When bankers were good?

Ian Pattison

Ian Hislop's BBC documentary 'When Bankers Were Good' starts by quoting ex-New Labour minister Peter Mandelson's line "I'm intensely relaxed about people getting filthy rich". Hislop contrasts this greed and that of our current bankers with the 'charity' of philanthropic 19th century bankers, like Samuel Gurney and Lord Rothschild.

But greed and crisis are inevitable consequences of an anarchic capitalist system. Similar problems appear again and again. In 1825, a boom was followed by a bust, where 80 banks collapsed. None of these outfits were bailed out - today capitalism believes the banks are 'too big to fail'. A 19th century version of sub-prime debt forced philanthropic banker Samuel Gurney's banks to collapse after his death.

Today's bleak economic crisis was partly fuelled by the replacement of manufacturing by financial services, which produce nothing. Hislop acknowledges that even in the 19th century, many capitalists left manufacturing and other industries to join banking.

Hislop admits not all bankers were 'good', but only briefly mentions the horrendous living conditions ordinary people suffered with no welfare whatsoever.

Merchant banker George Peabody tried to address the terrible housing problem. But 'Peabody' homes were only for the 'industrious poor', those lucky enough to have a job, people who could afford rent, not the destitute or unemployed.

In the 19th century, the average British household was giving away 10% of its income to charity - the second biggest expenditure after food! But it made little difference. Hislop admits that charity was not a progressive engine of social change as the free market was making society more unequal.

In 1909, social and industrial unrest forced a Liberal government to announce its 'People's Budget'. 'Philanthropic' banker Rothschild opposed taxing the rich to redistribute wealth to the poor.

However, when World War One started in 1914, Rothschild said Britain should pay for the war effort by taxing the rich heavily! Hislop claims "that's been the policy ever since." But £120 billion is lost in tax unpaid by the super-rich every year, the banks were bailed out by £1.3 trillion, and the profitable half of Northern Rock was sold back to the private sector at a loss of £400 million to the taxpayer.

Lord Turner, chair of the Financial Services Authority, defended bankers, saying that he couldn't imagine the increased living standard of all sections of society in the last 200 years, without banking.

But the vast wealth existing in society is created on the backs on the working class. At one time capitalism was a productive, efficient system, certainly more so than the previous system, feudalism, but that age has clearly long passed.

Socialists don't rely on paternalistic charity from the rich. We fight for democratic socialism. The banks should be nationalised under democratic workers' control and management, so the vast wealth we've created can be used for the benefit of society as a whole. 'When Bankers Were Good' lacks this final conclusion and paints a far rosier picture than is accurate.