Ian Hislop: When Bankers Were Good

For over 200 years, London's financial districts

have made Britain one of the wealthiest nations on Earth.

Britain's bankers have juggled the country's fortunes, and, of course,

in the process, made substantial sums for themselves.

Bankers!

Nowadays it's almost a term of abuse.

Widely perceived as overpaid, greedy,

self-serving, amoral, or actually dangerous,

their reputation has fallen below that of estate agents,

or even journalists.

What would the current boss of Barclays give

for the sort of coverage his predecessor was getting in 1809

when The Morning Chronicle wrote,

"We cannot form to ourselves, even in imagination,

"the idea of a character more perfect than David Barclay,

"distinguished by his talent, his integrity, his philanthropy,

"his munificence.

"No man was ever more active than David Barclay,

"in promoting whatever might ameliorate the condition of man!"

David Barclay was one of a new breed of financiers

at the start of a century in which banking helped Britain

build the richest empire in the world.

But whilst the fat cats of Victorian finance achieved wealth on a scale

never envisaged by their predecessors,

they were far from being, as Peter Mandelson said he was,

"Intensely relaxed about people getting filthy rich."

Rather their embarrassment of riches led to intense personal soul-searching

and furious national debate about the moral purpose of money

and its ability to corrupt.

For some extraordinary individuals,

this led to an outburst of generosity,

an explosion of philanthropy.

Difficult as it is to imagine it now, this was the age when bankers were good.

At the start of the 19th century,

the Industrial Revolution was transforming Britain's economy.

Manufacturing and commerce needed credit and investment,

so banks were springing up across the country.

From barely a dozen outside London previously,

by 1800 there were 370.

There was the Barclay family,

successful brewers, who became bankers.

The Lloyds family, who moved from manufacturing iron to banking.

And here in wealthy Norwich,

the financial sector was dominated by the Gurneys.

Samuel Gurney was a banker with three brothers,

all bankers, too.

And two of his sisters also chose imaginatively to marry bankers.

The family was phenomenally successful -

"as rich as the Gurneys"

was contemporary shorthand for seriously loaded.

But all that money didn't help the Gurneys sleep at night.

Christians are told that it's harder for a rich man to enter the kingdom of heaven

than for a camel to pass through the eye of a needle.

And the Gurneys were not just Christians - they were Quakers.

As Quakers, the Gurneys met to worship in restrained quietness,

without liturgy, priests or singing.

Their puritan faith valued modesty and simplicity,

and they were taught to "beware the deceitfulness of riches."

Yet paradoxically, at the turn of the 19th century,

perhaps a quarter of English banks had Quaker origins -

not just the Gurneys, but Barclays and Lloyds, too.

Quakers were outsiders, and like other non-Anglicans, were barred from the professions,

driving the ambitious into business.

They were honest folk, um, rather self-righteous,

rather priggish many of them.

They got up early, they went to bed early,

they didn't drink too much,

and do all the things which most normal people do,

led very virtuous lives and worked very hard.

If you do all that in the world where capitalism is coming into growth,

you're bound to end up as quite well heeled, or indeed

very rich indeed as most of the Quakers that we know about did.

The Gurneys were deeply conscious of the irony

that the qualities of diligence, prudence and sobriety

that their faith encouraged,

also made them very good at getting very rich,

which their faith discouraged.

One brother worried in his diary.

"It is a very serious thing to be so largely engaged

"in the cares and transactions of money matters.

"It calls for a real watchfulness against avarice."

But for Samuel Gurney, banking could also be a genuine force for good.

When Lloyd Blankfein of Goldman Sachs told the Sunday Times,

not so long ago, that he and his fellow investment bankers

were "doing God's work", everyone fell about laughing.

He must be taking the mickey, no-one could mean that seriously.

But that's exactly what Samuel Gurney believed.

He felt that banking was his religious duty.

He wrote to his brother, "The income it affords,

"with its consequent influence and power,

"is by no means to be despised.

"Is it not a talent to be turned to good account?"

So, to continue the biblical parable,

if you have a talent for banking, you don't bury it in the ground,

you make the money and you spend the money well.

To reconcile the conflict between God and mammon,

money and morals, the Gurneys gave away substantial sums.

Their do-gooding stretched from poverty relief

to the anti-slavery campaign, but they became

most closely associated with the issue taken up by their sister.

OK, ladies and gentlemen, free money. I'm giving away money.

Just chucking it away. One simple question -

who's the lady on the back of the five-pound note?

Erm, it's not Edith Cavell?

Near.

-The Queen?

-No, that's the lady on the front.

-Heroines.

-Boudicca?

-No.

-Is it Florence Nightingale?

No. No, it's not Princess Diana!

You're in Norwich, she was from here...

THEY GIGGLE

-It's not Julian of Norwich?

-No.

-I don't know, I'm afraid.

-Sounds like a chocolate?

-Sounds like a chocolate?

