The world I traded in back in the mid-1960s was a world miles away from where we are now. Firstly, I will show you how the exchange rates have changed over those 47 years.
| 31/03/67 | 18/11/14 | |||
| German Mark | DEM | 11.11 | 2.4477 | 22% |
| Norwegian Kronor | NOK | 19.91 | 10.54 | 53% |
| Swiss Franc | CHF | 12.10 | 1.5030 | 12% |
| Canadian $ | CAD | 3.01 | 1.7670 | 52% |
| US $ | GBP | 2.7932 | 1.5656 | 56% |
As you can see, the pound has suffered quite substantially against all of these currencies - not too bad against the Norwegian Kronor and the US$ but terribly against the Swiss Franc and the Deutsche Mark. The rot started back in the early 1960s and built to a peak in the late 1970s and early 1980s until inflation was got "sort of" under control.
It is difficult to understand the prices of things in those days. Houses sold for £5,000 to £6,000, cigarettes were 20p - 30p a packet and petrol was around 6/- (30p a gallon - yes gallon - not litre - we didn't understand litres in those days). To understand them, you must know the inflation multiplier for use between 1967 and now. According to my information this number is 15.78. This means that all the above prices have to be multiplied by that to get a 2014 equivalent. This results in the following:
This makes houses and petrol look cheap but allowance needs to be made for salaries at the time. As a 7 year experience bank clerk working in the dealing room, I was earning £800p.a.. This equates to £12,650. I would guess that someone with 2 years trading experience now would be earning at least £40,000p.a. Using this as a multiplier the numbers come out like this:
It is difficult to understand the prices of things in those days. Houses sold for £5,000 to £6,000, cigarettes were 20p - 30p a packet and petrol was around 6/- (30p a gallon - yes gallon - not litre - we didn't understand litres in those days). To understand them, you must know the inflation multiplier for use between 1967 and now. According to my information this number is 15.78. This means that all the above prices have to be multiplied by that to get a 2014 equivalent. This results in the following:
| 1967 | 2014 |
| £5,000.00 | £78,900.00 |
| £6,000.00 | £94,680.00 |
| £0.30 | £4.73 |
| £12,624.00 | £40,000.00 |
This makes houses and petrol look cheap but allowance needs to be made for salaries at the time. As a 7 year experience bank clerk working in the dealing room, I was earning £800p.a.. This equates to £12,650. I would guess that someone with 2 years trading experience now would be earning at least £40,000p.a. Using this as a multiplier the numbers come out like this:
|
As you can see, this makes house prices look almost normal. £15.00 per gallon equates to £3.34 per litre as against the current pump price of £1.24 so petrol and cigarettes look cheap at current prices.
I will now look at the type of trading amounts that were usual in the City at that time.
| 1967 | 2014 |
| £5,000.00 | £78,900.00 |
| £100,000.00 | £1,578,000.00 |
| £1,000,000.00 | £15,780,000.00 |
| £50,000,000.00 | £789,000,000.00 |
The £5,000 figure represents the type of amount that we would trade against the smaller currencies, so we would keep NOK100,000 in our account at Den Norske Bank Oslo. Normal trades in GBP/USD would be for £358,000 (USD$1,000,000 as we always trading in foreign currency amount in the London broking market - never is Sterling) which is the equivalent now of £5.6 million. I will discuss in the next article about our trading in Canadian Dollars but suffice it to say for now that our regular trading amount was CAD 15,000,000 which, nowadays, equates to around £78,000,000! Wow, we knew it was big but not that big!
Next time, I will talk about how all of this is relevant to our trading on behalf of one major customer and the Bank of England.
Next time, I will talk about how all of this is relevant to our trading on behalf of one major customer and the Bank of England.
I have been told of by my wife for writing something that is Totally boring! Sorry about that but it is groundwork for the next blog. Like it or not, my job was all about large amounts of money and their worth!
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