De La Rue PLC

De La Rue PLC

6 Agar Street
London WC2N 4DE
United Kingdom
(071) 836-8383
Fax: (071) 240-4224

Public Company
Incorporated: 1896 as Thomas De La Rue
Employees: 8,600
Sales: £559.50 million (US$856.71 million)
Stock Exchanges: London
SICs: 6711 Holding Companies; 2753 Engraving and Plate Printing; 3574 Calculating and Accounting Machines, except Electronic Computing Equipment; 3555 Printing Trades Machinery and Equipment

The world’s largest commercial banknote and security printing company, De La Rue has a presence in literally the four corners of the earth. With 90 percent of its sales outside the United Kingdom, it controls 31 manufacturing plants in 13 countries and has sales and marketing operations in 14 others. Its customers include commercial banks, central banks, other financial institutions, government departments, and major retail organizations. At the forefront of the move to automate retail banking processes, De La Rue is also the leader in payment systems, supplying cash handling equipment, producing cash dispensing machines, banknote sorting machines, and counting products. A company founded on and fueled by innovation, De La Rue has had a colorful and eventful history.

Thomas de la Rue was born in a small village in Guernsey, the Channel Islands, in 1793. A boy of little formal education but much ingenuity, he was apprenticed at the age of nine to a newspaper printer in Guernsey’s capital, St. Peter Port. Immediately after his term of service ended in 1811, de la Rue entered into a partnership with Englishman Tom Greenslade to produce their own weekly “journal politique et litteraire,” the Publi-ciste. After only 13 editions, however, de la Rue, whose burning ambition was matched by an equally fiery temper, fell out with his partner and independently set up Le Miroir Politique, a forum from which he energetically attacked Greenslade and the other publishers in town.

From the beginning, however, de la Rue was more interested in publishing processes than in editorial content, and by the time he was 25 he had determined that provincial Guernsey offered too restricted a scope and moved to London. In order to support his family, de la Rue began his London career as a manufacturer of straw hats, but all the while he was experimenting with paper surfaces and printing processes. In 1829 he produced a deluxe edition of the New Testament, 25 copies of which were printed with pure gold powder. The result was universally admired, and book lovers judged it a marvel, but unfortunately, with a price tag of £15, only one copy was sold.

The foundation of the De La Rue company came in 1830, when de la Rue first went into the playing card business. Two years later de la Rue patented his “Improvements to Playing Cards” and produced the first modern cards. His printing technique, electrotyping on enameled paper, represented a notable achievement not only in playing cards but in the history of color printing. Within a few years De La Rue was acknowledged as the premier maker of playing cards in Britain. Although cards remained the backbone of the business until the 1850s, during the 1830s and 1840s De La Rue branched out into all aspects of the stationery business, establishing a brisk trade in elaborately designed Victorian stationery, visiting cards, wedding cards, fancy menus, and railway tickets (a handy way of using up odd pieces of pasteboard). In 1843 De La Rue established its first overseas trade, as de la Rue’s brother Paul traveled to Russia to advise on the making of playing cards.

Meanwhile the burgeoning postal system was to supply De La Rue with its next major business avenue. In 1840 the system of prepaid postage was first introduced, and with it the idea of the envelope. The earliest envelopes were sold flat and unfolded; later they were cut and folded, but the whole laborious process was done by hand. In 1846 de la Rue’s son Warren, an inventor like his father and in his later years a well-respected amateur scientist and astronomer, designed the first envelope-making machine, able to produce 2,700 envelopes in an hour. This proved to be a tremendous boost to De La Rue, particularly after 1851 when it caught international attention and acclaim at the Great Exhibition at the Crystal Palace in Hyde Park.

Two years later De La Rue scored another coup when it won a four-year contract from the Inland Revenue to produce adhesive fiscal stamps on drafts and receipts. The company’s main competitor in this area, Perkins Bacon & Co., might have seemed the logical choice for this contract as it was already making Britain’s first postage stamps, but De La Rue was pioneering a new method; instead of the old line engraved system, whereby each sheet was printed from a transferred plate, De La Rue’s new process was typographical, or surface printed. The system was more economical and practical, and De La Rue promised, in addition, that they could provide a special “fugitive” ink which would disappear if anyone attempted to clean the stamps to reuse them.

De La Rue’s first foray into security printing was thus a tremendous success. By 1855 the company was producing its first British postage stamp, the Fourpenny Carmine, and had begun supplying stamps to the East India Company. This was the start of a hugely lucrative contract; within a few years the company was supplying the entire colony with all its postal requirements. A rival’s bad luck and the uncertain temperament of a government official provided De La Rue’s next big break. In 1858 Perkins Bacon inadvertently offended the Agent General in charge of the British colonies’ stamps to such a degree that the Agent General relieved that company of the contracts for the Cape of Good Hope, Mauritius, Trinidad, Western Australia, Ceylon, Saint Helena, the Bahamas, Natal, and St. Lucia and awarded them all to De La Rue. This in turn led to another profitable avenue for De La Rue, as the same official contracted the firm to print the paper currency for Mauritius, giving De La Rue its first banknote printing contract. Success in the British colonies bred success at home, and by 1880 De La Rue had completely cornered the domestic postal market.