-I don't know.

-Cadbury.

No, the other lot, Quakers. Give me her name.

-Turkish delight.

-Fry! Elizabeth Fry!

-Elizabeth Fry! You're brilliant!

-Thank you! Thank you very much.

Fantastic, five pounds, thank you very much.

Elizabeth Fry, nee Gurney, was Samuel's big sister,

who'd married another Quaker banker, Joseph Fry.

Elizabeth, like her brothers, had a keen sense of the value of money.

When her husband bought her a caricature as a gift,

she scolded him for being a spendthrift.

Poor Joseph - who always was rather financially inept -

responded by throwing the present into the fire!

Unhappy with the frivolity of her well-to-do banking life,

Elizabeth determined to use her wealth to set the world to rights.

She found her cause at Newgate, London's most notorious prison,

recreated here with scrupulous realism by the BBC.

You know what they call you, don't you? Savages!

They lock you in a cage, they make you sleep on straw,

they allow you to drink and gamble.

Well, this is not the Lord's way, and we must change it.

Introducing education and paid work for the prisoners,

Fry determined to give them the habits of order, sobriety and industry

which the Quakers believed were the key to life,

whether you were a banker or a convict.

Much to management's surprise,

the reforms at Newgate proved a success.

Fry went on to become the most famous prison reformer of her age.

Her staunchest supporters were her banking brothers,

who not only backed her financially,

but joined her on research trips to prisons around Britain.

But the Gurneys could never leave their day jobs for long.

These were heady times to be in banking.

The Gurneys' Quaker faith not only taught them

to be wary of worldly avarice,

of storing up their treasures on Earth,

but also of the uncertainty of riches themselves.

Finding the dividing line between speculative financial investment -

which could be good for business -

and gambling, the Devil's work, was not always straightforward.

In 1825, a boom in speculation was followed by a stock market crash

that caused one of the most severe financial crises Britain has ever known.

Weeks of panic saw tumbling prices, a run on the banks,

and even the Bank of England on the verge of collapse.

Samuel Gurney shone in the crisis.

With sound judgement and prudent lending, he rescued many,

earning himself the nickname, the bankers' banker.

But being prudent didn't mean being sentimental.

In the credit crunch that followed, some 80 banks went bust,

and Gurney did not save the bank run by his brother-in-law, Joseph Fry.

Elizabeth's husband was declared bankrupt,

a humiliating experience for a Quaker.

The Quakers judged failure to pay back debt

an unforgivable betrayal of trust.

The bankrupt Joseph was thrown out of the Society of Friends

and Elizabeth's reputation suffered too.

This may seem harsh, but perhaps there's something to be said

for a morality that valued personal integrity

and prudence with other people's money,

and considered financial recklessness, well,

at the least, something to be embarrassed about.

These days, when bankers mess up the economy,

they seem to get off scot-free.

Perhaps a bit of stern Quaker shame wouldn't go amiss.

Despite her own financial ruin Elizabeth continued,

aided by her philanthropic brothers,

to speak up for prisoners and the poor for the rest of her life.

Today, Newgate prison is long gone.

On its site is the Old Bailey,

the Central Criminal Court of England and Wales.

And Elizabeth Fry is still, however, keeping an unflinching moral eye

on all proceedings at the heart of British justice.

Elizabeth Fry and her brothers,

both in their philanthropy and their banking business, demonstrated to others

that it was possible to keep your principles and your profitability,

to create wealth and to use it to create a better society.

And that there was a duty by those who had made good,

to do good.

Not all bankers were good, of course.

Indeed, many of them had reputations

somewhat less glowing than the Gurneys.

Ebenezer Scrooge is only the most famous

of a host of morally-dubious financiers in 19th century fiction.

Dickens, Trollope, Thackeray and Eliot all wrote of greedy bankers,

clinging to their ill-gotten gains, and lacking basic human charity.

Charles Dickens' Little Dorrit is a credit crunch story,

which depicts the terrible trail of misery caused by bad debt.

The crooked financier Merdle ends up killing himself

when his speculations fail.

Dickens' banker, Merdle, is thought to be modelled

on real-life banker and MP John Sadleir,

founder of the Tipperary Joint Stock Bank.

At first he was eminently successful as a businessman,

but he over-stretched himself with reckless speculation on the stock exchange.

He then tried to solve his problems

by raising money with forged deeds and embezzled assets.

When his swindles were about to be exposed,

and his bank was about to go bust,

Sadleir went to Hampstead Heath and committed suicide

by drinking prussic acid out of a silver cream jug.

"I cannot live", he wrote in a suicide note,

"I have ruined too many.

"I could not live and see their agony."

You see, it's that Victorian shame again.

No-one's suggesting that those responsible for the current financial crisis

should do the equivalent and all go and throw themselves off tall buildings in Canary wharf.

Well, not all of them obviously.

But as a sign of repentance it is fairly impressive.

