A bend in the river

THE OPENING CREDITS of East Enders, the most watched television soap in Britain, show an aerial view of the River Thames snaking west to east through London on its way to the sea. The camera pulls out to reveal the distinctive skipping-rope loop where the river dips south around a tongue of land known as the Isle of Dogs. This almost-island, with a generous spill-over a couple of miles north, west and east of the loop, is the East End, its boundaries more or less following those of London's poorest borough, Tower Hamlets. For more than two centuries, this bend in the river generated stupendous wealth in the midst of poverty of a persistence and intensity unmatched in any advanced capitalist nation. For most of London's history, ships navigated around the Isle of Dogs, bringing in everything an island could consume or transform for re-export and returning with everything a rapidly industrialising nation could produce, including convicts sentenced to transportation to Australia. The rich became fabulously rich, and so did the City of London. This teardrop of land was the crucible for creating the greatest concentration of wealth in the world.

But the wealth that drove the expansion of the British Empire did not trickle down to the hordes who scratched a living loading and unloading, stitching and scrubbing, selling services and selling sex. As commerce grew, so did the needy population of the East End, more than doubling in the nineteenth century and creating the infamous slums graphically depicted by, among others, the journalist Henry Mayhew, who recorded in meticulous detail the daily lives of London's working poor; the more florid novelist and campaigner Charles Dickens; and the social reformer Charles Booth. Like most of his class, Booth initially saw Mayhew and Dickens as peddling socialist fiction until he investigated for himself and mapped and categorised every alley, courtyard and road in the miserable East End.

When he was writing, in the late nineteenth century, socialism was certainly in the air. The refugees who arrived at this bend in the river included thousands of religious and political dissidents. Friedrich Engels, by then living in London, believed that the East End working class would rise up as its counterparts in Europe had done. It didn't, but he lived to see the birth of the union movement, born of two significant political strikes in the East End: the Bryant and May match girls of Bow in 1888, and the Great Dock Strike of 1889.

The great wealth turbine created by the Victorians shuddered to a halt when the loading and unloading of ships moved downstream to coastal container ports, during the 1970s and '80s. But the Isle of Dogs was soon at the heart of a second great explosion of wealth in which, once again, ingenuity and greed combined to make massive fortunes – for some. This time the trade generating wealth was in money itself. For some twenty-five years, spanning the final years of the twentieth century and the early years of the next, the bankers thought the free-market bonanza would never end.


AT NIGHT THE lights of the Canary Wharf towers twinkle like cartoon diamonds, reminding their low-rise neighbours in the East End that trading money is a round-the-clock business. But recently the illuminations have a gap-toothed look and blocks of black reveal missing tenants.

The landmark tower of the Wharf – at 774 feet, the tallest building in London – is the fifty-storey Canada House, designed by Cesar Pelli. Its warning beacon still flashes to warn planes flying in and out of the nearby City Airport, and its pencil-point roof still puffs out a cloud of steam, presumably the vaporised sweat of the remaining anxious bankers inside. Here, on the eighteenth floor, is the Financial Services Authority – charged, since 1997, with regulating the exponential growth in the trading of complex financial instruments, a task it undertook with such a light touch that the crisis unfolded on its doorstep before it had issued a single warning to luckless investors. Here, too, the 1,370 London employees of Bear Stearns worked until March 2008, when the investment bank was forced to acknowledge that its balance sheet included $29 billion of dodgy mortgages, most of them American. The inhabitants of the Wharf prayed that Bear Stearns was a one-off catastrophe, and the US Federal Reserve guaranteed the bad loans in order to persuade a bigger bank, JP Morgan, to take over the crippled investment bank. Ben Bernanke, the Federal Reserve chairman, acknowledged then that, without US government intervention, he feared ‘a chaotic unwinding'.

Even so, the unwinding was soon apparent. In September, a second major player in the Canary Wharf ghetto of adventurous bankers, Lehman Brothers, which occupied a million square feet of office space close by, also collapsed dramatically. Too small to survive alone but too big to save, it reported $613 billion of debt, incontrovertible evidence for most bankers that the financial weather could, from then, only get bitter. Lehman's four thousand London employees provided the iconic pictures of the beginning of the crisis as they spilled onto a former quayside of the old London West India Docks with their cardboard boxes of personal possessions: an iPod, trainers, maybe a farewell card. Observers predicted that by the end of 2009 the City and Canary Wharf would lose ten thousand more jobs. But no one has estimated the size of the cull of spinoff jobs, from high-paid consultants and lawyers to the minimum-wage workers who feed, clothe, transport and clean up after the bankers. The UK's finance sector employs a million people around Britain. All will feel uncertain about their future.

The unpayable debts that stalled the world's financial system may have been American, but London's Canary Wharf, named after a small unloading quay for bananas, was the laboratory of the arcane, still scarcely understood, financial instruments that have ravaged the global economy. With a daytime population of up to ninety thousand, the Wharf is the size of an average town. But it is a town like no other. It is not London's financial area: that is still the City of London, about three kilometres to the west. It has no town hall, no schools, no charity shops. Children are found mainly in the subterranean shopping malls beneath the high-rise office blocks, but generally only at weekends. No old people or mothers with prams require your help through the revolving doors or off the escalators. There is not even a traffic problem, since most of the inhabitants commute in and out by public transport. There is no litter. You will never see a cat, and dogs are more likely to be sniffer dogs, alert for drugs or bombs, than pets. There are no beggars. The few poor people you meet are cleaners and service staff, usually early in the morning or late at night waiting for the buses.

