All the way to the bank

Observations on Northern Rock

Friday 14 September, 13.32: "Is there a rush on the bank?" I asked, half joking. "It's not really a rush," said the man in the black flat cap as he pointed to the well-formed, 90-strong queue in front. At 6ft 6in he had the best view of the line that had been forming outside Northern Rock's branch in Golders Green, London since morning. Stretching 45ft from the cashier windows and on to the pavement, the queue was beginning to obstruct the front entrance of the HSBC next door. "It's not worrying," said Flat Cap. However, many of the bank's savers thought that it was.

"Oh God, when is this going to end?" said a man with unbrushed hair, sandals, T-shirt and jogging pants. He told me his age, 57, but not his name (people are sensitive about personal finance) and that he was a retired estate agent who once worked for the music business. He was now caring for his mother and wanted to get out his savings: more than £100,000. "I thought I could relax. I've been very careful with my money, working since I was 15. Now I'm worried sick."

Other prudent savers, many retired and with hundreds of thousands of pounds, were waiting in line. But there were also younger people with less to lose, like the musician Michael Lesirge, 29, who put what he had into Northern Rock a year ago - "They had the best rates" - and worried account holders who had brought along supporters: friends and siblings, husbands with wives, mothers with children, children with parents, like the lawyer in her thirties waiting with her mother. "I could have killed my husband," said the mother. "He knew about this three weeks ago . . . He read something in the Telegraph."

Those in line were acting on different sources of information. Most had some idea of Northern Rock's problems after the US downturn in August. For them, the last straw had been the BBC's reporting of the Bank of England loan. For others, it was Friday morning's newspaper, or a phone call from a fiscally aware friend. For Lesirge, it was the downgrading of Northern Rock's financial rating by the independent credit assessor Standard & Poor's. But many had simply seen the queue that morning and decided they had better join it. One man had been talking his dog for a walk when he passed the branch and rushed back home to get his documents. "If I don't get my money back, this could be the most expensive walk with the dog I've ever taken."

The only cheerful customers were those who squeezed their way out of the bank and past the queues, holding fuchsia deposit books stamped "CLOSED". As the line shuffled along, the world was kind and cruel in turn.

The manager of a Costa coffee shop sent out trays of free cranberry and raspberry slushies. "We've got a promotion on, but the people in the queue look like they need something nice," said the waiter.

Across the road, people stopped and stared in silence for minutes on end. Others were more vocal. "You're gonna lose your money," chanted some teenagers.

A few financial experts felt the need to add their twopennyworth as they passed. One Serbian man nodded knowingly. "See, this is the result of speculating in America. They say banks are supposed to have 10 per cent of their money available but I don't trust the banks." Where did he put his money? "I have no money," he said, laughing loudly. A 65-year-old man in a Man City football shirt chipped in: "They say there's a guarantee, but it's a matter of trust; do you trust anyone in this world?"

Mr and Mrs Michaels, a retired Greek Cypriot couple, had more than £100,000 in bonds. "I feel nervous and sick. The saving grace is that it is a British bank, but still I don't know what to do."

At 14.20, an employee of the bank in black suit, fuchsia tie and light-responsive glasses told customers that due to excessive demand the bank could no longer do instant Chaps transfers. However, it would issue cheques for "a penny less than a million pounds". He reminded customers that those with bonds or postal or internet accounts would have to write to head office. "Where is that?" asked one pensioner. "Newcastle, madam."

At 17.55 the doors closed with 30 people still queuing inside. Most customers had waited more than five hours to get their money out. Chancing on the peculiar sight of a bank doing business late into the evening, an Indonesian woman asked me what was going on.

"Oh, this happened to me," she said. "I lost £100,000 in BCCI. I got it back in the end, but it was in dribs and drabs and in dollars. But, you know, I survived."

"It reminds you of the 1930s American Depression," said one woman who had come down from Hampstead to take out tens of thousands' worth of savings. "Or that film, It's a Wonderful Life!"

She was referring to the moment in the 1946 film when James Stewart, a savings and loan bank manager, tries to persuade savers to leave their money where it is because otherwise neighbours and friends who have borrowed money will be ruined. As in the film, the people in the Northern Rock queue knew that simply by being there, they were making it worse. Yet they couldn't help but act as self-interest and personality dictated.

This was the real irony. Those who gathered in the first few hours of the Northern Rock rush were perhaps the most cautious people in our society. These were people who, even with thousands and thousands of pounds, had not invested in the stock market, nor even in property - investments that have delivered much, much higher rates of return over the past 15 years. No, these were people who were seriously averse to any kind of risk. That is why they had put their money in the safest place they could find, a savings bank.

And, at the first whiff of risk to what should have been a worry-free investment, they naturally lined up to take their money out.