Certainly a lot more convincing than giving yourself a bonus

and saying, "It's time to move on."

Today we rely less on disgrace and prussic acid

to keep the banking community in check,

and more on the Financial Services Authority,

located in a tall building in Canary Wharf.

Does it worry you that banking at the moment

has a very poor reputation?

Well, I think it's completely understandable,

that the banking profession is not held in high esteem at the moment,

after what happened in the financial crisis,

and I think the banking industry, the intelligent people in it,

realise that they are going to have to re-earn public trust.

What we've got to have is a financial system

which performs its necessary and important functions,

and where people in it

can feel proud of doing useful activities.

To earnest Quakers like the Gurneys,

there were problems with the very idea of banking,

can it be a good activity?

Well, I think it can, it undoubtedly can.

I mean, first, I think it's important to realise

it is very difficult to imagine

the transformation in the standard of living of everybody in society,

which has occurred over the last 200 years since the Industrial Revolution,

without there being a banking and financial system.

It's a fundamental part of how you take savings,

surplus money from people who have savings, and work out

how to put it productively in a way that produces investment and growth.

So as long as they were doing the right sort of banking

they should have been OK with their conscience.

Do you think it dulls the moral sensibility?

If you simply deal with something which is completely immaterial,

right, money, things up and down on a screen,

you can be in danger of not thinking about the value what you're doing.

I think people need to realise

that the process of dealing with things which are only, you know,

digits on the paper or digits on the screen,

you know, unless you're careful,

can end up with a belief that money is the measure of all things

rather than something, which it is perfectly legitimate to want to have

as part of a wider life, which is hopefully socially useful as well.

Plenty of people wanted to make money back in the Victorian City,

which was increasingly seen as a place of opportunity,

where even the humblest person had a chance to succeed.

Meet George Peabody, the quintessential self-made man.

Born in relative poverty in America,

with very little formal education,

his drive for success propelled him

from lowly apprentice in a grocery store,

to king of the dry goods business.

When he moved to London in 1837

he was already a man of serious substance.

He seemed to embody that Victorian ideal of self help,

that anybody could make good,

provided they were sufficiently hardworking, thrifty, and determined.

It's rather a double-edged sword though because it implies that

if you ARE still stuck in poverty, it's your own fault,

so bah humbug to you.

Meanwhile Peabody worked so hard and saved so much money

that some less generous people thought he was nothing more than a miser,

a sort of real-life Scrooge.

Despite his sizeable fortune George took a packed lunch to work every day,

and if he sent the office boy out to buy him a bag of apples,

which cost one pence ha'penny,

he expected the change back from tuppence.

He was living proof that if you look after the pennies

the millions of pounds take care of themselves.

In 1838 Peabody opened up a counting house.

No longer just trading in dry goods but financing that trade too,

he became what was known as a merchant banker.

With no family, and no interests other than making money,

parsimonious Peabody spent only 1% of his income.

Everyone assumed he would take his millions to the grave,

but in 1862 he proved them all wrong.

These magnificent documents

are the Deeds of Trust by which Peabody gave away his money.

This one is for £100,000,

this is £150,000,

that's £200,000.

They total half a million pounds,

which is a staggering amount of money, then,

and now would be worth something like 50 times that.

Why did he do it?

We don't really know.

There's no evidence that he was particularly religious.

It could be that he couldn't forget the poverty of his past.

Or he could be trying to improve British American relations,

the two countries were on the edge of war at the time.

Perhaps he just wanted the glory of being a great philanthropist.

I like to think he was visited by ghosts in the middle of the night like Scrooge,

and decided he had to stop hoarding his money and start giving it away.

Peabody declared his aim was to,

"Ameliorate the condition of the poor and needy of London".

The population explosion in the capital

had created shockingly bad living conditions

for the impoverished masses.

There was no sense in those days that the government was obliged

to make sure that the poor were properly housed.

The only thing you were obliged to do was pick them out of the river if they'd actually died,

pick them out of the gutter if there had been a cholera epidemic.

And if they didn't work, thrash them and put them in the poor house,

but the idea that you might give them somewhere decent to live

didn't cross the minds of government.

When the first Peabody Dwellings opened in 1864

they must have seemed like Paradise on earth.

They were designed around open courtyards,

with their backs to the roads

in a deliberate attempt to make tenants feel separate

from the slums outside.

They had unheard of luxuries

like laundry rooms,

free baths

and rubbish collection...

and best of all, space for children to play.

No wonder Peabody properties became so much in demand,

but only the right sort could apply.

Even in his charity, Peabody pursued the ideals of self-help.

Differentiating between the so-called "idle poor", and the "industrious poor",

he wanted to help those who would help themselves,

people who were hard working and thrifty,

who were already trying to get out of poverty, as he himself had done.

His homes were for those of "good moral character"

who displayed this through "good conduct as a member of society".

Oh, Hello.

-Hello, Joan. I'm Ian.

