Sunday, 15 April 2012

The tentacles of the City of London.

Recently there was an article in The Economist misnaming Scotland as “Skintland” the cover almost totally misrepresenting the situation post independence.

There were two remarkable outcomes from the Economists graphic; first was the level of media coverage and story dissemination it generated, resulting in a superb short term publicity stunt. Second was the data showing the wealth distribution graph within the current UK. A graph which is relatively linear, progressing steadily until the topmost segment, the City of London, is reached and then there is an inordinate jump in personal GDP.

Many railed against the Scots graphic, but none appeared to question why or how the City of London has managed such an enormously disproportionate wealth gap when the odds seem to be stacked severely against such an occurrence.

In the City of London everything costs more, salaries, accommodation, food, basic necessities, transport, even parking is at a severe premium.

Under a taxation system where higher earnings should equate to higher taxes, and where there’s no “London loading” taxation exemption, the GDP differentials should self correct.

It costs more to incentivize staff to relocate to London. Organisations must account for higher property valuation overheads. In a logical world anyone could be forgiven for believing there would be a mass exodus of companies from London to other parts of the UK; that this hasn’t happened indicates a situation that goes against almost all economic models, especially in an era of almost instantaneous communication.

The answer lies in England’s past. It’s a situation that not only the UK inherited but which has spread its tentacles worldwide, has been responsible for driving UK and often world policy for centuries and from Scotland’s perspective, still continues to do so.

The City of London Corporation and its constituent members have self evidently been responsible for untold levels of global misery, and arguably uncounted loss of life.

Behind all of the atrocities, the anti democratic laws, the insane executive orders lies the power of money and the pursuit of it within the City. Behind the policy of Westminster, particularly under Tory governments lies the power of the Corporation.

The Corporation is an ancient creature, dating in its present form from William the Conqueror in 1067; it has survived largely untouched because of the power of money. Fundamentally the City of London is attractive to business headquarters because it is in effect an offshore tax haven within the British state.

William the First granted the City Corporation this special charter because he knew without it, London and therefore England was unlikely to be subdued. With the City and its resources on his side the task was achievable.

In reality “Tax Havens” are playgrounds of the very wealthy where the laws of the land of birth or residency can be avoided. It’s also significant that almost all current “tax havens” are former British colonies or current crown dependencies. The British Virgin Islands, the Turks and Caicos Islands, the Isle of Man, the Channel Islands, the Cayman Islands; the list goes on.

The Cayman Islands' tax and secrecy laws are not designed for the benefit of the small number of residents. They exist to help wealthy people and corporations, mostly in the US and Europe, get around the rules of their own democratic societies. The outcome is one set of rules for a rich elite and another for the rest of us.

While the City of London Corporation profits, the rest of Society suffers an undue burden.

The City's status in Britain stems from a simple formula: over centuries, monarchs and governments have sought City loans, and in exchange the City has extracted privileges and freedoms from rules and laws to which the rest of first England, then Great Britain and now the UK must submit.

Historically it wasn’t all bad, the Corporation did reign in the odd unwieldy monarch, but it wasn’t altruism, it was enlightened self interest to protect its own. In modern times, post 1707, the Corporation has simply worked financial systems to its own purpose.

Whenever the Queen makes a state entry to the City, she meets a red cord raised by City police at Temple Bar, and then engages in a col­ourful ceremony involving the lord mayor, his sword, aldermen and sheriffs, with a character called the Remembrancer. This modern ceremony marks the political separation at the City's borders.

The Remembrancer, whose position dates from the reign of Elizabeth I, is the City's official lobbyist in parliament, sitting opposite the Speaker, and is "charged with maintaining and enhancing the City's status and ensuring that its established rights are safeguarded". His office watches out for political dissent against the City and lobbies on financial matters.

Then there is the City's Cash, "a private fund built up over the last eight centuries", which among many other things helps buy off dissent. Only part of it is visible: the Freedom of Information Act applies solely to its functions as a local authority or police authority.

