Sid to the rescue
WHY do the companies writhe under the institutions' gun? Why do they not raise their hands and come quietly? They have for long had a multiplicity of reasons for wanting to go beyond the cartel which supplies their new capital. They may, like ICI, want the international spread of their °wnership to be closer to the international spread of their business, or, like Barclays, want to break into the financial markets of Tokyo and think that a presence in the stock market would help. They may start from the reasonable Tokyo premise that, if there were competition instead of cartel, Capital might be cheaper. They may find that our system of rights issues, offering shares to existing shareholders at a dis- count to the market price, costs a fortune in fees and commissions (guess who gets the commissions) and goes on for weeks on end. They can watch their American com- petitors raising capital without any such hassle. They hear the persuasions of invest- ment banks which want their business and would willingly take a whole new share issue on to their own books, selling it on and spreading it out at leisure. The institu- tions do not want to know. Their interest is to use their cartelised votes to maintain their hold. They have withstood the com- panies — but will they be able to stand up to Sid? Sid is the new force in the battle. Nine million Sids, the shareholders brought in by the privatisations, make a New Model Army. The companies have seen what can be done and how much can be raised by offering shares to this army. They may think that it offers them a better class of owner — more likely to be commit- ted, less easily rounded up by a bidder. They can look at Sir Peter Thompson's shareholders at National Freight, and think that such owners may have more to contri- bute than the National Tramways Pension Fund. If they think it, so do ministers, for whom a share-owning democracy is a matter of doctrine. The Financial Secretary to the Treasury, Norman Lamont, sees the opportunity, and can see the institutions standing in its way. He has politely sug- gested to them that they should move over. All the signs are that his politeness has been wasted on them. Now, with a Finance Bill and a Companies Bill coming up, there are other means of persuasion to be tried. The assurance companies' tax privileges are already under threat. Artillery, it is said, is a king's final argument. I expect the fortress of privilege to fall.
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