Just a few hundred yards north of the Wharf is the other East End, with an oversupply of the litter and dirt and annoyances of inner-city boroughs. But if proximity to great wealth over two decades has failed to benefit East Enders, that at least now has an upside. The troubles of Canary Wharf's bankers (who, if they live in the area, inhabit the serviced riverside blocks) are likely to have less effect in these down-at-heel streets than in richer parts of London. The very informality of the East End economy has bred a certain resilience and self-reliance. You will find few of the well-known High Street names in the shopping parades, few big supermarkets, no chain restaurants or coffee bars, no chain pharmacies. There are no big employers, either. Most businesses are small or family concerns, particularly in areas of recent immigration (half the population is from ethnic-minority groups). Outside the Wharf there are few mainstream banks. In the predominantly Muslim areas of Aldgate and Whitechapel, for instance, there are Indian, Bangladeshi and sharia-compliant banks. Even more remote from the big banks are hawala schemes, cheap, efficient trust-based networks for transferring money overseas by phone. The Somali population in East London is said to send millions of pounds in this way so that money can instantly reach families back home with no bank account.

The rest of London has tended to leave the East End to its own devices. But, for the nearly a quarter of a million East Enders in Tower Hamlets, all this may be about to change.


IN 2012, THE EAST End will have more visitors than residents: the Olympic Games will bring around half a million workers and visitors to Tower Hamlets and neighbouring Stratford. So far, the Games have found few friends among London's middle classes and media commentators. The latest price tag of £9 billion is seen as a calamitous addition to the national debt. But the closer you get to the Olympic Park (where the main stadium structures are well underway), the more enthusiasm you find. Thousands of jobs are being created – in construction, but also in cultural and other support services. An associated commercial centre is being built by Westfield. And by 2012 the East End will have a high-speed train link to Europe and better cross-London connections (initially to transport the athletes, spectators, and foreign great and good) than it has ever had.

Shortly after London's successful Olympic bid, I took a sceptical Will Hutton – a fellow journalist on The Observer, where I then worked – on a tour of the as-yet-undeveloped Olympic site, a mile from where I live. Hutton, an influential commentator, is the author of The State We're In (Jonathan Cape, 1995), a damning excoriation of the destructive greed encouraged by the Thatcher government. Like many Londoners, Hutton had argued that the billions it would take to develop an Olympic site could be better spent. But he also confessed to me that, like most middle-class North Londoners, he never had much reason to visit the East End.

I took him along disused canal towpaths through the metaphorical back door to the Lea Valley, an ugly ribbon of land that will soon be the Olympic Park. It had hardly seen a shilling of investment since the small factories and warehouses which once serviced the docks were bombed to blazes in World War II. Hutton saw a perspective that the many dignitaries who have visited since will not have seen and now never will. We went past dilapidated, unplanned and mostly deserted factories, under bridges where putrid water pooled, past scruffy storehouses and car repairers and paint shops. He was shocked that within sight of both the then-booming City of London and Canary Wharf an area of such neglect and ugliness could exist. In July 2006 he wrote in The Observer: ‘The smell of sewage in the fifty yards of canal path before you arrive at Old Ford locks – junction of the River Lea and the Hackney Cut on the River Lea Navigation – is overpowering. Don't breathe in too deeply; at this intensity, it's almost certainly toxic...Ahead there is the outfall sewer that conducts most of London's sewage to the treatment plant in Beckton. This is the shittiest part of London...Where I was walking is about two miles from the City of London, one of the richest urban areas in the world, yet here everything is poor. The tracts of derelict land crisscrossed by overhead power lines, disused canals and sewage drains; the lack of infrastructure; the low incomes; the disastrous health experience; low life expectancy – everything is a tribute to neglect.'

Many are sceptical about the transformative power of the 2012 Olympics. But the Games will necessarily generate immediate local wealth, some good-quality housing and longer-term employment. London's stalled economy will certainly get a kick-start, even if the doubters are right that insufficient attention has been paid to the post-Olympic legacy. Siting the Games in this neglected part of London was without doubt the correct decision, righting a great wrong. Britain will, for once, have put its money and energies into the stubbornly derelict and impoverished East End.


WHEN WORK STARTED on the construction of the West India Docks in the final year of the eighteenth century, London had fewer than a million inhabitants. By the end of the nineteenth century, the population had increased sixfold. It was not only the largest city in the world; it was also the wealthiest. But the increase was a disaster for the East End's poor, straining already inadequate shelter beyond all limits. London's population explosion was fuelled partly by the flight of landless rural workers to the cities following the agricultural-enclosures acts, and later the failure of the agrarian economy, but also by surges of foreign immigration. Each political upheaval in Europe brought more asylum seekers. The largest group of arrivals in the nineteenth century were Russian and Polish-Russian Jews, fleeing religious persecution from Tsarist Russia. Between 1880 and 1900 their numbers grew from 46,000 to 135,000, mostly in the East End neighbourhoods of Aldgate, Spitalfields and Whitechapel. The first Baron Rothschild established the Four Per Cent Industrial Dwellings Company to construct model housing for the newcomers. The Jewish Board of Deputies was active, too, particularly in seeking other destinations for would-be immigrants – Buenos Aires, New York and Cape Town – fearing for their safety in an overcrowded East End.

There had also been what we would today call mass economic migration, including tens of thousands of Irish escaping the Great Famine. No border agency turned back those in search of a better future. As London grew, so did its appetite for cheap labour. Only towards the end of the century did the ruling class begin to fear that the large influx of subversives and radicals from Europe could foment revolution among the British working class. Most immigrants landed on quaysides in the East End and tended to stay until they had the means to move on. The stresses on this unplanned and already overcrowded patch became extreme, every now and then erupting into crisis when dwellings were torn down to build more riverfront dockyards, warehouses and roads to cater for the ever-expanding trade on the Thames.

In 1857 the Medical Officer for Limehouse reported that half of all children there died before they reached adulthood. Those who lived were likely to be stunted by disease, crippled by malnutrition and destitute. Epidemics of cholera killed thousands at a time and continued to do so until Sir Peter Bazalgette completed his program of closed brick-built sewers towards the end of the century.

