Rise and fall of a financial giant

Grand building: Halifax Building Society head office, opened between 1921 and 1927 with the adjacent Alexandra Hall and, below, the new book
Grand building: Halifax Building Society head office, opened between 1921 and 1927 with the adjacent Alexandra Hall and, below, the new book

It began with a meeting in a pub and almost ended with the financial crisis of 2008. A new book charts the history of the Halifax Building Society

THE financial crash of 2008 was the worst since 1929.

fron tocer of Paul Bagnall's book

fron tocer of Paul Bagnall's book

Globally a number of banks went bust while in Britain, some were saved only because of government intervention either by nationalisation or emergency takeovers. One of those rescued from the brink was HBOS, taken over by Lloyds TSB.

The story of this well-known institution through good times and bad is now compellingly documented in a new book - The Halifax: From Riches to Rags.

Its author is retired economist Paul Bagnall who was inspired to write the book because of the “earth-shattering events” of 2008.

“The western banking system was seen to be tottering and on the verge of a complete meltdown,” he says “In these circumstances only one institution in a country has the power and authority to intervene and intervene successfully - the state. So it was that western governments, sometimes unilaterally, sometimes in unison, started to do what for a generation it had become increasingly unfashionable to do. For nearly 30 years, since the election of Margaret Thatcher and Ronald Reagan, laissez-faire had ruled the roost. Now the chickens were coming home. I thought to myself, there’s a story to be told here.”

Paul, who lives in London, adds that his original intention had been to write about more than one bank.

“But the question was which one?” he says.

“I’d been a Halifax customer in the past and so the selection process was as simple as that. I thought I’ll concentrate on HBOS.”

“A consequence of the crash was the disappearance of some very familiar names on the British High Street, Woolworths being probably the most obvious example,” he says. “While the name Halifax did not disappear, this crisis was the end of its independence which had started more than 150 years before.”

Paul’s book is now the story of the institution’s 156 year-old history, beginning with its establishment in 1853 by a group of well-meaning individuals in the mid 19th century, its financial consolidation in the later 19th century, through the First World War and onto the inter-war era when all seemed secure. He charts how it even escaped the 1930s depression and how it fared through the Second World War.

“Things were a bit slow in the late 1940s and for much of the 1950s but again there were no threats to its existence and financially it prospered,” he explains.

“Inflation was a serious economic problem in the 1970s but every institution had to face it and the Halifax dealt with it as well as any. In retrospect the increasingly liberal economic policies of the 1980s sowed the seeds for the ultimate disaster.

“Once the Halifax became a limited public company however, then it had shareholders to satisfy. The speed of change seemed to increase as it merged with Bank of Scotland to create HBOS.

The property market seemed to be going from strength to strength in the first decade of the 21st century - but it was a bubble.

“More dangerously, Halifax was getting substantial funds from dubious financial instruments it was buying on the markets. Then the crisis came,” he says.

Paul’s book is brought to life by the personalities and characters involved through the decades, all of whom in one way or another helped to shape the building society which was to become a bank. Among these was Jonas Dearnley Taylor, who was secretary from the time of the society’s inception and who was recognised for his organising ability, his preserving efforts and his powers of concentration. Sadly he did not live to see the golden jubilee. At the end of his time there were just 50 branches and all bar one (in Darlington) were in Yorkshire. He was succeeded by Sir Enoch Hill and it was during his time the society developed from a local to a national institution.

“Hill had the genius which Taylor, for all his qualities, lacked. He also had the defects such as immodesty and flamboyance,” records Paul.

However, it was Hill, who in 1905, looked forward to the diamond jubilee and persuaded the directors to institute a “special reserve fund” as the nucleus for a cash bonus to be distributed to all members in commemoration of the event.

Paul also devotes a chapter to “The Fred Bentley Affair” - Bentley was general manager from 1949 to 1956.

The book is illustrated throughout with photographs and images taken from newspapers, including the Courier.

“I personally would like to thank the help I’ve received from the archives of Lloyds Banking Group who have most helpful in providing material,” says Paul. “A copy of my book is now held in their archives.”

In all, the book took two years to put together with countless hours of painstaking research.

“It has been quite intensive because I started with the bank’s archives to begin with and then the British Library and their newspaper library, so there was a lot of searching for information.

“The result really is my general comment on what led to the banking crisis and the years leading up to one bank’s demise. I hope people will find it interesting.”

l We have three copies of Paul’s book to give away. To be in with the chance of winning a copy, simply answer the following: In what year was the Halifax Building Society founded? Send your answer with your name, address and contact number to Riches to Rags Competition, Virginia Mason, Halifax Courier, King Cross Street, Halifax, HX1 2SF.

The book is also on sale at Fred Wade, Halifax and Bankfield Museum, Boothtown, Halifax.