Drifting Towards Oblivion, 1950-1959
There could have been little confidence on the London Stock Exchange in 1950 that it had much of a future. As an institution its income was static, its costs were rising, and its fixed expenditure substantial. Membership was not attractive to the younger generation and was beginning to fall, as death and retirement took its toll. As a market many of its most actively traded securities had been sold to foreign investors or governments, while nationalization at home had removed whole railways, utilities, and coal. In the immediate post-war years all this had been hidden by the turnover generated by the reinvestment of the proceeds from overseas sales and nationalization, but this had now largely run its course. Instead, the London Stock Exchange was forced to compete for much of the business that still existed with both provincial brokers and London finance houses. Neither of these groups were governed by the same regulations that limited the room for manœuvre available to Stock Exchange members. Even the role the Stock Exchange had developed for itself, as the government's regulatory authority for the securities market, was none too secure. Operational control over the financial markets was vested in the Bank of England, with the Stock Exchange being but a small component. As long as the Stock Exchange carried out the wishes of the government, as transmitted by the Bank of England, it could retain a role for itself within the emerging apparatus of a managed economy. If it failed to deliver there was the unstated but everpresent threat that it would be bypassed by direct supervision from the Bank of England or a government appointed supervisory body.
Nevertheless, when those running the Stock Exchange in 1950 looked back, rather than forward, they took comfort in what they had achieved. Despite world wars, global economic collapse, and a socialist government, the Stock Exchange had not only survived but retained its independence, and this had required considerable change in the way it, as an institution, and its membership, operated. Too often survival is taken for granted but to many in the Stock Exchange in the early 1950s it was regarded as something of a miracle. One such was Sir Herbert Ellissen, who had been a