Victorian England seemed blind to the misery in its midst. In 1851, marvelling at the Empire's wealth and good fortune, the ‘respectable' classes flocked to the Great Exhibition. All was triumph. Britain was pre-eminent, on the way to ruling a quarter of the world. Only a handful of liberal writers, philanthropists and campaigners voiced concern at evidence of acute deprivation at the heart of the Empire, and started to question the notion that poverty was a moral failing of the poor themselves. When Henry Mayhew told a meeting of London tailors in October 1850 that ‘morality on £5,000 a year in Belgrave Square is a very different thing to morality on slop-wages in Bethnal Green,' he was challenging firmly entrenched Victorian values. The idea that poverty might be any kind of excuse for immoral behaviour was shocking indeed. Mayhew had been the joint founder of Punch, but proved a better journalist than businessman. Forced by bankruptcy to abandon the satirical magazine, he freelanced for the Morning Chronicle, with which both Charles Dickens and John Stuart Mill had connections.


MAYHEW PERSUADED THE Chronicle's editor to back a detailed investigation of the 1849 cholera epidemic, thought to have killed around thirteen thousand people. Mayhew believed cholera to be a disease of poverty. Likely to 

have been influenced by Engels' 1845 study of Manchester, The Conditions of the Working Class in England, his survey ultimately ran to the three-volume London Labour and the London Poor, published in 1851. The editor had given him three helpers, but Mayhew himself concentrated on the East End. His vivid reports revealed lives far grimmer than Dickens's graphic stories of the workhouse or the street boys of Fagin's kitchen. Unlike more lurid accounts of East End life and degradation, which concentrated on moral turpitude, Mayhew's approach is credible in its journalistic detail. He gives an account of about a dozen boys and girls, ‘not one of them over twelve years of age, and many of them but six. It would be almost impossible to describe the wretched group, so motley was their appearance, so extraordinary their dress, and so stolid and inexpressive their countenances...There did not appear to be among the whole group as many filthy cotton rags to their backs as, when stitched together, would have been sufficient to form the material of one shirt.' He learns that most of the girls took to prostitution as soon as they could, and the boys to thieving.

From one boy he hears how the Ragged Schools (the endowments of well-meaning philanthropists) were places for planning stealing raids: ‘I was so much struck with the boy's truthfulness of manner that I asked him, would he really lead a different life, if he saw a means of so doing?' Mayhew gave the boy two shillings (by his own calculations around ten times more than a day's pickings) and later learned that the boy and his sister had kept the family for a week by buying and reselling some sprats. A ‘literary friend', perhaps Dickens, finds a job for the boy and takes on the sister as a housemaid. The mother opens a small shop, which does well. Mayhew writes that this story ‘may teach many to know how often the poor boys reared in the gutter are thieves, merely because society forbids them being honest lads'.

This was dangerously progressive. Indulging the destitute was considered to encourage low morals: give an urchin a pair of shoes and you might foster a wicked dependence on handouts and a work-shy attitude. The Economist of 15 December 1849 argued that reports such as Mayhew's were ‘unthinkingly increasing the enormous funds already profusely destined to charitable purposes, adding to the number of virtual paupers' and equated the Chronicle writer with a ‘piteous, whining, begging-letter writer'. Then, as now, it believed that the ‘higgling of the markets' had to be trusted. Trying to enrich the labourer at the expense of the master was, in the context of the 1848 uprisings in Europe, ‘communism more insidious than across the water'.

The historian Tristram Hunt explains it thus: ‘The Victorians considered poverty a failure of will. The idea developed that there was a character peculiar to the East End, an exotic danger. They had a prurient fascination with it. That is why the Jack the Ripper murders became a symbol of the East End: the victims were prostitutes, the attacks savage, feeding the fantasy that it was a morally dangerous place. The poor started to be regarded as sub-human.'

The economic success of the Empire made attitudes to the ‘savages' at home even worse, he argues. InBuilding Jerusalem: The Rise and Fall of the Victorian City (Weidenfeld, 2004), Hunt notes, ‘Time and again [the East End] was portrayed as another world: a world of dangerous swamps and violent savages more readily suited to the jungles of Angola than the back streets of Bethnal Green. It was imagined as an alien civilisation which the age of progress had all but forgotten.' The idea of the ‘alien' danger in the East End continues today, he believes, in a ready identification of the East End's large Muslim population with terrorism.

The latter half of the nineteenth century saw a spate of hysterical novels and salacious accounts of the horrors of the East End, such as James Greenwood's The Wilds of London (1874). Journals such as the Pall Mall Gazette told of ‘colonies of heathens and savages in the heart of our capital'. George Gissing described ‘the pest-stricken regions of East London, sweltering in sunshine which served only to reveal the intimacies of abomination', and called it ‘the city of the damned'.

But amid this pornography of poverty the dissenting humanitarian voices became more forceful. In 1883 the Reverend Andrew Mearns condemned Victorian England for the consequences of desperate overcrowding. ‘Here are seven people living in one underground kitchen, and a little dead child lying in the same room...Here is a mother who turns her children into the street in the early evening because she lets her room for immoral purposes until long after midnight...' Tristram Hunt describes Mearns's The Bitter Cry of Outcast London as ‘a blunt, brilliant...indictment of the policies of church and state alike for failing to alleviate "the great dark region of poverty, misery, squalor and immorality"'.

The humanitarian crisis that became impossible to ignore in the final decades of the nineteenth century was, at root, a housing crisis resulting from the boom years of the 1850s and '60s. Trade and industry had flourished; more docks, and roads plying goods from them to the city, were needed. The building of the Commercial Road to transport goods from West India Docks to the city resulted in extensive destruction of workers' housing. Overcrowding became systemic. A docker had to live nearby in order to join the daily scramble for work and, as river traffic increased, so did the numbers of those flocking to the East End. The docks and roads around them had been funded almost entirely by private investment.

The Victorians were, in effect, conducting a social experiment in laissez-faire economics, where more work brought in more labour. Margaret Thatcher would have pronounced it a great success. But the devastation caused by the entrepreneurs who invested a few thousand pounds to make far greater fortunes was paid for in millions by the philanthropists of the later decades of that century.

