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:
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