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Taking stock: a view since '52

By John Harrington

Date: Sunday 03 Jun 2012

  • Part one of a light-hearted look back at the changes to the FT 30 index, the forerunner to the FTSE All-Share and FTSE 100

Back in 1952, there was no FTSE 100 index, so it makes it difficult measuring the performance of the London stock market during the reign of Queen Elizabeth II.

Even the broader-based FTSE All Share index did not start life until 1962, so if you want to measure how well the market has performed, you have to use the good old FT 30, Britain's answer to the Dow Jones index which for some reason, unlike its US counterpart, seems to have fallen out of favour as a market benchmark.

Dating back to July 1st 1935, the FT 30 is the oldest stock market index in the UK and one of the oldest in the world.

Unlike the FTSE 100, where the constituents of the index are reshuffled according to the market capitalisation of London quoted stocks, the composition of the FT 30 is determined by the guardians of the index at the Financial Times.

The idea is that the index should represent, broadly speaking, the gamut of the UK economy, unlike the FTSE 100, which these days seems largely a proxy for the mining and/or oil sectors.

GKN and Tate& Lyle: the great survivors

Seeing as this is a week for nostalgia, it is illuminating to take a look at the original constituents of the FT30 back on July 1st, 1935. Company names in italics are still quoted on the London Stock Exchange today.

Original FT30 constituents

Associated Portland Cement, Austin Motor, Bass, Bolsover Colliery, Callenders Cables & Construction, Coats (J&P), Courtaulds, Distillers, Dorman Long, Dunlop Rubber, Electrical & Musical Industries (EMI), Fine Spinners and Doublers, General Electric, Guest Keen & Nettlefolds (GKN), Harrods, Hawker Siddeley, Imperial Chemical Industries (ICI), Imperial Tobacco, International Tea Co Stores, London Brick, Murex, Patons & Baldwins, Pinchin Johnson & Associates, Rolls-Royce, Tate & Lyle, Turner & Newall, United Steel, Vickers, Watney Combe & Reid, Woolworth (FW).

There are quite a lot of textile firms in there, unless I miss my guess. Courtaulds was certainly one, and the name Fine Spinners is a bit of a give-away, while I would bet money that Coats (J&P) ultimately merged with Patons & Baldwin to form Coats Patons, which subsequently became Coats Viyella.

The list also includes two major brewers in Bass and Watney Combe Reid, plus a spirits firm, Distillers, which will be forever remembered more for its disastrous diversification into drugs which led to the Thalidomide tragedy.

Your mileage may vary, but the names unfamiliar to me are Bolsover Colliery, Callenders Cables & Construction, Dorman Long and International Tea Stores.

An industrial strength index

One thing you may notice from the list is the complete absence of any financial stocks, such as banks, insurers or investment trusts.

That is because, if memory serves, the index was restricted to "industrial" stocks in those days. I am not sure why this was; perhaps it was because finance companies - whose contribution to Britain's balance of payments was always referred to as "invisible earnings" in the news bulletins of my youth - were not regarded as part of the "real" economy.

How things change, though it is worth remembering that the UK still ranks around sixth or seventh in the world's manufacturing league table, so the motherland is not quite the nation of shopkeepers and investment bankers it is sometimes painted as.

Only two of the original members are still in the index today: Guest Keen & Nettlefolds (GKN) and Tate & Lyle. Another original member, Imperial Tobacco, is still around as a publicly quoted company, though it has had a spell as a non-independent company. Others have evolved into other incarnations (e.g. Bass) or been taken over (e.g. ICI) or have bitten the dust (Woolworth).

Ch-ch-ch-changes

Looking over the major changes to the index during the reign of Queen Elizabeth is like looking at a series of snapshots of British life.

The first seven years of her reign saw no change. Then, in 1959, Bowater Paper and Alfred Herbert replaced J and P Coats and William Cory to give representation to paper and machine tool industries, respectively. Harrods got taken over by the House of Fraser, which duly took the Knightsbridge store's place n the FT30.

In 1960, United Steel, which had been privatised, supplanted Pinchin Johnson in the index after the latter was taken over by Courtaulds. Governments change, though, and in 1967 United Steel was nationalised again, at which point its place was taken by gases firm British Oxygen (so much better than that foreign oxygen ...), probably better known as BOC.

Courtaulds was at it again in 1964, taking over Patons Baldwins and Lancashire Cotton, paving the way for drugs firm Glaxo (later to merge with Wellcome) and United Drapery Stores to join the index.

Shipbuilder Swan Hunter got the heave-ho in 1966 to be replaced by technology firm Plessey. The FT's web site said Swan Hunter was ejected because of poor performance; the Swan later became a dead duck.

Beecham, later to merge with US firm Smithkline, replaced Murex in 1967 because of the latter's mundane performance. Smithkline Beecham later merged with GlaxoWellcome to firm DaveDee,Dozy,Beaky,Mick & Tich.

Car industry running out of fuel

The following year, in another episode in the long and painful decline of the British car industry, Leyland Motor was jettisoned from the index because it was about to merge with British Motor to form a "national champion" in the car sector. Boots Pure Drug replaced it. Said national champion, British Leyland, replaced British Motor in the FT30 in 1969.

Talking of car firms, once upon a time Rolls-Royce used to be one (you thought it still was? The car business is now owned by German company BMW). Rolls-Royce was booted out of the FT 30 index because of poor share price performance to make way for Allied Suppliers, of which more anon.

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