-Pleased to meet you.

'Joan Gregory is a Peabody resident of excellent moral character.'

Joan how long have you lived on the Peabody estate?

-Well, I would say 84 years because that's my age...

-Never!

-Yes.

My grandfather come to the estate around 1899 or 1900.

My mother was 1900

and she started off the children born on the estate.

Cor...they haven't moved much. R block, R block, R block...

F Block! See that's round the other street!

I get the feeling everyone was respectable.

Well, I think so because

the father had to have a job.

Otherwise he couldn't pay the rent,

and if you couldn't pay the rent you couldn't live on the estate.

Do you think it was a good thing, what Peabody did?

Setting up this special sort of housing?

I think so. He done good with his money.

Exactly! Do you think they do good with their money now?

I don't know what would happen now if he was in the same position

and still alive now.

He would probably be with all the other bankers making profits

and getting big bonuses.

Impressive as it was,

Peabody's charity was criticised from all sides.

Some said he should target the really destitute who couldn't afford 2/6d a week.

Meanwhile, the private landlords were furious

because the Peabody estates offered such extraordinary value,

undercutting their overpriced and hideous slums.

But Peabody was a shrewd businessman

and by targeting the labouring poor

who could afford to pay some rent,

the trust ensured that it made enough money to perpetuate itself indefinitely.

It was, quite literally, the gift that kept on giving.

Peabody estates sprung up rapidly across London,

housing 2,000 people by 1869.

30 years later it was ten times that.

Now more than a century on, there are 50,000 people

living in over 20,000 Peabody properties in the capital.

Tell me what his legacy is now.

I mean this was 150 years ago. How much is left?

Well, we've got a surprising amount of the Victorian property left

and it's really stood the test of time.

But it's much more than that.

So many people's lives have been touched by Peabody homes,

and really made good and have used them as a stepping stone,

a springboard, into a better way of life.

I note you use the word "made good",

Peabody would've liked that cos he wanted people of good moral character to live in his houses.

Yes, that's, that's absolutely right, and it's something

we've tried to keep going in the way that we operate now.

Is there philanthropy on a Peabody scale, in Britain any more?

I think that isn't the case

and the Government has actually suggested that,

there's a time for a cultural change in the banking sector

to, er, encourage them, bankers, to make donations to charitable organisations,

-but, frankly, we haven't seen it yet.

-As yet...

-As yet!

You're still waiting!

Peabody had flourished at a time

when banking was helping to transform Britain.

The nation's savings funded railways, shipbuilding,

and the new telegraph cables which kept the City in touch with faraway markets.

Through the 19th century the Bank of England gradually assumed

the responsibilities of a central bank.

Several times a year throngs of people would arrive there

for an occasion celebrated in one of the grandest rooms at the heart of the building.

This is George Elgar Hicks' painting Dividend Day at the Bank of England.

The Victorians loved these genre pictures of great national events

where they, the public, were centre stage.

And it shows how widespread banking and investment had become

that this picture was such a huge hit

when it was shown at the Royal Academy.

What we have here is the public, the investors

going to get their twice yearly interest on their investment.

You see the sign says Consols which is consolidated debt.

The people of England were financing the country

and being rewarded with a small, 3% sometimes a bit more,

but solid return on their money.

The amazing thing about the picture is the cross section of people there who are now investing.

Yes, there's a rich young lady giving the eye to a banker in a top hat,

but it's not just the rich.

In the corner there's someone quite clearly up from the country

with his basket, scratching his head

not quite sure if he's got the right return for his coupon,

old people invalids, children, town, country, a widow, they're all there.

It's an amazing cross section of middle Britain,

to demonstrate that we had become a nation of shareholders.

By 1850 nearly 40% of all assets held by British citizens were financial.

But not all investments were as reliable as Bank of England stock.

Speculating in the increasingly complicated and volatile money markets

was a dangerous business.

It was a jungle because it was absolutely unregulated

and you only have to read the novels of the period

to realise that whole human lives, and in indeed whole human communities,

can be wrecked overnight by a rash investment in the City

or by somebody speculating in a way they shouldn't do.

Or by somebody gambling. It was basically a gambling casino.

The intoxicating lure of easy riches could lead to recklessness

from even the most level-headed.

In 1866, just a decade after the risk-averse Samuel Gurney died,

the firm which he'd built up so successfully.

Overend & Gurney collapsed thanks to a Victorian version of subprime debt.

It caused the last run on a British bank

before 2007.

As Walter Bagehot, then editor of the Economist, put it,

"The partners at Overend & Gurney seem to have run their business

"in a manner so reckless and foolish

"that a child who had lent money in the City of London

"would have lent it better."

Poor, trustworthy Samuel Gurney must have been turning in his grave!

One bank that did stay rock solid and reliable was Coutts.

Thomas Coutts had built his bank up

to be perhaps the most successful private bank in the country,

able to count the royal family

and much of the landed aristocracy among his customers.