By mid-century London had been transformed into a thriving commercial capital, with roads, railways and more docks. Houses were torn down and the poor pressed into the remaining inadequate housing. A few philanthropists responded to this crisis with purpose-built worker tenements, notably George Peabody, an American, and Angela Burdett-Coutts, heiress to the Coutts bank fortune and the richest woman in England at the time. By her death in 1906, she had given away three million pounds, most of it in the East End. But philanthropy was not equal to the task of housing and feeding the huge numbers still flooding into the overcrowded hamlets along the Thames. Friedrich Engels despaired at the passivity of the East Enders. Only in the final decade of the nineteenth century did they start to fight back.


TODAY, BY ALMOST every measure, the East End remains the poorest area in Britain. In 2007, the borough of Tower Hamlets had more children in income-deprived homes than anywhere else in England. Unemployment rates of around 14 per cent for both men and women were the highest across England and Wales. In the schools more than half the borough's children were receiving free school dinners, since their parents had insufficient income to pay for them. Health statistics tell a similar story: life expectancy is lower and cancer rates are higher than in any other London borough.

The government of Margaret Thatcher almost planned it thus. When the great London docks -West India, East India, Millwall, Royal, Blackwall, Rotherhithe – were abandoned for container ports on the coast, more than 150,000 jobs in the Docklands boroughs disappeared. One in five of all jobs along the river was lost between 1966 and 1981. The Thames was left with a ghost town of empty wharves, warehouses and quays. The redevelopment of Docklands became a matter of urgent political debate in the late 1970s. But the new Conservative government passed up the opportunity for the people of the East End to share in the planned regeneration of the Isle of Dogs.

Margaret Thatcher came to power in 1979 with a zealous free-market philosophy. The former Docklands was to be redeveloped as an ‘Enterprise Zone' where business could pursue wealth without obligation to its neighbours. The island enclave in which the alchemy of wealth creation was to take place need not concern itself with the sea of poverty surrounding it. Specifically, the companies who came to this free-market zone would be relieved of observing the planning laws of the borough in which they sat, and of the burden of rates and taxes that applied to the rest of London. There was, after all, ‘no such thing as society', as Thatcher said in 1987.


IF WISHES WERE horses, beggars would ride and the Isle of Dogs would now be not the epicentre of the global financial recession, but a large garden suburb housing retired dockers. When the last upstream crane lifted its final load in 1981, the question of how to redevelop this unloved and unlovely part of London was the capital's primary planning issue. Docklands action groups pushed for a fair deal, finally, for the people who lived around the docks and had depended on them for their livelihood. Tower Hamlets, Newham to the east and Southwark across the river all started to plan redevelopment. The local authorities, solidly Labour, were under voter pressure to deal with persistent problems of overcrowding and some of the worst living conditions in the country. A home with a garden was the dream of every poorly housed East Ender. There was no private housing: Tower Hamlets owned virtually all of the borough's housing stock and had run out of space to build more. The council had earmarked twenty-two hectares of the former docks area for new homes. Together, the boroughs intended to double their housing stock.

But their ambitions for East Enders coincided with the advent of a leader dedicated to a free-market orthodoxy in which the poor and unemployed were perceived as victims only of their own lack of enterprise and guts. Margaret Thatcher unashamedly echoed the Victorian moralists. A thriving capitalist society, she believed, had to make capitalists of its citizens. Her lessons started in the East End. She wanted free enterprise and market values to flourish in the Labour bastion. She wanted a house-owning democracy to replace council-owned housing. She wanted a nation of free-marketeers, not of welfare dependents.

In 1981, two years into her prime ministership, she decided to take on London's left-leaning local authorities. The riverside boroughs, unable to agree among themselves on the way forward for the deserted docks, were easy opponents. A House of Lords Select Committee looking at the competing political ambitions for redeveloping the Isle of Dogs summarised the local boroughs' case thus: ‘the need – if only there were the money to satisfy it – is for the provision of publicly rented small houses with gardens'. The government argued that the boroughs were looking ‘too much to the past and too exclusively to the aspirations of the existing population and too little to the possibility of regenerating docklands by the introduction of new types of industry and new types of housing'. The Labour boroughs had done themselves no favours by opposing all private housing and xenophobically claiming that private ownership would bring in ‘an alien community'. The government's ambitions predictably prevailed.

Geoffrey Howe, Thatcher's Chancellor of the Exchequer, was the mastermind behind the Enterprise Zones, which he saw as experimental havens where businesses could flourish free of taxes and regulation. Thatcher and her environment secretary, Michael Heseltine, saw the economic potential of isolating a twenty-square-kilometre zone of prime building land close to the City of London that could come under a Docklands Development Corporation, outside the control of socialist local politicians.

New businesses which came to the Enterprise Zone would have no responsibilities, financially or morally, for anything but wealth creation. Had political journalists not found the language of planning and zoning so dreary, it is possible that, even in 1981, Thatcher would have faced greater opposition. In fact, the audacity of putting a large chunk of the East End outside democratic rule may have given even Margaret Thatcher some sleepless nights. The House of Lords Select Committee had expressed concern that ‘the transfer of development control over so wide an area from democratically elected councils to [an unelected body] a step which is not easily justified especially in an area such as Docklands where the attachment to local democracy was shown to be so strong.'

Nearly thirty years later, addressing a meeting in Canary Wharf in July 2008, Heseltine claimed to have had to persuade Prime Minister Thatcher. He had got her behind the idea of bypassing democracy, he boasted, only by telling her, ‘The problem is, Margaret, all those councillors down there, they're communists.' Her conversion followed instantly, he joked.

What the Tory government wanted to do with the land deemed too valuable for the poor had not at this point been specified, and it would be wrong to credit Thatcher and her two ministers with a vision of the million-pound bonuses that characterised the financial city which eventually emerged. The Tories' ambitions were, in part, small-minded – to weaken the socialist boroughs of inner London – and, in part, theoretical: to establish an experimental site for their vision of a Britain ruled by an unfettered market. The homes and jobs of those who had depended on the docks for their livelihoods simply did not figure in the plans.


