOMON BROTHERS, SINCE BOTTOM LINE CONSIDERATIONS WILL ALWAYS HAVE A HABIT OF GETTING THROUGH TO TOP MANAGEMENT EVENTUALLY.

WE HAVE SEEN THAT BEFORE WITH OTHER COMPANIES SUCH AS WEEDEN, WESTERN AMERICAN AND ORION BANKING.

 

BUT I MENTIONED FOUR REASONS FOR OUR REDUCED PROFITABILITY AND THERE IS NO DOUBT THAT THE FOURTH - INVENTORY CONSTRAINTS, PLAYED A PART IN HOLDING BACK OUR GROWTH.

TO BE FORCED TO DUCK THE SIZE BUSINESS ONCE OR TWICE IS PERMISSIBLE WITH SOME OF OUR CLIENTS WHO HAVE, AFTER ALL, BEEN TRADING WITH US A LONG TIME.

BUT MORE THAN THAT, DELIVERS THEM INTO THE HANDS OF OUR OPPOSITION ON A PLATE.

SO HOW CAN WE STAY AHEAD OF THE GAME?

SHOULD WE TRY TO?

OR DO WE ACCEPT THAT HOUSES OF THE MORGAN, SALOMON AND GOLDMAN WILL-AUTOMATICALLY-ASSUME-THE-PREMIER-POSITIONS, JUST AS THEY DO HERE IN NEW YORK?

WE CAN OF COURSE RESORT TO THE SAME TACTICS AS THE OPPOSITION.

WE CAN PINCH THEIR TRADERS, AND SINCE WE NOW LOOK RIGHT DOWN ON MORGAN STANLEY’S OFFICES, WITH A BIG ENOUGH TELESCOPE WE MIGHT EVEN MANAGE TO ZEROX THEIR POSITION SHEETS AND TRAVEL SCHEDULES.  WE MIGHT EVEN DEVELOP A GAME PLAN FOR SEDUCING THEIR SECRETARIES AND BUGGING THEIR BRAS.

BUT STAYING AHEAD - BEING THE BEST, DOESN’T DEPEND UPON THE ADOPTION OF THOSE SORTS OF TACTICS.

JUST AS THEY DO-NOT-NECESSARILY-DEPEND ON NAME, PRESTIGE AND MONEY ON THE LINE, THOUGH THE LATTER CERTAINLY HELPS.

 

NO, REACHING THE TOP OR STAYING THERE REVOLVES MOSTLY AROUND PERSONNEL AND THERE-QUITE-SIMPLY WE STILL HAVE THE BEST.

LAST YEAR I SAID AND AGAIN I QUOTE “THE STRAIGHT BOND BOOK UNDER BOB SMITH HAD ITS BEST YEAR EVER, BUT IF THERE WERE ANY CURTAIN CALLS DUE IN LONDON THEY MUST GO TO HARRY SIBLEY AND HIS PARTNER IN CRIME, DAVID PHILLIPS, WHO COMBINED BRILLIANTLY ON THE EUROBOND CONVERTIBLE TRADING DESK”.

I TOLD YOU THAT THOSE NAMES SHOULD MEAN A LOT TO YOU AND THAT-YOU-SHOULD-REMEMBER-THEM.

THAT IS EVEN MORE TRUE TODAY.

LOSING A DEALER TO SALOMON (WHO ELSE) WE HAD TO PUT PHILLIPS ON TO THE STRAIGHT BOND BOOK AND, AS BOB SMITH WILL TELL YOU, HIS FLEXIBILITY IN MAKING THE TRANSITION SWIFTLY, AND MOREOVER, VERY PROFITABLY, HAS BEEN LITTLE SHORT OF INCREDIBLE.

HARRY, ON THE OTHER HAND, WORKING THROUGHOUT MOST OF THE YEAR VIRTUALLY SINGLE-HANDED, GROSSED-NEARLY-TWO-AND-A-HALF-MILLION-DOLLARS AND IS MOST DESERVEDLY HERE TODAY AS A STOCKHOLDER AND A NEW DIRECTOR OF KIDDER PEABODY SECURITIES.  I HOPE THAT EVERYONE HERE WILL MAKE A POINT OF MEETING BOTH HARRY AND BOB, AND WARMLY CONGRATULATING THEM ON THEIR ACHIEVEMENTS.