During the middle decades of the nineteenth century, De La Rue became an international force in security printing. As new countries emerged or different governments came to power, De La Rue was there to offer its expertise in postal and currency printing. During the U.S. Civil War, De La Rue was hired by the Confederacy to produce the only American stamp ever printed abroad: the Five Cents Blue, adorned with the head of Jefferson Davis. The business expanded into Italy, Portugal, Uruguay, and Ecuador, and as it expanded Thomas de la Rue and his sons Warren and William continued to make improvements in paper and processes.

In 1896 De La Rue converted from a family partnership to a private company. Now under third-generation leadership, the firm seemed to lose those qualities of ambition and innovation that had caused it to flourish under Thomas and his sons, and entered a long period of stagnation and decline. The company did enjoy a brief success with its Onoto pen, the first practical fountain pen. As its eccentric inventor George Sweetser enthused of his creation: “It can not only be filled in a flash and written with, but could be used to syringe your ears, spray the geraniums with insecticide, and it is ideal for ’ink-splashers’ as it will carry across the road.” Fueled by a £50,000 advertising campaign (an enormous sum at the time), the Onoto was a big success in the early years of the twentieth century, though not big enough to save the faltering fortunes of De La Rue.

As early as 1888 there had been some concerns expressed in Parliament about De La Rue’s monopoly of the British postage stamp market. That incipient storm had blown over largely because De La Rue was able to convince the government that it was, simply, the best company for the job. By 1910, however, suspicions were rekindled, not least because, although production costs had gone down, De La Rue’s prices remained as high as ever. The company was, in fact, making colossal profits and had grown complacent. The Inland Revenue proposed to split the contract between De La Rue and another firm, Harrisons. Reportedly, Thomas de la Rue’s grandson, Thomas Andros de la Rue, was so incensed by this proposal that he stormed out of a meeting with the secretary of the Post Office after shouting that De La Rue would have the entire contract or it would have none of it. Thus De La Rue lost a contract it had held for 30 years. The consequences for the company were grave, with idle factories and redundant workers the result. Loss of face was added to loss of profits only months later when Thomas Andros de la Rue died and the rumor went around that De La Rue’s workers were each to benefit by his will. The widely publicized rumor proved to be untrue, and De La Rue sank even further in the public’s estimation.

With the outbreak of World War I, the company’s fortunes were briefly revived with an important government commission to print one and ten shilling notes, but on the whole fourth-generation management fared no better than had third-generation. Indeed, the company started the war with £90,000 to its credit, and ended it £90,000 in debt. Part of the problem stemmed from Stuart de la Rue’s too-eager embrace of the wartime government’s suggestions that manufacturing firms should diversify. De La Rue diversified into everything from cricket bats to motor cars with mostly disastrous results. On one occasion, in a bid to prove De La Rue’s security printing superiority, Stuart de la Rue forged one of the company’s competitor’s banknotes, successfully presented it to his bank, and triumphantly informed the government, only to be nearly imprisoned for counterfeiting.

By 1921, when the company went public, it was nearly ruined. Once at the forefront of new technologies and developing research, De La Rue’s factories were degenerating into a jumble of antiquated machinery and outdated processes. Stuart de la Rue, as chairman, was the only family member left in the firm. When the government proposed that the company fulfill India’s printing requirements on location rather than in London, Stuart refused to do so, with the result that within a few years the entire Indian contract—a mainstay of the business—was lost.

In 1923, Stuart de la Rue unwisely revealed that De La Rue had a secret private agreement with its competitor Waterlows over stamp interests. De La Rue held a monopoly on domestic and colonial stamps, Waterlows on foreign stamps. If the “wrong” tender were accepted, one company paid compensation to the other. There was a great public outcry at this revelation, and although Stuart received only a public admonishment in the inquiry that followed, the company’s reputation was further discredited. Stuart de la Rue’s own reputation was in tatters. It is said that, in desperation, he asked his employees what had gone wrong with the company, and one of them, Bernard Westall, a junior clerk who later became managing director, responded, “You.” Stuart de la Rue left the company soon thereafter.

It took some time for De La Rue to recover from its troubles, but recover it did. Instrumental in the company’s revival was its 1930 entry into the vast and lucrative Chinese market, which was to be for nearly 20 years a mainstay for De La Rue. Operations were frequently fraught with cloak-and-dagger style intrigue as international hostilities heightened and World War II drew near. A factory was secretly built in the French settlement of Shanghai with a back-up plant constructed in Rangoon, Burma, as a precaution against Japanese aggression. When France fell, De La Rue succeeded in moving its operations to Rangoon, and when Rangoon fell, to Bombay, India.

De La Rue’s London factories at Bunhill Row were destroyed in the Blitz in December 1940, and the old ways of commercial printing were finished forever. De La Rue, however, quickly made arrangements to resume printing elsewhere by offset lithography and was able to honor all commitments.