AS IT HAPPENED, the rewards for the ambitious and greedy were to be far greater: a new city unhampered by ‘gentlemen's rules' and any obligations to the wider community. When Thatcher came to power, the City of London had just begun its transition from a gentleman's club to an international financial centre. A battle was underway between the traditional stock exchange and the modernisers who wanted London banks to join in the highly profitable world of futures trading. Deregulation of the London Stock Exchange and an end to control by the ‘top hats' was a glint in the eye of the big international bankers.

The first challenge was to establish the London International Financial Futures and Options Exchange (LIFFE), which was opposed by the traditionalists. The modernisers won and trading in financial instruments began. In February 1982 the Financial Times lamented that few understood this market: ‘Hands up who knows what a fill or kill contract is?' the anonymous Lex column asked on the eve of the LIFFE's opening. The world of swaps and derivatives and debt-trading had arrived. The ‘Big Bang' was to follow, bringing international banks into the sacred Stock Exchange and ultimately allowing for electronic dealing and the rapid development of London as the world's financial centre.

But where would all these new banks be housed? Space in the Square Mile, as the City of London was known, was limited to just about that. Even when the laws were relaxed to allow trading outside the Square Mile, there remained problems of planning permission. It was nigh on impossible to get consent for a building taller than St Paul's or any that interrupted familiar vistas of Wren's great cathedral.

In February 1985, with the Big Bang fixed for the following year, Michael von Clemm, then chairman of Credit Suisse, went to lunch on a barge with the unelected Development Corporation running Docklands. Von Clemm was there not to pursue his banking interests but gastronomy. He had been a friend and adviser to the restaurateur Roux Brothers since helping them set up business in the 1960s, and was looking for a site for a packaging plant. The enterprises then springing up in the planning-free zone were small-scale commercial projects of this kind. The barge on which he lunched was moored near an old banana warehouse and von Clemm eyed it up as a suitable back office for Credit Suisse. He discussed his interest with a US real estate developer, who suggested that the warehouse should instead be developed as the front office. It was an audacious idea.

The development of Canary Wharf began in July 1987. By 1990 Pelli's landmark Canada House tower was finished. In 1991 the first tenants moved in; in 1992 the original developers went bust. But the project could not now be allowed to fail. By 1995, this monument to free enterprise and the wisdom of the market had cost the taxpayer, in development grants and tax breaks, an estimated £3 billion.

The first tenants of the showpiece Canada House were not bankers, but newspapers. In 1992, lured from their costly Fleet Street addresses by low rents and tax breaks, the Daily Telegraph took up residence, followed by the Mirror Group and The Independent. Eventually, the banks followed. John Willcock, writing inThe Independent in November 1998, commented: ‘This is what Canary Wharf offers – cheap rents and big floor plans. This is also what riles the City of London, which has seen a steady stream of its most rewarding residents – Morgan Stanley, CSFB, Citicorp, even the Financial Services Authority (FSA) – moving downriver. A lot of this was due to the massive tax breaks bequeathed by Margaret Thatcher's government to kick-start the development in the 1980s. As Stuart Fraser, chairman of Planning and Transportation at the Corporation of London, put it: "The offer of £235 million to HSBC to move two miles downstream does seem to be a generous use of taxpayers' money".'

Willcock wrote that column when The Independent occupied the eighteenth floor of Canada House, now home to the Financial Services Authority, which egregiously failed to protect the public against even greater losses.



TWO HUNDRED YEARS earlier, on the site that was to prove so attractive to investment bankers, another group of entrepreneurs saw the great fortunes to be made if those who wanted to make money also made the law. In the closing years of the eighteenth century, the River Thames had become impossibly congested. The tidal range of the Thames meant that loading and unloading had to be carried out mid-river, by barges and lighter ships. The cargo vessels backed up around the Isle of Dogs, waiting days, even weeks, for their turn to be unloaded. After that, unloading into smaller vessels and thence to the dockside could take days. Every delay posed opportunities for pilferage and shrinkage of the cargo. The trading companies claimed their losses amounted to hundreds of thousands of pounds a year;  private watchmen and guards were inadequate to the task.

There was at that time no publicly funded police force in Britain, and considerable popular opposition to the idea. The House of Commons had been petitioned by the merchants, but shied away from something still considered alien to the British conception of freedom. Pressure mounted. In 1794, the philosopher Jeremy Bentham and his brother Samuel, a shipping engineer and architect, testified before the House of Commons for a bill aimed at ‘preventing fraud and embezzlement in the dockyards'.

Parliament moved too slowly for the West India merchants, who claimed to be losing hogsheads of rum, molasses and sugar through ‘sweepings' and ‘samplings', at that time widely perceived by those who worked on the water as their routine and  deserved rewards. The merchants wanted to deal with not just the petty thieving, but the entire riparian culture. Patrick Colquhoun, a magistrate and merchant who became obsessed with what he described as the ‘matured delinquency' of the river workers, estimated that 120,000 ‘lumpers, watermen and coopers' were directly employed in river work, and that up to half a million men and women owed their living to the river indirectly. Many of these workers had, over more than a century, been entitled to a share of offloaded cargo; these were the ‘perquisites' of the work and worth considerably more than the wages, which as a result had remained unrealistically low. The perks were the remuneration. Colquhoun was unimpressed by that line of reasoning. ‘Custom and example sanction the greatest enormities which at length become fortified by immemorial and progressive usage: it is no wonder that the superior Officers find it an Herculean labour to cleanse the Augean stables,' he wrote in 1795 as he set about cleaning up the river, a task he resolved to achieve, if necessary, without parliament's help.

Colquhoun argued vehemently for the business of making money to be publicly protected. As provost of Glasgow and the founder of its chamber of commerce and manufacturing, he lobbied government for legal reforms and strategies to promote business and trade. He travelled to London in the late 1790s to confront politicians and get something done. Impatient with parliament's prevarication, he raised funds from the West India merchants trading out of London to set up a police force at Wapping.