The full assets of the City of London Corporation are beyond even rudimentary democratic scrutiny.

The Corporation is different from any other local authority; international finance co-mingles with ancient rites and customs that underline its separateness and power with mystifying and near invisible interconnections within its guilds.

Among the City's 108 livery companies, or trade associations is found the Fletchers (arrow-makers) as well as the Worshipful Company of Tax Advisers, whose prime aims is "to support the Lord Mayor and the City of London Corporation", and the Worshipful Company of International Bankers.

For centuries reformers in England, then Britain have tried and failed to have the corporation merged into a unified London authority. The political landscape often heaved and shifted in its direct vicinity, but the City stood immune. Resulting exemptions and immunities from law and the ability to effectively remove issues from history that the City's grandees have created are astonishing. In 1881 the Times wrote, "The City Corporation is sacred although nothing else is."

For much of the 20th century, the Labour Party had a pledge in its manifesto to abolish the corporation. Peter Mandelson's grandfather said: "Is it not time London faced up to the pretentious buffoonery of the City of London Cor­poration and wipe it off the municipal map?" "The City is now a square mile of entrenched reaction, the home of the devilry of modern finance."

Clement Attlee took up the baton in 1937. "Over and over again we have seen that there is in this country another power than that which has its seat at Westminster," he said. "Those who control money can pursue a policy at home and abroad contrary to that which has been decided by the people.

Attlee was perhaps bristling at the fact that the City of London Corporation was a driving force behind the Nazi Party.

All political organizations require money, Germany in 1930 was bankrupt, yet by 1938 she had the best infrastructure and war machine in Europe. It all had to be paid for.

Perhaps Attlee was viewing the situation in the same light as Paul Einzig, foreign editor of "Financial News," who wrote at the time in World Finance, "Practically the whole of the free exchange available to Germany for the purchase of raw materials was supplied directly or indirectly by the British Government."

One year later The City Corporation was still making money in Nazi Germany, the UK Government knew for weeks that Hitler was massing troops on the Polish border, yet in the thirteen days before declaring war on September 1, 1939, Britain shipped Germany 17,000 tons of rubber, 8,000 tons of copper, and large stocks of nickel, tin and lead.

The London "Evening Standard" for August 21, 1939 stated: "To execute the orders in time, heavy withdrawals were made from stores in the United Kingdom. A third of our stocks of rubber and a quarter of our supplies of nickel have gone and are on their way to Germany."

It might be mentioned that the City financing of Nazi Germany disappeared from the record in Sutton's post war account of the financing and support which previously included very generous representations from England's banking, insurance, munitions, transportation and oil companies.

Even after war was declared it may be construed that the City was behind Chamberlains refusal to permit the RAF in France to overfly Germany and hit German targets. German infrastructure was declared “private property” by an executive order of the Prime Minister of the day. The result was the German surprise attack in the Ardennes and the loss of the British Expeditionary force.

The City of London Corporation made its money, and the Nazi assets backing those funds were protected, for a little while at least.

Eight years later Clement Attlee, now Prime Minister charged that "from the outset a large part of the City had given every support and encouragement to German rearmament."

No part of the City of London Corporation or its officers was ever held to account.

Labour never did abolish the corporation; instead, the Greater London Council was abolished in 1986 under Margaret Thatcher. In 1996, Tony Blair got Labour to replace its pledge to abolish the corporation with a promise merely to "reform" it.

Such is the influence of the City of London Corporation over the politics of the British Isles; it is everything to do with the power of money and the revolving door between the City and the Palace of Westminster.

In 2002 this Blair charter amendment was an astonishing gift to the corporation.

Like any other local authority, the City of London is divided into wards. These elect candidates to serve on the Court of Common Council, the City's principal decision-making body. Unlike any other local authority, however, individual people are not the only voters: businesses can vote, too. Political parties are not involved - candidates stand alone as independents - and this makes organised challenge to City business consensus all but impossible.