Today, all visitors to the boardroom pass through a room where

the most important members of the family still hang on the walls.

This is the venerable Thomas Coutts

who had daughters but no male heir, and scandalised his family,

not to mention the rest of society,

when he decided at the age of 80 to marry the young, beautiful,

dark-haired actress Harriet Mellon,

who was less than half his age.

On his death he bequeathed to her his entire fortune

and his half share of the bank.

You can imagine how popular she was with the Coutts daughters!

Anyway on her death the entire family gathered to hear

the will read out.

You can imagine the scene. It was like something from a Victorian melodrama.

There were the daughters, there were ten surviving grandchildren,

and none of them knew how the family fortune would be distributed.

The lawyers read out the will and dropped the bombshell.

Harriet had left the lot, everything,

the vast pile to the youngest grandchild

Angela Burdett, age 23.

All young Angela had to do was take the name Coutts,

and promise not to marry a foreigner.

Her romantic story made her an overnight celebrity.

The newspapers came up with wild statistics to describe

the size of her fortune.

It would take 107 men to carry it in gold,

over ten weeks to count it in sovereigns,

and if it was laid out in crown pieces,

the line would be over 113 miles long.

She became the new darling of high society,

with her lavish parties,

fine clothes, impressive jewellery, love of small dogs -

she even had a stalker who was imprisoned -

she could have been a sort of Paris Hilton of her day.

But Miss Burdett Coutts was neither particularly attractive nor terribly

vivacious, though she did have, obviously, other attractions...

millions of them!

Eligible suitors queued up to propose marriage

and press rumours linked her with everyone from the future Napoleon III

to the Bishop of Oxford.

But Miss Burdett Coutts was fiercely independent,

wary of gold diggers, and had other plans for her future.

Angela's vast wealth gave her far more power than other women of her time.

She was free to turn philanthropy into a career.

She turned for advice to that great observer of Victorian society,

Charles Dickens.

Dickens divided the charitable into two types.

One, people who did a little and made a great deal of noise.

The other, people who did a great deal and made no noise at all.

His novels frequently ridicule blind, misplaced,

or patronising do-gooding,

creating characters like Mrs Jellyby in Bleak House,

who is so concerned about the plight of natives in faraway Borrioboola-Gha

that she totally neglects her own children.

But Dickens considered Miss Burdett Coutts to be

"the noblest spirit one could ever know".

He didn't put her in a novel, he dedicated one to her.

Using the wealth made from banking,

Burdett Coutts gave away four times as much as Peabody.

Indeed she contributed more millions, to more causes,

than anyone before her, until she became a kind of British institution.

Burdett-Coutts poured money in every direction where she saw need

new schools, night schools, technical schools, sewing schools,

training for teachers in the schools,

new hospitals, training for nurses in the hospitals,

libraries, scientific foundations, training for policemen,

temperance societies to stop people drinking,

drinking fountains to get them drinking water,

soup kitchens for the poor,

famine relief for Ireland, help for Muslim refugees, churches,

bible classes,

bishoprics in the colonies,

the fishing industry, bee keeping,

better conditions for flower girls, better conditions for boot blacks,

free milk for children, the campaign against cruelty to children,

the campaign against cruelty to animals,

scholarship, art, cancer relief.

No cause was too small...

Angela Burdett Coutts was the first patron of the British goat society

and she donated funds to make it possible

and she was a very key player in the formative years.

So why did she think goats were such a good idea?

Because in Victorian times, they didn't have refrigerators and so on,

so people needed milk.

You couldn't buy milk and keep it, you needed a fresh supply of milk,

so obviously for the average household, there was no way

that they could afford to keep a cow but they could keep a goat

quite easily and the goat would go in the garden

and eat all sorts of wide variety of food

and would produce fresh milk for the children.

So they're perfect for the poor?

Absolutely perfect.

Now, is the goat community in need of help nowadays?

Could you use some bankers?

Yes, we could definitely use some bankers.

The British Goat Society still does what it can to develop the goat,

improve the goat, publicise the goat and of course, all that costs money.

The Burdett Coutts of our time!

We need them! We need them.

I hope they're listening.

Yes!

GOAT BLEATS

Hello, goat.

Got any views on the role of charity as against the nanny state?

GOAT BLEATS

In recognition of all that Burdett Coutts had contributed,

in 1871 Queen Victoria made her a Baroness,

an extraordinary honour then for a woman to be given in her own right.

Punch even dedicated a poem to her.

It's called In Angelae Honorem, which is a pun

on the words "angel" and "Angela",

which they obviously thought was very amusing.

"The Queen has made her noble, but ere that rank was given,

"She had donned robe and coronet of the peerage made in Heaven.

"Baptised in purer honour than from earthly fountain flows,

"Raised to a prouder Upper House than our proud island knows."

And it gets worse, if you can believe that.

