''We know each other well''

Peter Wilby on punts, pints, "Peston" and Premier League cricket

If I were a betting man, I might have made money out of Margaret Thatcher. When a Tory leadership contest was announced, after the two election defeats of 1974, Joe Coral offered 50-1 against a Thatcher victory. Looking at the unimpressive alternatives, I concluded she would romp it. A £100 stake would have netted me £5,000, then a decent annual salary. Alas, in a regrettable act of principle, I stuck to a lifelong rule that I risk money only on Labour Party raffles.

Why was I confident of her success? Mainly because, as the Observer's education correspondent, I had seen her determination and clarity as education secretary in Edward Heath's government. She was called "Milk Snatcher" because she stopped free milk for children at school but, I thought, put the case for this harsh act - she wanted to protect money for books and teachers - as plausibly as it could be put.

I confess I also harboured a very tiny soft spot for her. Soon after her appointment, she came to lunch at the Observer where I was "on trial" in the education portfolio (as, I suppose, was she), partly because I was thought too rabidly left-wing to get on good terms with Tory ministers. I had, I think, previously spoken to Thatcher only twice, briefly and probably crossly. Nevertheless, in front of the editor and senior executives, she warmly grasped my hand and loudly stated, "We know each other very well!" as though I were a confidant. Soon afterwards, I was confirmed in the education job and received a pay rise to go with it.

Later, to my embarrassment, I found myself living opposite Thatcher House. I should explain – to readers now doubting my political credentials – that the local Tories erected this appropriately ugly building, in what was previously a pleasant tree-lined garden in suburban Essex, some years after I had moved there. Moreover, the day the Iron Lady (as she then wasn’t called) was due to open it, our six-year-old looked down at the milk bottles on our doorstep as he left for school and said solemnly: “You’d better take your milk in, Mummy, or Mrs Thatcher will snatch it.” I have always been absurdly proud of this story and quote it if anyone questions my parenting skills.

Thatcher owed much to the Institute of Economic Affairs, the think tank that kept the free-market flame burning when every mainstream economist was either Keynesian or Marxist. The left – I mean the real left, not New Labour – eventually became as intellectually isolated as market liberals once were. I have always thought it should have learned from the Institute of Economic Affairs. In a forthcoming history of the 1970s, When the Lights Went Out, the Guardian journalist Andy Beckett quotes Ralph (later Lord) Harris, the former director, on the secret of the institute’s success. Since the free market was “rather a cold distillation”, Harris told Beckett, the IEA needed to seduce as well as lecture. So it invited people to lunch three times a week and intended them “to go away feeling they’d enjoyed themselves”. Look no further for an explanation of the right’s success and the left’s lack of it.

If, as Ed Balls suggests, this recession is to be worse than the 1930s, to which precedent should we turn? The main candidate appears to be what some historians call the Long Depression from 1873 to 1896.

Alfred Russel Wallace, better known for proposing natural selection before Darwin, wrote a book about it, Bad Times, in 1885. He blamed "the increase of speculation and of millionaires" and pleasingly concluded that "whenever we depart from the great principles . . . of equal freedom and justice . . . the evil that we do surely comes back to us".

There are other analogies. The Long Depression was preceded by a Europe-wide property boom (and by a British prime minister, Gladstone, boasting that prosperity was increasing in "leaps and bounds"), started with a steep rise in inter-bank lending rates, and led to bank closures and prolonged deflation. At one stage, unemployment reached 25 per cent in New York City.

Most people have never heard of the Long Depression and, given the inadequacies of 19th-century statistics and the lack of a Victorian Robert Peston, many historians dispute there was any such thing. Yet it certainly left a literary stamp: the worst effect in Britain was on agriculture, and Thomas Hardy’s major novels were all published between 1872 and 1897. The number of male rural labourers fell by over 40 per cent and Hardy’s characters, plagued by misfortunes of distant, mysterious origin, had obvious contemporary resonance, even though the novels were set in an earlier era.

Britain's rural areas never recovered. One wonders if the City of London will do so. I would not accuse anybody at HBOS or Royal Bank of Scotland of selling a wife, but is there a writer who can do for a fallen banker what Hardy did for the mayor of Casterbridge? The best we can hope, I fear, is that my old friend Robert Harris will write another thriller.

I wrote last week about the survival of imperial attitudes in English cricket. The affair of Allen Stanford, the billionaire benefactor now accused of fraud, provides further illustration. Power in cricket has shifted to India, which is hardly surprising, since it has easily the largest market as well as the greatest enthusiasm for the game.

Twenty20 cricket may not be to everyone's taste, but members of our cricket Establishment thought it a brilliant idea as long as they controlled it. When the rude colonials started the Indian Premier League and threatened to buy up the best players - as the premierships of English football and rugby union have done for years - the English would do anything to stop them. That was why they accepted money from a dodgy Texan, with no questions asked.