In July 1798, fifty men with four or five boats started to patrol the river around the quaysides, to the consternation of those who for years had found ways to outwit the private watchmen paid to protect warehouses along the banks of the Thames. It was a direct challenge to all who worked on the river. The new ‘river police', operating with government permission but without public funds, were hated. They enforced rules of working (daylight hours only, with meal breaks taken on board) and a dress code (goods had been smuggled in deep pockets, hats and special coats), and even supervised the payment of wages. Before the year was out, a crowd of thousands tried to set fire to the riverside ‘police station' and one security guard was killed. The spark was the ‘theft' of a bag of coal. The arrested man's defence was that it was the customary entitlement of those heaving coal. Sadly for the defendant, Patrick Colquhoun was the magistrate who dealt with the case.

After two years, Colquhoun believed he had made the economic case for a permanent river police: the private force had cost the West India merchants £4,200 a year but had saved £182,000 worth of cargo, he argued. Parliament now agreed to fund the River Thames Police: the first state-funded police force in Britain, predating Robert Peel's ‘bobbies' by three decades.

Colquhoun's police project transformed the economy of the East End and, ultimately, the fortunes of Britain. It made possible the next giant leap, the introduction of the closed docks on the Isle of Dogs. The scope and audacity of the project – the historian and critic Peter Ackroyd describes it as ‘the largest single, privately funded enterprise in the history of London' – determined the future of the capital, the nation and the world for the next century and a half.

The primary purpose of the West India Docks, on which the towers of Canary Wharf now sit, was to protect shipping from thieving locals. The Isle of Dogs provided a perfect site, an excavation at the northern end rendering it a true island for the first time. Ackroyd describes the resulting architecture of moats, high walls (guarding against thieving), warehouses and giant lakes as depicted in paintings and engravings of the time as ‘an elegant prison island'.

On the eve of the nineteenth century, parliament passed the West India Dock Company Act, authorising the creation of a wet dock in the area now called Canary Wharf. The merchants had lobbied energetically for a period of trading monopoly intended to help encourage investors, much as the later tenants of the Wharf were thought to need the inducement of tax holidays. Parliament agreed but placed what proved to be generous limits on the amount of profit the company could make before reducing charges on shipping. Despite the scale of the buildings and excavations, the docks were completed with astonishing speed and were ready to be opened by Prime Minister William Pitt the Younger in 1802. Construction had taken three years and cost half a million pounds, all paid by private subscription.

The West India merchants calculated that the near-perfect security immediately saved them £400,000 a year. The Treasury, which had invested nothing, was rewarded with tax revenue of £150,000 a year. Investors received the maximum dividend parliament had allowed, 10 per cent, for the first quarter-century of the dock's operation, and the company made huge profits on top of that, soon accumulating £800,000 capital, sufficient to secure its monopoly control of trade.

Further enclosed docks soon followed: East India (now the ExCel centre, where on 1 April 2009 – Financial Fools Day, it was called – the G20 met to consider emergency measures to deal with the financial crisis), Wapping and, in 1828, St Katherine's, where the most valuable cargo was taken. These luxury goods – ivory, carpets, marble, shells, perfumes – were deemed worthy of luxury accommodation, and the magnificent Ivory House at St Katherine's dock has since become a great tourist attraction. But, as its construction required the destruction of yet more of the housing of those who worked and lived on the river, accommodation for the poor deteriorated further.



NOT ONLY WERE workers deprived of their traditional share of the wealth generated by the river trade, but the new docks created a regime of casual labour – the hated ‘call-on' system, which left labourers unsure each day whether they would work – that contributed enormously to the impoverishment of the East End. By the end of the nineteenth century, in the factories, gasworks and on the docks, workers were beginning to stir. Friedrich Engels had despaired of the working classes following the example of their continental counterparts. But when they did, the revolt started in the East End and, once again, the West India Docks were at the heart of a social and political movement that would determine the course of a century.

The dockers sought a minimum shift of four hours and a wage increase; the dock owners refused, confident that the supply of cheap labour in the East End would make it impossible for casual workers to maintain a strike. But, for once, the dockers were not without support. The year before, in 1889, the Bryant and May match girls had successfully campaigned for better wages and conditions. Their appalling safety conditions, which saw many of the women dying of ‘phozzie jaw', a necrosis of the jaw bone brought on by poisoning from phosphorous, aroused the consciences of middle-class reformers. Beatrice Webb – who, with her husband Sidney Webb, founded the Fabians – wrote three decades later of ‘a growing uneasiness, amounting to conviction, that the industrial organisation, which yielded rent, interest, and profits on a stupendous scale, had failed to provide a decent livelihood and tolerable conditions for a majority of the inhabitants of Great Britain'.

Not long after, gas workers at Beckton, just downstream of the West India docks, secured a reduction in working hours from twelve to eight by threatening to strike. Thus inspired, the dock labourers of the tiny Tea Operatives Union walked out. They were soon joined by the better-paid stevedores. Other docks joined in, and soon some sixty thousand dockers were on strike. The London Evening News & Post reported: ‘Dockmen, lightermen, bargemen, cement workers, carmen, ironworkers and even factory girls are coming out. If it goes on a few days longer, all London will be on holiday. The great machine by which five millions of people are fed and clothed will come to a dead stop, and what is to be the end of it all? The proverbial small spark has kindled a great fire which threatens to envelop the whole metropolis.'

The dockers organised mass meetings by the river near Tower Bridge. Support was coming from far beyond the East End: Engels' socialist allies, including Tom Mann, Marx's daughter Eleanor and John Burns, along with William Morris and Annie Besant, all contributed. Most important, however, was their success in raising money – almost fifty thousand pounds, of which an astonishing thirty thousand came from the organised dockworkers of Australia. It proved a turning point in the strike, enabling ‘relief coupons' to be given to thousands of strikers, and it demoralised the employers into agreeing to the workers' demands.

The Tea Operatives immediately became the Dock, Wharf, Riverside and General Labourers' Union, later part of the Transport & General Workers Union, for many decades Britain's largest union. Engels was delighted. He wrote: ‘The dock strike has been won. It's the greatest event to have taken place in England since the last Reform Bills, and marks the beginning of a complete revolution in the East End.' And: ‘Hitherto the East End had been in a state of poverty-stricken stagnation, its hallmark being the apathy of men whose spirit had been broken by hunger, and who had abandoned all hope.'



