CITY AND SUBURBAN
Dear Mr Clarke, your overdraft has doubled, so your bank needs a pleasant surprise
STOPHER Fl LDES CHRI
Knneth Clarke breezes into his bank manager's office and slaps down a pile of paper: 'Here you are, the new figures and forecasts, you wanted to see them — che- root?' The manager stares at him through rimless glasses and lights another cigarette. His customer settles back in the bank's armchair. 'Well,' he says, 'business is good and, as I've been telling the shareholders, we have an excellent record of keeping our spending and borrowing under control....' 'Don't tell me. Let me guess. You need more money?"Um, yes. Just a matter of £4 or £5 billion.' And how did that hap- pen?' The revenues were rather disap- pointing and the growth will come next year, and of course on the spending side we have commitments.' The manager gropes for his matches: 'You see, Mr Clarke, what worries us is the way this keeps happening. This year isn't over yet. Last year you turned out to need another £10 billion. Just like your predecessor, he always looked on the bright side... "Now, that's not fair. Our forecasts show the budget coming into balance in the medium term."Yes, I noticed. Wonderful things, these word- processors. All you need to do is change • the date. You do realise, don't you, that your overdraft has doubled in eight years and is still rising?' His customer explodes: 'If it comes to that, Mr George, your bank's forecasts have always been wrong and they've always been too gloomy. I told the shareholders that, too. Now stop being diffi- cult' It's for your own good, Mr Clarke, so let me remind you — creditors are human. So they like their surprises to be pleasant ones. Try it. Just for once. Good morning.'
Running out of Rothschilds
WHEN I came to the City, N.M. Roths- child and Sons was a family partnership and Rothschild Continuation was a paper partner. It had been invented in case of some accident, or enemy action, which might make the partnership run out of Rothschilds. Nowadays NMR is a limited company and Continuation owns it — but with the shockingly sudden death, this week, of Amschel Rothschild, there is for the first time no obvious Rothschild in the line of succession to Nathan Mayer Roths- child's chair. The present incumbent, Sir Evelyn de Rothschild, has reached what in a less idiosyncratic bank would be retire- ment age, and his sons are not of an age to follow him. His cousin Jacob, now Lord Rothschild, Amschel's elder half-brother, has always seemed to me the quintessential Rothschild of his day, but the cousins had a sundering quarrel years ago and Jacob left the bank. A family bank without family management will sooner or later find that the family wants to sell out, as (for exam- ple) the Kleinworts and Bensons sold out. I once asked a merchant banker which of his competitors might be for sale. 'I expect they all are,' he said prophetically. 'This one cer- tainly is.' He paused. 'All except Roth- schilds, I suppose.' Now we shall see.
No reward for talent
I HAVE always felt sorry for the man in the biblical parable who wrapped his talent in a napkin and buried it in the ground. It did not multiply. Still, he could have done worse. He could have wrapped it in the Norwich Union. This has been the experi- ence of a City and Suburban reader who 40 years ago spent £350 on a Norwich policy — enough money, in those days, to buy a small car. Then he was posted abroad and forgot all about it. This year, riffling through a desk, he found the policy and wrote off to the Norwich, eager to know if his talent had multiplied. Well, not exactly. It was now, so the Norwich told him, worth £330: costs, you see. I recommend him to invest the proceeds in a good dinner. Para- bles teach lessons, and he has now learned who a mutual assurance company is run for.
Fight at the M4 Corral
PISTOLS FOR two and tea and sandwich- es for one — here comes the gunfight at the M4 Corral. Thirty paces or several miles apart are Patrick Minford and Tim Congdon: two of the Chancellor's wise men, both monetarists, each of them
deeming the other a menace. Patrick believes that interest rates should be tum- bling, Tim wants to see them go up, Ken- neth Clarke sits back and lets them cancel one another out. Next week Patrick ven- tures onto Tim's home turf, to speak at Lombard Street Research, and Tim has greeted him with a premonitory fusillade. I am negotiating for the film rights. The plot summary will explain that this feud is all about inflation. Tim fears that it is on its way back. Broadly speaking, he says, there is too much money around, the supply is growing at a rate of 10 per cent, the pace has been speeding up and all past experi- ence shows that this spells trouble. Patrick says that this is all too simple and that this time will be different. He discards the broad measure of money, called M4, and focuses on MO, which measures cash in cir- culation — the true monetary fuel, so he says, of spending. Tim calls it the fuel of the black market: 'I don't think it sensible to base policy on a monetary aggregate which is held, to a disproportionate extent, by tax evaders and criminals.' My instincts are on Tim's side. My Bad Investment Guide warns me to distrust the proposition that this time will be different.
Inflated opinion
THE TEST bed for these rival theories on inflation is, as you might not have expected, Oxford University. Professorships are now being run off on the University Press like so many billions of reichsmarks. A committee of presumably disinterested academics has advised that Oxford should have another 162 professors, more or less doubling their numbers. This comes just in time for the freebie season, or Long Vacation, as Oxford likes to call it, and means that when the dons address their seminars at Williamsburg, Witwatersrand or Waikiki, they will be shown even more respect and allocated better bedrooms. My friend Dr Anatole Wetterhahn is most excited. He has just become the Weimar Professor of Monetary Economics, with a stipend to match. I told you so, he says — once Oxford has twice as many professors we shall all be twice as clever. Dr Wetterhahn's new pamphlet, Demand Management Revis- ited, is now being serialised by a national newspaper which thinks of him as its counter-attraction to Will Hutton.
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