It escaped complete destruction in a 1915 bombing raid, was struck by lightning on Midsummer's Night in 1950 and boasts a ghost in the basement - Dereham's Corn Exchange hides a dark secret: a black-clad spirit who roams underground.

It was projection of an entirely different kind which sent shivers down the spine of the builders working at the cinema in Dereham – as they installed a bar in the basement, they were interrupted by an eerie figure dressed in black.

William Nightingall and Christopher LeMoignan had bought the old Corn Exchange in 1975, bringing back the cinema which had been forced to close and opening a Bingo and Social Club – but their entertainment plans for the town extended further: into the basement, to be precise.

Built in 1857, Dereham's Corn Exchange was built on the site of The Shambles, thought to be a gathering of dilapidated market stalls which were privately-owned by six different traders, and also ground belonging to the porch of the nearby Red Lion Inn and ground in front of the hall belonging to a drapers and a chemist.

A huge stone statue of Lord Coke of Norfolk stood above the attic room's half-moon windown from 1858 – carved from a single piece of Portland stone, it weighed more than three tonnes and Coke stared out across the town for almost 100 years until Midsummer's eve in June 1950 when there was a freak storm which struck the Lord and split his head into four pieces.

The building has been used for trade, had its roof blown off during a 1915 air raid, was used by the Army for the Dereham and District Volunteer Training Corps during the First World War and became a cinema in 1924, firstly showing silent movies and then 'talkies'. By 1978, the old exchange was about to boast a brand new pub, making Bill Nightingall's dreams come true.

In order to create a larger space, construction work began in earnest and builders were employed to excavate the space under the old Corn Exchange by hand before they could install a new bar.

A report from the Eastern Daily Press of January 1978 describes in detail what builders Terry Thomas and Harry Lever saw

as they worked on the new

Plough and Furrow pub, work on which had started in the preceding summer.

They explained that workmen had refused to work in the building alone because of the creepy atmosphere and the discovery of a strange doorway covered in strange carvings and more than 20 signatures dating back to the mid-19th century. Londoner Terry, who was in charge of the project, said: 'I was working on a wooden beam and talking to Harry when I saw a figure out of the corner of my eye. It was a man dressed in black and he walked across the floor from the right in the main bar area below us.

'Harry asked who he was. The figure disappeared behind a column so Harry and I went different ways around the column to see who it was - but when we looked there was no-one there.'

Harry, of Humbletoft, Dereham, and Terry went as 'white as sheets'. It was 3.30pm and a hot water pipe was heating the new bar - but suddenly it went cold, said Terry.

Other strange happenings were seen by workers, he claimed, 'but on each occasion the person who saw it was alone - so they got on with their work and thought nothing of it. But Monday was different - two of us saw it.'

The EDP asked Malcolm Ramplin, secretary of the East Anglian Psychical Research Unit to offer some answers as to what had been seen. He said: 'On initial facts, it certainly sounds like some sort of apparition. It is quite possible the men could have disturbed something during their renovation work.'

A week after the article appeared, two men accepted a £50 challenge to spend the night locked in the 'haunted' pub with the doors taped shut. Harry Lever, however, told the EDP that nothing could convince him to spend the night locked in the basement 'whatever the reward'.

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