A look at how coffee has influenced two major financial institutions
From my desk, if I lean back, twist my neck and strain a bit, I can see the spire of St. Mary’s, Abchurch – a Wren church with an impressive painted dome and an imposing Grinling Gibbons altarpiece. It sits in Abchurch Yard where you will also find Matt and his ‘Lazy Coffee Cart’.
Now you may be wondering where I’m going with this…Wren church? Coffee? Well, ever since Sir Christopher was building churches in London there has been a financial connection to coffee, which I’m going to explore and which I’ve brought right up to date at the end. So please read on as we take a short meander through this little corner of the City. After a shot of Matt’s delicious espresso to get us going, we can begin the tour.
We leave Abchurch Yard and walk up Sherborne Lane passing through Post Office Court and out onto Lombard Street, where we find a branch of Sainsbury’s. It occupies the former site of Lloyd’s Coffee House, which was found here from 1691 to 1785.
In the 17th and 18th Centuries the coffee houses of London were popular social places where men would meet for conversation and commerce and learn the news of the day – reporters, called runners, went around the coffee houses announcing the latest news. They attracted men of wit and intelligence (reportedly including Christopher Wren), in contrast to the rowdier elements more commonly found in alehouses.
Lloyd’s Coffee House was opened by Edward Lloyd in 1686 on Tower Street, but later relocated to Lombard Street. It was popular with sailors, merchants and ship owners, who paid a penny for a coffee and admission. The enterprising Edward provided his clientele with regular and, importantly, reliable shipping news. Gentlemen of the shipping industry frequented the place to discuss maritime insurance, shipbroking and trade. The dealing that took place ultimately led to the establishment of the insurance market, Lloyd’s of London which, since 1986, has occupied its still-impressive, Richard Rogers designed, headquarters in Lime Street.
Leaving Sainsbury’s (sorry, Lloyd’s Coffee House) we cross the road and enter Change Alley (formerly Exchange Alley) where in the 17th and 18th Centuries you would have found Jonathan’s and Garraway’s coffee houses – not forgetting ‘Tom’s, the ‘Rainbow’ and the ‘Jerusalem’, plus a whole bunch more of those alehouses.
You might not want another coffee just yet, but you could check your share prices. Jonathan Miles, who opened his coffee house in 1680, allowed John Castaing to post the prices of stocks and commodities – the first evidence of systematic exchange of securities in London. Dealers expelled from the Royal Exchange for rowdiness pitched up in Jonathan’s and Garraway’s to continue their business, and in 1761 a club of brokers was formed to trade stocks. The club built its own building in 1773 in Sweeting’s Alley, which was dubbed New Jonathan’s, but which was later renamed the ‘Stock Exchange’. The London Stock Exchange is now found in Paternoster Square, near St. Paul’s Cathedral.
So there you have it, the partaking of coffee in public coffee houses led directly to the formation of two critical and historic financial institutions. I can’t start my day without a good cup of coffee, so you could say that coffee and finance are still closely associated, and have been ever since the 17th Century.
Of course, coffee is a traded commodity and, if you’re brave – nay, foolish – you could invest in it (and not just by the jar) via an Exchange Traded Fund (ETF). I say foolish because…well, look at this chart. It plots the performance of a coffee ETF over the last ten years. It’s a bit of a roller-coaster ride, to say the least, and you’ll likely spill your coffee?
Philip Chandler FPFS, CFPTM, Chartered MCSI
Chair of Aspinalls Technical and Investment Committee