"If we needs must find her symbol, then carve and set on high

"A heavily-laden camel going through the needle's eye."

So Angela is so marvellous that the parable of the rich man

and the eye of the needle no longer applies.

But it does show you the esteem in which she was held

by the general public.

And Punch, the satirical magazine, makes no criticism of her at all.

But Angela once wrote

that her wealth had brought her little real happiness.

She knew there was more to life.

In February 1881, the Baroness, now in her late 60s,

gathered a few close friends and family here,

at Christ Church in Mayfair.

They'd come to witness her marriage

to her secretary, who was nearly 40 years her junior.

The Burdett Coutts' wedding was the biggest scandal of the time.

The partners at the bank were aghast,

and the gossip columnists had a field day.

The former Prime Minister, Benjamin Disraeli, wrote to Queen Victoria,

saying Lady Burdett's marriage is the greatest scrape

since the war in Afghanistan.

The Queen herself declared it "the madness of a silly old woman".

And the Archbishop of Canterbury suggested that rather than marrying him,

Burdett Coutts should adopt him.

It wasn't just that her chosen husband was young

and possibly a fortune hunter.

It was worse than that. He was an American.

By marrying a foreigner, she had broken the terms of her inheritance,

so at a stroke, Angela Burdett Coutts sacrificed the majority of her wealth for love.

The Baroness' charitable giving continued, though now much limited,

but apparently she was finally happy.

The great thing about money is that you're the lord of your own life,

or lady of your own life in this case.

And I think that with all these philanthropists,

very deep inside them actually

is a desire not to just share their great wealth

but to get rid of it all, cos it's a kind of a burden,

and it's a kind of filth.

Philanthropy was now becoming fashionable.

Victorians discovered that charity balls, like this one,

were a popular and effective way to encourage the rich to give.

In the mid-1880s, The Times claimed that the income of London charities

was greater than the governments of several European countries.

Yet some social commentators worried

that the rich giving money wasn't enough.

There was something intrinsically wrong with the free market,

which wasn't making society fairer, but more unjust and materialistic.

One fierce objector was John Ruskin, the great Victorian critic,

whose essays Unto This Last attacked greed and unbridled capitalism.

Ruskin would have recognised and shared contemporary concerns

about bankers' excessive pay and bonuses.

His book was an attack on that desire for riches,

which ignores the wealth of the wider community.

In fact, he defined two types of wealth.

Wealth, which makes the world a better place,

and illth, which is created for no purpose,

and makes the world a worse place.

Well-th and Ill-th - you see?

Ruskin argued that the purpose of commerce needed to be about

more than just adding shareholder value.

He wrote, "It is no more the merchant's function to get profit

"for himself than it is a clergyman's function to get his stipend".

For Ruskin, the purpose of business is to provide for the nation.

Ruskin thought a society would be genuinely rich

when its citizens were happy, healthy and good.

As he famously put it - "There is no wealth but life."

What was so original about Ruskin,

was that he realised that all this money that the Victorians had,

far from being a blessing, was a curse,

and the belching smoke and fumes and poison coming out of Victorian factories,

for Ruskin were the storm clouds of the 19th century

and they weren't just physical clouds wrecking the atmosphere,

they were moral clouds of poison.

Ruskin's ideas weren't too popular with economists.

One reviewer felt he'd been preached to death by a mad governess.

But 150 years on, we're again wrestling with the same questions.

Surrounded by temples to Mammon, St Paul's Cathedral,

has become the recent unexpected epicentre of this debate.

A clash of values has stirred the nation, challenged the Church,

and would cost its canon, Dr Giles Fraser, his job,

shortly after he spoke to me.

I think the Church should not condemn making money per se.

It gives people jobs, it creates energy for the economy

and there's nothing wrong with that.

I think the Church has been too snooty about money for centuries.

So I think that that side of things is fine, but,

the one thing the Church has always said is that,

the love of money is the root of all evil.

Not money per se, but the love of money.

Ruskin said at the time that a lot of the creation of money was,

he called it illth, rather than wealth,

but it's the same thing, he said it was socially useless.

Do you think there are ways of commerce here that are useless?

There are those who say that all forms of activity,

even if you're buying a Porsche and wasting it in champagne bars,

is generating jobs for people who make Porsches and who sell champagne,

so to that extent, there is an argument.

But I would say for the person who's doing all of that,

it's actually corrupting.

It's bad for you.

I think people don't get the extent to which it is sort of corrosive of the soul.

There are many more important things in life

and that that level of wealth can actually distance you from

other people and distance you from the great things in life.

You can't live in a bubble, which is just the bubble of the rich,

and forgetting the world around you.

The City has to have much greater sense of responsibility

for the world around it.

Do you think bankers are sitting there, feeling guilty?

No.

No. I had a feeling they weren't.

I don't see them kneeling in penitence!

Did they ever get the message about how annoyed people were

about their behaviour?

Well, they feel beaten up by it.