Before 2002, the 17,000 business votes already swamped the 6,000-odd residents. Blair's reforms expanded the business vote to about 32,000 and allowed a say, based on the size of their workforce in the Square Mile, to international banks and other big players.

Voting now reflects the wishes not of the City's 300,000 workers, but of corporate managements. Organizations as diverse as Goldman Sachs and the People's Bank of China get to vote in what is arguably Britain's most important local election, and thereby obtain a direct policy line to Number 10.

The City spin on the gift was that it would be "radical change that is essential to keep a world-class financial centre". Glasman called it "a retrograde step”. These workers were effectively being subordinated to a level comparable, he said, to the voting rights of chattel owners in the pre-war American South: the slavery franchise.

What is critical to those who live in modern Britain is it means the City's rights pre-date the construction of even the Union of Parliaments, and this has placed it outside parliament's normal legislative remit.

The City evolved as an institution not so much subordinate to parliament, or the church, or the Crown, but adjacent to and intertwined with them in complex relationships.

It is no coincidence that the capital of what was once the world's greatest empire - with the City as "governor of the imperial engine", according to the historians Cain and Hopkins - has become a focus of the modern global offshore system.

The Bank of England, fixed in the heart of the City, in effect encouraged tax havens. By the 1980s, the City was at the centre of a great, secretive financial web cast across the globe, each of whose sections - the individual havens - trapped passing money and business from nearby jurisdictions and fed them up to the City: just as a spider catches insects. So, a complex merger involving a US multinational could route a lot of the transaction through Caribbean havens, whose British firms then send much of the profits up to the City.

This is the source of the City’s skewed GDP and balance sheets.

The Crown dependencies of Jersey, Guern­sey and the Isle of Man, which focus heavily on European business, form the web's inner ring. In the second quarter of 2009, Jersey alone provided £135bn in bank deposits to the City. Jersey Finance, states: "Jersey is an extension of the City of London."

The next ring of the web contains the British overseas territories, such as the Cayman Islands and Bermuda. Like the Crown dependencies, they have governors appointed by the Queen and are controlled by Britain in myriad ways, but with enough distance to allow Britain to say "There is nothing we can do" when it suits. This “not us” cry is a fallacy.

The web's outer ring contains an assortment of havens, such as Mauritius and Hong Kong. Britain does not control these, but they still feed billions in business to the City.

The corporation has two main claims to being a tax haven: it’s semi-autonomous, floating partly free from Britain (like the Cayman Islands), and it’s the hub of a global network of tax havens sucking up offshore trillions from around the world and sending it to London.

Nearly every multinational corporation has offshore subsidiaries (not counting those in Lon­don). The biggest users of offshore finance are banks. It was recently reported there are over 550 offshore subsidiaries just for Barclays, RBS and Lloyds. Banks go offshore to escape certain financial regulations, they can grow faster. This makes the City and its offshore net a big part of the “Too Big To Fail” story.

This was just one of myriad facts within the City that gave Barclay’s chief executive, Bob Diamond, the brazen cheek to tell the UK Treasury select committee on 11 January that he didn't know how many offshore subsidiaries his bank had, but that the "period of remorse and apology" for banks should now end.

What’s the purpose of the dubiously elected Lord Mayor of London; The Lord Mayor and colleagues promise to "take up cudgels on behalf of the City anywhere in the world on any subject which is of concern to the City". They appear ably aided by Westminster policy.

In the end the purpose of the City of London Corporation as a municipal authority is its least important attribute. It’s fundamentally a massively financed international offshore lobbying group pushing for international financial deregulation, tax-cutting and tax havens.

For Scots, there are two issues in the future. The first is extracting themselves from the tentacles of the City, for every Union vote is surely not a vote for democracy, it is a vote for the City and its control of government policy.

