Did you ever try and sign The Smiths?
"No. I was very close to The Smiths. I was very close to Morrissey. Morrissey was part of that little punk scene until 77 and there was a social whirl around a house called 35 Mayfield Road where Steven partially lived and where Linder lived, who was Howard Devoto's girlfriend and also still today is Morrissey's best friend. But I treated Steven, he was our genius writer. He was the speccy kid in the corner, the clever little swotty outsider boy, and very brilliant. My first contact with him was when he sent me as a schoolboy, a battered New York Dolls album sleeve and said 'Dear Mr Wilson, why can't there be more bands on television like this?' so I knew him and I actually was encouraging his writing. He wrote a fantastic short play about eating toast and I think he gave it to me and I lost it.
Then, at some point, whenever it was in 1980, he phoned me up and said would you come and see me. I drove out to King's Road, Stretford, to his mum's house, went to his bedroom upstairs and sat on the edge of the bed while he sat on the chair, surrounded by James Dean posters and he informed me that he'd decided to become a pop star. I sort of went 'well Steven that's very interesting', and inside I was thinking 'you must be fucking joking'. The least likely, you're off your fucking head. Completely in my mind, absolutely, the least likely rock n roll star imaginable in the universe.
So then obviously we were all part of a group of mutual friends and I can remember saying this same thing to Richard Boon, my mate who manages the Buzzcocks, and about four or five months later the two of us went to a gig in the Manhattan Club in Manchester. I think it was probably the Smiths' first or second gig and as we walked out, I was blown away, it was fantastic, and he said 'what do you think?', and I said 'I take it back completely, he's amazing'.
However, at that point in time Factory had gone through its wonder days of 78, 79 and we were now in late 1980 and into early 81. This is pre 'Blue Monday'. We weren't selling records, we were useless, we'd lost our plot and I was very depressed by the company. I had a band called Stockholm Monsters, I couldn't sell Stockholm Monsters records and I thought fine and my honest approach was, I'm not going to saddle Steven with this pile of shit, with Factory when it's shit. So I didn't even pursue it. I said to him 'I wouldn't be any use to you'. That was my version of why I didn't sign the Smiths. I know the Smiths have their version. Everyone has.
Do you regret not signing them?
"Not at all. Not for one moment. Oasis have their version of why I didn't sign Oasis. Everyone has their own version of these stories. Part of the fun of the movie ['24 Hour Party People'] is it messes around all these things. Morrissey and The Smiths was part of the movie, quite a large part of the second draft. The other bit was, though, the main memory I have of that point was that Rob Gretton wouldn't sign them. He'd tell them, 'because your demo's shit. Do another demo'. Which it was. The fact that Rob Gretton was wondering around Manchester, shouting at anyone he'd meet, 'The Smiths are the new Beatles', because he was a massive fun. 'But your demo's shit we're not signing you'. Which is typical Rob. About a year and a half later, Pinnacle records went bankrupt and three months later was bought up by Steve Mason and resurfaces, but Rough Trade survived through that period. If The Smiths had not been on Rough Trade, Rough Trade would not have survived. If Rough Trade would have gone down in 82 when Pinnacle went down, it would have all been over. So in some strange historical way, The Smiths being on Rough Trade was the economic safety net for the British independent record movement.
Is it true that Morrissey pulled music from the '24 Hour Party People'?
"I don't know. I've no idea. It wouldn't surprise me one little bit because he's a miserable git. Also, he would have broken my heart. He's a very talented boy, but he's actually one of the most miserable. . . he's actually, let's be really honest about it, he's actually a nasty person, as a human being. As was John Lennon. Because he treats good human beings who help him - this isn't me, I've never helped him, I'm fond of him because I'm fond of his talent and his creativity - he treats excellent good human beings who try to help him like pieces of dog dirt. He tramples on them. It's not his fault, he's just a terribly unpleasant human being, in terms of pure human values, he is not a nice person."
Why do you think he's like that?
"I've no idea. Some people are nasty people. One of the things was, from the beginning, very cleverly, when he was doing his second gig, he behaved like he was Little Richard, like a major pop star. With that arrogance, with that treatment of other people. That was his thing and it worked. But he's a miserable, he's not a nice human being."

© Ian Watson, 2003