The end of the equity cult
Sir: Is it permitted to the ordinarily edu- cated man to differ from Mr Nicholas Davenport's pronouncement in your issue of 23 May, that the 'cult of the equity is dead'? He says that the cult of the equity arose from a wish to share in the growth of the national product, whereas many of us feel that it arose infinitely more because of the inflation that resulted from undisciplined finance in this country since the last war. (That the inflation has been due to lack of discipline is shown by its striking absence —relatively speaking—in Germany.) People have wanted to keep their capital in real assets, not in paper.
It is true that over a specified period amounting to seven recent years, Mr. Daven- port has shown that this protection against inflation has failed. But if he were to take a longer view, a very different picture would emerge. In a period of fifty years the French franc has depreciated to one- thousandth of its value. A champagne
business in France would today sell for much the same value in terms of other goods that it did fifty years ago, regardless of any growth whatever. But if it had been sold fifty years ago, and the results put into paper--government paper, mortgages, or any comparable holding—its value today would not be worth an old second-hand motor car.
Some businesses in England go back 200 years and more. They often maintain their owners in much the same standard of living as they did that time ago. But what of the owner of an equivalent amount of paper in those days? Until the government give us a stable currency, as the German govern- ment has pretty well achieved, the cult of the equity is. I am sure, going to be very much practised here—shop stewards or no.
T. L. Cleave Redmarley, Sandringham Road, Catisfield, Fareham, Hants
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