When bankers were good
Far from being socially useless, Victorian financiers campaigned to end slavery, built homes for the poor and saved fallen women. Emily Dugan finds modern-day parallels hard to come by
Emily Dugan is Social Affais Editor for The Independent, i and Independent on Sunday. She was previously a news reporter for The Independent on Sunday. Her investigations into human trafficking have twice been awarded Best Investigative Article at the Anti-Slavery Day Media Awards and her human rights journalism was shortlisted for the Gaby Rado Memorial prize at the 2012 Amnesty Media Awards. Emily is on sabbatical until March 2015
Sunday 20 November 2011
As Britain reels from a financial crisis largely blamed on the avarice and excesses of the banking industry, few can remember a time when the country's wealthiest financiers were also forces for good. But little more than a century ago, giving your fortune away was as laudable an achievement as acquiring it.
On Tuesday, Ian Hislop, the editor of the satirical magazine Private Eye, presents a BBC documentary looking at an age when the super-rich had consciences. In Victorian Britain, vast fortunes were amassed by bankers, but with the growth of personal wealth came a sense of philanthropic duty.
The programme will air on the same day that the High Pay Commission publishes the findings of a year-long inquiry into how senior figures in British business came to be paid astronomical sums. The commission's research will show increases of several thousand per cent in top pay over the past 30 years. Yet, unlike their Victorian predecessors, today's bankers appear mostly untroubled by their bumper salaries.
The commission is expected to conclude that excessively high pay for the UK's top executives has been corrosive to the economy, to companies and to society as a whole, rewarding individuals for failure and undermining productivity and trust in British business.
The apparent lack of major social or philanthropic works paid for by today's financiers and chief executives is doing nothing to dispel this poor image. Here we examine the philanthropic legacy of five Victorian bankers, and look at their most high-profile modern counterparts.
'When Bankers Were Good' screens at 9pm this Tuesday on BBC 2
Honoured by royalty
In 1837 Angela Burdett-Coutts became the wealthiest woman in London overnight when she inherited her banking grandfather's enormous fortune – a sum estimated at £600,000 (now £30m) in cash and an income of £50,000 a year.
With her pots of money and her love of small dogs, she could have been the Paris Hilton of her day. Instead she went on to become the greatest philanthropist of the Victorian age, in recognition of which she became the first woman to be made a peer. Her projects ranged from funding the bells for St Paul's Cathedral, to social housing, soup kitchens, lifeboats and "ragged" schools for destitute children. One of her earliest projects was to establish, with Charles Dickens, Urania Cottage – a home for women who wanted to escape "a life of immorality" as thieves and prostitutes. She also established the National Society for the Prevention of Cruelty to Children.
By the time of her death in 1906, she had given away an estimated £4m, leaving a relatively modest estate of £79,000.
The chairman of HSBC was appointed CBE in 2006, not for his philanthropy, but for "services to the finance industry". His salary and bonus package amount to almost £4m, but it is not known how much of this he gives to charity. HSBC says: "It's an entirely private matter for him." However, Mr Flint is a high-profile supporter of Leap, a charity helping people from disadvantaged communities move out of poverty.
The political animal
A Quaker and MP, as well as a banker, Samuel Gurney campaigned in Parliament for good causes. Born in 1786, he was the brother of the prison reformer Elizabeth Fry – featured on today's £5 note – whose work he supported. On one occasion, when his own name was copied by a forger, he refused to prosecute, knowing that were he to do so, it would undoubtedly end in the offender receiving a sentence of death.
He campaigned vociferously for the abolition of slavery. In 1849, in the middle of the Great Famine, in which a million people died, he went on a tour of Ireland, making generous donations. He also sent funds to the colony of Liberia, founded by former slaves; a town there was named after him in 1851. He pushed for – and helped to fund – Britain's first hospital for dock workers, established in 1855 in east London.
Parachuted into Royal Bank of Scotland as chief executive, Hester studied at Oxford and chaired the Tory Reform Group. He then pursued a career in banking and in 2008 was hired by RBS on a salary of £1.2m to overhaul the bank after the departure of Sir Fred Goodwin. In 2009 he and his board threatened to resign if they could not pay £1.5bn in bonuses to staff. He is a trustee of the Royal Botanic Gardens, Kew, but RBS said it did not have any further details on Mr Hester's links with charities.
The self-made man
Before entering the world of finance, Montefiore – born in Leghorn, Italy, in 1784 but brought up in London – began work as an apprentice to a grocer and tea merchant. Success in investment banking came so quickly that he was able to retire at 40 with vast wealth. He threw himself into civic and community work, in particular helping destitute and persecuted Jews in Palestine, Morocco, Rome, Russia and Turkey. Elected Sheriff of London in 1837, he was dedicated to public service. For 36 years he was head of the Board of Deputies of British Jews. When, at the age of 90, he gave up his position, he received a farewell gift of £12,000, worth more than half a million pounds today. He donated the entire sum to build houses for the poor in Jerusalem. He also helped to fund the campaign for the abolition of slavery and continued to sign cheques for charitable causes on his deathbed. At his death, he left £375,000 to charity (now more than £22m).
A former Tory party treasurer, Michael Spencer has won plaudits for his philanthropy, though it is doubtful it is on the scale of Montefiore's. The founder and chief executive of the broker ICAP, he established its Charity Day, when all of the company's revenues are given to good causes. Last year, £12.1m was raised. Mr Spencer's personal wealth is estimated at £520m.
The Cambridge graduate
He could have been the spoilt brat of a banking dynasty, but Nathan "Natty" Rothschild tried to ensure that both his personal wealth and that of his family's bank were put to good use. Educated at Trinity College, Cambridge, he worked as a partner at the London branch of NM Rothschild & Sons, becoming head of the bank when his father died in 1879.
He helped set up the Four Per Cent Industrial Dwellings Company, a model housing organisation that aimed to provide decent accommodation for the poor, predominantly Jews in east London. Rothschild himself donated £10,000 (now almost £500,000) to the project and then paid for the site of the first building. A friend of Cecil Rhodes, he helped to found the Rhodes Scholarships at Oxford University.
Compared with some of his banking colleagues, Ron Sandler, chairman of Northern Rock, has a modest salary of £250,000 a year and no bonus. But that did not stop him overseeing £13.1m in bonuses to his staff this year. A German national, he received an estimated £1m payoff from NatWest, his former employer. A spokesman for Northern Rock said: "Ron supports many [charity] initiatives that many of our colleagues undertake. Our charity this year is the Samaritans."
The American in London
When the American self-made millionaire and merchant banker George Peabody moved to London in 1837, he could have lived a life of luxury. Conspicuous consumption was not Peabody's style, though. He dressed plainly and had a reputation for stinginess. This turned out to be misplaced, as he began to pour money into housing for the disadvantaged. In 1864 he opened his first housing estate, in Spitalfields, east London; 150 years on, Peabody estates still house 50,000 Londoners.
When the United States government refused to fund its own section at the Great Exhibition in London, Peabody paid £5,000 to make sure the display did his home country justice. In modern money, his donations to good causes totalled more than £140m.
Like Peabody, Bob Diamond was born in Massachusetts and came to Britain to pursue a career in banking. There the similarities end. Taking home more than £4m a year as chief executive of Barclays, he famously said, in the wake of the financial crisis, that bankers should stop being remorseful. He has donated £3.7m to his alma mater, Colby College in Maine. The Diamond Family Foundation, which manages his educational donations, recently invested nearly £1m in Barclays shares – propping up Mr Diamond's own job.
Additional reporting by Antony Peyton and Oliver Poznanski
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