They feel a bit "woe is me" about it,

but whether that's genuinely transformative, I'm not sure.

And actually I don't think that the beating up of bankers

always helps because I think what they need is,

though I'm happy enough to beat up the bankers,

but I think what they need is another model,

a model of what banking could be,

that is socially useful, that they can aspire to, they can grow into,

and I think part of the problem with our society

is we haven't given them a model of what socially-responsible banking could look like,

which is what the Victorians precisely can do.

By the start of the 20th century, Britain was in many ways

unutterably different to the country inhabited by the Gurneys.

London was now the capital of the biggest, richest empire in the world,

and the bankers that had made it so, had become the wealthiest,

most powerful, establishment figures of their age.

No longer social outsiders, they were the new aristocracy

and lived the life of the landed gentry on their country estates.

Even - unthinkable a century earlier - if they were Jewish.

Living here at Tring Park was the head of the richest

and most famous banking family of all Europe -

Nathaniel Rothschild, known as Natty to his friends.

Despite his family pedigree, Natty wasn't a natural financier.

He'd had to leave Cambridge without taking his degree exams

for fear he'd fail maths.

But that didn't stop him running the world's biggest bank,

or being made Lord Rothschild, the first non-Christian ever

to reach such giddy heights in British society.

Natty loved playing lord of the manor, the grand country gent,

hosting lavish hunting parties,

in the manner of an old-fashioned, blue-blooded aristocrat.

And why not? In many ways, that's exactly what he was.

As part of the Rothschild banking dynasty, he had inherited wealth,

status and power to match anyone in Britain.

As a banking aristocrat,

Lord Rothschild had a rather feudal sense of duty.

An unusually generous landlord, he provided new cottages

and free medical treatment for his estate employees in Tring.

And at the bank, he created a department

solely responsible for charity - an early example of corporate giving.

Not that everyone was always grateful.

The journalist Claud Cockburn, who grew up in Tring,

tells the story of Lord Rothschild's birthday, when he announced

that he would give a shilling to every child in the town of Tring.

All they had to do was turn up at ten o'clock that morning

outside the manor.

Very generous, it seems.

But Lord Rothschild had not reckoned with the enterprising people

of Tring, who decided that perhaps they needed a few more children,

so they imported them from neighbouring villages -

cousins, friends, anyone.

So the town was full the night before

of children staying over in barns and outhouses ready for the big day.

When the day dawned, there was Lord Rothschild,

he'd set up trestle tables piled high with silver shillings,

ready to give to the children.

The gates opened and this flood of children came to get their shillings,

and the ones who were first in the queue,

took the shilling, ran round the back and then came forward again.

So there was a constant queue of children being given

these shillings, and of course they began to run out.

And Lord Rothschild had to send out to Aylesbury, to Watford,

even to London, to get more shillings.

Even that wasn't good enough and eventually the pile disappeared.

One father claimed that that day his children had made him the equivalent

of two and a half weeks' wages, with two bottles of whisky thrown in.

There's gratitude for you!

Rothschild's wider charity was on a stupendous scale,

particularly to the thousands of Jewish refugees

who'd been coming to Britain since the 1880s

to escape persecution in Russia.

It wasn't just that he was sympathetic to their plight.

To him, it was a religious obligation.

This synagogue, Victorian London's finest,

was founded by Natty's brother.

Lord Rothschild was a very religious Jew,

with a strong sense of noblesse or richesse oblige.

And it's a fundamental principle of Judaism

that all Jews are responsible for one another,

and he realised here were people arriving, not knowing the language,

many of them very poor indeed, and he felt an enormous patrician

sense of responsibility, which is really a Jewish imperative.

The amount of money he gave,

there was something like £15,000 a year then for a Jewish school,

there were youth clubs and housing projects.

This is vast charity.

Is that necessary? Is that compulsory?

Absolute minimum 10%,

but if you are wealthy, no limits.

The key word in Judaism is "tzedakah",

which you can't easily translate into English because it means both charity and justice.

In English, something can't be both.

If I give you £1,000 because I owe it to you, that's justice.

If I don't owe it to you but I think you need it, that's charity,

so it's either one or other. In Judaism, it's both.

And therefore for us, tzedakah, which we'd see as charity,

is not something we give out of the generosity of our heart

it's something we give because we must.

Rothschild used his money every way he could,

even refusing to do business with Russia

while persecution of the Jews continued there.

But there were real limits to what he and others could do.

So this was the conundrum.

In Natty Rothschild, we have a very wealthy man

who was genuinely trying to direct his wealth towards the public good.

And not just his own wealth, that of the bank too.

No-one could accuse him of not being philanthropic.

And this do-gooding spread throughout the rest of society.

A survey in the 1890s showed that the average British household

was spending 10% of its income on charitable giving.

That's the single largest item of expenditure apart from food.

But despite all this generosity,

the sad fact remained that poverty and distress

was still all around and in some cases seemed to be getting worse.