This is why Union policy is nearly identical for every party. Union policy is effectively controlled by spread betting on behalf of the City.

If Labour wins, the bondholders of the City must be placated.

If the Tories win, their backers in the City must be appeased.

If the Lib-Dem’s manage a miracle they are bound by both bondholders and backers.

There is only one solution to the trap, “YES” in 2014. Until then Scotland will be ruled by Westminster in name only, the true power lies in an adjacent square mile that our votes and democracy have no ability to impact.

Liberty or the London Corporation, it’s really that simple.





These are only some of the well over 30 articles and archives read in the making of this particular blog. 


With thanks to: 

New Statesman
Open Democracy
City of London Corporation
Tax Haven in the Heart of Britain
London Metropolitan Archives
The Conquerors Charter
The Nazi's British Bankers: Independent Article 1997
England Financed Germany Before WW2
Men Behind Hitler
Who Financed Hitler: The Secret Funding of Hitler's Rise to Power
Trading With The Enemy, How the Allied multinationals supplied Nazi Germany throughout World War Two

21 comments:

  1. Hazel I'm trying to read a book.with not a lot of success,and it must be me as I had to leave off of your topic as I cant seem to maintain my interest,my fault or age but I'd rather print it off and read at leisure,I hope that is OK.You do a lot of digging and I appreciate it,as I think everybody who reads the blog does.I enjoy all of your blogs,and from what I have read here could start the revolution if you can get it out there.

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    1. No problem, the article is two and a half thousand words long so I understand. Settle down with a coffee and a chocci biscuit later and have a read.

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  2. Nice article, thanks for sharing.

    Anna @ rental mobil

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  3. Hazel, I have thought for a long time that somebody was pulling the strings of Miliband, Cameron and Clegg.

    Your article above just articulates my opinion in amore specific fashion.

    The following is a post I made several days ago on Facebook which reads some of the runes of what you say and some of the implications for Scotland in the referendum and beyond.

    I think they want us to break the Union and why,

    Cameron really wants Scotland to break the Union as does Miliband and Clegg.

    They all want a simple two party system modelled on the US two horse Tweedledee and Tweedledum system.

    They are close enough to it now but Scotland is the fly in the ointment as we have seen through the sameness of the three parties and have voted for a different set of politics; one working for the people, not the financial, backers lurking in the background.

    Let Scotland go and we have Red and Blue pills to take. Same politics with perception of difference being maintained by controlling the MSM's spin on everything.

    The LibDems will be absorbed by Red and Blue (effectively done) and a rump outlier of a Green Party will be allowed to float as a false home for some people of conscience.

    It will not matter which side rules, Red or Blue as there will be the same money men behind both.

    They really don't want the nuisance of democracy, voters and policies; just the illusion will do fine for them.

    The City will provide all the bounteous riches that the financiers need and so perforce will Red and Blue.

    In fact I could see the SE of England becoming a City State like Singapore and to Hell with the hinterland of England and Wales. Ireland will have already become one country by then.

    No need for Military just use money as the weapon to keep the Celtic Periphery in check.

    Job done, not in the next 5 or even 10 years but 25 years on I reckon will see it to fruition.

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    1. Don't think you're far from the mark there!

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  4. Lupus that is word for word of a posting By James McLaren on facebook a couple of days ago.You could give credit to him.

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    1. Charles, I think you'll find Lupus and James quite closely related, by the Panda line..... just saying!

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    2. I give credit to myself then.

      If you reread it, on the third line I say that I have posted this on Facebook a few days ago.

      Well spotted and now my secret is out, I am a Panda who thinks he a gorilla who wants to be a wolf.

      I am a very mixed up chimera.

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  5. Wow you give plenty for thought Hazel. Thank's my brain is spinning Noo. :-/

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  6. OK sorry but just read the first line then glanced down and thought this is wrong instead it was me jumping to high and landed on that conclusion.Nearly finished reading but got a branch meeting tonight missed the last one so I forged a note saying the dog ate the excuse.