VICTORIAN ENGLAND HAD hung on to the belief that helping the poor would take from them the drive to work, the one thing that might save them from damnation. Eventually the flaws in this dogma confronted them – with lasting consequences for the organisation of British society. The dockers became a powerfully organised political force, heralding the ‘New Unionism' that gave working people a voice and soon after, in Labour, a political party.

The Empire, too, came to see the sickness at its heart. In 1899, the British struggled to defeat fifty thousand Boers, and was saved from a rout in the Transvaal only by enlisting healthier Australians. The army drew parliament's attention to the problem: the poor quality of British soldiers. Poverty-related diseases of the inner cities meant the army was rejecting one in three recruits. A militant reformer, William Booth (who went on to found the Salvation Army), had in 1890 railed against the East End's ‘dwarfish dehumanised inhabitants'. So wedded were the Victorians to the free market, they had failed even to safeguard the health and wellbeing of the workers and soldiers they needed to protect the Empire.

Today, it has taken a dramatic failure of the banking system to convince free-market fundamentalists that the market may not always get it right. Canary Wharf's bankers became intoxicated by the belief that their wealth-creating mechanisms were underpinned by sound scientific principles. They created fiendishly clever financial algorithms which ‘proved' that parcelling up different types of debt and swapping it for other kinds of debt insulated them against the risk of loan defaults. But they did not, apparently, see the risk of widespread defaulting (of the kind you might expect, for example, when house prices crash), nor of investors and depositors getting a hunch that they should withdraw their money quickly.

The failure, when it came, was catastrophic. That is to say, the transition from apparent normality to chaos was sudden and dramatic. The financial journalist Gillian Tett was one of only a few British commentators who foresaw the problems and reported her fears as early as 2005. A former student of social anthropology, Tett did not underestimate the role of human behaviour. ‘There was one dominant free-market ideology...a complete dogma that could not be challenged,' she said earlier this year in a BBC Radio 3 discussion with Britain's former chief scientific adviser, Lord Robert May. ‘It is widely forgotten...that the financial industry built wonderful financial models based on Newtonian physics. But while [bankers] had taken on the idea that economics can be reduced to crude formulae, science had moved on to adopt chaos theory.' Lord May, too, was scathing. ‘Some of the maths was not that sophisticated. Some of it was deeply stupid,' he said. ‘Important questions were not asked [about the credit swaps]. For example, "What are the correlations in the things you bundle together?"'

But if the traders were blinded by belief in their own brilliance, why did others not see the dangers? Tett uses the anthropological term ‘social silence': the convictions of elites remain unchallenged. Gordon Brown promised as chancellor that the days of boom and bust were over. But the man who staked his reputation on ‘prudence' has now seen the biggest bust of his lifetime because the freedom of the market simply could not be questioned.

Inside the banks, the social silence was even more astounding. Greed overcoming caution is one explanation: bankers are paid according to the units of money they push around; the more parcelling and slicing and swapping, the better. But why, asks Tett, did the chiefs not examine the risks inherent in credit-default swaps more closely? Because, she says, in too many banks, the risk managers had lower status than the traders. ‘At Merrill Lynch, for example...the chief risk officer never reported directly to the CEO. As a result, risk managers were in no position to challenge the actions of traders. Similarly, at UBS and Citi, risk managers mostly had lower status than the traders they were supposed to monitor,' she wrote in Management Today.

Then there are those whose business it was to advise on risk: credit-rating agencies such as Standard & Poor's, which in May 2009 upset the British government by putting a question mark on the AAA rating of its bonds, apparently saw no problem at all with the mass swapping of sub-prime loans. It is hard to understand how someone with a 120 per cent mortgage on a downtown Los Angeles house was seen as a safer bet than a major economy.

The social silence extended to individuals too. The ever-upward valuation of homes encouraged everyone in Britain to feel richer, to feel they deserved more. ‘My house earned more than I did this year,' we would say of the phoney new wealth held in bricks and mortar. Personal indebtedness grew as people borrowed on their homes. While house prices remained buoyant, lenders were insouciant. And, completing the cycle, the government kept quiet, too. Voters who believed they were richer would keep Labour in power and not cavil about rising inequality and the failure of their representatives to address the entrenched poverty of areas such as the East End.



'BILLIONS OF POUNDS have been poured into alleviating poverty in the East End but the only product is strategy documents,' said Andrew Mawson when I met him at the House of Lords. Mawson is a non-party peer who chose the title of Lord Mawson of Bromley-by-Bow, one of the East End's poorest neighbourhoods, where he developed and put into practice his philosophy of social entrepreneurship. ‘The issue here is not the economic crisis but the ineffectiveness of the public sector. Children are dying as a result of indecision.'

The ineffectiveness of local government, he told me, was a political failure dating back to the ‘private sector bad, public sector good' mantra of the 1970s. ‘It was almost a religion,' he said of that era's stymied political debate. He did not add that its replacement in the 1980s by Thatcher's ‘public sector rotten, private enterprise holy' philosophy cannot be said to have fostered energetic local institutions. But he pinpoints a major problem in the East End. The public-sector ethos is strong, still overwhelming private-sector initiatives outside the former Enterprise Zone of the Docklands. Tower Hamlets still has one of the highest proportions of public housing in London, much of it in poor condition. But local authorities have been robbed of the power to improve or replace this housing. They no longer have the funds, or the skills in management. And even if they did, Britain is now under heavy international pressure to cut public debt. No future government is likely to be giving local authorities new powers to spend up big.

‘The key issue is not money,' says Mawson, ‘but how we use public money well. Dealing with local authority bureaucracy is like wading through treacle.' The major investment needed in the stymied economy of the wider East End cannot, he believes, start in the council offices. It has to start in the street, and the street of his example, St Paul's Way, is a few hundred yards from mine. Here, he believes, with the right private and public partnerships, a health centre and 1,300-pupil school will kick-start private commerce and housing. This is Mawson's concept of the social entrepreneur, of partnership between investors and users, as discussed by Cheryl Kernot in Griffith REVIEW 24: Participation Society.

