January was a bad month for Howard Graham. One week into the new year he suddenly realised that the business which he had been building up for the past decade was about to fall apart. Waiting for him in the office was a letter from his bank, Barclays, containing the grim sentence: "I have today cancelled the overdraft facility to the company and I would ask you to refrain from issuing any further cheques." After that, he figured, he had no chance of staying in business.
Graham set up a jewellery design and manufacturing business called The Colorado Gold Company in 1983. He built up a thriving little company. There were important customers such as Ratners, at the bottom end of the market, and Bond Street jewellers at the top. Money was coming in - in its latest full year, 1990, the business turned over £1.2 million, and made profits of £29,298. It provided a living for its owner and 20 staff. By June of this year it was in liquidation.
According to the auditor's report presented at the creditors meeting on June 21, the bank was directly responsible for its collapse. The withdrawal of the £175,000 overdraft left Graham with a crippling shortage of cash, a situation which he tried to remedy by frantically selling off stock, sometimes at a loss. After that the business could not win enough sales to stay afloat. Graham put it into voluntary liquidation.
"We had seen a slowdown in the British market, so we tried to shift overseas," he says. "We were sponsored by the DTI, and we started trading in Japan as well as in Europe and America. So things were starting to progress. But then we got this letter from the bank. We were aghast. They simply pulled the plug on us."
Barclays declined to comment officially, saying that the bank had a policy of not talking about individual cases. A spokesman said that it would not withdraw an overdraft without good reason.
Perhaps the real problem with banks is not the level of interest charged on loans but the sudden disappearance of credit. As for Graham, who estimates that he lost £50,000 in the crash, he has little option but to begin again. "I'll start up in manufacturing," he says. "It's all I know. But I won't be banking with Barclays."