OF OUR FORTY-FIVE PEOPLE, I’VE MENTIONED ONLY THREE OF VERY CONSIDERABLE TALENT BUT WE HAVE BEEN TAKING ON YOUNGSTERS WITH STOCK MARKET TRADING BACKGROUNDS AND INSTEAD OF COMPETING FOR DEALERS IN THE OPEN MARKET-PLACE WE ARE, SO TO SPEAK, GROWING OUR OWN, FOR OUR NEW 16-POSITION, 150-LINE DESK.

SO I AM SURE THAT WE SHOULD, WITH THE NEW YORK BACKING WE NEED, REMAIN STRONG, COMPETITIVE, ACTIVE AND PROFITABLE.

 

BUT THAT’S NOT ENOUGH IN ITSELF ANYMORE, TO COMMAND THE LEAD IN INTERNATIONAL MARKETS.

IN 1974, WHEN THE MARKETS WERE AT THEIR LOWEST POINT EVER, I TOOK ON A YOUNG MAN TO BEGIN AN ADVISORY DEPARTMENT.  I THINK SOME PEOPLE THOUGHT I WAS POTTY TO BE DEVELOPING SUCH A CAPACITY AT THAT TIME.  BUT AS I TOLD ‘EUROMONEY’ THE OTHER DAY, THAT IS JUST THE TROUBLE WITH OUR MARKET.

FOR SO LONG IT’S BEEN GOING TO FOLD ITS TENT AND GO BACK TO WHERE IT BELONGED, NEW YORK, THAT THE LEVEL OF ADVISORY CAPACITY HAS ALWAYS REMAINED TRULY ABYSMAL, SINCE NO ONE HAS BOTHERED TO DEVELOP IT.

IN A MARKET OF NOW FIFTY BILLION DOLLARS, THE UNTAPPED OPPORTUNITIES FOR PORTFOLIO MANAGEMENT ARE ENORMOUS.

WHEN, FOLLOWING PREVIOUS ADVISORY SUGGESTIONS WHICH RESULTED IN SOME MILLIONS IN NOMINAL VALUE OF PROFITABLE ORDERS FOR THE DEALERS, A MAN COMES IN, AS HE DID A WEK AGO, AND PUTS ON MY DESK A PORTFOLIO DRAWN FROM ALL OF HIS INTERNATIONAL OPERATIONS, AND SAYS, “THERE’S A QUARTER OF A BILLION DOLLARS WORTH OF ASSORTED BONDS - PULL IT INTO SHAPE FOR US” YOU KNOW THAT YOU ARE BEGINNING TO ACHIEVE THE OBJECTIVES ENVISAGED A COUPLE OF YEARS AGO.

SINCE IAN KERR IS NOW BEING SWAMPED WITH ENQUIRIES AND THUS BEGINNING TO BECOME MORE AND MORE AN INTEGRAL PART OF THE EUROBOND OPERATION, WE ARE IN THE PROCESS OF EXPANDING THIS AREA WHERE OUR COMPETITORS ARE NOWHERE AT ALL.

IN TERMS OF CLEARING OPERATIONS WE ALSO HAVE THE BEST MAN IN THE BUSINESS HEADED BY THE-INDEFATIGABLE-PETER-STUART-WILLIAM WHO IS LONDON’S ANSWER TO THE INCREDIBLE WILLIAM N. LOVERED HIMSELF.  I CAN, I THINK, GIVE PETER NO HIGHER PRAISE THAN THAT.

INCIDENTALLY, HE IS HIMSELF BEING, AT THIS MOMENT, AGGRESSIVELY SOUGHT AFTER BY A FIRM OF HEADHUNTERS, BUT SINCE HE AND I HAVE WORKED TOGETHER FOR A QUARTER OF A CENTURY NOW, I PROMISE YOU THEY ARE WASTING THEIR TIME - BUT YOU CAN GET SOME IDEA OF THE PRESSURES WE ARE WORKING UNDER.

 

BUT EVEN WITH ALL THIS TALENT AT OUR DISPOSAL, 1977 WILL BE A YEAR IN WHICH WE AT SECURITIES WILL ALL HAVE TO WORK HARDER.