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  7. Your post is so poorly researched it is difficult to know quite where to start. You conflate the City of London Corporation, a body that has no financial regulatory functions with 'The City' journalistic shorthand for UK financial industries.

    Your understanding of the most basic economic geography is utterly woeful. Throughout the world, whether in London, Edinburgh, New York, Tokyo or Frankfurt businesses congregate together in central business districts driving land prices higher.

    What you call "this special charter" of 1067 is a scrap of paper that merely says:

    "William the king, friendly salutes William the bishop and Godfrey the portreeve and all the burgesses within London both French and English. And I declare that I grant you to be all law-worthy, as you were in the days of King Edward; And I grant that every child shall be his father’s heir, after his father’s days; And I will not suffer any person to do you wrong; God keep you"

    William took over England by defeating and killing King Harold at the Battle of Hastings the previous year.

    The same rules and laws apply in the City as in the rest of England. Income tax and Corporation Tax is the same as it is in the rest of the United Kingdom.

    Ancient ceremonial involving a piece of red cord is not a "modern ceremony" and does not denote any "political separation". The City Remembrancer no more 'sits' in Parliament than a journalist in the press gallery or a Japanese tourist who queues for admission to the public gallery 'sits' in Parliament. The City's Cash is precisely that, a private fund completely separate from monies raised by rates and council tax. The Freedom of Information Act applies to all the Corporation's public activities.

    "For centuries reformers in England, then Britain have tried and failed to have the corporation merged into a unified London authority." Simply not true, apart from the early 1850s when City residents and businesses were dissatisfied with the Corporation, and 1893/4 when the short lived government of Lord Roseberry wanted to abolish the City there has never been any credible attempt to abolish the City. (It should be noted that Roseberry not only wanted to abolish the City, but every parish and vestry in the administrative County of London.)

    "For much of the 20th century, the Labour Party had a pledge in its manifesto to abolish the corporation." Again this is simply not true, and Peter Mandleson's grandfather, better known as Herbert Morrison did not say any of what you claim he did. Morrison died in 1965 and the words 'quoted' were fabricated and falsely attributed to Morrison in 1983 by an author trying to sex up his book about the City.

    Clement Attlee, a liveryman and a Freeman of the City of London was, as you would see if you look it up (It is available in Google Books) writing about the 'City of London' as journalistic language for the UK's financial industries.

    How could Attlee writing in 1937, respond to something that Paul Einzig did not write until March 1939? The title of the book is actually 'World finance, 1938-1939' and Einzig was criticizing the UK government, not the City. Furthermore the City Corporation no more regulated the export of rubber and copper in the 1930s than is does today. Your claim that the Corporation financed Hitler is not only absurd, but it is also grossly offensive.

    As for your second Attlee 'quote' this is actually from an anonymous Fabian Society pamphlet written in 1937. Entitled 'The Road to War', Attlee wrote the preface, but not the words you attribute to him.

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  8. There was no pledge to abolish the Corporation for Tony Blair to change nor did he make any promise to 'reform' it.

    Businesses cannot vote in City elections, but can appoint voters, who then vote in the normal way. The 2002 Act of Parliament that changed the City's ward voting system was a 'Private Bill' and as such nothing to do with the government, and certainly nothing to do with Tony Blair. Four of the City's wards are predominantly residential, but it is difficult to discern any difference in the Aldermen and Common Councilmen elected in those wards from the other 21. There is no bar on political parties putting up candidates in City elections. Labour put up candidates in the last City wide elections in 2009, but none were elected. Aldermen and Common Councilmen have to state whether they are members of a political party in their declarations of interest, but very few are members of any party.