However extensive, however strategic, however well-directed,

philanthropy on its own was never going to be enough.

It was increasingly clear

that though banking had made Britain great

and the rich extraordinarily wealthy,

it was not a progressive engine of social change.

In fact, the country was facing extremes of destitution

that no amount of thrift, self-help or do-gooding could solve.

Some people began to think the unthinkable -

that for a just society, the State itself would have to provide.

In 1906, the new Liberal Government was elected with the radical agenda

to "lift the shadow of the workhouse from the homes of the poor".

They introduced reforms

that laid the foundations for the Welfare State -

free school meals, National Insurance, old age pensions.

To pay for reform, in 1909, the Chancellor, Lloyd George,

announced what became known as the People's Budget.

It was the first British budget ever with the express purpose

of using tax to redistribute wealth from the rich to the poor.

For bankers like Rothschild, however philanthropic,

this was heresy.

Lord Rothschild was absolutely opposed to any increase in taxation.

He believed the rich should do their duty to the poor,

but that this should be voluntary,

a matter of private conscience,

and not something to be taken over by the State.

What's more, he argued,

capital should be free from taxation in order to accumulate,

thus stimulating economic growth and benefiting everyone.

It is exactly the same argument used by bankers today

to resist State intervention.

Lord Rothschild was up in arms about the People's Budget.

He called a big protest meeting, and personally delivered

a petition of complaint from the City to Westminster.

Lord Rothschild was a political heavyweight, a big beast...

but so was Lloyd George.

The Chancellor hit back with a typical oratorical tirade.

"I think we are having too much of Lord Rothschild.

"You are not have estate duties or a super-tax. Why?

"Because Lord Rothschild has signed a petition

"on behalf of the bankers saying he will not stand for it.

"You are not to have a tax on reversions.

"Why? Because Lord Rothschild says it will not do.

"You ought not to have old age pensions.

"Why? Because Lord Rothschild said it could not be done.

"Now, really, I would like to know,

"is Lord Rothschild the dictator of this country?

"Are we to have all the ways of reforms,

"both social and financial, blocked simply by a notice board -

"'No thoroughfare. By order of Lord Rothschild'?"

It was a huge political struggle, but Natty had met his match.

Lloyd George eventually got his budget through Parliament.

And what of Lord Rothschild?

Even he the came round eventually,

in the extreme national crisis of 1914.

"How are we pay for the war effort?" asked Lloyd George.

"Tax the rich!" came the unlikely reply from Lord Rothschild.

"And tax them heavily!"

And that's been more or less the policy ever since.

The 20th century was, overall, a great leveller.

With increased tax,

the Welfare State largely took over from philanthropy.

Do-gooding was nationalised!

So what should a rich banker today do with all that spare money

left after tax?

Not far from Tring is Waddesdon Manor,

built by Natty's cousin, Ferdinand de Rothschild.

If not happiness, it's amazing what money can buy!

Now owned by the National Trust,

it still benefits from another philanthropic financier -

Natty's great-grandson, Jacob, the current Lord Rothschild.

You still appear to be tithing.

You're still giving 10% away,

which is quite a lot more than a lot of people. Why is that?

I'm not a hugely extravagant liver.

I can't eat more than three meals a day.

I don't want to live in a particularly big house.

I love looking after a particularly big house at Waddesdon Manor.

But, um, so why not?

Is it possible to make a huge amount of money

and still be good?

It's difficult for many people to liberate themselves of their money.

I think that can be a problem

because it can become an obsessive pursuit, an addiction.

But, um, if you look at Bill Gates -

I don't know if he's the richest man in the world

or the second or third richest man in the world -

or similarly, Warren Buffett...

In a sense they're like fishermen who put the fish back, aren't they?

I mean, almost everything they've made,

probably over 90% of what they've made, they've returned to the world.

Do you think there comes a point,

and maybe we're at it now,

where the State can't do any more, can't afford to do any more

and the wealthy have to put their hands deeper in their pockets?

Well, I think if you put yourself in the position of the State...

I mean, the State has to withdraw money.

It's got to spend less.

And, therefore, who's going to make up the difference?

You have to encourage the philanthropic sector. Why not?

The current anger about the City... all that talk of,

"Oh, these people are socially useless. What are we doing here?"

What can the bankers,

what can the City do to assuage that anger?

What can they do?

Well, they can behave well and give back more.

I'm sure that there'd be a lot less banker bashing today,

if they followed the example of

the best of their 19th century predecessors.

Of course, the Gurney family, Peabody, Burdett-Coutts,

Lord Rothschild were rooted in their time.

But they wrestled with their consciences

and they got out their chequebooks.

Maybe societies get the bankers they deserve.

Somehow, we accepted that greed was good

and that probity, conscience, philanthropy, do-gooding,

were boring, old-fashioned, Victorian values.

Perhaps we were wrong.

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