ONE REASON IS THAT WE’VE MOVED OFFICES.

YES, IT SEEMS THAT THE BRIEF MENTION THAT I THINK-I-MADE-LAST-YEAR-ON-SPACE, WAS HEEDED.

JUST BEFORE SIGNING HOWEVER, I STARTED GETTING COLD FEET AND WONDERING IF WE SHOULD NOT STAY PUT, BUT ONE EVENING WHEN DICK COONS WAS IN TOWN I LEFT EARLY TO GO DOWN WITH HIM, (ABOUT 9PM I THINK IT WAS …..)

AND JUST AS WE EMERGED FROM THE LIFT, WALKING ALONG THE EMPTY BUILDING, A MOUSE-RAN-RIGHT-OVER-MY-FOOT …..

I NEARLY HAD A HEART ATTACK SINCE I HAVE A HORROR OF MICE AND FROM THEN ON OUR MOVE COULDN’T HAVE GONE FASTER.

INCIDENTALLY, THE FIRM WHO MADE UP THE OFFICES CARRY OUT WORK FOR NO LESS A PERSONAGE THAN THE QUEEN HERSELF - TALK ABOUT FROM RAGS TO RICHES.

SO WE’VE GONE UP - LITERALLY - TO THE 24TH FLOOR NO LESS.

BUT SO HAS THE RENT AND THE MONEY HAS GOT TO COME FROM SOMEWHERE.

THUS THE MOTTO WE NOW HAVE TO ADOPT IS WITHOUT DOUBT, ‘CHERCHEZ L’ACHETEUR’ WHICH ROUGHLY TRANSLATED INTO AMERICANESE MEANS:-

FIND-THE-MAN-WITH-THE-FOLDING-GREEN.

NEW AREAS HAVE TO BE OPENED UP.

WE ALL KNEW FOR EXAMPLE THAT THERE WAS CONSIDERABLE INTEREST IN HONG KONG IN EUROBONDS, BUT IT WAS NOT UNTIL I SENT MY OWN MAN TO LIVE THERE THAT WE BEGAN TO SEE A VERY LARGE PORTION OF IT.

LIKE THE PIED PIPER, WE ARE NOW BEING FOLLOWED OUT THERE BY CREDIT SUISSE WHITE WELD, MANUFACTURERS HANOVER, SALOMON BROTHERS AND I DON’T KNOW WHO ELSE.

STILL IN THE FAR EAST, TOKYO REMAINS A DISAPPOINTMENT WITH REGARD TO SECONDARY BUSINESS WHILST THE MIDDLE EAST, LIKE ITS GREAT PROTAGONIST, T. E. LAWRENCE, REMAINS AN ENIGMA.

EVERYONE TELLS ME THAT THERE IS A HUGE POT OF GOLD AT THE END OF THE MIDDLE EASTERN RAINBOW, BUT ALL I’VE EVER BEEN AWARE OF IS A LARGE PAIL OF …..

SSSOMETHING QUITE UNMENTIONABLE.

BUT WHAT I DO KNOW IS THAT SOME OF OUR COMPETITORS HAVE MADE-A-GREAT-DEAL-OF-MONEY FROM MIDDLE EAST SECONDARY BUSINESS.

WHILST-WE-HAVE-MADE-PENNIES.  BUT I AM ADVISED AND I BELIEVE IT, THAT THIS POSITION WILL-CHANGE-VERY-SIGNIFICANTLY-IN-THE-NEAR-FUTURE

SO EVERYTHING COMES TO HE WHO WAITS.

PATIENCE IS A VIRTUE THEY SAY AND I GUESS THAT WE MUST BE THE MOST VIRTUOUS BUNCH OF INVESTMENT BANKERS IN THE BUSINESS.

 

A PARTICULAR AREA OF DISAPPOINTMENT TO ME HAS BEEN HERE IN THE UNITED STATES.

AS MY BARBER AT THE WALDORF ALWAYS TELLS ME

“THIS IS THE RICHEST, MOST POWERFUL COUNTRY IN THE WORLD FOR CRISSAKES”.

