Skinflint's City Diary
The Confederation of British Industry is suggesting rather obviously that if the Government allows a wages free-for-all but maintains price controls there will be a dangerous effect on cash flow and profitability. Needless to say, if I were thinking about the problem I should not start by accepting the need for either wages or price controls. The answer is simple and plain to grasp. It merely means the state spending less money and ruthlessly cutting back on their expenditure with all that that entails. Probably it should also mean, in my ideal state, Britain withdrawing to a great extent from the world economic system except so far as was necessary, mutually advantageous and welcome on a bilateral trade basis. A siege economy surely, but insulated from the terrifying and little understood world crisis. For the moment it little matters what the CBI say or the Government do. The economy will continue to slide since no leader can take the correctives through Parliament.
However living in the wretched political world we do, the gross margins of companies should be sacrosanct whatever happens to their profits. These gross margins have taken years of careful work and development and the chain of the economy depends on their being there inviolate for total collapse of supply among plenty not to occur. This disappearance of goods from the shelves of business is the surest indicator of inflation and forerunner of the total collapse in the value of the specie. Watch for these signs.
Sahib King
You won't have forgotten Richard King or Colin Forsythe, who sold their not particularly profitable Pan Australian Unit Trust Group to London and United Investments (once London and Bombay) of which they were also directors, for a staggering price. Subsequently they silenced their critics by arranging for London and United to sell the Unit Trust section to Barclay Unicorn before the crash for cash.
King has a reputation for bravado, or perhaps foolhardly courage. At Veeraswamy's Indian Restaurant, King, who was entertaining a few lucky shareholders, asked for his beef curry to be extra hot. When
it arrived the Indian waiter benefited from a little homily from King on how to prepare curry and was told that what Veeraswamy's thought to be extra hot was in fact mild to the choleric tastes of a Director of London and Bombay. King not only liked his curry extra hot, but would like it brought back extra-extra hot. Apparently an Anglo-Indian chant rang down the passages to the kitchens far below, as bearer called to bearer: "Jildi jildi, curry no good. Sahib King says extra hot curry too mild." The cooks, pressed hard, obliged with a curry that had a distressed and emotional King speedily leaving the table calling "Pani, pani," to the dismay of his guests, who were left with the bill which he had no time to pay. The dyspeptic King is once again hot and flustered and in need of a chota peg to cool him down. His libel action against Private Eye magazine, due to be heard last week, has been abandoned by him unilaterally. King has just got the tab. He has to pay £10,000 for his costs, which include a litle matter of three grand run up by his counsel, David Hirst QC, all of N ThiCh has to be met from King's private lakhs.
Slater Walker and cash
Jim Slater is able enough but I fear that he has been the butt of some unconsidered criticism in his avowed interest in being in cash.' I cannot understand why. Presumably Tony Benn is to be believed in his slavish following of the more outlandish ideas in Professor Galbraith's new book, in suggesting that all really large business is not properly competitive. Benn believes such firms become self-cartelised and restrictive in their practices and that the only future they may have is. through some form of state control and nationalisation. If this is correct it must be assumed that Slater is not only wise from the viewpoint of his shareholders in being 'in cash' but that he is being positively patriotic in anticipating Mr Benn's plans by turning into cash and therefore into a state where he is ready to buy the giltedged stock that Mr Benn will in due course use to buy these wretched industries that are beyond the power of private enterprise to help. Slater is certainlY not reviled by industry which he is still ready to back when a viable proposition appears.
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