The same bottom-up approach is the basis of his current project in the East End: Water City, conceived in Canary Wharf boom-time. The aim is to fully use the East End's greatest resource, its water, for leisure and commerce, housing and transport, including the underdeveloped River Lea Valley, until World War II the site of many small factories and now part of the Olympic 2012 redevelopment. The East End's canals, whose dereliction and squalor so astonished Will Hutton, are already being reclaimed for recreation. Mawson, in keeping with his philosophy of social entrepreneurship, had, when we spoke, just found a new partner. Ironically, it was the Bank of America, in which the US Federal Reserve now has a massive stake. That adds a new dimension to the idea of public-private partnership, but it also suggests one way in which banks really could begin to transform themselves and use their public subsidies for public good.



THE EAST END of the past is fertile ground for England's burgeoning passion for family history. Countless books seek to record the ‘real East End'. These memoirs, written by the grandchildren or great-grandchildren of ‘real' East Enders, add wonderful human dimensions to history's grim catalogue of the consequences of imperial wealth and expansion. But they also sentimentalise and glamorise. Just as the phrase ‘real East Ender' has too often been used to mean ‘white', so the word ‘vibrant' too often precedes ‘community', and means Bangladeshi or black neighbourhoods. Now, at least, internationally acclaimed writers like Monica Ali, who tells the story of a woman from Bangladesh arriving in Brick Lane, the title of her book, are demonstrating that the ‘real East End' shifts, constantly reinventing itself.

When sentimentalists lament the loss of old solidarities and scorn gentrifiers and yuppies in ‘their' traditional East End, they fail to acknowledge that most new waves have gentrified, if that means coming to a poor, rundown area hoping to improve it. The Huguenot silk weavers were gentrifiers in the seventeenth century, bringing the manners and skills of Protestant France to Spitalfields; so are the Bangladeshis, now a third of the population. And so were the Poles, whose work ethic during the recent boom years alarmed the more relaxed local plumbers, decorators and carpenters.

Unlike those in the soap opera, today's East Enders do not live lives of multiracial solidarity. Poverty does not encourage harmony. The British National Party is feeding a residual resentment among locals at the failure of governments to help them share in the years of plenty. My first address in the East End was off Brick Lane, then a dingy street of curry houses where the last Jewish shopkeepers were moving out and the first-generation Bangladeshis were developing what is now a chic lunch-hour destination for City workers. At that time, in the 1970s, the neo-fascist National Front sold its newspapers at one end – carrying on a tradition from Oswald Mosley's blackshirts, calling for wogs, waps and Jews to get out of the East End – and the Socialist Workers Party distributed anti-Nazi pamphlets at the other.

My second address, three decades ago, was in Mile End, where I still live. A young neighbour, then about thirty, lamented the loss of the East End of her 1950s childhood. ‘They used to call this [Mile End Old Town] the Cohens and Kellys,' she told me, having correctly identified that I was neither Jewish nor Irish. She moved soon after to North London, like many ‘Cohens' before her. Three connected families across the road had lived in the street since the first of hundreds of World War II flying bombs to blitz East London hit the nearby railway. When London house prices soared in the 1990s, two of them sold quickly and moved to Essex. Now my neighbours are Chinese, Polish, Sri Lankan. As teenagers, the sons of a family of second– or third-generation British Sikhs adopted the accents of North London black rappers, rather than a Cockney twang – which, despite living in the heart of the East End, I now seldom hear. Their father talks as I do: southern, slightly lazy. And there's another sound I seldom hear: the EastEnders signature tune ends with a cheerfully whistled phrase. Now the only whistler is the ‘East End' window cleaner. Probably a ‘Kelly', he drives in from Essex.



A SECOND POPULAR television program uses the signature East End image of the bend in the river. Here the credits show a helicopter clattering over the water and the high-rise landscape of Canary Wharf, towards a tower-top helipad. All is steel and glass and money. This is The Apprentice, a ‘reality' show where ambitious young men and women compete with each other to become an ‘apprentice' to the business tycoon Sir Alan Sugar. He is the son of an East End tailor (and, since June, enterprise adviser to Gordon Brown's benighted government) and talks with an improbably authentic Cockney accent, pouring scorn on their attempts to impress him with their business acumen. The Apprentice has proved hugely popular – partly because of Sir Alan's barked put-downs and partly because of the unashamedly raw capitalist energy of the competitors, many of them second-generation Asians. Canary Wharf is the right visual cue for this program. Over two centuries the former marshland on which the Wharf now sits has delivered hundreds of chancers their fortunes. It has done so mostly in a sea of deprivation.

That this particular bend in the river should again become the crucible for generating global wealth is an accident of geography. But the collocation of plenty and poverty is no accident. Muck and money are proverbial bedfellows. Those who need money and those who worship it find each other. The desperate arrived in London, welcomed in periods of boom and reviled when times were hard. Desperation and alienation breed lawlessness which, for rich and poor, has been a continuous thread in the East End's story.

For all the sentimental literature on the old harmonious East End, the stronger narrative is one of resilience. For a while, the life of the river and of the dockers who found their voice did provide cohesion and solidarity. But loyalties here have always been frail. Tower Hamlets has no centre; it groups together Mile End, Stepney, Poplar, Bow, Whitechapel, Millwall, Wapping, Limehouse, Bethnal Green, Shadwell, Aldgate, Spitalfields. Each hamlet has significance to its inhabitants, but no administrative coherence. The 2012 Olympics, the continuing development downstream of the Isle of Dogs and Lord Mawson's Water City will shift London's commercial centre further east. The East End could become central. The East End, with its rump of a name, could become the hub. The coming decade might be the first time – after centuries of poverty and substandard health, and of providing labour and services to enrich others – that East Enders get something back. They will not be the same East Enders, not even their descendants, quite probably not even with ancestors from the same continent. But it will be something to celebrate.

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