BUT DESPITE THE VERY EVIDENT FINANCIAL ACUMEN WHICH IS HERE, NOT ONLY IN THIS ROOM BUT IN EVERY CITY WHICH I VISIT, THERE IS RELATIVELY LITTLE KNOWLEDGE OF, AND CERTAINLY ONLY TOKEN COVERAGE OF, THE EUROBOND MARKET.

I RECENTLY WENT TO BOSTON, BALTIMORE, PHILADELPHIA, AND CHICAGO WITH MY COLLEAGUE IAN KERR AND THE COLLECTIVE VALUE OF THE FUNDS MANAGED BY THE VARIOUS INSTITUTIONS WE MET, MUST HAVE TOTALLED SEVERAL HUNDRED BILLION DOLLARS.

BUT WITH THE NOTABLE EXCEPTION OF ONE OFFICE THERE HAVE NOT BEEN ANY SIZEABLE ORDERS RESULTING FROM THOSE VISITS.

WHEN WE LEFT A VERY COLD AND BLEAK CHICAGO TO FLY TO BERMUDA, IT WAS TO A CHORUS OF “GOODBYE STANLEY, HAVE A NICE HOLIDAY ….”

NOW I MUST ADMIT TO LIKING BERMUDA, BUT IT MAY BE OF INTEREST TO HEAR THAT WE PROBABLY TRANSACTED FIVE TIMES AS MUCH BUSINESS FROM THOSE TWO DAYS IN BERMUDA THAN IN VISITING FOR TWO WEEKS SOME OF THE MAJOR FINANCIAL CENTRES IN THE UNITED STATES.

I FIND IT ALL SLIGHTLY DISHEARTENING, FOR THE UNITED STATES, IN MY VIEW, IS THE GREATEST-OF-UNTAPPED-MARKETS-FOR-EUROBONDS.

HOW CAN WE HELP, TO HELP YOU, TO HELP US - AND IN THE PROCESS HELP YOURSELVES IN THIS BUSINESS?

THE EXCUSE ALWAYS USED TO BE THAT THE U.S. INSTITUTIONAL INVESTORS DID NOT UNDERSTAND THE CREDITS, BUT THAT IS SIMPLY NOT TRUE ANYMORE.  S. E. C. REGISTERED FOREIGN ISSUES - PRIMARILY GOVERNMENTS - WHICH ARE COMMONLY CALLED YANKEE BONDS - TOTALLED ALMOST EIGHT BILLION DOLLARS IN 1976 ALONE, AND WERE ABSORBED BY THE MARKET WITHOUT UNDUE DIFFICULTY.

YOU WILL RECOGNIZE SOME OF THE NAMES - WHICH WE HAVE BEEN TRADING FOR YEARS IN EUROPE.

BUT U.S. DOMESTIC INVESTORS SEEM RELUCTANT TO LOOK AT THE EUROBOND ALTERNATIVE OF THE SAME GUARANTOR EVEN WHEN THEY ARE FREELY ALLOWED TO BUY THE EUROBOND.

SOMEBODY OUGHT TO TELL THEM OF THE PREVAILING YIELD DIFFERENTIALS ALTHOUGH WE DO DRAW ATTENTION TO SOME OF THESE DISPARITIES IN OUR REGULAR WEEKLY EUROBOND LETTER - WHICH STILL CONTINUES - I AM FREQUENTLY TOLD - TO LIGHTEN MANY A DARK MONDAY MORNING.  RALPH I KNOW IS OFTEN ALIGHT AFTER READING IT.

BUT THE EURO-MESSAGE SHOULD IN FACT BE CONVEYED DIRECTLY TO THE CLIENTS BY OUR DOMESTIC SALESMEN.

WE HAVE GOT TO REALISE THAT IT’S WORTHWHILE.  WE MUST UNDERSTAND THAT YANKEE BONDS AND PERHAPS AT A LATER STAGE EUROBONDS, WILL BE BIG BUSINESS FOR KIDDER, PEABODY.

IT IS GALLING FOR ME TO SEE THAT WHEN KIDDER PEABODY SECURITIES IS CONSIDERING THE SALOMON BROTHERS OF THE EUROBOND MARKET, AND I WOULD ADD THE-COMPARISON-IS-NOT-MY-OWN, IN THE YANKEE BOND MARKET WE ARE PROBABLY LUCKY IF WE ARE PLACED IN THE FIRST HALF DOZEN.