Following the war, De La Rue embarked on a half century of acquisitions, developments, and expansions. In a strong postwar position, the company grew, establishing interests in Pakistan, Ireland, and Brazil. In 1958 the company set up Formica Ltd. (with 40 percent participation by American Cyanamid) and within a few years its factories were established in France, Germany, Australia, New Zealand, and India. Security Express, a carrier of valuables service, was created the following year.

In 1960 De La Rue’s growing involvement in bank automation was signaled by its creation of a subsidiary, De La Rue Instruments. The following year the company acquired the de la Rue family’s old printing rivals, Waterlow and Sons. The 150th anniversary of Thomas de la Rue’s first edition of his own newspaper Le Miroir Politique coincided with the company’s registration in New York as a security and financial printer to the New York Stock Exchange. In the late 1960s, the Rank Organisation made a bid for De La Rue but this was rejected by the Monopolies Commission as being against the public interest. In 1969 the early foundation of De La Rue, the playing card business, was finally sold.

The 1970s and 1980s were busy years of acquisitions and sales, with De La Rue divesting itself of interests that were not part of its core businesses (such as the sale of Formica in 1977) and consolidating its position in its chosen ventures (witness the 1982 acquisition of the U.S. payment card firm Faraday National Corporation). Also during the 1980s some of De La Rue’s banknote export factories were opened, including those in Singapore and Hong Kong. Most significantly, however, the company moved increasingly into the area of payment systems, among other ventures, forming De La Rue Garny in Germany in 1983 and acquiring the Scottish-based Fortronic in 1987.

De La Rue has fared particularly well in the 1990s. To some extent this is due to Jeremy Marshall, chief executive since 1989. Taking over just after De La Rue had narrowly avoided a takeover bid by Norton Opax, Marshall continued and strengthened the trend toward concentration on De La Rue’s strong core areas of currency, security printing, and payment systems, selling off loss-making subsidiaries and concerns not directly related to the firm’s principal ventures.

De La Rue also profited from political events. The break-up of the Communist bloc resulted in some 26 countries requiring new currency. De La Rue got the lion’s share of the business. Boosted by these new markets, the company’s currency division remained strong in the 1990s. Of the world’s countries whose governments do not print their own currency, De La Rue has 60 percent of the market share. The company has regained its traditional lead in technological innovation: specialized presses are continually being developed and marketed by its associated company, De La Rue Giori. Its patented Computer Aided Design System, Durer, is able to produce banknote designs in half the time formerly required.

Research and development are also keystones of De La Rue’s security printing division: it supplies the Bank of Scotland with debit cards incorporating laser-engraved photographs, and in partnership with a Dutch electronics company, Philips, is developing microchip “smart cards.” Plastic payment cards, checks, passports, travelers’ checks, and bonds all play a part in De La Rue’s security printing business, and the company is expanding into related ventures, moving increasingly into printed materials for elections and for national registration and identity card schemes.

De La Rue’s payment services division, however, is the company’s fastest growing areas of business. As banking becomes increasingly more automated, De La Rue is at the forefront of technological development. Its 1991 acquisition of Inter Innovation, a Swedish payment systems firm, caused the company’s profits to rise sharply, and De La Rue is avowedly on the lookout for similar acquisitions to take full advantage of this rapidly expanding market. In the future, it seems likely that De La Rue will continue to uphold its status as the world’s preeminent security printer while aiming to become a leading force in the creation of the automated banking world of tomorrow. Thomas de la Rue, that shrewd businessman and inventor, would surely applaud today the strategies of the company he founded so long ago.

Principal Subsidiaries:

De La Rue Card Technology; De La Rue Giori (Switzerland; 50%); De La Rue Holographies (80%); De La Rue Identity Systems; De La Rue Inter Innovation (Sweden); De La Rue Numbering Systems; De La Rue Smurfit (Ireland; 50%); Garny (Germany; 93%); LeFebure Corporation (U.S.A.); Thomas De La Rue (Brazil); Thomas De La Rue (Hong Kong); Thomas De La Rue (Malta); Thomas De La Rue (Singapore); Thomas De La Rue and Company; Thomas De La Rue Kenya; Thomas De La Rue Lanka (60%); Thomas De La Rue International.

Further Reading:

“De La Rue Is Secret Bidder for Portals,” London Times, May 15, 1994, sec. 3, p. 1.

“De La Rue’s Future Looks Secure,” Management Today, June 1991, p. 38.

“Excellent Results from World Leader,” Investors Chronicle, June 4, 1993.

Houseman, Lorna, The House that Thomas Built: The Story of De La Rue, London: Chatto & Windus, 1968.

“In Line to Make a Mint,” Mail on Sunday, April 4, 1993.

“The Lex Column: De La Rue,” Financial Times, June 2, 1993.

“UK Company News: Ex-communists Help De La Rue Rise 34 Percent,” Financial Times, June 2, 1993.

—Robin DuBlanc