Eddie George: supreme technocrat with a love for banking

Eddie George, who died recently aged 70, oversaw the biggest revolution in the Bank of England’s history and became the first modern governor to manage interest rates independent of political interference.

Eddie George once described retirement as swapping Who's Who for "Who's he?" But George who died last week aged 70 has earned his place in history. "Steady Eddie" oversaw the biggest internal revolution in the Bank of England's 300-year history and became the first modern governor to manage interest rates independent of political interference.

George enjoyed a reputation as an avuncular bon vivant, who loved dry martinis and chain-smoked his way through City dinners. Professionally, though, he was "a supreme technocrat", says The Daily Telegraph. A lifelong Bank of England man, he had a markedly different style to that of his predecessor. If Robin Leigh-Pemberton "looked every inch the lord-lieutenant", George the son of a post office clerk from Carshalton, Surrey "looked like a hard-working bank manager". One of his forerunners, Montagu Norman, used to say that the Bank of England was his only mistress. And although "Eddie George was too fastidious to use such racy language", notes former colleague Howard Davies, "the same was true of him". He loved everything, "from the pink-coated parlour stewards to the annual governor's cricket match".

George's first big break was to win a county scholarship to Dulwich College. After a spell of national service he vaulted into Cambridge to read economics. He joined the Bank in 1962, having been interviewed by a man he'd impressed with his mastery of bridge at university. Initially, George worked on East European affairs and spent nine months in the USSR, where he was accused of spying by the Russians: an allegation he firmly denied. But his real expertise was currencies and the wholesale money markets. When he was made deputy governor in 1990 he was hailed by Tory MP Nigel Lawson as "the Bank's real monetary expert".

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However, George's mistakes over the collapse of the Bank of Credit and Commerce International in 1990 "could have cost him the governorship", says The Guardian. Some also claimed he was lily-livered in his defence of the pound against George Soros in 1992. But he still took the Bank's top job a year later. There were hairy moments during his first term, such as the Barings collapse in 1995, but it was George's relationship with the then Chancellor Ken Clarke that defined the era. "The Ken and Eddie Show" (the published minutes of their discussions on interest rates) were presented as good-natured jousts. Clarke later said "the biggest arguments we had were over who got the ashtray".

After the openness of Clarke, George found Gordon Brown "more complicated", a relationship not improved when Brown stripped the Bank of England of its banking supervision powers (see below), having granted it independence in 1997. George was "incandescent" and nearly resigned, says the Daily Mail. But the relationship later warmed. A favourite Brown story which sums up George well is of the Governor helping himself to a drink at a charity raffle, only to discover it was the vintage whisky intended to be the first prize. Unabashed, he presented it anyway, describing it as "half full, not half empty".

Eddie George:awise head and a safe pair of hands

"Down the ages, there have been strong governors and weak governors, petulant and dogmatic governors," says The Independent. "But George was not any of these things." He was just a wise old bird who could be trusted. With him in the chair, everyone felt comfortable." Indeed, he presided over a golden decade of almost constant growth and in appearance at least great stability.

However, George could and perhaps should have done more to protest at the removal of the Bank's supervisory powers, which left him with "only half the toolkit". What really riled him was that Gordon Brown had lied to him, says The Guardian. When the Bank was granted independence, Brown promised a review of its supervisory role. But two weeks later he handed those powers to the newly-formed Financial Services Authority (FSA). Brown was fortunate that during subsequent squalls, such as the Asian, Russian and September 11 crises, George got almost all the big calls right.

He was also "a lovely man and much more fun to be with than his central bankish demeanour suggested", notes the ex-FSA boss Howard Davies. Most refreshing and in contrast to many of today's public servants and bankers was his attitude to pay. When he became Governor, he had his salary frozen for five years: he believed pay restraint would help Britain grow without inflation, and he was happy to serve without mega-bucks. Modern bankers should remember, says Ian Campbell on Breakingviews, that "safety and sobriety come first".