BUT-INVESTORS-NEED-THE-SERVICES-OF-FIRMS-WHO-HAVE-AN-ALL-ROUND COVERAGE OF AND-COMMITMENT-TO THE FOREIGN BOND MARKET AS A WHOLE.

ADDITIONALLY WE MUST UTILISE ALL THE OUTLETS AND CAPACITIES THAT A FIRM OF 43 OFFICES AND 2400 PEOPLE SHOULD GIVE US, INSTEAD OF MOSTLY RELYING ON OUR LONDON DEALERS TO PULL TOGETHER THE GREAT MAJORITY  OF-ALL-THE-INTERNATIONAL-SECONDARY-MARKET-BUSINESS- THAT WE TRANSACTED IN 1976.

BUT IN ALL EVENTS, AND HERE IS THE REAL CRUNCH POINT OF MY ADDRESS TODAY,

A TALENTED TEAM OF TRADERS, HOWEVER MUCH THEY COVER,

A TOP ADVISORY CAPACITY,

THE BEST OF SETTLEMENT MECHANISMS AND ANY AMOUNT OF DIVERSE MARKETING AREAS

ARE-ALL-TOTALLY-MEANINGLESS-TO-US UNLESS THE EXECUTIVE COMMITTEE OF THIS COMPANY APPRECIATES TO THE FULL THE CHANGING INVENTORY NEEDS OF OUR OPERATION.

HAPPILY I WAS TOLD YESTERDAY THAT WE ARE BEGINNING TO MOVE IN THE RIGHT DIRECTION ON INVENTORY

BUT WHEN ONE CONSIDERS:

THAT SO FAR IN THIS BRIEF PERIOD OF OUR FINANCIAL YEAR WE HAVE GROSSED 1.4 MILLION DOLLARS OR ABOUT ONE THIRD OF LAST YEAR’S ENTIRE PROFITS

AND WHEN WE CLEARLY SEE THE SIZE AND RUTHLESSNESS OF THE COMPETITION WE NOW HAVE TO FIGHT,

IT IS SO OBVIOUS THAT THE COMMITTEE MUKST REMAIN ALIVE TO THE TREMENDOUS PRESSURES AND CHANGES WHICH ARE BUILDING IN OUR MARKET.  MOREOVER THE WHOLE STRUCTURE AND WAY OF DOING BUSINESS IS CHANGING.  FOR EXAMPLE, A SIGNIFICANT DEVELOPMENT WAS THE WAY IN WHICH UNION BANK OF SWITZERLAND, USING ITS AGGRESSIVE TERMS AND MUSCLE, WAS ABLE TO PULL AWAY FROM KUHN LOEB THEIR TRADITIONAL LEAD MANAGEMENTSHIP OF THE KINGDOM OF DENMARK ISSUES, AND ONLY LAST WEEK TOOK MOBIL FROM MORGAN.  WE SAW IT WHEN THE DEUSTCHE BANK TOOK AWAY ALSO FROM MORGAN STANLEY THE LEAD MANAGERSHIP OF THE AUSTRALIAN ISSUE AND IT IS CLEAR THAT THIS KIND OF DEVELOPMENT IS GOING TO INTENSIFY THIS YEAR.

AS YOU KNOW I HAVE ALWAYS CONTENDED THAT THE BIG COMMERCIAL BANKS WERE GONG TO GET INTO OUR BUSINESS IN SUCH A WAY

AND THAT OUR MAJOR FORM OF DEFENCE, BEARING IN MIND THAT THE BANKS HAVE ALL THE MONEY IN THE WORLD, AS WELL AS ALL THE CLIENT CONTACT, WOULD COME BACK ONCE AGAIN - YES, YOU’VE GUESSED IT,

TO THAT ALL IMPORTANT SECONDARY MARKET CAPABILITY.

THAT IS THE ONLY AREA WHERE OUR REAL STRENGTH AND MUSCLE TO COMPETE IS TO BE FOUND.