    As the stated the 2002 Act was the result of a private Bill. Anybody can petition Parliament in opposition to private or hybrid bills. (There were hundreds of petitions from community groups, individuals and companies regarding the Crossrail Bill; I was involved in drafting three such petitions by community groups.) As far as I am aware the only petitions against the Bill were by two notorious self-publicists (Maurice Glasman and Revd William Campbell-Taylor) with not a single City resident objecting. The very idea that the electoral system of the City of London is a legitimate matter for Scottish political discourse is as absurd as the idea that anyone in London should have a say in how Scotland elects its government and local councils and of course an inherently Unionist position.

    As for your codswallop about tax havens it is the Treasury and Foreign Office that has allowed such an absurd situation to arise. Senior civil servants place their own money offshore and the idea that they need encouragement from the City (or anybody else) to line their own pockets is risible.

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    1. Post is well researched. The City of London Corporation and The City are so intertwined as to be practically indivisible.
      Your understanding of economic geography is now obsolete by some decades.
      As to the 1067 Charter, what is written and what is demonstrated by subsequent actions are clear. Hastings was but one battle and to believe an entire nation the size of England could be overcome in one days conquest would be to stretch credulity.
      The City and its needs have always had premier treatment.
      You are correct in that there has never been a CREDIBLE attempt to abolish The City, for it wields too much power to allow that to happen.

      You are more than welcome to Google search any reference in this blog.

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  9. "an entire nation the size of England " The idea of a nation state in the 11th Century is interesting. England was a lot smaller with a population a tiny fraction of modern times. The Normans were far more advanced than the anglo-saxons and after winning at Hastings had little trouble in subjugating the rest of the country. For the average peasant the replacement of one Lord by another would make little difference, so the idea of any popular resistance is fanciful. The erection of stone castle, massive in comparison with any previous buildings, made very clear who was boss.

    There are no references in your post. What I did before commenting was to Google every one of your assertions and supposed quotes.

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  10. Thanks, Hazel, for another great, and very important article.

    So, the City of London Corporation helped to finance the Third Reich. A natural extension to that fact would then be that the City of London Corporation not only financed the Holocaust, but the deaths of all British soldiers killed in WWII.

    At ALL costs, Scotland MUST get rid of that city, it's no more than cancer in concrete.

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  11. Bill Elison says:

    "Businesses cannot vote in City elections, but can appoint voters, who then vote in the normal way."

    Bill, how does that work, exactly?

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    1. Douglas,

      For full chapter and verse, google Elections - business voting FAQs - City of London and follow links. Basically businesses, which in this context includes inter alia corporations, pubs, hospitals and churches (Slightly different rules for partnerships & sole traders) can nominate voters. The number of voters that can be nominated depends on the size of the workforce at any particular location - one voter for a staff of 1-9, 2 for a staff of 10-24, 5 for a staff of 25-49 and roughly one voter per 5 staff thereafter. Nominated voters must basically be either a member of staff working at that location, or be a director, or have worked for that organisation for 5 years, or have worked in the City for 10 years. No individual can have more than one vote. Voting is by secret ballot and ward elections (for Aldermen and Common Councilmen) are subject to the same provisions of the Representation of the People Acts as other local government elections in England. As stated above you have to go back to the early 1850s to find City residents wanting to abolish the Corporation. If you dig around on the English Local Government Boundary Commission website you will find that residents of the Barbican and Golden Lane Estates (both of which were built across the City / LB Islington border) sucessfully petitioned to be wholly brought within the City's boundaries in the early 1990s.

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  12. good article....its very useful also.......

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  13. Nice topic! I like to reading this article.



    GPS Tracking

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  14. Before you get too carried away over the "Positive feed-back" you might care to note that the exact same comment appears on at least thirty other blogs, with oddly enough similar links to what purports to be a hotel in Jakarta.

    Clicking on the link also brings up a warning from my anti-virus software.

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    1. Thanks for the warning. I've deleted the comment. I have no wish for anyone to get a virus from this site.

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