WE SHOULD NOT FORGET EITHER THAT HANS JORG RUDLOFF’S TREMENDOUS AND TIRELESS WORK WHICH CULMINATED IN HIS BRINGING OFF INTERNATIONAL’S COUP OF THE YEAR IN THAT NOW HISTORIC DEUTCHE BANK E. E. C. ISSUE, WOULD NOT HAVE BEEN EVEN REMOTELY POSSIBLE WITHOUT THE STRENGTH OF THE KIDDER PEABODY SECURITIES DISTRIBUTION AND TRADING CAPABILITIES BEHIND HIM.

THERE-CAN-BE-NO-QUESTION-ABOUT-THAT.

INDEED IT WAS THE DEUTSCHE BANK THEMSELVES WHO CALCULATED THROUGH THEIR DEALING DEPARTMENT THAT THE COUNTERPARTY WITH WHOM THEY WRITE THE MOST EUROBOND TICKETS IS NONE OTHER THAN KIDDER PEABODY SECURITIES, AND INCIDENTALLY THE DEUTSCHE BANK IS ITSELF SUCH A HUGE TRADER IN EUROBONDS THAT THEIR DEALER IS CALLED ‘JAWS’ BRIDGEMAN FOR HIS ABILITY TO SWALLOW IN SIZE.

I THINK IT IS RATHER APT AT THIS POINT THAT I SHOULD TELL YOU OF A CONVERSATION THAT A COLLEAGUE OF MINE HAD WITH AN AGGRESSIVE PROMINENT OFFICIAL AT THE MANUFACTURERS HANOVER, WHO INCIDENTALLY IS NO FRIEND OF MINE.

HIS OPINION WAS THAT KIDDER PEABODY AS A GROUP HAD FAILED TO RECOGNIZE THE TRUE POTENTIAL OF ITS TRADING OPERATION IN LONDON.  IN HIS VIEW, IF THE KIND OF COMMITMENT THAT COULD HAVE BEEN MADE TO OUR TRADING OPERATION HAD BEEN MADE, IN THE WAY THAT SALOMON FOR EXAMPLE ARE PREPARED TO MAKE THEIR COMMITMENTS TO TRADING MARKETS, KIDDER PEABODY WOULD HAVE BEEN ABSOLUTELY PRE-EMINENT AND MORE IMPORTANT, THAT VERY FEW EUROBOND ISSUES WOULD HAVE COME TO MARKET WITHOUT KIDDER PEABODY BEING INCLUDED AS A CO-MANAGER.

THAT MAY INDEED BE OVERSTATING THE CASE TO A CERTAIN EXTENT BUT IN MY VIEW THERE HAS BEEN IN THE PAST AN ELEMENT OF TRUTH IN HIS STATEMENT.

OF COURSE, BEFORE YOU CAN FACE THE MUSIC YOUHAVE TO KNOW THE SCORE.

I THINK THAT THE SCORE, AS FAR AS THE INTERNATIONALISATION OF OUR BUSINESS IS CONCERNED SHOULD BE VERY SIMPLE TO READ.

1976 SHOWED THAT REPORTED PROFITS, THAT CERTAIN BANKS HAD EARNED FROM THEIR INTERNATIONAL OPERATIONS, WERE AN INORDINATELY HIGH PERCENTAGE OF THEIR TOTAL EARNINGS, 70% OF CITICORP’S, 64% OF CHASE’S, 60% OF MORGAN GUARANTY TRUST’S, AND ALMOST 40% OF THE DEUTSCHE BANK’S EARNINGS CAME FROM INTERNATIONAL OPERATIONS.

FOR OUR PART I HAVE CERTAINLY TRIED TO BRING HOME TO STOCKHOLDERS EACH YEAR THE IMPORTANCE OF THE INTERNATIONAL OPERATIONS OF KIDDER PEABODY, PARTICULARLY IN SO FAR AS KIDDER PEABODY SECURITIES IS CONCERNED.

SURELY THERE CAN BE NO DENYING OUR FIGURES.  INDEEED, I CALCULATE THAT THE NET INCOME OF OUR 45-MAN LONDON GROUP OVER-THE-LAST-FIVE-YEARS- AVERAGES-OUT-AT-AROUND-30-PER-CENT-OF-THE-ENTIRE-STOOCKHOLDER INCOME OF OUR COMPANY, WHICH NOW NUMBERS 2400 PEOPLE.

THIS IS AN INCREDIBLE CONTRIBUTION, SO, YOU KNOW, NEVER HAVING BEEN ONE TO HIDE OUR LIGHT UNDER A BUSHEL, (“AMEN TO THAT” DID I HEAR RALPH SAY?), MAYBE I’LL AWARD US THAT GOLD AFTER ALL.

 

GENTLEMEN, I AM SURE WE ARE GOING TO CONTINUE TO GET THE INCREASING FLEXIBILITY OF OPERATION THAT IS ESSENTIAL TO US.

FOR I TELL YOU FRANKLY AND SIMPLY, WITHOUT HISTRIONICS,

IF WE DO NOT - GIVEN THE TRULY MASSIVE COMPETITION NOW -

WE ARE DEAD.

I ONLY HOPE I HAVE SAID ENOUGH TO CONVINCE YOU OF THE VERY FINE LINE THAT REALLY DOES EXIST FOR US,

BETWEEN-GREATLY-INCREASED-PROFIT-POTENTIAL-AND-MARKET-STATURE-

AND RELEGATION, WITH INFINITELY LOWER INCOME AND REPUTATION.

I FOR ONE WOULD FIND THE LATTER VERY DIFFICULT TO LIVE WITH.

THE-SITUATION-IS-THAT-DRAMATIC.

I BELIEVE WE ARE AT THE POINT WHERE WE COULD, ALMOST HAVE

EVERYTHING

OR,

WE COULD RUN THE RISK OF ENDING UP WITH VIRTUALLY NOTHING.

 

I DO NOT WISH HOWEVER TO IMPLY THAT SUPPORT IS NOT NOW FORTHCOMING IN A MORE MEANINGFUL WAY

I SIMPLY WISH YOU TO UNDERSTAND, IN AS PLAIN A LANGUAGE AS POSSIBLE, THAT WE ARE UNDER VERY REAL THREAT OF LOSING OUR PROMINENT POSITION.

FROM THE FIGURES I QUOTED EARLIER I THINK IT IS EVIDENT THAT WE SIMPLY CANNOT AFFORD THIS TO HAPPEN.

 

I WOULD HATE TO FINISH ON SUCH A SOLEMN NOTE, HAVING PERHAPS CONVEYED THE IMPRESSION OF A BESEIGNED MACBETH STANDING ON THE CASTLE BATTLEMENTS WITH THE FOREST OF DUNSINANE MOVING RELENTLESSLY FORWARD TO ENGULF OUR LONDON OPERATION.

BOB, HARRY AND I WILL BE HERE NEXT YEAR

I MAY NOT BE ASKED TO SPEAK OF COURSE

BUT HAVE NO DOUBT THAT I WILL BE HERE.  WE MAY EVEN HAVE ANOTHER VERY SUCCESSFUL YEAR TO REPORT.

OUR “WEEK IN EUROBONDS” SHOWS THAT WE SIMPLY FIND IT IMPOSSIBLE TO TAKE LIFE, AND INDEED OURSELVES, SERIOUSLY ALL THE TIME.

WHAT DULL PEOPLE WE ALL WOULD BECOME IF WE DID!

 

WHEN I EVENTUALLY FIND MYSELF SITTING AT THAT GREAT EUROBOND DEALING DESK IN THE SKY - AND AM ASKED WHAT I WANT TO DO IN MY AFTER-LIFE, WHAT WILL BE MY REPLY,

“PLEASE MAY I BE AN INVESTMENT BANKER AGAIN”?

I WONDER.

I THINK I MIGHT JUST PREFER TO BE THE SOLE PROPRIETOR OF THE FOLIES BERGERE OR THE CRAZY HORSE SALOON OR MADAME CLAUDES OR THE MIRANDA CLUB IN LONDON,

BUT IF ALL THOSE POSITIONS HAVE ALREADY BEEN RESERVED BY THE PARTNERS OF GOLDMAN SACHS,

I-MIGHT-JUST-OPT-FOR-MY-JOB

ALL-OVER-AGAIN.

IN ALL EVENTS, GIVEN THE COOPERATION WE NEED, I AM SURE THAT WE IN LONDON WILL CONTINUE IN 1977 TO MAKE YET ANOTHER VERY SIGNIFICANT CONTRIBUTION TO THIS COMPANY.